Creating Lasting Change for a Better Michigan · Newsletter Every month, OPT publishes a statewide newsletter featuring employee and director spotlights and accomplishments across

Creating for a Better Michigan

Lasting Change

Annual ReportFiscal Year 2018

Office of Performance and Transformation

Remediated56

material weaknesses

Rescinded2,369

rules as of October 2018

Increased Employee

Engagement to 75%

Trained 2,000 employees in Lean Process Improvement

The Office of Performance and Transformation (OPT) shall

be responsible for continuous and systematic review and coordination of

the state’s regulatory, business, and customer service environments and

processes as well as coordination and implementation of performance management

service process optimization efforts, employee engagement programs and protocols, and change management

and leadership education and training.

-Executive Order 2016-4

111 S. Capitol Avenue, 8th Floor • Lansing, Michigan • www.michigan.gov/OPT

Honorable Rick Snyder:

Thank you for the opportunity to serve as the Executive Director of the Office of Performance and Transformation (OPT). Enclosed is the OPT Annual Report for Fiscal Year 2018 (FY18).

OPT includes four offices — the Office of Good Government (OGG), the Office of Internal Audit Services (OIAS), the Office of Reinventing Performance in Michigan (RPM), and the Office of Regulatory Reinvention (ORR).

Objectives for FY18 included launching the "A Path Toward Our Future" dashboard, supporting the Strategic Pathways Project, improving enterprise risk management, administering the fifth Employee Engagement Survey, and making Lean Process Improvement an integral part of the culture of state government. I am delighted to report that OPT accomplished each of these objectives and more.

The enclosed report includes an overview of our journey in FY18, highlights of our accomplishments, our interactions with organizations outside the State of Michigan, and our recommendations for FY19.

OPT's top FY19 priorities include:

1. Continue to support the current administration through December 31, 2018.2. Be a vital partner to the next administration using our expertise in employee engagement, lean process

improvement, performance excellence, regulatory reinvention, risk management, and interagency initiative management.

3. Establish the Office of Interagency Initiatives (OII) to achieve strategic outcomes identified by the Executive Office.

The State of Michigan is fortunate to have an incredible OPT team that champions a culture of continuous improvement for better services and outcomes for Michigan.

Respectfully submitted,

Scott Hiipakka November 2018

Table of Contents

OPT FY18 Annual Report Page 1

FY18 Journey Map ....................................................................................................................... 2

FY18 Accomplishments ............................................................................................................. 3

Awards, Partnerships, and Recognition .............................................................................. 7

FY19 Recommendations ........................................................................................................... 8

OPT Overview ................................................................................................................................ 9

Partners in Performance, Transformation, and Innovation ......................................... 10

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FY18 Accomplishments

North American Employee Engagement AwardThe State of Michigan was named winner of the Government Agency Employee Engagement Award at the 2018 North American Employee Engagement Conference.

Employee Survey

The fifth Employee Survey was sent out to approximately 45,000 employees in September 2018. Seventy four percent of the state's workforce, more than 33,000 employees, participated in the 2018 Employee Survey — a 16 percentage point increase since the first survey in 2012.

Talking Reinvention (tR)Each quarter, OGG hosts a talk to foster learning, inspire relentless positive action, and provoke innovation and conversation that matters. During FY18, tR events featured Gov. Rick Snyder; Anthony Ianni of the Michigan Department of Civil Rights and former MSU basketball player; Kevin Ames, Director of Speaking and Training at the O.C. Tanner Institute; Bryan Ritchie, vice president and associate provost for innovation at the University of Notre Dame; and Ken Miller, founder of the Change & Innovation Agency.

Harvard Case StudyIn partnership with Harvard University, the National Association of State Chief Administrators (NASCA)

developed a case study focused on Michigan’s employee survey and OPT. Relentlessly

Engaged: The State of Michigan’s Employee Survey and The Office of Performance and Transformation Case Study was developed for the 2018 NASCA Institute on Management and Leadership September conference held in Omaha, NE. This case study was one of two

leading practices discussed and reviewed at this event by over 40 states.

Monthly OPT Newsletter

Every month, OPT publishes a statewide newsletter featuring employee

and director spotlights and

accomplishments across departments. In

FY18, the newsletter was consistently one of the most read emails in state government.

