• Q & A with Elaine Chao: The Future of Work

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    As president and CEO of the United Way of America, you have been credited with restoring trust in the organization after a public mismanagement scandal. What were the key steps in doing so?

    Enlisting the help and support of local United Ways in reforming the operations and governance of the national organization was critical. Over the years, UWA had grown to be a top-down organization. It was important to return the balance of power to the grass roots volunteers, contributors and staff in reforming the governance and future direction of the national organization.

    I also established a new “evergreen” code of ethics that demonstrated to contributors that UWA was, at its heart, a volunteer organization that was responsive to contributors’ concerns for fiscal responsibility, accountability and community results. For the first time ever, financial accounting and budgeting was introduced to the organization, and each department had to operate within its budget. Institutionalizing integrity through rigorous internal financial controls and ethics standards were the new touchstones of the organization.

    I also led by example – I cut my own salary in half and eliminated all executive perks such as a car and driver, and first-class air travel, to name a few. And I focused on the basics – visiting and listening to the local United Ways, which are the foundation of the national organization.

    Which of those steps do you feel was the most important?

    The organization was in crisis mode when I was appointed president and CEO. On my first day of work, there was not enough money to meet the payroll because local United Ways withheld their membership dues. More than 64 percent of Americans had heard of the financial mismanagement and abuse at United Way of America, and many had stopped contributing to United Way. So, all these steps had to be taken all at once to win back donors’ and volunteers’ support and trust. Each was critical to turning the organization around, but strong and credible internal financial controls and ethics standards were key to assuring everyone that a new culture of integrity and accountability existed at UWA.

    Many notable U.S. organizations have, in recent years, lost the trust of the American public. Can you identify some of the common mistakes companies make – both in the initial “mismanagement” and in the ensuing events?

    Shortsighted tactics to attain short-term goals with little or no regard for the long-term ramifications have doomed or diminished many companies. Failure to anticipate, recognize and adapt to change is extremely perilous in the increasingly competitive worldwide economy. You can’t drive forward for long with your eyes stuck on the rear view mirror. Consumers today are more sophisticated and informed than ever before, and their loyalty must be earned, over and over again. They won’t soon forget when big-ticket items, such as cars, fail to perform.

    “Consumers today are more sophisticated and informed than ever before, and their loyalty must be earned, over and over again. They won’t soon forget when big-ticket items, such as cars, fail to perform.”

    What is the primary role of the U.S. secretary of labor? In an era of increased globalization, is that an appropriate role?

    The U.S. Department of Labor’s mission is to maintain the competitiveness of the American workforce in the 21st-century worldwide economy and to protect the wages, health, safety, welfare and pension security of the American workforce. The bulk of the Department of Labor’s multibillion dollar annual budget goes to administering unemployment assistance and job training to help dislocated or unemployed workers access unemployment insurance income and new job opportunities. The department also helps dislocated or unemployed workers acquire new skills through the approximately 3,500 local One-Stop career centers administered in partnership with state and local governments throughout the country. These programs are so important as the world economy changes and our workforce is now competing in the 21st-century global environment.

    How can the U.S. Department of Labor best prepare the American workforce to compete and succeed – both domestically and internationally?

    The U.S. Department of Labor is one of the biggest regulators of our economy. Yet the success of the American workforce cannot rest on the government alone. The main responsibility of the government is to do no harm and to create the environment through which employers can thrive and are able to create jobs for our workforce. More than two-thirds of the net new jobs are created by small businesses. To foster flexibility and competitiveness, the government must be careful of the regulatory burden it places on employers and the dampening impact such regulatory burdens have on job creation in a recession.

    America is becoming a knowledge-based economy – new jobs are increasingly demanding higher skills and more education. So our educational system needs to provide quality education to our future workforce. Our government-financed, public job-training programs need to be more “demand driven” and be more responsive to training workers with the skills that will be receptive to what the market demands or requires.

    “Our government-financed, public job-training programs need to be more ‘demand driven’ and be more responsive to training workers with the skills that will be receptive to what the market demands or requires.”

    The U.S. Department of Labor alone spends billions of dollars annually on job training. Many other departments in the federal government also spend billions of dollars annually on job training – departments such as education, HUD, defense and energy, to name a few. The main job training program is housed at the U.S. Department of Labor, but this is a system that spends too much taxpayer money on administrative overhead and duplicative bureaucracies with insufficient results to show in terms of the number of workers receiving marketable training and landing jobs that are sustainable in the long run. With a revamped, far more efficient and effective workforce training system that is “demand driven” and that emphasizes teaching relevant to 21st-century job skills, the workforce investment system can do so much more to help workers get higher paying jobs that have greater growth potential over the lives of their careers.

    The Workforce Investment Act of 1998 needs to be reformed, but unfortunately these reforms have not been successfully implemented due to the entrenched special interests. There are many good people in the job-training-system, and they are frustrated by the bureaucracies and duplicative structures. The WIA system needs to challenge itself to do more to help dislocated and unemployed workers access better opportunities and build better lives in a global economy.

    Your tenure as secretary during the George W. Bush administration marked a number of milestones: longest-serving secretary since World War II; first Asian-Pacific-American woman and first Chinese- American to be appointed to a president’s cabinet. Did the latter two distinctions add any pressure to your service … and does the knowledge of the first distinction mean anything to you?

    I was the only member of the Cabinet in the last administration to have served all eight years. By far the greatest pressure I felt as a Cabinet officer was the clock – knowing how quickly time passes, how long and difficult it was to affect change. Every moment was precious to accomplish what was needed to improve life for working families, rank-and-file union members and the competitiveness of our country. My mantra was: Make every day count. You can’t know in the first term whether there will be a second term. You certainly don’t know if the president will keep you on throughout his administration. It is remarkable, in hindsight, that I was the longest-serving labor secretary since World War II. Time flies when you’re trying to get something done.

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