Merger hazards: lessons for the new security agency

Mega-unions can work, but morale and mission are key.

As Washington grapples with pulling off the biggest government merger in half a century – by creating the new Department of Homeland Security – a central question looms: How can it fuse 22 agencies and 170,000 people into one über-bureaucracy in a way that actually boosts America's safety from terrorism?

To succeed, observers say, it must happen quickly: If it bogs down, it will be a dangerous distraction from current antiterror efforts. Also the new agency – which will be the fourth-largest in government – must balance centralizing control in Washington with improving the power and information-sharing abilities of front-line workers.

If the merger experience of corporate America is any guide, it's a risky venture: Half to two-thirds of business marriages fail. Yet corporate lessons can be valuable in guiding Washington, including the need to address employee concerns about big changes. History hints that government mergers can succeed. President Truman's creation of the CIA and the Defense Department in 1947 was a key first step in building the apparatus that won the cold war.

In all, many observers say, enhancing security with a new agency will be difficult – but not impossible.

"It's a huge job," says Elaine Kamarck, who headed Vice President Al Gore's "reinventing government" initiative. But if it succeeds, she says, it will shrink bureaucratic entanglements and overhead costs, put more focus on front-line protection, and benefit Americans.

One of the biggest dangers of such mergers, say corporate experts, is that they sidetrack workers from the task at hand. In this case, America's security could suffer.

The biggest distraction, says Alexandra Reed Lajoux, author of "The Art of M&A Integration," a book on corporate unions, is employees worrying about their job safety, salary, and retirement security.

Indeed, as some 22 government agencies consolidate into the new department, pay scales will be a central issue. Border Patrol agents, for instance, are classified as law-enforcement personnel – and thus typically get paid more than, say, immigration officers.

Constant communication and reassurance about the big changes are important, Dr. Lajoux says. And it must come from mid-level supervisors – as well as the top brass. "The wrong thing is to have the top executive send out a broadcast message," she says. It's crucial to have face-to-face meetings down through the ranks for a smooth transition.

In this merger, the new agency's connection to Congress will have to defined. Currently 88 congressional committees and subcommittees oversee some aspect of homeland security. Lawmakers on these bodies will be loathe to forfeit control.

President Bush described a White House meeting with leading lawmakers on Friday as "the beginning of winning the turf battle" in Congress. "The biggest pitfall is the turf battle – not within the [new] department – but within Congress," says Rep. Christopher Shays (R) of Connecticut. He adds that members of Congress may be willing to give up control of their individual jurisdictions – whether it be oversight over the Coast Guard or the Secret Service – if they get some say over the whole agency.

Currently, Congress appears to be moving toward creating an entirely new committee for oversight of the new agency. Jockeying to be on the committee has already begun.

Mr. Bush has said he wants the new agency functioning by Jan. 1, 2003. Observers say that's ambitious – but doable. Some lawmakers, including House minority leader Richard Gephardt (D) of Missouri, say they think it can be done by Sept. 11, 2002.

If Truman's experience setting up the Central Intelligence Agency, the Defense Department, and the National Security Council is any guide, such moves can be done quickly. He achieved most of those changes in a year, notes Richard Immerman, a history professor at Temple University in Philadelphia.

But that was only the beginning. The 1947 structure has been constantly tweaked. It wasn't until Nixon's administration, for instance, that the National Security Council achieved its current status of power. "Whatever is established in 2002 will be undergoing continual, and in some sense, radical changes" for many years, says Dr. Immerman.

The danger is that the new department will never gell. The Department of Energy, created from many different agencies in 1977, has never successfully coalesced, observers say.

Ensuring cohesion will be a big issue for the new department. It's set to swallow some of the government's biggest agencies – the Coast Guard's 43,000 workers, and the new Transportation Security Administration's 41,000 or more employees. The new mega-agency will ultimately be smaller than only the Defense Department, the Postal Service, and the Veterans Administration.

One question in getting all those people to work together: Will agency heads all move to the new department's main building? Getting the head of the Coast Guard talking to the head of the immigration service, for instance, will be harder if they never see each other.

Another question: Will all the agents wear the same uniforms? "Uniforms, logos, letterhead," and other symbolic items, says Rod Kramer, a professor at Stanford University's graduate business school, "can be enormously symbolic to people – and helpful in getting them going in the same direction."

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