Recognition Coin ProgramOGG distributed approximately 3,300 Excellence, Teamwork, Leadership, and Customer Service

Recognition Coins in FY18 to departments. The coins were awarded to state employees who go above and beyond normal expectations in the spirit of reinvention.

Leadership Development More than 2,000 current and emerging leaders completed the Fit Leader Program, which offers leadership training, mentoring, and networking.

“The State of Michigan led a huge undertaking and the

results delivered so far are, quite simply, worth

winning this award."

- Matt Manners, CEO and founder of the Employee

Engagement Awards

“The newsletter

provides a glimpse into the diverse work of

other state employees, puts a face on those performing

those tasks and engenders a greater appreciation for all of effort that goes on every day

behind the scenes."

- Jamie Dolan, MSP Specialist

MiFuture Dashboard

In January 2018, OGG launched the "A Path Toward Our Future" dashboard which demonstrates the state’s key objectives, the progress made, and the work to be done.

OPT Scorecard

The OPT Scorecard was developed and published on internal and external websites to regularly assess the quality of service provided to OPT's customers, agency partners, and stakeholders.

Open Data Guidance OGG was a significant contributor to the development of the Open Data Guidance document, which is intended to maximize and improve the

quality of data and metrics made available to the public through the Open Michigan website as directed by Executive Order 2016-24.

Michigan Security Accreditation Program

(MiSAP) OIAS worked with DTMB and other state departments to implement leading practices to remediate information technology (IT) control deficiencies within the state’s IT processes and systems. These leading practices helped support the state’s cybersecurity and related control objectives.

Internal Control Evaluation (ICE) ProgramOIAS led a comprehensive reengineering of the state’s ICE practices, including identifying leading practices in private and public sector organizations. The goal of the improved ICE process was to create greater enterprise risk management capability through identification of key processes, risks and controls, and aligning evaluation results with key departmental outcomes and strategies.

Top-Down Risk AssessmentOIAS introduced the new Top Down Risk

Assessment (TDRA), one of the essential first steps in the ICE process. TDRA enables a department's senior executive team to identify its most significant risks so that management can prioritize its risk mitigation activities and ICE efforts accordingly.

Independent Review of OIASPwC noted in its January 2018

External Quality Assessment (EQA) that OIAS generally conforms (the highest rating available) with 10 of the 11 Institute of Internal Auditors standards, in comparison to 9 of the 11 standards for the 2012 assessment. OIAS was also recognized as consistently implementing several attributes of excellence in the profession of Internal Auditing.

Remediating Material WeaknessesOIAS worked with departments to remediate internal control deficiencies, leading to the remediation of 56 material weaknesses during FY18. The remediation of material weaknesses has been one of OIAS' most important priorities.



“MiSAP would not have been successful

without the involvement and support of OPT/OIAS

as a trusted advisor to the new process and as a “blue

team” member of the development group."

- David DeVries, DTMB Director &

CIO

“Leaders identifying and

prioritizing risks is key to understanding the

risks to the department's mission and business

objectives and driving behavioral change.”

- Nick Khouri, State Treasurer



Flint Integrity Oversight Monitoring OIAS was an important contributor to the City of Flint's recovery efforts. OIAS performed a proactive review of state and city activities to ensure prevention and detection of fraud, waste, and abuse related to funds dedicated to the remediation program. As of June 2018, 62

percent of all expenditures related to the Flint Water Emergency were subject to audit by the Office of the Auditor General, and no instances of malfeasance, waste, or abuse were identified.

Community Ventures The State of Michigan's Community Ventures program received national recognition from the International Economic Development Council in 2018. According to a study done by OIAS, participants in the Community Ventures program who have kept their jobs for one year or more have been able to support themselves, resulting in a savings of $2.2 million in public assistance benefits.

Enterprise Risk and Control Committee (ERCC)

Throughout FY18, ERCC provided oversight to improve the adequacy and effectiveness of risk management, control, and governance processes within the executive branch. Chaired by the State Budget Director, ERCC is composed of Cabinet members, two independent advisors, and OPT.

Expanded Lean Process Improvement (LPI) Across the State

RPM introduced LPI to six agencies — MSP, MDE, TED, DIFS, TIA, and DCR — as a strategy for improvement. OPT more than doubled the number of employees trained in the LPI Methodology by the end of FY18, including 1,622 in Lean Concepts and more than 400 in

Lean Do-It-Yourself.

