The experience of DHS and ODNI suggest leaders must imbed the vision and values in the new organization for it to gain traction and succeed, but that doing so might rank among the most challenging tasks.

Intangible elements, or the “soft stuff,” such as communicating a new culture and identity while remaining sensitive to tradition, are often the toughest to tackle.

That’s Lesson Two in a report released this week by the Partnership for Public Service and Booz Allen Hamilton detailing four lessons from the creation of and subsequent problems within the Department of Homeland Security and the Office of the Director of National Intelligence.

Securing the Future: Management Lessons of 9/11 provides a behind-the-scenes look at the reorganization efforts of a decade ago. The report is based on exclusive interviews with major figures in the reorganization efforts, including Judge Michael Chertoff, former Director of National Intelligence Mike McConnell and General Michael Hayden.

While acknowledging key differences in these organizations, the report uncovers common management lessons in four key areas Breaking Gov summarized Monday and is detailing throughout the week. Authors hope the report serves as a guide for the Obama Administration in government reform and similar pursuits currently under way.

Tackling the soft stuff, as the PPS report puts it, requires a solid change management strategy. But that means much more than spewing catch phrases, said Ron Sanders, Chief Human Capital Officer at the DNI during the reorganization and now works for Booz Allen Hamilton.

“I’ll tell you what it isn’t — a strategic communications plan with slogans and bumper stickers,” Sanders said. “A real change management strategy is a matter of imbedded values in management processes. It takes difficult decisions, including budget decisions.”

So-called “soft stuff” can also include personnel policies and practices such as promotion criteria, incentives, ceremonies and rituals, as well as procurement processes. And they can become one of the most potent sources of organizational resistance, especially amid perceived disrespect.

Early on at DHS, for example, there was a plan to have common uniforms for the law enforcement side of the department. “I thought the Border Patrol would en masse
walk out and quit. They had a proud history,” said Fran Townsend, the former White House deputy national security adviser in the Bush administration and later homeland security and counterterrorism adviser.

Beyond respect for tradition and history, shaping a new culture means embedding the desired values and behaviors into the very DNA of the new organization, according to the PPS report.

Admiral Jim Loy, former commandant of the U.S. Coast Guard and deputy secretary of DHS who’s now with The Cohen Group, said DHS leaders sought to communicate the raison d’etre of their new department at a fundamental level.

“Words like ‘awareness’, ‘protection’, ‘prevention’, the notion of ‘a God-forbid event’, ‘response and recovery,'” Loy states in the report. “They became understandable words that everybody in the room could see their work in those words one way or another.”

However, despite a strategic plan that spelled out the department’s vision and mission, core values and guiding principles, embedding those core values in the department’s strategic plan turned out not to be sufficient.

For example, Townsend pointed to the struggles of the department’s nascent domestic intelligence unit, created to thwart another terror attack.

“I watched DHS at various steps struggle with its own identity with the intelligence capability. It just didn’t know what it wanted to be,” said Townsend. “At various times, it struggled with wanting to be a mini-CIA, as well as assuming an intelligence role as it relates to the state and local components, which is why it had been created,” she said. “Then when it figured out that was its mission, it then struggled for turf with the FBI, which was a much more mature, established organization. That wasn’t very productive.”

ODNI’s employees suffered from their own identity crisis. Given the need to find people quickly and break down resistance while developing working relationships in the intelligence community, ODNI’s organizational identity and culture became problematic.

“We got people who knew nothing about intelligence, absolutely nothing, but they showed up because the word on the street was, ‘If you’re a GS-13 and you want to be a GS-14, ODNI is hiring,”‘ said former DNI McConnell. “The lesson is to be very selective in who you hire and retain,” and “work through the cultural issues.”

Sanders had a slightly different take. He said many people who came to ODNI were seen as expendable by their own organizations or were frustrated by their jobs. In such situations,

Sanders said: “You may not get the best people, but you also get revolutionaries. You have people who want to change things. They hadn’t been very good at that where they were. Sometimes that was because there was so much bureaucracy that they couldn’t do it. You got people who went to DHS headquarters who wanted to help stand up this great, brand new department and save the country. It was the same thing at ODNI. They weren’t necessarily the best, but again, if there is a choice between mind-set and skill set, I’ll go for mind-set.”

William Jenkins, director of GAO’s homeland security and justice issues, pointed to the poor response to Hurricane Katrina in 2005 as another example of misaligned vision and culture. Lack of clear leadership roles within FEMA and DHS in the response to the catastrophic natural disaster reflected a general confusion about FEMA’s place within a department focused on terrorism.

“FEMA’s resources were diminished during a pre-Katrina DHS reorganization, and a demoralized
FEMA staff, many with years of disaster response experience, left FEMA,” said Jenkins. “By the time that Katrina hit, FEMA had almost one in four positions vacant.”

High levels of employee dissatisfaction within DHS during its reorganization was also noted in the report as an example of why it is important to find ways to engage employees in the transformation and get their buy-in to the changes and the new mission and value system.

The Best Places to Work in the Federal Government® rankings, published by the PPS and based on a federal employee survey, placed DHS 29 out of 30 departments and large agencies in the 2005 and 2007 rankings. The 2005 and 2007 rankings gave DHS low marks in matching employee skills to the agency mission, in teamwork and in effective leadership. The 2010 rankings, the most recent, ranked DHS 28 among 31 departments and large agencies.

At ODNI, there was an attempt to build a new culture through an intelligence community workforce that would not be insular, and that would more readily share information and collaborate across agency lines. To that end, Congress mandated that the DNI set up a civilian version of the military’s concept of joint duty.

Sanders states in the report that this proposal went through a two-and-a-half-year gestation period and was initially met with resistance because of ambiguous statutory authorities, but key personal relationships between McConnell, Gates, Hayden, and James Clapper, the Pentagon’s undersecretary for intelligence, broke that legal logjam, and the program was implemented
in 2007 with the signing of an inter-agency treaty.

Despite questions over whether the DNI could actually enforce the terms of that agreement, Sanders said the program has made headway toward creating a common culture of collaboration in the intelligence community. He said it covers the community’s entire senior executive and senior professional positions, with more than 12,000 professionals earning joint duty credit as of 2010.