The Risks and Rewards of Transparency

Admitting mistakes is a risk. But willingness to admit mistakes builds trust.
by | February 6, 2008

One of the best strategies for improving government performance is transparency. Why, then, does being transparent so often feel like a risk? Let's look at this important question through three examples.

Thinking about the first example always brings a smile to my face. The U.S. Department of Education Office of Federal Student Aid maintains regular communication with financial-aid advisors on college campuses around the country. A few years ago, a letter to these officials announced a new customer-service call center. Unfortunately, two digits of the call center's phone number were transposed. Instead of reaching FSA staff, callers heard a sultry voice say, "Do you like it hot?"

When the responsible employee bravely reported the error, the late Greg Woods -- who led FSA at the time -- convened his top advisors, who suggested various courses of action. For Woods, though, it was of paramount importance to keep the integrity of FSA intact. So none of his employees went home until several hundred financial-aid advisors were contacted by phone. They received an explanation of the error (I don't think the sex line was mentioned) and an apology.

Admitting mistakes is a risk. But willingness to admit mistakes builds trust.

Transparency also means being open and honest with citizens about how well their tax money is spent. Over the past decade, we've witnessed an explosion in th enumber of cities, counties and states that are reporting quantitative and qualitative data to the citizens they serve.

At one end of the transparency continuum, many jurisdictions report measures of what they do -- pave so many miles of streets, handle so many unemployment cases, put so many cops on the street, and so forth. Fewer jurisdictions go the next level, reporting the extent to which their citizens are benefiting from those efforts. It's one thing to pave streets; it's quite another to reduce commuting time. We like cops on the street and we like small class sizes in our schools, but the real outcomes we seek are safe streets and students making greater academic progress.

State systems such as Results Iowa or Virginia Performs, and similar systems employed by cities and counties, tell us the actual outcomes being achieved. And this form of transparency helps dispel some of our treasured assumptions. The evidence is telling us, for example, that class size is not highly correlated with student achievement and that the size of the police force is unrelated to the level of crime. These notions are so radical that no sane politician would ever utter them aloud. But, because increased transparency in outcome reporting is becoming more widespread, this may no longer be true in five or ten years.

Even further along the continuum of performance-measurement reporting are those few leaders who are willing to talk publicly and authentically about performance. The Government Management Accountability and Performance program implemented by Washington Governor Christine Gregoire is particularly significant. As part of her accountability initiative, she has invited the press into her regularly scheduled outcome reviews with her cabinet. Reporters have a front-row seat when the governor and her cabinet discuss the impact of state parolees who have committed murder, or when GMAP exposes the embarrassing fact that fewer than half of public-works projects are completed on time.

Albeit tremendously risky, the efficacy of this extent of transparency is plainly evident. Ask yourself who is more likely to be motivated to improve results: one of Governor Gregoire's cabinet members or a department head from a state that only boasts about its accomplishments and keeps its shortcomings hidden from public view?

Here's an example of advanced transparency: New York City Mayor Michael Bloomberg has been encouraging executives in his administration to create a coordinated effort to reduce poverty in the city. Finance Commissioner Martha Stark explored ways her department could contribute to the mayor's effort. She speculated that many city residents who were eligible for the federal Earned Income Tax Credit were not receiving it, and an investigation proved this to be true. Since New York piggybacks a tax on state and federal income tax, the folks at Finance had full access to the income-tax files for all city residents. From those records, Stark was able to quickly ascertain those who were eligible for the EITC but had not filed for the benefit.

Her staff suggested that the department notify these taxpayers of their eligibility and encourage them to file for the credit. But Commissioner Stark went the next step. The residents were not only informed of their eligibility, but they also received a completed form that needed only their signature. As a result, thousands of the working poor received the tax credit to which they were entitled. In fact, the credit is reflected not only in their federal tax, but also in state and city income taxes. Now in its second year, the IRS has joined forces with New York City, helping the city to improve the accuracy of its efforts.

Our tax laws are designed not only to raise revenue, but also to accomplish many other purposes. These courageous tax administrators are making those goals a practical reality. But doing so involves serious risks. Bureaucrats are supposed to stick to their own turf. Crossing organizational and jurisdictional boundaries is at least a violation of strongly held unwritten rules. And going out of your way to "give back" revenues (even to those so entitled) is not likely to win many friends in budget offices searching for every precious dollar.

These examples of transparency are truly heroic. Why would simply doing the right thing rise to the level of heroism? Because our political and administrative systems punish transparency rather than reward it. In fact, you have to be stupid to be transparent. Either that or heroic. It's smarter to sweep mistakes under the carpet rather than to openly admit them. Why run the risk of embarrassing yourself politically by reporting outcomes in public safety, education, health or traffic congestion when the numbers may well be going in the wrong direction? Why make yourself accountable for outcomes beyond your direct control? What's to be gained by crossing several organizational boundaries and running the risk of embarrassing fellow tax administrators by letting the working poor in on a little secret?

We are well served by leaders who take these risks to do the right thing. And until we change our political and administrative system to reward rather than punish transparency, we need to recognize the value of their heroism.

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