LPI Before ITRPM worked with DTMB Enterprise Project Management (EPMO) to make LPI a readiness requirement prior to launching IT projects. LPI was recognized by SBO Director John Walsh

as important for “ensuring that dollars are not wasted by investing in technology

to automate ineffective processes."

Significant LPI ProjectsRPM helped launch over 50 LPI projects within agencies by providing the LPI methodology, training, tools, and templates. RPM staff assisted agencies by co-facilitating, documenting projects, and helping report

success stories. Listed below are some of the projects RPM helped facilitate:

More Timely Hearings

In less than 90 days, MSHDA's Housing Choice Voucher and Case Compliance Team reduced wait times by 66 percent for hearing dates requested by the MI Administrative Hearing System. The case backlog was reduced by 70 percent in four months.

Improved Productivity

LARA's Office of Performance Reengineering Optimization (PRO) improved productivity in FY18. These improvements included a 73 percent increase

in departmental processes reviewed, a 37.5 percent increase in LPI projects initiated, and a 36.4 percent increase in projects streamlined before technology was applied to the process.

“OPT's experienced

facilitators helped us gain valuable insight into how to improve our

programs. We wouldn’t do a major change without the

OPT team."

- Dawn Brinningstaull, MSP Criminal Justice

Information Center Director

“I have witnessed and been

part of the state’s efforts to identify and address not

only issues but also effective practices across the state's

departments to manage and improve on areas of risk.”

- Randy Paschke, Independent Advisor to

the ERCC

Significant LPI Projects (continued)

Patients Receive More Care

MDHHS' Active Treatment Team improved the process to help patients receive treatment options at the Walter P. Reuther Psychiatric Hospital. The hospital’s goal was to ensure that all patients were scheduled for a minimum of 15 hours of therapeutic group activity per week and to expand the hours treatment was offered. As a result of the LPI, there is now a total of 31 hours of group treatment available each week — exceeding the hospital's goal by 66 percent.

MDOT Sets the Pace

MDOT's Effective Solutions for Improved Performance Team set the pace for

process improvement in FY18. This team expanded lean training in the department by 40 percent, led seven team building and seven strategic planning projects, had a 92 percent customer satisfaction rate for projects, and a 99 percent customer satisfaction rate for facilitators.

Better Response Times for Farmers

MDARD’s Farmland Preservation Processing Team enhanced the Farmland and Open Space Preservation Program. These enhancements resulted in a six-week reduction of customer wait times, a 250 percent increase in the total number of documents processed monthly, conversion to a paperless system, and a 90 percent improvement of inquiry response times.

Improving Veterans Homes

The Grand Rapids Home for Veterans and the D.J. Jacobetti Home for Veterans serve more than 500 veterans. The RPM team helped the staff at the homes establish a baseline for improvements being made to the Electronic Medical

Records (EMR) system. The RPM team completed around-the-clock time studies and interviews of staff to

ensure the data was accurate. The team also provided hands-on coaching to medical staff and administrators during implementation of the EMR system at the Jacobetti Home.

Improved Water Quality Monitoring

The RPM and ORR teams helped DEQ review all core processes that support

the testing and monitoring of water quality across the state. RPM facilitated stakeholder meetings to design new lead and copper water quality rules.

ORR reviewed and provided legal advice on the water quality rules.

Administrative Rule ReviewSince 2011, ORR

has helped rescind 2,369 rules. In the 2018 calendar year, ORR reviewed approximately 689 rules, and 202 rules

were rescinded.

Emergency Rule PromulgationORR worked with departments to use the emergency rulemaking process to better serve the safety and health of Michigan citizens. Emergency rules impact immediate public safety, such as rules for the regulation of the

medical marihuana industry and rules to protect the Straits of Mackinac with restricted anchor and vessel equipment zones.

Rescission of Obsolete ReportsORR conducted a review of obsolete reporting requirements and partnered with the legislature to pass bills that resulted in the rescission of 41 obsolete reports. Eliminating reports that no longer serve a legitimate purpose allows state employees to spend more time working for and responding to the people of Michigan.



“When we first began the LPI

process, I thought we couldn’t afford to take the time for the process. Now

that it’s completed, I realize that we couldn’t afford not to

take the time.”

