Innovations in Human Resource Management : Getting the Public's Work Done in the 21st Century 9781317467878, 9780765623140

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Transformational Trends in Governance and Democracy National Academy of Public Administration Terry F. Buss, Series Editor

Modernizing Democracy: Innovations in Citizen Participation Edited by Terry F. Buss, F. Stevens Redburn, and Kristina Guo

Meeting the Challenge of 9/11: Blueprints for More Effective Government Edited by Thomas H. Stanton

Foreign Aid and Foreign Policy: Lessons for the Next Half-Century Edited by Louis A. Picard, Robert Groelsema, and Terry F. Buss

Transforming Public Leadership for the 21st Century Edited by Ricardo S. Morse, Terry F. Buss, and C. Morgan Kinghorn

Performance Management and Budgeting: How Governments Can Learn from Experience Edited by F. Stevens Redburn, Robert J. Shea, and Terry F. Buss

Innovations in Public Leadership Development Edited by Ricardo S. Morse and Terry F. Buss

Reengineering Community Development for the 21st Century Edited by Donna Fabiani and Terry F. Buss

Innovations in Human Resource Management: Getting the Public’s Work Done in the 21st Century Edited by Hannah S. Sistare, Myra Howze Shiplett, and Terry F. Buss

About the Academy

The National Academy of Public Administration is an independent, nonprofit organization chartered by Congress to identify emerging issues of governance and to help federal, state, and local governments improve their performance. The Academy’s mission is to provide “trusted advice”—advice that is objective, timely, and actionable—on all issues of public service and management. The unique source of the Academy’s expertise is its membership, including more than 650 current and former Cabinet officers, members of Congress, governors, mayors, legislators, jurists, business executives, public managers, and scholars who are elected as fellows because of their distinguished contribution to the field of public administration through scholarship, civic activism, or government service. Participation in the Academy’s work is a requisite of membership, and the fellows offer their experience and knowledge voluntarily. The Academy is proud to join with M.E. Sharpe, Inc., to bring readers this and other volumes in a series of edited works addressing current major public management and public policy issues. The opinions expressed in these writings are those of the authors and do not necessarily reflect the views of the Academy. To access Academy reports, please visit our website at www.napawash.org.

Innovations in Human Resource Management Getting the Public’s Work Done in the 21st Century

Edited by

Hannah S. Sistare,

Myra Howze Shiplett and Terry F. Buss

T ransformational T rends in Governance and D emocracy

First published 2009 by M.E. Sharpe Published 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 2009 Taylor & Francis. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any informati on storage or retrieval system, without permission in writing from the publishers. Notices No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use of operation of any methods, products, instructions or ideas contained in the material herein. Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility. Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Innovations in human resource management : getting the public’s work done in the 21st century / edited by Hannah S. Sistare, Myra Howze Shiplett, and Terry F. Buss. p. cm. — (Transformational trends in governance & democracy) Includes bibliographical references and index. ISBN 978-0-7656-2314-0 (cloth : alk. paper) 1. Administrative agencies—United States—Personnel management. 2. Civil service—United States—Personnel management. 3. Human capital—United States—Management. 4. Personnel management—United States. I. Sistare, Hannah S. II. Shiplett, Myra Howze, 1944– III. Buss, Terry F. JK765.I56 2008 352.60973—dc22

2008028970

ISBN 13: 9780765623157 (pbk) ISBN 13: 9780765623140 (hbk)

Contents

Foreword Paul A. Volcker

ix

Preface and Acknowledgments Terry F. Buss

xi

  1. An Overview Myra Howze Shiplett

3

Part 1. The Challenge Ahead   2. Human Capital: Federal Workforce Challenges in the Twenty-first Century J. Christopher Mihm

13

Part 2. Understanding the Twenty-First Century Multisector Workforce   3. Challenges and Effective Practices in Managing the Multisector Workforce Alethea Long-Green

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  4. Multisector Workforce Lessons Learned: The National Aeronautics and Space Administration Laurie J. May

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  5. Getting the Best from “Most Efficient Organizations” Bruce D. McDowell

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  6. Building Surge Capacity in the Disaster Workforce: Improving SBA’s Response to Mega-Disasters in the Future Terry F. Buss and Joseph Thompson

55

v

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Part 3. Transforming Organizational Culture   7. The U.S. Government Accountability Office: A Case Study in Human Capital Reform David M. Walker

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  8. Strategic Human Capital Management in Federal Government: Principles, Strategies, and the Case of NASA Elwood F. Holton III, Sean C. O’Keefe, Vicki A. Novak, and David M. Walker

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  9. Organizational Transformation: Strategic Succession Management and Leadership Development Ruth T. Zaplin and Sydney Smith-Heimbrock

114

10. Four New Models of Networked Leadership Development Kitty Wooley

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Part 4. Innovation in Action 11. A New Look at Paybanding and Pay for Performance: The Views of Those Participating in Federal Demonstration Projects James R. Thompson and Rob Seidner

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12. Employee Retention and Engagement Tim Rutledge

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13. Building Relationships to Fix the Federal Talent Pipeline: An Innovative Approach in Chicago Provides a Model for Recruitment Success Rob Seidner and James R. Thompson

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14. Competencies for Success in International Leadership in Challenging Times Daniel Spikes and John Stroup

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15. An Agency-Level Look at Alternative Working Arrangements in Federal Government Sharon H. Mastracci and James R. Thompson

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16. Strategic Workforce Management: Innovation and Improvement at DTRA Michael Simpson

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contents

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Part 5. Managing the Management of People 17. A Certified Assessment of Human Resources Systems: An Innovative Pathway to Assurance NAPA Fellows and Staff

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18. Using Data-Driven Human Capital Decisions to Improve Basic Personnel Functions Edward H. Stephenson Jr.

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19. Succeeding as a Strategic HR Partner: A Practical Approach Tom Wimer

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Part 6. Legislating Reform 20. Legislating Innovation in Human Capital Management: Lessons from the Department of Homeland Security Douglas A. Brook and Cynthia L. King

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21. The Human Capital “Crisis” in the Federal Government: A Modest Proposal Alan P. Balutis

292

Part 7. Concluding Thoughts 22. The Path of Reform: Challenges and Opportunities Hannah S. Sistare

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About the Editors and Contributors Index

315 323

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Foreword Paul A. Volcker

In January 2003 the National Commission on the Public Service that I chaired called for sweeping change in the organization, leadership, and operations of our national government.1 The Commission worked against a backdrop of rising concern about the need for reform and renewal of government, and the quality of its leadership and workforce. Those concerns were sharpened by 9/11 and the recognition that our nation faced major challenges to our collective security. However, the problems were evident long before that particular event. Those who had responsibility for carrying out the work of government came to recognize the need for major change in the way public servants are recruited, rewarded, resourced, managed, and led. In the circumstances, the Commission’s recommendations were welcomed by many—members of Congress, the executive, experts in public administration, and the “good government” community. To those knowledgeable, the challenges facing our nation were indeed stark. There are many agencies of government upon which our well-being—even our survival—is dependent. Yet the competency of government to live up to its responsibilities has been called into question. Basic trust in government—the foundation of an effective democracy—has been low for years, bumping up only temporarily in the wake of the attacks of 9/11, and falling again in the months following. Basic reform of administration is never easy. It is not a thing that seizes public attention—not until scandal, waste, and ineffectiveness is exposed in crisis. In contrast to historic experience, it has been difficult to convince our best to enter government service at both the entry and senior levels. This challenge is sharpened by the fact that competent and experienced civil servants who entered government decades ago are retiring or leaving early. The Commission’s report and subsequent efforts have helped encourage some reforms in public service practices, and even useful legislation. Specifically there has been progress with respect to more flexible personnel practices within the federal government. Recruitment efforts are being rationalized. Focus on specific missions has been enhanced. Exceptional performance of those already in government is now better recognized. Some of the reforms enacted, due to problems of design or implementation, have been less successful. Still others remain to be tackled. So, on the whole, this reform has yet to achieve the scope and intensity that is ix

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required. Problems of design and obstacles to implementation are evident. Plainly, much remains to be done. The National Academy of Public Administration’s goal in assembling this volume, Innovations in Human Resource Management: Getting the Public’s Work Done in the 21st Century, is to stimulate that effort by a flow of new ideas, best practices, and other potentially useful information among today’s and tomorrow’s reformers. The stakes in terms of government that can command the trust and confidence of the American people have never been higher. Success in meeting that challenge has to start with the people who will make up the public service today and tomorrow. They must be educated, skilled, trained, and given the necessary resources to fulfill their responsibilities. These days, it is critically important that they be able to recruit, motivate, and deal with the many private parties who today make up the broader workforce carrying out government’s missions. One lesson that I have learned over my career is that change in long-established practices is indeed hard to bring about, and resistance to change is strong. Almost always, big change, important change, requires a strong catalyst. There has to be a sense that the existing ways of doing things are no longer adequate, a sense of foreboding or that crisis is building. Fortunately, in recent years there has been some greater recognition of the central role played by the people who work at all levels of our government. Notable failures of government domestically and internationally have been a catalyst for that recognition. There is growing appreciation that we face a world of environmental, fiscal, and social challenges beyond the evident need to protect national security. A second important lesson that I have learned is that there is no greater sense of excitement, no greater sense of satisfaction, than public service when one can participate in a process of reform and renewal. And that is true whether the involvement is in local communities or at the highest levels of the federal government. Reflection, reform, and renewal will strengthen our institutions, those who lead them, and our society at large. My hope for those of you reading this volume is that it will not only add to your knowledge and ideas but also help catalyze your own participation in this process. Note The report is available at National Commission on the Public Service. 2003. Urgent Business for America: Revitalizing the Federal Government for the 21st Century. Report (January). Washington, DC: National Commission on the Public Service. Available at http://www. napawash.org/si/PDFs/VolckerJan03.pdf (accessed 1–15–08).

Preface and Acknowledgments

This volume brings together the latest thinking on human resource management in the public service, presented by thought leaders in the field. While it focuses primarily on federal government policies and practices, the principles, conclusions, and recommendations reported here translate nicely into state and local government, and perhaps to the private sector as well. Human resource management is undergoing profound change, leading to new challenges, exciting accomplishments, and much uncertainty. The public service has moved substantially away from the old days of “personnel” concerned mostly with processing employee “personnel actions” paperwork to a system where public employees are managed as human capital to get the work of the government done more effectively and efficiently. Many of these changes manifested at the organizational level, but not all, must be understood in the broader context of three trends: (1) the aftermath of 9/11, and to some extent Hurricane Katrina, on public governance—explored in Stanton (2006) (see also Stanton and Ginsberg 2004); (2) the ascendancy of performance management throughout government—explored in Redburn, Shea, and Buss (2008); and (3) the evolution of public management as a discipline—the New Public Management and the New Governance, especially in the context of public leadership—explored in Morse, Buss, and Kinghorn (2007) and Morse and Buss (2008) (see also Abramson, Breul, and Kamensky 2006). This book comes at a propitious time in that it establishes the groundwork for understanding and taking advantage of change as it unfolds.

Collectively, the authors of chapters in this book all contribute to our understanding of the transformational trends enveloping public human resource management. Treating Public Sector Workers as Human Capital Rather Than Labor Labor in the public service was, not all that long ago, generally treated as “fungible, homogenous, and interchangeable” and easily replaceable. This view tended to discount the fact that workers are educated, knowledgeable, skilled, xi

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and capable, and possess values essential to the workplace. Such “qualified” workers are highly mobile and are likely to accept employment where their needs will be met. They are not overly abundant in the labor force. As such, some workers never consider public sector employment, or once in the civil service, leave for better opportunities. This being the case, organizational missions and goals may not be achieved at preferred levels, because government might have the wrong people at the wrong place at the wrong time. Human capital management requires: Recognizing and rewarding performance. Because human resource management is now heavily grounded in performance, a new emphasis exists on rewarding those who meet or exceed expectations. Rewarding those who do not excel creates problems in the federal service by discounting the accomplishments of higher achievers. Making the workplace more worker friendly. Work efficiency and productivity is expected to increase and workers are likely to stay on the job if management is willing to accommodate their needs in exchange for performance. Flexible work hours, job sharing, telecommuting, and part-time work now are commonplace, making the public sector workplace an increasingly better place to work. Finding and retaining the best workers to conduct the public’s business. It stands to reason that if managers are going to be held accountable for performance, then they must have access to the best workers, both recruiting them into the federal service, then keeping them there, and investing in their capability and growth with an eye to maximizing return on that investment. This continues to be a challenge in the face of competition from the private sector and nonprofits. The public sector offers many of the most attractive positions in the sense that many jobs contribute greatly to the public good, are challenging and rewarding, and can have high visibility and compensation. At the same time, many other jobs do not seem to contribute much, and are simple-minded and obscure. A challenge in managing the public workforce is to find ways to move people into “better” jobs as they grow and develop and to make less desirable jobs more rewarding. Developing and encouraging growth and leadership, especially among younger workers. Under the old civil service system, workers systematically worked their way into ever higher positions according to fixed, predictable schedules, and then retired. There was little concern for systematically developing leadership and management capacity in younger workers. Now there is wide recognition that there must be a concerted effort to develop leaders and managers and to systematically replace them as they retire (Morse, Buss, and Kinghorn 2007; Morse and Buss 2008). Continually improving worker capacity through training, education, and personal development opportunities. Although not explicitly dealt with in this volume, capacity building in the workforce must be continuous. All too often, though, training, education, and development experiences are improperly targeted or simply ineffective.

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Working smarter through information technology. Not that long ago, the public workforce lagged far behind its private sector counterparts in the use of technology to improve efficiency and effectiveness. Now, information technology has become firmly imbedded in agencies and programs. And a great deal of the public’s business is conducted online. Problems do remain, however, as the public sector has a poor track record in implementing management information systems. Achieving social equity. Government has yet to take full advantage of the potential contributions of qualified minority or disadvantaged workers toward delivering public services. Social equity is addressed not only in this book, but also in Johnson and Svara (forthcoming). Planning for the future in human resource management. Not too long ago, it occurred to some policymakers that they should not focus just on recruitment and retention, but also plan for the impending retirement of tens of thousands of “baby boomer” civil servants who would be leaving en mass—the so-called “retirement tsunami.” Policymakers may have waited too long. Requiring Performance and Accountability in Getting the Public’s Work Done The public sector has a long tradition of trying to improve the performance of programs and agencies, and holding managers and workers accountable. Since 1993, with passage of the Government Accountability and Results Act, and with the Bush administration’s Presidential Management Agenda begun in 2002, the federal system has become driven by performance and accountability at the highest levels ever, with budgets increasingly linked to organizational performance. At present, performance management is high on the agenda of many agency and program managers (see Redburn, Shea, and Buss 2008). It remains to be seen whether it will continue to evolve under future administrations. Linking individual performance ratings to organizational goal attainment. In the next wave of innovations in performance, policymakers are likely to increasingly tie individual performance ratings to organizational goal attainment. Individual merit raises will be tied directly to accomplishment. At present in the public service, rewards for individual performance may not be related to how well an organization achieves. High-level federal managers often get large bonuses for poorly performing agencies and programs. Empowering managers with more flexibility in how work is managed. With increasing concern for achieving performance, policymakers have recognized the need to afford managers more flexibility to accomplish organizational missions and attain goals. Managers now have greater flexibility in hiring, firing, paying, promoting, and classifying workers to enhance performance. They also have more resources to develop workforce capacity. It is not clear whether this flexibility will yield the results and return on investments policymakers expected.

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The next generation of innovations will likely look at the return on human resources investments. Understanding the New Public Service Arena The public service arena has moved away from a hierarchical command-and-control system based on authority. It is becoming more networked and collaborative in the following ways: Working with a multisector workforce. The public’s business is no longer conducted exclusively by civil servants. Government now contracts out services to nonprofit organizations and private business, it co-produces services with other public organizations or nonprofits and private sector in partnerships, and it privatizes service delivery. This trend not surprisingly has precipitated much debate about which services ought to be delivered by government—“inherently governmental”— and which can be transferred elsewhere. Regardless, the public sector workforce is now substantially different from the old civil service model. Effective management of this “multisector” workforce is only just beginning to be understood. The multisector workforce has major, and not fully understood, implications for acquisition, procurement, and contracting. Recognizing the emergence of formal and informal networks. Both the terrorist attacks of 9/11 and Hurricane Katrina exposed the fact that traditional hierarchical command-and-control systems fail to meet the needs of the people. But these disasters also pointed up the rise of governance through networks—formal and informal—that have evolved to replace hierarchies. Increasingly, the work of the public sector is being accomplished in a system of networks (Agranoff 2007; Goldsmith and Eggers 2004). But these are not fully understood. Recognizing the growth of collaboration and partnership. Public leadership and management are moving away from strictly hierarchical systems to ones that are more collaborative, employing partnerships (Dorn 2007; Tapscott and Williams 2007). This movement meshes nicely with the rise of networks. Working with citizens. The growth of the Internet and of collaborative technologies that bring people together virtually is leading to an era of increased interaction between citizens and their government (Buss, Redburn, and Guo 2006; Tapscott and Williams 2007). Citizens now have unprecedented access to public managers and performance and budgeting data. Public servants will be increasingly held accountable as they accomplish the work of government. Acknowledgments The editors would like to thank Jenna Dorn, president of the National Academy for Public Administration, for her support and encouragement in the preparation of this book and other books in the M.E. Sharpe series, Transformational Trends in Governance and Democracy. We owe a special debt of gratitude to Academy

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staff that volunteered to prepare many of the chapters in this book. We would also like to thank the staff at M.E. Sharpe, especially Harry Briggs, Elizabeth Granda, and Ana Erlić, for their assistance and encouragement. Terry F. Buss St. Petersburg, Russia References Abramson, Mark A., Jonathan D. Breul, and John M. Kamensky. 2006. Six Trends Transforming Government. Washington, DC: IBM Center for the Business of Government. Agranoff, Robert. 2007. Managing within Networks: Adding Value to Public Organizations. Washington, DC: Georgetown University Press. Buss, Terry F., F. Stevens Redburn, and Kristina Guo, eds. 2006. Modernizing Democracy: Innovations in Citizen Participation. Armonk, NY: M.E. Sharpe. Dorn, Jennifer L. 2007. “Web 2.0: Rebooting the Public Square.” Federal Computer Week, December 3. Available at www.fcw.com (accessed 1–10–08). Goldsmith, Stephen, and William D. Eggers. 2004. Governing by Network: The New Shape of the Public Sector. Washington, DC: Brookings Institution Press. Johnson, Norman, and James Svara, eds. Forthcoming. Justice for All: Promoting Social Equity in Public Administration. Armonk, NY: M.E. Sharpe. Morse, Ricardo, and Terry F. Buss, eds. 2008. Innovations in Public Leadership Development. Armonk, NY: M.E. Sharpe. Morse, Ricardo, Terry F. Buss, and C. Morgan Kinghorn, eds. 2007. Transforming Public Leadership for the 21st Century. Armonk, NY: M.E. Sharpe. Redburn, F. Stevens, Robert Shea, and Terry F. Buss, eds. 2008. Performance Management and Budgeting: How Government Can Learn from Experience. Armonk, NY: M.E. Sharpe. Stanton, Thomas, ed. 2006. Managing the Challenge of 9/11: Blueprints for More Effective Government. Armonk, NY: M.E. Sharpe. Stanton, Thomas H., and Benjamin Ginsberg, eds. 2004. Making Government Manageable. Baltimore, MD: John Hopkins University Press. Tapscott, Don, and Anthony D. Williams. 2007. Wikinomics: How Mass Collaboration Changes Everything. New York: Penguin.

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Innovations in Human Resource Management

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1 An Overview Myra Howze Shiplett

Transformation is about creating the future, not perfecting the past. —David Walker, Comptroller General of the United States, November 2007

Three streams of activity merged in this first decade of the twenty-first century that support vibrant, effective, and efficient human resources policies and programs, promoting a culture of performance in public organizations. When Congress passed, and President Bill Clinton signed, the Government Performance and Results Act (GPRA) of 1993, a revolution began in the way citizens and public employees began to think about government functions, products, and services to citizens.1 The sense of Congress in passing GPRA was that federal managers were unable to improve program efficiency and effectiveness, because program goals were not articulated and performance information was inadequate. Because federal managers were inhibited from performing at their best, Congress was handicapped in making spending decisions and performing program oversight. The law directed that every federal agency develop a mission statement and a strategic plan with goals and outcomes and to “express such goals in an objective, quantifiable, and measurable form . . . for the major programs and operations of the agency.” Under the direction of the Office of Management and Budget (OMB), each agency was also to develop a performance plan articulating how the agency planned to meet its strategic goals and outcomes, to develop metrics to assess the degree to which outcomes were achieved, and to report annually to Congress on what the agency had achieved or failed to achieve. The mission statements were prepared and the first strategic plans were prepared for fiscal year 1999. This focus on program effectiveness and efficiency enabled departments and agencies to question program priorities in a much more structured and analytical way, which ultimately led these organizations to also question the resource allocations—money, people, and materiel—associated with program priorities. The roots of the human resources revolution emerged some fifteen years earlier when public organizations—and particularly federal departments and agencies— realized that the rigid civil service structures established with the Civil Service Reform Act of 1883, which ushered in a merit-based civil service for the United 3

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States, were no longer adequate to assure that the federal civil service could attract and retain a well-qualified workforce. In response to those needs, a variety of human resources reform legislation was passed beginning with the Civil Service Reform Act of 1978. However, these reforms were not as successful as supporters had hoped because they were designed and implemented somewhat in isolation, without any particular regard for the substantive programs they were to support in departments and agencies. Only after the GPRA mandated mission statements supported by strategic plans with measurable objectives and outcomes was there a policy foundation with an analytical framework able to ask the needed questions about resource allocation. At the same time that the GPRA was passed, the National Academy of Public Administration (NAPA) established its Center for Human Resources Management (HRM Center). To support research on human resources issues, the HRM Center established a consortium of public organizations that contributed funds to enable research on a wide variety of human resources issues, programs, and problems. At its height in the early 2000s, the consortium had more than sixty federal, state, local, and international organizations as members. The consortium’s research touched every facet of strategic and operational program issues in human resources. It provided members—particularly the federal agency members—with a forum for exploring solutions to complex human resources problems and issues. Universities and professional organizations also began to focus their research attention on human resources issues. As a result of all of these activities, there is now a substantial body of knowledge about how employees act, react, and interact within public organizations and about the types of human resource policies, programs, and practices needed to enable public organizations to attract and retain a well-qualified workforce (see www. napawash.org/pc_human_resources/index2.html). The chapters of this book share some of the very best of those efforts as well as providing insight and analysis about perplexing issues that remain to be solved. In his foreword, Paul Volcker—former chairperson of the National Commission on the Public Service and of the Federal Reserve Board, and NAPA fellow, lays out the need for change and the hope that it will occur, opining that progress has been achieved through more innovative and effective federal human capital policies. I have laid out, above, a concise description of the evolving field of human resources and the linkages that must exist between and among the range of human resources policies, programs, and procedures as well as the linkages that must exit between human resources programs and the organization’s substantive policies and programs. The chapters below capture the major issues and trends in human capital management. J. Christopher Mihm, a NAPA Fellow and Director of Strategic Issues for the Government Accountability Office (GAO), describes in Chapter 2 the challenges that the future holds, arguing that human capital management must be central to any

An Overview

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anticipated transformation strategy for government. His chapter serves to organize the topics for the chapters that follow. Chapters 3 through 6 look at the multisector workforce that has dramatically altered the traditional model in which civil servants exclusively delivered public services. Government now produces its products and services through multiple sources—contracts, grants, volunteer services, nongovernmental organizations (NGOs). This raises issues of accountability, procurement, or acquisition strategy and practice, human capital management, governance, and social equity.2 How can government organizations plan for and manage this more disparate workforce with its different cultures, motivations, and performance incentives? Alethea Long-Green, in chapter 3, discusses the intricacies of managing the multisector workforce in a series of case studies. Laurie May reviews the realities of multisector workforce planning and management challenges in chapter 4, reporting on a 2006–2007 study of the National Aeronautics and Space Administration (NASA) to determine how an agency faced with a radically changing mission could and should manage its multisector workforce. May details how NASA handled the issues of accountability, acquisition, human resources management, social equity, and the legal and governance issues that resulted from the president’s directive to terminate the space shuttle program and refocus NASA’s work and workforce on returning to the moon and on human exploration of Mars and beyond. Holton et al. in chapter 8, describe in detail the strategic human capital management effort at NASA. In chapter 5, NAPA Fellow Bruce McDowell writes about another challenge that emerges from contracting for government goods and services: most efficient organizations (MEOs). MEOs are new structures created within the U.S. government in which federal employees compete against the private sector to keep their commercial-type jobs. For the human resources community, the primary significance of competitive sourcing through MEOs is that the federal government has a new type of organization and a new type of employee. McDowell points out that a lot of work was completed on how to create an MEO, but very little thought was given to how they would work in practice. The uncertainly of today’s world requires government agencies that deal with disasters to be particularly nimble in their ability to respond efficiently and effectively. In chapter 6, Terry Buss and Joseph Thompson describe the experience of the Small Business Administration (SBA) in dealing with damaged homes and businesses after Hurricane Katrina. The SBA’s dilemma is how to maintain a workforce surge capacity to meet victim needs in rare megadisasters without spending excessive amounts of taxpayer dollars while waiting for something bad to happen. While the military has always had its surge capacity through the National Guard, only in more recent times have civilian agencies needed this capability. Given the uncertainties of the twenty-first-century domestic and international political landscapes, a variety of federal, state, and local governments are grappling with this issue. At the federal level, the FBI and the Department of State are now struggling

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with these issues, as is SBA. Buss and Thompson lay out some possible nontraditional solutions to this workforce problem. In chapters 7 through 10, contributors lay out major transformation initiatives in two agencies, the GAO and NASA. Then two chapters look at organizational transformation at the individual level through succession planning and leadership development, and using networks of young government leaders. In Chapter 7, David Walker, Comptroller General of the United States and NAPA Fellow, recounts the effort he led to transform the GAO from an organization designed to audit federal agency activities to one that would assess federal agency performance. Walker shows how the GAO transformation relied heavily on innovative human capital management practices and policy that have now become models in the federal system. In chapter 8, Elwood F. Holton, Sean C. O’Keefe (former NASA Administrator, NAPA Fellow), Vicki A. Novak (former NASA Chief Human Capital Officer, NAPA Fellow), and David M. Walker discuss NASA’s evolutionary development of a strategic human capital program. One salient observation is: When an organization invests in human capital, three outcomes occur that cannot be owned by the organization, making it different from physical and fiscal capital. For individuals, investment results in increased knowledge, skills, and abilities, leading to individual development and growth. For the organization, investment results in better performance and productivity. And for society, more qualified individuals and highly productive organizations result in community growth and development. Ruth Zaplin and Sydney Smith-Heimbrock in chapter 9 discuss succession planning and the importance of a method for identifying, selecting, and developing leaders who understand the forces of transition and transformation.3 Kitty Wooley raises two common problems for which uncommon answers have emerged in chapter 10. The problems are: inadequate or ill-fitting support for inexperienced new hires, leading to feelings of isolation, and a disconnect between leadership training and succession planning, fueling employee disappointment and disengagement. Either outcome makes it difficult for an agency to realize the intended return on (its human capital) investment. On that basis alone, the emerging solutions that follow are worthy of study. This chapter reports on new networks that have been generated by employees of several federal agencies with the potential to turn these problems into solutions. Over the past decade, policymakers and managers have implemented numerous innovative human capital solutions to improve effectiveness and efficiency, as presented in chapters 11 through 16. James R. Thompson and Rob Seidner examine the issues of paybanding and pay for performance in chapter 11. They note that “the prevalence of paybanding in federal agencies results from flaws in the General Schedule (GS), the government’s predominant compensation and classification system. The authors discuss various paybanding efforts and their results over the last almost thirty years. Their discussion concludes with a summary of the lessons learned from these experiences. Among the most important lessons learned is that with paybanding, managers are more accountable for results.

An Overview

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Tim Rutledge writes on the power and importance of employee retention and engagement in chapter 12. He describes the changes in demographics and diminution of labor market growth. His thesis is that “employee loyalty has been replaced by employee engagement.” Creating and maintaining employee engagement requires a very different approach to work assignments, supervision, and management of the workforce. It also requires that both career and political executives have the courage to address performance issues by rewarding good performance and either correcting poor performance or finding ways to have the poor performer leave the organization. The shrinking labor market does not allow organizations to waste their employee talent. In chapter 13, Seidner and Thompson describe innovative solutions developed in Chicago to deal with public agency recruitment needs. There, public service agencies and local universities partnered to develop a talent pipeline from the schools to government agencies, with the goal of assisting agencies in recruiting while educating students and career counselors on why and how to choose public service internships and careers. Daniel Spikes and John Stroup turn their attention to the competencies needed to produce public leaders capable of dealing with the complex international diplomatic issues of the twenty-first century. International leadership competencies have been too vague to be useful. In chapter 14, the authors define these competencies. They find that skills and knowledge for international work are distinct from traditional leadership and management competencies. The authors lay out the international leadership competencies they feel would better serve diplomacy in an era of globalization. Chapter 15 examines the issues that emerge from the move to a less permanent workforce—in the authors’ words, a “contingent workforce”—to carry out federal legal responsibilities to U.S. citizens. This idea, which NAPA calls the multisector workforce, generates significant emotion from those who support the idea of a contingent workforce as well as those who oppose the idea. Sharon Mastracci and James R. Thompson describe the issues thus: “Recent changes in staffing and personnel management have evoked passionate responses. . . . Microsoft Corporation’s ‘permatemps’ symbolized the rough-and-tumble private sector employment landscape, and Microsoft employees’ lawsuit highlighted employer abuses of contingent work arrangements. Similar trends in government have provoked alarm. . . . Who are these people in alternative working arrangements? . . . Amid all of the reactions to contingent and alternative work arrangements in government, sober insight is critical; for, as NAPA observed (1998, 7): ‘Whatever our personal feelings about all of these changes, it is unlikely that the workplace and workforce of the past will reappear.’” In chapter 16, Michael Simpson turns to the workforce planning experience of the Defense Threat Reduction Agency (DTRA). Much of the theory and literature of workforce planning underscores the importance of agency executives being involved in agency workforce planning efforts. In most agencies, the theory never

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achieves reality. The DTRA experience was different. Historically, DTRA, which hires a variety of highly technical scientists, engineers, information technology professionals, and other technical professionals, had a very stable long-term permanent workforce. However, the changing demographics of the U.S. labor pool are changing this reality. Faced with a significant portion of the workforce eligible for retirement, the director of DTRA assigned his executive staff the task of developing a workforce planning system for the agency that would accurately predict current and prospective workforce needs, taking into consideration permanent, temporary, contractor, and other sources of workforce acquisition. The project has the additional effect of helping the executive staff strengthen its ability to work together as a cohesive team. Are there additional tools that are needed to manage human resources effectively and efficiently within public organizations? chapters 17 through 19 examine innovative approaches that are helping to product impressive results. Academy fellows and staff have developed a creative assessment tool at the request of the University of California to judge the adequacy of the human resource programs of public institutions. As the authors state in the introduction to Chapter 17, “[f]ederal agencies risk mission failure if they are unable to recruit, develop, and sustain the workforce necessary to meet the evolving complexity and scope of federal missions. . . . In 2007, [NAPA] unveiled an innovative model for improving, documenting, and assessing human resource systems regardless of the mode of delivery [of those services].” The model includes a three-part process of readiness assessment, selfassessment, and independent peer review of assessment results. The methodology assures that the human resources leaders and staff will be fully engaged in the assessment activities, as well as maintaining the assessment integrity through an independent peer review. The requirement for public organizations to justify their human resources program investments with qualitative and quantitative data led Edward Stephenson to prepare chapter 18, which explores the importance of data-driven human capital decisions. GAO noted the importance of data-driven human capital decisions in its model of strategic human capital management. GAO listed such decisions as one of eight critical success factors to improved human capital management. In chapter 19, Tom Wimer, president and CEO of the human resource consulting firm KnowledgeBank, outlines an approach that has proven successful with a variety of public organizations. According to Wimer, it’s time for HR professionals to take the steps necessary to become successful strategic partners: • • • • • •

First, seek to understand Build a business case Embrace your client as a member of your team Lead, but don’t push Deliver Follow up, and take credit for success, but with humility

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What changes in structure and approach are needed to provide public organizations with additional tools they need to provide the human resources goods and services needed to support the successful production of necessary goods and services for U.S. citizens? In chapter 20, Douglas A. Brook and Cynthia L. King argue that creation of the Department of Homeland Security (DHS) was a historic achievement in human capital management modernization and reform efforts, not seen in the United States since the reorganization of the War Department into the Department of Defense following World War II. It will be studied for decades to learn what worked and what did not. Alan Balutis, a NAPA Fellow, completes this section, providing his perspective on changes that will position public institutions to respond to citizens’ need for government goods and services. His suggestions, in Chapter 21, include the need for government focus on e-government, transparency, and mobility. Human capital management make a huge difference in government’s ability to attract the best workers regardless of where these workers live and when they work. Balutis suggests: • Establish a twenty-first-century Hoover Commission to “rethink government today.” • Commission a study on the Government Worker: 2015 • Provide early-out authority across government to encourage the remaining baby boomers to retire from public service. We end this journey of examination with observations from NAPA Fellow Hannah Sistare, who served as executive director of the second National Commission on the Public Service, known as the Volcker Commission. In Chapter 22, Sistare examines the historic reforms of the U.S. civil service and concludes that the path of reform going forward must be continuous if government is going to be able to meet its twenty-first-century challenges. She notes Paul A. Volcker’s call to action—“there is an excitement in the air”—created by the knowledge that the tools and means to improve public service are at hand and that the desire to continue in that great tradition has captured the imagination and energy of academics, practitioners, and policymakers. Notes 1. The topic of government performance—past, present, and future—is covered in F. Stevens Redburn, Robert J. Shea, and Terry F. Buss (eds.) (2008), Performance Management and Budgeting. Armonk, NY: M.E. Sharpe Publishing. 2. James Svara and Norman Johnson are preparing a book, Justice for All: Social Equity and Public Management, as part of the series. The book is expected to appear in early 2009. 3. Issues in public leadership were extensively covered in Ricardo Morse, Terry F. Buss, and C. Morgan Kinghorn (eds.) (2007), Tranforming Public Leadership for the 21st Century and in Ricardo Morse and Terry F. Buss (eds.) (2008), Innovations in Public Leadership Development, both published by M.E. Sharpe.

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Part 1 The Challenge Ahead

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2 Human Capital Federal Workforce Challenges in the Twenty-first Century J. Christopher Mihm

Driven by long-term fiscal constraints, changing demographics, evolving governance models, and other factors, the federal government is facing new and more complex challenges in the twenty-first century and federal agencies must transform their organizations to meet these challenges. Strategic human capital management must be the centerpiece of any serious change in management strategy. In 2001, the U.S. Government Accountability Office (GAO) identified human capital management as a government-wide high-risk area because federal agencies lacked a strategic approach to human capital management that integrated human capital efforts with their missions and program goals (GAO 2001). Although important progress has been made, the area remains on GAO’s most recent high-risk list because there is still the need for a government-wide framework to advance human capital reform. This framework is essential to avoid further fragmentation within the civil service, ensure management flexibility as appropriate, allow a reasonable degree of consistency, provide adequate safeguards, and maintain a level playing field among agencies competing for talent (GAO 2007a). Federal agencies do not always have the right people in the right jobs at the right time to meet the current and emerging challenges they face. For example, the federal government is confronting a retirement wave and with it the loss of leadership and institutional knowledge at all levels. Not only are agencies facing a fiercely competitive market for talent, but hiring is also affected by uncompetitive salaries in some critical occupations and lengthy hiring processes. Federal employees also operate in cultures that often lack a clear “line of sight” between individual effort and organization results. Of particular concern, federal agencies do not consistently have the modern human capital programs, policies, and procedures in place that are needed to succeed in their transformation efforts. More specifically, based on a large body of GAO work over many years, it has become clear that agencies continue to face strategic human capital management challenges in four key areas: 13

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1. Leadership. Top leadership in the agencies must provide the committed and inspired attention needed to address human capital and related organization transformation issues. As the government’s human capital leader, the Office of Personnel Management (OPM) has a key role in helping executive branch agencies build the needed infrastructure to support their transformation efforts. OPM, therefore, must have the internal capacity to lead agencies’ efforts. 2. Strategic Human Capital Planning. Agencies’ human capital planning efforts need to be fully integrated with mission and critical program goals. Too often, agencies do not have the essential components of strategic human capital planning needed to address their current and emerging challenges. 3. Acquiring, Developing, and Retaining Talent. Augmented efforts are needed to improve recruiting, hiring, professional development, and retention strategies. Agencies need to ensure that they are using flexibilities available to them to recruit and hire top talent and to address the demographic challenges facing the government. 4. Results-oriented Organizational Cultures. Organizational cultures need to promote high performance and accountability and empower and include employees in setting and accomplishing programmatic goals. In many cases, the federal government has not transformed how it classifies, compensates, develops, and motivates its employees to achieve maximum results within available resources and existing authorities. Congress has recently taken important steps in this direction by providing the Departments of Defense (DOD) and Homeland Security (DHS) with authorities intended to help them manage their people more strategically, but a government-wide framework is needed. Agencies not only face these challenges in moving forward but do so during a period of likely sustained budget constraints. However, budget constraints should not be viewed as an insurmountable obstacle to needed human capital reform. Rather, tighter budgets will require agencies to plan their transformations more strategically, prioritize their needs, evaluate results, allocate their resources more carefully, and react to workforce challenges more expeditiously in order to achieve their missions economically, efficiently, and effectively. Although human capital reforms often require an investment of budgetary resources, many of these costs are one-time in nature that can pay future dividends through more efficient agency operations. In the current fiscal environment, Congress will need to scrutinize agencies’ transformation plans, capabilities, and measurable results to make informed funding decisions. The following sections provide additional details on each of these four key challenges as identified by GAO’s work. Sustained Leadership Leadership in agencies across the federal government is essential to providing the accountable, committed, consistent, and sustained attention needed to address human capital and related organization transformation issues. Leaders must not only

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embrace reform, they must integrate the human capital function into their agencies’ core planning activities and programs. Yet, OPM’s 2006 Federal Human Capital Survey (FHCS) results showed that the government needs to establish a more effective leadership corps (OPM 2007). For example, slightly less than half of employees responding to the survey reported a high level of respect for their senior leaders or are satisfied with the information they receive from management on what is going on in the organization. Similarly, only 38 percent of respondents agreed or strongly agreed with the statement that leaders in their organization generate high levels of motivation and commitment in the workforce. This represents little change from the 2004 survey, in which 37 percent of respondents had positive responses to this question. However, a majority of respondents, 58 percent, agreed or strongly agreed that managers communicate the goals and priorities of the organization. This level of response is essentially the same as the 2004 survey, when 59 percent of respondents provided a positive response to this item. OPM plays a key role in fostering and guiding improvements in all areas of strategic human capital management in the executive branch. As part of its key leadership role, OPM can assist—and as appropriate, require—the building of the infrastructures within agencies needed to successfully implement and sustain human capital reforms and related initiatives. OPM can do this in part by encouraging continuous improvement and providing appropriate assistance to support agencies’ efforts. For example, OPM has exerted human capital leadership through its Federal Human Capital Scorecard (FHCS) of the President’s Management Agenda (PMA) to assist agencies in improving strategic management of their human capital. Also, OPM has developed the government-wide FHCS to assist agencies and OPM in better understanding specific and government-wide agency workforce management conditions and practices in the areas of leadership, performance culture, and talent. Most recently, OPM began a television campaign to promote federal employment and has undertaken a greater focus on succession planning to respond to the forthcoming federal retirement wave. However, in leading government-wide human capital reform, OPM has itself faced challenges in its capacity to assist, guide, and certify agencies’ readiness to implement reforms. GAO recently reported that OPM has made commendable efforts in transforming itself into less of a rulemaker, enforcer, and independent agent to more a consultant, toolmaker, and strategic partner in leading and supporting executive agencies’ human capital management systems (GAO 2007b). GAO also reported on OPM’s leadership of government-wide human capital initiatives. Using the new senior executive performance-based pay system and other recent human capital reform initiatives as a model for understanding OPM’s capacity to lead and implement future human capital reforms, we identified seven key lessons learned, which are: 1. ensure internal OPM capacity to lead and implement reform, 2. ensure that executive branch agency infrastructures support reform,

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3. 4. 5. 6. 7.

collaborate with the Chief Human Capital Officer (CHCO) council, develop clear and timely guidance, share best practices, solicit and incorporate feedback, and track progress to ensure accountability.

In addition to the lessons learned that can be applied to future human capital reforms, GAO recommended, among other things, that OPM (1) improve its capacity for future reforms by reexamining its own agency-wide skills, and (2) address issues specific to senior executive pay systems, such as sharing best practices and tracking progress toward goals. OPM has said that it has made progress toward achieving its operational and strategic goals (GAO 2007b). Equally important is OPM’s leadership in federal workforce diversity and oversight of merit system principles. In GAO’s review of how OPM and the Equal Employment Opportunity Commission (EEOC) carry out their mutually shared responsibilities for helping to assure a fair, inclusive, and nondiscriminatory federal workplace, GAO found limited coordination between the two agencies in policy and oversight matters (GAO 2006a). The lack of a strategic partnership between the two agencies and an insufficient understanding of their mutual roles, authority, and responsibilities can result in a lost opportunity to realize consistency, efficiency, and public value in federal equal employment opportunity and workplace diversity human capital management practices. GAO recommended that OPM and EEOC regularly coordinate in carrying out their responsibilities under the equal employment opportunity policy framework. Both agencies acknowledged that their collaborative efforts could be strengthened and have begun efforts toward that end. Improved collaboration should help ensure a more thorough and consistent approach to workforce diversity issues across the federal government. Strategic Human Capital Planning Strategic human capital planning is a central element of federal agencies’ efforts to transform their organizations to meet the governance challenges of the twentyfirst century. Generally, strategic workforce planning addresses two critical needs: (1) aligning an organization’s human capital program with its current and emerging mission and programmatic goals, and (2) developing long-term strategies for acquiring, developing, motivating, and retaining staff to achieve programmatic goals. The long-term fiscal outlook and challenges to governance in the twenty-first century are prompting fundamental reexaminations of what government does, how it does it, and who does it. Strategic human capital planning that is integrated with broader organizational strategic planning is critical to ensuring agencies have the talent they need for future challenges. An agency’s strategic human capital plan should address the demographic trends that the agency faces with its workforce, especially pending retirements.

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In 2006, OPM reported that approximately 60 percent of the government’s 1.6 million white-collar employees and 90 percent of about 6,000 federal executives will be eligible for retirement over the next ten years. GAO has found that leading organizations go beyond a succession planning approach that focuses on simply replacing individuals and engage in broad, integrated succession planning and management efforts that focus on strengthening both current and future organizational capacity to obtain or develop the knowledge, skills, and abilities they need to meet their missions (GAO 2003a). For example, about one-third of the Nuclear Regulatory Commission’s (NRC) workforce with mission-critical skills will be eligible to retire by 2010 (GAO 2007c). At the same time, NRC’s workforce needs to expand because NRC expects to receive applications for new nuclear power reactors beginning in October 2007. GAO reported that NRC’s human capital planning framework is generally aligned with its strategic goals and coherently identifies the activities needed to achieve a diverse, skilled workforce and an infrastructure that fully supports the agency’s mission and goals. The agency’s framework included using its human capital authorities, developing a critical skills and gaps inventory tool, and using targets and measures to monitor the composition of its hires and separations. NRC has been effective in recruiting, developing, and retaining a critically skilled workforce, though it is unclear if this trend will continue in the next few years. GAO also has reported in recent years on a number of human capital issues that have hampered the Department of State’s ability to carry out U.S. foreign policy priorities and objectives, particularly at posts central to the war on terror (GAO 2006b). For example, the department initiated a number of efforts to improve its foreign-language capabilities. However, it has not systematically evaluated the effectiveness of these efforts, and it continues to experience difficulties filling its language-designated positions with language-proficient staff. GAO found that these gaps in language proficiency can adversely affect the department’s ability to communicate with foreign audiences and execute critical duties. Another example of the government’s strategic human capital planning challenges involves its acquisition workforce. The government increasingly relies on contractors for roles and missions previously performed by government employees. Acquisition of products and services from contractors consumes about a quarter of discretionary spending government-wide and is a key function in many federal agencies. GAO reported in 2003 that because of a more sophisticated business environment, most acquisition professionals would need to acquire a new set of skills focusing on business management (GAO 2003b). In a forum hosted by the comptroller general in July 2006, acquisition experts reported that agency leaders have not recognized or elevated the importance of the acquisition profession within their organizations, and a strategic approach has not been taken across government or within agencies to focus on workforce challenges, such as creating a positive image essential to successfully recruiting and retaining a new generation of talented acquisition professionals (GAO 2006c).

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Acquiring, Developing, and Retaining Talent Faced with a workforce that is becoming more retirement-eligible and finding gaps in talent because of changes in the knowledge, skills, and competencies in occupations needed to meet their missions, agencies need to strengthen their efforts and their use of available flexibilities to acquire, develop, motivate, and retain talent. The federal hiring process, with its lengthy procedures, often puts the federal government at a competitive disadvantage. In recent years, Congress, OPM, and agencies have taken significant steps to streamline federal hiring. For example, Congress has provided agencies with flexibilities such as the use of categorical rating and exemptions from the pay and classification restrictions of the General Schedule. OPM’s efforts included improvements to the USAJOBS website as well as other measures, such as job fairs and television commercials, to make the public more aware of the work federal employees do. OPM has also established a model forty-five-day hiring program—limiting the time-to-hire period from the date a vacancy announcement closes to the date a job offer is extended. In addition, OPM has developed a Hiring Tool Kit on its website to help agencies improve their hiring processes. Moreover, OPM assists agencies on the use of student employment program flexibilities, which can expedite the hiring process and lead to noncompetitive conversion to permanent employment. Our work, however, has found that agencies’ use of the tools and flexibilities provided by Congress has been uneven (GAO 2004a). OPM has made some progress in assessing how agencies are using their hiring flexibilities and authorities. For example, in January 2007, GAO reported that OPM had begun working with a contractor in 2005 to review hiring flexibilities and authorities to determine which ones are used and not used, who is using them, and when and how they are being used (GAO 2007b). As a result of its work with the contractor, OPM plans to survey eight CHCO Council agencies to evaluate the use and effectiveness of hiring authorities and flexibilities and use the results to improve policies in these areas. Developing and maintaining workforces that reflect all segments of society and our nation’s diversity is a key part of agencies’ recruitment challenge. For example, the National Aeronautics and Space Administration (NASA) said it must compete with the private sector for the pool of Hispanics qualified for aerospace engineering positions, which is often attracted by more lucrative employment opportunities in the private sector in more preferable locations (GAO 2006d). To address the situation, part of NASA’s strategy in recruiting Hispanics focuses on increasing educational attainment, beginning in kindergarten and continuing into college and graduate school, with the goal of attracting students into the NASA workforce and aerospace community. NASA centers sponsor, and its employees participate in, mentoring, tutoring, and other programs to encourage Hispanic and other students to pursue careers in science, engineering, technology, and math. NASA also developed a scholarship program designed to stimulate a continued

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interest in science, technology, engineering, and mathematics. Another example is the U.S. Air Force’s “Grow Your Own” aircraft maintenance program at three of its Texas bases. In partnership with vocational-technical schools, the program includes both on-the-job training and classroom education to provide a pool of trained candidates, including Hispanics, to replace retiring federal civilian aircraft maintenance workers. In addition to hiring, agencies need to have effective training and development programs to address gaps in the skills and competencies that they have identified in their workforces. GAO has issued guidance that introduces a framework, consisting of a set of principles and key questions that federal agencies can use to ensure that their training and development investments are targeted strategically and are not wasted on efforts that are irrelevant, duplicative, or ineffective (GAO 2004b). Training and developing new and current staff to fill new and different roles will play a crucial part in the federal government’s endeavors to meet its transformation challenges. Of some concern, however, is the 2006 FHCS, which showed that about half, or 54 percent, of respondents were very satisfied or satisfied with the training they receive on their current jobs, little change from the 2004 survey, which showed 55 percent had positive responses to this question. Results-Oriented Organizational Cultures High-performing organizations have found that to successfully transform themselves they must often fundamentally change their cultures so that they are more results-oriented, customer-focused, and collaborative in nature. An effective performance management system is critical to achieving this vital cultural transformation. Effective performance management systems are not merely used for once- or twice-yearly individual expectation setting and rating processes, but are tools to help the organization manage on a day-to-day basis. These systems are used to achieve results, accelerate change, and facilitate two-way communication throughout the year so that discussions about individual and organizational performance are integrated and ongoing. Moreover, leading public sector organizations both in the United States and abroad create a clear linkage, commonly known as a “line of sight,” between individual performance and organizational success and, thus, transform their cultures to be more results-oriented, customer-focused, and collaborative in nature (GAO 2003c). The government’s senior executives need to lead the way in transforming their agencies’ cultures. Credible performance management systems that align individual, team, and unit performance with organizational results can help manage and direct this process. The performance-based pay system that Congress established in November 2003 for members of the senior executive service (SES) seeks to provide a clear and direct linkage between performance and pay for the government’s senior executives and is an important step toward government-wide transformation (Pub. L. No. 108–136, § 1125, 117 Stat. 1392, 1638, Nov. 24, 2003). Under

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this performance-based pay system, senior executives no longer receive annual across-the-board pay increases or locality-pay adjustments. Executive branch agencies are to now base pay adjustments for senior executives on individual performance and contributions to agency performance through an evaluation of their skills, qualifications, or competencies as well their current responsibilities (GAO 2006e; 2007d). Just as it has for senior executives, the federal government needs to fundamentally rethink its current approach to paying nonexecutive employees by better linking their pay to individual and organizational performance. Today’s jobs in knowledge-based organizations require a much broader array of tasks that may cross the narrow and rigid boundaries of job classifications of the General Schedule system. Since being exempted from the General Schedule system, DOD and DHS have been moving toward occupational clusters and pay bands that better define occupations and facilitate movement toward performance management systems that create a line of sight between performance and organizational results, make meaningful differences in performance, and appropriately reward those who perform at the highest levels. The results of the 2006 FHCS underscore the need for serious attention to the way federal employees are assessed and compensated. About one-third, or 34 percent, of the respondents strongly agreed or agreed with the statement that promotions in their work units are based on merit. When respondents were asked if pay raises in their work units depend on how well employees perform their jobs, only 22 percent responded positively. These responses are consistent with past survey results. Further, somewhat less than a third of the survey respondents had a positive response to the question about whether their leadership and management recognized differences in performance in a meaningful way. High-performing organizations have found that actively involving employees and key stakeholders, such as unions and other employee associations, helps gain ownership of new performance management systems and improves employees’ confidence and belief in the fairness of the systems. In addition, adequate safeguards need to be built into the performance management system to ensure fairness and to guard against abuse. Using safeguards, such as having an independent entity conduct reasonableness reviews of performance management decisions, can help allay concerns and build a fair, credible, and transparent system. In summary, we need to continue to move forward with appropriate human capital reforms. But how reform is done, when it is done, and the basis on which it is done can make all the difference in whether such efforts are successful. Before implementing significant human capital reforms, especially reforms that make stronger links between employee pay and performance, executive branch agencies should follow a phased approach that meets a “show me” test. That is, each agency should be authorized to implement reform only after it has shown that it has met certain conditions, including having the institutional infrastructure to effectively and fairly implement any new authorities.

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Note Most of the material in this chapter is drawn directly from issued GAO work, particularly GAO, Human Capital: Federal Workforce Challenges in the 21st Century, GAO 07 556T (Washington, DC: March 6, 2007). Anthony P. Lofaro, Ami J. Ballenger, Thomas M. Beall, Crystal M. Bernard, William Doherty, Karin K. Fangman, and Anthony R. Patterson were the major contributors to that GAO testimony. The material here has been changed to the degree that the views expressed should be considered those of the author and do not necessarily express the views of the GAO.

References Government Accountability Office. 2001. High-Risk Series: An Update. GAO-01-263 January. ———. 2003a. Human Capital: Succession Planning and Management Is Critical Driver of Organizational Transformation. GAO-04-127T October. ———. 2003b. Acquisition Workforce: Status of Agency Efforts to Address Future Needs. GAO-03-55 January. ———. 2003c. Results-Oriented Cultures: Creating a Clear Linkage between Individual Performance and Organizational Success. GAO-03-488 March. ———. 2004a. Human Capital: Increasing Agencies’ Use of New Hiring Flexibilities. GAO-04-959T July. ———. 2004b. Human Capital: A Guide for Assessing Strategic Training and Development Efforts in the Federal Government. GAO-04-546G March. ———. 2006a. Equal Employment Opportunity: Improved Coordination Needed Between EEOC and OPM in Leading Federal Workplace EEO. GAO-06-214 June. ———. 2006b. Department of State: Staffing and Foreign Language Shortfalls Persist Despite Initiatives to Address Gaps. GAO-06-894 August. ———. 2006c. Highlights of a GAO Forum: Federal Acquisition Challenges and Opportunities in the 21st Century. GAO-07-45SP October. ———. 2006d. The Federal Workforce: Additional Insights Could Enhance Agency Efforts Related to Hispanic Representation. GAO-06-832 August. ———. 2006e. Human Capital: Aligning Senior Executives’ Performance with Organizational Results Is an Important Step Toward Government-wide Transformation. GAO06-1125T September. ———. 2007a. High-Risk Series: An Update. GAO-07-310 January. ———. 2007b. Office of Personnel Management: Key Lessons Learned to Date for Strengthening Capacity to Lead and Implement Human Capital Reforms. GAO-07-90 January. ———. 2007c. Human Capital: Retirements and Anticipated New Reactor Applications Will Challenge NRC’s Workforce. GAO-07-105 January. ———. 2007d. Human Capital: Bonuses to Senior Executives at the Department of Veterans Affairs. GAO-07-985T June. Office of Personnel Management (OPM). 2007. 2006 Federal Human Capital Survey: Results from the 2006 Federal Human Capital Survey. Washington: OPM.

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Part 2 Understanding the 21st Century Multisector Workforce

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3 Challenges and Effective Practices in Managing the Multisector Workforce Alethea Long-Green

As federal agency executives cope with evolving missions, insufficient budgets, and burgeoning service demands, they are increasingly turning to alternative workforce solutions and flexible staffing strategies to accomplish their work. Federal managers are no longer relying solely, or even primarily, on civil servants to carry out agency programs. Emerging instead is a “multisector” workforce consisting of a combination of civil servants (full- and part-time, permanent and temporary), active duty military, reservists and other uniformed personnel, state and local workers, private contractors, grantees, nonprofit partnerships, and even volunteers. These vastly different components of the workforce carry out agency programs, often side by side, but under substantially different governing laws, compensation systems, appointment, termination, and discipline provisions, and ethical standards. The trend toward using workers who are not part of the federal civil service has escalated greatly in recent years. Many motives have been associated with the change. Federal managers are seeking more flexible ways to acquire needed skills, save money, counter the knowledge drain, augment capacity on an emergency basis, and reduce the size of government, to name often-cited reasons. At this time, accurate figures on the size of the various components of the multisector workforce do not exist, nor is there agreement on the definition of these components. There is, however, a growing consensus that managing this vast and sometimes disconnected web of service providers is a huge challenge. In 2004, the National Academy of Public Administration (NAPA) formed a working group of NAPA fellows to examine the multisector workforce phenomenon (NAPA 2005). NAPA was concerned that the blurring of roles, responsibilities, and lines of authority could potentially lead to accountability failures and service disasters. NAPA focused its review on “how to manage and govern the third party workforce in a period where the capacity of the official workforce is dwindling and the rules which govern it are undergoing basic reform.” Its research covered three areas: (1) gathering basic data on the size, scope, and nature of the third-party workforce; (2) identifying the means by which a limited federal workforce could perform its technical oversight and accountability responsibilities; and (3) explor25

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ing the question of inherently governmental functions. The overall focus was on management challenges presented by the multisector workforce. As a complement to its research, in 2006, the Academy sponsored a study team of eight participants1 in the U.S. Department of Agriculture (USDA) Executive Potential Program to conduct mini–case studies examining multisector workforce issues at three federal agencies—the U.S. Coast Guard, the Department of Education’s (DOE) Office of Federal Student Aid (FSA), and the National Park Service (NPS). Following an overview of the multisector workforce challenges identified by the Academy, this chapter describes the multisector workforce at each of these agencies, the approaches that the agencies are using to manage this workforce, and lessons learned and emerging best practices based on their experience to date. Multisector Workforce Challenges According to NAPA’s initial research, the multisector workforce presents significant management challenges in six key areas: accountability, acquisition, human capital, legal and governance, social equity and values, and organizational culture. These challenges play out in a variety of ways and are often interdependent. Accountability Federal managers are primarily responsible for ensuring accountability for government services by exercising control and preventing abuse of power. At the heart of the accountability issue is this: The federal manager is responsible for spending public funds, exercising public authority, protecting the public’s trust, and delivering results to citizens as part of the mission of each individual agency. Increasingly, the federal manager is relying less on traditional civil servants and instead using multisector workforces to accomplish agency missions and achieve results. Using multisector workforces requires a dispersion of administrative authority and reduces the level of control that the federal manager has over the process. Yet this does not reduce the managers’ oversight responsibilities or their obligation to deliver results. Accountability for multisector workforce performance requires clearer articulation of managers’ roles and responsibilities as well as training and tools to help them direct and oversee various kinds of workers. Acquisition Acquisition, as defined by the Federal Acquisition Regulations (FAR), involves “acquiring supplies or services with appropriated funds through purchase or lease.” Contracting is the tool that the government uses to determine and implement the agreed-upon business arrangement (identifying products and/or services to be provided, costs, performance period, and so forth). Key multisector workforce acquisition challenges include: (1) providing oversight and accountability for out-

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sourced functions, given the increasing federal workloads and limited workforce capacity, (2) identifying and communicating clear contract requirements, and (3) streamlining and improving the use of regulations to ensure accountability. Human Capital The multisector workforce presents many challenges affecting a range of human capital standards including: aligning human capital resources with the mission, conducting workforce analysis and planning, developing leadership and knowledge, recruiting and retaining talent, fostering a results-oriented performance culture, establishing accountability mechanisms, and providing oversight for merit system principles. Given the growing use of multisector workforces, agencies must find ways to apply these standards to all components of the workforce—not just the civil servants. For example, currently, agencies struggle to perform comprehensive workforce planning and analysis, which includes all components of the multisector workforce. As another example, managers must understand both the regulations/ rules that govern performance management of contractors and those that apply to civil service employees. Legal and Governance This issue focuses on the traditions and institutions by which authority is exercised, including developing statutes and regulations, formulating policy, and discharging duties. Public administration experts have identified the laws and rules as the glue that holds the federal architecture and workforce together, but they readily admit that many of these rules were developed to govern a very different kind of workforce composed mostly of federal employees. The emergence of the multisector workforce has changed the legal and governance landscape. The overarching questions concern what administrative laws need to be revised, amended, or eliminated to facilitate the effectiveness and efficiency of the multisector workforce, and how we can determine the best alternatives for establishing a governance structure for the multisector workforce. Social Equity and Values NAPA defines social equity as the fair and equitable management of all institutions serving the public directly or by contract; the fair, just, and equitability distribution of public services and implementation of public policy; and the commitment to provide fairness, justice, and equity in the formation of public policy. Values, on the other hand, form the framework surrounding all the interactions of people within a system and are used to interpret events and give meaning to communications. For the civil service, social equity and values are articulated in public laws, policies, and regulations. As federal missions are increasingly performed by contractors

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and other non–civil service workforce components, federal managers need to pay attention to issues of social equity and values—due process, procedural fairness and consistency, and equal access. Questions related to the multisector workforce phenomenon include: Is there fair and open competition? What is the impact of contracting out on the actual delivery of services (i.e., who is served, who is not served)? What impact does contracting out have on the values and goals inherent in the treatment of civil servants? Does it make a difference that federal employees take an oath of office, but other components of the multisector workforce, such as contractor employees, do not? Organizational Culture An agency’s mission and culture, of course, provide the organizational framework for recruitment, retention, and effective management of the agency. The emergence of the multisector workforce creates a more complex operating environment, with a mixture of diverse perspectives and norms. Differences between the federal workforce and other components are seen in areas such as professional credibility, visibility, work space, promotions, and awards. Academy research found that disparate treatment of individuals depending on their workforce status (for example, civil servant versus contractor) can directly affect workforce dynamics and hinder performance. As a result, successful management of multisector workforces will increasingly strive to create a culture of inclusion for all workers. Managing the Multisector Workforce To better understand the multisector workforce, the study team researched the experience of three agencies: the U.S. Coast Guard, FSA, and NPS. At each agency, the team gathered data through in-depth interviews with senior executives and program managers, human capital and acquisition personnel, and focus groups of program specialists, using questions developed by the Academy. They reviewed agency workforce statistics and related planning documents and surveyed publicly available information such as agency websites, external evaluations, agency human capital reports, and government manuals. The study team found that these three agencies demonstrate the diversity of the multisector workforce and the different ways the agencies are managing and supervising their workforces. All three agencies currently rely, to varying degrees, on a multisector workforce to accomplish their missions. The mix of components is different at each agency: the U.S. Coast Guard is using military, civil service, contractors, and volunteers; FSA relies on civil servants backed by a larger number of contractors; and NPS is working with a mix of federal employees, contractors, concessionaires, volunteers, and partnerships participants. As shown in Table 3.1, the three agencies approach the management of the multisector workforce differently, thus demonstrating distinct models for others to consider.

