The Foreign Service Journal, October 2006

74 F OR E I GN S E R V I C E J OU R N A L / OC T OB E R 2 0 0 6 A F S A N E W S S ome of you are experts on theManage-to-Budget concept, knownasMTB. Someof youhaveheardofMTBandknow the basics, while others may know nothing about it. Wherever you fall on this scale, MTB is likely to affect your life in one way or another, for it is our new administrator’s solution to improve our agency. Coming froma private sector position as chairman and chief executiveofficer of thepharmaceutical giant Eli Lilly, Ambassador Randall Tobias is serious about reforming our agency. During his five-year tenure inthat position, themar- ket value of Eli Lilly jumped from$14 bil- lion to well over $70 billion. Quite an accomplishment, for sure. So, now, is it USAID’s turn? But wait: USAID doesn’t generate revenueor sell productsor services. Well, the next best thing is to become a more efficient,meanand leandevelopment machine. Noone canbe against that, right? Let’s look at this more carefully. The main idea behind the MTB process is to look for efficiencies by reducingwaste through an incentive system. Todo that, author- ities andbudget control have todevolve to the lowest operational unit possible; inour case, theUSAIDmission. The theory is that if managers have the ability to plan and design their workforce compositionandotheroperational expense items basedonagiven budget, therewill be amore efficient use of budget resources. The missions already manage a large part of their operating expens- es budget for such things as FSNsalaries,maintenance, rents, sup- plies, travel,motor pool, ITcosts and local contracting. One bud- get item they do not yet manage is U.S. direct-hire salaries. The idea behind theMTB, ultimately, would be to givemissions this authority. Here is where good intentions go bad. In the private sector, an operating unit, such as the field office of a large pharmaceu- tical company, candetermine its staffing requirements. If a posi- tion or employee is not needed, the next logical step is to elim- inate the jobanduse the “savings” to increaseprofitabilityby either not filling it or downgrading itwitha lower-cost employee. Under our current system, Washingtonmanages FSO salaries directly, inaddition tohiring and firingpersonnel. While amissiondirec- tormaydecide that anFSOposition is not needed, he or she does not have the authority to remove the FSO from the Service or hire a replacement. So, even if the mission director eliminates the position, there will be no “savings” for himor her to use for other purposes. The FSOsimply goes on to another assignment elsewhere. For MTB to make sense and be truly implemented, themissiondirectorwouldhave tohave the authority tohire and fire. Congress wouldhave toapprove that. Fortunately, at this point, there are no immediate plans to decentralize financial and per- sonnel management to the mission level. Butwhy change the systemat all? FSOs are actuallyonlypass- ing through a mission for a few years, much like military per- sonnel. MTBmakes more sense under a Civil Service systemat headquarters, where positions are intend- ed to be stationary and long-term. While salary control is only one aspect of a real MTB system, anothermajor component is an incentive system to entice managers to bemore efficient. As of thiswriting, the lat- ter system, which is separate fromour nor- mal awards procedures, was still being designed andunder discussion. Again, the concept is simple — but like many other proposals, the devil is in the details. Given enough incentives, somemanagersmay elect tonego- tiate cheaper and less desirable housing for their staff, cut down onnecessary travel expenses, reduce trainingopportunities, dilute benefits, eliminate staff and choose FSOs with the fewest num- ber of dependents. The rewards for doing this couldbe substan- tial and quite tempting. There is even a suggestion to giveman- agers apercentageof the savings aspersonal or “corporate” rewards. That sounds dangerous tome, and full of opportunities for abuse, not to mention morale problems. Does MTB work? Of course it does— in the private sector, where the bottom line is the profit-and-loss statement and sub- stantial raises are a possibility. No one should be against saving moneyor beingmore efficient. But in the public sector, our prof- it is the knowledge that we have done something good for our country and the world. The real issue is thatwe arenot in the private sector. We don’t have total control of our budget due to congressional earmarks and tight budgets.We have even had to resort to using program funds to subsidize operational expenses. International develop- ment is not a profit-making venture. We don’t need to pretend that ourmissions are business franchises becausewe are not sell- ing widgets or drugs. We are providing an essential public ser- vice. USAIDstaff are alreadydutifullyworkingbeyond their paid 40hours aweekhere and inmany inhospitableparts of theworld. They deserve better treatment than this. MTB should be called GMB (as in, Give Me a Break). V.P. VOICE: USAID BY FRANCISCO ZAMORA To MTB or Not to MTB — That Is the Question! In the public sector, our profit is the knowledge that we have done something good for our country and the world.