- Rich Harlow, MDARD Farmland and Forestry

Program Manager

“There is no need for outdated,

redundant regulations that serve no purpose in the lives of hard-working

taxpayers. Addressing laws no longer relevant to today's

landscape helps fine-tune our government to better serve

state citizens.”

- State RepresentativeRoger Hauck

In May 2018, OPT staff members presented at Governing Magazine’s seventh annual Michigan Leadership Forum Lansing.

OPT presented in February 2018 at the Association of Government Accountants conference in Washington DC, and former Executive Director Jeff Bankowski was named the recipient of the 2018 William R. Snodgrass Distinguished Leadership Award.

OPT presented at the May 2018 Socrata Connect Conference in Austin, TX to highlight Michigan's open data analytics.

OPT partnered with the Michigan Lean Consortium (MLC) to spread lean principles and tools throughout the state to make Michigan the best place in the country to live, learn, and earn. OPT presented at the MLC Annual Conference in July and holds a seat on the MLC Board of Directors.

OIAS partnered with the Institute of Internal Auditors (IIA) to share and leverage leading internal audit and governance practices and to develop professional education opportunities. OPT holds a seat on the board of the Detroit chapter of the IIA.

OPT, in partnership with the Information Systems Audit and Control Association (ISACA) and Institute of Internal Auditors (IIA), coordinated and hosted an annual spring conference attended by more than 400 professionals.

OPT is represented on the Board of the Association of International Certified Professional Accountants and on the Governing Council of the American Institute of Certified Public Accountants.

OPT presented at the Michigan Open Data Summit in November 2017, reviewing the Open Data Portal and explaining how it can be used across departments.

OPT presented at the March 2018 American Society for Public Administration Annual Conference in Denver, CO to promote government innovation and efficiency in Michigan.

OPT employees are active members of the Michigan Association of Certified Public Accountants, including serving as a member of the President's Advisory Council and past Chairman of the Board.

OPT presented at the Harrisburg University Agile Lean Summit in March 2018 and discussed how Michigan is using Agile Lean tools.

In September, OPT presented "Relentlessly Engaged," a Harvard case study developed for the 2018 National Association of State Chief Administrators Institute of Management and Leadership in Omaha, NE.

In June, OPT accepted the 2018 North American Employee Engagement Government Agency of the Year Award in Chicago, IL.

To support Michigan State University’s Visiting International Professional Program, OPT presented to two delegations from China.

OPT is a member of the University of Michigan’s Positive Organizations Consortium, learning from private and public sector executives how to practice and implement positive business principles.


Awards, Partnerships, and RecognitionThroughout FY18, OPT was recognized by and partnered with organizations outside the State of Michigan.

FY19 Recommendations


Invest in the Office of Interagency Initiatives OPT recently established a new service area called the Office of Interagency Initiatives (OII). The purpose of the OII is to achieve strategic outcomes identified by the Executive Office through an accountability framework that promotes interagency collaboration and shared understanding. Examples of supported initiatives are the Flint Recovery Project, the Strategic Pathways Project, the Marshall Plan for Talent, the Michigan PFAS Action Response Team, and the Michigan Team to End Drug Addiction (Opioid Task Force). OPT recommends that the next administration provide the resources and funding necessary for the OII to become fully operational.

Continue Commitment to Employee EngagementOGG manages Michigan’s approach to employee engagement, which is recognized as the leading practice among state governments. The success of the state's approach is demonstrated in the 2018 Employee Survey results in which Michigan's engagement score of 75 percent exceeds the public sector benchmark of 58 percent. OPT recommends that the next administration continue support for the employee engagement program.

Expand Scope and Impact of Continuous ImprovementSince FY16, RPM has set the standard for continuous improvement through the State of Michigan’s LPI methodology. Michigan is the only state with a methodology designed specifically for government organizations. Growth in the number of LPI practitioners and LPI projects is essential to making state government more effective for citizens and making the work environment better for state employees. OPT recommends the percentage of state employees trained in LPI to increase from 3 percent currently to 12 percent by the end of FY20.