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Table 3.1 Multisector Workforce Management Models Agency

Model

Description

U.S. Coast Guard

Multisector command, control, and coordination

Alignment of roles and responsibilities with the mission across various components of the multisector workforce

Department of Education, Office of Federal Student Aid

Targeted contract management

Focused contract management, extensive training of managers and acquisition workforce, extended use of performance based contracts, outcome measures

National Park Service

Collaborative partnerships

Collaboration and alignment of all components of the multisector workforce

U.S. Coast Guard The U.S. Coast Guard, the smallest of the five armed services, performs multiple national defense, maritime safety and security, commercial mobility, and natural resource protection functions. Housed within the Department of Homeland Security, the Coast Guard has a multisector workforce of about 94,000, including volunteers. Chief components of the Coast Guard’s multisector workforce are the active duty military (39,854), the career civil servants (7,299), and civilian employees of nonappropriated fund activities such as the Coast Guard Exchange System (1,450). The remainder of the multisector workforce is split between reservists subject to recall to active duty (8,447) and a sizable number of volunteers in the Coast Guard Auxiliary (33,353) and the Ombudsman program (252). The Auxiliary are uniformed civilians who help the Coast Guard perform some civil responsibilities— public education and vessel safety checks. Ombudsmen volunteers are spouses of active duty military personnel who provide assistance and information to support Coast Guard families. The study team was not able to determine the number of contract employees working at Coast Guard facilities because it does not track this number. In the future, all personnel who regularly enter Coast Guard facilities will require an official access pass. This should provide a proxy for the number of contract employees who work on-site with Coast Guard employees. To manage its multisector workforce, the Coast Guard applies a command, control, and coordination approach, in keeping with its military status. This aligns roles and responsibilities with missions across the major components of the workforce

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(military, civil service, reservists, and volunteers). At the same time, the Coast Guard has created communications mechanisms to ensure that all workforce participants have an avenue for expressing their concerns. Researchers were told that inclusion of all components of the multisector workforce is helped by a strong sense of the “Coast Guard Family” and commitment to mission. Federal Student Aid (FSA) FSA’s mission is to ensure that all eligible individuals benefit from federal financial assistance—grants, loans, and work-study programs—for education beyond high school. FSA programs are the nation’s largest source of student aid. During the 2005–2006 school year alone, FSA provided approximately $78 billion in new aid to nearly 10 million postsecondary students and their families. Key services of FSA include: developing, distributing, and processing approximately 14 million Free Application for Federal Student Aid applications each year; making students and their families aware of available financial aid opportunities; and overseeing FSA partners in the student aid community to ensure fair, honest, and efficient operations. In carrying out its responsibilities, FSA relies heavily on a contractor workforce. FSA has 1,037 civil servants (both career and excepted service) employed in its Washington headquarters and ten regional offices. Over three times that number (3,500) contract employees perform a variety of FSA services, including managing application processing, staffing call centers, providing systems support, and producing software. FSA uses no volunteers. As a performance-based organization, FSA endeavors to standardize accountability and performance expectations of its contractor workforce. Its contract management approach involves extensive training of managers and acquisition workforce, and extensive use of performance-based contracts and outcome measures. National Park Service (NPS) Since its inception in 1916, NPS has served as the steward of America’s most precious natural and cultural resources. NPS manages much of the vast lands and resources for which the Department of Interior is responsible—protecting the nation’s resources, providing recreational access to park lands, promoting educational information, and performing environmental and scientific research, among other activities. The 391 units in the national park system receive nearly 300 million visits annually. To carry out its responsibilities, NPS relies on a varied workforce—collectively the internal and external workforces. Federal employees are the internal workforce and comprise 45 percent of the total workforce, including rangers, law enforcement specialists, concessions specialists, professional science and engineering specialists, interpreters, administrative staff, and others. The remaining 55 percent represents the

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external workforce, comprised of contractors, volunteers, concession employees, student hires, and various nonprofit partners/cooperators such as cooperating associations, foundations, “friends groups,” and Cooperative Environmental Study Units. As described below, the NPS external workforce has several unusual components, which are highly dependent on collaboration and partnerships, as opposed to contracts. • NPS contracts out over $1 billion for supplies and services annually and employs approximately 12,000–15,000 contract workers. The contracting decisions are based on competitive sourcing studies, which are linked to NPS workforce plans to ensure that resources are deployed appropriately. • Concession employees (24,000 strong) work under a contractual agreement between the park and the concessions company and operate restaurants, lodging facilities, gift shops, and other visitor convenience outlets found within national parks. • Cooperating associations are private nonprofit partner organizations that operate under an agreement with national park areas. These associations manage the bookstores found in national parks. Their “profits” get returned to the parks in the form of financial aid to support educational programs in the parks. • Foundations engage in fundraising activities for parks. • “Friends groups” also raise funds and provide support for parks on a volunteer basis. • Cooperative Environmental Study Units (CESUs) are formal relationships between universities and national parks to provide university expertise on a reimbursable basis. Because internal workforce hiring authorities are expected to be limited in the future, NPS is seeking to expand its collaborations with its external workforce. Often, concessions and visitor center workers, contractors, volunteers, and other members of the external workforce are the NPS’s public face to visitors. If NPS is to satisfactorily meet national park customers’ demands, NPS believes it must expand partnerships, strengthen collaboration, and ensure continuity with its large external workforce. Three Agency Experiences: Lessons Learned and Best Practices As the three agencies gain experience with their multisector workforces, they are beginning to identify and address numerous issues raised by this relatively new way of doing business. The following are the most often cited themes and issues found in the case studies. • Federal managers need more training and better tools to help them effectively manage the multisector workforce.

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• Having skilled acquisition staff is key to successful implementation of multi­ sector workforce strategies. • The role of the human capital management in meeting the numerous “people” issues associated with the multisector workforce must be better defined and strengthened. • The multisector workforce requires comprehensive communications strategies. The Coast Guard, FSA, and NPS are taking steps to address these issues and are developing approaches that could be adopted elsewhere in government. More Training and Better Tools for Federal Managers The three agencies amply illustrate the challenging world in which today’s federal manager operates—one that was largely unknown until recent times. How does a manager maintain accountability when contracting out is on the increase at the same time that the number of federal employees available to manage those contracts is on the decline? How does a manager direct a workforce where many of the employees are not under the manager’s direct supervision? How can a manager leverage dollars from nonfederal partners without violating procurement and ethics rules? Can a federal manager exercise oversight over the multisector workforce? Clearly federal managers need training and tools to help them cope in this environment. For example: • Coast Guard active duty officers may go for most of their career without any assignment requiring supervision of civilians or volunteer Auxiliary members. Then, they could be assigned to manage thirty civilians or coordinate the mission efforts with an Auxiliary Flotilla with no formal training about the rules and intricacies governing the work of these entities. • NPS managers confront a stove-piped operation where federal employees supervise federal employees, contractors oversee their own employees, and concessionaires manage concession employees. Managing in this environment requires special skills and techniques. • In FSA, there is one civil servant for every three-plus contractors. Getting the job done requires managers to understand rules and regulations governing contracted out operations. It is important that managers understand the rules and regulations governing the performance of contract employees versus those governing performance management of federal employees. Examples of the steps agencies are taking to help managers cope with the multisector workforce environment include: • Given the growing importance of partnerships in its operations, NPS is working with other agencies to identify competencies that will foster greater

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use of partnerships in carrying out federal programs. NPS also has identified collaboration, communication, and conflict resolution as fundamental competencies for current and future leaders of NPS. • FSA recognizes that continuity of contractor operations is critical to successful mission accomplishment. To retain the right people, FSA managers are encouraged to create and maintain a positive work environment for job content, appreciation, rewards, and recognition. • The Coast Guard promotes the “Coast Guard Family” as a way to bridge differences between the various components of the multisector workforce. • NPS’s Denver Service Center, which oversees many large construction projects, is moving toward professional certification of its project managers. Part of the rationale is that professional certification will help project managers stay abreast of industry practices and thus will help them better understand the contractors with whom they will work. NPS officials told the study team that promoting training in business practices and business management will help educate federal employees about the multisector workforce environment. Skilled Acquisition Staff Are Needed The research team found convincing evidence that contracting out to deliver federal services is increasing and that this trend will likely continue. Although in any contract arrangement the federal agency is presumed to be the managing partner, federal managers do not always have the necessary tools to oversee the daily activities of contractors. And very importantly, agency acquisition staffs have often not been made knowledgeable enough to protect the federal interest. Like the rest of the federal government, each of the three agencies extensively uses contract employees. Among the agencies studied, FSA relied most heavily on contractors to accomplish its work, with contractors outnumbering civil servants by more than three to one. Both the Coast Guard and NPS also used contractors to carry out their program responsibilities. The three agencies shared common concerns about the adequacy of the numbers and skill levels of their acquisition personnel. They generally agreed that more numerous and better-trained contracting officers are needed. Among the acquisition community’s biggest challenges are clearly articulating contract requirements and helping managers understand how contracting rules can help them oversee contract operations. The study team noted the following examples of efforts to strengthen the capacity of the acquisition workforce. • The Coast Guard has come to realize that all acquisition professionals should be certified. Consequently, the Coast Guard is sending the acquisition community to the Defense Acquisition University to receive the same professional certification provided Department of Defense participants. • For FSA, the biggest challenge for the acquisition workforce is clearly communicating the requirements of the contract. FSA envisions linking the

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acquisition office with human capital planning to help the acquisition staff better understand agency requirements. • NPS is working to familiarize potential contractors with NPS culture and environment. Its Denver Service Center conducts a three-day training session for architectural and engineering contractors to better prepare them to become integral partners in achieving NPS goals. • NPS also places a high priority on contracting officer training, devoting additional funding to this need. NPS recognizes that training must go beyond federal procurement rules and regulations and address issues such as better utilization of the multisector workforce. Human Capital Management Role Needs to Be Defined Traditionally the focus of most agency human capital operations has been almost exclusively on the federal civil service workforce, with little interaction with other components of the multisector workforce, such as contractors. Yet civil servants and contractors often work side by side and have similar needs. Human capital offices have an important role to play in helping agencies adapt to the new workforce structure. For example, workforce planning—a key strategic human capital function—is incomplete when it includes only the federal workforce and not the often larger contracting and volunteer components. Human capital offices have expertise to help agencies in additional ways including: developing training programs on multisector workforce issues; helping managers decide whether it is best to fill a position with a federal employee, a contractor, or other type of worker; building skills inventories on the total workforce; and helping resolve conflicts among various workforce components. The study team found that agencies may not be effectively using their resident human capital expertise to address multisector issues. For example, NPS’s chief human capital officer, responsible for developing strategies for managing the total workforce, does not sit on the National Leadership Council with other top leadership. Thus, there has not been an HR voice represented at the senior policy-making body where key decisions affecting the composition of the workforce are made. However, at lower levels in NPS, there is movement in the direction of involving HR early in the decision process. At the Golden Gate National Recreation Area, a Human Resources Executive Board consisting of the park’s top leadership including the director of human resources meets weekly to decide whether vacant positions should be filled by federal employees or other third-party hires. The study team concluded that a formal strategic human capital plan would help make the case for a greater human capital role in the strategic management of an agency. A strategic plan should set forth the agency’s human capital goals, objectives, and strategies, and link them to the overall agency planning documents. It should address strengths and weaknesses of each part of the multisector workforce and communicate how the human capital office can help managers best use the different workforce components. Such a plan would also give direction and vision to human capital staffs.

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The study team recognizes that the human capital function in some agencies is evolving. For example, FSA only recently was delegated human resources authorities. Much of FSA’s HR staff has been acquired through contract, providing flexibility to adjust staffing quickly. The Multisector Workforce Requires a Comprehensive Communications Strategy Communicating clear and consistent messages to all segments of the multisector workforce is a major challenge. This is most important with respect to communicating agency mission, objectives, goals, values, and norms. Without good communications in these areas, different components of the workforce could find themselves at cross-purposes or in conflict. Thus, when developing communications strategies within organizations that use multisector workforces, it is imperative that messages be crafted and delivered so as to reach all segments of the workforce. Within the multisector workforce, stove piping is a significant communications barrier, particularly in the Coast Guard and NPS. Put simply, federal employees supervise other federal employees, contractors supervise contract employees, concessionaires supervise concession workers, and so forth. For example, at a Coast Guard project, the study team found that federal and contractor staff reported separately to different supervisory chains. Their primary interface occurred in integrated product teams, where it was sometimes difficult to hold individuals accountable. The problem was mitigated by the development of team incentive awards. The study team believes that good communications requires a two-way street. The Coast Guard has established Civilian Advisory Boards to facilitate the communication of unique needs of different parts of the workforce to the highest levels in the organization. This is particularly helpful in a military organization where the vast majority of senior management is comprised of senior active duty officers. Interviewees identified several circumstances wherein the only avenue open to an employee embedded deep in the organization was to raise the issue outside the chain of command through the advisory board system. The Coast Guard has extended this practice to other parts of the multisector workforce through use of a Coast Guard Training and Education Advisory Council, Coast Guard Professional and Military Training Advisory Committee, Coast Guard Non-Rate Advisory Committee, and the traditional senior enlisted network or Command Master Chief program. This practice is strengthening the chain of command by fostering a better understanding of the needs and viewpoints of all members of the Coast Guard’s family. Conclusion The experiences of the Coast Guard, FSA, and NPS provide insights into the challenges inherent in managing a multisector workforce. They also illustrate areas in need of more emphasis—training federal managers and supervisors, bolstering

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agency acquisitions skills, involving human capital professionals in developing solutions to address multisector workforce issues, and creating communications strategies that reach all components of the workforce. NAPA intends to include the examination of multisector issues in its human capital studies, as appropriate. Specific findings will be culled and shared within the community of human capital practitioners. Note 1. Case studies were conducted by USDA Graduate School, Executive Potential Program, High Synergy Team 2007. Credited for research and contributing authors: Christine Bowman, Education; Kimberly DeFazio, Federal Railroad Administration; Morgan Geiger, Homeland Security; Carolyn Gethers, Agriculture; Bruce Noble, Interior; David Panzer, Interior; Jewel Pearson, Federal Deposit Insurance Corp; Karen Willis, General Services Administration research associate; Elan Martin, NAPA.

Reference National Academy of Public Administration. 2005. Managing Federal Missions with a Multisector Workforce: A 21st Century Leadership Challenge. Washington, DC: NAPA.

4 Multisector Workforce Lessons Learned The National Aeronautics and Space Administration Laurie J. May

The multisector workforce is that combination of civil servants, state and local workers, private contractors, and nonprofits and others who do the work of the federal government today. While debate continues as to whether use of non–civil servants to accomplish federal missions has gone too far—or not far enough—the multisector workforce has become a central component of modern governance in the United States. Recognizing that this phenomenon had been little studied, the National Academy of Public Administration (NAPA) initiated a project in 2005 to examine how the multisector workforce was impacting public governance. The long-term goal of the project was, first, to understand the impact of the multisector workforce on the federal government, including any challenges it presents to the accomplishment of program goals, the health of the civil service, accountability, compliance with legal requirements, and maintenance of key values, culture, and ethical norms. The second goal was to develop recommendations for adjusting current public management practices to successfully meet these challenges. This chapter is based on a study that NAPA undertook for the National Aeronautics and Space Administration (NASA) in 2006 and 2007 (NAPA 2007). In that study, the Academy addressed how NASA could lead the public sector in demonstrating how agencies with significant multisector workforces can respond effectively to changing mission requirements. (Holton et al. in chapter 8 discuss the reorganization effort at NASA, and Long-Green in chapter 3 presents general conclusions about the multisector workforce.) NASA’s Classic Multisector Management Challenges As noted in the NAPA 2005 report, Managing Federal Missions with a Multisector Workforce: Leadership for the 21st Century, the public sector reform agenda has focused primarily on organizations using human capital strategies to become more mission-driven and results-oriented. Striving to improve what they do and how they work within budgetary and civil service constraints, managers and lead37

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ers of these organizations must explore alternative workforce solutions to deliver improved government services. With a historical reliance upon contractors (currently numbering about 40,000) and approximately 18,000 civil servants, other types of loaned workforce members, and grantees, NASA may well be the archetype for federal entities finding themselves with legacy structures, limited budgets, changing missions, and the need to redefine how they accomplish their work within challenging deadlines. The agency, which has long had a field structure of ten major centers (some research-focused, others more operational, one a federally funded research and development center), is experiencing a fundamental mission shift. With the retirement of the Space Shuttle Program in 2010 and a new, ambitious agenda to expand its role in exploration, establish a permanent lunar outpost on the moon, and travel to Mars and beyond, the agency needs an optimally sized, appropriately skilled workforce that is flexible and scalable. Perhaps, above all, it needs to embrace the change necessary to strategically achieve and maintain a healthy workforce balance. What other factors impacted the agency’s agility in dealing with its multisector workforce? In addition to this dramatic mission shift and a minimally increasing budget, NASA faced: • A congressionally imposed ban on reduction-in-force (RIF) through at least March 2007. • Civil service as well as internal barriers to workforce restructuring. • Contemporaneous implementation of full cost accounting, which requires agencies to tie all direct and indirect costs (including civil service personnel costs) to major activities. • The revelation that, at one point following the announcement of the new exploration programs, as many as 2,673 civil service full-time equivalent (FTE) employees were without funded work. • A commitment by the administrator that each of the ten field centers would have a critical role in the new exploration program and a fully funded civil service. • Civil service workforce misalignments and skill mismatches. • A legacy of hiring freezes, leading to such unhealthy demographics as an aging workforce and too few workers in their twenties and thirties. • A workforce strategy with a primary emphasis on civil servants and a heavy reliance on an essentially passive and voluntary strategy of buyouts, attrition, and retraining to align the workforce to the new mission. Recognizing the need for expert guidance and practical tools to help determine how to balance its total workforce, the Senate Appropriations Subcommittee and NASA commissioned a 2007 NAPA study, NASA: Balancing a Multisector Workforce to Achieve a Healthy Organization, to help the agency address three main questions:

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• How should NASA decide whether to obtain the services/deliverables from a contractor or hire a civil servant? • If NASA decides to hire a civil servant, what kind of appointment should it use (tenured permanent or multiyear term)? • What is a healthy center? How should NASA measure it? The NAPA (2007) report provides insights into NASA’s challenges as well as recommendations for possible paths to managing the multisector workforce of the future. While the lessons learned are organization-specific, the report notes the opportunity for broader application and stated in its opening report message: “Together, Congress and NASA have the opportunity to break new ground by demonstrating the government’s agility in responding to change” (p. 1). The authors further noted, “If NASA successfully adopts a more knowledge-based management decision model . . . NASA will then be at the forefront of 21st century governance—pointing the way for other federal agencies facing similar challenges” (p. 2). Lessons Learned Using the NASA project’s initial identification of six critical areas for multisector data collection and analysis, the Academy has identified some potentially transferable lessons learned from the NAPA 2007 study. Accountability • Accountability flows from knowledge and transparency. A fundamental theme is that the healthiest organizations are knowledge-based and data-driven. Organizations that rigorously collect and analyze work and workforce data, share the evaluation of that information in a transparent manner, and make decisions based on these analyses are better able to identify trends and develop timely and appropriate responses. They are also able to generate useful information for stakeholders and garner support for budgetary resources and statutory authorizations. This openness and willingness to share data and ensure evaluation must start at the top. • Full cost accounting, while challenging to implement, was intended to engender increased accountability for the cost implications of management decisions. It created a new awareness on the part of managers as to real program cost. • The full range of program managers should be included in the results of procurement evaluations to encourage their participation in resolving identified problems. • All civil servants should be held accountable, via performance evaluation and award mechanisms, for compliance with contract management requirements.

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• Agencies should empower employees to plan their own careers by providing factual and analytic information about the direction and health of the agency and its organizational components. Agencies should also encourage employees to keep their skills updated, adapt those skills to the evolving mission, and seek developmental experiences consistent with the agency’s evolving needs. Acquisition • The era of separate acquisition and human capital planning is outmoded. Agencies must establish, align, and achieve a high level of integration in acquisition and workforce planning processes. Agency human capital and acquisition are the key internal support capabilities; both functions must be at peak performance level, sufficiently expert, work creatively to surmount the planning challenges presented by a multisector workforce, and go beyond the traditional, stove-piped approach that has been the unfortunate hallmark of traditional workforce planning strategies. • Consistent with the idea that robust organizations collect and analyze data to spot trends before ill effects take hold, procurement offices, which are overburdened and understaffed government-wide, are a good place to apply metrics. Metrics have helped organizations make decisions, reduce processing times, set priorities, and readjust workloads. • Evaluations of the procurement function need to probe deeply to determine how consistently or effectively staff manage contractors. Functional compliance reviews are too limited in scope and do not deal with real-world contract management problems. • Agencies need to get a better handle on their total acquisition workforce, including the usually dispersed yet critical contracting officer technical representatives (COTR), who are the agency’s technical link to ensure that contractors deliver quality products within agency-prescribed specifications, schedules, and costs. • With regard to the management of contracts, organizations need to establish consistent, work-based, and quantifiable hire-or-buy criteria. • As part of sound contract management, contractors need to be located in separate office space rather than with civil servants whenever possible. • Agencies need to limit vulnerability to prohibited personal service relationships with contractors by training managers, as well as COTR, in the legal requirements. • At the management level, agencies should reach out and bridge the divide between federal civil servants and contractor organizations; senior leaders should establish venues for the early and open two-way collaborative exchange of concerns and discussions of solutions to common challenges.

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Human Capital and Management • Human capital must be a full participant in all agency processes that have significant impact on the total workforce; human capital must be at the table with top agency leadership when decisions are made about work requirements and how to balance the workforce. Human capital officials must provide agency leadership with analytical expertise and support for an integrated acquisition and human capital planning process. • Data-driven organizations are able to quantify core competency needs and project overlapping program requirements over time. They also use innovative tools to quantify core competencies required for project completion and the minimum number of staff (civil service and contractor) that should be retained for competencies that are likely to be needed in the future, but not a current priority. Such organizations are able to quantify skill mismatches and take action to remedy these imbalances. • It is critical for an agency to develop formal processes to ensure that it has the right people, with the right skills, at the right time, in the right place. • Because the federal workforce is far more than the sum of its civil servants, comprehensive workforce planning must consider all the elements and resources the government leverages to accomplish its tasks. These resources include contractors, grantees, intergovernmental and interagency partnerships, as well as private and nonprofit organizations, and universities. Agencies must seek not only to bring resources into the agency, but to partner with other organizations in outplacement for developmental purposes or when agency mission shift leaves temporary or permanent skill mismatches or unfunded work. • Agencies need to consider the full menu of flexibilities available to them and not just the ones that have historically proven to be productive. For example, agencies are typically more effective over the long term if they diversify their recruitment strategy rather than rely, as has NASA, on the co-op program as the major source of new talent. Social Equity and Values • Healthy organizations collect and analyze information, share the results broadly, and take corrective actions based on thoughtful evaluation. They share effective practices in the hope of helping struggling components succeed and improving the overall health of the total institution. Organizations that do not measure against an established framework fail to attach importance to the values they espouse and send a negative message of insincerity or lack of commitment to stated priorities. In a knowledge-based organization, employees may not agree with the ultimate decision, but they have the opportunity to examine the underlying data and analysis and appreciate attempts to achieve consistency and equity.

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• Highly insular organizations can stifle employee growth and personal development. • Organizations that lack a steady influx of new hires can become imbalanced both demographically and in the area of skills. Such organizations typically do not have a normal age distribution and can even become monogenerational. This can impede effective succession planning by limiting the number of individuals available to be mentored, those placed in first-line supervisory positions, and those given experience in critical decision making and multisector/contract management. This hinders the agency’s effectiveness by creating significant gaps in the management structure. Legal and Governance Issues • When agencies have significantly evolving missions, the government’s civil service system does not facilitate or encourage sufficient flexibility in the civil service workforce. Agencies must seek new flexibilities to overcome specific challenges. If the agency is data-driven and knowledge-based and shares its analysis, it will be in an enhanced position to work with Congress and other federal partners to obtain the flexibilities it requires. • As agencies adapt to the twenty-first-century need for multisector workforce flexibility and governmental agility, they may need to consider tools that will help in the reshaping of the workforce, including modified RIF rules, blanket buyout authority with a higher dollar value incentive, and, in cases such as NASA’s, limited statutory authority for emergency retirement reform. • Agencies also need to evaluate the appropriateness and efficiency of their organizational configuration. Some may find that they need to explore alternative organizational models, including closure of components, as did the military in the Base Realignment and Closure (BRAC) exercise. • In a multisector work environment, contractors and civil servants must work together with significant communication and interdependence. This situation poses challenges that are not always readily resolved through physical separation or relaying instructions through the contractor’s chain of command. Under these circumstances, it is particularly important to include contractors in mandatory annual ethics training. • Inconsistency between an agency’s procedural requirements and its daily management practices is frequently an indicator of organizational tension and legal or regulatory compliance concerns. In a multisector workforce, governed by different and sometimes conflicting regulations, it is particularly important that managers and staff who interface between the systems understand laws and regulations and comply with them. Dual systems of governance (one on the agency’s books, the other an informal system actually used by managers) create serious vulnerability.

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In a multisector world, agency policies and procedures must be multidimensional. Agencies must reexamine current policies and procedures to make sure that they accurately reflect the interrelationships between the workforce elements. For example, NASA issued a workforce strategy in 2006 that did not take into account its sizable contractor workforce or its Jet Propulsion Laboratory, which, while a Federally Funded Research and Development Center, is nonetheless counted among the agency’s ten field centers. Organizational Culture • Organizations that deviate from a data-driven decision mode to protect their existing workforce can end up mortgaging their future by making tactical rather than strategic decisions. In many organizations, such decisions are delegated to line managers who see only pieces of a much larger puzzle. Healthy organizations value their employees and workforce partners but focus analysis on the nature and duration of the work required and how best to balance the overall workforce. In the end, the result is a more successful organization and a better place to work. • Organizations that adopt passive workforce strategies do not encourage employees to take ownership of their careers. Proactive and creative workforce management looks at multiple options for all members of the leveraged workforce. It encourages employees to adapt through open communication and the sharing of information about the organization’s health and direction. Recommended Multisector Solutions for NASA Among the NAPA study’s recommendations was advice to adopt a knowledgebased, data-driven workforce management strategy. The panel emphasized that this was essential to ensure a flexible, optimally sized, and appropriately skilled multisector workforce. Specifically, NASA should: • Broaden its workforce planning methods and processes to incorporate, as appropriate, both civil servants and contractor organizations. • Use innovative planning methods to position the agency for any sudden changes in future program direction, as well as to quantify the core workforce required for maintaining critical aeronautics and scientific competencies. • Integrate acquisition and human capital management at the highest levels of the agency. • Use a formal decision-making process and metrics to determine the appropriate distribution of work between civil servants and contractors throughout the agency.

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• Use a formal decision-making process and metrics to determine the most appropriate type of appointment for civil service hires (permanent tenured or time-limited term). • Make maximum use of existing authorities for recruiting and retaining the best and brightest employees, as well as strategically sharing talent with other federal agencies and levels of government. • Seek statutory and regulatory authorization for modified reduction-in-force rules, buyout changes, and limited emergency retirement reform to remedy agency-acknowledged skill imbalances. • Adopt a comprehensive approach to assessing center health, including corrective actions based on annual evaluations and consideration of organizational configuration changes where corrective actions are not effective or sufficient to meet changing mission needs. Note For those seeking additional information regarding the findings and recommendations, as well as the practical decision tools and healthy center framework, see www.napawash.org/ NASA_Report_2–26–07.pdf; and for the supplementary materials, see www.napawash.org/ FINAL_Supplemental_Volume2_2–22–07.pdf (accessed 10/24/07). For additional information on the Academy Multisector Workforce project, see www. napawash.org/about_academy/MultisectorWorkforce12–13–05.pdf (accessed 10/24/07).

Reference National Academy of Public Administration. (2007). NASA: Balancing a Multisector Workforce to Achieve a Healthy Organization. Washington, DC: NAPA.

5 Getting the Best from “Most Efficient Organizations” Bruce D. McDowell

MEOs Are Coming Most efficient organizations (MEOs) are separate, new structures created within the U.S. government executive branch in which federal employees (1) decide to compete against the private sector to keep their commercial-type jobs, and (2) win the competition. The federal jobs required to be proposed for commercial competition are identified under U.S. Office of Management and Budget (OMB) Circular A-76 as those that could be performed by private contractors. Under A-76, all federal jobs are classified as either inherently governmental, meaning that they must be performed by federal employees, or as commercial-type. More than half of all employees in most agencies are working in commercial-type jobs under these definitions, but each agency has the option of determining which of its commercial-type employees will be made subject to competition and which ones will be exempted—for a variety of reasons. The Federal Activities Inventory Reform (FAIR) Act of 1998, which modified the foundation on which the long-standing Circular A-76 is based, requires most federal agencies to classify all of their employees into one of these two groups. All commercial-type (exemptions excepted) are subject to a competition within five years, and the jobs that remain federal under the terms of a winning proposal put forward by the agency will have to be offered for private competition again in the future—typically after five years if those jobs are being performed successfully during the five-year performance period. The purpose of these competitions is to bring the federal government’s costs down and keep them down. Over 80 percent of agency proposals have won in the first round of competitions, which is now nearing completion. So, a significant number of new MEOs have been created, and their nature is becoming clearer. Until now, there has been very little post-competition (post-award) guidance. However, enough experience with MEOs has begun to accumulate for various agencies and OMB to begin drafting post-award accountability guidance. For the human resources community, the primary significance of competitive sourcing is not just that the federal government has a new type of organization 45

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within its agencies, but that it also has a new type of federal employee. For managers, MEOs create a new form of tripartite management for getting management’s work done—consisting of the continuing agency leadership responsible for the function, MEO leadership responsible for producing the promised performance of activities for a set price, and the contracting officer (CO) in the agency’s acquisition office responsible for signing, overseeing, and amending the contract-like letter of obligation (LOO) that establishes and governs MEO activities. And, for acquisition people, there is a substantially new type of contracting to administer internally within the agency; essentially, the agency is contracting with itself. For all three groups, the MEOs create major new workloads outside the MEOs to serve MEO needs. The way this process is set up, most large agencies are likely to find themselves hosting several MEOs in the foreseeable future. Some of the experience with early MEOs was gathered through a one-day symposium conducted by the National Academy of Public Administration (NAPA) as part of a project to advise the U.S. Forest Service during its first year of operating a large MEO responsible for all the agency’s information technology (IT) equipment and services (NAPA 2006b). The symposium attracted thirteen agencies interested in sharing their experiences with MEOs and learning from others (NAPA 2006a). Although the February 2006 symposium raised more questions than it answered, it began the necessary process of finding practical answers to several new challenges. Much of what follows in this chapter had its beginnings in the Academy symposium and NAPA’s work with the Forest Service in 2005–2006. The Academy also gained valuable insights about two MEOs at the National Institutes of Health (NIH)—for facilities management and grants management—where it assisted that agency with a variety of administrative restructuring initiatives in 2003–2005 (NAPA 2005). Four Challenges in Getting the Best from MEOs Looking at this new MEO phenomenon broadly, four challenges stand out in trying to get the best results for federal agencies: • • • •

Setting up MEOs to be most effective. Establishing MEO accountability for performance and cost savings. Taking good care of MEO employees. Modifying the agency to be optimally supportive of MEOs.

These key challenges are examined in turn. Setting Up an Effective MEO The first thing to recognize is that the MEO will be designed, established, and operated under both OMB Circular A-76 and the Federal Acquisition Regulations (FAR). The FAR sets some fairly unbending ground rules that need to be followed

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throughout the life of the MEO. So, winning the award is likely to be the easy part. Setting up the new MEO to do the work is likely to be much harder for several reasons. To begin with, the MEO may be a largely new organization unlike any that existed before in the agency; the pre-set organizational design and cost estimates set in the acquisition documents may prove to be unrealistic in actual practice; the automated systems relied on in the proposal may not work as planned; the assumed personnel complement may not materialize as expected; unexpected delays may cause transition problems; and the transition period for creating this completely new organization may not be long enough to get everything right at the beginning. These potential challenges should not be underestimated. They might be minimized if the request for proposals (RFP) and government’s winning proposal are well crafted, but that is not always the case. Because of the competition with private contractors, a level playing field must be established and honored throughout the process of preparing and submitting the government’s proposal, as well as in judging its merits against all competing private contractors. Thus, the government team that prepares the agency’s proposal must be completely separate and insulated from the agency team that prepared RFPs, as well as from the other agency team that will compare the proposals from all parties and recommend the organization that promises the best deal for the government in terms of price and performance. Since the agency head will make the ultimate decision to award the work, he or she must also be isolated from the government team preparing the agency proposal. Whoever wins the work—whether it is the agency or a private contractor—the terms of the winning proposal will be binding, subject to formal contract amendments that would not break faith with the original RFP. Since violations of this principle could open the MEO to protest by losing bidders and the necessity to recompete, the terms of the RFP and the winning proposal will determine the future shape and substance of the MEO when it is established as a separate organization to perform only those tasks specifically included in the acquisition documents—in return for the specified price. Thus, the award process will largely lock in the MEO design for the next five years, assuming the MEO’s performance is acceptable to the CO, who must certify to this fact each year as a condition of the MEO’s continued existence. This is a more rigid framework than in a typical federal agency internal reorganization or process reengineering initiative. And it may be more risky. The rule of thumb in these competitive sourcing cases is that any government proposal should offer at least a 25 percent cost saving if it hopes to win, and many proposals aim much higher. By necessity, therefore, government proposals generally include reorganization, consolidation of many existing offices, major personnel reductions, and significant amounts of automation—some or many of which may be untried and not guaranteed to work as planned. Because the proposal reaches so far into the unknown, it may be based on estimates and assumptions that may not turn out

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to be accurate when actual numbers become available. Adjustments will need to be made when the facts emerge, but there will be great pressure to honor the cost caps put in place by the competitive process, since that promise is a key reason to do competitive sourcing. From a performance standpoint, competition may be found to have wrung out most resources that could provide any margin for error. So, this may create a very tight and challenging fit. The test for whether an adjustment can be made is likely to be the strength of the case that new information has come to light that would clearly justify making a contract adjustment for any private contractor that might have won the work. If this case can be made and the agency can find additional resources elsewhere, a formal amendment to the LOO will need to be made through the MEO’s CO in the agency’s acquisition office. Actually launching the MEO may be a daunting task in the short time allotted for this purpose, and the agency’s human resources office may be at the center of this effort. If the new MEO is being created by consolidating a widely dispersed field operation into a largely centralized headquarters operation, and significantly downsized at the same time—as in the Forest Service case—then everyone formerly carrying responsibilities for the reorganized function, and everyone ending up in the MEO, will need action by the HR office. New job descriptions will need to be created for all positions in the MEO, everyone wishing to work in the MEO will need to apply for a new position there, and everyone accepted to work in the MEO will need a new appointment to their MEO job. Personnel who have been performing jobs affected by the reorganization but neither applying for nor being accepted for employment by the MEO, will need personnel actions to transfer them to other jobs, change their job descriptions, retrain them for other positions, or process papers for voluntary transfers to other agencies or separations from federal service. Reductions-in-force (RIFs) were not used in either the Forest Service or NIH, but if they had been, they would have created major new HR workloads as well. In the Forest Service case, 1,260 full-time equivalent (FTE) employees were affected by the MEO proposal, so this created a massive, sudden demand on the HR office that required a good deal of top-level attention. At NIH, two large MEOs were proposed at the same time—and also in the midst of a non-MEO consolidation, downsizing, and automation of the agency’s HR office—largely to meet outside expectations for cost savings. Fortunately, modest delays in setting up one of the NIH MEOs, and two major unforeseen delays in setting up the other one, spread out what could have become an unmanageable HR workload. The message to HR offices suggested by these two cases seems clear, however: plan ahead to accommodate the added workloads created by MEO awards. This message is especially important when the agency is contemplating several MEOs. Managing the FAIR Act inventory in the context of agency-wide workforce planning, and scheduling competitive sourcing activities to avoid bottlenecks, could help to avoid unmanageable peaks. Extra workloads associated with setting up MEOs also affect other parts of the

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agency. Obviously, extra workloads fall onto the acquisition office and the office responsible for finding suitable office space for the new organization. But not as obvious is the extra work of counseling employees who are having problems adjusting to changed circumstances, training employees to do things in new ways— especially when new software and procedures are being introduced—and providing relocation services when significant numbers of employees are being moved all at once. The nature of large MEO proposals is to bunch up these transition needs into large batches—which may require surge capacity to handle smoothly (see Buss and Thompson, chapter 6, for an analysis of surge capacity during disasters). NIH established a dedicated change management office to assist its transition to a major new suite of management software modules and found it very helpful. Establishing Accountability for Performance and Cost Control The Forest Service MEO was set up to be accountable for improving IT services agency-wide, while cutting costs. It is walled off to be responsible for a limited number of service delivery tasks, with a specific service level agreement (SLA) and performance measure established for each one. Each SLA is measured regularly, and quarterly quality assurance meetings are held with the leaders responsible for delivering all of the services and commanding the resources available to fix any shortfalls. Table 5.1 illustrates how this SLA performance monitoring process worked in the first full year of operation of the Forest Service MEO that consolidated and slimmed down almost all of the agency’s computer, telephone, and radio services. All costs internal to the MEO were tallied continuously from the beginning, but were not presented at the quarterly meetings, since the MEO was operating within its budget and no one was concerned about the bottom line until near the end of the first year, when costs were considered. However, the external costs were neither tallied systematically nor considered in MEO-monitoring meetings. No attempt was made to measure the cost of “work left behind” in the national forests and Forest Service research stations when the IT function was consolidated at headquarters. Some of the consolidated IT work may still be getting done in the field, especially where the people previously responsible for it remain there (assigned to other work); it is simply easier and quicker to do this than to go through a remote call center where you do not know the people and they do not know your situation. At NIH, where the Academy had the opportunity to study the effects of several consolidations, the amount of work left behind was quite large—and unaccounted for. At the Forest Service, this problem was recognized informally, but considered something that would correct itself over time as the previously responsible employees retired or moved on to assignments elsewhere. Similarly, the costs of the Forest Service HR, acquisition, and A-76 offices incurred to service the IT MEO were not measured. So, the MEO stayed within its cost cap, but the full cost of the effort was not counted.

Acceptable Level of Performance

Q1

Q2

Q3

Q4

Source: NAPA (2006b), p. 39. *Tivoli is the system management software program used by the Forest Service that allows remote access to computers for purposes of installing, updating, and configuring hardware and software components.

99% of complaints and inquiries responded to 100 100 99.3 100 within 1 day; easy cases resolved 95% of complex cases are resolved and 82.97 78.95 77.46 75.46 confirmed with customer before case is closed   3. Perform IT consulting (technical approval request 99% of research results completed in 10 days Null Null 98.24 100 development, resource request review), 5%   4. Make evaluations and recommendations on IT 95% of recommendations and evaluations 95 100 100 67 infrastructure, 5% provided within agreed-to time frames   5A. Resolution of endpoint health tickets, 10% Resolve Tivoli* desktop problems within 5 days 98.21 90.08 97.55 Null 99% of the time   5B. Endpoint health 95% of desktops and laptops remotely 93 96.67 96.68 95.57 managed within 30-day time frame   6. Implement and monitor security plans, SOPs, 95% of security items implemented within 99 82 85 91 etc., 10% agreed-to time frames 99% of the time   7. Develop agency enterprise network tactical, 99% of plans submitted within agreed-to time 99 100 100 100 strategic, and project plans, 10% frames each quarter   8. Resolve network component problems, 15% 99% of cases closed within 5 days of opening 97.52 91.76 92.93 96   9. Troubleshoot and resolve server software 99% of cases closed within 2 days of opening 90.63 89.34 91.02 93 problems, 15% 10. Troubleshoot and resolve desktop software 99% of cases closed within 5 days of opening 91.74 76.03 86.24 96 problems, 15% 11. Troubleshoot and resolve radio problems 99% of cases closed within 5 days of opening Null Null 74.13 65 12. Troubleshoot and resolve telephone problems 99% of cases closed within 5 days of opening Null Null 81.55 78

  1. Respond to customer complaints and inquiries, (“ticket” logged in for each case), 5%   2. Manage response times for complex cases, 10%

Indicator and Weight

Implementation Year Performance Indicators, Acceptable Levels of Performance, and Quarterly Scores (expanded and refined in subsequent years)

Table 5.1

50

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The internal MEO accountability system is very straightforward and designed explicitly to be that way. The SLAs measure MEO program outputs and the costs of the MEO measure program inputs. This is a contained system, and the measures are all fairly quantitative and precise. The MEO has pretty good control over both its use of inputs and the provision of its services (program performance), and the MEO has no responsibility for program outcomes (the larger impacts in the Forest Service and the nation of performing its services), which might be affected by external factors beyond the MEO’s control. Two external factors did affect the provision of the MEO’s services during its first year, but were managed successfully to result in only temporary lowering of service levels. One was a pair of computer virus attacks fairly early in the first year of performance, and the other was the total wipeout of the MEO’s prime desktop computer supplier by Hurricane Katrina—in about the middle of the first year. The MEO maintained a very strong focus on customer service throughout its first year, and was very alert in managing the external forces and internal problems that degraded service levels. A customer advisory committee and regular customer surveys were instituted from the beginning. This focus was relatively new to the government and may be one of the greatest strengths of the MEO initiative. However, the exclusivity of this focus on performance also proved to be a distraction from one of the most important factors in the success of the MEO’s performance—its employees. The next section considers the need to properly care for the MEO’s employees. Getting the Best out of MEO Employees The Forest Service did not begin its MEO operation with an employee advisory committee or an employee survey comparable to the two mechanisms it established to track where it was with its “customers.” But it gradually came to hear from grassroots workers operating this new organization. The conclusion was that an MEO is a very stressful place to work. There are several reasons for this conclusion—beginning with these folks being classified as holding commercial-type jobs. The message is clear: as long as they stay in these jobs, they will be subject to the uncertainty of having to compete to hold those jobs—not just once, but multiple times. Their career path is no longer clear. The incentive is to transfer into a more predictable, inherently governmental career path. And it will be easier for the best-qualified employees to transfer out than for the less-qualified ones to do so. This tendency shows up early as top talent begins to leave the agency—or at least these jobs—shortly after their agency gives notice of its intent to allow outsiders to compete for a given function. Then, as delays mount prior to the final decision to establish the proposed MEO, attrition continues to grow. The competitive sourcing process, in and of itself, is fairly long and complex. In addition, the agency decision to award MEO status to the government offer may be appealed by a losing

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private bidder. In addition, affected government employee unions can enter formal protests after any bidder protests have been resolved. If the union protest reaches an impasse, it may need to be resolved by the National Labor Relations Board (NLRB)—which has a very long backlog of cases. So, the whole process can take several years, as indeed NAPA observed in one agency. During an extended period of time like this, it is not unusual for the surplus of workers that would be created by the agency’s downsizing to turn into a long list of vacancies that will need to be filled—including many positions previously held by highly experienced employees who had been counted on to fill key leadership roles in the new organization. Working to avoid any grounds for protests, and to enter the competition with employee unions behind the government proposal, could pay off if it eliminates transition attrition. And a strong, cost-conscious performance once the MEO is up and running can also pay off by reducing the possibility that future competitions will arise soon and once again put these same commercial-type employees’ careers at risk. This effort will help to dispel the often prevalent idea that the MEO is just a stop on the way to eventual outsourcing to the private sector. Once in the MEO, however, many employees have noticed that their workloads increased noticeably—even unacceptably—as a result of the competitively induced downsizing of staff. More work to be done over a larger territory, stretching far from home and keeping employees on the road for longer periods of time and more constantly, creates not only increased job stress, but also increased family stress. Many employees will have new bosses to get used to, new tasks to perform, new equipment and software to get used to, and new locations to work from. In these situations, it is not surprising that some employees will need counseling and other support services—perhaps including retention bonuses in some cases. These special needs should not be left to become afterthoughts. They should be anticipated and provided for in the MEO proposal in order to ensure that the MEO will be a smoothly performing organization. Modifying the Agency to Get the Best from Its MEOs As MEOs have been created here and there within agencies, they have been treated as one-of-a-kind organizations. But, as they multiply as anticipated under the FAIR Act, they can be expected to become a new class of federal organizations. Large agencies and departments can expect to incorporate several. To get the most benefit from these new mechanisms, the departments and agencies should consider how to nurture and learn from them. On the nurture side, the agency or department may wish to consider beefing up its HR and acquisition offices, and creating a special change-management office. On the learning side, a tech-transfer office might make sense. There is no reason why the performance management and cost accounting lessons demonstrated by MEOs—and the savings realized—could not be replicated by other organizations in the federal government. But where is the incentive to do

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so? Perhaps the biggest contribution made by the FAIR Act is its requirement for competition. It provides incentive to sharpen the cost-cutting pencil to produce savings—on paper at least—in the neighborhood of 25 percent, instead of the 8 or 9 percent savings more typically produced by standard government reorganization and process reengineering initiatives (Gansler 2006, 97–99). Some would argue that the A-76 competitive sourcing process introduces too much risk and neglects to count some of the real costs involved—against the savings claimed. But it does seem to create a cost-savings stretch goal against which to measure future in-house federal proposals for reorganizations and process reengineering initiatives. Future in-house cost-cutting proposals might be able to get as good results without the extra expenses and FAR restrictions involved in the competitive acquisition process, but they should not stint on the augmented HR and change-management services needed to make them succeed without disrupting the agency. Competitive sourcing may not be the only way to get real savings in the federal government. NIH pursued competitive sourcing and standard administrative restructuring side-by-side for about three years—with greater emphasis on the standard approach than on the new one. The Academy did not have the opportunity to directly compare the two—to find the performance and cost-saving results. But such a study would be of great interest. Emerging Best Practices for Getting the Best from MEOs For now, though, the lessons that seem to be emerging to get the best results from MEOs are: • Don’t skimp on preparing the original proposal to establish an MEO. If your proposal wins, you will have to live with it for a long time. Try to make sure it is as realistic as possible. Look at the experiences of other MEOs and try to avoid their mistakes. Resist the temptation to cut so deep as to damage the chances for successful performance. • Don’t rely on untested technology. Automation is often taken for granted; plug it in and it will work. This is often not as simple as assumed, but this lesson seems very difficult to learn. Government agencies have to learn it over and over. Get the best advice you can about this before incorporating it into your proposal. • Within the limits of the FAR, try to ensure that the agency leadership and any relevant unions agree with basic outlines of the MEO proposal. And certainly, involve them in setting up the MEO once it is approved. Establishing the MEO will be challenging enough without either opposition or indifference impeding it along the way. The ancillary services needed from the agency’s HR and acquisitions offices will be vital to success. Ensure that they will be available and supported by top management.

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• If amendments to the LOO become necessary during the set-up period or during the first year of operation, make sure to work closely with the agency’s top management and budget officer to obtain any additional resources that may be needed. • Give as much attention to the morale and special needs of MEO employees as you do to the MEO’s customers—from the beginning. They are key to successful performance. References Gansler, Jacques S. 2006. “Moving Toward Market-based Government: The Changing Role of Government as the Provider.” In Competition, Choice, and Incentives in Government Programs, ed. John M. Kamensky and Albert Morales, chapter 2. Lanham, MD: Rowman & Littlefield. National Academy of Public Administration (NAPA). 2005. Effective Administrative Restructuring: Lessons from the NIH Experience. Washington, DC: NAPA. ———. 2006a. New Tools for Implementing “Most Efficient Organizations” (MEOs) in the Federal Government: Symposium Proceedings. Washington, DC: NAPA. ———. 2006b. First-Year Assessment: USDA Forest Service Information Solutions Organization. Washington, DC: NAPA. Redburn, F. Stevens, Robert J. Shea, and Terry F. Buss, eds. 2008. Performance Management and Budgeting: How Governments Can Learn from Experience. Armonk, NY: M.E. Sharpe.

6 Building Surge Capacity in the Disaster Workforce Improving SBA’s Response to Mega-Disasters in the Future Terry F. Buss and Joseph Thompson

This work is dedicated to the men and women, mostly unsung heroes all, who risk their lives and give their time unselfishly helping victims of disasters.

In 2005 hurricanes Katrina and Rita battered the Gulf Coast region, overwhelming the capacity of government disaster assistance agencies, nonprofits, and the private sector to meet the needs of disaster victims.1 The Small Business Administration’s (SBA) Disaster Loan Program, managed by the Office of Disaster Assistance (ODA), as the federal government’s primary source of funding for restoring the homes and businesses of disaster victims, found itself overwhelmed by 422,000 loan applications. Not only was it the largest disaster response in SBA’s history, the volume of work from this single disaster represented almost one-fourth of the total disaster work performed since SBA was created in 1953.2 The disaster loan program provides low-interest loans and working capital to business owners (20 percent of total loans granted) and homeowners (80 percent of total loans granted) devastated by disasters.3 The disaster loan program begins operations generally the next day following the declaration of a disaster, making ODA among the first to arrive on the scene of a disaster. Disaster loans have lower interest rates and more favorable terms than conventional loans. Economic Injury loans up to $1.5 million to small businesses provide working capital until normal operations resume. Physical Disaster loans provide for permanent rebuilding and replacement of uninsured or underinsured disaster-damaged privately owned real or personal property, up to $200,000 for individuals and $1.5 million for businesses. ODA was roundly criticized for its management of disaster assistance following the Gulf Coast storms. Victims of the disasters, elected representatives, the Government Accountability Office (GAO), media commentators, and witnesses at numerous public hearings all complained about SBA’s performance (GAO 2007a, 2007b). As SBA administrator Steven Preston noted: “Like every other level of government—local, state, 55

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and federal—SBA was initially overwhelmed by Hurricane Katrina. This demand surge left the agency struggling to meet the needs of thousands of disaster victims.”4 These criticisms stung SBA’s staff, particularly those in ODA who were, as one observer noted, accustomed to being seen as the “good guys” who provide timely, long-term help to disaster victims. During the September 11 response to the New York City terrorist attack, for example, ODA was applauded for its efforts (GAO 2003). The dilemma for ODA, from a policy perspective, is how to maintain a surge capacity to meet victim needs in rare mega-disasters without spending excessive amounts of taxpayer dollars maintaining capacity while waiting for something bad to happen, which thankfully rarely does. The National Academy of Public Administration (NAPA), at the behest of the House Committee on Appropriations’ Subcommittee on Science, State, Justice, Commerce and Related Agencies, and with the full cooperation of the SBA, studied ODA’s short- and long-term disaster response to hurricanes Katrina and Rita in 2005 and Orlando, Florida’s short-term response in the field to the tornado disasters in December 2006. Here, we report the results of the study. We provide a brief overview of how the disaster loan program works, then we look at how ODA was staffed to respond to disasters. We point out that ODA was in the middle of a major reorganization that was not complete and it had numerous other organizational issues in play when the 2005 hurricanes hit. So, not only was ODA surprised by the hurricanes, it also was not fully capable of responding as it should. Next, we look at the consequences of the failed workforce surge. Finally, we offer an overview of possible policy interventions to address ODA surge capacity issues. Some are under study at ODA and in Congress; others might be considered as well. We begin with an overview of how we conducted the study. Study Overview A panel of four members—including three NAPA Fellows5 and a panel member with extensive disaster loan program experience—guided the study. The panel brought to the project a combination of disaster planning, management, policy, and research experience in financial and legal policy, management in the private and public sector, and other lending programs.6 The study began with an analysis of key policies, procedures, and processes, revealing how the ODA program is intended to work, its program goals and policy priorities. This background evaluation informed the later assessment of how ODA operates during actual disasters and its limitations and constraints under mega-disaster scenarios. In all, more than 125 personal interviews were conducted in Washington and in the field—Texas, Mississippi, Louisiana, and Florida—with public officials at the federal, state, and local levels, and other staff in nonprofits and private organizations. During site visits to the Gulf Coast and Florida, we visited Disaster Recovery Centers (DRCs)7 and interviewed managers and staff from ODA and the Federal Emergency Management Agency (FEMA) and representatives from other federal,

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Figure 6.1  Disaster Loan Business Process Outreach & Intake

Loss Verification

Underwriting

Closing & Disbursement

Servicing & Collections

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

state, and local agencies. Other interviews included members of key private and nonprofit organizations—e.g., Red Cross and church groups—that also provide disaster assistance. Site visits made in fall 2006 focused on ODA’s disaster response to those affected by the Gulf Coast hurricanes. Site visits to central Florida in December 2006 immediately following a series of tornadoes allowed us to observe ODA’s disaster response in progress during a “normal” disaster. Interviews were undertaken with ODA managers and staff both in the DC headquarters and at ODA’s Herndon, Virginia, Administrative Operations Center and Disaster Credit Management System Center, as well as senior leaders at SBA who have supervisory and/or policy authority over ODA, including the SBA Administrator and Deputy Administrator. NAPA also interviewed ODA managers and staff working at the Fort Worth, Texas, Processing and Disbursement Center (PDC), serving victims of the Gulf Coast hurricanes and other recent disasters. This study was also informed by the experiences of disaster loan applicants and recipients—forty home loan applicants and forty business loan applicants in March 2007. We conducted focus groups and individual personal and telephone interviews in New Orleans, Louisiana, and Biloxi, Mississippi. Focus groups and interviews elicited client views about how well the disaster loan program functioned following hurricanes Katrina and Rita. The Disaster Loan Process Though the size of disasters varies, ODA business processes do not (see Figure 6.1). Outreach and Intake For homeowners or renters seeking post-disaster federal assistance, an initial step is to register with FEMA, either in person at a DRC located at the disaster site, or by telephone, or online. If the applicant’s income is high enough to meet income thresholds established by SBA, FEMA refers applicants to ODA for a loan application; if income is less than the threshold, then FEMA refers applicants to the FEMA Individual and Family Grant Program. Prospective applicants who visit a DRC meet with an ODA Customer Service Representative who provides information about the program and assists applicants in filling out paperwork, which is then forwarded by express mail to ODA in the

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Fort Worth, Texas, PDC. Internet and phone applications go directly to Fort Worth for processing, bypassing DRCs. The DRC workforce consists mostly of staff recruited from within fifty miles of a disaster site. Having workers live in a disaster area saves the government travel and per diem costs. These workers are recruited locally through the mass media, especially newspaper and radio advertisements. There are no special skill or education requirements (with the exception of being good at dealing with people under great stress), and workers can be quickly trained to process initial loan paperwork (essentially a ten-page document asking for basic information). Potential applicants for business physical disaster or economic injury loans do not register with FEMA, because the applicants’ financial circumstances are considered to be too complex for the threshold screening test. Information from hard copy applications is keyed into the SBA disaster loan database by hand and accompanying supporting documents are scanned into the system. At this point, SBA again assesses both individual and business applicants’ potential ability to repay, based on each applicant’s credit history. Business credit reports are printed and then scanned into the Disaster Credit Management System (DCMS), the computer system used to process loan applications. If the applicant is not creditworthy, the application is declined. Otherwise, the application is forwarded to Loss Verification. At the same time, an inquiry is faxed to the Internal Revenue Service (IRS) asking for verification of the applicant’s income. Loan officers are highly skilled personnel with backgrounds in banking, accounting, insurance, or allied fields, conducive to making loan decisions. They work primarily out of the Fort Worth office and are recruited locally in Fort Worth when possible. Loss Verification Loss verifiers conduct on-site inspections to: • determine the estimated cost of repair or replacement of real, personal, and business property • estimate replacement and pre-disaster fair market value of property • gather information to help loan officers establish applicant eligibility • determine if property is located in areas requiring special insurance • provide estimated values of undamaged real property offered or required as collateral Applications for business economic injury loans do not go through loss verification. Instead, ODA reviews documentation provided by the applicant in support of the business’s prior earnings and expenses as an indication of ability to repay. Disaster victims may find these documents difficult to obtain because they have been destroyed or are inaccessible, and may need to work with ODA to re-create the necessary information.

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Loss verifiers are also recruited locally when possible to save on travel and per diem. Loss verifiers must have extensive backgrounds in construction or contracting sufficient to accurately evaluate property damage and estimate the cost to rebuild. Underwriting, Closing, and Disbursement During the underwriting stage, ODA loan officers decide whether or not to approve a loan. Loan officers examine the applicant’s credit quality and income to determine ability to repay a loan of sufficient size to repair or rebuild the home or business. Standards and procedures for this determination are shaped by statute, historical program experience, and, in some cases, the disaster itself. The underwriting stage ends with approval or decline of the loan application. Loan Servicing and Collection Once the final loan disbursement is made, responsibility for managing loans transfers from ODA to SBA’s Office of Capital Access (OCA). OCA ensures that borrower information is kept current and modifies loans when appropriate—for example, when a paid insurance claim enables a borrower to reduce the size of a loan. But OCA’s primary focus is collection of delinquent loans. OCA employs permanent SBA staff who are not much affected by the need to surge to create capacity: their work progresses over a period of up to thirty years and does not have the same sense of urgency as that of ODA. The 2005 Surge: Disaster Incidence, Staffing, and Productivity The casual observer would be amazed at the number of “official” disasters occurring annually in the United States. Between 1997 and 2006, there were 2,140 disaster declarations from all official sources (see Table 6.1). Indeed, the United States is one of the most disaster-prone countries in the world. Ironically, FY 2005 saw the lowest number of presidential declarations in ten years, but the largest single disaster in the program’s history—Katrina. ODA also responds to numerous smaller disasters, including those declared by SBA and governors (30 to 60 annually), as well as those declared by the Secretary of Agriculture (82 to 268 annually). Interspersed among this continual, annual wave of disasters are occasional megadisasters (or catastrophic disasters) (see Table 6.2). Hurricane Katrina in 2005 was the largest by far, followed by the 1994 Northridge, California, earthquake, 2004 Florida hurricanes, and hurricane Andrew in south Florida in 1992. Obviously, the inability to predict mega-disasters in the context of relatively stable, smaller disaster events over time plays havoc with the management of the disaster workforce, and hence with the ability of ODA to perform well.

