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IRS project shows how analytics can improve performance

Report: Agencies must be open, transparent about how data is used

Oct. 25, 2012 - 08:45PM   |  
By SEAN REILLY   |   Comments
Daniel Liddell, TSA federal security director for seven upstate New York airports, left, and Dean Silverman, senior adviser to the IRS commissioner for corporate analytics initiatives, speak during a forum at Partnership for Public Service on Oct. 17 in Washington, D.C.
Daniel Liddell, TSA federal security director for seven upstate New York airports, left, and Dean Silverman, senior adviser to the IRS commissioner for corporate analytics initiatives, speak during a forum at Partnership for Public Service on Oct. 17 in Washington, D.C. (Thomas Brown / Staff)

For the Internal Revenue Service, the goal was not new: Stop tax preparers from filing erroneous claims for refundable tax credits.

The method, however, was novel.

Under a pilot project begun last year, the agency used a scoring system to identify almost 1,500 preparers known for filing higher-risk claims, alerted them that it would be monitoring their work and then pulled data on a daily basis to follow up.

The outcome was a drop of about $200 million in mistakenly claimed credits for the 2011 tax year, Dean Silverman, head of the IRS’s office of compliance analytics, said last week.

That project, which the IRS is continuing this year, exemplifies how agencies can use data-crunching to improve performance, according to a new report. But it also registers the importance of creating a culture that nurtures the regular use of analytics “to determine what works and what doesn’t,” said John Kamensky, senior fellow at The IBM Center for The Business of Government, which released the report last week in tandem with the Partnership for Public Service.

In general, analytics refers to crunching large amounts of data to manage better. Despite growing use by government agencies, the approach can be “a tough sell,” the report said.

“You have to make analytics part of everyday life,” Judy England-Joseph, strategic adviser at the partnership, said at a forum on the findings last week. That means agency leaders have to “walk the talk” and make sure that employees get the point of using analytics, she said. “If you don’t get the people stuff right, then folks will not embrace the kind of change you’re trying to incorporate.”

Among other recommendations, the report said that managers should:

• “Prepare the troops” by explaining the importance of data and making clear how that data will be used in decision-making.

• Encourage partnerships both inside and outside the agency to advance common goals.

• Share results “openly and transparently.”

After joining the IRS last year to lead his small, newly formed office, for example, Silverman saw his job as working with staff from existing divisions to crack “the biggest, hardest, most difficult problems” facing the agency, he said at the same forum. In the case of the preparer project, for example, he was building on an initiative to reduce improper payments. To design it, he found a “champion” already at the IRS.

When other employees saw the results, “doing that stuff became infectious,” Silverman said.

The report also references how about a half-dozen other agencies are using analytics. When Dan Liddell, a Transportation Security Administration manager in upstate New York, began employing analytics to strengthen security at seven airports, for example, he focused on team performance, not individual blame, the report said. Front-line supervisors collect data on how individual employees perform, but then use the information to pinpoint common underlying problems in the security line.

“First time around, that’s tough, because all people are nervous [about] being evaluated,” Liddell said. The antidote, he said, is to build trust among agency leaders and staff.

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