Increase Training in Administrative RulesORR oversees the administrative rulemaking process for each department across state government. Since 2011, ORR has helped rescind 2,369 obsolete, unnecessary, and burdensome rules and is on target to rescind 3,000 such rules by the end of calendar year 2018. Training state employees in the administrative rulemaking process is essential to continuous improvement in this area. OPT recommends increasing Regulatory Affairs Officer training sessions from one to four per year.

Implement Governance, Risk and Compliance Solution Enterprise Risk Management (ERM) is a forward-looking management approach that enables agencies to assess threats and opportunities that could affect the achievement of their goals. OIAS has made significant progress in ERM since FY16. Examples of this progress include reengineering the biennial ICE process, implementing a TDRA methodology, implementing leading practices to remediate information technology control deficiencies, and establishing the ERCC to oversee and monitor the state’s ERM framework. OPT recommends the continued improvement of the state's ERM capability by implementing a Governance, Risk and Compliance (GRC) technology solution during FY19.

Establish Comprehensive Employee Development Program A strategy for creating a learning community is essential for state government. An organization that focuses on creating a learning community differs from a more traditional organization by adapting to a changing culture, attracting and retaining a talented and committed workforce, embracing diversity and innovation, and promoting emphasis on learning and growth. To meet the challenges of a rapidly retiring workforce, a shrinking labor pool, and the loss of critical institutional knowledge, OPT recommends a collaboration with executive state leadership, the Michigan Civil Service Commission, and OPT to develop a vision and roadmap for learning and development for all state employees.


OPT Overview

Employees

OPT has 58 employees as of September 2018. Our team includes 12 certified public accountants, 11 Lean Process Improvement certified facilitators, 9 certified information system auditors, 4 certified strategic performance managers, and 3 attorneys.

MissionOPT is a trusted advisor to state government that enables a culture of continuous improvement for better services and outcomes for Michigan.

VisionWe foster an open and transparent statewide culture built on trust where:

Every leader is a coach;Every employee is a problem solver;Every challenge is addressed without fear or blame; andEveryday continuous improvement is achieved for all people of Michigan.

ValuesLEADERSHIP: Developing coaches of today and tomorrow.

EXCELLENCE: Doing the best work possible.

TEAMWORK: Collaborating with, respecting, and engaging colleagues; supporting decisions and working as one team.

INTEGRITY: Doing the right thing.

INCLUSION: Seeking others’ ideas and participation, individually or collectively, to make things better.

RESULTS-ORIENTED: Focusing on real results for real people. Ensuring follow-through and focusing on continuous improvement.

John Fitzpatrick

Director, Office of Good Government

Rick Lowe

Director, Office of Internal Audit Services

Holly Grandy-Miller

Director, Reinventing Performance in Michigan

Office of Regulatory Reinvention

OPT Leadership

Scott Hiipakka

Executive Director, Office of Performanceand Transformation

Partners in Performance, Transformation, and Innovation

Lean Process Improvement Teams

Office of Organizational Performance Management

Office of Organizational Innovation

Performance Reengineering Optimization

Workforce Engagement andTransformation Section

Effective Process Improvement and Communication Section

Continuous Improvement and Engagement Division

Performance Excellence Services Section

Performance Excellence Officer (PEO)The PEO is responsible for coordinating performance excellence responsibilities within each department and serving as a liaison to OPT.

Regulatory Affairs Officer (RAO)The RAO is responsible for coordinating department rulemaking activities and serves as the regulatory affairs liaison between the department and the Office of Regulatory Reinvention (ORR).

Employee Engagement Champion (EEC)The EEC is responsible for coordinating a department's employee survey and action plan activities.

Internal Control Officer (ICO)The ICO is responsible for coordinating department-wide efforts to design, implement, conduct, and assess internal control activities in conformance with the state’s General Framework and System of Reporting.

OPT is privileged to be aligned with people from throughout the executive branch to pursue performance excellence, transformation, and innovation. Some of the key roles that work with OPT are described below.

Certain departments have established dedicated teams that provide Lean Process Improvement (LPI) within the depart-ment and that collaborate with the OPT to provide coaching, mentoring, and oversight for statewide LPI projects and initiatives.


Michigan.gov/OPT • Facebook.com/MichiganOPT • [email protected]

Documents

Creating Lasting Change for a Better Michigan · Newsletter Every month, OPT publishes a statewide newsletter featuring employee and director spotlights and accomplishments across