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Table 6.1 Disaster Declarations, 1997–2006 Source Year

Presidential declaration

SBA declaration

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Total

38 45 40 22 30 30 64 41 21 25 356

31 48 29 38 24 34 37 28 32 35 336

Governor certification

Secretary of Agriculture

Total

129 85 112 116 82 126 112 154 226 268 1,410

206 190 190 188 151 207 225 225 225 333 2,140

8 12 9 12 15 13 12 2 3 5 94

Source: SBA/ODA, Office of the Associate Administrator (April 2007). Note: Table does not include other “official” disasters declared by the Secretary of Commerce and Defense Military Reservist Economic Injury Disaster Loans.

Table 6.2 ODA Assistance to Four Largest Disasters

Event Gulf Coast hurricanes (2005) Northridge, California, earthquake (1994) Florida hurricanes (2004) Hurricane Andrew (1992)

Disaster loan applications 422,253 250,402 181,751 45,727

Total loan amounts approved    $10.6 billion    $4.0 billion    $1.8 billion    $700 million

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

Staffing Staffing for the disaster loan program fluctuates dramatically on an annual basis and goes off the charts during mega-disasters. To accommodate this, ODA has special hiring authorities from the Office of Personnel Management (OPM) that are not even remotely similar to standard personnel systems even in SBA, ODA’s parent agency. ODA staff are not part of a collective bargaining unit. ODA dayto-day staffing consists of a handful—in April 2007 there were 21—of permanent, full-time civil servants and a much larger number—historically around 350—of “cadre” staff. The cadre staff are career civil servants who are “on-call seasonal”

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workers. Though most in fact work year-round, under ODA policy, they are guaranteed only six months’ work annually. When the workload exceeds the capacity of full-time and cadre staff, ODA hires temporary workers and draws on its reserve corps. Temporary workers are typically sought from within a fifty-mile radius of a disaster site in the case of customer service representatives and loss verifiers at DRCs, or from the Fort Worth vicinity in the case of loan officers. Reserve corps workers reside on a call-up list where they are on “no pay” status until called up. They may be deployed virtually anywhere in the United States. Should they not be able to work a disaster, their names could be deleted from the call-up list. To assess workforce surge capacity issues, it is necessary to understand working conditions at DRCs and in Fort Worth. DRC workers—temporary and reserve corps—receive only a few hours’ notice of a deployment and are expected to be on-site in one or two days. Those who are employed typically take a leave of absence from their regular jobs. Working in a DRC, although rewarding, is difficult. Staff work long hours, seven days a week, to get the job done. They live near the site with limited access to amenities such as showers, hot meals, electrical power, and proper beds, depending on the circumstances. Some DRCs are located in buildings, but many are situated in tents. Disaster sites are dangerous places, where workers can be injured. When DRC workers provide outreach or loss verification, they sometimes are accompanied by police for the safety—homeowners have been known to shoot at looters in disaster areas. Disaster sites are, needless to say, depressing places filled with human misery. Although it is not officially part of their job, DRC workers occasionally end up comforting and counseling disaster victims. When we were studying the disaster response to tornadoes in central Florida one week after they touched down, killing nineteen people, the DRC in which we were working had to be immediately evacuated of people and equipment because another wave of tornadoes was forming. As noted, Fort Worth houses loan officer functions for ODA. At peak periods during the disaster response, loan officers may find themselves working long hours without days off, trying to clear the case backload. During Katrina, loan officers were at work for many weeks, rather than a few days as required in normal disasters. Some temporary workers, including the reserve corps, soon discover after arriving at DRCs or Fort Worth that they cannot handle the work conditions, have unexpected family or personal issues, become ill, or receive notice from their employers that they are about to be terminated, so they quit. The impact of turnovers is huge: though the peak number of temporary and reserve corps employees in 2006 was 3,994, ODA estimated that it hired about 7,000 employees. Disaster work creates large staff turnovers and accommodates staff working for varying lengths of time, complicating workforce surge management. Of course, some people thrive on helping others in disasters. Many DRC workers we interviewed were once disaster victims themselves, and they wanted to give something back. Others were in business in a region and saw an opportunity to

   8 329 379 200 (est.)

Peak

   8 353 602 320 (est.)

2002 Peak    8 357 517 115 (est.)

2003

   8 347 270   70 (est.)

Low

Peak    11   354 2,354    70 (est.)

2004    8 331   75   25 (est.)

Low

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

Permanent Cadre Temporary Reserve corps

Low

Changes in Disaster Loan Staffing, 2002–2007

Table 6.3

11 331 3,672 310

Peak

2005 11 279 469 25

Low

12 358 3,994 700

Peak

2006 12 234 2,317 310

Low

2007 21 384 1,886 905

Current

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help out their neighbors. Some were just searching for adventure. An issue with managing the reserve corps, as opposed to the temporary workforce, is that they tend to drift away if there are not enough disasters to keep them employed or if their circumstances have changed through finding alternative employment, moving out of town, becoming ill, getting married—just about anything. Unfortunately, they do not always make their intention not to work a disaster known to ODA. This gives the false impression that there are more people available to work disasters nationwide than there really are. Table 6.3 shows the dramatic swings in the workforce within and across years. Productivity As might be expected, ODA’s disaster response to the Gulf Coast hurricanes was significantly slower than policymakers expected based on past experiences with a few catastrophic events. No one anticipated the magnitude of Katrina, and the surge capacity in place was insufficient to process the disaster by several magnitudes. Although loan processing expectations were 18 days for business loans and 14 days for home loans, ODA took 71 days, on average, to make loan decisions. Figure 6.2 shows that ODA was processing disaster loan applications eight months following Katrina. Figure 6.3 shows comparable processing delays in just one component of the process—loss verification. Costs in processing disaster loans can fluctuate wildly because of an inability to manage the surges and vacillations in normal disaster years. Too little or too much capacity creates cost issues. Table 6.4 shows the dramatic rise and fall of average costs per application processed over the period FY 2001 to FY 2006. Year 2006 likely boasts the highest average cost because of the confusion in the Katrina response. ODA staff were overwhelmed by the sheer volume of applications received, but the applications themselves were delayed in coming in. Many people had evacuated considerable distances from the Gulf Coast and had difficulty returning. Disaster loans require that applicants be on-site during the loss verification process. This is significant because the temporary and reserve corps workforce generally do not Table 6.4 Cost per Application Processed, FY 2001–2006 2001

2002

2003

2004

2005

2006

Cost per application processed $1,752 $3,506 $2,644 $1,994 $2,775 $4,000 Percentage change from prior year

↑100

↓25

↓24

Source: SBA Performance and Accountability Report, FY2002–2006.

↑39

↑44

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Figure 6.2  Applications Received Following the Gulf Coast Hurricanes 140,000 120,000

Applications

100,000 80,000 60,000 40,000 20,000 0 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

Figure 6.3  Loss Verification Backlog Following Gulf Coast Hurricanes

Number of Remaining Loss Verification Inspections

140,000

120,000 100,000

80,000 60,000

40,000 20,000

0 Oct-05

Nov-05

Dec-05

Jan-06

Feb-06

Mar-06

Apr-06

May-06

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

Jun-06

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Figure 6.4  Distribution of Disaster Loan Disbursements Following Gulf Coast Hurricanes 180,000 160,000 140,000

Disaster Loans

120,000 100,000 80,000 60,000 40,000 20,000 0 Jan-06

Feb-06

Mar-06

Undisbursed

Apr-06

May-06

Jun-06

Jul-06

Aug-06

Partially Disbursed

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Fully Disbursed

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

plan to process disasters for more than a few days at a time. Most would not have believed that their services would be required for six to eight months. Applications for loans as above are at one end of the process; disbursing monies to disaster victims is at the other. ODA does not have historical data on the time it took to fully or partially disburse disaster loans. Data for loans in 2006, however, show very long disbursement times (see Figure 6.4). For example, by July 2006, of the 153,000 loans approved for the Gulf Coast hurricanes, over 60,000 had had no disbursement, and another 60,000 had been only partially disbursed. There were several external factors that precluded borrowers from requesting disbursements, including borrowers not being ready or able to rebuild, and borrowers who decided to relocate or wait for grant funds before making a decision to take their loan funds. Table 6.5 shows application approval rates for disaster loans over ten years. Around one-half—give or take a percentage point or two—of all loans were approved. One reason for this high turndown rate is that DRC customer representatives suggest that most people visiting the DRC for assistance go ahead and apply for a loan even it they don’t end up getting approved or needing it (e.g., insurance may cover the loss). This practice front-end loads the process with “bad” applications that overwhelm the system. Most of these applications will be paper-based, mailed overnight by express mail from DRCs, adding even greater expense. Because quickly infusing money into disaster sites is key to recovery, and in-

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Table 6.5 Disaster Loan Approval Rates, 1997–2006

Year

Applications

Withdrawals

Approvals

Percentage of Applications Approved

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

107,526 76,300 104,641 62,651 122,599 48,937 69,474 85,885 189,094 369,910

15,598 14,038 25,340 12,291 24,417 11,883 16,985 18,633 43,210 71,721

47,135 30,147 35,288 27,302 47,192 18,789 24,082 26,719 58,821 169,534

51.3 48.4 44.5 54.2 48.0 50.7 45.9 39.7 40.3 56.8

Source: SBA/ODA, Office of the Associate Administrator (April 2007).

deed, the purpose of the disaster loan program, disaster victims became extremely upset when their government lets them down. Elected officials, advocates, news commentators, and political agitators were quick to complain as well. The Perfect Storm: Mitigating Circumstances The impact of the Gulf Coast storms on ODA’s disaster loan processing capabilities was compounded by several factors: • • • •

ODA reorganization Restructuring of loss verification under A-76 Insufficient management information system capacity Inability to anticipate a mega-disaster

ODA Reorganization When Hurricane Katrina struck, SBA was in the middle of realigning its ODA organizational structure (see NAPA 2007). ODA had previously operated with four area offices nationwide. Each office provided the full range of disaster response services for a particular geographic area such as customer service, loan processing, and administrative support. The four offices generally operated independently of one another. Under the realignment, SBA centralized its Disaster Loan Program’s customer service function (a call-in center for answering questions about the status of loan applications) in its Buffalo office and its loan processing function in its Fort Worth office. The field operations centers in Sacramento and Atlanta were responsible for all disaster field operations, public information, and congressional

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relations functions. Ironically, some believe that ODA operations in Katrina may have been even more problematic under the old system. Restructuring of Loss Verification ODA was in the final stages of the Office of Management and Budget’s A-768 process for contracting out loss verification operations when the Gulf Coast storms occurred. The George W. Bush administration had as a policy the privatization of any government service or function that was not “inherently governmental”—that is, only government could or should provide the service or function. Because loss verification clearly fell within the A-76 process, ODA was compelled to reengineer this function. This fundamental change in the loan approval process—which may have been a good management decision in itself—became a bad one when it occurred around the Katrina disaster, contributing to loan processing backlogs. Insufficient Management Information System Capacity The Disaster Credit Management System, the computer system used to process loan applications, underwent major revisions in 2004. System development contractors, among their other mistakes, did not anticipate the capacity required to handle the unprecedented number of concurrent users stemming from the Katrina workload, resulting in significant down time and slow response times (GAO 2007a). In short, the loan officers could not all access the system at one time. Unrealistic Mega-Disaster Preparation As already observed, SBA had not anticipated a disaster of Katrina’s magnitude (see GAO 2006, 2007a; NAPA 2007). The number of applications received, the speed with which they arrived, and the size of the workforce and related space and support services needed were unprecedented. SBA did not have a plan to meet the demand, and it acknowledged that the method it used to forecast activity resulting from disasters did not anticipate anything approaching the scope of this disaster. SBA relied on estimates based on prior experience, especially the 1994 Northridge, California, earthquake, which had been the largest disaster before 2005. That event generated less than half of the value of loans approved following Katrina. GAO reported in February 2007 that SBA had engaged in limited logistical disaster planning before the Gulf Coast hurricanes, and that insufficient planning likely contributed to initial challenges faced in the agency’s response. GAO pointed out that SBA had not used sophisticated approaches, such as catastrophic risk modeling or disaster simulations, to prepare a comprehensive disaster plan, even though such techniques are available in the private sector and are used by some government agencies (GAO 2007a).

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Policy Options An array of major options could be pursued by policymakers in addressing the disaster workforce surge issue, including:9 • • • •

Automating disaster loan processing Reengineering the disaster loan business process Privatizing disaster loan processing Supplementing ODA workforce with other federal agency, nonprofit, SBA volunteers • Providing tax and other incentives to maintain viable volunteer list

Some of these options tinker around the margins of the surge problem. None are mutually exclusive. Some are relatively expensive to execute, others rather cheap. Were all of these options to be implemented, surge capacity would be greatly enhanced. Whether these options would meet the needs of disaster victims for some unforeseen mega-disaster in the future remains to be seen. SBA is, as of September 2007, actively exploring the policy options below based on the NAPA report and its own policy analysis (see SBA 2007). Automating Disaster Loan Processing After assessing ODA operations in the field, it seemed clear that SBA could reduce the magnitude of the surge by automating as much of the entire loan process as possible. Computers substitute for labor and are less expensive to operate. SBA could automate initial loan applications originating in DRCs. Rather than having disaster victims fill out paper applications, then sending them overnight express to Fort Worth where they would be entered by hand into DCMS, the process could be done electronically from the point of initiation. SBA could establish an automated loan underwriting system to render a preliminary credit decision within minutes and eliminate the time-consuming process of manually creating a credit profile for those applicants lacking a credit score. An automated underwriting would also be useful for all applications, not just those without a credit score. Private lenders employ this technology, saving time and reducing expense (see NAPA 2007 for a review). The “credit elsewhere test,” to determine whether applicants have access to other sources of credit, which make them ineligible for federally subsidized disaster loans, consumes what SBA officials estimate to be 10 percent of loan officer time and resources. Since the test is amenable to automation, SBA might revise the credit elsewhere test by basing it on borrower credit scores, net assets, and the applicant’s ability to afford loan payments at the market rate through a cash flow analysis.

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To expedite decisions for loan applicants, reduce processing errors, and more fully automate underwriting decisions, SBA might establish a comprehensive electronic exchange of information with the IRS that eliminates the manual steps— faxing requests—built into the current process. SBA would also seek the statutory authority to include the tax filing release request on disaster loan applications. SBA and the IRS would establish a process to fully automate electronic exchange of applicant tax information for the purpose of expeditiously processing disaster victims’ loan applications. Reengineering the Disaster Loan Business Process Making financial underwriting decisions before the loss verification stage in the disaster loan process would significantly reduce unnecessary inspections and diminish the likelihood of future loss verification backlogs following catastrophic disasters. Currently, in cases where there is an absence of property to inspect following total destruction from a disaster, loss verifiers still conduct on-site loss verification inspections. In cases where there may be an absence of property to inspect following a disaster, SBA could use available technology and FEMA loss verification reports whenever practical in place of on-site loss verification inspections. Privatizing Disaster Loan Processing The disaster loan origination process could be changed to enlist the help of the private sector during catastrophic disasters. Note that the private sector often conducts the work of government, as in the case of the student loan program operated by banks. The downside in using private sector contractors is that they might cost more to employ than temporary federal employees. The presumption is that the efficiency gained by contracting with the private sector would make up for the cost differential. This is an open question, because the temporary disaster workforce is already drawn from the private sector. Additionally, contracting with the private sector may introduce more opportunities for fraud and abuse. In an effort to expand staff capacity and serve disaster loan borrowers expeditiously following a catastrophic event, SBA might pilot a disaster assistance program utilizing banks and other financial institutions to process, close, and disburse direct loans. SBA might conduct the pilot on a regional basis to establish procedures and identify areas of operational weakness, potential fraud, and greatest risk before implementing any full-fledged program to augment the origination of direct disaster loans by SBA officials, as at present, during a presidentially declared catastrophic disaster. Options for Supplementing the Reserve Corps Several options for supplementing the reserve corps workforce with volunteers or unpaid workers are perpetually under consideration by SBA, the Bush adminis-

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tration, Congress, and advocacy groups interested in disasters (see NAPA 2007). ODA might partner with SBA Small Business Development Centers (SBDC)10 or other nonprofit business assistance centers to employ their staffs as volunteers to assist in disasters. Other federal agencies engaging in similar work—any agency that processes loans would work—might be called upon to contribute staff as needed. Even SBA staff that do not normally work in disaster assistance might be asked to participate. These approaches all have merit, although they do pose problems in their own right for staffing disaster responses. In practice, volunteers from other organizations probably do not contribute enough workers to even put a dent in the surge. Volunteers, as is the case with those on the reserve corps list at present, might not be available to work or might not want to work for extended periods of time. Organizations lending volunteers to the disaster effort might not allow them to be away from their jobs for an extended period. ODA has not had good success in using volunteer workers from other parts of SBA to help out during disasters. Coordination and training pose major problems for ODA when it considers use of volunteers, especially as volunteers turn over and ODA procedures change. Tax and Other Incentives Tax Incentives Tax incentives are used widely to change individual and corporate behavior for the public good. Tax incentives could help maintain a more viable reserve corps list. Here is how the program could work. Reserve corps workers would receive either a tax credit or tax deduction for remaining active on the reservist list. Tax credits would be offered to those who are retired, unemployed, or not in the workforce—that is, they have no earned income for the tax year. Tax deductions would be offered to those who have earned income for the tax year. Tax credits or deductions would be tied to (1) the amount of time workers served on the list, (2) their annual earnings while on the list, and (3) whether they responded to a call-up for a disaster. Compensation through the tax code could be varied in amount depending on the three criteria above. Tax benefits would be capped at a level that provides a strong incentive to participate in the reserve corps. The longer the reservist remained on the reserve corps call-up list, the more tax benefits he or she would receive. This provision is included because volunteers tend to drop off the reserve corps list the longer they remain on it and are not utilized. Once a reservist completes work on a disaster for which they received a wage and received the appropriate tax benefits, they would start at the lowest (tax benefit) rate and then increase until the next disaster. This provision reduces the cost to the government of those who receive sufficient compensation to the point where they do not really want to remain on the list. Should a worker be unwilling or unable

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to participate in disaster work when called up from the reserves, they would not receive a tax benefit through the tax code for that year or previous years.11 This prevents people from signing up and then refusing to participate when called up in later years, and reduces the incentive for volunteers to sign up even when they do not intend to serve when called. Reservists may also be excluded from participation in future years if they have not served when called. Three other characteristics of the program include: • Benefits through the tax code should be equivalent for reservists regardless of whether a tax credit or tax deduction is used • Those with special skills should earn tax benefits at a higher rate • Tax benefits should accrue once ODA adds the reservist to the reserve corps Advantages of using the tax code to fund the reserve corps are several. First, funding would be relatively stable, not subject to vagaries in the appropriation process. Second, reservists would have a strong incentive to remain in the reserve corps and work disasters, creating a stable volunteer workforce. Third, ODA would have fewer coordinating responsibilities with other organizations, including keeping them up to date on process, procedure, and policy. Proposals to use the tax code to aid in disasters are under consideration at the local, state, and federal levels, and some have been legislated. Victims—although not disaster workers—of Katrina qualified for an Earned Income Tax Credit, demonstrating the use of the tax code in disasters. Representative Nita Lowey (D-NY) proposed giving tax credits to businesses that deployed employees during a disaster under the Assistance for Individuals Delivering for America Act of 2005. Senator Jay Rockefeller (D-WV), in the Community Security Act of 2004, proposed tax incentives to volunteer first responders and their employers. In a March 2004 report, Call to Action, the International Association of Fire Chiefs asked Congress to “provide national tax incentives for certified volunteer firefighters, reducing federal income tax by 3 percent annually.”12 The National Volunteer Fire Council (NVFC), in sponsoring the Supporting Emergency Responders Volunteer Efforts (SERVE) Act of 2005, asserted, The NVFC strongly supports the passage of the Supporting Emergency Responders Volunteer Efforts Act, which would provide a $1,000 annual tax credit for active members of volunteer fire and EMS organizations. A $1,000 tax credit for volunteer firefighters and EMS personnel can serve as an important recruitment and retention tool for local volunteer fire departments who are struggling to meet the increased demands placed on them. With the ranks of the volunteer fire service decreasing over 10 percent in the last 20 years, the federal government should provide a small incentive to these brave men and women who risk their life for little or no compensation to help reverse this trend. In fact, the cost of this tax incentive to the federal government would be quite small compared

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to the estimated $37.2 billion annual cost savings provided by the volunteer emergency services.

At the local level, some communities offer property tax abatements for volunteer first responders. National Guard Model Temporary workers and reservists may not have jobs to return to should they work a mega-disaster requiring their services for extended periods of time—a major disincentive to participate. One way to hold these workers harmless is to require employers to take them back following disaster work.13 This has several precedents. The National Guard more or less works this way for troops either called to active duty or working on state-level emergencies. Another instance is maternity leave. The clear disadvantage of such a policy is that it transfers the cost of disasters from the federal government to the private sector. Conclusion SBA learned a lot from its failed response to the Katrina and Rita mega-disasters. It is putting in place policies that should lead to more effective responses to future mega-disasters. Other factors contributing to failure are no longer issues, so should not affect the success of future responses. Is the reengineering of the disaster loan program sufficient to avoid future failures in addressing mega-disasters? No one knows for sure, because each disaster is different and the magnitude of the next mega-disasters is unknown. SBA efforts to date should go a long way in responding to Katrina-like events in the future. Unfortunately, the agency remains vulnerable while it continues to improve its operations. Thankfully, mega-disasters are rare. Some of the innovations under consideration by SBA to improve its surge capacity might be applicable to other agencies that need to surge in unanticipated ways—primarily FEMA and perhaps those who fight wildfires in the West. Policies and actions to consider include: • Reengineer business models to reduce workforce needs and rely on increased use of technology • Include the need to surge in program or agency transformation initiatives so as not to be caught by surprise • Expand use of volunteers • Enter into partnerships that include private sector enterprises and other agencies

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• Offer incentives to participate in a surge, and minimize negative effects for having participated Notes Results presented here do not necessarily reflect the views of NAPA as an institution, the NAPA panel that executed this study, SBA, or Congress. Any errors of commission or omission are the responsibility of the authors. We would like to thank Chairman Frank R. Wolf and Ranking Member Allan B. Mollohan on the House Appropriations Committee for supporting the study, and the SBA staff, Administrator Steven Preston, Associate Administrator Herbert Mitchell, External Affairs Liaison Becky Brantley, and Field Operations Supervisor Carlton Abbott, for their assistance in gathering information necessary for the study. 1. Details of the Hurricane Katrina mega-disaster and the multisector response are found in Brinkley (2007) and Cooper and Block (2006). 2. ODA was created in 1981 exclusively to manage disasters. 3. Some assume erroneously that because they are under SBA disaster loans must be exclusively a business recovery program. 4. Speech to the National Press Club, February 1, 2007. 5. See NAPA website at www.napawash.org for a profile of the organization. NAPA is a congressionally chartered independent nonprofit whose mission is to improve public management. 6. The panel included: Thomas Stanton, JD, an expert on government sponsored enterprises (GSEs); William Hamm, Managing Director of the Law and Economics Consulting Group; Bernard Kulik, JD, former Associate Administrator of SBA Disaster Loan Program; and John Shannon, former Acting Secretary of the Army. 7. A Disaster Recovery Center (DRC) is a readily accessible building, tent, or mobile office where people may go for information about FEMA or other disaster assistance ­programs. 8. See www.omb.gov for an overview of A-76 policy. 9. See NAPA 2007 and GAO 2007a for a review of other options. Also see Weiss 2007 for recent congressional legislative and oversight activity to improve the program. Congress has tried to improve the Reserve Corps concept in the Relief for Entrepreneurs Act of 2007. 10. Refer to SBDC program at http://www.sba.gov. 11. Tax benefits could also be calculated and awarded every six months, or at some other time interval, rather than annually. 12. See: http://forums.firehouse.com/showthread.php?t=62472 (accessed 1–02–08). 13. Some advocates have even called on government to reimburse employers to hire replacement workers when their employees volunteer for disaster work.

References Brinkley, Douglas. 2007. The Great Deluge. New York: Harper. Cooper, Christopher, and Robert Block. 2006. Disaster. New York: Times Books. Government Accountability Office (GAO). 2003. SBA: Response to September 11 Victims and Performance Measures for Disaster Lending. Washington: GAO, #03-385, January. ———. 2006. SBA: Actions Needed to Provide More Timely Disaster Assistance. Washington, DC: GAO, #06-860, February.

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———. 2007a. SBA: Response to the Gulf Coast Hurricanes Highlights Need for Enhanced Disaster Preparedness. Washington, DC: GAO, #07-484T, February. ———. 2007b. SBA: Additional Steps Needed to Enhance Agency Preparedness for Future Disasters. Washington, DC: GAO, #07-114, February. National Academy of Public Administration (NAPA). 2007. Preparing for Catastrophe: Management Review of the Disaster Assistance Program. Washington, DC: NAPA, June. Small Business Administration (SBA). 2007. Disaster Recovery Plan. Washington, DC: SBA, June 1. Available at http://www.sba.gov/idc/groups/public/documents/sba_homepage/ serv_da_disastr_recovery_plan.pdf (accessed 1–02–08). Weiss, N. Eric. 2007. Changes to the SBA Disaster Loan Program. Washington, DC: Congressional Research Service, RL34058, June 22.

Part 3 Transforming Organizational Culture

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7 The U.S. Government Accountability Office A Case Study in Human Capital Reform Honorable David M. Walker Comptroller General of the United States

Although the world has changed significantly in the past twenty years, we are poised to see even greater changes in the next twenty or thirty. To avoid irrelevancy, businesses, nonprofit entities, and federal agencies will all need to adapt to an accelerating pace of change. Transforming organizations to better meet the demands of the twenty-first century will require wholesale changes in several policy and operational areas, key among them human capital. This chapter examines how my agency, the U.S. Government Accountability Office (GAO) is attempting to lead by example in implementing human capital reforms. At the end of the nineteenth century, the original Dow Jones Industrial Average consisted of twelve stocks. These were all powerful companies, the leaders in their fields. Firms like National Lead, U.S. Rubber, and Tennessee Coal and Iron were the Microsofts and Wal-Marts of their day. It is sobering to realize only one of the original twelve Dow Jones companies survives today, and that is GE. The rest could not adapt to changing conditions and either merged with competitors or went out of business. Efficiency, effectiveness, and relevancy are just as critical in government operations. Today, the U.S. government faces a range of sustainability challenges on many fronts: fiscal, health care, energy, education, the environment, infrastructure, immigration, and the conflict in Iraq, to name a few. Many of these challenges are complex and long-term in nature. It will take a sustained effort over many years to address them. Unfortunately, our government has a poor track record in adapting to new conditions and meeting new challenges. Much of the federal government remains overly bureaucratic, hierarchical, myopic, and narrowly focused. Agencies continue to cling to outmoded organizational structures and strategies. They have also been slow to adopt best practices. Although a few agencies have begun to rethink their missions and operations, many federal policies, programs, processes, and procedures are hopelessly out of date as well as conflicting or contradictory. Hurricanes Katrina and Rita brought that point home in a painful way. The 77

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damage these storms inflicted on the Gulf Coast put all levels of government to the test. A few agencies, such as the Coast Guard, did a great job. Other agencies, the Federal Emergency Management Agency (FEMA) in particular, fell far short of expectations. This was especially disturbing given that as far back as the early 1990s, GAO reports have pointed out serious shortcomings in natural disaster preparedness. Public confidence in the ability of government to meet basic needs was severely shaken—and understandably so. If our government cannot handle known threats like natural disasters, it is only fair to wonder what other public services may be at risk. Another concern is that much of government is not aligned with modern needs. In fact, many federal programs and policies are geared toward social, economic, and national security conditions from the 1950s and 1960s. To remain relevant to the needs of current and future generations of Americans, our government needs to rethink what it does, how it does business, and who should do that business— federal workers, contractors, or some combination of the two. To capitalize on opportunities and minimize related risks, any organization, including the federal government, must be mindful of the big picture and consider the future. Entities that endure periodically rethink their missions and operations. They also tend to engage in continuous improvement. World-class organizations understand that innovation requires change. An organization that stands still today is going to get passed by and, ultimately, may not survive. Human capital reform must play a central role in the government’s overall transformation efforts. In both the public and private sectors, three factors are essential to maximizing performance and accountability: people, process, and technology. Of these, the most important by far is people. They define an organization’s character and are responsible for its achievements. Success or failure can depend on whom you hire and how you treat them. The central idea behind human capital theory is that employees are an asset whose value can be enhanced through investments in training, technology, incentives, and other areas. At the same time, human capital policies cannot exist in isolation. To be truly effective, they need to be linked to an organization’s mission, core values, vision for the future, and specific goals and objectives. The simple truth is that effective government requires a first-rate workforce. Given the scope and breadth of the federal government—arguably the largest, the most diverse, and most complex entity on earth—we can afford nothing less than top talent in key government posts. In the modern era, civil servants must be able to identify the risks associated with both old and new problems and develop innovative solutions to mitigate risk. These individuals also need to be committed to the greater good and able to show others the way forward. A strong sense of stewardship is vital. We need more men and women in government who are committed to leaving things better off and better positioned for the future. Unfortunately, too many federal agencies lack enough people with the right

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skills and the right attitude. In addition, the civil service is aging: large numbers of federal executives and managers are expected to retire in the coming years. Many of them are part of the so-called JFK generation, which answered our thirty-fifth president’s call to “ask not what your country can do for you—ask what you can do for your country.” Despite these demographic trends, few agencies have succession plans in place. The traditional approach of planning for the succession of one person against one particular position is inadequate given the volume of turnover, particularly in the leadership ranks. World-class organizations now find that they need to plan for, recruit, train, and develop pools of cohorts of qualified candidates for succession to ensure they have a good mix of talent to fill vacancies as they arise. At the same time, the government faces stiff competition for top talent. Soughtafter prospective hires can be highly selective when it comes to job offers. In my view, federal positions can be attractive if they offer opportunities to do meaningful work that is recognized and rewarded. In so many areas—recruiting, training, and development, job classification, pay and benefits, and employee empowerment—the federal government lags behind other sectors. Many federal personnel practices date back to the 1940s and 1950s. For example, government organizations are often very hierarchical, and the prevailing General Schedule (GS) pay scale tends to reward time in grade rather than performance on the job (see Thompson and Seidner, chapter 11 for a discussion of the issue). Moreover, the hiring process for many federal jobs can be incredibly lengthy. Clearly, government needs to be treating human capital as a strategic issue. Unfortunately, human capital has been missing from most agency efforts to deliver a more results-oriented and accountable federal government. Federal departments have typically glossed over workforce planning and rarely mention it in their mission strategies. A growing human capital crisis now threatens the ability of some agencies to carry out their missions. The situation is so serious that GAO added “strategic human capital management” to its list of high-risk government areas in 2001. Government workers are not the problem. It is the absence of strategic planning, the continued use of outdated personnel policies and practices, and the frequent turnover in top federal leadership that have gotten us where we are today. The truth is that meaningful government transformation will occur only when government leaders view federal employees as an asset to be developed rather than a cost to be cut. Although broad-based civil service reform may not be at the top of the legislative agenda at the moment, its time is coming. In the meantime, Congress has provided selected agencies, including GAO, with greater flexibility to address their human capital needs. So far, GAO has instituted a broad range of fundamental human capital reforms, some based on legislation, others administrative in nature. The effort to revise our personnel practices actually dates back more than

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twenty-five years. Until 1980, our personnel system was indistinguishable from those of executive branch agencies—that is, GAO was subject to the same laws, regulations, and policies as they were. With the expansion of GAO’s role in congressional oversight of federal agencies and programs, however, concerns grew about the potential for conflicts of interest. Could GAO conduct independent and objective reviews of executive branch agencies, such as the Office of Personnel Management, when these agencies had the authority to review GAO’s internal personnel activities? As a result, GAO worked with Congress to pass the GAO Personnel Act of 1980, whose main thrust was to make GAO’s personnel system more independent of the executive branch. Along with this independence, the act gave GAO some greater flexibility in hiring and managing its workforce. It gave the comptroller general the authority to appoint, promote, and assign employees without regard to certain executive branch requirements found in Title 5. The act also set employees’ pay without regard to the GS scale and established a merit pay system. By exempting our agency from these requirements, the GAO Personnel Act of 1980 allowed us to pursue some significant innovations in managing our people. One key innovation was the establishment of a “paybanding” approach to classifying GAO’s analyst and attorney workforces, along with the adoption in 1989 of a pay-for-performance system for these same employees (see also Thompson and Seidner, chapter 11). These changes did not affect GAO’s continued commitment to federal merit principles, protection from prohibited personnel practices, and the application of veterans’ preference in a manner consistent with the executive branch. In addition, GAO is covered by Title VII of the Civil Rights Act, which forbids employment discrimination. GAO takes pride in its diverse workforce and maintains a policy of zero tolerance for discrimination of any kind. When I first came to GAO in 1998, I found an agency that had recently experienced a major downsizing over a several-year period. From fiscal year 1992 through fiscal year 1998, GAO saw its workforce reduced by 39 percent—from 5,325 to 3,245 employees. To cope with mandated budget cuts, GAO had run a reduction in force that involved cuts at headquarters and the closing of several field offices. The agency also froze hiring; eliminated performance rewards; curtailed travel, supplies, and other support costs; and scaled back investments in training and technology. As a result, GAO faced a number of critical human capital, information technology (IT), and work process challenges. In particular, GAO’s workforce was seriously out of shape. It had a dearth of younger workers, and it was top-heavy with mid- and upper-level employees (see Table 7.1). The lack of recruitment and investment in GAO staff had produced a serious skills imbalance that threatened the agency’s long-term viability. As a result, with Congress’s approval and input from its employees, GAO began to undertake a range of comprehensive human capital initiatives to enhance our ability to recruit and retain a first-rate workforce. In 2000, Congress authorized additional human capital flexibilities for GAO. In addition to giving GAO the authority

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Table 7.1 GAO Shape Chart FY 1998 and FY 2007

Senior Executive Service/Senior Level Analyst band III Analyst band II Analyst band I Attorney Admin & professional support (APSS)

FY 1998 (Actual %)

FY 2007 (Actual %)

3.9 12.4 46.1 13.2 3.5 20.9

4.0 14.0 41.8 18.0 4.5 17.7

Note: Profiles represent staffing at the end of each fiscal year.

the establish senior-level positions to provide critical scientific, professional, and technical expertise, the law also made performance the most important criterion in the event GAO needed to carry out a workforce restructuring. The legislation also authorized a three-year pilot program at GAO that gave the agency specific tools, such as voluntary early retirements, to help it rightsize its workforce and bring in new knowledge and skills. Further flexibilities were authorized by the GAO Human Capital Reform Act of 2004, which made permanent the temporary authorities authorized in 2000. This legislation also eliminated the long-standing requirement that GAO give all employees automatic annual pay increases regardless of performance. Under the act, GAO also began to move to a more performance- and markedbased pay system. Today, annual pay raises at GAO are tied more closely to performance appraisal ratings. Employees whose performance is satisfactory and who are not paid above competitive compensation ceilings receive an annual salary adjustment determined by the comptroller general. Additional compensation depends directly on a person’s individual performance as compared to their peer group. GAO also hired a leading consulting firm to assist in developing competitive salary ranges for all our job series based on surveys of public, private, and nonprofit organizations with whom GAO competes for talent. Job responsibilities and pay ranges at GAO are now classified according to an employee’s roles and responsibilities and market-based conditions. GAO is among the first, if not the first, federal agencies to adopt such a job classification and pay system for its permanent employees on an agency-wide basis. The act also gave GAO greater flexibility to reimburse employees for relocation costs and to provide key employees with less than three years of federal service additional annual leave. In addition, the act established an executive exchange program at GAO to allow us to tap into knowledge and experience in the private sector. In my view, more agencies need to be more open to the idea of partnering

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with other federal entities and with businesses and nonprofit groups to address issues of common interest and concern. Over the years, we have also adopted many best practices to help make GAO an employer of choice. For example, to help our employees better balance the demands of work and home, GAO provides flexible work schedules and telecommuting. In our Washington, D.C. headquarters, GAO provides an on-site childcare facility and a fitness center. GAO has also made it a priority to recruit aggressively at select colleges and universities. Thanks to these efforts, and the use of student loan repayment authorities and our first-rate training and development programs, GAO has been able to attract and retain a first-class workforce. As a result, our workforce now has the right mix of knowledge, skills, and ability. Through its efforts to acquire, develop, and retain staff, GAO has assembled a diverse and inclusive workforce, which I believe gives the agency a competitive advantage both in attracting top talent and achieving our strategic goals and objectives. To give our staff the tools they need to get the job done, GAO continually invests in new computer hardware and software. In fact, for the third year in a row, CIO magazine rated GAO among the top 100 public, private, and nonprofit organizations nationwide in IT management. Likewise, more and more of the agency’s support services are being automated. Employee-benefit as well as time-and-attendance systems are now automated, and all GAO employees have online access to nearly 1,000 training classes. As part of our commitment to investing in our workforce, GAO has also made life-long learning a priority. We have tried to foster an environment that values education. GAO has a chief learning officer who oversees our in-house training center. That facility offers a wide range of classes to keep our employees up to date on the latest professional trends and skills. We also offer opportunities for outside training. Our approach to learning blends core analytic skills, professional development courses, and a leadership program. GAO supports voluntary communities of practice throughout the organization to enable staff in similar roles, or those that have common interests, to regularly dialogue across teams. GAO has made a sustained effort to provide both on-demand and scheduled learning opportunities at each stage of an employee’s career, with particular attention to people’s needs as they move from one level of responsibility to another. At all levels of GAO, staff development is emphasized. All new hires are enrolled in our professional development program. As part of our executive candidate development programs, we encourage our new executives to attend the Senior Management in Government Program at Harvard’s Kennedy School of Government or a comparable program. We have that found this is an excellent way for our people to gain exposure to various leadership styles and concepts and improve the ability to solve problems and manage change. In 2007, we launched our first GAO-wide mentoring program linking senior and

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junior employees according to shared interests and specific developmental goals. This is an informal adjunct to the centralized training and coaching that occurs on the job as part of our normal work. For many years, GAO’s workforce has been predominately professional, and that is still the case today. We count among our 3,100-plus employees economists, social scientists, writers, attorneys, and accountants as well as specialists in areas ranging from national defense to health care. The difference today, with our greater focus on human capital, is that old institutional divisions within the agency have given way to a more inclusive and participatory approach to making decisions and staffing jobs. A particular assignment may have input from staff across the agency—seasoned employees with institutional memory, mid-level hires who have worked at other government agencies or in private industry, and younger workers with fresh perspectives and cutting-edge skills. We have also undertaken a number of employee empowerment initiatives. Among other things, GAO conducts annual electronic employee feedback surveys on key issues. We’ve also established employee suggestion and rewards programs and an elected Employee Advisory Council to advise top management on employee concerns. Piece by piece, GAO has built a modern human capital system that is credible, equitable, affordable, sustainable, and linked to the goals in our strategic plan. In the final analysis, all these initiatives are designed to help GAO better support Congress and serve our country. I am always mindful that GAO is in the information business, and any GAO report is only as good as the people who worked on it. Not all of our human capital changes have been easy—or without controversy. Obviously, reforms that affect an employee’s pay and job classification tend to be very controversial. This is particularly true in a workforce like GAO’s, which is highly educated and, by training, highly skeptical. Even so, the overall result of GAO’s many human capital initiatives has been improved performance, greater employee job satisfaction, and more effective use of GAO’s resources. Feedback has been overwhelmingly positive. In fact, the Partnership for Public Service recently ranked GAO second on its list of the best places to work in the federal government. Today, GAO is not only better equipped to tackle Congress’s toughest assignments; it is also better prepared for the future. A report issued in 2005 by the IBM Center for the Business of Government was similarly complimentary, concluding that GAO had successfully used human capital management as part of its broader organizational transformation efforts. The report said that “other agencies would do well to heed the lessons of the federal government’s chief accountability office as they go about the critical work of reinventing their own personnel systems. . . .” Although acknowledging that the GAO model may be less useful for some executive branch departments, such as those that are significantly larger, structured differently, and have multiple or diverse missions, the report noted five lessons from GAO that had applications across government: “the need to move cautiously when pushing major change; the need for strong

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workforce planning; the need to emphasize more targeted recruitment, hiring, and retention policies; the need to beef up investments in systems for the selection and training of managers; and the need for a fair, unbiased, and transparent system for employee appeals.” In addition to human capital changes, we have also undertaken other efforts to transform how we do business. One of the first initiatives we undertook after I arrived at GAO in 1998 was to develop a strategic plan. We issued our first plan in early 2000, and we have updated it periodically to reflect changing congressional needs and national priorities. Our most recent update was issued in April 2007. Any organization, whether it is a Fortune 500 company or a federal agency, needs to be able to identify what is going on around it, decide what really matters, and act on those issues in a timely manner. GAO’s strategic plan defines our mission, lays out the key trends and themes that GAO will focus on, and outlines the agency’s goals and objectives. GAO’s own strategic goals are ambitious but straightforward. First, we seek to produce positive and measurable benefits for Congress and the American people. Second, we try to meet the needs of our congressional clients. Third, we want to help reinvent government so that it continues to meet the needs of its citizens. Finally, GAO aspires to become a model federal agency and a worldclass professional services organization. With the strategic plan in place, we reassessed our organizational structure and resource allocations. In 2001, we trimmed our organizational units from thirty-five to thirteen, reduced the number of field offices from sixteen to eleven, eliminated an entire management layer, redistributed resources, and encouraged internal teamwork and external partnerships. The strategic plan is also a touchstone for our budgeting and spending decisions. People, dollars, and technology are consistently allocated with an eye toward GAO’s overall goals. We have also changed how we keep score to focus on results. Achieving positive, measurable results has been central to GAO’s transformation efforts. Since 2000, GAO has issued annual performance and accountability reports that inform Congress and the American people about GAO’s accomplishments and its plans for the coming year. For example, in 2006 GAO’s work produced a record $51 billion in financial benefits. That is a $105 return on every dollar invested in GAO. We also reported significant nonfinancial accomplishments. In our view, this type of straightforward agency performance measurement and cost/ benefit reporting needs to become standard throughout government. Another key lesson from GAO’s experience is the importance of managing change. Top management must be willing to tap into the ideas of rank-and-file employees. Obviously, the people on the front lines often have the best sense of what is working, what needs to be fixed, and how things can be improved. In the case of the federal government, civil servants are uniquely positioned to help realign programs, eliminate inefficiencies, and fine-tune federal services. A successful leader, or “change agent,” should gather the best available infor-

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mation from every level of his or her organization before making decisions. At the same time, leaders must ultimately make decisions on the basis of what they think is right for today and tomorrow—even though they may not be popular. Agency leaders need to effectively communicate key institutional decisions and the reasons for them. Agency leaders should go out of their way to both inform and empower their employees. As part of their stewardship responsibility, they also need to mentor those who will follow in their footsteps. At GAO, we want our employees to have input into the changes that are taking place and the direction in which GAO is headed. We have established an elected twenty-two-member Employee Advisory Council (EAC) to meet with top management once a quarter to discuss issues of mutual interest and concern. GAO also regularly solicits employee feedback on all aspects of the agency’s operations as well as proposed new policies. Listening and responding to employees’ concerns and comments is particularly important during a time of change. As comptroller general, I make it a point to talk on a regular basis to all GAO employees via live broadcasts over our inhouse television system. During my remarks, which are known as “comptroller general chats,” I make it a point to address various transformation issues as well as external developments that may affect the agency. Importantly, I also answer questions from EAC representatives based on comments they have received from GAO employees. Transforming government will not happen overnight. Success depends on sustained leadership that transcends the efforts of a single person or a single administration. Public officials will also need to partner with other federal agencies, businesses, universities, and nonprofit groups, both domestically and internationally. The bottom line: we can succeed with enlightened and sustained leadership. GAO is proof that dramatic and fundamental human capital reform is both desirable and achievable in the federal government. In fact, many of our efforts are transferable and scalable. I am convinced that, in time, every department and agency will have to consider the types of changes GAO has undertaken. My hope is that other federal agencies, as well as entities outside of government, can learn from our experience and apply what is useful to their own circumstances.

8 Strategic Human Capital Management in Federal Government Principles, Strategies, and the Case of NASA Elwood F. Holton III, Sean C. O’Keefe, Vicki A. Novak, and David M. Walker

Human resource management (HRM) practices in the federal government have undergone a revolution that began in the mid-1990s and continues today. Commonly called strategic human capital management (SHCM), this revolution has paralleled a similar one in the private sector. Federal human resource (HR) officers are now called on to be strategic partners critical to accomplishing organizational objectives rather than administrative gatekeepers. Today, HR professionals in the public sector are called on to perform radically different roles demanding radically different competencies (NAPA 2001). This chapter presents an overview of SHCM, especially in the federal government. First, we will review some of the key theories and studies in the academic literature. Second, we will discuss the development of SHCM in the federal government, including an overview of key concepts and models that have emerged. Third, we will discuss the implementation of SHCM at the National Aeronautics and Space Administration (NASA), which was the first executive branch agency to receive a “green” rating (the highest rating) from the Office of Management and Budget (OMB) for meeting the standards of the President’s Management Agenda (PMA). Finally, we will discuss the implications of a strategic approach for HR professionals. Theoretical and Research Foundations for SHCM In this section we begin our discussion of SHCM by looking at three streams of theory and research: HRM, human capital, and intellectual capital. Strategic Human Resource Management The strategic approach to human capital/resource management has dominated the research agenda in HRM since the early 1980s. The origin of the strategic 86

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approach is often traced to an article by Devanna, Fombrun, and Tichy (1981) in which the authors talked about HR operating at three levels: strategic, managerial, and operational, noting, “Only a handful of U.S. organizations approach HRM in any systematic way at the strategic level” (54). They went on to call for a closer integration of HR with business strategic planning and the integration of HR functions in order to have greater impact on organizational outcomes. Throughout the 1980s and early 1990s, academicians continued to refine the theoretical perspectives for SHRM (Schuler and McMillan 1984; Miles and Snow 1984; Schuler and Jackson 1987; Lengnick-Hall and Lengnick-Hall 1988; Baird and Meshoulam 1988; Schuler 1990; Wright and Snell 1991; Donk and Esser 1992; Schuler 1992). What was at first a practice-based perspective became entrenched in the academic literature. Several themes emerged in the literature. One, of course, was simply to define what was meant by SHRM. A commonly used definition emerged in Wright and McMahan (1992), which stated, “[SHRM] is the pattern of planned HR deployments and activities intended to enable an organization to achieve its goals” (298). This definition had two implications: • there must be a vertical linkage between HR practices and the strategic management process of the organization • it is the coordination of HR practices into a pattern of actions that will best support organizational goals These themes have dominated the literature on strategic HRM and continue to do so to this day. Academicians ground SHRM in what is called the resource-based view of the organization (Colbert 2004; Lado and Wilson 1994; Prahalad and Hamel 1990; Wright and McMahan 1992; Wernerfelt 1995). In the resource-based view, organizations can gain effectiveness and competitive advantage by capitalizing on the strengths and capabilities of their internal resources, including HR competencies. In the private sector, the push is to create internal capabilities that are unique and not easily copied by other companies. Fundamental to SHRM is the resource-based premise that in any organization, HR can add value to the organization’s strategy rather than simply being a cost of doing business. Thus, the competency and capability of an organization’s people can be a strategic advantage. Empirical Research on Strategic Human Resource Management As the 1990s unfolded, researchers began to undertake the challenge of empirically testing whether HR systems do influence organizational performance—a quest that continues today. While individual HR practices had long been researched, what was unique about this was that it (a) examined HR practices jointly as a system, and (b) used organizational performance as outcomes. Much of the seminal work in this area focused on a constellation of what are called

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“high-performance work systems” or HPWS. Such systems are “generally thought to include rigorous recruitment and selection procedures, performance-contingent incentive compensation, and management development and training activities linked to the needs of the business” (Becker et al. 1997, 10). This approach was often referred to as the universalistic view of HR (Delery and Doty 1996) in that it posited a set of best practices that should be employed by all HR organizations. An impressive body of research emerged showing that HR practices do contribute to organizational performance (see, for example, Becker and Huselid 1998; Huselid 1995; Huselid, Jackson, and Schuler 1997; Youndt and Snell 2004). Although research was conducted in the private sector—due to the readily available performance measures—it nonetheless is important to the public sector because it demonstrated the link between HR practices and strategic outcomes of the organization. In addition, it reinforced the theoretical view that HR practices operate best when they are aligned as a system. Becker and Huselid’s (1998) work showed three stages of HR sophistication: (1) initially developing an HR architecture, (2) developing operational effectiveness, and (3) aligning the HR system with the firm’s strategic goals. Moving from stage 2 to stage 3 resulted in a significant increase in the market value of the firm. Human Capital Theory Underlying the notion of HR as a key resource for the organization is human capital (HC) theory. HC theory suggests that investment in people results in economic benefits for individuals, organizations, and society as a whole (Sweetland 1996). Schultz (1993) listed several critical attributes: (1) HC cannot be separated from the person who has it; (2) HC is to be had by investing in people; (3) HC is related to economic growth. Together these attributes emphasize the importance of investing in people and increasing their knowledge and education levels. HC theory focuses on the educational level of employees as a source of labor productivity and economic growth (Becker 1993; Schultz 1961). One of the most influential theoretical concepts of HC theory is the distinction between general and specific training and knowledge (Becker 1960). General HC refers to overall education and practical experience, while specific HC refers to education and experience with a scope of application limited to a particular activity or organization (Gimeno et al. 1997; Lazear 1998). Organization-specific training guarantees the sustainability of HC because employees with such knowledge and skills may be more valuable to the organization due to their organization-specific knowledge. These are the employees that contribute to the core competence of the organization and provide competitive advantage. These competencies are the hardest to replace. Schultz (1961) defined HC as the knowledge and skills people acquire during education and training, saying that this capital is a result of deliberate investment that yields returns. HC means investing in both formal and informal education and training, which enhances individual productivity by providing knowledge, skills, and attitudes necessary for economic and social development (Psacharopoulos and

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Woodhall 1985). Fitz-enz (2000) offers a more modern definition of HC as traits one brings to the job: intelligence, fulfilling work energy, positive attitude, reliability and commitment, ability to learn, imagination, and creativity. When a firm invests in HC, three outcomes occur. At the individual level the investment results in increased knowledge, skills, and abilities, which leads to individual development and growth. At the organizational level the investment results in better performance and productivity. Finally, at the societal level better educated and developed individuals and highly productive organizations result in cultural and economic growth and prosperous communities. HC cannot be owned by the organization, making it distinct from any other form of capital. After all, an organization’s HC can walk out the door at any time. Despite the firm’s inability to own HC, it is imperative that it capitalize on it. What differentiates one organization from another—and makes one more effective than another—is not its fixed assets but how much knowledge, innovation, and creativity it can obtain from its people (Burud and Tumolo 2004). Everything starts from investments in organization-specific skills and knowledge training. Intellectual Capital Strategic HC implies benefits for organizations in terms of organization-specific knowledge linked to strategic goals. Since the 1990s, however, HC and its implications for organizations has been broadened to include intellectual capital. The latter is a much broader notion and encompasses organizational tangible and intangible resources. Intellectual capital was first defined by Thomas Stewart in 1998 as the sum of everything people know that gives competitive advantage to the organization. Clearly this definition is similar to that for strategic HC. However, according to Edvinsson and Malone (1997), intellectual capital has three components: HC, social capital, and structural capital. HC is the skills and knowledge acquired by an individual. Social capital is defined in terms of the nature of relations between organizational members. Such relations create complex systems, referred to as social networks (see Wooley, chapter 10, on social networks). Structural capital represents the organizational processes and mechanisms—including culture—that embody the organization’s prior learning. Thus, it is the combined knowledge, innovation, skills, and ability of the company’s employees to meet the task at hand, along with the organization’s values, culture, and philosophy that result in maximum performance. Organizations must not only invest in developing their HC, but must also create work environments enabling employees’ talent to flourish. Public Sector SHRM Research and Theory SHRM has also received attention in the public sector research literature. McGregor (1988) made a critical distinction when he talked of two levels of SHRM in the public sector. At one level, he called for HRM to be more aligned

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with the strategic plans of an agency. At a second level, he noted that HR is the resource upon which agency productivity depends. Thus, HC is a strategic resource, which he called strategic management of a strategic resource—a theme that has driven most of federal HR reform. Public sector literature has paralleled the general HR literature in its definition of SHRM (Hays and Kearney 2001; Klingner 1993; Mesch, Perry, and Wise 1995; Tompkins 2002). What is distinctive about the public sector research is the recognition that HR organizations face special challenges in transitioning to strategic partners. As Klingner (1993) explains, public sector HRM has been dominated by concerns about balancing political forces with merit principles designed to protect employee rights. In contrast, SHRM presses for efficiency and responsiveness to organizational goals. These contradicting forces represent rather fundamental changes in public HRM that are more complicated than those faced by the private sector. Mesch, Perry, and Wise (1995) characterize these as the bureaucratic versus strategic models. In the bureaucratic model of HRM, which had dominated the public sector, “the primary focus is to protect the integrity of the process, which is seen as fundamental to limiting inequitable treatment in the employment relationship or unfairness in the distribution of rewards” (389). It creates hierarchical, centralized, uniform HRM to ensure consistency across agencies. In contrast, the strategic model emphasizes decentralization and flexibility in authority. Excessive rules and regulations are to be reduced in order to enable managers to act in the best way possible to achieve organizational goals. This literature does not suggest that reform is impossible, but it does highlight the magnitude of the culture change that has been ongoing. In general, HR organizations across organizations have had to learn to be better business partners, but the challenges have been greater in changing the culture of the federal HR system. As the Government Accountability Office (GAO) noted in 1995, “the ‘one-sizefits-all’ approach to managing people was deeply rooted in achieving pay equity across government, reducing competition among agencies, and gaining efficiency and savings through economies of scale” (11). But, these principles, however well intentioned, had become a barrier to creating high-performance organizations. Fortunately, the last decade has showed that barriers in the existing civil service system were to some extent just perceived barriers. While some reforms had to be made through changes in laws, a number of reports have shown that more flexibility existed in the system than was perceived and considerable movement toward SHCM was possible within the existing system (see for example GAO 1995, 1998; NAPA 2000; OPM 1999). Current Theory and Research Despite the empirical success of this line of research, there has been a distinct movement in the literature away from the universalistic best practice view of HR systems to a contingency or fit perspective (Delery and Doty 1996; Becker and Huselid

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2006; Colbert 2004). In this view, it is the fit between an organization’s strategy and the HR practices that drives performance. While this line of thinking is not new (Lengnick-Hall and Lengnick-Hall 1988), it has gained increasing importance as organizations have explored the best-practice approach to HR. Best practices are still important, but how they are bundled together depends on the unique needs of the organization’s strategy. Thus, we can expect to find different organizations employing different HR systems depending on elements such as environmental conditions, organizational strategy, organizational life cycle, competitive pressures, labor market conditions, and so forth. The current challenge, then, is to define the nature of the contingencies. That is, which types of HR systems are the best fit for different constellations of strategic contingencies (Becker and Huselid 2006; Ferris et al. 2004)? Practitioners inherently understand that different HR practices are called for in different organizational contexts, but defining the exact nature of the fit remains a challenge for researchers and practitioners. The Evolution of SHCM in Federal Government This section traces the evolution of thought and models for SHCM in federal government. This overview is offered in part so that readers can understand the historical evolution of the principles and models and their alignment with the general SHRM theory. In addition, it is important to embrace not only the current models in use, but also the underlying concepts and principles that are now embodied in federal regulations and law. As will be seen, the evolution of thinking is completely consistent with the SHRM literature and embodies all the key concepts discussed in the previous section. The Roots of the Federal Human Capital Revolution The revolution of federal HRM has been unfolding since the mid-1980s, though it has been most noticeable beginning in 2000. Table 8.1 summarizes some key milestones in the history of HRM reform in federal government. This list is not intended to be comprehensive, but rather representative of what has been a multipronged effort by the GAO, OPM, NAPA, OMB, Congress, and others to change the way federal government manages its workforce. Implementation of SHRM first requires that organizations be strategic and focused on results. Thus, the seeds of the revolution in federal HRM have to be traced to the Government Performance and Results Act (GPRA) in 1993. This act demanded a new level of results orientation and accountability in federal agencies. Without this new strategic orientation, the recasting of federal HRM into a strategic partner would not have been possible. GPRA also requires agencies to incorporate an HC plan into their annual plans. The Reinventing Human Resource Management (NPR 1993) report summarized HR at that time:

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Table 8.1 Key Milestones in Federal Strategic Human Capital Reform Sowing the Seeds of Change 1989 1993 1993 December 1995 June 1996 July 1998 September 1998 December 1999

The National Commission on the Public Service (The Volcker Commission) releases “Leadership for America: Rebuilding the Public Service” Congress: Government Performance and Results Act (GPRA) passed Office of the Vice-President—“National Performance Review: Reinventing Human Resource Management” GAO: “Transforming the Civil Service: Building the Workforce of the Future” NAPA: “A Guide for Effective Strategic Management of Human Resources” (NAPA 1996a) and “A Competency Model for Human Resources Professionals” (NAPA 1996b) released GAO releases “Management Reform: Agencies Initial Efforts to Restructure Personnel Operations” OPM: Office of Merit Systems Oversight and Effectiveness releases “Strategic Human Resources Management: Aligning with the Mission” report NAPA releases “Success Building the Workforce of the Future to Achieve Organizational Success”

Strategic Human Resource Management Reform January 2000 GAO releases “Human Capital: Key Principles from Nine Private Sector Organizations” July 2000 NAPA releases “The Case for Transforming Public Sector Human Resources Management” October 2000 Congress: Report of Senator Fred Thompson, Chairman, Committee on Governmental Affairs, “Management Challenges Facing the New Administration, Part 2: Federal Workforce Challenges” December Congress: “Report to the President: The Crisis in Human Capital,” 2000 issued by Senator George V. Voinivich, Chairman, Subcommittee on Oversight of Government Management, Restructuring, and the District of Columbia January 2001 GAO declares strategic human capital as a “high risk” area of government management March 2001 NAPA releases “Changes in the Human Resources Function since 1996: Implications for HR Competencies” Summer 2001 President’s Management Agenda released with Strategic Human Capital Management as one of five government-wide initiatives October 2001 OMB releases standards of success for five government-wide initiatives in the PMA October 2001 Congress: Managerial Flexibility Act passed December OPM releases human capital balanced scorecard to accomplish OMB 2001 guidelines March 2002 GAO releases “A Model for Strategic Human Capital Management” 2002 Chief Human Capital Officers Act passed by Congress October 2002 OPM releases Human Capital Assessment and Accountability Framework (jointly developed by OMB, GAO, and OPM)

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Today, the system’s functional operating components present a burdensome array of barriers and obstacles to effective HRM. Hiring is complex and rule-bound; managers can’t explain to applicants how to get federal jobs. The classification and pay systems are inflexible. The performance management system is not adequately linked to the organization’s mission and goals. The labor relations program is adversarial. The federal workplace is not family-friendly, with its overly restrictive leave practices and limited implementation of available programs. Diversity programs are fragmented, and affirmative employment planning and reporting processes are duplicative and resource-intensive. Agencies see little value in the efforts of central guidance agencies to monitor and control their activities.

In 1995, the then General Accounting Office, now the Government Accountability Office (GAO), issued a report, “Transforming the Civil Service: Building the Workforce of the Future,” to document the results of a symposium they held involving public and private leaders. The pressures for change are evident in that report: To remain viable in today’s demanding environment, public and private sector organizations alike must improve their performance while holding the line on costs. This is nowhere more apparent than among federal agencies, where pressure is mounting for a government that works better, costs less, and employs a smaller and more efficient workforce. The necessity to improve performance in the face of steady or declining resources has led some organizations, both here and in other countries, to make radical changes in the way they manage people. These organizations have begun changing both their traditional organizational structures and the approaches they have taken to managing their employees. In place of centralized, hierarchical, rule-based systems, they are creating decentralized, flatter, more flexible arrangements. And in place of highly detailed rules to manage their employees, they are relying increasingly on a well-defined mission, a clearly articulated vision, and a coherent organizational culture to form the foundation for the key business systems and processes they use to ensure the successful outcome of their operations. Recognizing that people are central to any organization’s success, these organizations give their managers greater prerogatives to manage and their employees greater opportunities to participate in the decisions that affect them and their work.

