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Business -- Organizational Development Cases Study
The organizational entity involved in this case study is a component of the largest Office of Inspector General (OIG) of any United States federal government agency. Specifically, the entity is the Office of Audit Services (OAS) of the Inspector General of the U.S. Department of Health and Human Services (HHS). That organization maintains its headquarters in Washington, DC and regional field offices in all eight federal regions throughout the country. Its primary responsibilities relate to conducting financial audits within all of the federally funded programs under the authority of HHS, in conjunction with which it issues formal reports detailing any federal funds improperly claimed or received and pursuant to the lawful authority of the Inspector General (IG), under the Inspector General Act of 1978, to order the return of those funds (Edwards, Wattenberg, & Lineberry, 2009).
Because all eight regional field offices conduct audits and reduce their findings to report form independently, there are perpetual delays in connection with the final approval of those regional reports by headquarters, which, in turn, substantially delays their eventual issuance. A series of internal reviews utilizing process consultation and specific interventions in the form of organizational conflict meetings and interorganizational relations meetings generated a proposed solution of hiring a dedicated report Writer-Editor in each regional field office working under the dual supervision of at the regional level and under the supervision of David Long, Assistant to the Deputy Inspector General at headquarters. That initial solution proved highly ineffective in one federal region by virtue of the latitude allowed by the New York Regional Inspector General (RIG) to audit managers with respect to incorporating the writer. That emboldened the resistance of some Region II audit managers and audit teams to accept the input of the writer. Ultimately, the solution was to institute fundamental and uniform changes to the entire production process of agency reports in Federal Region II that specified the process steps involving the writer in the report production process.
Background of the Issues
The audit production process and organizational responsibilities pertaining to the audit report issued by the U.S. Health and Human Service (HHS) Office of the Inspector General (OIG) remained largely unchanged for decades (Nowolinski, 2008; USHHSOIG, 2011). Generally, each individual field office conducted audits either assigned by headquarters or approved by headquarters after proposal by regional Assistant Inspector Generals. Thereafter, auditors and audit managers draft regional reports and furnish them to headquarters in Washington, DC. Based on the recommendations of the Joe Vengrin, Deputy Inspector General to Inspector General Daniel Levinson, a new position of Writer-Editor was added to each of the eight agency regional field offices. After appropriate training in Washington, each of those Writer-Editors was added to the personnel of the regional field offices under the joint control of Joe Vengrin in Washington and the RIG in each regional field office. A serious problem developed in Federal Region II, covering New York, New Jersey, and Puerto Rico.
When the new Writer-Editor, Charles Liverhant, was added to the Region II OIG office, James Edert, the RIG in charge of that office instructed the five audit managers under his authority to "decide for yourself how you want to use the writer." Thereafter, only one audit manager, James Cox, made a good-faith effort to incorporate Charles into the report generation process in his audits. Elliot Hirshon made only patronizing attempts in that regard, intended more to placate Charles and avoid confrontation without involving him significantly in the report writing process. Richard Schlitt instructed his audit team to consult Charles as a resource for questions about grammar and punctuation. John Berbach and John "Jack" Madigan simply ignored Charles altogether and never sent any of their teams' reports to him for review.
Charles informed Jim Edert that he was spending many days doing absolutely no work because only one manager, James Cox, had been providing him with any significant volume of work. Two audit teams were merely consulting Charles occasionally with grammar questions while another two never sent Charles any work at all and never consulted him for anything. Meanwhile, Charles was receiving communications from headquarters asking why Region II audit reports were still unimproved while those of the other federal regions were showing significant improvement in many respects. Jim Edert responded that he would not interfere with the autonomous authority of his audit managers and that Charles should simply continue to provide only the services requested of him. After headquarters indicated to Jim Edert that the quality of the writing in Region II had not improved the way it had in the other regions, Jim summoned Charles to discuss the matter and implement a solution.
Charles indicated to Jim that he knew from his discussions with the other regional writers that only New York allowed audit managers to avoid including the writer in the audit report writing process. In order to improve the regional reports uniformly, Jim would have to instruct all of his audit managers to send their draft reports to Charles for review. Thereafter, both Richard Schlitt and Elliot Hirshon followed Jim's instructions and instructed their senior auditors to provide their draft reports to Charles and to incorporate the changes suggested by Charles. Meanwhile, both John Berbach and Jack Madigan followed Jim's instructions only in the most literal sense: they did send their draft reports to Charles but they simply discarded the files he returned to them and ignored any changes proposed by Charles to their reports. Charles confronted John and Jack about the situation and they both responded that they had complied with Jim's instructions to send their reports to Charles but that they still retained the ultimate authority to incorporate or not incorporate any changes proposed by Charles. When Charles sought intervention from Jim Edert, Jim responded that he would not second guess his audit managers.
A few months later, headquarters again contacted Jim Edert demanding to know what the problem was. Unbeknownst to Jim, Charles had taken the initiative of contacting Deputy Inspector General Joe Vengrin's office expressing his frustration and his concern that headquarters would assume that Charles was the problem in Region II. Although annoyed at the situation, Joe Vengrin instructed his staff to ascertain what the problem was and to implement a solution immediately. To avoid generating antagonism in the region toward Charles, Joe Vengrin's assistant David Long interviewed Charles privately and determined that headquarters would have to establish specific guidelines for the incorporation of the writer in Region II (Daft, 2005; Robbins & Judge, 2009). Under the guise of providing those guidelines to all federal regions, David Long actually sought merely to ensure that the same procedures that he learned from Charles had already evolved naturally in the other federal regions would be adopted in Region II. He initiated a communication directly to Jim Edert according to which headquarters was issuing more specific guidelines to incorporate the writers.
The communications issued to all the regions from headquarters set forth the following guidelines: (1) All audit reports were to be reviewed by the regional writers before being forwarded to headquarters in draft form; (2) Regional writers were to be consulted and their suggestions deferred to with respect to the specific point of development when draft reports were to be provided for their review; (3) All changes proposed to reports by regional writers would either be adopted by the audit managers or discussed with the writer before being rejected; (4) If resolution could not be achieved between the regional managers and the writer, the matter would be referred to the RIG; and (5) if resolution could not be achieved between the RIG and the writer, the matter would be referred to David Long at headquarters.
Upon receiving the communications from headquarters, Jim Edert immediately called a meeting…[continue]
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