An Organizational and Leadership Debacle: Is it Time to Audit the IRS?

The IRS has never been the most popular kid in the lunch room. The current IRS scandal shows an agency experiencing organizational and leadership issues. I suppose they provide a necessary function, but who hasn’t complained bitterly in the spring about the amount of money and time it takes to meet their demands?

I’ve been following the news in hopes that things would improve for the IRS – seems that’s not the case. This year, the IRS has definitely been setting off some red flags: just take a quick look at the number of scandals that have rocked the IRS in the past twelve or so months.

Remember the whole thing with the Tea Party and other conservative groups? It turned out that when the IRS was receiving requests for tax-exempt status, it scrutinized groups that used words like “tea party” and “Israel” in case files. Initially other organizations with more obvious liberal leanings were approved without the same level of scrutiny – though it has surfaced that some of them were also targeted.

Of course, this is right on the heels of the New York Times’ revelation that the IRS had been using funds drawn from taxpayers to enhance the experience of employees. Enhance meaning providing free cocktails at company events and handing out engraved pens. Now, I’m all for team building when needed to enhance organizational performance; however, within reason and when the activities will achieve the desired results. 

Government scandals are nothing new- who can forget the GSA scandal last year? They spent over $800,000 on a Vegas conference. Of course it was all in the name of “team building”, but as we argued, your team can bond and increase performance for under $823,000. Anyone who’s been to a college orientation can attest to that…

The IRS’s troubles are a bit different. Sure, they also got caught spending tax dollars on ridiculous luxuries, but this whole thing about targeted inquiries adds a different level. Couple that with the fact that the IRS was never too popular to begin with, and the level of potential government involvement, well, you’ve got a giant organizational mess. 

There are several core areas to focus on when analyzing how your business can become higher performing, in the public perception and internally. And I’m not talking about hair, makeup, and clothing like makeovers in the movies.

So, what are some of the problems facing the IRS that are negatively impacting perception and performance – and what are some things to think about so you can avoid similar issues?

Leadership: Leading in a very bureaucratic and hierarchical organization is never easy. Some basic leadership skills failed at the IRS – communication and accountability. The IRS requires congressional approval for many leadership posts, and while that approval is tied up and permanent leadership vacancies exist, acting leadership is in place. This leads to levels of increased uncertainty for both the leaders and the workforce. Lack of continuity and stability in leadership impacts performance. Leaders living with uncertainty regarding their role and responsibilities are often not empowered to assert authority or influence organizational improvement. This uncertainty also reduces levels of commitment and communication. Signs of a high-performing organization often start at the top. What’s the leadership like in your organization? Do your leaders empower your employees? Do you set clear roles and responsibilities?

“The supreme quality of leadership is integrity.”  – Dwight Eisenhower

Structure: The structure of your organization has a direct impact on performance. The more simplified the structure the more open the lines of communication tend to be, and the more freely information flows. The more complex the structure the more difficult it can be to achieve high performance. Government systems tend to be overly complex. That said, even in systems with complex structures, it’s still possible to achieve high performance. If you must have an organizational structure that is a bit more layered and complex, then focus on simplifying your processes. How flat can you make your organization? What processes can increase communication instead of inhibit communication? How can you best deliver on your mission while keeping things as un-complex as possible?

“People can be encouraged to change, but if the structure of the system in which the individuals work does not support them or allow enough flexibility, improvement efforts will fail.”

- Todnem & Warner

Communication: Communication is supported by organizational structure and process, and often driven by leadership. When leadership is in a place of uncertainty or complexity, it is even more important to make sure communication is a priority. Many of the problems at the IRS stem from lack of communication. If interdepartmental communication was open and frequent then the recent scandal may have been avoided. Communication increases trust. Trust increases the feeling of safety for employees. Increased safety increases the likelihood of employees to speak up. Are your leaders creating a safe place for employees to speak up? Is your organization communicating transparently? Do you communicate up, down, and lateral?

“Build skills in communication such that the real conversations can be held on a regular basis.”

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Who knows what will come of this mess. Either way, any business can learn from the mistakes of the current IRS scandal to become higher performing. Hopefully the IRS will learn from their mistakes as well.

About Scott Span, MSOD: is CEO & Lead Consultant of Tolero Solutions – an Organizational Improvement & Strategy firm.  He helps clients in facilitating sustainable growth by connecting and maximizing people –> performance –> profit™, creating organizations that are more responsive, productive and profitable.

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