NAPA joined this call for a new approach in 1996, in its report “A Guide for Effective Strategic Management of Human Resources,” stating (NAPA 1996a): Downsizing, reengineering, restructuring—they jump off the front page of the newspaper, are discussed on the evening news, and appear in the titles of articles in business and human resource journals. Differences in the management of organizations—public, private, foreign, domestic—are blurring as they face the same forces of change. Many successful companies and several foreign governments have responded to these pressures by adopting a new management tool, which merges strategic planning and HRM. This merger has resulted in a new name to describe the process: Strategic Human Resources Management (SHRM). This management process results from the recognition that mission accomplishment depends upon an organization’s HR.

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Table 8.2 Strategic Human Capital in the President’s Management Agenda The Expected Near-Term Results • Human capital strategies will be linked to organizational mission, vision, core values, goals, and objectives. • Agencies will use strategic workforce planning and flexible tools to recruit, retrain, and reward employees and develop a high-performing workforce. • Agencies will determine their “core competencies” and decide whether to build internal capacity, or contract for services from the private sector. This will maximize agencies’ flexibility in getting the job done effectively and efficiently. • The statutory framework will be in place to make it easier to attract and retain the right people, in the right places, at the right time. The Expected Long-Term Results • Citizens will recognize improved service and performance, and citizen satisfaction will increase. • Agencies will build, sustain, and effectively deploy the skilled, knowledgeable, diverse, and high-performing workforce needed to meet the current and emerging needs of government and its citizens. • The workforce will adapt quickly in size, composition, and competencies to accommodate changes in mission, technology, and labor markets. • Government employee satisfaction will increase.

Source: OMB (2001).

HC issues continued to intensify during the late 1990s (e.g., GAO 1998; NAPA 1999). In January 2001, the GAO placed SHCM on its list of government-wide high-risk areas, stating: [w]e have determined that one new area—SHCM—merits designation as a government wide high-risk. While legislation and other actions have been put in place since 1990 to address most major management areas, the government’s approach to managing its people—its HC—is the critical missing link in reforming and modernizing the federal government’s management practices. Many agencies are experiencing serious HC challenges, such as skills imbalances, succession planning challenges, outdated performance management systems, and understaffing. The combined effect of these challenges serves to place at risk the ability of agencies to efficiently, economically, and effectively accomplish their missions, manage critical programs, and adequately serve the American people both now and in the future. To a significant extent, serious management challenges across a wide range of federal agencies, covering programs that involve billions of federal expenditures, can be attributed to shortcomings in how agencies manage their HC. (GAO 2001, 11)

This clarion call was quickly followed by President George W. Bush, who placed HC management number one on the PMA. Table 8.2 shows the expectations in the

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PMA that would guide federal HR reform. Reflecting back to our earlier discussion of SHRM theory, one can quickly see that this was a classic call for SHRM. Operationalizing SHCM in Federal Government The years following the release of the PMA were focused on operationalizing SHCM within federal government. It is important to realize that at the point the PMA was released, the reform efforts were being driven from GAO, OMB, and OPM, as well as Congress. Thus, there was a period lasting until October 2002 during which there were multiple models and criteria in existence. Each made important contributions to the unified framework that ultimately emerged. Government Accountability Office GAO’s efforts to operationalize a model of SHCM began in earnest with the release of key principles it distilled from exemplary private sector organizations (GAO 2000a) (see Table 8.3). Although released prior to declaring SHCM as “high risk,” they nonetheless set the conceptual foundation upon which future models would be built. Shortly thereafter GAO released “Human Capital: A Self-assessment Checklist for Agency Leaders” as a first step for agencies to become HC organizations consistent with the ten principles (GAO 2000b). Quite importantly, they defined two foundational principles of HC management that were quite consistent with the theory discussed earlier: (a) that people are assets whose value can be enhanced through investment, and (b) that an organization’s HC policies must be aligned to support the organization’s shared vision (GAO 2002b, 1–2). As will be seen in the next section, it is this philosophy and self-assessment process that was used in the beginning of NASA’s HC planning. GAO (2002) extended their work and released “A Model for Strategic Human Capital Management.” In this model (see Table 8.4) they identified four HC cornerstones and eight critical success factors. This model is a strong fit with the general strategic HC literature and is quite consistent with the “fit” approach to SHRM discussed earlier. Office of Management and Budget During this same time period, OMB was working to operationalize the PMA (OMB 2001). In 2001 they introduced criteria for each of the five management initiatives and introduced the now well-known “red-yellow-green light” scoring system to rate agencies on each of the initiatives (see the OMB website for details—www.whitehouse.gov/ omb/budintegration/pma_index.html). These criteria were specific in some areas but broad and still vague in others. Nonetheless, at the time OMB released these criteria, they published their first scorecard showing where agencies stood on the criteria. Of the 26 rated, 23 received a “red” rating and only 3 received a “yellow” rating.

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Table 8.3 Guiding Principles Developed by the GAO Each of the nine private sector organizations in our review implemented human capital strategies and practices that were designed to directly support the achievement of their specific missions, strategic goals, and core values. Although human capital management alone cannot ensure high performance, proper attention to human capital is a fundamental building block to achieving an organization’s mission and goals. On the basis of the information they provided, we identified 10 underlying and interrelated principles of human capital management that are common to the 9 organizations:   1. Treat human capital management as being fundamental to strategic business management.   2. Integrate human capital functional staff into management teams.   3. Leverage the internal human capital function with external expertise.   4. Hire, develop, and sustain leaders according to leadership characteristics identified as essential to achieving specific missions and goals.   5. Communicate a shared vision that all employees, working as one team, can strive to accomplish.   6. Hire, develop, and retain employees according to competencies.   7. Use performance management systems, including pay and other meaningful incentives, to link performance to results.   8. Support and reward teams to achieve high performance.   9. Integrate employee input into the design and implementation of human capital policies and practices. 10. Measure the effectiveness of human capital policies and practices. These 10 principles of human capital management demonstrate that the 9 organizations viewed human capital as the foundation for their ongoing success and viability. Because these principles could generally be applied in federal agencies without statutory changes in many cases, agencies need only adopt and adapt, if necessary, these principles to give human capital higher priority as they implement performance-based management to achieve success and higher performance.

Source: GAO (2000a).

Office of Personnel Management OPM also attempted to help agencies by introducing its initial HC scorecard in December 2001 (OMB 2001). However, this meant that by mid-2002 there were actually three different frameworks for SHCM in existence. GAO, OMB, and OPM decided to join forces to produce an integrated framework to reduce confusion and speak with one voice. The result was the Human Capital Assessment and Accountability Framework (HCAAF) that is still in use today (for details see www.opm. gov/hcaaf_resource_center).

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Table 8.4 GAO Human Capital Model, March 2002 Human Capital Cornerstones

Eight Critical Success Factors

Leadership

Commitment to human capital management

Role of the human capital function

Strategic human capital planning

Integration and alignment

Data-driven human capital decisions

Acquiring, developing, and retaining talent

Targeted investments in people

Human capital approaches tailored to fit organizational needs

Results-oriented organizational culture

Empowerment and inclusiveness

Unit and individual performance linked to organizational goals

Congress The Chief Human Capital Officers Act of 2002 codified into law the principles of strategic human capital management for the federal government. First, it created human capital officer positions in each agency. These officers were charged with: setting the workforce development strategy of the agency; assessing workforce characteristics and future needs based on the agency’s mission and strategic plan; aligning the agency’s human resources policies and programs with organization mission, strategic goals, and performance outcomes; developing and advocating a culture of continuous learning to attract and retain employees with superior abilities; identifying best practices and benchmarking studies; and applying methods for measuring intellectual capital and identifying links of that capital to organizational perform­ance and growth (CHCO act, sec. 1302). It also mandated that OPM further codify these principles into a formal system and law by requiring: OPM shall design a set of systems, including appropriate metrics, for assessing the management of human capital by federal agencies. The systems referred to under paragraph (1) shall be defined in regulations of OPM and include standards for—aligning human capital strategies of agencies with the missions, goals, and organizational objectives of those agen­ cies; and integrating those strategies into the budget and stra­tegic plans of those agencies; closing skill gaps in mission critical occupations; ensuring continuity of effective leadership through implementation of recruitment, development, and succession plans; sustaining a culture that cultivates and develops a high performing workforce; developing and implementing a knowledge manage­ ment strategy supported by appropriate investment in training and technology;

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and holding managers and HR officers accountable for efficient and effective HRM in support of agency missions in accordance with merit system principles (CHCO act, sec. 1304). Changing Competencies for Federal Human Resource Professionals The demands for SHCM in federal government led to a redefinition of competencies needed by federal HR professionals. A series of key studies (NAPA 1996b, 2001; OPM 1999, 2000) along with literature from the private sector (Robinson and Robinson 2005; Ulrich 1997) have highlighted an array of new competencies needed for HR professionals in order to function effectively in the new federal HC environment. A complete review of these competencies suggests similar conclusions. HR professionals must stretch beyond their traditional administrative and transactional roles. These studies point to new roles including business partner, change agent, and leader (NAPA 2001; OPM 2000). HR professionals have been called on to reinvent themselves to become performance partners and consultants. To function as a strategic partner requires HR professionals to (a) understand the “business” functions of their agencies; (b) have a working knowledge of all HR processes—to be generalists, not just specialists; (c) think systemically to link HR systems with organizational strategic plans; and (d) continue to operate efficient and responsive HR processes. Only then will HR have a “seat at the table” of strategic planning and achieve the potential of SHCM. The Case of the National Aeronautics and Space Administration It is against this backdrop that NASA undertook its HC reforms. As stated earlier, NASA was the first federal agency to receive a “green” rating from OMB, indicating that it has met the criteria specified by OMB and OPM. There were multiple drivers of this effort. Obviously the government-wide efforts described above were critical. Equally important, NASA faced strategic HC challenges: “A world-class science and engineering agency requires a world-class workforce. NASA seeks the ‘best and brightest’ scientists and engineers (S&E’s) to accomplish its core work. It also requires a highly competent, skilled staff to support NASA’s technical programs and address the Agency’s financial, acquisition, and business management challenges” (NASA 2002, 6). NASA’s ability to attract and retain a world-class, diverse S&E workforce is threatened by several nationwide trends: a shrinking S&E pipeline, increased competition for technical skills, and lack of diversity among applicants. Contributing to this challenge are skills imbalances and lack of depth in critical competencies, significant loss of knowledge due to projected retirements, and increased recruitment and retention problems.

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The Strategic Human Capital Planning Process at NASA In early 2002, because of these many internal and external drivers and challenges, there was wide management acceptance that NASA needed a strategic and integrated approach to HC management, a roadmap for the future. Soon after the new NASA administrator was appointed in 2001 and stated that SHCM was the linchpin of the PMA, the chief human capital officer (CHCO) met with him to discuss the need for the development of a strategic human capital plan (SHCP), and he told her to proceed as quickly as possible. More importantly, he assured her that she had his complete support on this critical project. They agreed the CHCO would serve as the champion for this effort and that the project needed to be completed within a four-to-five-month period because of its importance and the looming HC crisis. With the administrator’s support, the next and most important step in the process was to get the right team of senior managers engaged in the development of the SHCP. The CHCO knew the effort would not be successful unless she had the active involvement and buy-in of several key and influential senior leaders in NASA who would be accountable for delivering program results. In addition, she also knew the project—and ultimately the SHCP—would fail if it were viewed as only an HR initiative. So, she met with the four enterprise or mission directors who were responsible for the major programs of NASA and several strategically selected center directors and the associate administrator for Equal Opportunity to get their commitment to personally participate. The team was intentionally kept small to ensure quicker results given the tight timeline. And, interestingly, unlike with some other HR projects, the team members were enthusiastic and wanted to be involved, reflecting their commitment to the importance of SHCM and their recognition that a workforce crisis was looming. In spite of this, getting started and proceeding with the development of the plan was sometimes frustrating because of the level of the participants, their busy schedules, and the fact that the CHCO wanted only the principals to attend the team meetings. They persevered, however, and made steady progress with the CHCO serving as a full team member in addition to playing an important facilitating role to make sure the team stayed on track. The team began by discussing what a SHCP should look like in terms of format, and what it should contain. In addition, they used guidance from OMB, OPM, and GAO and reviewed several examples of strategic HC plans from industry and other government agencies. But they were largely developing the plan from scratch. After considerable discussion, they settled on five pillars (discussed in the next section) as the architecture on which to build the plan because these were areas pointed out as important in the strategic HC plans of a number of successful Fortune 500 organizations. Then they spent a significant amount of time defining these and developing associated goals and strategies relevant to NASA. The next step was the assessment or gap analysis of NASA’s HC strengths and weaknesses, pillar by

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pillar, including identifying problems the team felt needed to be addressed, and outcomes and results they wanted to see achieved through HC programs. This was the most controversial part of the process because the team members had varying ideas and vocalized strong opinions about the benefits and effectiveness of current programs, what new or revised programs/activities were needed, and where resources/attention should be focused in the future. After lengthy discussions and occasional disagreements, the team agreed on nine HC focus areas or improvement initiatives they felt were very important, merited special emphasis, and could be expected to yield the greatest benefits given resource limitations in NASA. They also had long discussions about how best to measure the effectiveness of HC programs and initiatives and ultimately developed a hierarchy of metrics (see next section). About halfway through this process, the team also decided two documents were needed rather than one: a high-level strategic plan (Strategic Human Capital Plan, or SHCP) that would be flexible enough to accommodate mission and programmatic changes and with a life of approximately five years; and a shorter-term, more tactical implementation plan (Strategic Human Capital Implementation Plan, or SHCIP) with specific activities and milestones with a life of approximately two years. Once an initial draft of the SHCP was developed and significant work had been done on the SHCIP, some of the team members involved their staff in the development of the action plans for the improvement initiatives, working with the corporate HR staff. However, the principal team members remained committed and were actively engaged in reviewing, blessing, and “signing on” to everything that was developed during this process. During the four to five months the team was developing the SHCP and SHCIP, communication on progress within and outside NASA was deemed to be very important, as was getting buy-in from many stakeholders. The CHCO updated the administrator and other senior-level management at weekly staff meetings on the team’s progress, and several iterations of the plans were shared with the entire senior leadership team and comments incorporated. At every opportunity it was emphasized that everyone’s commitment and buy-in was critical even though a small team developed the documents. Toward the end of the process, formal briefings on the plans and their content were conducted not only by HR staff throughout the agency but also by technical senior leaders who recognized the importance of SHCM. The CHCO also kept OMB and OPM closely in the loop as the plans were developed, gave them frequent progress reports, and shared drafts with them. In fact, since these agencies issued the guidance on SHCM and graded NASA on its progress, there were frequent discussions on the specific activities, schedules, and metrics identified in the improvement initiative action plans, and their comments were taken seriously. NASA’s CHCO also shared draft plans with GAO as well as with congressional staff interested in NASA’s HC efforts. And, before the team received the administra-

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tor’s final blessing on the plans, they were sent to several universities, professional groups (e.g., NAPA), and other CHCOs for a final critique. Lastly, it was extremely important to communicate with and get buy-in from the employees of NASA. In addition to regular communication with the workforce during the time the plans were being developed, the completed SHCP and SHCIP were sent to all employees as well as posted on the web. In addition, trifolds reflecting the pillars, goals, and improvement initiatives were widely distributed. Beyond this, initiatives and HC programs and strategies were discussed widely throughout the agency in management and employee sessions, and they became well known and understood. These sessions were not always led by HR staff but often involved the technical senior leaders of the agency too who had bought into the importance of SHCM in a way never experienced before in NASA. NASA’s Strategic Human Capital Program As described above, NASA was at the forefront of strategic human capital planning in federal agencies and thus was developing their plan before the final HCAAF existed. Thus, they examined and adapted the various frameworks discussed to create a framework that fit NASA’s needs and had buy-in from senior management in the agency. However, after the HCAAF was released, the NASA plan was in compliance with the then new standards. Metaphorically, the system was envisioned as a three-legged stool. First, and quite importantly, the NASA HC program was linked directly to the NASA vision and mission, which can be viewed as the top of the stool. The three legs were the fundaments of the HC program—the foundation that would enable NASA to achieve its vision and mission. Any strategic HC system (the legs of the stool) has to have the three fundamental components found at NASA: a long-term strategic plan; a shorter-term action plan to move the organization forward and keep it focused on its most important assets, its people; and an accountability framework to assure that the plan is successful. The three legs work together to make the overall HC program effective and enable NASA to achieve its vision and mission. Remove any one of them, and the “stool” doesn’t support the vision and mission. This framework operationalizes the theoretical notions discussed earlier of vertical and horizontal integration of the human resource system. At NASA, the long-term strategic plan was called the “Strategic Human Capital Plan” (NASA 2002). It was designed to be strategic and to last five years or more. It had three hierarchical components: pillars (5 defined), goals (12 defined), and strategies (29 defined). The plan matrix is shown in Table 8.5. As can be seen, there were five pillars defined: strategic alignment, strategic competencies, learning, performance culture, and leadership, which very closely paralleled the OMB and OPM models available at the time. For each pillar, long-term goals were defined, and for each goal, key strategies were defined.

Strategies

1.3 A situation in which human resources (HR) activities clearly, effectively, and efficiently support and enable the agency’s mission.

1.2 Creating an agency in which employees understand that what they do and how they do it supports overall agency goals.

1.1 Establishment of an agency that is well structured organizationally and matches its workforce and workload to support its mission in a safe, effective, and efficient way.

1.1.1. Verify a clear linkage between the human capital strategies of the agency and the mission, vision, and goals as stated in the NASA Strategic Plan. 1.1.2. Assure clarity of key goals, measure progress toward their achievement, and periodically assess the effectiveness of the organizational structure in achieving the goals. 1.1.3. Leverage organizational capabilities through efficient and effective use of civil servants, contractors, grantees, and other nonagency resources. 1.2.1. Use the performance management system to clearly assign to the leaders of specific organizations, and hold them accountable for, the activities and functions required to achieve NASA’s objectives. 1.2.2. Assure all employees understand how their assignments contribute to achievement of the agency goals. 1.2.3. Effectively, fairly, and equitably use performance management to enable employees to understand their role in achieving agency goals, individual performance, and desired improvements, and hold them accountable. 1.3.1. Assure alignment of human resources activities to contribute—through specific achievement of excellence in the five pillars—to achievement of the agency’s key goals. 1.3.2. HR policies and processes enable the agency to effectively and efficiently manage its workforce. 1.3.3. Human resource management professionals partner with agency top management in developing strategic and program plans.

1.0 Strategic Alignment: NASA aligns human capital to support the vision and accomplish the agency’s mission and goals.

Pillar (in bold) Goal

NASA Strategic Human Capital Plan: Goals and Strategies

Table 8.5

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2.1.1. Develop, utilize, and periodically update an integrated workforce planning and analysis process, and associated information technologies, including competencies required to achieve NASA goals, and allow an agency-level view as they relate to projected programs. 2.1.2. Conduct periodic competency gaps assessment and use results to target recruitment and development activities. 2.2.1. Utilize NASA’s exciting and fulfilling work to attract and retain employees with essential competencies. 2.2.2. Provide the workforce with sufficient resources to succeed in their assignments. 2.2.3. Facilitate leadership strategies that support NASA’s values.

4.1 The fostering of an inclusive climate where employees are valued, treated fairly and with respect, and where they feel empowered to make meaningful, relevant, and fulfilling contributions.

(continued)

4.1.1. Assure that the agency’s human capital programs and processes create an inclusive climate where employees are treated fairly, respected by management and their peers, and are valued for their meaningful and fulfilling contributions.

4.0 Performance Culture: NASA creates a culture that focuses on results, motivates employees to perform, and ensures fairness in the workplace.

3.1 The creation of a climate of open sharing of 3.1.1. Strategically invest in training and development opportunities, including relevant knowledge to facilitate best practices, coaching and mentoring, and foster a climate of continuous learning and promote personal and professional growth, and improvement. avoid failures. 3.2 The active collecting, sharing, and utilization of 3.2.1. Stimulate and encourage the capture and exchange of knowledge within the best practices learned from NASA’s successes agency. and failures. 3.2.2. Provide a process for enabling the collection, sharing, and utilization of best practices from failures and successes.

3.0 Learning: NASA promotes a knowledge-sharing culture and a climate of openness, continuous learning, and improvement.

2.2 A situation in which NASA recruits, acquires, and retains world-class employees in the essential competencies.

2.1 An agency that knows the competencies it needs, and the workforce is concentrated in those competencies.

2.0 Strategic Competencies: NASA recruits, acquires, and retains a diverse workforce with world-class capabilities in strategic competencies needed for all components of its mission.

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4.2.1. Enhance and fully utilize management, holding it accountable for maintaining an inclusive workforce and fostering an inclusive environment. 4.2.2. Promote employee education and training of equal opportunity and diversity to strengthen the agency’s appreciation of the value added of a diverse and inclusive workforce. 4.3.1. Assure linkage of employee and managerial rewards, recognition, development and performance to agency key goals.

Strategies

5.1.1. Assure that the agency senior management is involved in the process of recruiting a diverse cadre of high-performing leaders. 5.1.2. Provide mentoring, training, development, and coaching opportunities to equip employees to assume leadership positions within the agency. 5.1.3. Establish methods and processes for leadership continuity. 5.1.4. Assure that developmental opportunities improve supervisory effectiveness in managing and developing employees. 5.2 An atmosphere in which leaders are held 5.2.1. Hold leaders accountable for consistently applying management practices accountable for overall performance, at the aligned with NASA’s values. individual and organizational levels, and for 5.2.2. Hold leaders accountable for performance at the organization as well as the maintaining high standards of honesty, integrity, individual level, including civil service workforce actions and associated costs. safety, and equal opportunity principles. 5.2.3. Ensure that the value and spirit of equal opportunity and diversity are an integral part of leader evaluation and management expectations. 5.2.4. Create a climate where ethical and moral behavior is understood and followed.

5.1 The recruitment, selection, hiring, and retention of a diverse, high-performing cadre of leaders who are nurtured through training and development opportunities.

5.0 Leadership: NASA ensures it has leaders who are adaptable; who inspire, motivate, and guide others toward goals; who mentor and challenge the workforce; and who demonstrate high standards of honesty, integrity, trust, openness, and respect.

4.3 The establishment of a rewards and recognition system that acknowledges highlevel performance and encourages the behaviors the agency desires in individuals and groups.

4.2 An environment in which equal opportunity and diversity are utilized and valued for their contribution to the agency mission.

Pillar (in bold) Goal

Table 8.5 (continued)

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The shorter-term action plan was called the “Strategic Human Capital Implementation Plan” (NASA 2004a). It was designed to be more tactical and to last only about two years. After conducting a baseline assessment on where NASA stood at the time, nine improvement initiatives were identified. As Table 8.6 shows, these initiatives were linked to the goals and represented critical near-term steps to move toward the goals and strategies defined by the plan. Each initiative also had a defined outcome or result expected. Then, for each initiative, a specific action plan was developed, with activities, milestones, and metrics to assess progress toward accomplishing that initiative. An accountability component was contained in a roles and responsibilities matrix that defined the roles that each level of the organization would play in achieving the goals laid out in the plan clearly defining agency-wide ownership. In addition, measurement and assessment were critical in helping NASA senior management determine if progress was being made toward meeting HC goals, if current initiatives were effective or not, and if programs needed to be modified, canceled, or new ones implemented. Thus, a hierarchy of metrics was developed to help gauge the successful implementation of the goals, strategies, and improvement initiatives: 1. Very basic measures at a project level that would provide insight into the health of an initiative or program and be mostly of interest to the HR community. An example might be the number of executives who participated in training/development activities. 2. Higher-level measures that would provide useful feedback to management at multiple levels on current programs/initiatives so that course corrections could be made, if necessary. An example might be whether or not a specific development program for executives was producing effective results. 3. A “critical few” metrics that senior management would be especially interested in because of their importance to the NASA workforce and mission, and these would generally be broad and cut across several of the pillars, goals, strategies, and improvement initiatives. The two critical metrics identified in the plans are: • Continuous progress in closing gaps in NASA’s critical competencies, which relates to several pillars and improvement initiatives and for which NASA implemented several major HC programs • Alignment of NASA’s HC strategy with its mission, goals, and organizational objectives, which cuts across all the pillars and improvement initiatives and relies on an annual government-wide OPM survey to provide data A close read of the plan shows that it was carefully woven together to be a model SHCP. First, it clearly linked HC to the strategic goals of the agency. Second, it

Problem

Strategic Competencies NASA understands the • Inadequate ability to identify competencies required imbalances in current and for safe and successful projected workforce arising from missions, and recruits, changing priorities and turnover. acquires, and retains a • A shrinking national pipeline of world-class workforce talent needed for the future. representative of the nation’s diversity and consistent with competency needs.

Strategic Alignment The agency is organized to • Failure to achieve “One NASA” support its mission in a safe, due to ambiguity in roles and effective, and efficient way. responsibilities or stovepipe Each organization behaviors. understands its contribution • Smaller workforce—not deployed to the agency mission and most effectively. each employee understands • Inadequate ability to track/forecast his or her personal human capital across programs. contribution.

Pillar (in bold) Goal Summary Outcomes/Results

Develop an agency competency • Agency has skills it needs. management system that defines • Contribute to ensuring a source competencies the agency must of competencies needed to retain and those for which it will rely assure future mission success. on industry, academia, and others (see Action Plan 3). Ensure that NASA education programs match a diverse population of students with projected NASA workforce needs.

Develop and implement an agency- • “One NASA” with integrated wide integrated workforce planning capabilities to support NASA and analysis capability (see Action missions. Plan 1). • Better deployed workforce and Increase the utilization of flexibilities enhanced mission performance. and tools to ensure a highly skilled, • Increased ability to attract and diverse, and productive workforce retain a highly skilled, diverse (see Action Plan 2). workforce.

Improvement Initiative

NASA Strategic Human Capital Plan Improvement Initiatives

Table 8.6

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Leadership NASA has leaders who think strategically, inspire employees, and achieve results.

Performance Culture NASA achieves excellence by valuing and recognizing performance in an environment in which all employees feel encouraged to contribute.

Learning NASA assures mission success by using existing knowledge effectively and acquiring new knowledge through learning.

Pillar (in bold) Goal Summary

Table 8.6 (continued)

Ensure that an integrated strategic training and development program builds needed agency leadership competencies (see Action Plan 8).

• Lack of an integrated, strategic approach to leadership development. • Agency does not fully benefit from insights/experience of existing leaders when developing future leaders.

• Agency has right kind and number of diverse leaders to achieve mission success. • Effective process to develop leaders for future NASA leadership roles/ responsibilities.

Assure that the agency-wide • Improved individual and performance management system organizational performance. focuses on accountability for results • Enhanced mission success (see Action Plan 7). through more effective use of Assure that employee rewards the diverse talents/abilities of and recognition programs are the workforce. adequately linked to performance that contributes to achievement of agency goals (see Action Plan 7).

• Performance expectations ambiguous (e.g., accountability, effort vs. results). • Failure to deal adequately with poor performance.

Outcomes/Results

Ensure that training and • Better performance through development programs build a more knowledgeable, more needed competencies, including highly skilled workforce. more effective incorporation of • Higher mission success rate. knowledge sharing and mentoring in the development of the employee (see Action Plan 5). Capture knowledge and lessons learned (from failures and successes) in a more effective, systematic way (see Action Plan 6).

Improvement Initiative

• Failure to capitalize on—and “institutionalize”—lessons learned from failures and successes. • Insufficient attention paid to mentoring.

Problem

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integrated all elements of HC management into a mutually reinforcing system including workforce analysis; competency and skills assessment; recruitment, hiring and retention; performance management; leadership development, succession planning, and career development. Transforming the NASA HR community Early on, when it was clear that SHCM was becoming an area of focus in the federal government and in NASA, NASA’s center HR directors and the CHCO decided they needed to transform the NASA HR community to be ready to accept the new challenges. They saw this as an opportunity to “be at the table” as consultants and partners with management rather than to just oversee transactional work, but they knew they had to “step up.” They held a series of quarterly meetings beginning in the summer of 2002 to chart a new course for the NASA HR community and called it the “One HR” initiative. This was a big challenge because the HR offices throughout the agency were used to operating as nine separate and independent organizations, but the effort resulted in a major transformation. They defined desired roles and work and did some reorganizing at the corporate and center level to make sure they had the right people in the right positions. They also hired several new HR professionals at the corporate and center levels and better aligned skills with position requirements. As a result of these efforts, the HR community became more credible to management and more involved in strategic discussions and decisions. A realization for NASA at this time was that there were existing flexibilities in laws and regulations that could be taken advantage of to a greater extent in managing their HC assets. However, it was also determined that new flexibilities were needed to assist the agency in attracting, hiring, and retaining a world-class staff. After considerable effort, the NASA Flexibilities Act of 2004 was passed by Congress, consisting of a number of new “tools” to enable the agency to achieve its HC goals and objectives. Implementation Events Two key aspects of the implementation process are notable. First, on February 1, 2003, tragedy struck NASA and the nation when the Columbia space shuttle was lost during its return to earth. Subsequently, the Columbia Accident Investigation Board (CAIB) was created to investigate the accident and make recommendations to prevent future ones. The “CAIB Report” (NASA 2003) was released in August 2003 and was far-reaching in its investigation and recommendations, focusing not only on technical issues but also on organizational issues that led to the disaster. NASA then created an internal committee, which released the “Diaz report” (NASA 2004b) in January 2004 to respond to the CAIB report recommendations on organizational issues.

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A major organizational crisis such as this had the potential to derail the SHCM effort. Instead, it actually served as a catalyst to accelerate implementation of key parts of the plan. The SHCM plan was crafted to be sustainable no matter what happened and proved to be robust enough to embrace the CAIB report recommendations without derailing it. What the CAIB report did was to bring four specific areas to the forefront as priorities—leadership development, communications, culture change, and mentoring. Efforts in these areas were redoubled in order to get the space shuttle program back on track. Furthermore, the process used in developing the SHCM proved to be a good model, so it was also used in preparing the Diaz report. The second implementation issue has been the apparent need to expand the HC planning process. The SHCM plan described in this chapter only encompassed NASA’s civil service workforce. Yet NASA has more than double the number of its civil servants employed as contractors. NASA is expected to become more reliant on this multisector workforce to meet its needs for a flexible and scalable workforce (NAPA 2007). Lessons Learned About Developing a Successful SHCP Clearly, developing a SHCP is a major undertaking for any organization. While each organization will have its own special needs and character, there are some lessons learned from the NASA case that illustrate some critical success factors to making the planning process work: Investing in and truly valuing human capital is critical to mission success. There was little dispute at NASA that the expertise of its people were its most vital asset. Without the right mix of knowledge and competency, the agency simply would not succeed. Top management support is not optional. NASA’s top administrator made it absolutely clear that HC was the linchpin of the PMA and would be the same for NASA. In addition, the plan itself was developed by senior management, which created a high level of buy-in. SHCM is EVERYONE’s job. Perhaps most understated in all the models is that a shift to SHCM also entails a shift away from HR being “just HR’s job.” Once HC strategies are linked to the mission and goals of the organization, it is everyone’s job to make them happen. Accountability needs to be built in at all levels of an organization. Strategic plans of any type without accountability for results usually just collect dust on a shelf. The process used to build the plan is critical. One cannot underestimate the importance of buy-in while building the plan, particularly within the senior management team. One has to allow time for debate and dialogue to air different perspectives from around the organization. The goal is for it to be “owned” by management rather than to be viewed as HR’s plan. Create a sense of urgency. At the same time, planning processes that are allowed

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to run without a sense of urgency often end up wasting a lot of people’s time. There is a delicate balance to strike between allowing enough time to create buy-in and enough urgency to make sure it gets done in a timely manner. Allow adequate time for the development and planning process. A good strategic HC plan takes time to develop. And it needs time from some of the busiest people in your organization. It is a challenge, but it must be a priority for those involved in the process. Customize the plan to fit the organization. As stated earlier, the state of the art in HRM is finding a plan that fits your organization’s unique situation and needs. Simply, if your strategy is unique then your plan will be also. Thus, there is no such thing as a one-size-fits-all SHCP. Don’t reinvent the wheel—benchmark. Notwithstanding the above, there is little need to start from scratch. There are now many examples from the public and private sectors of effective strategic HC plans and organizations. It would be foolish not to freely beg, borrow, or steal whatever components fit your organization. You can jump-start and shorten your organization’s transformation process by doing so. Develop the tactical plan to go along with the strategic plan. If your strategic HC plan is to work, it must have the detailed tactical plans to accompany it. A strong “chief human capital officer” is needed to lead the process. It takes considerable skill and talent to lead a SHCP process and the HR organization that results. The leader needs to have strong facilitation skills, keen strategic insight, and strong HR fundamentals. Communicate, communicate, communicate! It can’t be overstated—communication is critical to success. In the early stages it is essential to communicate with senior management, later with mid-level management, and eventually with everyone in the organization. Everyone has to understand the plan and live it for it to be successful. Keep external partners in the loop. In the federal government it is important to keep your key external partners informed and involved along the way. Share your drafts and keep them updated on your progress. Seek their comments and input so that the final product will meet not only your agency’s internal needs but also the standards set by your external partners. Conclusion The strategic HC revolution has continued to pervade federal human resource practices. As of June 2007, 15 of the federal executive agencies had received a “green” rating from OMB and the other 11 received a “yellow” rating—a considerable advance since only 2001, when the original scorecard showed no “green” agencies and all but three of them rated “red.” However, just because so many agencies have “gone green” doesn’t mean the work is done. Because strategic management is a dynamic, ever-evolving process, so too is SHCM. Thus, the work at NASA is ongoing as their strategic plan has evolved and new workforce challenges have emerged.

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SHCM is not just a fad—it is here to stay. As shown in this chapter, it has deep roots in theory and research as well as a long track record of success in the private sector and now in federal government. The continued growth of the “knowledge economy” combined with changing workforce demographics will present bigger and bigger challenges for HR in the federal government. Both practice and research show that it is the best way for HR to meet these challenges in the private and public sectors. HR needs to continue to be a strategic partner to meet these challenges and help government agencies achieve their goals. References Baird, L., and I. Meshoulam. 1988. “Managing the Two Fits of Strategic Human Resource Management.” Academy of Management Review 13, 116–128. Becker, G.S. 1960. “Underinvestment in College Education.” American Economic Review 50(2): 346–354. ———. 1993. “Nobel Lecture: The Economic Way of Looking at Behavior.” Journal of Political Economy 101(3): 385–397. Becker, B.E., and M.A. Huselid. 1998. “High Performance Work Systems and Firm Performance.” Research in Personnel and Human Resource Management 16: 53–101. ———. 2006. “Strategic Human Resource Management: Where Do We Go from Here?” Journal of Management 32: 898–925. Becker, B.E., M.A. Huselid, P.S. Pinkus, and M.F. Spratt. 1997. “HR as a Source of Shareholder Value.” Human Resource Management 36: 39–47. Burud, S., and M. Tumolo. 2004. Leveraging the New Human Capital. Palo Alto: DaviesBlack Publishing. Colbert, B.A. 2004. “The Complex Resource-based View: Implications for Theory and Practice in Strategic Human Resource Management.” Academy of Management Review 29: 341–358. Delery, J.E., and D.H. Doty. 1996. “Modes of Theorizing in Strategic Human Resource Management.” Academy of Management Journal 29, 802–835. Devanna, M.A., C. Fombrun, and N. Tichy. 1981. “Human Resources Management: A Strategic Perspective.” Organization Dynamics 9(3): 51–8. Donk, D.P. van, and A. Esser. 1992. “Strategic Human Resource Management: A Role of the Human Resource Manager in the Process of Strategy Formation.” Human Resource Management Review 2: 299–315. Edvinsson, Leif, and Michael Malone. 1997. Intellectual Capital. New York, NY: HarperCollins. Ferris, G.R., A.T. Hall, M.T. Royle, and J.J. Martocchio. 2004. “Theoretical Development in the Field of Human Resources Management.” Organizational Analysis 3: 231–254. Fitz-enz, J. 2000. “How to Leverage Your Human Capital ROI.” Tooling and Production 66(5): 28–43. Gimeno, J., T.B. Folta, A.C. Cooper, and C.Y. Woo. 1997. “Survival of the Fittest? Entrepreneurial Human Capital and the Persistence of Underperforming Firms.” Administrative Science Quarterly 42(4): 750–783. Government Accountability Office (GAO). 1995. Transforming the Civil Service: Building the Workforce of the Future. Washington, DC: GAO/GGD-96-35. ———. 1998. Management Reform: Agencies’ Initial Efforts to Restructure Personnel Operations. Washington, DC: GAO-GGD-98-93. ———. 2000a. Human Capital: Key Principles from Nine Private Sector Organizations Washington, DC: GAO/GGD-­00-28, January 31.

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———. 2000b. Human Capital: A Self-Assessment Checklist for Agency Leaders. Washington, DC: GAO/OCG-00-14G. ———. 2001. Major Management Challenges and Program Risks: National Aeronautics and Space Administration. Washington, DC: GAO-01-258. January. ———. 2002. A Model for Strategic Human Capital Management. Washington, DC: GAO02-373SP, March 15. Hays, S.W., and R.C. Kearney. 2001. “Anticipated Changes in Human Resource Management: Views from the Field.” Public Administration Review 61, 585–597. Huselid, M.A. 1995. “The Impact of Human Resource Management Practices on Turnover, Productivity and Corporate Financial Performance.” Academy of Management Journal 38: 635–672. Huselid, M.A., S.E. Jackson, and R.S. Schuler. 1997. “Technical and Strategic Human Resource Management Effectiveness as Determinants of Firm Performance.” Academy of Management Journal 40: 171–188. Klingner, D. 1993. “Reinventing Public Personnel Administration as Strategic Human Resource Management.” Public Personnel Management 22: 565–578. Lado, A.A., and M.C. Wilson. 1994. “Human Resource Systems and Sustained Competitive Advantage: A Competency-based Perspective.” Academy of Management Review 19, 699–727. Lazear, E. 1998. Personnel Economics for Managers. New York: John Wiley & Sons. Lengnick-Hall, C.A., and M.L. Lengnick-Hall. 1988. “Strategic Human Resource Management: A Review of the Literature and a Proposed Typology.” Academy of Management Review 13: 454–470. McGregor, E.B., Jr. 1988. “The Public Sector Human Resource Puzzle: Strategic Management of a Strategic Resource.” Public Administration Review (November/December): 941–950. Mesch, D.J., J.L. Perry, and L.R. Wise. 1995. “Bureaucratic and Strategic Human Resource Management: An Empirical Comparison in the Federal Government.” Journal of Public Administration Research and Theory 4: 385–402. Miles, R.E., and C.C. Snow. 1984. “Designing Strategic Human Resources Systems.” Organizational Dynamics (Summer): 36–52. National Academy for Public Administration (NAPA). 1996a. A Guide for Effective Strategic Management of Human Resources. Washington, DC: NAPA. ———. 1996b. A Competency Model for Human Resources Professionals. Washington, DC: NAPA. ———. 1999. Building the Workforce of the Future to Achieve Organizational Success. Washington, DC: NAPA. ———. 2000. The Case for Transforming Public Sector Human Resources Management. Washington, DC: NAPA. ———. 2001. Changes in the Human Resources Function since 1996: Implications for HR Competencies. Washington, DC: NAPA. ———. 2007. NASA: Balancing a Multisector Workforce to Achieve a Healthy Organization. Washington, DC: NAPA. National Aeronautics and Space Administration (NASA). 2002. Strategic Human Capital Plan. Washington, DC: NASA. ———. 2003. Columbia Accident Investigation Board Report. Washington, DC: NASA. ———. 2004a. Strategic Human Capital Implementation Plan. Washington, DC: NASA. ———. 2004b. A Renewed Commitment to Excellence: An Assessment of the Agency-wide Applicability of the Columbia Accident Investigation Board Report. Washington, DC: NASA.

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The National Performance Review (NPR). 1993. Reinventing Human Resource Management. Washington, DC: NPR. Office of Management and Budget (OMB). 2001. The President’s Management Agenda. Washington, DC: OMB. Office of Personnel Management (OPM). 1999. An Occupation in Transition Part 2: Looking to the Future: Human Resource Competencies. Washington, DC: OPM. ———. 2000. An Occupation in Transition Part 3: The HR Workforce: Meeting the Challenge of Change. Washington, DC: OMB. Prahalad, C.K., and G. Hamel. 1990. “The Core Competence of the Corporation.” Harvard Business Review (May/June): 79–91. Psacharopoulos, G., and M. Woodhall. 1985. Education for Development: An Analysis of Investment Choices. Oxford: Oxford University Press. Robinson, D.G., and J.C. Robinson. 2005. Strategic Business Partner: Aligning People Strategies with Business Goals. San Francisco: Berrett-Koehler. Schuler, R.S. 1990. “Repositioning the Human Resource Function: Transformation or Demise.” Academy of Management Executive 4: 49–60. ———. 1992. “Strategic Human Resource Management: Linking the People with the Strategic Needs of the Business.” Organizational Dynamics 22: 19–32. Schuler, R.S., and S.E. Jackson. 1987. “Linking Competitive Strategies with Human Resource Management Practices.” Academy of Management Executive 1: 207–219. Schuler, R.S., and I.C. MacMillan. 1984. “Gaining Competitive Advantage Through Human Resource Management Practices.” Human Resource Management 12: 241–255. Schultz, T.W. 1961. “Investment in Human Capital.” American Economic Review 51(1): 60-71. ———. 1993. “The Economic Importance of Human Capital in Modernization.” Education Economics 1(1): 13–31. Sweetland, S.R. 1996. “Human Capital Theory: Foundations of a Field of Inquiry.” Review of Educational Research 66(3): 341–359. Tompkins, J. 2002. “Strategic Human Resources Management in Government: Unresolved Issues.” Public Personnel Management 31: 95–110. Ulrich, D. 1997. Human Resource Champions. Boston: Harvard Business School Press. Wernerfelt, B. 1995. “The Resource-based View of the Firm: Ten Years After.” Strategic Management Journal 16: 171–174. Wright, P.M., and G.C. McMahan. 1992. “Theoretical Perspectives for Strategic Human Resource Management.” Journal of Management 18: 295–320. Wright, P.M., and S.A. Snell. 1991. “Toward an Integrative View of Strategic Human Resource Management.” Human Resource Management Review 1: 203–225. Youndt, M.A., and S.A. Snell. 2004. “Human Resource Configurations, Intellectual Capital, and Organizational Performance.” Journal of Managerial Issues 16: 337–360.

9 Organizational Transformation Strategic Succession Management and Leadership Development Ruth T. Zaplin and Sydney Smith-Heimbrock

This chapter explores three imperatives for an organizational transformation agenda emerging from the new global environment: (1) strategic human capital management (SHCM)—the U.S. Office of Personnel Management’s (OPM 2007a, 2007b) new approach through which federal agencies are aligning personnel management with organizational transformation and effectiveness, and, as it relates to the leadership and knowledge management component of the SHCM paradigm, (2) strategic succession management and (3) leader development (see Zaplin and Smith-Heimbrock 2008). This chapter explores public and private best practices, focusing on innovations in the federal workplace, to demonstrate how these imperatives translate into a cogent business case for innovation in leader development. A basic premise is that the most effective approaches to organizational transformation are those that integrate all three imperatives. We believe it is increasingly urgent for the more common, process-driven federal organization of today—with a culture that discourages innovation and organization agility—to adopt the SHCM paradigm. In short, implementation of the SHCM paradigm, done well, will foster innovation and organization agility and lead to better performance outcomes over time and, to successfully accomplish this task, leader development must be understood within the wider context of SHCM. The chapter begins with an overview of the key challenges today’s leaders face in a global environment, including the need for organizations and individuals at all levels of the organization to be change-adept. Dorfman (2003, 1) states: [g]iven the many bilateral and multilateral exchange agreements with other countries to which the U.S. is a party, there is almost no policy arena that does not require public administrators to engage with international counterparts and monitor global trends and events. More and more, successful mission accomplishment for agencies requires the ability to influence events and ideas across national and cultural boundaries—in essence, to exercise effective global leadership. 114

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We present an overview of SHCM’s contribution to organizational transformation—including a visual depiction of the SHCM paradigm. Within the leadership and knowledge management component of the SHCM paradigm, strategic succession management and leader development are presented as key components to ensure organizational effectiveness and transformation. Finally, one leadership development best practice—coaching—is highlighted. For the purposes of discussion, coaching is defined as “a way of working with people that leaves them more competent and more fulfilled so that they are more able to contribute to their organizations and find meaning in what they are doing” (Flaherty 2005, 3). Coaching leaders, particularly C-level executives, has received comparatively little attention in public administration research as an effective approach to address SHCM goals in the context of the organizational transformation agenda. The Need for Change-Adept Leaders Traditionally, organizational cultures have been marked by structural approaches to authority and production. Leaders generally knew that they were invested with formal authority. This is much less true today. Because today’s organizations are flatter and less hierarchical, many people called to lead find that their formal authority is not particularly useful. To get people moving in the right direction they must rely on personal influence, diplomacy, and skill in communicating, conflict resolution, and the carrot of motivation (Harvard Business Essentials 2004). To exacerbate matters, today we are moving at an accelerating pace toward a poststructural and synergistic global culture—one more comfortable with spontaneous process, more accepting of what looks like chaos, and more apt to perceive control as something that emerges, not something that is imposed. Being comfortable with chaos is what experts say is necessary to function effectively in the new networked economy (Slater 2001; Blandin 2007). In this global environment, organizational leadership and management go from: • • • • • •

Overseeing work to also doing it Organizing hierarchies to organizing communities Imposing work designs and methods to understanding them Hiring and firing workers to recruiting and retaining them Building manual skills to building knowledge skills Evaluating job performance to assess behaviors that lead to innovation and productivity • Ignoring culture to building a knowledge-friendly culture • Supporting the bureaucracy to fending it off (Davenport 2001, 47) Additionally in this environment, all organizations, from the Fortune 500 to the local nonprofit agency, need greater reach. In order to be in more places, to

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become more aware of regional and cultural differences, and to integrate into coherent strategies the varying work occurring in different markets and communities, organizations need to be change-adept. According to leading transformation expert Rosabeth Moss Kanter (2002, 55–56), change-adept organizations share three key attributes, each with a particular role for leaders: • The imagination to innovate. To encourage innovation, effective leaders help develop new concepts—the ideas, models, and applications of technology that set an organization apart. • The professionalism to perform. Leaders provide personal and organizational competence, supported by workforce training and development, to execute flawlessly and deliver value to ever-more-demanding customers. • The openness to collaborate. Leaders make connections with partners who can extend the organization’s reach, enhance its offerings, or energize its practices. Such collaboration requires risk-taking behaviors, the willingness to engage with stakeholders in new ways and to identify new partners—with their own interests—previously perceived as outside the traditional scope of the organization’s reach. Leaders and managers in the future will have to continuously adapt to the new world they will face. This requires, according to Kanter (2002, 55–56): • Creating networks—because a leader cannot possibly know enough, be in enough places, or understand everything happening inside or outside the organization. • Developing kaleidoscope thinking—a way of constructing patterns from the fragments of data available, and then manipulating them to form different patterns. • Communicating well—if compelling visions are to become reality. • Building coalitions—in order to involve the people who have the resources, the knowledge, and the political clout to make things happen. • Sharing leadership—including transferring ownership to others. • Learning to persevere—in order to create lasting change. • Making everyone a hero—by recognizing, rewarding, and celebrating accomplishments. Given the vast number and range of skills that tomorrow’s change-adept leaders will need to acquire, it is not surprising that shared leadership may emerge as the leadership model of the future (Greenberg-Walt and Robertson 2001). Currently the subject of some debate, at the highest level shared leadership means splitting the responsibilities of the executive between two or more individuals. In the broader sense, it means empowering individuals at all levels of the organization and giving them the opportunity to take the lead. It is a leadership model that is becoming

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more common as the old, top-down management structure gives way to flatter, more decentralized forms, and is seen by some experts as a way of promoting agility (elaborated upon further below), proactivity, and autonomy (Greenberg-Walt and Robertson 2001). It is also increasingly demanded by a networked constituency that perceives public accountability as getting the job done—rather than adhering to strict bureaucratic silos and hierarchies that prevent timely response to public need (Kettl 2007). The shared leadership model, and leading experts’ thinking in general on transformational leadership, does not see leadership as a fixed set of character traits or as linked to an exalted position. Rather, leadership is seen as an organizational capability (Lawler 2001). This thinking is based on the assumption that it is possible—and necessary—for everyone to lead: leaders are made, not born. Kouzes and Posner (2002, 83) state: If we assume that leadership is learnable, we can discover how many good leaders there really are. That leadership may be exhibited on behalf of the company, the government, the school, the religious organization, the community, the volunteer group, the union, or the family. Somewhere, sometime, the leader within each of us may get the call to step forward. Ordinary people are capable of developing themselves as leaders far more than tradition has ever assumed possible.

We also posit that leaders are made/developed not born. Viewed from this perspective, leadership is rooted in the systems, processes, and culture of the organization where all employees, when given the opportunity to develop to their full leadership potential, will want to take initiative, and, according to Spreitzer and Cummings (2001, 246): • Act more like owners and entrepreneurs than employees or hired hands (that is, they assume owner-like responsibility for financial performance and managing risk) • Take the initiative to solve problems and to act, in general, with a sense of urgency • Willingly accept accountability for meeting commitments and for living the values of the organization • Share a common philosophy and language of leadership that includes tolerance for contrary views and a willingness to experiment • Create, maintain, and adhere to systems and procedures designed to measure and reward these distributed leadership behaviors The challenge to develop global leaders arises at a time when it is increasingly difficult to attract, develop, and retain people. Record low unemployment rates and a shortage of skilled workers have created a “war” for talent. Skilled employees with high potential are in high demand, creating fierce competition among organizations trying to attract them (Spreitzer and Quinn 2001). Organizations with a

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competitive advantage create a leadership culture that attracts and keeps the best and the brightest. Moreover, employees want to know they are valued and that the organization is investing in them. High-potential workers are reluctant to leave once they experience this investment. They know they will be unsatisfied and unfulfilled in an environment with less opportunity (Spreitzer and Quinn 2001). Given today’s competitive environment for talent, having a steady supply of the right leaders, at the right time, in the right place, doing the right thing is a tall order. It is especially so in a world where organizations are rapidly flattening and using multisector workforces and team-based structures; markets are becoming more complex and interrelated; knowledge workers will continue to have little organizational loyalty, instead preferring to view themselves as professional free agents interested in working only for the leader who provides the most challenge and opportunity (Greenberg-Walt and Robertson 2001); and, there is a dearth of people who are accomplished in their disciplines, want to do leadership, and are competent at it. It is no wonder that many executives see their central task as developing other leaders and actively helping followers reach their own leadership potential. If they fail, it is usually not for lack of technical skill but the inability to establish effective human connections—upward, downward, and outward—that motivate and inspire people, build effective teams, and make organizations work through people; the only ways today’s organizations can work (Bacon 2003). Overview: Strategic Human Capital Management OPM defines SHCM as an organizational system that “focuses on results aligned with mission and strategy, not processes. It places the right people in the right jobs at the right time to most effectively perform the work of the organization and has become a focal point of federal agencies” (OPM 2007a, 1). SHCM marks a continuing evolution of government personnel management from transactionand process-based personnel management through human resources management (HRM), which introduced a business focus to the work of attracting, developing, and managing people. With SHCM, HRM’s traditional business process orientation widens in scope to encompass the strategic focus of organizational effectiveness. SHCM ensures that “agency mission requirements drive all human resource activity, and all agency staff contribute directly to achieving agency results and are rewarded accordingly” (OPM 2007a, 1). SHCM fulfills its vital function for federal agencies by strategically planning and implementing leadership, talent, and performance management systems that align with agency mission, provide accountability for results, and comply with merit system principles. A visual depiction of the five elements of SHCM demonstrates the integration of all human capital management practices within one strategic system (see Figure 9.1). SHCM begins with effective human capital planning strategically aligned with agency outcomes. Strategic human capital planning integrates the range of existing personnel planning efforts—including workforce planning, diversity, and

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Figure 9.1  Strategic Human Capital Management Planning and goal setting

Implementation

Evaluating results

Leadership and knowledge management

Strategic alignment

Results-oriented performance culture

Accountability

Talent management

Provides direction

Delivers hum an capital

Provides performance information

Source: Office of Personnel Management, 2007.

succession—into one vision for moving the agency toward mission accomplishment and organizational transformation. Starting with strategic integration of planning assures that leadership succession plans focus on organizational outcomes and that individual development is aligned with organizational needs. Once the planning phase has been accomplished, SHCM practitioners move to the three implementation systems: leadership and knowledge management, resultsoriented performance culture, and talent management. Leadership and knowledge management is where effective succession management and leadership development approaches are designed and implemented. Whereas traditional succession management matched basic recruitment and retention tactics to predicted departures and retirements, SHCM demands a more strategic and future-focused approach. From this perspective, strategic succession management and leadership development are an ongoing process of assessing current and future organizational needs, designing and executing strategies to meet those needs, and assessing the results. Federal managers increasingly recognize the urgent need to transform their organizations into change-adept and accountable providers of public goods and services. This transformation agenda—coupled with the unprecedented turnover in workforce generated by the anticipated baby boomer retirement wave and newly

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mobile workforce—underscores the need for what Joiner and Josephs (2006) call leadership agility. Leadership agility—the ability to lead effectively under conditions of rapid change and mounting complexity—is increasingly needed, not just in the executive suite but throughout the organization. The challenge for an organization, then, becomes how best to create and maintain leadership agility in order to maintain a cadre of empowered, change-adept people/leaders throughout the organization, not just at the executive level (Spreitzer and Cummings 2001). A visual depiction of strategic succession management shows the integration of ongoing strategic planning, program design, implementation, and evaluation (see Figure 9.2). In this new paradigm, succession management looks far different from the traditional, individual-by-individual approach to assuring continuity in leadership. Specifically, the traditional succession planning model that appears to guide much leadership training in the federal government involves identifying those best qualified to serve as future top executives and then providing this select group with extensive training and development opportunities. Only those selected for participation through an extensive, competitive application and review procedure are allowed to participate. In the new SHCM paradigm, strategic succession management becomes a mechanism through which an agency transforms and shapes its future organizational culture and structure. Rather than react to a changing organization, strategic succession management positions the organization for the future and reaches well beyond the immediate need to replace retiring or departing leaders by building bench strength with qualified leaders who already exist in the organization. Strategic succession management links predicted demands on the organization—including possible external factors and identified internal organizational development goals—to the development of leaders and a talent pool of emerging leaders who can serve as organizational change agents. Effective strategic succession management also links directly to talent management—another implementation system within the SHCM paradigm—in order to inform recruitment efforts for leadership positions. Planning Strategic Succession Management As the SHCM cycle shows, the first and most critical phase of an effective strategic succession management system is the planning process. In the planning phase, human capital officers engage with agency leaders to create a clear articulation of organizational needs. These needs are based on data that project future demands on the organization and the workforce competencies and resources these demands will require. Among the key questions posed during this phase is the one that asks how the organization’s mission is evolving. For federal agencies, the question is, “what will be the public need in five years? What will be the business scenario in ten?” (Stone 2007). The future demands and scenarios identified should suggest an organizational change agenda. The agency’s succession management strategy

Evaluation • Synthesize metrics data • Analyze results against goals • Identify areas for change/improvement

Implementation • Execute the program design • Collect data on identified met rics

Implement leadership development, recruitment/retention, knowledge management

Succession Planning

Strategic Planning • Understand organizational needs • Create goals and objectives • Define success with stakeholders

Evaluate results: Were organizational objectives achieved? If not, why not?

Figure 9.2  Strategic Succession Management

Design recruitment, retention, and development programs

Program design • Design approach to meet the object • Identify metrics to measure success

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is then designed specifically to accomplish this organizational change agenda. Leadership development, discussed further below, is married with succession management as one function that builds a high-performance, high-involvement work environment (NAPA 2005). A good example of this vital link between strategic succession management and organizational transformation is found in the Department of Interior’s (U.S. DOI) Succession Plan (2006). In 2005, DOI projected that retirements from management and leadership ranks would reach a daunting 85 percent of senior level (GS-14/15) and senior executive service (SES) by 2015 (DOI 2006). While DOI’s leadership succession plan identifies seventeen actions to address this challenge, the plan establishes the principle that all succession activities relate the agency’s strategic plan and individual departmental operating plans “in order to focus on both current and future needs . . . [and] facilitate broader transformation efforts within the DOI by selecting and developing leaders and managers who support and champion change” (NAPA 2005, 10). Agency transformation is a key objective of the plan, which drives this transformation agenda deep into the organization by identifying “talented employees at multiple organizational levels, early in their careers or those with critical skills who will be mentored as they pursue a management career” (NAPA 2005, 11). All employees have access to DOI’s leadership competency model and assessment tool in order to begin early in their careers to develop the skills and achievements that characterize effective leaders. Private sector leaders have long recognized the critical role of strategic succession management and leadership development in driving organizational transformation. Cor Herkstroter, the former chairman of the Royal Dutch/Shell Group, once asked his top 50 to 60 leaders to suggest improvements to the company’s financial performance. Shell’s committee of managing directors decided that a new leadership development process could be a catalyst for organizational change, resulting in creation of Shell’s Leadership and Performance Program. After the program showed positive measurable returns in the United States and elsewhere, Shell made it corporation-wide (Fulmer, Gibbs, and Goldsmith 2000). At Johnson and Johnson and Shell, the heads of the leadership development process have seniorlevel business experience. The use of business leaders is based on a belief that executive participation will help ensure buy-in from the employees and will keep the programs practical (Fulmer, Gibbs, and Goldsmith 2000). Succession management strategies must ultimately demonstrate their effectiveness in delivering organizational results. Therefore, the succession management plan must clearly define what success looks like. The plan should: (1) specify the organizational needs that will be met by succession management activities; (2) identify the strategic goals that will meet these needs; and (3) define the specific outcome measures that will be used to determine whether the goals have been met. Agencies must ensure that systems are in place to gather, analyze, and use the data needed to measure results. Getting data into usable form for decision making is key. Human capital officers must have the ability to analyze information and apply it to

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strategic decision making and to develop recommendations for agency leadership decision making on selecting and resourcing succession management strategies. In addition, the specific resources needed to achieve these goals must be included in the strategic succession management plan. While adequate funds for program activities are critical, they are only one piece of the resource puzzle. Another key resource required is agency leadership engagement. Agencies can assure this engagement by building participation into the strategic succession planning process. One example of this engagement is the Royal Canadian Mounted Police’s (RCMP) senior executive committee, which consists of the agency’s chief executive, chief human capital officer, and six other officials. The committee meets quarterly to discuss the organization’s succession needs, and to make decisions on development, placement, and promotion of its top 600 officer and civilian employees. Talent management is thus integrated fully into succession management and leadership development strategies in order to achieve organizational outcomes (GAO 2003). RCMP’s model is echoed across Canada’s government’s attention to succession management. Each year, Ontario’s secretary of the cabinet—Ontario public service’s top civil servant—convenes and actively participates in a two-day succession planning and management retreat with the heads of every government ministry. They discuss anticipated leadership needs across the government, as well as the individual status of about 200 high-potential executives who may be able to meet those needs over the next year or two (GAO 2003). Designing and Executing Strategic Succession Management Once an agency’s leadership has participated in and approved a strategic succession management plan, the agency’s human capital officials move to the design phase. From the private and public sectors, there is a wide array of program options that promise to deliver results for organizational transformation and succession management. Any design choice should demonstrate why it is the best approach to accomplishing the goals of the succession management plan. Some options: 1. 2. 3. 4. 5.

