Section 925 of the National Defense Authorization Act for Fiscal Year 2018 authorized the move of the Office of Personnel Management’s National Background Investigations Bureau (NBIB) to the Department of Defense and the Defense Security Service (DSS). The DoD Consolidated Adjudication Facility will also become part of DSS. An April 24, 2019 Executive Order mandated that the move be substantially completed this year.
NBIB will become part of the newly renamed Defense Counterintelligence and Security Agency (DCSA). One big change that has happened is the designation of NBIB Director Charles Phalen as the Acting Director of DCSA. That move most likely came as a surprise to staff of the former DSS. It is probably only the beginning of the surprises that NBIB and DSS staff have in store for them. In fact, this type of transition can be perilous, and how it is handled can make or break an organization. The Department of Defense has had many successful examples of mergers of organizations during the years when the Base Realignment and Closure Commissions were in place. They have also had their share of sloppy mergers that did not produce the promised results. My experience in the early years of BRAC taught me many lessons that made the later rounds go far more smoothly.
DoD is not alone in having a mixed track record on such moves. The private sector is routinely experiencing mergers and acquisitions (M&A) and has the same track record of mixed results. The good news is that there are some best practices that, if done properly, can go a long way toward ensuring a successful transition.
Communicate, then communicate some more. Staff in the gaining and losing organizations will talk about what is going on. In the absence of factual information from the organization’s leaders, the rumor mill will fill the gap with stories that may or may not be fact-based. The idea that you should communicate only when you have something new to say is one of the first failures we often see. The hunger for new information is so powerful that employees may suspend their skepticism long enough to believe just about anything they hear. A formal communications process, documented by a plan that everyone follows, is essential. Ad hoc communications will not be enough to battle the rumor mill.
Talent Retention is Crucial. Lack of information and the misinformation that tends to replace it can lead to one of the biggest M&A risks – the departure of critical talent. CAF, DSS and NBIB have key players whose loss could cause significant problems, such as loss of institutional memory and decreased productivity. Bleeding talent is one of the problems that can spiral out of control quickly. Both in government and the private sector, rank-and-file employees often follow the lead of the high performers in the organization. When the star players start bailing, the good players are often not far behind. If an agency does not monitor the situation and take proactive steps to retain their key players, they may find a talent hemorrhage starts that they cannot stop. In my own BRAC experience at the Defense Logistics Agency (DLA), we brought more than 20 organizations into the agency as a result of BRAC. The groups included mission units from the Army, Navy and Air Force, as well as new customers who wanted DLA to provide their HR services. We quickly learned that employee retention does not happen on its own. Agencies that fail to proactively reach out to key staff to reassure them will find themselves having too many going away parties and find the mission at risk.
Plan, check the plan, then check it again. Changes can overwhelm the team and make errors more likely. When a move involves changes in timekeeping and HR systems, the likelihood of errors increases. Add in the idea of moving from Title V to a completely different pay and personnel system and the risk escalates. The combination of big changes in the personal (pay, benefits, schedules, leave procedures, and other work rules) and the professional (mission changes, work practices and policies, etc) introduces countless opportunities to miss critical factors. The number of details that must be tracked to execute a change like this is mind-boggling. Organizations that do not have experience with transitions such as this have a high risk of overlooking critical details until it is too late to avoid the negative consequences of inadequate planning.
Culture is where risks and opportunities lie. The cultures of DSS, CAF and NBIB are most likely very different. My own experience in Defense and in civilian agencies taught me that there is a mindset in the Department of Defense that is very different from the civilian world. I spent 26 years in DOD, partly because I like the culture. In the civilian agencies, there is also a difference between central management agencies such as OPM and GSA, and those agencies whose missions are more expansive. At its worst, the clash of cultures can cause M&A failures, or cause expected benefits to never materialize. Failure to recognize how culture permeates employee thinking is a huge risk. The new DCSA will need the talent of DSS, the CAF and NBIB to succeed. If any of those groups perceive that they are not respected, or that their history is being dismissed, they are likely to start looking for the exits. Even if the staff does not leave, failure to build a new culture is likely to result in an underperforming agency that does not live up to its potential.
Ignore warning signs at your peril. When mergers are mandated by Congress or presidential orders, there is an increased tendency to overlook warning signs that things are not going well. The feeling is often that it has to happen anyway, so why worry about what you cannot control. That is a big mistake. OPM and DoD cannot stop this merger, but they control virtually every aspect of it. They can control how they educate and inform the workforce. They can control the level of detail they want in cataloging systems, policies and practices. They can control whether this is a move where one organization (NBIB) is simply plopped into another one, or it really is a merger that builds on the capabilities of everyone involved. And they can control the rigor of their planning and execution, which is likely to drive the ultimate success or failure of the merger.
The belief that one agency is the winner and one is the loser is common in mergers such as this. My experience in early BRAC rounds in DOD gave me firsthand experience with that when DLA took over some functions of the Navy’s Supply Centers. DLA came in with an imperious attitude that made the transition far more difficult than it should have been. Years later, when I was DLA’s HR Director and a former Navy Executive was our senior civilian in Logistics Operations, we made certain DLA did not repeat that mistake again.
The designation of NBIB’s Director (Charles Phalen) as acting Director of DCSA makes it less likely that there will be a perception that DSS is a winner and NBIB and CAF are losers in this transition. Avoiding that perception and, even more critically, making certain it does not become a reality, is essential if these organizations are to successfully merge into cohesive team that can finally deal effectively with the background investigation issue, while continuing the vital DSS and CAF missions.