Targeted recruitment and hiring Incentives (retention/relocation, pay adjustments, flexible workplaces) Career paths Competency assessments for staff that demonstrate leadership potential Leadership development programs at all levels of the organization

Each program selected should include an implementation plan with clear timelines, milestones, and completion dates. In addition, programs should be integrated to assure logical sequencing of activities for employees and the organization. As an example, competency assessments based on the qualifications required for leadership should be made available to employees at all levels of the organization—and not just at the point of entry into a leadership development program. Since selection

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into leadership development programs is highly competitive, it is critical to assure that all employees have access to the information they need to build their track record of leadership and results. It also helps drive leadership development down through the organization’s hierarchy, creating a true learning organization where leadership competencies are recognized, developed, and rewarded at all levels. Once a succession program has been selected, it is critical to monitor its performance, using the selected performance metrics, on an ongoing basis. This close attention to how the program is progressing enables human capital officers to make midstream adjustments to implementation. Monitoring should include regular communication with program participants and with agency leadership. As an example, the Veterans Health Administration (VHA) uses its twenty-one divisions or networks across the United States to regularly oversee and monitor its national leadership program. The VHA instituted quarterly meetings of the twenty-one network coordinators to assess the success of individual programs and to discuss what can be learned on a national, broad-based level. The questions asked at these meetings are simple: “What can be improved?” and “What can we do differently?” The regions also run a web-based Annual Planning Evaluation to specify issues, challenges, or problems—and to document successes. A national deployment committee compiles the assessments to make program recommendations. Clinical, business, and financial measures are part of the overall process. Based on this ongoing assessment, regional programs are further refined, continually building on lessons learned (OPM 2006). Leading organizations link their leader development programs to organizational transformation needs as outlined in the SHCM paradigm. Their leadership development programs, discussed in the next section related to coaching, deliberately aim at both horizontal growth and vertical transformation as necessary correlates to accomplishing SHCM goals, life-long learning, and adaptation to the ever greater demands of a rapidly changing global society. In this scenario, an individual’s ideal leadership development plan supports both horizontal learning and the transition to the next, more complex meaning-making stage in order to fulfill SHCM goals. Because coaching can be a critical component, particularly related to vertical transformation, it is especially useful in developing change-adept executives. Leadership Development and Executive Coaching Most learning, training, and development in an organizational context is geared toward developing people by teaching them new skills, behaviors, and knowledge in order to enable them to apply their new competencies to widening circles of influence (Cook-Greuter 2004). In the words of Cook-Greuter, this “horizontal” development is “like filling a container to its maximal capacity” (276). In addition to horizontal development, developing change-adept, transformational leaders also calls for vertical development—development of inner potential. Vertical development calls for supporting people to transform their current way of

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making sense toward broader perspectives, expanding, deepening, and enriching a person’s current way of meaning-making (Cook-Greuter 2004). This vertical development is what Cook-Greuter calls transformations of consciousness (277). In vertical development, only specific long-term practices, self-reflection, action inquiry, and dialogue as well as living in the company of others further along on the developmental path have been shown to be effective (Cook-Greuter 2004). From a continuous learning perspective, leader development—both horizontal and vertical development—is viewed as an ongoing process based on the assumption that no single developmental event, no matter how powerful, is enough to create lasting change in an individual’s approach to leadership tasks (Van Velsor, Moxley, and Bunker 2004). Traditionally coaching was seen as horizontal development—a by-product of performance appraisal—an activity through which managers work with subordinates to foster skill development, impart knowledge, and inculcate values and behaviors that will help subordinates achieve organizational goals and prepare them for more challenging assignments. Now there is an emerging emphasis on coaching as an essential skill set for leaders (Whitworth et al. 2007), and the definition of coaching has widened significantly. The expanded view of coaching is about vertical development—shifting the observer so that the person being coached begins to see what to do from a different perspective, consistent with what Cook-Greuter (2004, 277) calls meaning-making. In the coactive coaching model, when an employee is with her coach, she “rediscovers” the unique person that she is—the natural, effortless, genuine self. Then, anchored in herself, the leader automatically accesses more creativity, inspiration, and drive. Most importantly, people are drawn to others who are authentic— comfortable in their own skin—and people will trust and follow them more; that is, people want to be led by someone “real.” This is partly a reaction to the turbulent times we live in. It is also a response to the public’s widespread disenchantment with politicians and businesspeople (Goffee and Jones 2005, 88): Authenticity is not the product of pure manipulation. It accurately reflects aspects of the leader’s inner self, so it can’t be an act. But great leaders seem to know which personality traits they should reveal to whom and when. They are like chameleons, capable of adapting to the demands of the situations they face and the people they lead, yet they do not lose their identities in the process. Authentic leaders remain focused on where they are going but never lose sight of where they came from. Highly attuned to their environments, they rely on an intuition born of formative, sometimes harsh experiences to understand the expectations and concerns of the people they seek to influence. They retain their distinctiveness as individuals, yet they know how to win acceptance in strong corporate and social cultures and how to use elements of those cultures as a basis for radical change.

The basic underlying assumption of the coactive leadership coaching model is that leaders who are capable of developing their inner potential automatically create

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higher engagement, personal development, and performance for others—the core qualities of change-adept leaders. Within the leadership coaching model described, the interactive elements described continually reinforce each other and create a positive spiral. The coactive coaching relationship challenges the person being coached to become a master of his own perspectives and mindsets, and of the freedom this brings to create what one wants. A leader who is a master of his own perspectives and mindsets challenges the unexamined assumptions and perspectives that limit him from being creative—and that impedes the creativity of others. The leader also, through the leadership coaching experience, learns to remain flexible in response to the consequences of actions, continually iterating until the desired results are achieved. Within this model, the job of a coach is to understand the client’s structure of interpretation, then in partnership, alter this structure so that the actions that follow bring about the intended outcome. Coaches do this by providing a new language that allows the client to make new observations. Flaherty (2005, 9) states: We cannot find chartreuse unless we have the language for it. We can’t find the brake pedal in our car unless we have the language of driving. We can’t observe what we’re feeling if we don’t have the language of emotion. We can’t tell if we are communicating effectively if we don’t know what to look for.

The second vital element the coach provides is practices that allow the language introduced to become permanently part of the client’s structure of interpretation. Flaherty (2005, 10) states: No one can learn to drive a car simply by learning the language of automobiles and traffic laws. After learning that language, we must get behind the wheel, spending many hours practicing driving. It’s only by this continual, focused, intentional practice that we become competent drivers. Practicing without knowing the language may leave us able to drive, but we will be powerless when breakdowns occur or when we have to coordinate our driving with other people, say at a crowded urban intersection.

In essence, to connect the importance of language and practice to the products of coaching, language is what allows the client to be self-correcting and selfgenerating, and it is practice that makes it possible for the client to become an excellent long-term performer. From the SHCM perspective, self-correction means that the person being coached can observe when they are performing well and when they are not and will make any necessary adjustments independently of the coach (Flaherty 2005). Selfgeneration means that the person being coached can always improve. Well-coached people know this and will continually find ways on their own to do so. They will practice more, or they will watch others perform, or they will learn an activity that will strengthen them in a new way that improves their competence. For C-level managers, the odds are that many will need coaching either in their transition into new positions or to prevent derailment. According to Bacon (2003, 293):

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In his study of good-to-great leaders, Jim Collins and his research team identified only eleven CEOs of the 1,435 companies in their initial sample as Level 5 leaders—the type of leader “who builds enduring greatness through a paradoxical blend of personal humility and professional will” (p. 29). Few of these, Collins notes, are recognizable names: “They were seemingly ordinary people quietly producing extraordinary results” (p. 20). If one accepts Collins’ conclusion that very few CEOs qualify as Level 5 leaders, then there is a considerable need for C-level coaching, especially when leaders are promoted to C-level positions or assume those positions from another organization. In our experience, the first three months or one hundred days is the most critical, because this is the honeymoon period, during which new executives need to establish their leadership within the new organization or in the new position and when people inside the organization are apt to be most forgiving as new executives learn to “get it right.”

Coaching the C-level executive, particularly someone new to the organization, means asking a lot of questions throughout the organization about what people expect from this new leader and interpreting and passing on those expectations. It means looking for the critical success factors and uncovering critical obstacles (Bacon 2003). In the context of establishing an SHCM culture, it means helping the executive assess his/her leadership style to see how it can be an asset or a liability related to leading organizational transformation. Best Practices and the Future of Strategic Succession Management Leading organizations that embrace strategic succession management as part of the SHCM process have a number of best practices in place. They have: 1. Leadership that is committed to organizational transformation. Risk taking is inherent to organizational transformation, and requires leaders who are willing to take those risks—and who encourage others to take risks. Officials responsible for strategic human capital management must be reassured that innovative approaches that achieve organizational outcomes will be rewarded, and not discouraged. Agency leadership must visibly support the SHCM agenda of organizational effectiveness. 2. Human capital officials who have the capacity to engage in the strategic conversation with agency leadership. Human capital officials must have a seat at the table when strategic discussions take place. In the federal sector, the Chief Human Capital Officers Act made great strides in assuring that human capital is part of the agency’s overall strategic planning. Drilling this strategic capacity down throughout agencies’ human resource operations is critical to assure that human capital officials are working collaboratively with line managers to incorporate HR into their strategic thinking and decision making. 3. Human capital officials who have the capacity to use data for predicting organizational need and measuring the results of human capital programs. Transforming human capital professionals from transaction processors to analysts and strategic thinkers is critical for supporting agency leadership in making informed

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decisions that position the organization for the future. Talent, time, and resources must be dedicated to human capital data systems, analysis, and planning. 4. Workforce development funds dedicated to the program requirements of strategic succession management. In periods of scarce public resources, human resource and workforce development funds are often the first to be cut. The key for effective SHCM is to assure that budgetary decision makers understand the effect that amply resourced human capital operations can and do have on the agency mission. 5. Human capital officials who know how and why to evaluate SHCM strategies. The evaluation of SHCM strategies should ask the simple question: Did the program accomplish its stated organizational objectives? If not, why not? Two key principles should guide program evaluation. First, a range of data should be gathered and analyzed rigorously as a way to identify program areas that need improvement. Not only should qualitative data from program participants be obtained, but this information must be matched up against quantitative workforce data. As an example, the Social Security Administration (SSA) made improvements to its recruiting system and expanded its leadership development programs in response to findings from its Retirement Wave Analysis. This analysis combined retirement projections (based on time-in-service disaggregated by occupation) with focus groups of recent SSA retirees to determine what issues affected an employee’s decision to retire. By specifying more clearly how organizational factors affected retirement decisions, SSA was able to adjust a number of the specific initiatives within its succession management strategy. These included training managers on behavior-based interviewing and developing a competency-based structured interview process; increasing hiring to over 3,300 per year; and expanding the leadership development program (OPM 2006). Program evaluators must be open to concluding that the program chosen was not effective for achieving the organization’s goals or that implementation choices rendered the program ineffective. To counteract a possible desire to protect a specific program from close scrutiny, agencies should consider procuring independent evaluations by third-party organizations, and using transparent and rigorous criteria that focus on organizational impact. Only through the transparent evaluation of succession management programs can agency leaders and human capital officers make effective decisions for future planning. Obtaining the participants’ input is key to an effective evaluation and to demonstrating that agency leaders are committed to incorporating employees’ input into the organization’s transformation actions. But all of the above is not enough if an organization’s culture does not emphasize the value that leadership development is self-development (Kouzes and Posner 2002). Warren Bennis called the “management of self” (knowing your skills and deploying them effectively) a leadership commandment. “Management of self is critical,” he says, because “without it, leaders and managers can do more harm than good.” In addition, the leader’s (self) voyage of development is not an easy one. In the words of Rooke and Torbet (2005, 76):

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Some people change little in their lifetimes; some change substantially. Despite the undeniably crucial role of genetics, human nature is not fixed. Those who are willing to work at developing themselves and becoming more self-aware can almost certainly evolve over time into truly transformational leaders.

Additionally, for those who are willing to work at developing themselves, we believe that the importance of coaching to engender authentic leadership, within the context of SHCM, will continue to grow as organizational structures get flatter and the necessity for continual learning and change-adept leadership is recognized. Some of our best institutions, from corporations to change agencies to schools, are learning that there is another way of doing business, a way that is consensual, cooperative, and communal: they are fulfilling a different prophecy and creating a different reality (Palmer 2000). References Bacon, Terry R. 2003. Adaptive Coaching. Palo Alto, CA: Davies-Black. Blandin, Nanette M. 2007. “Leading at the Edge of Chaos.” In Transforming Public Leadership for the 21st Century, ed. R. Morse, T. Buss, and C.M. Kinghorn, 138–153. Armonk, NY: M.E. Sharpe. Cook-Greuter, S. 2004. “Making the Case for a Developmental Perspective.” Industrial and Commercial Training 36(7): 275–281. Davenport, T.H. 2001. In The Future of Leadership, ed. W. Bennis, G.M. Spreitzer, and T.G. Cummings, 41–58. San Francisco, CA: Jossey-Bass. Dorfman, Peter W. 2003. “Introduction.” In Advances in Global Leadership, ed. W.H. Mobley and M.W. McCall, Jr., 3–7. New York: Elsevier Science. Flaherty, J. 2005. Coaching: Evoking Excellence in Others. 2nd ed. Boston: Elsevier Butterworth-Heinemann. Fulmer, R.M., P.A. Gibbs, and M. Goldsmith. 2000. “Developing Leaders: How Winning Companies Keep on Winning.” MIT Sloan Management Review 42: 49–52. Goffee, R., and G. Jones. 2005. “The Paradox of Great Leadership.” Harvard Business Review 83(12): 87–94. Government Accountability Office (GAO). 2003. Human Capital: Succession Planning and Management is Critical Driver of organizational transformation. Washington, DC: GAO-04-127T. Greenberg-Walt, C., and Robertson, A.G. 2001. “The Evolving Role of Executive Leadership.” In The Future of Leadership, ed. W. Bennis, G.M. Spreitzer, and T.G. Cummings, 139–157. San Francisco, CA: Jossey-Bass. Harvard Business Essentials. 2004. Manager’s Toolkit. Boston: Harvard Business School Press. Joiner, B., and Josephs, S. 2006. “Leadership Agility.” White paper based on an article published in The OD Practitioner 38(3). Kanter, R.M. 2002. “The Enduring Skills of Change Leaders.” In On Leading Change, ed. F. Hesselbein and R. Johnson, 47–59. San Francisco, CA: Jossey-Bass. Kettl, D. 2007. “Collaboration in Government.” Presentation to the Federal Executive Board Annual Conference. Washington, DC. August 1. Kouzes, J.m., and B.Z. Posner. 2002. The Leadership Challenge. 3rd ed. San Francisco, CA: Jossey-Bass.

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Lawler, E., III. 2001. “The Era of Human Capital Has Finally Arrived.” In The Future of Leadership, ed. W. Bennis, G.M. Spreitzer, and T.G. Cummings, 14–25. San Francisco, CA: Jossey-Bass. National Academy of Public Administration (NAPA). 2005. “Literature Review: Succession Planning and Leadership Development.” Washington, DC: NAPA. Office of Personnel Management (OPM). 2006. Strategic Leadership Succession Model. Guidance document for federal agencies issued by OPM. Washington, DC: OPM. ———. 2007a. Human Capital Assessment and Accountability Framework (HCAAF). Washington, DC: OPM, Resource Center. Available at www.opm.gov/hcaaf_resource_ center/1–5.asp (accessed 12/04/07). ———. 2007b. Human Capital Assessment and Accountability Framework (HCAAF) Systems, Standards and Metrics (SSM). Available at www.opm.gov/hcaaf_resource_center/ assets/hcaaf_ssm.pdf (accessed 12/04/07). Palmer, P. 2000. Let Your Life Speak. San Francisco, CA: John Wiley & Sons. Rooke, D., and W.R. Torbert. 2005. “Transformations of Leadership.” Harvard Business Review 83(4): 66–76. Slater, P. 2001. “Leading yourself.” In The Future of Leadership, ed. W. Bennis, G.M. Spreitzer, and T.G. Cummings, 103–115. San Francisco, CA: Jossey-Bass. Spreitzer, G.M., and T.G. Cummings. 2001. “The Leadership Challenges of the Next Generation.” In The Future of Leadership, ed. W. Bennis, G.M. Spreitzer, and T.G. Cummings, 241–253. San Francisco, CA: Jossey-Bass. Spreitzer, G.M., and R.E. Quinn. 2001. A Company of Leaders: Five Disciplines for Unleashing the Power in Your Workforce. San Francisco, CA: Jossey-Bass. Stone, A. 2007. “Planning for the Next Generation of Managers.” Federal Times. U. S. Department of the Interior (U.S. DOI). 2006. Leadership Succession Plan. Available at www.doi.gov/hrm/doilsplan.doc (accessed 12/04/07). Van Velsor, E., R.S. Moxley, and K.A. Bunker. 2004. “The Leader Development Process.” In The Center for Creative Leadership Handbook. 2nd ed., ed. C.D. McCauley and E. Van Velsor. San Francisco: Jossey-Bass. Whitworth, L., K. Kimsey-House, H. Kimsey-House, and P. Sandahl, eds. 2007. Coactive Leadership Coaching. 2nd ed. Mountain View, Ca: Davies-Black Publishing. Zaplin, R.T., and S. Smith-Heimbrock. 2008. “Developing Leaders in the New Age of Government.” In Innovations in Public Leadership Development, ed. Ricardo Morse and Terry F. Buss, 49–175. Armonk, NY: M.E. Sharpe.

10 Four New Models of Networked Leadership Development Kitty Wooley

In 2003, four unrelated groups of federal employees (Feds) in Washington, D.C., began investing substantial amounts of personal time into generating solutions to two problems with which human capital practitioners everywhere are familiar: • inadequate or ill-fitting support for inexperienced new hires, leading to feelings of isolation, and • a disconnect between leadership training and succession planning, fueling employee disappointment and disengagement. Either outcome makes it difficult for an agency to realize the intended return on investment. On that basis alone, the emerging solutions that follow are worthy of study. This chapter reports on new networks that have been generated by employees of several federal agencies—networks with the potential to turn these problems into solutions. Here, four such networks are labeled networked groups, because neither network nor group fully captures the potential of what is happening. I have functioned as initiator, advisor, or observer in all four networked groups. All involve continuing inputs of discretionary energy by Feds for work-related purposes, have strategic development of the individual as an underlying theme, and constitute de facto leadership development. Three are interagency; all are multisector to a degree. Each has something unique to contribute to the human capital dialogue. To the extent that federal agency decision makers can embrace the mindsets associated with this activity, they can leverage them to increase employee ease and engagement, attract collaboration across dissimilar agency components, and equip bureaucracies to handle more complex problems. Better public service can result. Why Do Networked Groups Matter? Networked groups matter because they can do things traditional hierarchies can’t. The governmental response to Hurricane Katrina, taken as a whole, should inspire a sense of urgency: another huge natural disaster, or similarly complex, nonroutine 131

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event, will happen again. A credible response presupposes agile, well-coordinated, competent action by federal agencies, the private sector, religious institutions, civic organizations, and state and local government. (See chapter 6 on Katrina and the federal surge workforce.) Don Kettl of the University of Pennsylvania anticipates some challenges that will accompany the development of innovative human capital solutions (Kettl 2006). One challenging circumstance occurs when those who possess key information work at the bottom of the hierarchy. As more new hires enter the federal workforce, this will increasingly be the case. Agency first-line supervisors and middle managers, who are doing more with less and who may feel that they are fighting fires all the time, are understandably less concerned about rethinking organizational structure than about meeting deadlines that impact today’s bottom line. A manager here and there may be conscious that an employee has begun requesting conference rooms for after-work meetings with other Feds, but as long as the requests do not interfere with the organization’s ability to function, that’s the end of it. As yet, there is surprisingly little recognition, anywhere in the community, that something new and potentially very helpful has emerged. The good news is that the dynamics of the networked groups can exist within agencies without reorganization or funding, as long as some flexibility exists and boundaries are somewhat permeable. The behaviors can coexist comfortably with strong internal controls, although not with micromanagement. The real control, though, derives from a participant’s public service orientation and alignment with agency mission—something that the human capital community’s emphasis on “line of sight” has begun to address. The Ability to Generate the Right Relationships Is an Asset Government thinking about human networks has not moved far beyond the challenges associated with controlling them. A radical exception is the establishment of Intellipedia, a breathtaking development in which a conscious tradeoff of some control for improvements in analytic speed and integration is under way (Walker 2007). The wiki accompanies a cultural shift across the intelligence community, from need to know to responsibility to provide. Mike McConnell, Director of National Intelligence (DNI), who explained the necessity of this shift in an April 4th plenary session of Government Executive magazine’s 2007 Excellence in Government conference, indicated that the best intelligence depends on analysts’ reaching across entrenched silos and empowering counterparts. At the beginning of a task, all parties may be total strangers. Some participants may be much less seasoned. Neither factor can be allowed to stand in the way of collaboration aimed at producing the best possible intelligence. Networked groups described below also reach across silos and empower counterparts, for reasons that should interest agency executives. Connecting relationships signify access to talent, experience, and efficacy beyond an organization’s boundaries. Once connected, self-starting participants’ behaviors represent an

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opportunity to increase employee engagement, retention, and even recruitment, if agency senior leaders are able to expand their mental models enough to embrace the behaviors the way DNI has begun embracing Web 2.0 culture. Challenging? Absolutely. But, as the intelligence community is demonstrating, a “both/and” solution can catalyze energy and creativity. The good news is that numerous young and middle-aged Feds are using their leisure time to set themselves tasks, master new skills, and link up with like-minded people in a manner that prefigures new capacity in government. But Organizational Networks Are Nothing New, Are They? Twenty-five years ago, John Naisbitt’s Megatrends (1988) asserted that a shift from hierarchies to networks was occurring in response to the failure of hierarchies to support solutions to big problems. He observed that most hierarchies were unable to connect employees laterally, independent of their locations within the organization. Technology companies were seen as pioneering a shift in this area. While not every prediction (“smashing the pyramid”) has come true, the networked groups described below harken back to two phenomena Naisbitt described: the egalitarian aspect of the horizontal link, and the fact that rewards can result from empowering others. And each networked group connects across organizations in different ways. Those phenomena do not harmonize immediately with bureaucratic sensibilities, one reason why the full potential of the networked groups may not have hit the human capital radar, despite the fact that each has fairly broad reach. The largest has appeared in print and radio (e.g., Azaroff 2006; Hardy 2006; “FEDTalk” 2006) and has received invitations to partner from all sides. What has not emerged is a nuanced understanding of the reasons such networked groups exist or the true solution potential that they embody. Not everything about them is remarkable; for instance, it is still the norm that a small subset of members tends to do most of the work. But, in every networked group, one encounters hugely committed Feds who are building capacity for government on their personal time, who are hoping to be enlisted on the job for purposes that are worthy of their capabilities. The Networked Groups Young Government Leaders (YGL) Megan Quinn of the Environmental Protection Agency (EPA) and Steve Ressler of the Department of Homeland Security (DHS) began hosting happy hours in 2003 out of a sense that there were not enough ways for young Feds to connect, inside or across agencies. Gatherings over the next two years consisted of a steadily growing group that convened at locations near downtown Washington, D.C. In 2005, the group co-hosted a happy hour with Labor’s Effective Advocates for Development (LEAD), a young Fed group at the Department of Labor. In the same year, a website

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(www.youngovernmentleaders.org) was launched, committees were established, and the first of a series of YGL articles appeared in the Public Manager. The founders, who had been invited by several organizations to participate on panels about recruiting and retaining young Feds, were careful to delegate opportunities to other YGL members. This generous and strategic decision freed the founders to pursue additional marketing activity in order to build name recognition that would attract members and invitations to participate in government human capital conversations. Simultaneously, a group of young Feds began meeting in Atlanta and requested YGL chapter status, the first of several non-Washington-based Feds to do so (see Figure 10.1 on pages 136–137). In March 2005, the founders attended an Evening of Excellence hosted by the Council for Excellence in Government. The program was designed to honor a State Department employee, Susie Baker, who had won a Senior Fellows Award for her contribution to the growth of YPro (see below). Susie chose to invite a panel of interesting young Feds, who talked about intergenerational leadership with a room full of senior employees from across government. Steve Ressler and other young Feds lined the walls. There was a palpable tension in the room until one of the panelists answered a senior manager’s loaded question in a beautifully nuanced way—at which point everyone in the room relaxed and the dialogue caught fire. Three of the four networked groups described here were in the room that night, a stimulus for further YGL expansion to acquire a senior advisor and set up a Yahoo! Group that still supports the executive team. Since then, YGL has partnered numerous times with the Council for Excellence in Government, the National Academy of Public Administration, other good government organizations, and Office of Personnel Management (OPM) conference planners in recruiting and retention discussions. YGL members now serve on a Council for Excellence in Government advisory board and the board of editors of the Public Manager. As of June 2007, more than 1,000 young Feds from most civilian and military agencies had registered at the YGL website. By then, after-work programming had expanded beyond panel discussions to include a joint happy hour with Young AFCEA (a spin-off of the Armed Forces Communications and Electronics Association, which tailors professional networking events to younger IT contractor employees), a financial education seminar, and an interactive session on self-mentoring, with a self-employed educator and business writer, that was attended by nearly seventyfive young Feds. The year before, YGL developed formal strategic planning and considered ways to develop financial support (as well as the things such support would allow YGL to do) as Megan Quinn headed off to graduate school. This was done under the leadership of two committed Government Accountability Office (GAO) analysts, Adrienne Spahr and Katherine Walker, following the development of bylaws and an election process. Active YGL members were elected to fill public relations, communications, strategic planning, social networking, and membership committees, as Walker chaired professional development. experience in a particu-

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lar discipline, such as public relations, was not a prerequisite for that committee’s chairmanship, although prior service on a committee was. This illustrates a YGL way of life that is rare in civilian government: cross-training. One of the reasons this group has expanded so much is that it gives young Feds a way out of the boxes to which they’ve been assigned within their agencies. The executive team, committee members, and ad hoc volunteers acquire advanced skills or knowledge as they realize that they need them and will be able to use them right away. For instance, YGL leaders learned how to vet incoming partnering proposals from for-profit organizations in 2006 to ensure that federal ethics rules would not be violated, and returned a new member’s proposal in 2007 accompanied by a concern about Hatch Act compliance. People with a variety of job classifications learn how to plan events, write press releases, get restaurant space for happy hours, book conference rooms at other agencies, and anticipate unintended consequences. Members are gaining experience and savvy at an accelerated rate, as they benefit from the crossfertilization of ideas that occurs when different agency cultures come in contact. U.S. Department of State Young Professionals Society (YPro) YPro and YGL members take responsibility for their own development in many of the same ways, although the former was designed specifically to foster relationships and career development among young State Department foreign service and civil service professionals and has a formal membership process. As an employee organization formally recognized by the State Department, it collects membership dues from over 500 members and accounts for expenditures. It was established by Elizabeth Ash and Stephanie Hallett in September 2003, following an open house that they organized to confirm sufficient interest. Ash and Hallett, new hires at the State Department the year before, met on Take Your Child to Work Day and discovered that they had one big thing in common: they felt isolated from most other employees because they were considerably younger. In addition, Ash had not had the benefit of new employee orientation, because she began work as a contractor. Hallett (the sole HR practitioner among the founders, who is now overseas) and Ash decided to explore how to create a State Department affinity group in order to gather other young employees. After they wrote bylaws, recruited an advisory board, and received approval from a sponsoring organization, Hallett and Ash kicked off the new professional and social networking group. Committees include: professional networking, overseas outreach, mentoring, social networking, administration, membership and recruitment, and marketing. Although YPro limits membership to State Department and U.S. Agency for International Development employees, it has partnered with organizations as different as the CIA young professionals group, Miriam’s Kitchen, and the World Bank. With their counterparts in the other affinity groups, YPro chairs serve on the Diversity Advisory Council convened by the Office of Civil Rights, YPro’s sponsor. YPro members are regular participants in new employee orientation sessions. A

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Figure 10.1 YGL Perspective on Recruitment and Retention of Young Professionals CHALLENGES IN RECRUITING TOP TALENT TO FED CAREERS • Many young professionals choose jobs in the private sector because it takes too long to hear back from federal positions they applied to • Many young professionals don’t know the benefits of public service or the types of challenging and rewarding careers offered Some Possible Solutions to Attract Young Professionals: • Market the benefits of public service and develop performance systems that offer incentives • Emphasize that government careers can be challenging and rewarding (they provide an opportunity to serve the country and fulfill personal interests) • Offer student loan reimbursement • Design true “pay for performance systems” (e.g., bonuses tied to performance) Strategies for More Effective Recruiting: 1. Develop a hiring process that is quicker, clearer, and less burdensome • OPM should take the lead in streamlining the online application process, incorporating electronic responses to and updates to applicants, and a better communication mechanism between USA jobs and agencies 2. Take advantage of career fairs held at universities, colleges, and other venues • Deliver on-campus presentations that are equivalent in quality to those delivered by private sector companies • Establish relationships with career centers to help spread the word (especially for lesser-known agencies) • Put on more job fairs and more vigorously publicize them • Emphasize opportunities, benefits, perks, and other advantages of federal employment and clearly explain the government hiring and promotion process • Utilize young feds groups, like YGL, to participate in recruitment fairs for specific agencies or for the federal government in general (through OPM or Partnership for Public Service “Call to Serve”) 3. Offer internships or similar short-term programs • Design innovative internship or short-term employment that get young professionals in the door quickly and allow both the agency and young Fed to determine if there is a match for the long-term (e.g., offer conversion to full-time at the end of a successful intern program) • Create more professional development programs, like the Presidential Management Fellows Program • Develop more internship and training programs that are geared for undergrads • Establish grad/post-grad internship/scholarship/training programs with less strict eligibility requirements (i.e., programs that aren’t available only for GS 14/15 candidates or for individuals with 4–5 years’ experience)

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4. Take proactive steps to bridge the gap left by retiring feds • Work with upper management and Human Resources to accelerate recruitment and hiring practices • Utilize internet job-search resources, including USA Jobs, monster.com, “Best Places to Work,” and so forth. • Encourage positive word of mouth—especially from Young Feds’ friends who are federal employees themselves CHALLENGES FACING FEDERAL GOVERNMENT IN RETAINING TOP TALENT • Private sector jobs are booming, providing ample choices and often higher pay for types of jobs similar to those offered in government • Gen X, Y, and Z are less interested in job security, more interested in challenging, fulfilling careers Some Possible Solutions to Retain Top Talent in Government: 1. Continued development opportunities • A balance between work responsibilities and career development activities • The opportunity to try different assignments in house or outside the agency, which may benefit the entire agency • Encouragement and approved leave to attend lectures, conferences, and so on, to gain knowledge and new skill sets that benefit the organization • Provide training opportunities or detail assignments (IT Exchange Program and the Voyagers Program) 2. Promote uniquely challenging environment with direct application and effect on the nation, including • A culture that supports the office’s mission and strategic plan (or the opportunity to work on developing the same for the office) • Opportunities to move into leadership positions as rewards for good work • Travel opportunities • A sense of being appreciated or recognized • An opportunity for employees to see how their work “makes a difference” and how it fits into the larger government picture • The chance to work with others who share their passions and work ethic • Opportunities to network with other future leaders in their work 3. Ability to influence policy decisions and design high-quality programs on the ground 4. Support from and open communication with supervisor and peers • Clear and frequent communication of expectations, goals, individual development plans (with goals, milestones, and benchmarks), as well as clear and frequent feedback on job performance and progress • Motivation and inspiration for the ultimate attainment of SES/GS14–15 positions • Advice or, if possible, mentoring • Positive incentives instead of negative incentives to stay in the same office • An environment of mutual respect, given experience levels; this is especially important in offices where an age gap exists • Encouragement to attend non-work-related functions such as retirement celebrations, office parties, and so forth, in order to enhance new employees’ familiarity with the rest of the office’s staff

Note: Drafted by YGL leadership in 2006.

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rich variety of offerings occur at various times of the day and week. Sample event titles, as reported in the group’s 2004–2005 annual report, follow: • • • • • •

Unwritten Rules of the State Department with Mac Saddoris Meet Paul Foldi from the Senate Foreign Relations Committee Happy Hour with World Affairs Council USA–Panama World Cup Qualifier Evening of Diplomatic Networking at Meridian International Center Professional Reading Group led by Donald Jacobson

YPro, like YGL, sends out a weekly e-mail event listing to members and supportive others. Some participants in the other three networked groups keep tabs on YPro’s ever-changing offering. This innovative program, including the practices of its co-founders, may represent a turnkey solution for some agencies that are challenged in supporting new hires. Conversations About Leading (CAL) Conversations About Leading (CAL) was begun by Jackye Zimmermann, a former university French instructor and fine arts aficionado who manages the Editorial Policy, Publications, and Printing group at the Department of Education (ED). CAL began in April 2003, following the September graduation of two dozen ED employees from the Council for Excellence in Government’s Fellows Program. The idea, incubated as Zimmermann experimented with happy hours as a way to see the other program participants again, was for the group to stay together and find ways to deliver a return on investment to the agency. The author and two graduates from previous years formed a steering committee that has operated continuously since then. In September 2004, Zimmermann received an Honorable Mention through the Council for Excellence in Government’s Senior Fellows Award Program in recognition of the idea’s promising potential. About 350 people receive invitations to CAL’s events, including current and former fellows, prior speakers, Presidential Management Fellows, and other interested employees and guests. Anyone who expresses interest is added to the mailing list. Decisions are made by e-mail; in-person meetings are held to a minimum because the planners work in widely dispersed buildings in Washington. The monthly brown-bag sessions are conducted in centrally located buildings. Attendance ranges from fifteen to thirty people. Although the original aim—to keep the senior fellow cohort together—was never realized, a broad variety of young and middle-aged Feds, individual contributors, and managers finds value in the sessions and has continued to come together in dialogue. Regular visitors come from Department of Health and Human Services (HHS) and Treasury, and two prior guest leaders (retired Feds, who deliver process communication training to National Aeronautics and Space Administration employees and teachers nationwide) come from Mary-

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land when they are not traveling. Each August, a two-hour retreat is held in lieu of programming. The retreat is attended by past participants and interested visitors, whose input helps shape the slate of guest leaders for the next eleven months. Visiting leaders speak pro bono, as there is no budget for travel or honoraria. In its one expenditure per year, the steering committee uses personal funds to donate dessert and drinks for the retreat. Overall, the arrangement is light and fast enough to be sustained month after month under all workload conditions. The first guest leader was Thomas P. Skelly, director of ED’s Budget Service since 1997 and holder of three Presidential Rank Awards. Over time, the group has looked outward for others who lead by example and who are willing to engage with the group. For example, in June 2007, Conversations About Leading hosted Don Jacobson, director of the Consular Training Division at the Foreign Service Institute, Department of State. Don, a YPro mentor who invests his discretionary time to improve government, is known for developing a website, www.govleaders. org that aggregates leadership development content from many sources. Perhaps the high point in CAL’s history was a visit from Christian McBride, the jazz bassist from Philadelphia who has performed with many jazz greats and is now co-director of the National Jazz Museum in Harlem. His presence and perspective on leadership delighted participants, who spent 90 minutes considering how it is that a jazz band can work, given its complex and improvisational nature. At one point, a leading-from-the-middle theme was sustained for several months, to model the steering committee’s belief that true leadership is primarily about behavior, not position. This concept of leadership is seen by the committee as a key enabler of an employee’s assumption of responsibility, feelings of efficacy, and engagement in mission. If leadership can be about behavior, then everyone has the potential to become a leader. However, if leadership is only about position, then it follows that employees whose names are not found on the organization chart are not leaders and are unlikely ever to become leaders—and thus are not responsible to exercise leadership in their sphere. Two completely different story lines follow from these beliefs, with vastly different consequences for the organization. Senior Fellows and Friends (SFF) Senior Fellows and Friends grew somewhat accidentally out of a dinner engagement in July 2003, following a conversation between the author and Jim Trinka, now at the Federal Aviation Administration, about his research on the unique, vital strengths of Internal Revenue Service (IRS) middle managers and how that focus was helping them improve agency performance. Other senior fellows, including a DHS leadership coach who helped set up the dinner, and acquaintances who were focused on improving government were invited to attend. Ten people subsequently met in an Arlington restaurant, looked at Trinka’s data and accomplishments, and engaged in a spirited dialogue with him. After a few weeks, some of the participants inquired about the next dinner. This pre-

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sented the author with a choice that aligned with a business goal (do something to generate a return on investment for her agency after having been sent through a high-quality leadership training program the year before) and a personal goal (invent a sandbox in which Feds and others who wanted to improve government could have ideas, escape the limitations of their employers’ outdated assessments of them, and egg each other on to develop ways to create personal updrafts that could lead to improved mission delivery). The original 10 have grown to about 375 people from government, local corporations and nonprofits, universities, and good government organizations. Their rank, which is not on display during the evening, ranges from senior executive to young Fed, with an occasional intern, although most participants tend to be midlevel. Attendance ranges from one to three dozen, although the average is about two dozen. The emphasis is on the practice of friendly collegiality and constructive conversation that can open mental or physical doors for participants. Events, mostly dinners, originally were held about four times per year but now occur more frequently. They are offered at the founder’s cost, prepaid or on an honor system, depending on the extent to which restaurants with dedicated meeting spaces and decent food require prepayment. That setup has been found to remind participants that they are responsible for their performance, whatever the task (in this case, RSVP’ing, showing up, ensuring that the author recoups costs and the wait staff is adequately tipped, and so on). In four years, all participants have risen to these high expectations, and that enables SFF to continue. As with all the other groups, guest speakers are invited to appear pro bono, and they do. The opportunity to talk about one’s work with a group of Feds and colleagues from other sectors is appealing to many. The speaker lineup has varied widely, including such guests as Roz Kleeman, an extraordinarily accomplished former Fed now at George Washington University; Mike Frenz, who handled real estate transactions for the 2002 Winter Olympics and is now a vice president at Ginnie Mae; Brian Friel, a National Journal columnist who writes “Management Matters” for Government Executive; Chris Mihm, managing director of Strategic Issues at GAO (who also is looking at the intersection of bureaucracy and network); and many other talented, constructive individuals who are making a difference. Participants have found creative ways to leverage new relationships with speakers, as in the case when a senior State Department employee connected a visiting Russian with Mike Frenz to discuss Ginnie Mae business practices a few weeks after Mike’s appearance. A sentence in the Wall Street Journal’s June 8, 2007, review of “Ocean’s Thirteen” provides an apt comparison: “The director, Steven Soderbergh, and his large, cheerful cast have managed to make the least possible movie that still resembles a movie [italics added], as opposed to ‘Ocean’s Twelve,’ which resembled nothing more than a ramble through European scenery” (Morgenstern 2007, W2). This describes SFF. It is the least possible structure that can enable a rolling conversation about government and leadership, to which some

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of the same people return again and again. Active membership revolves slowly as people take jobs in other cities, develop other interests in retirement, or get too busy at the office. Once, a project management leader who presides over monthly chapter dinners in Maryland was astounded by the fact that so many people who could not come RSVP’d “No” at Evite.com—and then proceeded to explain why not. He thought that this behavior (routine for SFF) signified a high level of interest. Perhaps such interest springs from the fact that there is almost no focus in the human capital community on activating the untapped potential of long-time employees. This seems odd because many baby boomers will not retire within the next three years. It is as though OPM and agency heads do not believe that people continue to learn and grow in middle age. If that is true, then they overlook one piece of the solution to the retirement tsunami. In late 2006, Harvard professor Steve Kelman devoted an entire column to the damage done by supervisors who do not believe that people can change (Kelman 2006). Most agencies do not excel at talent management yet, and perhaps the lack of belief in people’s ability to change is one reason why. It would benefit human capital practitioners to pay attention to specific management practices at various levels that either foster or destroy employee capacity-building, and then develop compelling stories that can be used to teach agency leaders how to mitigate the impact of supervisory underestimation of employee capability on talent management. Recommendations for Agency Leaders Each networked group described above has characteristics that can prompt new thinking and practical action by agency leaders. Two of many possible paths are outlined below. Make More Room for High Performers This recommendation would require substantial commitment and courage from all parties and would have corresponding transformative potential. Host a discussion with the YGL executive team at the agency and encourage inexperienced new hires to become active YGL participants. Commit to an ongoing relationship with the latter, build rapport, and have periodic discussions about what they are learning, how they think it can be applied within the agency, and what they think are barriers to such application. Follow the barrier discussion as far as it goes. If, at some point, a need for dialogue about generational differences comes up, have a facilitated dialogue. Keep it professional and follow it as far as it goes. Everyone learns; everyone has to give a little. Executives and managers hear things they may not want to hear, but their understanding grows and they come to respect their workforce. Employees of all ages hear things they may not want to hear, but they get more savvy about how government works and thus come to respect agency leadership. Develop incremental solutions, not grand plans, that

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support the mission and encourage self-starters to take more responsibility. Coach and support supervisors as they make adjustments. Move self-starters away from supervisors who cannot adjust. Establish an Informal Leadership Development Mechanism This recommendation is intended to complement formal agency leadership programs, not replace them. It arises from the knowledge that the selection process for any such program is imperfect, and people are missed—or, they “turn on” when it’s “too late.” Agency human capital executives could put out a call for collegial employees who have demonstrated an ability to work across boundaries and with many different people, charter a workgroup, and task it with the development of a recommendation for the establishment of an agency-based networked group within a specific timeframe. Rather than handpicking representatives from each component, the networked group way would be to follow the energy, letting employees self-select. If they have the abilities described above, they will reach into every component on their own initiative. The workgroup could be instructed to travel to the departments of State and Education in order to gather information from YPro and CAL leaders, returning to the agency to work through it and brainstorm formats, programming, and all other aspects including group leadership during facilitated sessions. Programming content, and the extent to which a new group would be structured, would vary by agency culture and business challenges. A discussion of draft recommendations and questions with executive sponsors would allow the parties to arrive at mutually acceptable solutions. After getting necessary buy-in at the chief executive officer (CXO) and program executive level and ensuring that the new leaders understood agency expectations and how to handle logistics, the executive sponsors would then mobilize internal communications to support publicity drafted by the new leaders. All employees should be encouraged to attend as they choose, and supervisors should be encouraged to enable their attendance. Executive sponsors would be well advised to form a permanent bond with group leaders and meet periodically, establishing a pipeline that connects employees with the chief human capital officer (CHCO) and provides the agency with another mechanism for implementing CHCO Council best practices as it invites employees to accelerate their own growth. Conclusion To focus on numbers or any other single characteristic of a networked group is to miss the point, which is that both newer and seasoned Feds are using their own time in very positive ways to develop abilities that accomplish results and add value in the workplace. To the extent that CHCOs and other CXOs are able

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to see and respect such efforts, this presents them with an opportunity. People will see what their filters let them see. From one angle, any of the above could be seen as groups of people who are merely playing at leadership. But look at the outputs and preliminary outcomes that have been achieved primarily on employees’ discretionary time: don’t they speak to many current needs in government? References Azaroff, Rachel. 2006. “Hire me already!” Federal Computer Week, October 9. Available at www.fcw.com/article96316–10–09–06-Print (accessed 10/122/07). “FEDtalk: Young Federal Workers.” 2006. February 17. Available at www.federalnewsradio. com/index.php?hlpage=5&nid=35&sid=712178 (accessed 10/22/07). Hardy, Michael. 2006. “Megan Quinn and Steve Ressler: Accidental organizers.” Federal Computer Week, October 9. Available at http://test.fcw.com/article96352–10–09–06-Print (accessed 10/22/07). Kelman, Steve. 2006. “A learning-Oriented workplace produces more positive achievements but also more mistakes.” Federal Computer Week, December 18. Available at www.fcw.com/article97093–12–18–06-Print (accessed 10/22/07). Kettl, Donald F. 2006. The Next Government of the United States: Challenges for Performance in the 21st Century. Washington, DC: The IBM Center for the Business of Government. Morgenstern, Joe. 2007. “Film Review.” Wall Street Journal, W2, June 8. Walker, Richard W. 2007. “Government Taps the Power of Us.” Federal Computer Week, May 21. Available at www.fcw.com/article102750–05–21–07-Print (accessed 10/22/07).

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Part 4 Innovation in Action

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11 A New Look at Paybanding and Pay for Performance The Views of Those Participating in Federal Demonstration Projects James R. Thompson and Rob Seidner

In recent years, federal agencies have evidenced a great deal of interest in paybanding—a system that places civil servants in a few broad bands that relate to pay for performance, rather than a system that promotes people through a number of steps based on longevity and seniority. Since the first payband system was implemented at a naval research facility in China Lake, California, in 1980, twenty-three additional such systems have been developed (Thompson 2007). Once implementation of the National Security Personnel System at the Department of Defense is complete, approximately 900,000 federal employees will be paybanded. The popularity of paybanding is largely attributable to flaws with the General Schedule (GS), the predominant compensation and classification system in the federal government. Concerns with the GS include that (1) little consideration is given employee performance in the pay-setting process, (2) classification procedures place too much authority in the hands of classifiers and too little in the hands of line managers, (3) too many resources are expended identifying and enforcing relatively small distinctions between levels of positions. Paybanding, in contrast, makes it easier to adjust pay according to performance, allows managers a major role in the classification process, and obviates the need to make fine distinctions between positions. Agencies have used a variety of authorities to gain exemption from the GS and to implement paybanding. A number have sought and received designation as personnel demonstration projects pursuant to the provisions of the Civil Service Reform Act of 1978. Under that law, agencies can request that certain provisions of the act be waived for purposes of testing alternative human resource management approaches. As a result of a requirement that demonstration projects be rigorously evaluated, a significant quantity of data has been compiled on the outcomes of these projects. In this chapter we review that data to assess paybanding as a human resource management (HRM) innovation. We are interested in (1) whether payband systems have met 147

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their stated objectives, (2) what can be learned more generally about payband systems as a result of the experiences of these agencies, and (3) whether, on the basis of these experiences, paybanding should be extended to other agencies. History of Paybanding in the Federal Government Paybanding as a HRM innovation was first implemented in 1980 at the Naval Air Warfare Center Weapons Division in China Lake, California.1 China Lake is a research and development laboratory having a high proportion of scientists and engineers. The facility was undergoing a reorganization at the time; with paybanding, fewer positions would have to be reclassified. Other advantages of paybanding from the perspective of facility management were that it allows (1) management to offer higher salaries to new hires than is generally possible under the GS and thereby offers recruitment advantages, and (2) line managers have more authority over pay and classification matters. Under the GS, classification experts decide the grade to which a position is assigned. With paybanding, there is less need to make fine distinctions between positions, so the classification function can therefore generally be handled by line managers. These managers, in turn, can be held accountable for the performance of their units. Subsequent to China Lake, a series of other agencies have implemented payband systems pursuant to personnel demonstration project authorities (see Table 11.1). The National Institute for Standards and Technology (NIST) initiated a paybanding demonstration project in 1988. That project was extended indefinitely by Congress in 1996. Pursuant to the National Defense Authorization Act of 1995, demonstration project authority was delegated to a group of research and development laboratories in the Department of Defense. Eight separate personnel systems, each covering a single laboratory, were set up pursuant to this authority starting in 1997. In 1998, acquisition employees at the Department of Defense were included in a demonstration project. Although the project does not officially end until 2012, acquisition employees will gradually be transitioned to the National Security Personnel System and will be covered by the paybanding provisions of NSPS. The Department of Commerce initiated a demonstration project for several units in 1998 as well. The majority of participants in the project are from the National Oceanographic and Atmospheric Administration. That project is due to expire in 2008. Pursuant to the provisions of Civil Service Reform Act (CSRA), all the personnel demonstration projects have been subject to formal evaluations by outside entities. The Office of Personnel Management (OPM) has performed the evaluations for some of the projects, and in other instances, the agencies have retained private contractors. The data cited here draw from those evaluations. For purposes of the evaluations, comparisons were made between the results for the demonstration projects and for control or comparison groups. Although the various evaluations have some survey questions in common, there is some variation in method and format, so the data are therefore not comparable in all instances.

Navy

Defense

Commerce

Defense Defense Defense

Commerce

Defense

Defense

Defense

Defense Defense Defense

1980

1988

1996 1997 1997

1998

1998

1998

1998

1998 1999 2001

Technology Administration Economics and Statistics Administration National Oceanic and At­mospheric Administration National Telecom­muni­ cations and Information Administration Office of the Secretary

National Institute of Stan­ dards and Technology Acquisition Employees

Units/Groups

Date Imple- Department mented or Agency

Naval Sea Systems Command Warfare Centers Army Engineer Research and Development Center Army Medical Research and Material Command Army Research Laboratory Naval Research Laboratory Army RDECOM Communications— Electronics Research, Development and Engineering Center

Air Force Research Laboratory Army Aviation and Missile Research Development and Engineering Center

Space Warfare Systems Command, San Diego and Naval Air Warfare Center Weapons Division, China Lake, CA

Units Paybanded

Paybanding Demonstration Projects in the Federal Government

Table 11.1

2,000

1,100 1,900 2,800

1,600

21,000

76 360

6,377

508

1,200 6

3,000 6,500 2,400

8,000

   Year 4    Year 3

   Year 4

   Year 4

   Year 4

   Years 1–7

   Year 3    Year 5    Year 5

   Years 1–5

   Years 1–14

No. of Employees Evaluation Reports Paybanded Available

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Paybanding Project Objectives and Measures Table 11.2 lists the stated objectives of the five demonstration projects reviewed in this study and also identifies those objectives toward which the paybanding intervention is targeted. One such objective is to improve the quality of new hires. One criticism of the GS is that with few exceptions, the salaries of new hires must be set at step 1 of the grade to which their position is assigned. A concern is that this puts agencies at a disadvantage when competing with outside organizations for talent. In most payband systems, starting salaries can be set anywhere within the band to which the position is assigned, thus allowing the hiring official flexibility in offering a salary above the minimum. At the Department of Commerce, for example, the width of the entry-level band for scientists and engineers is the equivalent of six GS grades, giving appointing officials significant discretion in setting starting salaries. A second objective common to most of the projects is to increase the retention of high performers. Paybanding allows a closer link between pay and performance than is generally possible in the GS system. Annual pay increases can be linked directly to individual performance such that those receiving high ratings receive greater pay increases than those receiving lower ratings. With the GS, in contrast, the vast majority of employees receive a single-step increase every 1, 2, or 3 years, regardless of performance.2 Payband systems generally go further, however, by (1) allowing base pay increases greater than the equivalent of an additional step in the GS system, (2) denying base pay increases, including the general pay increase, to poor performers, and (3) scaling base pay increases according to performance rather than simply limiting such increases to one or two steps.3 A presumption is that the higher pay available under paybanding can induce the high performers to stay. A third objective of most payband systems is to provide managers with more authority over pay and classification matters. The GS has been criticized on the basis that classification decisions, which can have important organizational consequences, are made by classification experts on the basis of technical considerations rather than by managers on the basis of management considerations. Similarly, the rigid GS pay rules allow managers very limited influence over the salaries of their subordinates. Paybanding gives line managers greater influence over the workplace, which can be used to enhance unit and organizational performance. Table 11.3 lists specific measures of payband system effects (as identified in Table 11.2) as employed by the evaluators of the five demonstration projects. For example, paybanding “allows flexibility in setting starting pay,” one measure for which is, “perception of recruit quality.” Two measures of the objective “provides greater financial rewards to high performers,” are “perception of links between pay and performance” and “turnover of high and low performers.” Commonly used measures of the objective “gives managers more authority over pay and

Allows flexibility in setting starting pay Provides greater financial rewards to high performers Gives managers more authority over pay and classification matters

Paybanding Element Effect

More effective human resources management Increase delegation of authority and accountability to managers Better human resources systems to facilitate organizational mission and excellence Continue support for goals in recruiting, rewarding, and retaining minorities, women, and veterans

More efficient human resources management

Commerce3 Improve organizational and individual performance Increase quality of new hires Improve fit between position requirements and individual qualifications Increase likelihood of getting a highly qualified candidate Increase recruitment and retention of high performing employees

(continued)

Gives managers more authority over pay and classification matters

Allows flexibility in setting starting pay Allows flexibility in setting starting pay Allows flexibility in setting starting pay Provides greater financial rewards to high performers

China Lake2 Enhance the effectiveness of the laboratory by developing an integrated Gives managers more authority over pay and classification approach to pay, performance appraisal, and position classification and by matters allowing greater managerial control over personnel functions.

Improved recruitment of high quality researchers Increased retention of high performers Strengthening of the manager’s role in personnel management through the delegation of personnel authorities A more efficient and flexible personnel system

NIST1

Payband Personnel Demonstration Project Objectives

Table 11.2

151

Gives managers more authority over pay and classification matters Allows flexibility in setting starting pay Provides greater financial rewards to high performers

Allows flexibility in setting starting pay Provides greater financial rewards to high performers

2Management

Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, p. ii. Report IX: Evaluation of the Navy Personnel Management Demonstration Project: A Summary Assessment of the Navy Demonstration Project (1986), p. 1. 3Department of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, p. 2-2. 4DoD Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1 Management Report, p. 1-3. 5Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project, p. 2.

1Summative

Adjust workforce levels to meet strategic program and organizational needs

DoD Labs5 Improve the effectiveness of DoD laboratories through a more flexible, responsive personnel system Increase line management authority over human resource management Recruit, develop, motivate, and retain a high-quality workforce

AcqDemo4 Demonstrate that a flexible and responsive personnel system will enhance DoD’s ability to attract, motivate, and retain a high quality AT&L workforce

Maximize the contributions of all employees

Table 11.2 (continued)

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Table 11.3 Payband System Evaluation Measures Paybanding Element Effect Provides greater financial rewards to high performers

Perception of links between pay and performance (percent agreement) Turnover of high and low performers (percent agreement)

Allows flexibility in setting starting pay

Perception of recruit quality

Gives managers more authority over pay and classification matters

Perception of supervisors of expanded authority in the area of classification (percent agreement) Perception of supervisors of expanded authority in the areas of pay and promotion (percent agreement)

Global Pay System Criteria Efficiency

Cost neutrality

Equity

Perception of fairness of pay-setting processes

Employee acceptance

Pay satisfaction Support for demonstration project

classification matters” are “perception of supervisors of expanded authority in the area of classification” and “perception of supervisors of expanded authority in the areas of pay and promotion.” Also listed in Table 11.3 are measures that relate to global criteria of pay system effectiveness. Three such criteria commonly accepted that are pay system efficiency, equity, and employee acceptance. With regard to efficiency, all of the personnel demonstration projects have been held to a standard of “budget neutrality,” meaning that the costs incurred under paybanding would not be greater than costs that would have been incurred under the GS. Equity can be assessed based on the perceptions of employees of the fairness of the pay-setting process, and employee acceptance can be assessed according to satisfaction with the demonstration project. Outcomes of Paybanding Demonstration Projects In this section, we review outcomes of the various demonstration projects on seven measures: 1. Perception of links between pay and performance 2. Turnover of high and low performers 3. Perceptions of recruit quality

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4. 5. 6. 7.

Perception of supervisors of expanded authority in the area of classification Perception of supervisors of expanded authority in the areas of pay Satisfaction with demonstration project Paybanding system costs

Perception of Links between Pay and Performance Data in Table 11.4 lend support to the contention that payband systems allow a closer link between pay and performance. The percentage of demonstration project participants who agreed with the statement, “Pay raises here depend on how well you perform,” increased from 47 percent in Year 1 to 60 percent in Year 10 at China Lake, from 36 percent (baseline) to 54 percent in Year 7 at the Department of Commerce, and from 27 percent (baseline) to 57 percent in Wave 1 of the Department of Defense (DoD) laboratories.4 In each of the three organizations, a significantly lower proportion of control group participants were in agreement. At AcqDemo, the question was phrased, “In this organization, my pay raises depend on my contribution to the organization’s mission.” The percentage of respondents in agreement with that statement increased from 20 percent as a baseline measure to 59 percent in Year 5. Only 19 percent of control group respondents expressed agreement with that statement in Year 5. Turnover of High and Low Performers Table 11.5 summarizes the responses of demonstration project and control group participants to questions on perceptions of turnover of high and low performers. The percentage of demonstration project participants agreeing with the statement, “High performers tend to stay with this organization,” increased from 31 percent in Year 2 to 42 percent in Year 10 at China Lake. The percentage of control group respondents in agreement with the same question declined from 29 percent to 24 percent over the same period. A similar result was found at AcqDemo, where, by Year 5, 37 percent of demonstration project participants agreed with the statement, “High contributors tend to stay with this organization,” compared to 27 percent of control group members. agreement among demonstration project participants in Year 8 at NIST was 42 percent compared with 31 percent of control group members. Differences in levels of agreement of demonstration project and control group members with regard to the statement, “Low contributors tend to leave this organization,” were much narrower than for the question about high performers. By Year 5, only 18 percent of AcqDemo participants agreed with that statement, compared to 15 percent of control group members. Similarly, by Year 8, only 15 percent of NIST project participants agreed that low performers tend to leave compared to 10 percent of control group members. The Department of Commerce project evaluation includes actual rather than perceptual data on turnover among low and high performers. Data show significantly higher turnover among low performers than among high performers. However, no comparable data are available for control group members.

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Table 11.4 Perception of Links Between Pay and Performance (percent agreement) Pay raises Under the present here depend system, financial rewards on how well are seldom related to you perform. employee performance.

Project Navy Demonstration Project1 Demonstration project Control group Department of Commerce2 Demonstration project Control group

AcqDemo3 Demonstration project Control group NIST4 Demonstration project Control group

DoD Labs (Wave 1)5 Demonstration project 1Broad-Banding

Year 1 Year 10 Year 1 Year 10

47 60 46 40

Baseline Year 7 Baseline Year 7

36 54 34 35

Baseline Year 5 Baseline Year 5

58 32 60 65

In this organization, my pay raises depend on my contribution to the organization’s mission. 20 59 12 19

Baseline Year 8 Baseline Year 5

NA 55 NA 30

Baseline Year 4–5

27 57

Pay raises depend on my contribution to the accomplishment of my organization’s mission. 22 51

in the Federal Government: Technical Report, Table 8, p. 25. of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, p. 4-43. 3DoD Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1 Technical Report, p. II-46. 4Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, Table 4.23, p. 65. 5Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project, Table G-10, p. G-20. 2Department

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Table 11.5 Turnover of High and Low Performers (percent agreement) High performers tend to stay with this organization.

Project Navy Demonstration Project1 Demonstration project Control group

Year 2 Year 10 Year 2 Year 10

31 42 29 24 High contributors Low contributors tend to stay with this tend to leave this organization. organization.

AcqDemo2 Demonstration project Control group NIST3 Demonstration project Control group

Baseline Year 5 Baseline Year 5

32 37 35 27

15 18 13 15

Year 2 Year 8 Year 1 Year 8

35 42 39 31

17 15 22 10

Number of employees

Number of separated employees

Turnover rate based on 130

1,392 2,049 435 75 18 10

30 59 23 10  3  5

2.2 2.9 5.3 13.3 16.7 50.0

DoD Labs (Wave 1)4 n.a. Department of Commerce 5

Perf Score Category 90–100 80–89 70–79 60–69 50–59 40–49 1Broad-Banding

in the Federal Government: Technical Report, Table 10, p. 28. Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1 Technical Report, p. II-41. 3Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, Table 8.5, p. 112. 4Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project, Table G-10, p. G-20. 5Department of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, Table 4–70, pp. 4–78. 2DoD

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Perceptions of Recruit Quality Data with regard to perceptions of recruit quality (Table 11.6) do not show clear trends. The percentage of demonstration group respondents at China Lake who agreed with the statement, “This center is able to attract high-quality candidates,” declined from 54 percent to 47 percent between 1979 (baseline) and 1989 (Year 10). However, the proportion of control group members agreeing with the same statement declined by an even greater amount (51 percent to 30 percent). At the Department of Commerce, in contrast, the percentage of demonstration project participants agreeing with the statement, “My organization is able to attract high-quality employees,” increased from 45 percent in the baseline survey (1998), to 66 percent in Year 7 (2004). However, there was a similar increase in the level of agreement among control group participants (47 percent in 1998; 65 percent in 2004). The AcqDemo results are similar to those at Commerce with significant jumps in the percentage of respondents agreeing with the statement, “This organization is able to attract high-quality candidates,” between the baseline measurement and Year 5. At NIST, the evaluators asked hiring officials to compare the capabilities of recent hires to the rest of the workforce. Data show that whereas in the baseline survey hiring officials estimated that 43 percent of their new hires ranked in the top 10 percent of the workforce, by Year 8 (1995), officials ranked only 34 percent of new hires in the top 10 percent of the workforce. The corresponding control group percentages remained constant at 30 percent. The Year 4–5 evaluation for DoD labs included various measures of the quality of new hires such as level of education, licensed or not licensed, and membership in professional associations. The evaluation summarized the results as follows: In nearly all cases in which data are reported, there appear to be no significant changes in the quality of new hires at NAVSEA laboratories. However, the numbers reported are too small to determine statistical significance. Across Wave 1 laboratories, trends indicate a decrease in the hiring of PhDs and an increase in the hiring of employees with Bachelor’s degrees. NUWC Newport indicates a similar trend in Wave 2. Average GPA of new hires shows a slight decrease across time for all NAVSEA laboratories in which data were reported. Similarly, the percentages of new hires holding professional licenses, those having participated in postdoc programs, and those holding professional memberships all show a slight downward trend. One exception to this trend is the percentage of professional memberships for NUWC Newport, which has increased slightly from an “all Navy” average of 28% in 1997 to 32% currently. . . . The lack of a trend for improved quality can be explained in part by the competitive economy and resulting difficulty in attracting qualified candidates that existed from 1997 to 2000, the years in which the demonstration was implemented. (Department of the Navy 2000, F5)

The report identifies the state of the economy as an important, uncontrolled variable with regard to hiring. During periods when the economy was weak (late 1970s, early 1990s), new hires ranked highly compared to current employees; during periods when

Baseline Year 8 Year 1 Year 5

Technical Report II-26 Baseline Year 5 Baseline Year 5

Baseline Year 7 Baseline Year 7

43 34 30 30

Top 10 42 39 42 36

Top 25

11 18 16 24

Avg.

3 3 NA 6

Below Avg.

1 1 2 0

Poor

What was your (hiring official’s) assessment of the overall capabilities of the person hired compared to the rest of your workforce?

This organization is able to attract high-quality candidates. 28 47 36 45

My organization is able to attract high-quality employees. 45 66 47 65

This center is able to attract high-quality candidates. 54 47 51 30

1Recruitment of Scientists and Engineers in Four Navy Laboratories: Management Report XIV for the Navy Personnel Management Demonstration Project, Table 5-3, p. F-5. 2Department of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, Table 4-61, p. 4-68. 3DoD Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1, Technical report, Table 17, p. II-26. 4Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, Table 5.11, p. 82.

Control group

Demonstration project

NIST4

Control group

AcqDemo3 Demonstration project

Control group

Department of Commerce2 Demonstration project

Project Navy Demonstration Project1 Demonstration project Baseline Year 10 Control group Baseline Year 9

Perceptions of Recruit Quality (percent agreement)

Table 11.6

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Table 11.7 Perception of Supervisors of Expanded Authority in the Area of Classification (percent agreement) I have enough authority to influence classification decisions.

Project Navy Demonstration Project1 Demonstration project Control group Department of Commerce2 Demonstration project Control group AcqDemo3 Demonstration project Control group NIST4 Demonstration project Control group

Year 2 Year 9 Year 2 Year 9

35 54 12 40

Year 7 Year 7

49 41

Year 5 Year 5

64 30

Baseline Year 8 Year 1 Year 5

36 60 n.a. 34 Has classification authority been delegated to you? (percent yes)

DoD Labs (Wave 1)5 Demonstration project Control group

Year 1–2 Year 4–5 Year 1–2 Year 4–5

20 18 15 14

1Broad-Banding

in the Federal Government: Technical Report, Table 6, p. 22. of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, Tables 4-9, pp. 4-12. 3DoD Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1 Technical Report, Table 12, p. II-16. 4Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, Table 2.5, p. 14. 5Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project, Table E-4, p. E-5. 2Department

the economy was strong, new hires ranked less well relative to current employees. It is difficult to assess the independent effect of the intervention in this circumstance. Perception of Supervisors of Expanded Authority in Classification Data with regard to the perception of supervisors of expanded authority in the area of classification (Table 11.7) are ambiguous. The percentage of supervisors

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Table 11.8 Perception of Supervisors of Expanded Authority in the Areas of Pay (percent agreement) I have enough authority to determine my employees’ pay.

Project Navy Demonstration   Project1 Demonstration project Control group Department of Commerce2 Demonstration project Control group AcqDemo3 Demonstration project Control group NIST4 Demonstration project Control group DoD Labs (Wave 1) Demonstration project

Year 1 Year 9 Baseline Year 9

10 51 15 12

Year 7 Year 7

42 23

Year 3 Year 3

44 8

Baseline Year 8 Year 1 Year 5

18 54 16 12 n.a.

1Broad-Banding

in the Federal Government: Technical Report, Table 17, p. 38. of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, Table 4-50, pp. 4–58. 3DoD Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1 Technical Report, Table 12, p. II-16. 4Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, Table 3.15, p. 37. 2Department

agreeing with the statement, “I have enough authority to influence classification decisions,” increased from 35 percent to 54 percent between Year 2 and Year 9 at China Lake, but there was an even greater increase in the percentage of control group supervisors with the same statement over the same period. At the Department of Commerce, by Year 7, 49 percent of demonstration project supervisors agreed with this statement versus 41 percent of control group supervisors. Differences were greater at AcqDemo, where, in Year 5, 64 percent of demonstration project supervisors were in agreement with the statement versus only 30 percent of control group supervisors. Data show an increase of from 36 percent to 60 percent in perceptions of expanded authority in the area of classification by demonstration project supervisors at NIST between the baseline survey and Year 8. At DoD labs, in contrast, the percentage of demonstration project supervisors agreeing with the

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Table 11.9 Satisfaction with Demonstration Project

China Lake1 Demonstration project Year 8 Commerce2 Demonstration project Year 7 NIST3 Demonstration project Year 2 Year 8 DoD Labs (Wave 1)4 Demonstration project Baseline Year 4–5

AcqDemo5 Demonstration project Year 5

I am in favor of the demonstration project.

China Lake

71

71

59

57

47 70

42 71

34 55

29 47

Overall, the demonstration project is an improvement over the previous performance rating and compensation system. 46

51

1Effects

of Performance-Based Pay on Employees in the Navy Demonstration Project: An Analysis of Survey Responses 1979 to 1987, Table 16. 2Department of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, Table 4-1, p. 4-2. 3Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, Table 8.8, p. 115. 4Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project, Table 1.2, p. 6. 5DoD Civilian Acquisition Workforce Personnel Demonstration Project, Interim Evaluation Report, Volume 1 Technical Report, Table 12, p. II-11.

statement, “Has classification authority been delegated to you?” decreased from 20 percent in Year 1–2 to 18 percent in Year 4–5. A possible explanation for these differences is that the different projects incorporate different design features and that the different organizations engage in different practices with regard to the delegation of classification decisions. Perception of Supervisors of Expanded Authority for Pay Data regarding the perception by supervisors of expanded authority in the area of pay (Table 11.8) show significant and positive improvement over the periods that the various demonstration projects were in place. At China Lake, the percentage of demonstration project supervisors agreeing with the statement, “I have enough authority to determine my employees’ pay,” increased from 10 percent in Year 1 to 51 percent in Year 9. The corresponding percentages for control group supervisors over the period baseline to Year 9 dropped from 15 percent to 12 percent. As of Year

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7, there was a 19 percentage point difference between demonstration project and control group supervisors in agreement on the same statement at the Department of Commerce and a 36 percentage point difference in Year 3 at AcqDemo. The percent of demonstration project supervisors at NIST that agreed with this statement increased from 18 in the baseline survey to 54 in Year 8; the corresponding percentages for control group supervisors dropped from 16 to 12 between Year 1 and Year 5. Satisfaction with Demonstration Project Table 11.9 shows data on employee satisfaction with the demonstration projects at the various sites. Data for China Lake for the corresponding period are also provided as a benchmark. Employee support for demonstration projects is included as a global measure of employee acceptance of paybanding systems. In general, data show high levels of acceptance with substantial majorities expressing support for each of the demonstration projects with the exception of AcqDemo, where 46 percent of employees expressed satisfaction with the project. Cost Data with regard to the comparative cost of the various demonstration projects (Table 11.10) are somewhat limited. Cost data were compiled for only three of the five projects. Data show that salary costs at both the China Lake and NIST projects were higher than for the respective control groups. At China Lake, OPM estimated that salary costs for the demonstration labs were approximately 6 percent higher than for the control group for the first ten years of the project. Data for the NIST project show that salaries for the demonstration project were 4 percent higher than for the control group for the first three years of the project. At Commerce, the growth rates for the Demonstration Group and the Control Group were approximately the same. Discussion Figures 11.1a–d depict the presumed means by which paybanding impacts organizational performance. As summarized in Table 11.11, data from the five personnel demonstration projects are consistent with some of the links but not with others. Data in Table 11.4 are consistent with the proposition that payband system employees perceive a closer link between pay and performance than do GS employees (links a, d, e, and h in Figures 11.1a and 11.1b). Whether the amount of pay “at risk” under the payband/pay-for-performance demonstration projects is sufficient to induce changes in individual behaviors (link b in Figure 11.1a) is uncertain, however. Also uncertain is how and whether improved individual performance impacts organizational performance (links c, g, j, and m in Figures 11.1a, 11.1b, and 11.1c). W. Edwards Deming and Joseph Juran estimate that only approximately 15 percent of the variation in organizational performance is attributable to differences

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Table 11.10 Paybanding System Costs China Lake1 Year 10 Commerce2 Year 7

AcqDemo NIST3 Year 5

“Average salaries at the demonstration labs are 5.9% higher than at the control labs as a result of the demonstration project.” “The compounded average annual growth rate was nearly the same for both the Demonstration Group (4.56 percent) and the Comparison Group (4.88 percent) over time.” n.a. “While NIST has maintained budget neutrality at the organizational level, it has not done so at the individual employee level.”

NIST4 Year 3

“Table shows that relative to the control sites, salary costs at NIST are 3.91% higher for the period 1987–1990.”

DoD Labs

n.a.

1Salary

Costs Under the Navy Demonstration Project: Management Report XIII, p. 1. of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report, p. 5-1. 3Summative Evaluation Report, National Institute of Standards and Technology Demonstration Project: 1988–1995, p. 38. 4Broad-Banding in the Federal Government: Technical Report, p. 62. 2Department

in levels of performance of individual workers (Blair, Cohen, and Hurwitz 1982). Most of the variation, according to Deming, is explained by differences in systemic factors. Therefore, even presuming that workers can be induced to perform at a higher level as a result of pay-for-performance, the impact on organizational performance is uncertain. In its evaluation of the Department of Commerce Demonstration Project, consulting firm Booz Allen Hamilton (2006) convened focus groups of employees. Among the questions that were posed was the following; “Thinking about the fact that the Demo Project was designed to improve performance, do you think employee performance has improved, stayed the same, or worsened over the past seven [two] years?” Booz Allen Hamilton summarized the results as follows: When asked in focus groups whether individual performance has improved since the Demonstration Project began, most Demonstration Group participants indi-

Paybanding

Paybanding

Paybanding

Paybanding

A

B

C

D

n

k

d

a

b

Greater managerial authority—pay + classification

o

l

i

c

Greater managerial influence over workplace

p

m

j

Improved organizational performance

Improved organizational performance

Higher turnover among low performers

Improved organizational performance

g

Improved organizational performance

Lower turnover among high performers

Higher-quality hires

Lower pay for lower performers

f

Incentives to perform at a high level

Higher pay for higher performers

Flexibility to offer higher starter salaries

h

Payperformance link

e

Payperformance link

Figure 11.1  Models Depicting Potential Paybanding Organizational Impacts 164

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165

Table 11.11 Demonstration Project Results Demonstration Project Results Contingencies

Links Figure A a

+

b

?

c

?

Figure B d e f

+ + ?

g h i j

? + – –

Figure C k l

+ ?

m

?

Figure D n o p

+ + ?

Is the amount of pay at risk sufficient to induce a change in behavior? Does improved individual effort translate to better organizational performance?

Does improved individual effort translate to better organizational performance?

Does improved individual effort translate to better organizational performance?

cated that it had either stayed the same or improved; no participants felt that it had declined because of the Demonstration Project (see Table 4-83 in the report). Those who indicated that it has remained the same had perspectives ranging from a belief that performance is already high to concerns that the system lacks sufficient motivators to improve performance. Some of those who indicated that employee performance has improved added caveats such as that improvements have been slight, that higher performance is not sufficiently recognized, and that initial performance improvements have stabilized (Table 4-89 in the report).

As part of its evaluation of the DoD science and technology (S&T) labs demonstration project, OPM tried to determine whether the demonstration projects impacted laboratory quality. OPM’s report includes the following statement: “The demonstration project interventions are expected to contribute to increased laboratory quality. As our model of R&D Performance . . . illustrates, there are many other factors that influence laboratory quality, thus no direct causal link can be postulated”

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Table 11.12 Organizational Performance My agency’s efforts to implement the laboratory demonstration project to date have improved this organization’s programs/operations/projects. DoD Labs (Wave 1)1 Demonstration project

Year 1–2 Year 4–5

Agree

Undecided

Disagree

18% 37%

37% 29%

45% 34%

1Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project,

Table C-17, p. C-10.

(Department of Defense 2002, E5). Also, as part of the evaluation, employees were asked whether they agreed with the following statement, “My agency’s efforts to implement the laboratory demonstration project to date have improved this organization’s programs/operations/projects.” A bare plurality of demonstration project participants agreed with the statement in Year 5 (see Table 11.12). The data provide some support for the proposition that high performers will be more likely to stay as a result of higher pay (link f in Figure 11.1b). At China Lake, AcqDemo, and NIST (Table 11.5) an increasing proportion of demonstration project participants agreed with the statement, “High contributors tend to stay with this organization.” Data from the Department of Commerce demonstration project show much lower levels of turnover among high performers than low performers, but in the absence of similar data for the control group, it is not possible to draw any conclusions as to whether that result is attributable to the demonstration project. Consistent with the discussion above, even if the perceptions of project participants are accurate and turnover among high performers is lower as a result of the demonstration projects, it is not possible to thereby conclude that organizational performance has improved (link g, Figure 11.1b). Data do not support the proposition that paybanding/pay-for-performance results causes low performers to leave the organization at a higher rate than they would otherwise. Relatively low percentages of project participants at AcqDemo and NIST (18 percent and 15 percent, respectively) agreed with the statement, “Low contributors tend to leave this organization,” in Years 5 and 8 respectively. As discussed, data are ambiguous with regard to whether the quality of recruits at the various organizations that are part of the five demonstration projects has improved (link 1, Figure 11.1c). In general, the state of the economy appears to be the dominant influence on recruit quality. From Tables 11.7 and 11.8 above, it is possible to conclude that demonstration project managers perceive that they have more say about classification and pay matters as a result of paybanding (link n, Figure 11.1d). By definition, these managers therefore have more influence in the workplace (link o,

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Figure 11.d). The consequences for organizational performance have not been demonstrated however. Conclusion Although it would not be completely inappropriate to claim that, “paybanding works” based on the results of the demonstration projects, such a claim would have to be qualified on the basis of the many gaps that exist in our understanding of the organizational impact of paybanding. Certainly, the early results are encouraging. Demonstration project participants clearly perceive a closer link between pay and performance, and managers perceive that they have more authority over pay and classification matters. The payband systems that have been implemented in a demonstration project context have generally received the support of employees. Other results are less compelling. Although demonstration project results show some increase over time in the proportion of project participants who perceive that “high contributors tend to stay with this organization,” the numbers are still not high. Very low percentages of respondents perceive that “low contributors tend to leave this organization.” Nor has any demonstrable impact on recruit quality been demonstrated. The ultimate purpose of paybanding is to improve organizational effectiveness, but evaluation methods do not yet permit any conclusions on this point. It is important to consider context when interpreting the results of the demonstration projects. To date, the demonstration projects represent relatively small units in which top management has been able to devote significant attention to system implementation. This level of attention is not possible in larger agencies, and system success could be impeded as a result. Phasing the system in, as is being done with the National Security Personnel System at DoD, is one solution. Also, to the extent that it is easier to foster broad participation in system design and implementation in smaller units, large size could inhibit obtaining employee trust and acceptance. It is important to note that most of the paybanding demonstration projects have been sponsored by units with research and development missions. Education and training levels for the employees in these units are high, and levels of unionization among these employees is low. Unions have generally been skeptical of paybanding on the basis that assessment methods are inherently subjective. Suspicions of favoritism or bias on the part of some employees are inevitable. When pay is at risk, the potential for conflict over appraisal results becomes significant. Also, scientists and engineers generally have more and better employment opportunities than do rank-and-file white-collar workers who constitute the bulk of the workforce in most agencies and may feel less threatened by the implications of paybanding than would employees in other agencies. The main point is that despite some indicators of success, officials need to be cautious in interpreting the results of the payband demonstration projects and need to carefully consider the circumstances in which that success has been achieved.

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Lessons Learned Lesson 1—Payband systems work. Such systems have received widespread acceptance from managers and employees. Managers gain greater control over the pay of their subordinates; control that can be used to encourage higher levels of performance. Lesson 2—Payband systems sound more radical in theory than in practice. The reality is that in most organizations with payband systems, virtually all employees continue to receive the general cost-of-living increase and an additional base pay increase. As a result, it is easier for these plans to achieve employee acceptance. Lesson 3—Payband system implementation needs to be carefully managed. One explanation for the apparent success of most of the payband demonstration projects is that the units in which the projects have implemented are relatively small, and, as a result, top management has been able to devote significant time and resources to the implementation process. This is harder to achieve in large agencies such as DoD and Department of Homeland Security (DHS). One solution is to phase the system in as is being done at DoD. Lesson 4—Payband systems provide significant recruitment advantages. A number of the units that have adopted paybanding are S&T laboratories where the recruitment of scientists and engineers has been a challenge. With paybanding, prospective employees can be offered a significantly higher starting salary than is generally possible under the General Schedule, which makes it easier for these units to achieve their recruitment objectives. Lesson 5—With paybanding, managers can be held accountable for results. Under the General Schedule, this is more difficult because key classification and compensation decisions are out of the manager’s hands. Good managers can use the additional authority implicit in paybanding/pay-for-performance systems to encourage high performers to stay and low performers to leave. Notes 1. Although CSRA limits personnel demonstration projects to five years, the project was extended and eventually made permanent by Congress. 2. The GS does allow for high performers to receive a quality-step increase or the equivalent of two steps. 3. See Thompson (2007) for multiple examples of how payband systems incorporate pay-for-performance elements. 4. For purposes of its evaluation of the DoD laboratory demonstration projects, OPM divided the eight projects into two groups; those that started in either 1997 or 1998 (Wave 1) and those that started in 1999 (Wave 2). Only the data from the Wave 1 laboratories are included in this review.

References Blair, John. D., Stanley L. Cohen, and Jerome V. Hurwitz. 1982. “Quality Circles: Practical Considerations for Public Managers.” Public Productivity Review 6: 9–18.

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Booz Allen Hamilton, Inc. 2006. Department of Commerce Personnel Management Demonstration Project Evaluation: Year Seven Report. Washington, DC: Booz Allen Hamilton. Department of Defense. 2002. “Summative Evaluation 2002, DoD S&T Reinvention, Laboratory Demonstration Project,” Table E-4, p. E-5. Department of the Navy. 2000. “Recruitment of Scientists and Engineers in Four Navy Laboratories: Management Report XIV for the Navy Personnel Management Demonstration Project,” Table 5-3, p. F-5. Thompson, James R. 2007. Designing and Implementing Performance-Oriented Payband Systems. Washington, DC: IBM Center for the Business of Government.

12 Employee Retention and Engagement Tim Rutledge

The job market, including that for the federal workforce, is transforming how organizations recruit, train, and develop their key employees. Managers at all levels are challenged to learn new ways of relating to people for whose performances they’re responsible, especially superior performers. This chapter explores the structural changes in the job market and the demographics that underlie them. It stresses the need to leave some old workplace assumptions behind and adopt new, and perhaps unfamiliar, ones. The chapter explains how employee loyalty has been replaced by employee engagement and some of the challenges inherent in making the best performers disinclined to change employers. The reader will see how the role of the manager is becoming ever more crucial in keeping talent. Key themes throughout this chapter are: • Play defense. Manage the “Exit” door to make it unattractive to key employees. • Differentiate the workforce by identifying talent and treating it differently. • Keep some older workers. • Create and sustain engaging employment experiences, not just jobs. • Manage talent at a corporate level. • Carefully identify for supervisory roles people who can be engaged ­supervisors. Offense and Defense In every organization, in the view of employees, there are two doors: one marked “Enter,” and the other marked “Exit.” These doors correspond to “playing offense” and “playing defense,” respectively. Most organizations do a good job of managing the “Enter” door. This is where recruiting happens: aggressively bringing the right people into the organization. Everything organizations do to get a signature on an offer letter is playing offense. But no organization wins just with offense. Everything that happens after the new hire signs on is playing defense. Defense is taking the steps necessary to reduce the likelihood that the employee will leave. Most organizations devote almost no management attention to the “Exit” door. 170

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From a Buyer’s to a Seller’s Job Market The reason why the “Exit” door gets ignored is a result of the North American buyer’s job market that has been in place for forty years and is only now coming to an end. A buyer’s market in jobs is characterized by a surplus of job seekers over job openings. The buyer’s market began when the baby boom generation, the most populous generation ever, began to spill onto the job market, beginning around 1965. There weren’t enough jobs for so many people, and policymakers became concerned with unemployment rates and job creation programs. Because the buyer’s job market has lasted for so long, a number of assumptions and workplace practices have grown up. Chief among the assumptions is: Employees who leave can always be replaced. This assumption leads to a lack of concern over employees who walk through the “Exit” door. It has been in place for so long that no one active in organizational life today can remember anything different. This memory gap causes people to believe that the buyer’s job market, and the assumptions it supports, are permanent. They’re not. The coming seller’s market will sweep them away. Today we’re entering a seller’s job market, a market in which there are more job openings than job seekers. Whereas in a buyer’s market the advantage lies with employers, since the supply of workers exceeds the demand for their services, in a seller’s market this advantage is eliminated. It’s a short-handed economy. Policymakers will shift from finding jobs for people to finding people for jobs. We need a new assumption: I need to identify my key employees and take steps to keep them from leaving, because I may not be able to replace them with comparable talent. From Loyalty to Engagement This period was also characterized by a culture of employer and employee loyalty. By and large, employees could count on remaining with an employer for life, barring egregious behavior. This psychological contract broke down in the mid-1980s, but it has returned in a new form. Here’s how I once put it (Rutledge 2005, 22): Loyalty is indeed dead, but only in the sense that nature dies in winter. Employees themselves have brought it back to life, and in the process they’ve changed it and given it a new name. It’s now engagement. Loyalty is commitment for the long term. Engagement is a commitment too, but it is short-term. Loyalty is like marriage: “Till retirement do us part.” Engagement is like, well, an engagement. It may lead to something more permanent, but it may not. And everybody acknowledges this.

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What Is Engagement? Engagement is the state of being attracted, committed, and fascinated. • Attracted: I want to do this work. • Committed: I’m going to do this work professionally and well. • Fascinated: I love doing this work! The good news is that workplace engagement, short-term though it may be, can be renewed over and over if employees feel that they are in engaging employment experiences, and not just jobs. If they feel attracted, committed, and fascinated, they will be disinclined to leave. Increasingly, U.S. federal agencies are recognizing the importance of an engaged workforce. In 2003, the Best Place to Work initiative began to survey employees to capture the levels of engagement. The Federal Mediation and Conciliation Service (FMCS) was recognized as one of the Best Places to Work in 2007. Reviewers noted that FMCS “uses a rigorous selection process to hire new mediators and also works hard to provide professional development opportunities for them.” FMCS is continually on the lookout for qualified mediator candidates. As a result, the FMCS applicant pool is usually well-stocked with hundreds of mediator candidates. Applicants who qualify after the initial screening process go through a series of highly structured interviews that involve role play simulations and a formal presentation. Then, after they’re hired, even the most experienced new mediators are assigned mentors and receive training. The Service also pays close attention to each mediator’s professional development. For example, the agency has presented a series of regional workshops to its staff on key industries and issues, including aerospace and health care. FMCS also sponsors biennial professional development seminars for all mediators. These seminars provide valuable training, and also bring together the otherwise far-flung mediator workforce.

Buyer’s Market Blind Spot Despite the difficulty in replacing talent, organizations are behaving as though they were still in a buyer’s job market, and redoubling their recruiting efforts. Management is focused relentlessly on the “Enter” door. Here are two examples: We checked Workopolis for July 30, 2007, to see the number of job postings for recruiters (playing offense) and organizational development specialists (playing defense). Here are the totals for Canada on that day: Recruiters Organizational development

527 postings 9 postings

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Placing more and more resources at the “Enter” door won’t shore up defenses. The second example: There is a software development company that is experiencing turnover at a rate of 40 percent annually. They have a problem and they know it. But they refer to it as their recruiting problem, and, having framed it in this way, their solution is to recruit harder. Now it would appear that this company isn’t having a very hard time getting people in the door. It’s the other door that’s the problem, but they literally don’t see it. They are analogous to a baseball manager whose team loses a game 13 to 10 ordering extra batting practice because they didn’t score enough runs. Their offense is fine: it is lack of defense that’s the issue. These examples point to the existence of a blind spot caused by continuing to believe that employees who leave can always be replaced. Organizations that embrace the seller’s market assumption will outperform those that don’t. The Differentiated Workforce Many organizations measure employee turnover, the rate at which people use the “Exit” door. This is a useful thing to do. Useful too is a turnover target. It’s hard to know what to do about the rate of turnover if there is no consensus on how much is too much or too little. Turnover data are just numbers, charts, and graphs, however. There are no names or faces on turnover numbers. One resignation is accounted for in the same way as any other. Turnover data do not provide information on which employees are leaving. Bearing in mind our new assumption for the seller’s job market . . . I need to identify my key employees and take steps to keep them from leaving, because I may not be able to replace them with comparable talent.

We must distinguish between employees that are talented and those that are not. This means, first of all, redefining the word “fair.” In the buyer’s job market, fair came to mean treating everybody the same way. The equating of fairness with equal treatment resulted in the watering down of rewards available to employees who were superior performers, including the tendency to assign the same performance rating (usually “satisfactory”) to 75–80 percent of employees, regardless of performance. Treating all employees the same is a holdover from the industrial workplace. Let’s say there were thirty workers in a plant whose job it was to punch holes in fabric. Their supervisor managed their performances to ensure that each of them punched holes identical to all the others. It wouldn’t do if someone could tell which holes were punched by me and which by you. They had to be the same. Worker individuality was a liability. These sorts of jobs still exist, but they’re not being created very much any more. What is being created today are jobs in which the individual, aided by technology,

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can make a unique contribution to the organization. The supervisor needs to manage the performance of this person by treating him as an individual, because that is what he is, and because no one else in the organization is doing what he’s doing. There is nothing less fair than taking a superior performance and a less than superior one and rating them the same. If key employees come to believe that this is happening, they will conclude that performance doesn’t matter. And when the headhunters call, they’ll answer, believing that the grass must be greener somewhere else. Identifying talented, retention-eligible employees and treating them differently is important, because truly superior performers have options as never before. They’re in short supply. The manager’s challenge is to build figurative walls around these key employees, just as organizations do with their key customers, and for the same reason: so they won’t get poached away. These people are hard to replace. Another reason to treat talent differently is as a way of managing the organization’s reputation. All younger employees nowadays are connected by technology to a network of friends and contacts, all of whom are sharing information about their workplaces with each other. The people to whom superior performers are connected are more likely to be superior performers themselves, or to have the potential to be, than are the contacts of other employees. When your good performers communicate favorably about their employers, they encourage other good performers to have a look at their workplaces with a view to joining. This connectedness serves as an informal, but powerful, referral program. The opposite is also true: when key employees communicate unfavorably about their employment experiences, their contacts absorb that information and may be guided by it. Who Is a Key Employee? Organizations need to put in place objective criteria for identifying retentioneligible employees. The people who need to agree on these criteria must first reach consensus on what they are, because otherwise disputes about who is talented will be common, and there will be no mechanism for sorting them out that does not involve some application of organizational power. Here are some possible criteria. Key employees • produce consistently superior results • volunteer for cross-functional teams • are well and favorably known to senior management • express an interest in areas outside their own department (big picture orientation) • demonstrate the organization’s competencies and values • actively seek performance feedback from a variety of sources • embrace changes necessary for organizational success • engage in learning and development activities

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The U.S. civil service is no stranger to this concept. Public service employees may compete based on objective criteria, for engaging opportunities such as training or advancement. This process allows those employees with the greatest capacity to contribute to the organization’s mission to realize their potential. Managers need to encourage employees with high apparent potential to compete for these opportunities. The figurative walls that we’re building around key employees are reserved for those retention-eligible employees. We have only so much retention capital to spend; we need to spend it where it will provide the best return. This does not mean that we want other employees to leave. It means that we’re not actively working to make the “Exit” door unattractive to them. Besides, it’s easier to replace them, because they’re not in such short supply. Headhunters are not calling them as often as they are our retention-eligible employees, so they have fewer external opportunities. This may sound uncaring. It isn’t; it’s a reflection of the need to do things differently in a seller’s job market. Retention-eligible employees are more likely to grow a business over the long term than are other employees. That’s why retention capital is reserved for them. You can’t keep everybody; trying to do so is a setup for failure. Taking measures to keep the best is investing in the future growth of the enterprise. Tracking Talent When employees join an organization, their experience with the process typically consists of meeting a recruiter and the hiring manager. In most organizations, once new employees have had the corporate orientation, they are turned over to the tender mercies of their managers and the corporation loses sight of them. This won’t do if talent is to be retained. In a seller’s job market talent needs to be owned, not by one department or one manager, but by the organization. Remember that to be fair to key employees you must treat them differently; this means managing them corporately. Old buyer’s market management tactics, such as hoarding talent, or not providing career mobility within the organization—tactics that may have been tolerable when there were more job seekers than jobs—cannot be allowed to persist where there aren’t enough people to fill vacancies. “Ownership” of retention-eligible employees has to be at the CEO level. Managers can tap into this pool when they have projects or initiatives central to the strategic plan, and when a retention-eligible employee can contribute meaningfully and benefit from being involved. Managers can borrow talent, but they have to return it improved. Organizations will work out the details of managing key employees according to their own circumstances and needs. The main thing is to separate management of their performances and careers from any one particular manager. What About Money? Some organizations will be tempted to use money or other rewards to keep talent from leaving. And indeed that can work. But consider the drawbacks. Take the case

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of an individual who works at a very large and successful corporation. He’s well paid for what he does. And he hates his job. hates it. So every once in a while his employer gives him a raise or some stock so that he’ll stay. So he stays. And he hates it. He is retained with money but not engaged. This may seem a fairly benign way to retain a person whose services are needed. And as long as it’s just one person, there’s probably little harm done. But the organization is paying a disengaged employee more and more for the same performance (or less). The productivity of the job declines. You can imagine what this would do to overall productivity if the practice were multiplied over ten jobs, or fifty. Getting a raise in pay or other tangible rewards is like eating a big, delicious meal. You push yourself away from the table, saying, “Man, that was good, and I’m stuffed. I couldn’t eat another thing.” A few hours later you’re hungry again. Organizational rewards are like that. The effects of a raise, a promotion, a bigger office, or a grander sounding title, are exhilarating at the time, but they wear off fast. Role of the Manager A central consideration in creating and sustaining engaging employment experiences, and not just jobs, is this: The most important factor in my willingness to engage with the work of my organization is my feeling about my relationship with my manager. If employees think their relationship with their manager is a good one, it’s amazing what they’ll do, and do happily. If they don’t think it’s particularly good, they’ll believe the grass is greener elsewhere. For key employees, the relationship with a manager is most important. In my book (2005, 25), I wrote, My manager is the gatekeeper between me and the rest of the organization. He’s the traffic officer who gives me green lights, and also red ones, with respect to my access to the wider organization. He controls the information that flows down to me and the information that flows up. Some of the information that he allows to flow down to me impacts directly what I do, how, when, where I do it, etc. And some of the information that he causes to flow up is— inevitably—about me! As a result of this power to interpret the organization to me—and me to it—I’m acutely aware of my manager’s presence, absence, tone of voice, dress, punctuality, likes, dislikes, habits, closed door, open door, time spent with me or with others, biases, interests, moods, small talk, favorite sports team, use of e-mail—an acuteness that I invest in no other person in the organization!

The word “power” appears in the excerpt above. Organizations need to recognize that the position of front line supervisor, or team leader, is a position that has organizational power. We’re not accustomed to thinking of it in this way. And as

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far as senior managers themselves are concerned, it is not a very powerful role. But from the employees’ perspective it is a very powerful position indeed. People promoted or appointed to supervisory positions acquire organizational power. Nobody knows how they’ll tend to use that power because nobody screens for it. What does this power consist of? Anyone with supervisory responsibilities has, from the employees’ point of view, the power to: 1. tell employees what work to do, where, when and how to do it, and with whom 2. assign (or withhold) tasks of varying difficulties, challenges, pleasantness, and visibility 3. interpret company policies 4. approve vacations and other absences, or not 5. assign overtime hours 6. rate performances and approve pay increases/bonuses To the employee who has no organizational power, this is a lot! It is essential, therefore, to take great care in selecting supervisors. Sometimes this happens, but too often the position goes to the person who has been there the longest, or to the best worker. Neither length of service nor technical skill is a predictor of supervisory success. One way to sort candidates for supervisory roles is to ask them if they want the responsibilities. People who say they don’t are doing the organization a big favor. They are identifying themselves as noncandidates and preventing the promotion of the “wrong people.” The wrong people are most often the subjects of books in which they’re referred to as the “toxic supervisor,” or the “boss from hell.” A logical way to acquaint employees with the supervisor’s responsibilities is to share the job description with them. A caution: almost every job description for supervisor and above is 90 percent functional and 10 percent managerial. A description of a market research manager’s job is heavy on the doing of research and light on managing the performances of market researchers. Looking at the description of a recruiting manager’s job might leave the impression that it is a recruiting position with a higher salary. So candidates need to be clear on what the supervisory component of the job is. They need to understand that they’ll be expected to give away their old job and focus on managing. Then when asked if they want to be a supervisor, they’ll know what they’re responding to. How does supervisor selection tie in to retention and engagement? People in supervisory roles for whom supervision is not a good fit will not be engaged supervisors, and will be unlikely to create engaging employment experiences for their people. If we want to avoid the boss from hell and the toxic supervisor, we’ll treat supervisor selection seriously.

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Elements of Engagement We have already established that one challenge of managing is to build figurative walls around valuable employees. Let us now consider the building blocks of these figurative walls. Here the focus will be on what engaged managers can do to put the blocks in place. Organizations themselves, at a macro level, have a role to play through policies and programs that help managers create engaging employment experiences. But even if the organization isn’t being very helpful in this regard, managers still have a responsibility to keep talent from leaving. The manager’s role is crucial because true workplace engagement flows from the employee’s relationship with the work experience (which includes the manager). The work experience is the combination of the work itself and the environment in which it is performed. Engagement doesn’t come about as a result of factors external to the work experience, factors such as gym memberships, time at the company chalet, parental leaves, vacation, wellness centers, or education assistance. There is nothing wrong with these initiatives; they just don’t give you engagement, because they’re not part of the work experience. Here are the elements of employee engagement that we’ll elaborate on: 1. 2. 3. 4. 5. 6.

Communicate the big picture Implement flexible working conditions Promote individual learning Differentiate performances Conduct retention interviews Recognize achievements

Communicate the Big Picture To engage key employees, managers ensure that they understand how what employees do links to something that is bigger than the department. This is where mission and vision come in. An organizational mission statement describes the organization’s reason for being. It describes why the organization does what it does. Not what it does, but why. The Walt Disney Corporation has a mission statement: “To make people happy.” That is why the company exists, and why it does what it does. Note that the statement answers the question “why,” not “what.” A departmental mission statement may refer not to something outside the corporation, but to the whole organization or a different part of it. An IT help desk function might have this mission statement: “Our mission is to sustain employee productivity by ensuring that information technology can be used as intended.” Again, this is why the function exists. There’s no reference to the “whats”: resetting passwords, installing phone lines, refreshing screens, and so forth. Their reason for being is about productivity. Help desk employees who understand that they

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maintain productivity can become engaged with their work. If they believe that they just reset passwords, engagement is pretty well impossible. Employees who understand how their roles contribute to the organization’s mission find it relatively easy to engage with the organization’s work. The opposite is also true. It’s kind of hard to engage with your organization’s work without that vital link. A vision statement is a “what”: a big, audacious “what” about something that the organization has never done before, and maybe that no one has ever done. In 1962 President John F. Kennedy said: “We will put a man on the moon by the end of this decade.” OMIGOSH! said everybody. (There’s an OMIGOSH! reaction to good vision statements.) “How are we supposed to do that?!” Nobody knew how to in 1962. A vision statement is not concerned with how. That comes later. The vision states the “what” with a time line. Henry Ford said: “I will build a motor vehicle so that anyone earning a decent wage can afford one.” OMIGOSH! Henry. How are you going to do that? Actually, Ford had an idea as to how he was going to do that. But no one had ever done it before. As in the case of mission, employees who understand how their work contributes to the realization of the company’s vision can become engaged with that work. It is the manager’s responsibility to make that link, on a daily basis if necessary. Implement Flexible Working Conditions Today’s employees view their work as an important part of their lives among other important parts of their lives. Baby boomers tended to put work first, but younger people don’t. As a result, fixed, unchanging working hours are a turnoff. Younger employees react favorably to flexibility in when and where they work. Their family obligations or community interests may require them to be somewhere other than the workplace at one time or another during regular business hours. They don’t mind working at odd hours. Here are ways managers can introduce flexibility into work times: • implement the condensed workweek • schedule overtime in advance • encourage working from home where possible • make some jobs part-time • install a core workday of 10 a.m.–3 p.m. with flex time around that • institute community volunteer days Promote Individual Learning One thing that employees have learned is they need to update their knowledge and skills continually. They don’t expect to work their entire careers for one employer, so they need to remain attractive throughout their careers. The opportunity to do

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this is part of an engaging employment experience. Most impactful learning takes place on the job in real time. External courses have their place, but employees place more value on learning that happens during the work experience. Here are some ways to make this happen. Showcases and Displays When departing employees are asked why they’re leaving, one frequently cited reason is that they couldn’t see a career path inside the organization. This often means that they lacked awareness about the organization as a whole (and that the organization had not inquired into the employees’ career aspirations). Engaged managers deliberately expose key employees to the wider company. Sometimes this can happen through elaborate displays put on by different departments. Or it can be as simple as having the manager of another area visit your area and answer questions. Either way, the purpose is to allow your key people to see that they may be able to pursue their career goals without leaving your company. Skunk Works This sounds like a punishment, but it refers to the practice of setting aside a small amount of time each week to allow key employees to work on something of interest to them, whether or not it is part of their jobs. Post-it notes were invented in a skunk works. Customer Contact Some jobs can be performed without the employees ever meeting a customer. Arranging for employees to come into contact with customers from time to time anyway can help them see how what they do is of value to the customer. Mentoring If an employee has been designated retention-eligible, it makes sense to provide a mentor. A mentor is a supplement to an engaged manager, not a substitute. The key employee’s manager may be engaged, but may not have the background to help the employee understand company culture. This is a role for older workers to take on instead of proceeding into full retirement. Differentiate Performances The willingness of key employees to engage with the organization’s work depends on how confident they are that the company’s performance evaluation system will recognize and reward their contributions. Employees know who is performing well

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and who isn’t. If they perceive that those differences aren’t recognized, the good ones will disengage fast. Differentiating performances through ratings requires an act of courage on the part of the manager. It shouldn’t, but it does. Differentiating, either with a “better than satisfactory” rating or a “less than satisfactory” one means that some ratings fall into the “exceptional” category, and are treated accordingly. It means that the manager is inviting additional scrutiny, more work, and possibly unpleasant conversations. The way to avoid all this is to rate as many performances as possible “satisfactory.” That is the only rating that glides through the system without attracting attention. Survey after survey of employees uncovers dissatisfaction with performance management. What may be lurking behind this finding is a failure to deal with poor performance. If key employees observe that marginal or poor performers are not being escorted, professionally and sensitively, through the “Exit” door, they will open the door themselves to walk through. It shouldn’t be difficult to assign superior ratings to the performances of retention-eligible employees who are deserving. The hard part is dealing with the poor performers in such a way as to send a message to talent that the organization won’t tolerate substandard performance. For most companies this will be a culture change. Conduct Retention Interviews One way to treat talent differently is to conduct retention interviews with key employees. The purpose of the retention interview is to remind the employees that they are still retention-eligible, and to elicit some information about their states of mind vis-à-vis the organization. Managers ask questions like: • • • • • •

What do you like best about the company? How do you feel about the company’s long-term direction? What do you like best about your job? Can you tell me how you’re challenged in your job? Why do you stay? If you were to leave, what would you miss? What would you not miss?

Answers to these and other questions can provide clues about how engaged the employees are and whether or not they’re at risk of being poached. Tracy Parzych, CEO of International Time Recorder Co. Ltd., a provider of payroll-related services in Toronto, has done this with excellent results. Retention interviews are conducted by managers in the firm with their retention-eligible employees. “We find the questions and discussion extremely valuable,” says Parzych, “both [in terms of] the performance appraisal and creating future goals, as well as ensuring that we are ‘job sculpting’ and providing employees [with] proper tools,

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an environment they want, etc.” The mere exercise of conducting these retention interviews sends a powerful message to the employees that they are being treated differently. Recognize Achievements One of the most disengaging feelings for any employee is the sense that their achievements go unrecognized. The individual feels isolated, performing heroic deeds all alone, and no one seems to notice or care. Inexperienced managers, if they find themselves supervising a disengaged person, frequently reach for a reward to confer. Organizational rewards are accessed through policies and procedures. Managers need permission before granting them. They are tangible, concrete, and the demand for them always exceeds the supply. As we have seen, the impact of rewards is short-term. (This impulse is what produces layered job titles, e.g,. senior programmer, intermediate programmer, junior programmer—three different titles for the same skill set.) What disengaged employees need is recognition from someone who matters, almost always the manager. Recognition is given at the manager’s discretion, costs nothing but a few seconds of time, needs nobody’s permission, and has long-term impact. Every manager has a bottomless bag of it. Most forms of recognition are riffs on “thank you.” Here are a few: • • • • • • • • • •

Increase in responsibilities Pat on the back Time off Expression of confidence Time with manager Actionable performance feedback Special assignment Organizing/leading a meeting Having suggestions acted on Being listened to

Every employee needs recognition for achievements; retention-eligible employees are no exception. The above list consists of samples of positive recognition, implying that recognition can also be negative, as in: • • • • • •

Lack of performance feedback Meeting with manager interrupted or canceled Undesirable assignment Micro management Being kept in the dark Being treated with disrespect/insensitivity

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Absence of manager support Being excluded Not being consulted in one’s areas of responsibility Being held to a higher (or lower) standard than others Being checked up on Being asked to pick up someone else’s slack Having no context for assignments Being compared negatively to others (“Why can’t you be more like . . . ?”)

Regrettably, examples of negative recognition come more readily than positive ones. Negative recognition can be constructive if it is part of performance feedback. But, whether or not it is carefully contextualized and supported by an engaged manager, negative recognition has long-lasting effects, and care needs to be taken when it is delivered. What is crucial for engaging retention-eligible employees is that they receive from their managers recognition for what they accomplish. Keep Some of Those Older Workers Most employers have seen no reason to manage the “Exit” door. As long as the baby boomers were in the job market, there were always lots of applicants for vacancies. We are using the past tense to refer to the tenure of boomers in the workplace. They’re still there, of course, but we need to get used to the idea of their departure. As they reach retirement eligibility, they will ask themselves two questions: (1) Do I want to keep working? and (2) Can I see my way clear financially to stop working? Most people will answer “No” to the first question, and “Yes” to the second. After all, they’re supposed to retire. It’s where they’ve been heading all their working lives, and pension arrangements make it possible. Boomers entered the job market in droves, and that’s how they’ll leave it. But the market can’t afford that. In Canada, the federal minister of labour is on record as saying that all the employees in the federal public service who will become eligible to retire in the next five years simply cannot be allowed to. There aren’t enough people coming up behind. “Employers must now retain the services of skilled older workers rather than discharge them with pensions to make room for younger workers. Companies have never dealt with this situation before. Given the increasing longevity, declining birthrates, and the disproportionate size of the baby boom generation now approaching traditional retirement age, we must look at the workforce quite differently and adapt our workforce management practices accordingly” (Dychtwald, Erickson, and Morison 2006, 14; emphasis added). The challenge, then, is to redefine retirement to include the continuous presence of some of the baby boomers in the workplace. Two ways to do this are: (1) shorten the workweek for older workers so they can still contribute to the organization while having a “golf and grandkids” life, too; (2) give older workers roles as mentors and coaches for future leaders.

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Summary The shift from a buyer’s market in jobs to a seller’s market requires organizations to abandon some long-standing workplace practices and adopt some new ones. To recap the key ones: 1. Play defense. Manage the “Exit” door to make it unattractive to key employees. 2. Differentiate the workforce by identifying talented employees and treating it differently. 3. Keep some older workers. 4. Create and sustain engaging employment experiences, not just jobs. 5. Manage talent at a corporate level. 6. Carefully identify for supervisory roles people who can be engaged supervisors. References Dychtwald, Ken, Tamara Erickson, and Robert Morison. 2006. Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent. Cambridge: Harvard Business School Press. Rutledge, Tim. 2005. Getting Engaged: The New Workplace Loyalty. Ottawa: Mattanie Press.

13 Building Relationships to Fix the Federal Talent Pipeline An Innovative Approach in Chicago Provides a Model for Recruitment Success Rob Seidner and James R. Thompson

the debate over whether and why the federal hiring process is failing to ensure a future talent pool loses sight of the projects that are already successfully confronting the problem. In Chicago, a unique partnership has developed between public service agencies and local universities to improve the dialogue and build a talent pipeline from the schools to government. The Government College Relations Council (GCRC) is meeting regularly to foster partnerships between the two communities. The goal is to assist agencies in recruiting for positions while simultaneously educating students and career counselors on why and how to choose public service internships and careers. By collaborating with the Chicago U.S. Federal Executive Board (FEB) to leverage its resources, GCRC is able to reach a wider audience. According to the Partnership for Public Service (PPS), this is the only such affiliation in the country. This new initiative has already demonstrated early success with top students entering into public service. It has the potential to resolve decades-old recruiting problems at a minimum financial cost and change the tenor of discussion about public service on campuses across the country. This chapter examines the need for innovative recruitment methods in the context of the pending retirement wave and regulatory constraints on hiring. The structure of the collaboration is described in detail based on interviews from GCRC leaders, members, affiliates, and students. A literature review explains how this organization can be replicated and reveals that the ingredients for a similar effort are present elsewhere. The Retirement Tsunami The federal government is by far the largest employer in the United States, with approximately 2.7 million civilian employees, or about 2 percent of the workforce. 185

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Federal employees, representing more than 800 different occupations, are present in almost every county in the country and throughout the world (CCEA 2007). Recruitment for these vital positions remains an ongoing challenge. Considering government’s responsibility and scope, the potential consequences are grave if these positions are not staffed by people able to adequately perform the jobs. Also at issue for agencies are the knowledge gap created by the retiring staff and integrating new hires into the institution while maintaining seamless service. The director of the U.S. Office of Personnel Management (OPM) has declared that the federal government faces a “retirement tsunami” because three-fifths of its 1.8 million (non-postal) workers will be eligible to retire during the next ten years. OPM estimates that by 2015 approximately two-fifths of all current federal employees will have retired (OPM 2006). Senior management faces an even larger exodus. OPM estimates that 90 percent of the approximately 6,300 Senior Executive Service (SES) federal executives who occupy the top government positions will be eligible to retire within ten years (GAO 2007a). Some positions are particularly susceptible; half of all contracting officials and 90 percent of Social Security Administration (SSA) claims examiners will be eligible to retire in the next 10 years (FAI 2007, OPM 2007a), while 40 percent of mine safety inspectors will be eligible within five years (GAO 2007b) and up to 23 percent of air traffic controllers at the busiest airports are currently eligible (Rosenberg 2007). The retirement wave in the federal sector has been written about extensively since the mid-1990s. The number of people retiring has not been as high as initially predicted, because more employees are working past their retirement eligibility dates. Reasons for this are varied, but as the decision is personal, it is impossible to predict actual retirement rates with certainty. However, substantial retirements are indeed occurring. In 2006, 58,583 federal employees retired, 3.7 percent of the total workforce. This percentage has held constant since 2004, and OPM predicts it will increase slightly in the foreseeable future. The retirements need to be combined with an additional non-retirement-related attrition rate of approximately 2.7 percent per year to get a more complete picture of federal recruitment needs (Friel 2007). When employee transfers between federal agencies are included, the total government-wide turnover rate in 2006 was 7.11 percent (OPM 2006). Federal employees are eligible to retire at age 55 with 30 years of service. In 2006, the average age of federal employees was 48 (OPM 2006), an increase of several years since the 1990s. This age-creep is due in part to fewer entry-level hires. The federal government predominantly hires mid-career professionals instead of traditional-age recent graduates. Out of the 96,353 new hires in 2006, 54 percent, or 52,696, were older than 35 (Friel 2007). When taking into account that all new law-enforcement hires must be younger than 36.5, the average is even higher for non-law-enforcement agencies. In 2005, nearly 60 percent of federal workers had more than 15 years of service (CBO 2007). Some departments and agencies have workforces with an average age over 50 (OPM 2007d).

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Thin Talent Pipeline As the elderly population increases to a larger percentage of the total population, the competition for the best talent will grow fiercer (GAO 2007c). The federal government must vie for staff with the private sector, nonprofit organizations, as well as state and local governments. With almost 90 percent of federal employees based outside of Washington, D.C., oftentimes local, state, and federal agencies are recruiting from the same talent pool. During the past fifty years, the population in metropolitan and suburban areas increased from 85 to 213 million people, and it continues to increase rapidly (Stephens and Wikstrom 2000). This has forced local governments to expand in size to meet their citizens’ needs as well as to address issues such as the environment and health care (Ibid. 2000). At least fifteen states currently face their own retirement deluge, with about 25 percent of their employees eligible to retire within five years (Walters 2007). Complicating the exodus is the need for new recruits with advanced credentials. In 2005, 49 percent of all federal employees had college degrees. Ninety percent of those in professional occupations in all employment sectors held college degrees, with about half also holding graduate degrees. While government has specifically been recruiting college graduates since at least 1954 (Ingraham 1995), by 1975, only 30 percent of federal employees had college degrees (CBO 2007). Such degrees are needed for management or professional jobs, which represent approximately 44 percent of the federal workforce compared to 32 percent of the private sector (Barr 2007a). During the past thirty years the nature of federal work has changed from predominantly clerical to predominantly professional. For example, because of technological advances, agencies such as the Internal Revenue Service (IRS) and SSA no longer need tens of thousands of employees to enter data manually from handwritten forms. Instead, the government needs those with professional degrees to investigate and oversee claims, grants, contracts, and programs. Even the nature of law enforcement has evolved. In place of only street-policing skills, law-enforcement organizations now need those with skills in technology and accounting to reflect the new nature of crime. Professionals are also required to analyze and manage functions that the government used to perform. Since the 1960s, there has been a dramatic increase in the outsourcing of work that had previously been performed in house (Light 1999). Departments such as Energy outsource a high proportion of work, with the government acting in a regulatory role. Overall, hires today need to be, and are, better educated (CBO 2007). Fix the Hire There is a wide gap between the established patterns of recruitment and training of civil servants in the United States and the actual composition and organization of the bureaucracies. The doctrine and practices of the civil service personnel systems are designed, in large part, to deal with a kind of bureaucracy, which no longer exists. —Wallace S. Sayre, 1954

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The failures of the federal government’s hiring processes have been extensively documented and written about by agencies and in the media. Multiple features of law and regulation make it difficult to hire in a manner that preserves and expands accumulated knowledge. Agencies are rarely able to hire or promote employees in advance of a pending retirement in order to ensure a seamless transition and continuity. Instead positions are often vacant for several months because agencies do not or cannot recruit for the position until it is actually vacated, regardless of the amount of notice provided. Repeated independent analyses have concluded that the government’s hiring criteria are invalid. Minimum qualification standards are often antiquated, and unrelated education may be substituted for experience. Application grading relies on applicants’ self-rating and the quality of a credential is considered irrelevant (PPS 2004; Ingraham 1995). This system has persisted for decades as a result of cultural inertia and a lack of decisive congressional action. Broader personnel reform efforts, termed “demonstration projects,” include recruitment as a major focus. However, the largest programs at the departments of Homeland Security and Defense have largely stalled amid litigation and congressional opposition. The key tool is allowing the selecting officials to offer higher pay to top candidates instead of relying on the traditional entry-level pay rates. Misinterpretations of the Merit System Principles and Prohibited Personnel Practices, as well as the Veterans’ Preference Act and multiple hiring flexibilities cause confusion among managers and human resources (HR) departments. The result is that a system initially designed to place power in the position instead of the individual, in order to ensure that government would operate regardless of who occupies the position, now has difficulty adequately guaranteeing long-term and constant succession plans to ensure continuing operations. Lavigna and Hays (2004, 248) succinctly stated, “Public sector recruitment has a notorious reputation for being slow, unresponsive, bureaucratic and passive. Too often, public agencies have assumed that qualified applicants would clamor for job openings” (emphasis in original). OPM itself has declared the hiring process “broken” and is submitting proposals for new legislation while requiring agencies to immediately adopt new, flexible staffing models (OPM 2006). Congress passed legislation that allows agencies to offer hiring incentives and flexible hiring authorities to provide some latitude when it comes to quality candidates or those with critically needed skills, but these flexibilities do not come with implementation funding, and the forty-seven agencies that paid about $140 million in bonuses to recruit, retain, and relocate employees used existing operating funds (OPM 2007b). Despite all the warnings, not enough has been done from a comprehensive, government-wide standpoint. In 1996, OPM delegated recruitment to the individual agencies in an effort to streamline the hiring process. A negative consequence was that each agency recruited on its own, often competing with other agencies. The government lost the economy of scale gained with centralized recruiting in terms of costs and building relationships (PPS 2006). Agency HR offices became highly centralized and often eliminated the local recruiters who knew the community

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talent pool firsthand. Based on multiple interviews by the authors, agencies rarely have standardized recruitment plans to cover all their positions nationwide; most departments allow each subagency to have a completely separate hiring plan at the expense of the efficiency of a coordinated recruitment strategy for the entire department. Information is rarely shared between divisions and agencies. Agencies fail to cooperatively recruit for specific careers such as engineering and accounting. It must be noted that while this effort potentially hurts overall operations, individual agencies that indeed take more active recruitment approaches are able to hire quicker and more strategically, a vast improvement from traditional hierarchical models and centralization. The nimbleness enables them to better compete with the private sector for top talent. These best practices need to be studied to encourage replication. OPM utilizes its central position in the federal HR community to provide tools other agencies may leverage. Its USAJobs.Gov website is the one stop applicants need to find all open competitive positions. Its functionality includes storing five resume versions and ten search agents that e-mail candidates may use when their desired jobs open, resulting in 260,000 daily e-mails (OPM 2007c). Other tools include surveys to help applicants identify how their personality and experience match specific federal careers, a translator to compare private experience to federal qualification standards, and tutorials on how to use the website. OPM also created a series of television commercials titled “what have you done at your job today?” and paid to air them in markets with available federal positions. Further leveraging resources, OPM taped webinars on how to find federal jobs and other related topics, allowing greater access to the information. These programs require an assessment of their effectiveness. Who Is Uncle Sam? Organizations such as the PPS were founded to help publicize the accomplishments of government because the government has not done so itself. Its founder, Samuel J. Heyman, was inspired to create the organization after learning how few top graduates consider public service. Citing record levels of community service, Heyman stated, “The challenge is now to convert that interest in community service into a similar commitment to government service. . . . people may differ about the size of government, . . . [b]ut everybody agrees whatever the size, the quality has to be really good” (Lewis 2007). The federal government does not adequately brand a recruiting strategy. Many of the benefits of working for the country’s largest employer are lost when each agency recruits for specific vacant positions independently instead of comprehensively targeting skill categories or talent pools. Most agencies limit their recruiting to websites and participation in occasional job fairs when vacancies exist. Collins

and Stevens (2002) found “that early recruitment-related activities interacted with one another such that employer brand image was stronger when firms

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used publicity in conjunction with other early recruitment-related activities.” CareerBuilder, one of the largest online job listing services, reported receiving 1.2 million government job searches per month, but was concerned enough at the lack of branding that the company donated a section of its site for agencies to advertise themselves. A CareerBuilder executive commented, “One of the biggest things we hear from job seekers is that they don’t hear about opportunities in the government” (Ballenstedt 2007). Getting to Know You Part of the benefit for agencies of building long-term relationships with schools is to build the horizon for future employment. While an agency might not have an immediate need, it is realistic that in two or three years vacancies will exist. In committing to a long-term relationship with a school, agencies are meeting underclassmen and -women who will become knowledgeable about government jobs and will potentially be interested in those positions when they graduate. Such an approach also allows students to properly prepare to meet the minimum education requirements for professional positions. As an IRS recruiter lamented to the authors, “Government service seems to appeal to many students. It would be great if we could let students know the qualifications for our positions early in their academic tenure so they could actually know the positions and have the right courses to qualify.” Starks’s (2007) review of the “Outstanding Scholar” excepted appointment hiring authority, which is based on academic standing, found that agencies were able to improve their quality hire rate by matching students’ majors with congruent positions. In an article on recruiting for public service, Lavigna and Hays (2004, 242) summarize that, “simply filling positions is one issue, but to optimize recruitment results—to attract ‘the best and the brightest’—requires a more coordinated and proactive approach” (emphasis in original). The approaches they describe are incremental and can be employed by any public agency to change how it identifies, recruits, screens, and hires civil servants. Specifically, these include making procedural (regulatory barrier) changes, creating process innovations, and using technological applications. Mathews and Redman (1996) advocated less emphasis on expensive recruitment tactics and to “get personal” with college recruits to better identify those with the essential personal attributes. Davy (1959) found the best recruiting method for public service positions was getting professors to discuss them and arranging personal visits and counseling by governmental recruiters. The federal government has not done an acceptable job of recruitment since the halcyon days of President Kennedy’s call to “ask not what your country can do for you—ask what you can do for your country” led to an influx of highly motivated and skilled employees. Yet no new policies have been implemented to reflect the fact that “the Federal Government is facing new and more complex challenges in

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the twenty-first century because of long-term fiscal constraints, changing demographics and other factors” (GAO 2007a, 1). “Ask Not What Your Country Can Do For You” Government has many hurdles to overcome to improve the prospect of hiring top college graduates. Those who choose public service careers do so because they want to draw meaning from their work or because money and stable employment are not the primary motivators (Pattakos 2004). However, government service is often maligned by those elected to oversee it. Campaigning against government is the norm. Lane and Wolf (1990, i) stated that the customary presidential campaign attacks on bureaucracy are a reason the public has a “tangible sense of Federal institutional breakdown and declining morale.” According to Paul Light (1999), the last presidential campaign in which both candidates seemingly supported public servants was Nixon-Kennedy in 1960; he noted that by 1980, Ronald Reagan considered “government as a bastion of fraud, waste, and abuse.” The 2008 presidential election is shaping up to be anti–civil service. As Washington Post “Federal Diary” writer Stephen Barr (2007b) stated, “Federal employees and government contractors seem likely to get caught in the crossfire.” The hostile portrayal of the bureaucracy by elected officials is compounded by the media, which rarely focuses on government success stories. Senior government managers report that the negative comments impede recruitment and foster an environment of distrust toward bureaucracy (Garrett et al. 2006). Students also develop negative attitudes (PPS 2005). Defending civil service at different levels, Charles Goodsell (1994, 167) commented that “roughly 20 million Americans work for government. We all recognize that this huge slice of the population does not consist solely of lazy bums, incompetents, or the psychologically malformed.” Lane and Wolf (1990, i) wrote, “America has squandered one of its most critical resources—a fine civil service.” PPS (2005) reported that fewer than 10 percent of college seniors consider serving their country as the top reason to work in government. A negative correlation exists between a high GPA and interest in a public service job, while fewer than 25 percent of college seniors believe their parents would be proud of them for accepting government jobs instead of a private sector or nonprofit position. This is not a new problem, as only 6 percent of political science professors in 1959 stated their students had a positive view of government service (Davy 1959). Programs such as Princeton University’s Woodrow Wilson School of Public and International Affairs and Columbia University’s School for Public Affairs are no longer turning out many public servants. The Wilson School is being sued by its benefactors, as only about 10 percent of its fellows go into government foreign affairs positions while just 36 percent of Public Affairs graduates enter public service (Kinzie 2007; Knight 2007). In order to attract the best candidates, government must first change the public’s

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perception of government work and why careers in government can be rewarding. A highly public effort to accomplish this was the publication of two reports (1989, 2003) by the National Commission on the Public Service, also known as the Volcker Commission after its leader, former Federal Reserve Chairman Paul A. Volcker. These bipartisan commissions made a series of recommendations to strengthen the civil service. In the first report, the commission made seven recommendations that could be summarized as getting “the top jobs in government filled as fast as possible by the most qualified candidates in the nation” (Light 2007, 408). According to Paul Light’s recent analysis of the first commission (2007), accomplishments included the 1989 Government Ethics Reform Act, the 1998 Federal Vacancies Reform Act, and the Presidential Transition Act of 2000. However, action did not occur on other matters such as speeding appointments, limiting the number of political appointments, and financial transparency. The second commission had fourteen recommendations, including one specifically on recruitment. An Australian study demonstrated that to attract university students to the public sector, it is necessary to communicate the opportunities offered and minimize any misconceptions about the image of public service (Taylor 2005). Those who are considering nonprofit careers must be shown that they can also have a positive impact by serving in government. Those focused on career tasks must be shown the unparalleled experience that can be gained in government as a consequence of the resources and size of government operations. To those who are concerned with benefits, the government must highlight its competitive salaries, top-rated 401(K)-equivalent retirement plan, and generous vacation schedule. “Ask What You Can Do for Your Country” Despite the aforementioned challenges, the federal government has reasons to be optimistic. The Washington Post reported that a May 2007 poll found that more people’s dream jobs were in government than in the private sector. In some cases, the preference was by a 3:1 margin. Government was preferred even in high-paying positions. For example, being a federal judge was preferred over being a senior law partner, and being a National Cancer Institute scientist was preferred over a position as a biomedical in-house scientist (Barr 2007b). The Merit Systems Protection Board’s survey of 2,000 new entry-level hires found that more than half were specifically looking for a federal position, many with a particular agency (MSPB 2007). PPS (2006) summarized several benchmark results based on a representative sample of 3,200 students on perceptions of government service and recruitment. They found that student interest in federal jobs is relatively high at 42 percent, but that only 13 percent felt knowledgeable about federal positions. Those who learned more about such positions acknowledged feeling more positive about federal service. The biggest deterrent to working for the government had to deal with the perception that government bureaucracy is stifling. In terms of outreach, PPS noted that even though college students predomi-

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nantly use the Internet to search for a job, the most effective recruiting comes from personal interactions. Professors, who are in an excellent position to provide advice to students, overwhelmingly believe the federal government has good jobs for their students, but less than 20 percent felt very knowledgeable about the work available. Adding to recruitment complexity is that students now expect tailored job announcements. In terms of diversity, Hispanics, whites, Asians, and African Americans look for different job requirements and have different public service views. Finally, as a master’s student commented to the authors, the government needs to identify and advertise the most attractive features to working for the government. The new generation of America[ns], i.e. millennials, are motivated by different things than previous generations. Job security and benefits, the long-standing mantra of government employment, will not attract the top talent of the new generation. The opportunity to contribute immediately and have meaningful work that impacts society would certainly attract a lot of the talent.

The Chicago Initiative In Chicago, an innovative partnership has formed to build an effective talent pipeline between the colleges and the public sector. The Government College Relations Council (GCRC) was founded in 1968 as a professional development organization in which members could exchange information about government opportunities. The organization is inclusive, comprising federal, state, county, city, and suburban government representatives as well as the full range of accredited post-secondary colleges/universities from elite private to large state schools to community colleges. GCRC has members from throughout the upper Midwest, including Wisconsin, Indiana, and Iowa, but the largest concentration comes from the greater Chicago area. GCRC has approximately 125 members representing 60 agencies and schools. The volunteer efforts of its members result in a professional series of programs that are consistently evolving to respond to pressing topics and needs. GCRC has grown and shrunk in stature throughout the years, but by 2002 the group was rapidly fading in importance to the member communities as changes in recruitment practices were making it irrelevant to its target audience. Recognizing the need for change, the GCRC Steering Board transitioned the organization from a focus on information exchange to fostering individual relationships. What exists today has deep roots in terms of name recognition and membership connections, but also operates with the flexibility of a newer organization unencumbered by tradition. As a former GCRC president stated to the authors, That came after we looked at ourselves in a hard light. We had been doing the same type of meetings repeatedly and our member participation had declined . . . we had become stagnant. The result was that we had to institute some changes that involved assessing member satisfaction, changing meeting locations and styles, and finding fresh topics. It was not an easy transition.

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By reaching out to students in a more informal, open manner instead of relying on the Internet or large job fairs, GCRC modified its goals and procedures. GCRC has increased the size of its membership and its profile by developing individual relationships between agencies and the schools likely to produce the needed students. The sixteen-member Steering Board, evenly split between government and college representatives, is responsible for the majority of programming as well as for managing the infrastructure. The all-volunteer leadership often devotes its time as collateral work duties. In addition to splitting the number of board seats, each side (agencies, schools) is representative of the diversity within its community. On the college side, seats are divided equally to ensure each type of college is represented. Categories considered include public/private, large/small, two-year/ four-year, sectarian/nonsectarian, and Chicago/outside the city. All majors and degree types are included to provide talent pipelines for all types of public service careers. On the government side, board representatives are from federal, state, and city government agencies and are responsible for white- and blue-collar work as well as professional and administrative positions. This structure guarantees that GCRC remains attuned to the needs of different agencies and recognizes the different types of students that colleges educate. GCRC requires its government members to adhere to the principle of equal employment opportunity, and its colleges must follow the Principles and Practices of College Placement and Recruitment, published by the National Association of Colleges and Employers. These two broad principles are the generally accepted practices for each community and allow GCRC to stress ethical operations and adherence to federal and local merit system principles. In an effort to increase the size of the membership, GCRC controls costs and is funded by small membership and meeting fees. In most cases, the meeting hall is donated by an agency or college and the majority of speakers volunteer their time. Member agencies also share the cost of office operations such as printing and mailing, although technology has eliminated many of these expenses. A part-time contract webmaster maintains the website, which remains as an ongoing expense even as other costs have been eliminated. Each of the three meetings per year focuses on a topic of mutual interest to both agencies and colleges. Topics rotate between those where colleges can teach agencies and vice-versa. In the past year, the Federal Emergency Management Agency (FEMA) presented on how colleges can implement continuing operation plans in case of emergencies, the state of Illinois discussed personal security against ID theft, and OPM and the City of Chicago discussed how to navigate their hiring processes. Meanwhile, college personnel led sessions on generational differences, targeting the millennial students and using popular sites such as MySpace and Facebook for recruiting and research. The topics are intended to be of mutual interest—for example, how to integrate recently returned veterans onto campus and/or the workplace. GCRC also revamped the tri-annual newsletter to center on success stories

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instead of recapping previous events. Each issue includes a spotlight on a recent intern who subsequently attained a regular government job. The subject provides advice and discusses both the internship and his/her current position. These subjects serve as case studies for schools and agencies to highlight that utilizing hiring flexibilities can lead to great success. The newsletter also provides updates on major issues related to hiring that give an overview and talking points. A spotlight on members helps connect schools and agencies. Perhaps the most popular events are GCRC’s public service job fairs. GCRC hosts at least one annual government job fair that coordinates participation among as many as eighty local, state, and federal agencies. The 2006 event brought in around 1,500 current students and recent graduates while the 2007 job fair registered almost 1,000. A mini-job fair with 25 agencies in the fall of 2006 attracted almost 500 participants. These job fairs are completely devoted to public service and are intended to build awareness with students. One result of the repeated interactions among the agencies at GCRC events is the ability to then refer students to different, possibly more appropriate recruiters. Coordination helps students understand federal service as a unified employer with one mission and multiple career paths. As a result of the heightened attention, the executive director (ED) of the Chicago U.S. Federal Executive Board (FEB) made GCRC an affiliate of the organization and agreed to co-sponsor events. The FEBs, present in the twenty-eight major hubs of government outside Washington, D.C., pool resources to provide common services. It is the vision of the FEB that led to the partnership with GCRC: “To become a premier and valued asset: A nucleus of enthusiastic leaders for intergovernmental initiatives”; the mission enabled the implementation: “FEBs are catalysts for developing partnerships to coordinate intergovernmental cooperation to advance local and national initiatives” (FEB 2007, 1). In 2006, recruitment outreach was chosen as a FEB focus. The FEB recognized that GCRC was already accomplishing much of the outreach task and determined it would be mutually beneficial to collaborate. The FEB now leverages its central coordinating role of the almost 200 federal agencies in the area to support GCRC. The FEB is unique in its ability to communicate with all of the agencies in the region. It also has the power of representing the entire federal community, thereby encouraging agencies to participate more in GCRC events. In one of the strongest marks of the partnership, GCRC has sponsored an ongoing internship at the FEB. GCRC opens an announcement to juniors and seniors at member schools. Judging candidates on their credentials and commitment to public service, GCRC recommends the top three candidates to the FEB. The staff at the FEB interviews the candidates and selects the intern. GCRC provides a $1,000 stipend for the semester. The interns work at the FEB office on a variety of programs of interest to both the organization and to the interns. Interns examine issues related to recruitment that may assist both the FEB and GCRC. While at the FEB, the interns are introduced to multiple agency heads and have the opportunity to network. Additionally, the interns gain valuable insight and experience into

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federal government operations that can be parlayed into a public service career after graduation. internships and other student employment opportunities will become a larger area of focus of GCRC. Few agencies are fully aware of the numerous different methods to hire interns, with or without funding. Students are allowed to volunteer with agencies and receive academic credit. Many schools also now require students to complete a practicum by working with a government agency or nonprofit. Students who work with the government are able to see firsthand how public service careers may be rewarding. Publicizing and encouraging agencies to use these authorities will be accomplished by creating a database housed on GCRC’s website of all schools with practicum classes, by agencies posting potential projects, and by requests for interns. The website will also host a unified calendar of all the different job fairs in the region so that agencies may make a cohesive recruitment schedule. Setting the tone for the future direction of GCRC, the Environmental Protect Agency’s Assistant Regional Administrator Walt Kovalick challenged the members in a 2007 keynote speech to: “(1) Find a management ‘sparkplug’; (2) Determine available mechanisms to bring students on board; (3) Locate willing supervisors; (4) Create a relationship with school(s); and (5) Make sure the intern’s experience is a good one.” He highlights that each side bears a responsibility; that it is not just the job of government to reach out to colleges, but the job of the colleges to ensure students and professors are also getting the message. GCRC hopes to expand the audience while sticking to the one message: A cohesive approach will help reinforce public service career information. Results The efforts have paid early dividends. Several agencies have changed their local recruiting strategy from only conducting outreach activities when a position is vacant to developing ongoing relationships with talent pools. In turn, college career counselors have reached out to federal agencies to recruit at their schools. Both segments report increased interest from students asking about public service, including those in the top of their classes. One career counselor of a top-ranked school stated, “Personal contact with government recruiters has definitely increased and been quite positive. For those agencies that have made some kind of presence on campus—presentations, career fairs, etc. —students are much more aware of these agencies and realize the breadth of positions these agencies can have.” A director of a large graduate school career center is “seeing more government recruiters from a variety of agencies.” She also states that since more agencies have come to campus, the number and quality of students asking her about public service position has increased. The former GCRC president, a career counselor, proclaimed, “The recruiters I have met have actually visited my school and spoken to students. That’s a great thing in my opinion.” Meanwhile, another career counselor from a state university said he hoped he had

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“been able to open the eyes of some of the agencies that there are qualified people outside of the Chicago land area.” The career director from a sectarian college gained a “better understanding of the federal employment process, better ability to talk to students about government jobs and the hiring process,” and about contacts within agencies. Government personnel have also seen improvements. Representatives surveyed for this article from ten federal agencies report fielding more questions from students, developing more relationships with individual colleges, and having more meaningful conversations at job fairs. One small-agency representative felt that students had a better idea of her agency despite its general lack of publicity. Other agencies report they have increased the depth and quality of the applicant talent pool for the Federal Career Intern Program (FCIP), an excepted appointment for a developmental two-year, rotational program. Graduate students who were encouraged to apply for the Presidential Management Fellows Program (PMF), an elite program targeting future SES, also reached out to Chicago agencies upon being selected. Agencies also believed they received faster commitments from their top picks. PMF and FCIP are two national programs that require local publicity to attract elite students. A regional director of a federal agency stated, “I think both parties get credit: colleges are much more proactive now that they know we exist. And having met some of the counselors gives me name-recognition; I don’t have to explain who I am or why I want to discuss [the agency].” Being a part of GCRC helped a large federal department with “a growing awareness of the work we need to do to improve our academic outreach and increase in strategies and ideas for how to improve that outreach effort.” The most compelling proof of results comes from the students who do find federal employment as a result of the GCRC and FEB outreach initiatives. Dozens of students who have been hired directly credit the connections they made at these events for leading them to jobs. Several of them provided comments that justify the reason for GCRC. One recent graduate who was hired as a FCIP in Washington, D.C., stated: Hearing from practitioners in the field at an information session that I attended was really helpful in showing me what one can gain from federal employment and what day-to-day responsibilities one can expect. It convinced me to consider federal employment, where previously I was looking mainly at nonprofit job opportunities. I recently got a job offer that never would have happened without the connection.

Another recent graduate hired as an auditor said, “Bottom line is, the interactions I had at the [GCRC] job fair really got the ball rolling.”

Educating students about job opportunities in the public sector remains a key to convincing top talent to choose public service. A recent Human Resources master’s graduate attested, “I was only aware of the [misconceptions] of working with the government—unmotivated workers in a highly bureaucratic system

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with below-value salary and career opportunities more determined by seniority than merit. The exposure to a highly motivated employee showed me that those misconceptions were not entirely true.” An underclassman who attained a federal internship stated, “I became much more knowledgeable about the selection process and long-term goals in the public service.” A senior felt, “These presentations did achieve one major goal and that was enhancing a positive view of working in the public sector. My observation is that there is a pattern of growing and aggressive government recruitment at the school targeted at multi-lingual citizens, minority and diversity—[an] attempt by the government to be competitive for the best.” Replication What is starting to happen in Chicago can be adopted by other cities. GCRC, operating with volunteers and limited budget, is unable to devote the resources to oversee franchises. The FEBs are non-appropriated and lack the finances to underwrite the expansion. Therefore, if the Chicago initiative is to expand, it will need to replicate itself via innovation diffusion, allowing its lessons to spread almost autonomously to other locations. Making changes is possible, although not easy. “Governments invariably struggle with implementation because they hold a centre-periphery model of diffusion or learning, which rests in turn on a theory of the stable state” (Freeman 2006). Accepting Herbert Simon’s (1957) belief that the best solution cannot always be explicitly researched and found because too many choices exist, the goal becomes finding a satisfying program for results (Walker 1969). Walker aptly defines (1969, 881) innovation as “a program or policy which is new to the states adopting it,” no matter how long the policy actually has existed. Knowledge moves between entities, spreading an idea in time. According to Eyestone, “classically, the idea of diffusion refers to a pattern of successive or sequential adoption of a practice, policy, or program either across countries or across sub national jurisdictions such as states and municipalities” (cited in Freeman 2006, 369). Rogers (1995) defines diffusion as a process by which an innovation is communicated through certain channels over time and among the members of a social system. He describes a typical pattern that includes early adopters, followed by the bulk and then the “laggers” (Freeman 2006). The change engine comes from individuals or small groups at first. The initial innovators are policy entrepreneurs, people who seek to initiate dynamic policy changes by identifying problems, networking, shaping coalitions, and shaping the debate (Mintrom 1997). “Crafting arguments in support of their proposed policy innovation is critical for policy entrepreneurs if they are successfully sell—‘broker’ their ideas to potential supporters” (Mintrom 1997). Sabatier and Heclo sequentially developed the advocacy coalition framework; “the concept of the advocacy coalition serves to aggregate large numbers of actors and organizations at different levels of government into manageable units of analysis” (Freeman 2006, 56). First though, “prospective adopters need accurate information about the

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goals, designs, and actual operation of policies under consideration” (Mossberger and Wolman 2003, 428). According to Rogers, reinvention can occur during diffusion that can improve the original program (Mossberger 2000). Once a program has the stamp of legitimacy, it has momentum and can be replicated (Walker 1969). In the case of recruiting, “polydiffusion” can be an asset as it occurs through vertical and horizontal channels in an interactive network. The federal government’s mobilization might inspire other entities. Various scholars have suggested that policy innovations diffuse across states on a regional basis (Mintrom 1997). Professional organizations such as GCRC can disseminate the “how-to knowledge” with what is specific to Chicago versus what is generic. As Mossberger (2000) succinctly explained, it is much easier to “modify the idea than to start with a new one, explaining it and defending it.” Using a bounded rationality framework, the information becomes a process tool to get to a goal-driven result dominated by expertise, allowing for replication (Mossberger 2000). Several of the GCRC Steering Board members agreed about what would be necessary for replication. To make GCRC work in other cities, you need some grassroots efforts by colleges and government recruiters. They need to get together to share needs, concerns, and ideas and to collaborate on bringing value to each other. They must devise a continuing regular meeting schedule and develop career fair opportunities for students and agencies, and so on. A structure needs to be in place with a consortium of schools to support it that can weather the high turnover in college career offices. Initially, a key group of willing, able, and energetic volunteers from college/university career services and government people need to get started along with possible assistance from GCRC. A balanced board made up of different types of college members and a variety of government recruiters ensures equality. That can be tricky at times when, for instance, a local government member slot exists, but no one is willing to fill it. At least 3–4 key people from career services and 3–4 people from government agencies should be present. A leader or cohort of leaders who believe in the process and want it to happen needs to step up. Running a group like GCRC is a lot of work, especially for anyone who would like a leadership position as an officer. At the core, the group needs clarity of mission and goals, recognizing that they will not be able to reform the federal hiring system or find every student a job. When the focus on the goal or purpose (helping connect students with government jobs) is lost, momentum also is lost. Finally, the most intangible requirements are desire and strong will. Several cities have the proper ingredients to replicate the Chicago initiative, namely FEBs to provide the initial structure and multiple schools and agencies in a region. The program can be started without any changes to law or regulation. It would not require coordination from Washington or capital investments. The potential for developing new talent pipelines is great while the risk is low, creating the perfect situation for federal agencies to stretch their recruitment budgets in an innovative manner.

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Note The viewpoints represented in this article are those of the authors, not any of the organizations mentioned, regardless of authors’ affiliations. For more information on the GCRC, please go to: www.gcrcassociation.org for current leadership information.

References Ballenstedt, Brittany. 2007. “New Job Site Aims to Enhance Federal Recruitment.” Government Executive, June. Available at http://govexec.com/story_page.cfm?articleid=3700 8&dcn=todaysnews. Barr, Stephen. 2007a. “Staffing the Government: An Ever-Changing Task.” Washington Post, April 26, T25. ———. 2007b. “The Candidates Sound Off on Government Jobs.” Washington Post, May 30, D01. Chairman of the Council of Economic Advisors (CCEA). 2007. “Economic Report of the President.” Washington, DC: CCEA. Collins, Christopher J., and Cynthia Kay Stevens. 2002. “The Relationship Between Early Recruitment-Related Activities and the Application Decisions of New Labor-Market Entrants: A Brand Equity Approach to Recruitment.” Journal of Applied Psychology 87(6): 1121–1133. Congressional Budget Office (CBO). 2007. “A CBO Study: Characteristics and Pay of Federal Civilian Employees.” Washington, DC. Davy, Thomas J. 1959. “Competing for Administrative Brainpower.” Public Administration Review 19(4): 227–232. Federal Acquisition Institute (FAI). 2007. “Annual Report on the Federal Acquisition Work Force.” Washington, DC: FAI. Federal Executive Board (FEB). 2007. “Missions and Visions.” Available at http://www. feb.gov/mission.asp (accessed September 10, 2007). Freeman, Richard. 2006. “Learning in Public Policy.” In Oxford Handbook of Public Policy, ed. Michael Moran, Martin Rein, and Robert Goodin. New York: Oxford University Press. Friel, Brian. 2007. “Sticking Around: Retirement Surge and Empty Pipeline Fears Mostly are Unfounded.” Government Executive 39(8): 56. Garrett, R. Sam, James A. Thurber, A. Lee Fritschler, and David H. Rosenbloom. 2006. “Assessing the Impact of Bureaucracy Bashing by Electoral Campaigns.” Public Administration Review 66(2): 228–240. Goodsell, Charles T. 1994. The Case for Bureaucracy: A Public Administration Polemic. Chatham, NJ: Chatham House. Government Accountability Office (GAO). 2007a. “Diversity in the Federal SES and the Senior Levels of the U.S. Postal Service.” GAO-07–838T. Washington, DC. ———. 2007b. “MSHA’s Mine Inspector Recruiting and Workforce Planning.” GAO07–704R. Washington, DC. ———. 2007c. “Forces That Will Shape America’s Future: Themes from GAO’s Strategic Plan 2007–2012.” GAO-07–467SP. Washington, DC. Ingraham, Patricia Wallace. 1995. The Foundation of Merit: Public Service in American Democracy. Baltimore, MD: Johns Hopkins University Press. Kinzie, Susan. 2007. “Exacting Donors Reshape College Giving.” Washington Post, September 4, 2007, A01. Knight, Rebecca. 2007. “Concern Grows over Brain Drain Threat to US Public Sector.” Financial Times, London First Edition, February 5, 10. Lane, Larry M., and James F. Wolf. 1990. The Human Resource Crisis in the Public Sector. New York: Quorum.

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Lavigna, Robert, and Steven Hays. 2004. “Recruitment and Selection of Public Workers: An International Compendium of Modern Trends and Practices.” Public Personnel Management 33(3): 237–253. Lewis, Nicole. 2007. “The Best and the Brightest.” Chronicle of Philanthropy, May 31. Light, Paul. 1999. The True Size of Government. Washington, DC: Brookings Institution. ———. 2007. “Recommendations Forestalled or Forgotten? The National Commission on the Public Service and Presidential Appointments.” Public Administration Review 67(3): 408–417. Mathews, Brian P., and Tom Redman. 1996. “Getting Personal in Personnel Recruitment.” Employee Relations 18(1): 68–78. Merit Systems Protection Board (MSPB). 2007. “Attracting Career Entry Hires: Sizing Up the Competition.” Issues of Merit (July): 5. Mintrom, Michael. 1997. “Policy Entrepreneurs and the Diffusion of Innovation.” American Journal of Political Science 41(3): 738–770. Mossberger, Karen. 2000. The Politics of Ideas and the Spread of Enterprise Zones. Washington, DC: Georgetown University Press. Mossberger, Karen, and Hal Wolman. 2003. “Policy Transfer as a Form of Prospective Policy Evaluation: Challenges and Recommendations.” Public Administration Review 63(4): 428–440. National Commission on the Public Service. 1989. “Leadership for America: Rebuilding the Public Service.” Washington, DC: National Commission on Public Service. ———. 2003. “Urgent Business for America: Revitalizing the Federal Government for the 21st Century.” Washington, DC: National Commission on Public Service. Office of Personnel Management (OPM). 2006. “Career Patterns: A 21st Century Approach to Attracting Talent.” Washington, DC: OPM. ———. 2007a. “Federal Student Loan Repayment Program Fiscal Year 2006 Report to the Congress.” Washington, DC: OPM. ———. 2007b. Recruitment, Relocation, and Retention Incentives: Calendar Year 2005 Report to the Congress. Washington, DC: OPM. ———. 2007c. “What Did You Do at Your Job Today” Working Presentation. ———. 2007d. Central Personnel Data File (CPDF). Partnership for Public Service (PPS). 2004. “Asking the Wrong Questions: A Look at How the Federal Government Assesses and Selects Its Workforce.” Washington, DC: PPS. ———. 2005. “Class of 9/11.” Washington, DC: PPS. ———. 2006. “Back to School: Rethinking Federal Recruiting on College Campuses.” Washington, DC: PPS. Pattakos, Alex N. 2004. “The Search for Meaning in Government Service.” Public Administration Review 64(1): 106–112. Rogers, Everett M. 1995. The Diffusion of Innovations, 4th ed. New York: Free Press. Rosenberg, Alyssa. 2007. “Empty Towers.” Government Executive 39(13): 28–34. Sayre, Wallace S. 1954. “The Recruitment and Training of Bureaucrats in the United States.” Annals of the American Academy of Political and Social Science 292: 39–44. Simon, Herbert. 1957. Models of Man. New York: Wiley. Starks, Glenn L. 2007. “The Effect of Person-Job Fit on the Retention of Top College Graduates in Federal Agencies.” Review of Public Personnel Administration 27(1): 59–70. Stephens, G. Ross, and Nelson Wikstrom. 2000. “Reinventing Government and Federal Downsizing—or Whose Ox is being Gored.” Working paper, Annual Conference of the Southern Political Science Association. Taylor, Jeannette. 2005. “Recruiting University Graduates for the Public Sector: An Australian Case Study.” International Journal of Public Sector Management 18(6): 514–533. Walker, Jack L. 1969. “The Diffusion of Innovations among the American States.” American Political Science Review, 67: 880–899. Walters, Jonathan. 2007. “Courting Talent.” Governing 20(6): 26–34.

14 Competencies for Success in International Leadership in Challenging Times Daniel Spikes and John Stroup

The role and position of the United States in the world has been a perennial issue since the founding of the republic.1 The influence, and indeed the vulnerabilities, of the United States make it imperative for thoughtful Americans—and especially for those in positions of public trust—to consider how best to ensure national interests. As a contribution to that larger subject, we identify the competencies that government executives whose work has international implications should possess. Although our focus is on the U.S. federal government, we believe that our observations extend to other national bureaucracies, and perhaps multinational corporations. Our account is based on a review of academic research, an examination of U.S. government examples, and a survey of what federal executives say they need to know for their work. Modern-Day Theories of Competencies Descriptions of competencies for international leadership have tended heretofore to be vague and general in nature. Our research, however, shows that there are specific skills and knowledge needed for international work that lie outside the traditional canons of leadership and management. Those qualities, described below in greater detail, include appreciation for the role of the United States in international affairs, comprehension of the impact of the international economic system, understanding of foreign societies, cultivation of personal and institutional relations, and ability to employ appropriate strategies for public advocacy. The literature on the competencies for leadership and management, especially in the United States, tends to focus on skills and abilities that might be applied in equal measure to almost any field of endeavor (see Zaplin and Smith-Heimbrock 2008). The same observation is true for most of the studies that illuminate qualities needed for international leadership. Before presenting the results of our survey of U.S. government officials, it is worth examining some of the more significant definitions of the competencies for international leadership and to distinguish between generic characterizations of leadership and management skills and those qualities that have specific relevance for work with international implications. 202

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The study and practice of leadership and management, especially as promoted by generations of experts and practiced by consultancies, has been reviewed recently and amusingly by Matthew Stewart (2006) in the Atlantic Monthly. Stewart, a student of philosophy who was a founding partner for a successful consulting firm, left that profession and examined, for the first time and out of retrospective curiosity, the literature of management. His article exposes some of the questionable premises, faulty data, and hyperbole that have informed the profession since its origins in the Principle of Scientific Management of Frederick Winslow Taylor in 1899. Those exaggerations recall the characteristics of the “confidence man” who haunts the history of U.S. intelligence agencies as described by Rhodri Jeffreys-Jones (2002), where exaggeration and political considerations sometimes trump rational analysis to the detriment of organizations, policies, and ultimately the public interest.2 In his jaunty but thoughtful review of leadership and management theory, Stewart describes the heuristic nature of many of the commonplace notions of that subject—“they can lead you to solutions, but they can’t make you think”—and concludes that the study of philosophy and literature arguably provides better preparation and mental discipline for professional life than most advanced degrees in business administration, although he concedes that such degrees have merit for networking and credentialing. We believe that those criticisms have some merit, and that similar conclusions might apply to studies and programs that discuss international competencies in the context of public management. In 2003, the RAND Corporation published a survey of leaders in government, business, and the not-for-profit sector in the United States to learn which competencies they thought were necessary for international work (Bikson, Treverton, and Lindstrom 2003). Results showed consensus on the need for cognitive ability, interpersonal skills, character, tolerance, adaptability, and teamwork. Foreign language and area expertise were somewhat less important for managers, perhaps because many believed they could hire to need. This research also illustrates basic distinctions between the public and private sectors in that business has greater flexibility than government in hiring noncitizens. The RAND report also highlights some positive trends in government, including hiring flexibilities and the encouragement of portfolio careers, in which executives can gain broader experience through assignments to other agencies and departments. The Career Development Program for Foreign Service employees who wish to compete for promotion into the Senior Foreign Service at the Department of State is an example of an internal approach to developing flexibility and portfolio careers (U.S. Department of State 2005). Under the leadership of the Director of National Intelligence, the intelligence agencies are endeavoring to take a community-wide approach to developing international capacities in their organizational leaders (Office of the Director of National Intelligence 2006). Political appointees in federal agencies have an important role, the authors note, but the pendulum seems to have swung too far in that direction. They argue that senior jobs in agencies should be reserved for career personnel to ensure depth, experience, continuity,

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and an incentive for career advancement (see especially Ink 2007). It is worth noting, moreover, that the champions of the two examples cited above—the Director General of the Foreign Service and the Director of National Intelligence—are, respectively, distinguished representatives of the civilian and the military services who possess the experience and the sensibility to understand the challenges and the rewards of new policies. RAND study authors clearly state that the ability to work well across agencies is vital, and that implementing portfolio careers that allow for meaningful crossagency assignments provides a way to encourage that skill. Globalization of issues and economies should prompt agencies to reexamine certain fundamentals. For example, the need for clarity and diligence in hiring noncitizens and the fact that government, business, and nonprofit institutions are not competitors but collaborators now are matters of conventional wisdom. The psychology of globalization is an interesting and related idea for the development of international leadership competencies, with the development of multiple and sometimes novel senses of identity (Arnett 2002). Despite the need for government-specific skills and capacities, most of the studies of global competencies, however, focus on the world of business, and it is to a short review of those works that we now turn. An attempt to improve on generic categories, and to consider the possibilities of national differences, is the object of a pilot study of competency profiles reported by German, Australian, and American managers in an article by J.B. Hunt (1995). His comparative analysis presents by national group the rankings of ninety-one competency elements. Hunt identifies seven broad areas of thematic variance among the three groups: • • • • • • •

Relative emphasis on leadership and team-building Degree of flexibility in decision-making Emphasis on planning and control Persuasion and influence strategies Sensitivity to national differences Understanding information technology Regard for financial implications

Although this study admittedly provides only an illustrative and suggestive picture of international diversity, it does not isolate—nor does it seek to distinguish— competencies specific to work with international connections, although some of those qualities clearly are inherent in some of the areas of thematic difference such as “sensitivity to national differences” and “persuasion and influence strategies,” assuming, of course, that such sensitivity or persuasion are appropriate to the audiences in question. It is not surprising that European experts have taken a different approach that is more sensitive to international considerations. Koen Becking and Nikol Hopman (1985) have examined leadership development in the public sector in the European Union and have published their conclusions on the “competencies for Europe.”

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Their definition of seven core competencies for Europe includes a suggestive mix of attitudes, skills, and knowledge that warrants attention. In their system, each of the seven competencies is arranged under one of those three broad categories, and each core competency, similar to the classification of competencies used by the U.S. Foreign Service, includes detailed subsections. The seven “competencies for Europe” are: • • • • • • •

Open-minded Innovative Possessing integrity Possessing social skills Possessing communication skills Result driven Possessing knowledge at different levels

Many of the subcategories, such as flexibility, honesty, judgment, and teamwork skills, are reasonable and similar to those of most of the systems we have examined. The list is rather more distinctive for the emphasis placed on social skills and institutional and international knowledge, including linguistic skills, cross-cultural communication, negotiating skills, strategic perspective, and appreciation for the organization and priorities of member states in the European Union. The list certainly is an improvement over the more generalized and self-referential approach common in the United States, but its one apparent weakness is that there is no emphasis on the extra-European aspect of public service. In that connection, it should be noted that Becking and Hopman indicate the urgency of addressing the needs for global leadership and that the core competencies for the top officials of the European Commission include the development of a global mission (1985). The conclusions of Becking and Hopman, as suggested above, recall the description of competencies used for many years by the U.S. Foreign Service. By law, the Department of State and other foreign affairs agencies—the U.S. Agency for International Development and components of the Department of Agriculture and the Department of Commerce—have precepts for the evaluation of members of the Foreign Service. The Department of State expresses those competencies as leadership skills, managerial skills, interpersonal skills, communication and foreign language skills, intellectual skills, and substantive knowledge (see Spikes 2008). The general categories of competencies are unremarkable in themselves, especially in view of the common jargon of leadership and management, but analysis of the narrative description of the competencies suggests some distinguishing features for global leadership.3 In the more detailed descriptions under each category, those distinctive passages include such fundamental skills as understanding of foreign societies, foreign language skills, cultivation of persons and institutions, analytical and policy skills, and participation in public advocacy. Most of the published work on the competencies for success in international

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leadership, however, seldom goes beyond describing characteristics that might fairly be described as common to most any kind of professional endeavor. For example, of the twelve competencies described by Moran and Riesenberger (1994) in their fundamental work on international business, there are three that seem distinctive: having a global point of view, knowing and respecting other cultures, and treating others as equals. To be fair, other competencies in their list, including teamwork and negotiation, have additional value in an international context, but they also are qualities needed in most common endeavors. There are several recent studies from European scholars that provide useful summaries of the literature on the subject (Suutari 2002; Jokinen 2005). While there are exceptions, they tend to emphasize personal characteristics such as having a global perspective, cross-cultural sensitivity, self-awareness, and an open and agreeable nature (Cagliuri 2006). Other experts have elaborated on those themes in a more practical manner and have identified other characteristics. Black and Gregersen (1999), for example, cite five such qualities: (1) the drive to communicate, (2) a broad sense of sociability, (3) cultural flexibility, (4) a cosmopolitan orientation, and (5) a collaborative style of negotiation. In the United States, the Office of Personnel Management (OPM) has established a set of fundamental competencies and “executive core qualifications” (ECQs) for the Senior Executive Service, or the most senior officials in the civilian ranks of the U.S. Civil Service system. The competencies at the heart of the list are generic and unobjectionable, if tinged in part with understandable hues of fashionable concern as well as with the familiar litany of interpersonal skills, oral communication, integrity and honesty, written communication, continuing learning, and public service. OPM arranges the core qualifications under the headings “leading change,” “leading people,” “results-driven,” “business acumen,” and “building coalitions.” Noticeably absent from these lists is anything having to do with international considerations, a significant omission in a world of interconnections and for a workforce in which 40 percent of senior executives report that their work has international implications (www.opm.gov/ses/ecq.asp). Global Leadership Consortium Competency Research Federal Executive Institute surveys found that more than two-thirds of U.S. government executives reported that their responsibilities included international work but that the majority of those involved spoke no language other than English and rated their own international proficiency as substandard in most categories (http:// governmentexecutive.com/dailyfed/1005/100505mm.htm). Areas for improvement noted by respondents included (Brower, Newell, and Ronayne 2002, 20): • Substantive knowledge of the global economy, national security issues, intellectual property rights, export control, and environmental issues • Cultural sensitivity and country and regional expertise, including government, regulatory, and economic structures

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• Protocol and strategies for working with foreign governments and corporations • Understanding U.S. –foreign nation partnership agreements and the implications of such agreements on international policies • Negotiation skills and communication strategies for international audiences To challenge or to confirm those results, during April 2007 we conducted a new electronic mail survey of 645 senior members of the U.S. Civil Service and members of the Senior Executive Service (SES) whose responsibilities had policy implications. We report the results in Table 14.1 below. Table 14.1 Global Leadership Consortium Survey Data There is an international aspect to my work or that of my office Total Respondents

147

Yes No

110 37

75% 25%

Many, but not all of those surveyed had participated in programs at the National Academy of Public Administration and Federal Executive Institute. Of the 645 persons contacted, 147 responded to the survey. Participants were asked an initial question regarding whether they perceived an international aspect to their or their office’s work: Question 1: There is an international aspect to my work or that of my office. (If yes, please continue; if not, this question completes the survey.) If participants answered “yes” to this question, they then were asked to complete three more questions to describe the substantive, practical, and regional expertise for which they, or their staff, were interested in receiving further training: Question 2: The areas where my staff or I might benefit from training include substantive knowledge of issues (please check all that apply) Question 3: The areas where my staff or I might benefit from training include practical knowledge of U.S. policies and bilateral/multilateral relations (please check all that apply) Question 4: The areas where my staff or I might benefit from training for country or regional expertise (please check all that apply) Figures 14.1, 14.2, and 14.3 list the specific issues for questions 2–4 and provide percentages on the responses for each specific issue.

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Figure 14.1  Percentage of Federal Executives Indicating Interest in Further Training on Substantive Knowledge of International Issues Applying the Executive Core Qualifications to international work

30%

Global implications of American political and judicial institutions

25%

Substantive areas of knowledge

Intellectual property rights

30%

Trends in globalization and issues of common concern

44%

Character and role of international business

38%

Image of the U.S. in the world

47%

Conflicts of ideologies

27%

Nature of domestic and international terrorism(s)

32%

Role of nonstate actors

28%

Organization and influence of multilateral organizations and their instruments

29%

Role of U.S. in international affairs

65%

Energy and natural resources

33%

International economic system and global impact Global perceptions of U.S. political-military establishment 0%

55% 38% 10%

20%

30%

40%

50%

60%

70%

Percent indicating interest in further training

This new data, in view of the literature on leadership competency described earlier, suggests at least three areas for discussion. First, and recalling Matthew Stewart’s (2006) criticisms of management literature, the effort to create competencies generally remains grounded in the premise that complex human interactions can be simplified and replicated by defining a particular set of behaviors necessary for leadership. As Woodruffe notes, competency itself “seems to be used as an umbrella term to cover almost anything that might directly or indirectly affect job performance” (Woodruffe 1992). We suggest that current theory underlying human resource development and personnel management may have moved too far from specific substantive and intellectual content, skills, and abilities that one must have in order to succeed as a global leader in the public sector. In short, competency models often rely too much on generalized proposals for leadership. It is worthwhile to consider what a competency is. In management education, a competency is essentially a constructed image of a particular skill set of behaviors that can be synthesized under a single heading. Competencies are a constellation of latent and observable variables reduced and simplified. Consider, then, what a competency does. For the most part, individuals are required to demonstrate a set of accomplishments that fall under that heading. These images of competency,

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Figure 14.2  Percentage of Federal Executives Indicating Interest in Further Training on Practical Knowledge of U.S. Policies and Bilateral/ Multilateral Relations Influencing and advocating for one's position

41%

Use of technology as a communications tool

27%

Management of multinational workforce

25% 50%

Protocol and etiquette Practical areas of knowledge

Presentation techniques

41%

Foreign language skills or issues

25%

Leadership and management skills

45%

Critical analysis

29%

Tools for research

24%

Basics of international treaties and agreements

37%

Performance and measurement of results Reconstruction and development for failed or distressed states Crisis management

39% 23% 34%

Cross-cultural sensitivities

68%

International negotiation skills

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Percent indicating interest in training

Figure 14.3  Percentage of Federal Executives Indicating Interest in Training for Country or Regional Expertise 25%

Australia

47%

Country of regional areas for expertise

East Asia

35%

South Asia

38%

South America

35%

Central America North Africa

25%

Sub-Saharan Africa

28%

Middle East

38% 42%

Eastern Europe Western Europe

48%

North America (Canada/Mexico/Caribbean)

48%

0%

10%

20%

30%

40%

Percent indicating interest in training

50%

60%

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like all other human definitions of performance, can be narrowed or broadened to suit the desired purpose. International competency models often seem to be linked with previous individual contributions rather than setting out a set of skills, knowledge, and values necessary for future contributions. Certainly, as international work goes, transferring knowledge from one particular context to another may lead to less than successful solutions. Evolution of markets, and the interplay of global politics and cultures, should push current thinking on international competencies from past behavior toward the skills and knowledge necessary to solve problems in the future. Connecting international contexts with the skills to implement such a course of action is paramount for federal work. Thus, international leadership competency training might be more beneficial for federal executives if international training were to become more of an effort to expand the imagination of federal executives for work in novel situations. That is, training for knowledge or skills for international work is long over. The work of today’s and tomorrow’s federal executive requires training for the competencies that employ both. A second point is directly related to the call made by Treverton and Bikson in a 2003 RAND issues paper: The United States confronts a world that is both networked and fractured, both full of promise and full of danger. The global role of the United States in the century ahead will require both breadth and depth. It will demand deep understanding of particular languages and cultures, including those from whence danger might arise, as well as broad, strategic perspectives on the economic and political forces that will shape the world. (10, emphasis added)

This broad call suggests a central purpose for the education of international competencies. One of the primary purposes of training and education generally is to help learners create and fill a space between difficult problems and actions for solutions. The results of this survey show that federal executives desire a return to more specific substantive issues and practical skills for international work. Perhaps this new survey of federal executives will help educators and practitioners better to clarify specific content that will support more country-specific information as well as broader trends in international affairs. The data summarized above help to define the substantive information and specific skill sets that international leadership trainers may do well to incorporate. First, the role of the United States in world affairs remains an important substantive issue for federal executives. Because two of the top substantive issues involve thinking about the influence and perception of the United States in world politics, markets, and governance, international educators may do well to focus on those relations. Further, these data point out that international competencies, at least for Americans, require an introspective look at the influence of domestic policies that may shape international relations. Echoing expressions of much of the country, federal executives seem to be concerned about the image of the United States and

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what that means to their own work. That federal executives desire further area or regional expertise about countries in North America strengthens that hypothesis. Federal executives, however, also are concerned about the global context with which they may or may not be familiar. The second and fourth areas for substantive training involve thinking about globalization more generally. In other words, public sector leaders in the United States are interested in broad international trends that have an impact on their work. The results for desired area or regional expertise point out that beyond the contiguous neighbors of the United States, federal executives find themselves desiring further training primarily on countries in East Asia and Europe. Perhaps surprisingly, the Middle East, in a tie with South America, is at fifth place, although the level of interest, at 38 percent, is not insignificant. The data also point out what practical skills these federal executives need in order to put this substantive knowledge to good use. Cross-cultural sensitivities, international negotiation skills, and protocol and etiquette abilities all suggest the primacy of face-to-face interactions between federal executives and their counterparts in foreign governments and businesses. Rather than focusing on general skill sets applicable to any leadership situation, these results point to relational skills specifically tailored for international work. Finally, let us put to rest the notion that a federal manager can do his or her work without the international skills, knowledge, and temperament required to do the public sector work. As our results show, 75 percent of the respondents incorporate some international factors into their work and responsibilities. To garner and enhance these capacities, we also must first adopt a culture of management training. The development of international capacities must become an integrated goal among leaders across government. As the results demonstrate, federal executives and their agencies also should take international competencies seriously because senior officials in the public sector perceive the need for it. As fundamental competencies go, the ECQs created by OPM contain some helpful conceptions of competency. Certainly, “leading change,” “leading people,” being “results-driven,” showing “business acumen,” and “building coalitions” are important in any professional situation, but our results show that specific areas of substantive knowledge and practical skills also are important. Adding an international perspective to those ECQs, used primarily for personnel selection and for accountability, would, in our view, be a positive development. We also would encourage executive educators to consider trends in international relations and the global environment. One promising line of research would be to focus on the knowledge, skills, and attitudes that federal executives possess and employ in international contexts. Lines of international competency education then might be formulated to build on prior knowledge and to open new paths for the development of globally competent federal leaders.4 The most significant finding of the survey, however, remains the fact that substantive knowledge and practical skills matter, at least for the American officials we surveyed. We believe that those abilities, coupled with the more generic skills

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described in general studies of leadership skills and in the OPM competency list, provide a more reliable guide to what managers need to know to be successful in international work. Notes 1. This is true from the famous injunction of George Washington in his Farewell Address to avoid foreign entanglements, through the perceptive observation of Baron Winspeare, a Neapolitan diplomat assigned to the United States in the 1840s, who noted that Americans always will appeal to law as a basis for action, inventing new principles as necessary, to contemporary political arguments for and against intervention abroad. Cf. Imma Ascione, “Immagini dell’ America nei documenti diplomatici napoletani,” in Stati Uniti a Napoli: rapporti consolari 1796–1996 (Naples: Filema 1996). 2. See Jeffreys-Jones (2002). The investigation after Pearl Harbor and the formation of the Central Intelligence Agency, in part to coordinate the work of the several intelligence agencies, is one suggestive example. 3. For details, see U.S. Department of State, Foreign Affairs Handbook, Chapter 3 Exhibit H (http://www.state.gov/m/a/dir/regs/), and Spikes (2008). 4. The questions for such a survey might include: (1) have you received any training for international or global competencies? (2) what formal education have you had on those subjects? Was it experiential in nature? Did it involve your academic studies in high school, college, graduate school? (3) What post-graduate work have you done on global issues? (4) What have your international experiences been?

References Arnett, J.J. 2002. “The Psychology of Globalization.” American Psychologist 57(10): 774–783. Becking, K., and N. Hopman. 1985. Excellent Public Leadership: 7 Competencies for Europe. The Hague: Sdu Uitgevers. Bikson, T.K., G.F. Treverton, and G. Lindstrom. 2003. New Challenges for International Leadership. Santa Monica, CA: RAND. Black, J.S., and H.B. Gregersen. 1999. “The right way to manage expats.” Harvard Business Review 77: 52–60. Brower, D., T. Newell, and P. Ronayne. 2002. “Global Perspectives for Federal Executives.” The Business of Government, IBM Business Consulting Services (Winter): 18–24. Cagliuri, P. 2006. “Developing Global leaders.” Human Resource Management Review 16: 219–228. Hunt, J.B. 1995. “A Comparative Analysis of Management and Leadership Competencies.” International Journal of Organizational Behavior 5 (9): 263-281. Ink, Dwight. 2007. “Twenty-first Century Career Leaders.” In Transforming Public Leadership for the Twenty-first Century, ed. Ricardo S. Morse, Terry F. Buss, and C. Morgan Kinghorn, 47–68. Armonk, NY: M.E. Sharpe. Jeffreys-Jones, R. 2002. Cloak and Dollar: A History of American Secret Intelligence. New Haven, CT: Yale University Press. Jokinen, T. 2005. “Global leadership competencies: a review and discussion.” Journal of European Industrial Training 29(3): 199–216. Moran, R.T., and J.R. Riesenberger. 1994. The Global Challenge: Building a new Worldwide Enterprise. London: McGraw-Hill. Office of the Director of National Intelligence. 2006. Strategic Human Capital Plan. Washington, DC: Office of the Director of National Intelligence.

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Spikes, Daniel. 2008. “Competency for Global Leadership: Experience of the Foreign Service of the United States at the Department of State.” In Innovations in Leadership Development, ed. Ricardo Morse and Terry F. Buss. Armonk, NY: M.E. Sharpe. Stewart, Matthew. 2006. “The Management Myth.” Atlantic Monthly, June 15–20. Suutari, V. 2002. “Global leader development: An Emerging Research Agenda.” Career Development International 7(4): 218–233. Treverton, Gregory F., and Tora K. Bikson. 2003. “New Challenges for International Leadership.” Issues Paper. Santa Monica, CA: RAND. U.S. Department of State. 2005. Career Development for Foreign Service Generalists, Bureau of Human Resources. Washington, DC: Department of State, Bureau of Human Resources. Woodruffe, C. 1992. “What Is Meant by a Competency?” In Designing and Achieving Competency, ed. R. Boam. and P. Sparrow. London: McGraw-Hill. Zaplin, Ruth T., and Sydney Smith-Heimbrock. 2008. “Developing Leaders in the New Age of Government.” In Innovations in Public Leadership Development, ed. Ricardo S. Morse and Terry F. Buss. Armonk, NY: M.E. Sharpe.

15 An Agency-Level Look at Alternative Working Arrangements in Federal Government Sharon H. Mastracci and James R. Thompson

Taxpayers’ interests are best served by knowing that federal employees—sworn to uphold the public good and work in the public interest—perform government work. In order to get rid of a worker without notice or any due process, [an] agency seems willing to be staffed by a group of contingent workers to whom absolutely no loyalty, commitment, training or career development is offered. —AFGE President Bobby L. Harnage, March 12, 2003 [A]llowing private sector firms with an interest in NASA’s operations to send [their] employees into the agency for two to four years would allow them to “case the joint” for lucrative future contracting opportunities. —AFGE General Counsel Mark D. Roth, July 18, 2002 These workers do not receive one single benefit—not health insurance, not life insurance, not retirement, nor statutory appeals rights. These workers are left helpless to plan for their future and have no job security. —Rep. Frank McCloskey (D-IN), July 15, 1993 Core employees and unions need to view the supplemental workforce as helpers, not vultures hovering over a dying organization. —NAPA Center for Human Resources Management, September 1, 1998

Recent sweeping changes in staffing and personnel management have evoked passionate responses such as these. Microsoft Corporation’s “permatemps” symbolized the rough-and-tumble private sector employment landscape, and the Microsoft employees’ lawsuit highlighted employer abuses of contingent work arrangements. Similar trends in government have provoked alarm, as the above quotes demonstrate. Who are these people in alternative working arrangements? Are they victims of a Darwinian labor market, as Representative McCloskey suggests? 214

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Are they pawns of exploitive federal agencies, as the AFGE president alleges? Or worse, are they foxes in the henhouse, as the American Federation of Government Employees (AFGE) counsel charges? Can calls for trust and cooperation from the National Academy of Public Administration (NAPA) take root in such an emotionally charged environment? This chapter cannot tackle all of these questions. It can, however, investigate the phenomenon that has elicited such strong reactions and provide insight on contingent arrangements to policymakers and federal personnel managers. Amid all of the reactions to contingent and alternative work arrangements in government, sober insight is critical, for, as NAPA observes (1998, 7): “Whatever our personal feelings about all of these changes, it is unlikely that the workplace and workforce of the past will reappear.” Federal agencies have been encouraged to explore ways to streamline their workforces; two important approaches have been through outsourcing or use of workers in alternative or nonstandard capacities. Used interchangeably in the literature, “alternative,” “nonstandard,” “temporary,” “term,” or “intermittent” employment describes a job that is not permanent and/or not full-time. Private sector firms commonly employ workers in such capacities with the help of temporary help agencies like Kelly Services and Labor Ready. The jobs include seasonal work during summer for construction workers and during winter for holiday salespeople, and consultant work for independent contractors and freelancers, writers, and technical experts. The nature of federal government services differs from that of the private sector, but a need for part-time, seasonal, and temporary work exists in government all the same. This chapter explores aspects of nonstandard work in federal agencies, including trends over time and the factors driving their use, such as fluctuations in agency headcount, personnel costs, and type of functions performed by agencies. Interest in nonstandard working arrangements (NSWAs) is rooted in succession planning concerns as federal retirement projections attract more and more attention. Who will succeed high-level managers once they retire? Can federal agencies maintain high rates of productivity if large proportions of their workforces retire, as is projected? Office of Personnel Management (OPM) director Linda Springer likens these managerial challenges to a natural disaster, referring to them collectively as the “retirement tsunami.” She warns: OPM estimates that sixty percent of the government’s 1.6 million white-collar employees and ninety percent of about 6,000 federal executives will be eligible for retirement over the next ten years. . . . We need to take steps now to expand employment opportunities for the next generation of public servants. Because of expected retirements, we are looking at a very different, very new set of people who will be here eight, nine, ten years from now. The time to think about that is now, not then. (Springer 2006)

The need to address succession planning has drawn attention to flexible and nonstandard employment in federal agencies. Hiring workers in nonstandard ar-

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rangements has been identified as a strategy to address succession planning and cost-containment issues. Some agencies hire back former employees who have retired. The prospect of supplementing their retirement income is attractive to many annuitants. Anticipating retirements of large cohorts reaching thirty years of service and recognizing the impact this would have on their workforces, the Social Security Administration (SSA), the Internal Revenue Service (IRS), and the Department of Justice (DOJ) developed retire-rehire programs to bring back annuitants who can train newer employees and thereby maintain their institutional knowledge base. SSA’s use of retirees for training frees up regular employees to perform ongoing, mission-critical duties. OPM regulations, however, present obstacles to retire-rehire programs. Those regulations require that the annuitant’s earnings be offset by the amount of the retiree’s pension. The annuitant ends up working for free up to the amount of his or her retirement check. Agencies can apply, and have done so, for waivers of the “annuity offset” but waivers are subject to rigid requirements and are not readily granted. These rules derive from policymakers’ concerns about the appearance of double-dipping by federal workers receiving both pension and salary checks. Expanding annuity offsets beyond a few demonstration projects would require a change in federal law. Bills have been introduced in both the House (HR 3579 [110th]) and Senate (S 2003 IS [110th]) to allow reemployed annuitants to work up to six months without affecting their annuities. The idea to make the annuity offset permanent drew attention of unions representing federal workers (Rosenberg 2007): Legislation introduced in the Senate . . . would allow federal retirees to return to government service without taking pay cuts. The bill, unveiled by Sen. Susan Collins (R-ME), on Friday is a top priority of Office of Personnel Management Director Linda Springer, and is backed by a range of retiree and good government groups. Some labor union officials have expressed concern about its potential implications for current federal workers. Now, the salaries of federal retirees who re-enter the workforce are cut by the amount of their pensions. Collins’ bill would allow them to earn full salaries if they returned on a temporary limited term basis.

House and Senate bills introduced in 2007 appear to have broader support than previous legislative efforts and therefore the potential to change the law. Sooner or later, federal personnel administrators will have to accommodate changes to this law as well as the changing nature of work overall. Greater insight into the evolution of federal employment is critical. To facilitate greater understanding of nonstandard working arrangements in government, analysis proceeds as follows: first, the average age of the federal workforce is discussed and compared with demographic trends in employment to state and local government, private sector firms, and nonprofit organizations. The age distribution of the federal workforce illustrates clearly the potential for retirement waves to reduce employment abruptly and leave a vacuum of leadership and institutional knowledge. Plotting this distri-

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bution alongside those in other sectors shows that these challenges are unique to federal personnel managers. Shifting demographic trends in new hires to agencies underscore the significance of impending retirement waves. Second, the percentages of NSWAs in all fifteen cabinet-level federal agencies are examined. In some agencies, increases or decreases in permanent employment and increases or decreases in NSWAs are almost perfectly correlated. In others, no link exists, which suggests that a personnel manager’s decision to increase or decrease the use of nonstandard work arrangements is independent of growth or decline in the permanent workforce. The decision-making process surrounding NSWA use follows a separate course—perhaps project-related or cost-related— and does not vary as headcount changes. A few personnel managers in the federal sector are quoted to shed light on management strategies. Third, for six federal agencies the NSWA percentages are examined alongside personnel costs. The six agencies were chosen because their proportions of nonstandard work arrangements fluctuated significantly between 1998 and 2006. Personnel costs include payroll costs, the cost of overtime pay, and agency contributions to health benefits and retirement; each one tends to be lower for workers in temporary or part-time jobs that do not offer benefits or retirement plans. Although NSWAs help agencies address succession planning, they play an important role in cost cutting as well. A brief look at employees’ reasons for working in NSWAs suggests that as many as half do so because they have no choice, which is consistent with a costcutting strategy. Finally, the chapter advances a few questions for policymakers and managers to consider in light of agency-level trends in the use of nonstandard working arrangements. Federal Workforce Characteristics in Context Two pictures of the federal workforce capture its uniqueness compared to the overall labor force, and also underscore the unique challenges related to retirements that its personnel managers must face in the coming years. Figure 15.1 shows the age distribution of the federal workforce compared to state and local government and to the workforce outside the public sector, and is consistent with previous analyses of the federal workforce (CBO 2007; GAO 2000, 2001a, 2001b, 2007; Partnership for Public Service 2007; Ban 1999). Figure 15.1 demonstrates how large numbers of “baby boomer” retirements will affect personnel demographics of federal agency workforces to a far greater extent than changing workforce demographics will affect the private sector, nonprofit sector, and state and local government. Federal government expansions in the 1960s and early 1970s preceded hiring freezes throughout the 1980s and downsizing and outsourcing in the 1990s. Influences on human resource management processes such as these were brought about by political/ideological ebbs and flows and have produced challenges for personnel managers that are unique to federal agencies. In addition to illustrating that federal workers are older—five to six years on aver-

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Figure 15.1  Age Distributions of Workers in Core Federal Government, State and Local Government, and Outside the Public Sector, 2005 4

State & Local Government

Core Federal Government

Percent of Total

3

Outside the Public Sector 2

1

0

18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80

Age

Source: U.S. Bureau of Labor Statistics’ Contingent Work supplements to the Current Population Survey, February 2005. Note: Moving averages are used to smooth the distributions, which are based on weighted sample data and therefore more volatile than are distributions based on an entire population. Due to the use of a moving average, each distribution appears to start at around 18-19 years even though all age ranges start at 16 years.

age compared to state and local government and the private sector—Figure 15.1 also shows that retirement-eligible employees continue to work. According to OPM, the number of federal workers with thirty-plus years of service has grown from 6.9 percent in 1998 to 10.4 percent in 2006. A number of reports predicted retirement waves to hit as early as 2005, but an increase in average years of service as well as the fact that the majority of baby boomers have not quite reached full retirement age helps to explain why the onslaught has not yet arrived in full force. What is more, since retirements are not mandatory, it has become more difficult to estimate when retirements en masse will hit the federal workforce; as OPM observes: “Less than one in four employees that are eligible for retirement actually retires in a given year” (2006, 11). Incentives for early retirement helped to achieve workforce downsizing goals during the 1990s and can help personnel managers to better anticipate impending retirement waves, but “early out” rates have fallen steadily since the late 1990s (OPM 2006). Not only could half of the federal workforce retire in the coming decade, but recent hiring efforts in federal agencies will not offset the vacuum resulting from mass retirements. Between 1994 and 2004, new hires to the federal government have grown older and older, as Figure 15.2 shows.

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Figure 15.2  Age Distribution of New Hires in Federal Agencies, 1994, 1999, and 2004 20%

1994

1999

2004

18%

Percentage of Workforce

16% 14% 12%

10%

8%

6%

4%

2%

0%

< 20

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

> 65

Source: Figure 6, “Age Distribution of New Hires.” Office of Personnel Management, Federal Workforce Overview: FY 1994–2004. (2006 April).

The distribution of new hires shifts from single-peaked curves in 1994 and 1999, to a bi-modal curve in 2004, with a peak in the 25–29 age range and another around the mid-40s. Age distributions of new hires to federal agencies in 1994 and 1999 mimic trends outside the federal government. A smoother distribution across age cohorts provides a steadier stream of workers advancing through their careers. If new hires in 2004 remain in the federal sector for the remainder of their careers, federal agencies could face another succession crisis, albeit one of less impact, in approximately twenty years. Sooner or later, a retirement wave will hit the federal government because its workforce is older than that of the private sector, nonprofits, and state and local government; and because its new hires are older than in other sectors as well. What Is Known about Nonstandard Working Arrangements in Government? Beyond succession planning, federal agencies use a range of alternative employment strategies to meet surge needs when demand for agency services fluctuates, to support family-friendly workplaces, to recruit and retain talent, and to decrease personnel costs. What is known about the use of contingent and nonstandard work has come from both qualitative and quantitative analyses, the latter based on a na-

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tionwide survey of contingent work administered by the Bureau of Labor Statistics (BLS). Our research, and that of others, suggests that, in general, NSWAs are found at either end of the job skills spectrum: in entry-level positions to screen workers for relatively low-skilled clerical and technical jobs, and in high-skill jobs to obtain specific expertise for a particular project, maintain continuity of leadership, or to preserve institutional knowledge (Mastracci and Thompson 2005). Flexible working arrangements have served federal agencies well, but trends over time indicate that their use has not grown (Ban 1999). OPM director Springer underscores the importance of planning ahead for retirement waves, so as personnel directors increasingly follow OPM’s recommendations to plan for impending retirements, the numbers of NSWAs in federal government agencies should grow. In addition, as agencies face increasing pressure to cut costs, NSWAs should increase as well. BLS’s survey of contingent work captures demographic characteristics of workers, occupations, and job functions, but not employers. These data have been used to examine contingent work in the federal government, but the authors have concluded that these data fail to capture agency-level trends, where the “real action” might lie, and recommend that further research should focus on agencies. Contingent Work Arrangements over Time Using data from OPM’s Central Personnel Data File (CPDF), trends in NSWAs are tracked in proportion to total employment in an agency (OPM 2007). NSWAs are defined as jobs that are not full-time and permanent (Mastracci and Thompson 2005; Thompson and Mastracci 2005), as have Government Accountability Office (GAO) reports (GAO 2000, 2007). This population is captured by focusing on two CPDF categories: “not permanent” job appointments and “not full-time” work schedules. NSWAs play different roles in different agencies, and this is demonstrated by their share of total agency employment. In general, the fifteen cabinet-level agencies can be divided into those where NSWAs comprise fewer than 10 percent of total employment and those where NSWAs comprise more than 10 percent. Figures 15.3 and 15.4 depict trends in proportions of NSWAs by agency from 1998 to 2006. In both, certain agencies are selected for further analysis because their NSWA share of total employment varies more than others do over the time period. The departments of Treasury, Justice, Defense, and Housing and Urban Development (HUD) are highlighted because the authors examine them further against their personnel costs and employment growth. Employment in both the departments of Treasury and Justice fell after fiscal year 2003 due to the creation of the Department of Homeland Security (DHS). Employment in several agencies was affected as functions from other agencies became parts of DHS, and when large numbers of workers were released and then rehired after Hurricane Katrina. Contingent arrangements as a proportion of total employment did not fall, however. Figure 15.4 plots NSWA share of total employment in agencies where it exceeds 10 percent.

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Figure 15.3  NSWAs as a Proportion of Total Employment (10%) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1998

1999

Veterans Affairs

Interior

Agriculture

Commerce

State

Health & Human Services

Education

Homeland Security

2000

2001

2002

2003

2004

2005

2006

Source: Authors’ calculations using data from CPDF September employment data from 1998–2006.

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Veterans Affairs (VA) and Health and Human Services (HHS) are highlighted for further study because their NSWA shares exhibit interesting variations over the period, as well. Figure 15.4 shows the proportion of NSWAs in the Department of Commerce (DOC) to have increased substantially up to 2000 with a subsequent drop, but this change is due to the decennial need for temporary census enumerators. Agencies facing seasonal demands such as these were not examined further because their variations in NSWAs are predictable, the positions play a very specific role in their agencies’ missions, and these roles tend not to change. Changes in the Full-Time Permanent and Contingent Workforces over Time In some agencies, fluctuations in the employment of full-time, permanent employees do not coincide with changes in the percentage of nonstandard arrangements in an agency. In other agencies, changes in NSWAs and changes in the full-time permanent workforce are correlated nearly perfectly. Correlations (Pearson’s r) in Figure 15.5 show there to be essentially no link between growth in NSWAs and growth in the full-time permanent workforce in the departments of Energy (DOE), Labor (DOL), and Homeland Security (DHS). A somewhat weak relationship between the two is found in the departments of Defense (DOD), Interior (DOI), and Agriculture (USDA). This indicates that changes in the number of people working in NSWAs are independent from changes in the number of people working in full-time permanent positions. For instance, full-time permanent employment in DOE has fallen while NSWA positions fluctuated and then grew later in the period. Full-time permanent employment at DOL jumped and stayed higher from 2001 to 2003 and then dropped while its NSWA workforce shrunk steadily until about 2002 and then grew gradually thereafter. Somewhat stronger links exist in VA, HHS, and HUD; and even stronger correlations are found in the departments of Commerce and Education. As DOC’s full-time permanent employment rises, employment in NSWAs falls, and vice versa. The most striking results are found in the Treasury Department and the departments of State, Justice, and Transportation (DOT), where correlations between full-time and NSWA employment are almost perfect. Between fiscal years 1998 and 2002, full-time permanent employment in the Treasury and DOJ was flat. The extensive reorganization of these agencies that resulted in the creation of DHS caused employment in Treasury and DOJ to drop, and their NSWA workforces dropped accordingly. Full-time permanent employment at DOT remained steady from 1998 to 2001, jumped in 2002, and returned to its previous trend thereafter. NSWA employment at DOT did the same. Employment at the State Department has neither grown nor fallen during this period. These agencies have experienced no greater or lesser need for NSWAs. Their use only changes as overall employment does. In contrast, other agencies have increased or cut their NSWA workforces independently from their decisions regarding the regular full-time workforce. One

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Figure 15.5  Correlations Between Changes in Full-Time Permanent Employment and NSWAs 0.99

1.00

0.96

0.93

0.80

0.70

0.66 0.60 0.40

0.37

0.34

0.34

0.20 0.00 -0.03 -0.20 -0.40 -0.60

-0.06

-0.07

-0.20 -0.40

-0.41

-0.53

-0.80 -1.00

Source: Authors’ calculations using CPDF September employment data from 1998– 2006.

important lesson to be drawn from trends in these agencies is that there is no single NSWA strategy to fit all agencies. What is more, an agency may need to shift its own strategy as circumstances warrant. Federal personnel managers cannot follow a “recipe” for NSWAs, implement it, and maintain a status quo. Each personnel manager must answer several questions with respect to the unique needs of his or her agency—questions with which this chapter ends, after several trends and correlations are revealed. Each agency can use NSWAs for a variety of reasons, and several types of NSWAs can exist within a single agency. Katharine Abraham and Robert McKersie (1990) find that employers make use of NSWAs to gain more flexibility to adjust the quantity and skill mix of labor inputs; to save on compensation costs; and to obtain special skills and services not currently available in-house. And Susan Houseman (2002), in her survey of a nationally representative sample of private sector establishments, identified a number of reasons why firms make use of NSWAs; the most commonly cited had to do with staffing flexibility. For example, over 50 percent of the firms surveyed use workers in one or more categories of NSWAs to accommodate “unexpected increases in business” and/or to provide assistance “during peak time hours of the day or week.” A high percentage of firms also use workers in NSWAs to fill vacancies until a regular employee is hired, fill in for a regular employee who is sick or on vacation, and for special projects. The authors interviewed personnel managers in a dozen federal offices and found that many base their decisions on the role of an occupation or job function in the context of the agency’s mission (Thompson and Mastracci 2005; Mastracci and Thompson 2005). Several managers cite their need for specific expertise for a

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defined project. Several of them echo the sentiments of Marianne Jenkins, director of human resources at USDA, who noted during an interview, “We don’t need a permanent full time workforce a hundred percent of the time.” Director Jenkins describes USDA’s efforts to work with OPM to obtain employees with specific expertise “for those temporary positions related to BSE, which is mad cow disease. . . . We also have gone in and asked for a waiver of annuity offsets so that we could bring in retired individuals and then it wouldn’t affect their annuity. Again we have that because of the temporary work with BSE.” BSE, bird flu, and E. coli contamination are examples of high-profile public health matters to which USDA must respond quickly. NASA uses temporary and term appointments to obtain highly skilled specialists for specific projects, as noted by Robyn Gordon of the Glenn Space Center in an interview: “We have an aircraft that we fly to study the icing and the weather patterns. If that icing work is being defined [so] that we’re only going to do this for two years, that’s the length of the research project, [and] we [hire] a term pilot for that period of time.” According to Human Resources director Debra Tomchek in a telephone interview, DOJ has used temporary and term appointments to bring in highly skilled experts “to support the litigating divisions—antitrust and civil divisions—on large federal cases when the state is building its case and doing research” (Tomchek 2004). Although DOJ’s use of NSWAs is limited by hiring and training costs, the agency does not wish to cut corners in its personnel management processes: [Our] positions require specialized skills obtained from the FBI academy, DEA academy . . . we place a huge training investment in employees. A minimum level of security clearance is needed, plus regular drug testing, fingerprinting, and background checks, and all FBI [staff] have top-secret clearance and must pass lie detector tests. The investments in training and security checks are very high. All administrative personnel must have security clearance, as well.

The Department of Justice makes only limited use of NSWAs due to the high costs of screening, hiring, and training its workforce. The Transportation Security Administration (TSA) requires a workforce that can vary as demand for its services vary. Jan Karicher is part of the TSA’s organization-wide human resource management effort. He provides two clear examples of demand fluctuations that create a need for a flexible workforce (Karicher 2004): We have some temps, maybe some seasonals in Colorado in airports that are open in winter for skiing but not in the summer. Another thing we have is split shifts: we will permit an employee to work four hours in the morning and four hours in the afternoon . . . based on traffic flow and the needs of the airport.

The benefits of NSWAs, however, involve other compromises. It is harder to recruit for part-time, temporary, or seasonal positions compared to full-time, full-year permanent jobs. Many of those who accept NSWAs do so pending an opportunity for

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regular employment, and federal employers like the IRS and TSA cite high levels of turnover among their seasonal and part-time employees respectively. Turnover increases recruitment and training costs. Workers in temporary positions might be considered second-class citizens relative to their colleagues holding permanent positions. There is little incentive to invest in training for employees who may be with the agency for only a short period of time. Moss, Salzman, and Tilly studied the experiences of four firms in the electronics and insurance industries and found (2000, 95): “Managers generally voiced negative opinions about the results of using temporary workers, including lower productivity, higher turnover, and lower morale.” The firms found contingent work arrangements to be most useful in routine functions such as security or mailroom work, or establishing remote sites for low-level call-center and back-office tasks but not for work “where commitment, communication, and the ability to innovate are most critical” (Ibid.). Personnel managers might choose to bear the costs of lower morale and productivity, however, if they can cut personnel costs by using NSWAs. NSWAs and Personnel Costs One of the clearest and most criticized uses of contingent and temporary work is to cut costs. This human resource management strategy is criticized because temporary and part-time workers tend to earn lower wages than do their permanent and full-time counterparts. They are also far less likely to have health, retirement, and other benefits compared to permanent full-time workers. Houseman observes from her analysis of employer practices (2002, 161): Whereas the overwhelming majority of employers offered paid vacation and holidays, paid sick leave, pension benefits, and health insurance benefits to regular fulltime staff, few of them offered these benefits to short-term hires or on-call workers. Less than half of employers offered paid vacation and holidays to at least 50% of their part-time staff, and only about a third offered at least half of their part-time employees paid sick leave, pension benefits, and health insurance benefits.

Companies employing NSWAs can save on wage costs as well as on benefit costs. Temporary, short-term, or part-time workers are often not covered by the terms of collective bargaining agreements in firms with unionized workforces and hence can be paid at a lower wage. Kahn (2000, 243) references the use of temporary help agency personnel as a means of holding down headcount, noting, “The corporate policy with the most significant impact on temp use is head-count restriction, a common mechanism used by central management to control costs and keep major decisions in their own hands. . . .” Federal agencies are constantly pressured to hold down headcount. Two strategies pursued by federal agencies to control the sizes of their workforces have been outsourcing and using temporary working arrangements. The cost of health insurance for federal employees is prorated based on the number of hours worked. Thus an employee working half-time would have to pick up half the total cost of health insurance. This amounts to several hundred dollars per month in

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Figure 15.6  Reasons for Working in Federal Government NSWAs

Source: Authors’ calculations of BLS Current Population Survey Contingent Work Supplement data, 1995–2005 (n = 263). Categories may not sum to 100 percent due to rounding.

additional insurance costs, which is prohibitive for many workers. BLS data suggest that fully half of all federal workers in NSWAs are working in temporary positions involuntarily. However, BLS data also show that many workers, particularly retirees, students, and those with personal or family obligations prefer part-time, temporary, seasonal, and or contract work. It is in the interest of agencies seeking to tap into this labor pool to make suitable job opportunities available by expanding NSWA opportunities. Such a strategy is likely to become even more compelling in the future as a result of simultaneous slowing in the growth of the overall labor force and an increase in the number of individuals working past retirement age. Figure 15.6 summarizes these BLS data for federal sector workers in NSWAs. The Current Population Survey provides twelve reasons why one might work in a temporary or part-time job: Personal preference • • • •

I prefer a flexible schedule. To balance family or other obligations. To obtain experience. I wanted work for only a short period of time.

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Economic conditions or the nature of the work • • • • •

I was laid off and rehired in a temporary capacity. Only type of job I could find. I hope this job leads to a permanent position. The nature of the work is seasonal. Other economic and earnings-related reasons.

Reasons not related to economic conditions • Other personal reasons. • Health limitations. • Retired or exceeded Social Security earnings limit. The response “currently attending school” stands alone as its own category, and respondents must choose only one reason. One-half of respondents working in a nonstandard work arrangement feel that they do so involuntarily, rather than by personal preference. Selected Agencies’ Trends in Personnel Costs Six agencies were selected that exhibited significant changes in their NSWA share of total employment, as shown in Figures 15.3 and 15.4. Do personnel costs prompt human resource managers to use NSWAs? CPDF provides data on agency personnel costs, which include regular payroll and overtime pay, insurance benefits, and retirement contributions. The following charts plot percentage change in costs and NSWAs over time on two vertical axes. Percentage changes from the previous year in personnel costs are measured on the left-hand vertical axis in order to capture whether NSWA use is responsive to fluctuations in cost. Time is measured on the horizontal axis and ranges from 1997 to 2006. The number of NSWAs is measured on the right-hand-side vertical axis with ranges that correspond to costs for the agency. For example, DOD is a much larger agency than HUD and has a larger NSWA workforce. The right-handside vertical axis for DOD (Figure 15.7) when percents are converted to number of employees, ranges from zero to 75,000, while the same one for HUD (Figure 15.11) ranges from zero to 1,000. Information on personnel costs was obtained from OPM reports entitled Work Years and Personnel Costs. Only eight years are available, and personnel cost data is plotted from 1997 to 2003. NSWA data come from the CPDF September employment reports and are available from 1998 to 2006. The purpose of combining information from these two sources is to determine if agencies expand or contract their NSWA workforce in response to personnel cost changes. If so, then this would suggest that agencies are sensitive to costs and use NSWAs as part of their budgeting strategy. Pearson correlation

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Figure 15.7  Nonstandard Work Arrangements and Personnel Costs: Department of Defense Department of Defense (DOD) 80%

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coefficients between costs and NSWAs are also reported. Of interest are any patterns that might suggest any relationship between an individual agency’s personnel costs and the extent to which they rely on nonstandard work arrangements. Most NSWAs do not have health or retirement benefits, nor are they eligible for overtime pay; therefore, the agency would not make health and retirement contributions on their behalf. Some part-time positions have prorated benefits, so agency costs are lower even if benefits are provided. For these reasons, one would expect to see that as NSWAs increase, benefit costs and premium pay fall, as well. Workers in nonstandard arrangements tend to earn less than do their counterparts (GAO 2000), so basic pay might be expected to fall as NSWAs increase. The DOD NSWA workforce has varied only slightly between 1998 and 2006. Percentage change in personnel costs are measured on the left-handside vertical axis, and as Figure 15.7 shows, basic pay has climbed, as have contributions to employee benefits. Costs and NSWA percentage do not appear to correlate to one another, and this is confirmed by the Pearson correlation coefficient that captures the link between NSWAs and costs. For DOD, this coefficient is 0.03, which denotes the absence of any relationship between costs and NSWAs. Figures 15.8 to 15.12 contain cost trends and NSWA trends over time in the remaining five agencies selected. Like DOD, the size of the NSWA workforces at HHS (Figure 15.8) and DOJ (Figure 15.9) are not correlated with

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Figure 15.8  Nonstandard Work Arrangements and Personnel Costs: Health and Human Services Health & Human Services (HHS)

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Source: Authors’ calculations using CPDF employment data 1998–2006; OPM Work Years and Personnel Costs reports for fiscal years 1996–2003.

Figure 15.9

Nonstandard Work Arrangements and Personnel Costs: Department of Justice Department of Justice (DOJ) Basic Pay

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Figure 15.10 Nonstandard Work Arrangements and Personnel Costs: Treasury Department Department of Treasury

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costs. Correlation coefficients indicate the absence of any link between the two: rho equals 0.04 for HHS and 0.05 for DOJ. Evidence of stronger relationships exists for the Treasury Department (Figure 15.10), HUD (Figure 15.11), and VA (Figure 15.12). Basic pay and contributions to employee benefits dropped for both DOJ (Figure 15.9) and Treasury (Figure 15.10) once DHS was created. Although DHS drew from several existing departments, DOJ and Treasury were especially affected by the reorganization. The size of the NSWA workforce at DOJ does not change in response to personnel cost changes, but it does at the Treasury Department (ρ = 0.67). A rather strong and positive relationship exists between costs and the size of the NSWA workforce at Treasury. The size of the NSWA workforce and personnel costs are somewhat strongly linked at both HUD (ρ = –0.54) and VA (ρ = –0.63). Both relationships are inverse, which indicates that as one of them increases, the other decreases. Basic and overtime payroll costs for HUD varied from 1997 to 2003, as did the number of people employed in NSWAs. An interesting research project would be an examination of whether personnel managers at HUD responded to rising costs by using more and more NSWAs, or whether the changes in the size of the NSWA workforce triggered the jump in payroll costs. On the other hand, VA personnel costs varied only slightly between 1997 and 2003, but the size of the NSWA workforce dropped sharply in 1998 and did not increase. Another area for further research would be to investigate this linkage.

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Figure 15.11 Nonstandard Work Arrangements and Personnel Costs: Housing and Urban Development Housing & Urban Development (HUD) Basic Pay

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Source: Authors’ calculations using CPDF employment data 1998–2006; OPM Work Years and Personnel Costs reports for fiscal years 1996–2003.

Figure 15.12 Nonstandard Work Arrangements and Personnel Costs: Veterans Affairs Veterans Affairs (VA) 50%

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Toward the Future of NSWAs in Federal Personnel Management This chapter has raised several issues about contingent and alternative working arrangements in federal agencies, but has only scratched the surface. Policymakers must address several issues when considering agencies’ needs for NSWAs: • • • •

Do certain occupations require full-time permanent staff? Do certain job functions require full-time permanent staff? Which agencies are able to create flexible workforces more readily than others? Some agencies face mission-specific barriers to increasing their use of NSWAs: for example, the hiring and training costs faced by DOJ limit their use of NSWAs; are there others?

Similarly, personnel managers must address several questions to align their workers’ needs with their agency’s workforce needs: • What are workers’ motivations for working in NSWAs in the federal government? • Do workers in NSWAs hold those positions in order to eventually obtain full-time permanent employment with a federal agency? • Are NSWAs in federal agencies more attractive to workers than contingent work in the private sector? Federal leadership cannot ignore these questions if they are considering the use of NSWAs to address their workforce needs. Managers and policymakers who cannot answer these questions must revisit their flexible workforce strategies. Unions and good government groups could play a role in the process, as well. Results from the analysis in this chapter provide strong indicators of the types of issues to be resolved in a flexible workforce strategy and the factors that are related—or unrelated—to federal agencies’ NSWA use thus far. These results also underscore the variation of NSWA strategies across agencies as well as an absence of a onesize-fits-all approach to pursuing greater workforce flexibility. References Abraham, Kathleen and Robert McKersie. 1990. New Developments in the Labor Market. Cambridge, MA: MIT Press. Ban, Carolyn. 1999. “The Contingent Workforce in the U.S. Federal Government: A Different Approach.” International Review of Administrative Sciences 65(1): 41–53. Congressional Budget Office (CBO). 2007. Characteristics and Pay of Federal Civilian Employees. Washington, DC: Pub. No. 2839, March. Government Accountability Office (GAO). 2000. Contingent Workers: Incomes and Benefits Lag Behind Those of Rest of Workforce. Washington, DC: # HEHS-00-76, June 30. ———. 2001a. Federal Employee Retirements: Expected Increase over the Next 5 Years Illustrates Need for Workforce Planning. Washington, D#C: # GAO-01-509, April 27.

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———. 2001b. Human Capital: Taking Steps to Meet Current and Emerging Human Capital Challenges. Washington, DC: GAO-01-965T, July 17. ———. 2007. Employee Misclassification: Improved Outreach Could Help Ensure Proper Worker Classification. Washington, DC: # GAO-07-859T, May 8. Harnage, Bobby L. 2003. U.S. House of Representatives, Testimony before the House Committee on Science. Hearing on draft proposals for civil service changes at NASA. (109th Congress) Washington, DC: U.S. Government Printing Office, March 12. Houseman, Susan N. 2002. “Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey.” Industrial and Labor Relations Review 55(1): 149–170. Kahn, Shulamit. 2000. “The Bottom-Line Impact on Nonstandard Jobs on Companies’ Profitability and Productivity.” In Nonstandard Work: The Nature and Challenges of Changing Employment Arrangements, eds. Francoise Carre, Marianne A. Ferber, Lonnie Golden, and Stephen A. Herzenberg. Ithaca, NY: Cornell ILR Press. Karicher, Jan. 2004. Human resource manager, TSA, Chicago. Interview with authors, May 13. Mastracci, Sharon H., and James R. Thompson. 2005. “Nonstandard Work Arrangements in the Public Sector: Trends and Issues.” Review of Public Personnel Administration 25(4): 299–324. Moss, Philip, Harold Salzman, and Chris Tilly. 2000. “Limits to Market-Mediated Employment: From Destruction to Reconstruction of Internal Labor Markets.” In Nonstandard Work: The Nature and Challenges of Changing Employment Arrangements, ed. Francoise Carre et al. Ithaca, NY: Cornell ILR Press. National Academy of Public Administration (NAPA). 1998. New Options, New Talent: The Government Manager’s Guide to the Flexible Workforce. Washington: NAPA. Office of Personnel Management (OPM). 2006. Federal Workforce Overview FY 1994-FY 2004. Available at www.opm.gov/feddata/Workforce_Overview_Brief_1994_to_2004. pdf (accessed 1–04–08). ———. 2007. CPDF Fedscope data selection interface: www.fedscope.opm.gov. Data downloads through spring and summer 2007. Partnership for Public Service (PPS). 2007. Tapping America’s potential: Expanding student employment and internship opportunities in the federal government. Washington, DC: PPS. Rosenberg, Alyssa. 2007. “Bill Would Allow Retirees to Return with Full Pay.” Government Executive, August 6. Available at http://govexec.com/story_page.cfm?articleid = 37680&sid = 50 (accessed 1–04–08). Roth, Mark D. 2002. “AFGE Opposes NASA Human Resources Proposals.” AFGE press release. Available at www.afge.org/Index.cfm?Page = PressReleases&PressReleaseID = 145 (accessed 1–04–08). Springer, Linda. 2006. “OPM Director Addresses the Need for the Federal Government to Cultivate the ‘Next Generation.’” U.S. Office of Personnel Management news release, February 3. Available at www.opm.gov/news/opm-director-addresses-the-need-for-thefederal-government-to-cultivate-the-next-generation,1010.aspx (accessed 1–04–08). Thompson, James R., and Sharon H. Mastracci. Forthcoming. “Models of Blended Workforce Arrangements in Federal Agencies.” Public Personnel Management. ———. 2005. The Blended Workforce: Maximizing Agility through Nonstandard Work Arrangements. Washington, DC: IBM Center for the Business of Government. Tomchek, Debra. 2004. Human resource manager, Department of Justice, Washington, DC. Telephone interview with authors, May 24. U.S. Bureau of Labor Statistics (BLS). 1995–2005. Contingent Work Supplement to the Current Population Survey data.

16 Strategic Workforce Management Innovation and Improvement at DTRA Michael Simpson

The Defense Threat Reduction Agency (DTRA), an agency of the Department of Defense (DoD), has faced a series of workforce management challenges, as have other federal entities. Among the major issues were the following: fewer than anticipated losses of capabilities due to retirement, unexpected losses of workers for reasons other than retirement, difficulty attracting people with desired skill sets, further difficulty retaining people with needed knowledge and experience, and challenges in determining capabilities and experience that will be needed in the future. This description of recent observations, decisions, and recommendations to improve strategic workforce management at DTRA, and the process used to do so, is intended to help other organizations improve their workforce management approaches. One component of DTRA’s overall solution involved bringing in an outside facilitator, Computer Sciences Corporation (CSC), not to fix a broken system, but rather to improve, augment, and enhance the agency’s workforce management procedures and policies. Background DTRA’s mission is to safeguard the United States and its allies from weapons of mass destruction by providing capabilities to reduce, eliminate, and counter the threat and mitigate its effects.1 In 1998, elements of the Office of the Secretary of Defense staff, the Defense Technology Security Administration, the Defense Special Weapons Agency, and the On-Site Inspection Agency were consolidated to form DTRA. Today, the agency has authorized 1,955 military and civilian personnel, has a FY 2007 budget of $2.68 billion, and includes four enterprises—Research and Development (RD), Combating Weapons of Mass Destruction (CW), Operations (OP), and Business Enterprise (BE)—the Advanced Systems and Concepts Office (ASCO), Security and Counterintelligence Directorate (SC) and staff offices, including Equal Opportunity (EO), General Counsel (GC), Inspector General (IG), Public Affairs (DIR-COS-PA), and Legislative Affairs (LA). Human capital and the other support functions of acquisi­ 234

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Figure 16.1  DTRA Organization Chart Director

Deputy Director Security & Counterintelligence Advanced Systems & Concepts

Staff Offices

Associate Director R&D

Combating WMD

Associate Director Operations

Chemical/Biological Technologies

On-site Inspections

Nuclear Technologies

Cooperative Threat Reduction

Counter WMD Technologies

Combat Support

Associate Director Business

Basic & Applied Sciences

tion, financial management and information management are combined in Business Enterprise under the Associate Director for Business (see Figure 16.1).2 The agency, beyond the “vertical” organization of enterprises, is also “horizontally” organized in seven campaigns (Situational Awareness, Control WMD Materials and Systems Worldwide, Defeat the Threat of Lost or Stolen Loose Nuclear Weapons, Eliminate WMD as a Threat to the Warfighter, Protect the Homeland from WMD, Transform the Deterrent, and Business Excellence), activities that cut across and involve all the enterprises.3 Agency Challenges Much attention has been paid to the fact that the public and private sector civilian workforce is aging and potentially retiring, with subsequent challenges to employers to hire younger, capable workers quickly enough, while retaining knowledgeable and experienced workers long enough to train the next generation.4 While DTRA had been considering these retirement-related challenges, it nonetheless was surprised by the sudden losses of some highly experienced and high-level staff members. These losses were compounded by other unexpected losses of workers for reasons

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other than retirement—vulnerability to losses due to retirement, itself quite high, was outpaced significantly in certain parts of DTRA by actual losses due to reasons other than retirement. Further, hiring and retention rates in some areas were not keeping pace with loss rates. While events involving RD were of concern, DTRA decided to address the loss-hiring-retention and related challenges in an agencywide, strategic fashion, with an initial focus on RD. DTRA contracted with CSC to facilitate and add technical expertise to the development and implementation of an agency “strategic workforce management process and plan” (SWP). Developing and Implementing an Agency SWP A strategy was created for the development and implementation of SWP. DRTA’s deputy director would chair a “Blue Ribbon Panel” (BRP), composed of the associate directors of the four enterprises (RD, CW, OP, and BE), as well as the director of Human Capital. Interactive work to support the BRP’s decision-making function was performed by “points of contact” for each enterprise or office, who collectively formed the “Points of Contact” (POC) panel; while there was more than one POC panelist from each enterprise, some offices sent no more than one POC panelist. The CSC team, by serving as staff and rapporteurs, facilitated and brought technical expertise to the work of the BRP and POC panel. Interactions within the BRP and POC panel were, at times, intense. Focusing participants’ energies toward positive and usable endpoints was a major accomplishment of this innovative method for developing and implementing SWP. While each POC and BRP panelist came from and represented enterprises or offices, it was important that the sense of ownership of the agency SWP penetrate all enterprises and offices. The CSC team facilitated crucial initial meetings to maximize the sense of an agency-wide perspective and commitment—participants came to know more about the other enterprises and offices, came to appreciate one another, and came to see and understand agency-wide issues, policies, options, impacts, and objectives. The exchange of viewpoints on enterprise-specific and agency-wide programs and policies, not just during the initial meeting but through all the meetings among POC and BRP panelists, was valuable, and the arrival at consensus, enabled SWP. Targeted toward SWP, the POC, BRP, and CSC discussions, written assignments, presentations, and products were designed around a four-step strategic workforce planning process, composed of demand forecast, supply projection, gap analysis, and strategy development. The six-month implementation process for SWP involved broad scanning and deep inspection of workforce management within enterprises and offices, with broad and deep formulation of recommended actions. Observations, Decisions, and Recommendations The following may be considered innovative, but the real innovation is the collaborative process involving the joint efforts of POC, BRP, and CSC.

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Making BE-BH a Strategic Component. From the outset, it was apparent that the human capital function (BH), while organizationally within the Business Enterprise, has a strategic role to play in SWP. While there are occasions when simply replacing capabilities as they are lost may be adequate, there is a strategic role that BE-BH can play, by coordinating enterprise-specific needs into agency-wide plans and programs. From the beginning, BE-BH has been an integral component of the BRP and POC panel work toward SWP. Making DTRA SWP Authoritative. While there had been earlier efforts at SWP on an enterprise or office level, an authoritative, agency-wide SWP would need to be developed and implemented across DTRA. As such, an agency-wide directive and instruction, with explicit SWP duties specified for participants across DTRA (from individual workers up to and including the director) was the most authoritative approach for the agency-wide SWP. Making DTRA SWP Enduring, Strategic, and Integral. While unanticipated, immediate vacancies may have been the near-term inspiration to build SWP, a truly strategic, long-term approach to workforce management was needed, one not built on transient workforce needs or management concerns. A SWP should be linked closely with the programming, planning, budgeting, and execution (PPBE) system, as well as the program objectives memorandum (POM) process,5 to ensure that SWP would be an effort integrated with DoD’s planning and budgeting activities. SWP incorporated goals and plans as long as fifteen years hence, and it was designed to be enduring, strategic, and integral to DTRA and DoD. Making SWP Inclusive. Even with the initial focus on RD enterprise needs, DTRA staff capabilities transcended conventional science and technology skills. Skill sets under agency-wide consideration were made more inclusive, designated “STEMIT” to explicitly include science, technology, engineering, mathematics, and information technology. The concept of workforce diversity was expanded to include not only race, color, national origin, and gender, but also the diverse range of skills and capabilities needed across DTRA. While this first step in developing SWP focused on the RD enterprise, SWP would be applied, over the near future, to DTRA’s other enterprises and offices. Finally, this first step toward SWP centered on the civilian workforce, but in the near future, it would include military, Intergovernmental Personnel Act (IPA)6 and other similar workers, and contractors, all of whom may have important roles to play in SWP. Ultimately, through the full use of the multisector workforce, SWP would be maximally inclusive. Keeping the Agency SWP Timely. It is important to have the agency’s vision and mission leading efforts to develop SWP. As such, the director would provide an annual strategic vision with guidance for planning as long as fifteen years. The guidance, sufficiently detailed to enable SWP, would be presented to every DTRA staff member to promote understanding of agency plans and processes. Also, SWP would be reviewed annually to ensure its optimal relevance to plans and processes.

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Establishing the “As-Is” Condition for SWP. Sound information about the current state of the workforce, the “as-is” condition, was needed to formulate a sound SWP to arrive at the optimal “to-be” condition. Every DTRA staff member, encouraged by managers as part of the annual employee evaluation process, should keep their personnel data (training, education, licenses, and job responsibilities) current, so that the agency-wide picture of extant capabilities would be current. Further, while not universally endorsed, a DTRA-wide analysis of extant workers should be conducted (sometimes referred to as a “seat analysis”) to determine that people are optimally aligned to tasks, and that the workforce is optimally sized. Enhance Retention Policies. From exit interviews, climate surveys, and general conversations, at least for some workers, there was a perceived lack of growth and advancement opportunities that could result in reduced job satisfaction, lowered morale, decreased productivity, and departures from DTRA (both before and after becoming eligible to retire). DTRA staff members, based on their personnel data and as part of their annual evaluations, could benefit from an analysis of gaps in their skills and capabilities, gaps that could be filled with appropriate training and education. Such individualized personal development and continuous learning plans and programs, including duty and assignment rotations within DTRA and with outside governmental and private entities, could promote worker career success, enhance worker retention, and simultaneously facilitate mission accomplishment. Further, DTRA staff members, particularly those whose optimal performance is technically oriented and not supervisory in nature, could benefit from alternative mechanisms for advancement, which could be especially important because traditional promotion opportunities are limited under the National Security Personnel System (NSPS).7 Use of alternative criteria and mechanisms for advancement also can help efforts to recruit new DTRA workers, especially those more technically oriented. Some DTRA workers complained about bothersome commutes that were getting worse, excessive and growing time demands on the job, and overall erosion of quality of life due to work demands. The agency developed programs to improve employee work-life conditions, and to make workers fully aware of these programs—alternative work schedules, telework options, physical fitness and employee assistance programs. In order to have information about agency performance and worker satisfaction, departing workers would complete an exit interview survey administered by the equal opportunity (EO) office. An anonymous, network-based survey could produce useful information. The EO office would provide this information to enterprises and other offices each quarter. Biennial agency climate surveys would be performed, with findings to be published across DTRA. Supervisors would interview departing employees to learn their reasons for leaving, opinions about the workplace, and, when appropriate, to encourage the worker not to leave or possibly to return. Institute Career Tracks to Help Retain and Recruit. Certain current DTRA staff members (especially STEMIT, nonsupervisory personnel) were concerned about

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ways to advance their careers. Similarly, prospective agency workers were curious about procedures, processes, and milestones in a possible career in DTRA. Career tracks would be instituted to help retain current workers and recruit new ones. Career tracks, extensions of personal development, and continuous learning plans and programs would be a series of individually talented experiences, job assignments and rotations, education and training, levels of responsibility, types of work performed, skills required, and years of service. Such career-advancing series can be persuasive in attracting prospective workers, as well as convincing current workers to stay with DTRA and grow. Improve, Augment, and Enhance Recruitment and Hiring. At least on some occasions, losses of capabilities within an enterprise or office, and desires to acquire capabilities, were considered within the directly affected enterprise or office, with BE-BH brought in later. For SWP to succeed, addressing losses of capabilities or desires to acquire capabilities needed to be done in a fashion that coordinated across enterprises, offices, and BE-BH, and across the near and longer term. DRTA leadership would annually coordinate plans and programs relating to the size, makeup, and mix of capabilities of the near- and longer-term DTRA workforce. Especially with sudden and unanticipated departures, operations could be jolted from abrupt and unexpected job and personnel stops and starts. To ensure smooth continuity of operations across individual workers and across programs and plans into the future, succession planning and knowledge management (KM) would be institutionalized. As part of succession planning, enterprises and offices would identify key positions across the agency, the skills needed for those positions, and contingency plans for unanticipated vacancies. KM, another component of succession planning, is the preservation of information from key personnel and dissemination to appropriate current and future workers and programs. There should be an appointed KM professional. DTRA’s image could be made more attractive to prospective STEMIT career workers, whether young or more experienced. Several steps were identified to achieve this: • Making optimal use of web-based resources, including but not limited to reenergizing DTRA’s website, considering a presence in Second Life,8 and possibly an entry in the Facebook Marketplace.9 • Having first identified colleges and universities graduating students with capabilities relevant to the agency, establish and maintain long-term relationships with career and life counselors, deans, faculty, staff, and placement offices, through regular real and virtual campus visits to interview prospective workers, to participate in on-campus events such as symposia and conferences, and to exchange academic and professional information. • Making optimal use of Student Educational Employment Program (SEEP) capabilities, including possibly hiring college students to serve as representatives, marketers, event organizers, and recruiters at selected campuses.10

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• When conducting recruiting activities, including agency professional personnel (on-site or remotely) and subject matter experts and managers, so that prospective workers can “talk shop” and, when appropriate, be given contingent job offers. • Establishing and maintaining relationships and programs within which students, faculty, and academic leaders could visit and explore areas of interest and job possibilities at DTRA; selected institutions could be used as research partners and as loci for sabbaticals and training; some institutions might be willing to join in a DTRA “farm system” with opportunities and benefits to the agency, academic institutions, and individuals. • Marketing a unified and dynamic DTRA image and “brand,” via media releases and articles in national, state, and local markets, through targeted discipline or subject focused third-party e-mail, place-based advertising, and direct marketing. • Reviewing policies regarding minimum job-posting duration and hiring decision time; it was observed that lengthy job-posting and hiring decision times too often let desirable candidates slip away because other job offers are made more quickly; while specific posting and decision times were not selected by the POC panel and BRP, it was determined that enterprise and office managers, as well as BE-BH, be actively involved in working to reduce the time to hire. Making the Agency SWP Workable. While the ultimate goal of this activity was the development and implementation of a DTRA-wide SWP, challenges of synthesizing an agency SWP could be made more workable by having each enterprise and office prepare and maintain its own SWP. From civilian and military personnel database systems, each enterprise and office would get workforce demographics and related data from BE-BH. Enterprises and offices would gather information, perform analyses, and make strategic workforce management recommendations; BE-BH would consolidate these enterprise and office SWPs into the integrated and comprehensive SWP, with periodic review by DTRA leadership. Measuring Agency SWP Progress. The U.S. Office of Personnel Management’s (OPM) Human Capital Assessment and Accountability Framework (HCAAF) is the current model of evolutionary progression from “Personnel” to “Human Resources” to “Human Capital.”11 Strategic human capital management focuses on results aligned with mission and strategy, not processes. It places the right people in the right jobs at the right time to most effectively perform the work of the organization and has become the focal point of federal agencies. With consideration of OPM’s general HCAAF, metrics to gauge progress under SWP would include: • Approval by leadership of SWPs for each enterprise and office • Attainment of workforce turnover rates less than benchmark values, especially for key personnel

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• Accomplishment of diversity goals (using the inclusive concept of diversity that includes the diverse range of skills and capabilities needed across DTRA) • Attainment of vacancy rates lower than benchmark goals As with all aspects of agency, enterprise, and office SWPs, metrics should be tied to the PPBE system and POM process, incorporating goals and plans with consistent and periodic refinement. Conclusion The development and implementation of SWP at DTRA depended on the active, engaged, open, and receptive participation of each member of the POC panel and BRP. I was a member of the CSC team12 that facilitated and brought technical expertise to the effort, and it was impressively gratifying to witness the collaborative spirit, active engagement, and constructive attitude demonstrated by all of the participants. Knowledge and viewpoints about enterprises, the agency, and offices were shared and analyzed, debated, and synthesized into a range of options and actions that were carefully screened, and deliberate consensus was formed and implementation begun. The evolution of thought, concern, and commitment to be strategic and agency-wide augurs well for strategic workforce management in DTRA’s future. Notes 1. Department of Defense Directive, Number 5105.62. November 28, 2005. Available at www.dtic.mil/whs/directives/corres/pdf/510562p.pdf (accessed 1–04–08). 2. “Business Enterprise.” Available at www.dtra.mil/be/index.cfm (accessed 1–04–08). 3. James Tegnelia. “Statement of Dr. James Tegnelia, Director, . . . Defense Threat Reduction Agency, 21 March 2007, Before Subcommittee on Terrorism, Unconventional Threats and Capabilities, House Committee on Armed Services,” page 12. Available at http://armedservices.house.gov/pdfs/TUTC032107/Tegnalia_Testimony032107.pdf (accessed 1–04–08). 4. See the Partnership for Public Service/Grant Thornton, “Federal Human Capital: The Perfect Storm,” July 2007. Available at www.ourpublicservice.org (accessed 1–04–08). 5. PPBE, the main means in DoD for identifying mission requirements and translating them into budget and personnel resources needed to accomplish that mission, ensures that the highest-priority needs are funded, and that major issues have been addressed within resource constraints. The POM, the main document used to submit programming proposals, includes analysis of missions, objectives, alternative methods, and allocation of resources. Available at www.defenselink.mil/comptroller/icenter/budget/ppbsint.htm (accessed 1–04–08). 6. The Intergovernmental Personnel Act of 1970 (Public Law 91–648) enables “assignments to or from state and local governments, institutions of higher education, Indian tribal governments and other eligible organizations, to facilitate cooperation between the federal government and non-federal entity through the temporary assignment of skilled personnel.” Available at www.opm.gov/programs/ipa/Mobility.asp (accessed 1–04–08).

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7. NSPS, as enacted by the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108–136 [November 23, 2003]), allows DoD to establish a new civilian personnel management system. Contains basic information about NSPS. Available at www.cpms. osd.mil/nsps/docs/NSPSRequirementsDocument.pdf (accessed 10–02–07). 8. Second Life, a 3-D virtual world within which participants live a virtual life, has attracted NASA-Ames Research Center, IBM, Harvard University, and many other organizations to set up recruitment offices, research centers, schools, and more. NASA’s is available at www.space.com/adastra/070526_isdc_second_life.html, and IBM’s is available at www. technologyreview.com/Biztech/18016/?a=f (accessed 1–04–08). 9. Facebook Marketplace enables users to connect with job and other classified advertisements. Available at www.facebook.com/marketplace/guidelines.php (accessed 1–04–08). 10. The SEEP provides federal employment opportunities to college and other students. DoD currently employs one student at Michigan Tech University and one at the University of Puerto Rico to market jobs, especially related to engineering, to peers. Available at http:// govexec.com/dailyfed/1106/112206r1.htm and www.opm.gov/employ/students/intro.asp (accessed 1–04–08). 11. The U.S. Office of Personnel Management’s “Human Capital Assessment and Accountability Framework (HCAAF) Resource Center” contains details about, among other things, standards and metrics relating to human capital. For details, see www.opm.gov/ hcaaf_resource_center/ and www.opm.gov/hcaaf_resource_center/assets/hcaaf_ssm.pdf (accessed 1–04–08). 12. The author, Dr. Michael M. Simpson, is a senior analyst with the Computer Sciences Corporation. The viewpoints expressed here are those of the author and are not necessarily those of CSC or DTRA.

Part 5 Managing the Management of People

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17 A Certified Assessment of Human Resources Systems An Innovative Pathway to Assurance NAPA Fellows and Staff

Federal agencies risk mission failure if they are unable to recruit, develop, and sustain the workforce necessary to meet the evolving complexity and scope of federal missions. Whether human resource (HR) services and human capital strategies are delivered on-site, through shared services centers or outsourced, chief human capital officers (CHCOs) are concerned about their ability to ensure that the right people, processes, and systems are in place to guarantee organizational success. In a series of interviews, most cabinet-level CHCOs applauded the increased involvement of senior leaders in developing human capital strategies, but expressed growing concern about recruitment and hiring challenges, inadequate workforce management skills, and the overall success and performance of shared services. In 2007, the National Academy of Public Administration (NAPA) unveiled an innovative model for improving, documenting, and assessing HR systems regardless of the mode of delivery.1 In partnership with one of the nation’s most prestigious and respected public universities, the University of California (UC), NAPA designed and tested an assessment and assurance system for UC HR operations. The framework presented here has general applicability to all public organizations. The driving force behind the development of this system was a widely held belief by UC leadership that the university needed high-quality HR policies and programs to support its world-class academic and research operations. In addition, UC’s Board of Regents was requiring assurances that HR policies are applied appropriately and consistently throughout the ten campuses, five medical centers, and two national laboratories that comprise the university system. To satisfy these needs, UC leadership sought validated HR standards to measure and assess performance against standards, identify any remedial actions that may be required, and certify compliance. No off-the-shelf HR standards or existing assessment models matched UC’s requirements. Despite recent reforms and advances, there was little overall consensus on a universal set of standards against which HR can be measured. Also, 245

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while there are programs to certify individual HR professionals on the basis of their credentials or expertise, no program exists to certify HR systems as a whole. As a result, UC turned to NAPA for assistance. The Certified Assessment of Human Resources Systems (CAHRS) was developed to ensure that HR operations exhibit the same level of excellence that UC enjoys in its primary mission areas of education, medical care, and research. The CAHRS model, with HR standards that have been validated by the larger HR community, addresses a critical gap. Indeed, HR professionals involved in the design and testing of CAHRS are beginning to ask whether it might provide a means for removing government-wide strategic human capital from the Government Accountability Office’s (GAO) high-risk list. The CAHRS model and process consists of five components (see Figure 17.1): 1. 2. 3. 4.

Validated HR Standards against which HR performance can be measured; Readiness Review to prepare an organization for self-assessment; Self-Assessment to formally compare HR operations to the standards; Peer Review to ensure the integrity of the self-assessment by producing an independent expert opinion on the extent to which the standards have been met; and 5. Certification, which occurs when the peer review opinion attests or certifies that an organization has successfully met all the standards. • CAHRS is a continuous improvement process. CAHRS emphasizes remedial actions and improved performance, and it encourages corrective actions to the extent possible prior to moving forward. Realistically, an HR organization should expect to see some areas that need improvement, especially in the early implementation period. CAHRS is not a report card, and it does not rank organizations or compare one to another. Instead, it helps an organization benchmark its own progress in achieving the quality HR operations set forth in the standards. • CAHRS is flexible, with benefits available at each stage. An organization would not have to commit to the entire model in order to realize an improvement in HR performance. For example, the HR standards alone could be very useful in guiding policy development, training, staffing, and structure. Similarly, the readiness review and self-assessment can be powerful self-help activities to improve HR operations and provide enriching developmental experiences for those involved. Implementing the entire model through peer review and certification offers external validation and expert advice and guidance. • CAHRS is designed to be transferable to organizations other than UC. Although there has been some customization for UC use, the CAHRS standards and processes can be applied to other organizations with relatively minor modification.

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Figure 17.1  CAHRS Model Process

Certified Assessment of HR Systems

S

INESS AD RE VIEW RE

CERTIF ICA TIO N

STANDARD

PE V RE

ER IE W

EN T

A Pathway to Assurance

LF SE SM ES AS S

The CAHRS HR Standards The HR standards are the cornerstone of CAHRS against which the effectiveness and compliance of HR operations are assessed. The goal was to develop “generally accepted” standards that would describe first-class HR operations in today’s world. The CAHRS standards were developed with input from various experts (including subject matter experts, thought leaders, and practitioners), validated at several stages, and tested and refined through application at various pilot locations. NAPA researched standards and measures suggested by the Office of Personnel Management (OPM), the International Organization for Standardization (ISO), Malcolm Baldridge Award criteria, and the Saratoga Institute. Input was obtained from UC stakeholders, NAPA fellows and staff and other experts, academics, representatives of HR professional associations, such as the Society for Human Resources Management (SHRM) and the International Public Management Association for Human Resources (IPMA-HR). Additional systems reviewed included the federal government’s President’s Management Agenda and Executive Scorecard for the Strategic Human Capital Management Initiative and OPM’s Human Capital Assessment and Accountability Framework. NAPA also consulted with practitioners and HR professionals from federal and state agencies, including GAO and the Commonwealth of Virginia, and nonprofit organizations such as the National Association of Schools of Public Affairs and Administration and the Partnership for Public Service. The resulting CAHRS standards balance both strategic and operational dimensions and recognize that service delivery remains the threshold issue for establishing HR

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credibility. At the same time, they draw heavily from a strategic human resources management model that suggests the evolving role of the HR office is “to support the strategic mission of the organization by serving as full members of the management team and linking personnel and HR policy to agency mission, goals, and policy. Throughout the development process, the study team met with university and other public sector managers to identify management challenges as they arose, and ensure appropriate alignment of HR standards throughout the process. The resulting crosscutting and functional standards are the outcome of a rigorous effort to fully define the elements, attributes, and indicators of performance of the complex and diverse HR practice within centralized and decentralized environments. Figure 17.2 depicts the seven standards and their associated core components, called “key contributing elements.” The System-wide Management Standard describes the elements, success attributes, and indicators that comprise roles, responsibilities, policies, and activities of the corporate-level HR function. The HR Strategic Management Standard introduces the components of modern, strategic HR practices, which focus senior leadership attention on managing important people resources associated with high-performing organizations. The HR Operations and Assurance Program Standard describes the elements, success attributes, and indicators for the HR role in compliance and the management of HR operations. The remaining standards describe the elements, success attributes, and indicators of basic HR service delivery, the threshold issue for establishing HR credibility. These functions include Employment and Talent Management, Total Compensation and Benefits, Training and Development, and Work Environment and Employee/Labor Relations. These four standards are designed to enable specific outcomes measured by location-specific metrics. The following section provides an overview of the seven standards, defined in terms of the desired results, elements, success attributes, and illustrative measures. Each standard is defined in terms of expected quality, actions, and/or outcomes and further defined by multiple success attributes that provide more detailed performance expectations. All success attributes are considered critical and must be met in order to “pass” the standard successfully. Each success attribute, in turn, has a number of success indicators, the building blocks necessary to achieve success attribute requirements. Certain success indicators are designated “essential” and must be met; there is some flexibility in applying the others. An organization may wish to expand the number of essential success indicators, and believes that is entirely appropriate to do so given circumstances and priorities. Table 17.1 is an excerpt from the Employment and Talent Management Standard, which depicts the relationship and structure of success attributes and success indicators for the talent acquisition key contributing element (essential indicators are in bold italics). CAHRS Standard for HR System-wide Management Definition. As the University of California’s primary spokesman on HR matters and a key initiating source of HR policy, the Office of the President (UCOP) and its HR and

• Analysis and Design • Salary and Benefits Administration

• • • •

Talent Acquisition Talent Management Performance Management Rewards and Recognition

5. Total Compensation and Benefits

• Needs Assessment • Program Design, Delivery, and Evaluation

• Work Life • Health and Safety • Employee and Labor Relations

7. Work Environment and Employee/Labor Relations

• Assurance and Evaluation • HR Metrics and Continuous Improvement • HR Staff Management • Systems and Infrastructure Management • HR Consultation and Assistance

3. HR Operations and Program Assurance

6. Training and Development

Functional

CAHRS HUMAN RESOURCES STANDARDS

Cross-Functional

• Strategic and Business Planning • Policy Formulation and System Design • Communication, Consultation, and Representation • Accountability • System-wide Operations

1. HR System-wide Management

4. Employment and Talent Management

• Alignment, Integration, and Implementation • Influence and Collaboration • Workforce Analysis and Planning • Ethical Values and Diversity

2. HR Strategic Management

Figure 17.2  CAHRS HR Standards

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Table 17.1 Excerpt from the Employment and Talent Management Standard Key Contributing Elements Success Attributes/Indicators Talent Acquisition

1. Success Attribute: The location’s talent acquisition policies, programs, and/or activities provide an effective framework for expeditiously acquiring the talent needed to achieve mission goals and objectives consistent with UC policies. Success Indicators: a. These policies, programs, and/or activities are current and consistent with UC policies, ethical values, standards of conduct, and related principles, and comply with other appropriate contracts, laws, rules, and regulations. b. Relevant policies, programs, and/or activities are linked to and facilitate the location’s achievement of its mission, goals, and objectives. c. These policies, programs, and/or activities are effectively communicated to employees and managers. 2. Success Attribute: The location acquires a sufficient number of highly skilled, diverse, and competent employees when needed to meet priority mission needs. Success Indicators: a. The location recruits qualified and diverse candidates based on identified needs and recruitment plans. b. Vacancies are filled within a time frame collaboratively set by the HR department and its clients. c. Recruitment strategies identify underrepresented groups and reflect the diversity of the location, community, and customer base. d. Marketing, recruitment material, and interviews inform candidates of UC mission, goals, objectives, culture, employment contract, and total compensation and benefits packages, and include an emphasis on attracting well-qualified candidates for hard-to-fill positions. e. The location develops relationships with recruitment sources to ensure candidate pipelines, especially for hard-to-fill positions.

Source: The full text of all seven standards can be found in the 2007 NAPA report entitled “A Model and Process for the Certified Assessment of Human Resources Systems: A Pathway to Assurance.” Abbreviated “one page” versions of each standard follow.

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Benefits Department (HR&B) help UC accomplish its missions by setting the strategic direction for HR, identifying and championing resource and infrastructure needs, effectively and efficiently managing functions best handled at a centralized level, and overseeing and consulting on HR operations at locations throughout the system. Key Contributing Elements and Success Attributes Strategic and Business Planning • A collaboratively developed and effectively managed system-wide HR strategic plan helps UC address its mission environment and meet its current and future needs. • HR&B identifies system-wide HR resources and infrastructure needs and advocates for their inclusion in UCOP’s and the locations’ budgets. Policy Formulation and System Design • HR&B supports mission accomplishment by creating responsive, efficient, and effective HR policies and programs consistent with all relevant UC requirements. • Within established guidelines, HR&B creates total compensation and benefits programs and plans that promote UC as an employer of choice. Communication, Consultation, and Representation • HR&B communications deliver consistent, timely, accurate, and clear information. • Through consultation and advice, HR&B helps UC managers, location HR staff, and others understand HR policies, programs, procedures, laws, and regulations to ensure compliant and appropriately consistent implementation. • As the authoritative source on HR benefit programs and policies, HR&B represents UC and serves as the point of contact in responding to both internal and external inquiries concerning system-wide HR matters. Accountability • HR&B’s strategic initiatives are undertaken to identify opportunities to assure that HR policies, programs, and activities are operating in a manner consistent with UC standing orders and other policy requirements. • A system of reporting from UC locations facilitates information exchange, identifies best practices and improvement opportunities, and assures appropriately consistent implementation of policies and programs. • Employee information is appropriately protected. • Continuous improvement initiatives, such as CAHRS, for system-wide HR programs and services are developed, implemented, and evaluated.

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System-wide Operations • System-wide programs and activities (such as Labor Relations, Direct Service Activities, Risk Management, Diversity/Affirmative Action, Training and Development) enhance and strengthen the UC capacity to achieve its mission. Illustrative Measures Benchmark comparison with other universities; cost-effectiveness measures concerning system-wide programs and activities; satisfaction at all employee levels with compensation and benefits program and working conditions; completion rate of improvement initiatives; timeliness in negotiating bargaining unit agreements; locations’ feedback regarding satisfaction with HR&B communications and consultation; extent to which HR&B has achieved its priority objectives. CAHRS Standard for HR Strategic Management Definition. In pursuing its mission goals and objectives, the location collaboratively develops aligned and integrated HR strategic plans, identifies current and emerging workforce needs, and promotes commitment to UC ethical values and diversity. Key Contributing Elements and Success Attributes Alignment, Integration, and Implementation • The HR strategic planning activities identify an integrated set of HR priorities and actions that are clearly linked to the location’s goals and objectives. • Planned actions are supported, implemented, and achieved. Influence and Collaboration • The chief HR officer and key staff members play a leadership and/or enabling role in the strategic management of the location. Workforce Analysis and Planning • The location periodically analyzes current and projected workforce needs and identifies critical current and/or future gaps and surpluses. • The location develops strategies to address identified gaps and surpluses. Ethical Values and Diversity • The location demonstrates commitment to UC’s ethical values, standards of conduct, and related principles of community.

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• The location develops and delivers HR policies, programs, and/or activities that promote the values of diversity and inclusiveness and related principles of community. Illustrative Measures Employee/Manager/location leadership satisfaction with HR strategic plans and workforce analysis; feedback on value of HR involvement in location management; proportion of strategic planning actions accomplished within designated timeframes; evidence of gap closure; feedback from employees on location’s commitment to diversity and inclusiveness. CAHRS Standard for HR Operations and Program Assurance Definition. Through exemplary management practices, the HR Department assures UC leadership that it is a value-added part of the organization, providing highquality, responsive, and efficient services. Key Contributing Elements and Success Attributes Assurance and Evaluation • The HR Department conducts assurance and evaluation activities to determine the consistency/compliance, quality and efficiency of the location’s HR policies, programs and activities. HR Metrics and Continuous Improvement • The HR Department defines a comprehensive set of metrics by which HR programs and services are measured. • HR performance demonstrates a culture and practice of continuous improvement. HR Staff Management • The HR Department employs, or has ready access to, sufficient numbers of fully competent staff to carry out its mission successfully. Systems and Infrastructure Management • The location has the needed infrastructure and resources to accomplish priority HR work in a cost-effective manner.

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HR Consultation and Assistance • The HR Department provides guidance and support that assists managers, supervisors, and employees in solving problems in a timely, responsive manner. Illustrative Measures Frequency of assurance and evaluation activities; proportion of HR functions covered by review activities; comprehensiveness of published metrics; actual performance against targets, including trend data; customer, manager, supervisor, and employee satisfaction with delivery, content, and effect of HR programs; feedback on value of advice and assistance provided by HR; expense and full-time equivalent (FTE) ratios. CAHRS Standard for Employment and Talent Management Definition. The location acquires the talent needed to achieve mission goals and objectives and effectively manages its employees to enhance organizational capacity and improve individual performance. Key Contributing Elements and Success Attributes Talent Acquisition • The location’s talent acquisition policies, programs, and/or activities provide an effective framework for expeditiously acquiring the talent needed to achieve mission goals and objectives consistent with UC policies. • The location acquires a sufficient number of highly skilled, diverse, and competent employees when needed to meet priority mission needs. Talent Management • The location designs and classifies its work and helps employees manage their careers in order to strengthen organizational and individual performance. • The location effectively uses approaches and tools to retain critically needed talent consistent with UC guidelines. • The location responds effectively and responsibly to new conditions that require changes in workforce composition and/or deployment. Performance Management • The location’s managers and employees demonstrate a commitment to performance improvement and accountability.

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Rewards and Recognition • The location’s rewards and recognition actions result in sustained employee and organizational performance. Illustrative Measures Fill rates, that is, times to fill compared to established targets; hire offer acceptance rates; manager/supervisor satisfaction with quality of hires; competency gap closure as a result of hiring actions; cost per hire; employee satisfaction with career management, performance management, and rewards; effectiveness of retention offers in preventing loss of critical employees; percentage of appraisals completed on time. CAHRS Standard for Total Compensation and Benefits Definition. Within the scope of its delegated compensation and benefits responsibilities, the location manages these functions so as to attract, retain, and motivate a highly qualified diverse workforce, at the same time exercising stewardship of public funds consistent with UC total compensation philosophy and policies. Key Contributing Elements and Success Attributes Analysis and Design • The location’s compensation decisions are guided by relevant UC total compensation philosophy and policies, linked to the location’s mission goals and objectives, and resulting in a highly qualified diverse workforce. • The HR Department analyzes data and proposes changes to increase the effectiveness of its compensation and benefits package in attracting, retaining, and motivating a high-quality and diverse workforce. Salary and Benefits Administration • Compensation and benefits responsibilities are carried out in a timely, efficient, and responsive manner. • Managers, employees, and applicants receive sufficient information about the components of UC’s total compensation and benefits programs to understand its intent and appreciate its value. Illustrative Measures Market compensation rate comparison data; percentage of employees who decline employment due to dissatisfaction with compensation and/or benefits; percentage of

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actions or services provided within established time frames; employee/supervisor/ manager satisfaction with compensation and benefits; expenditure data; cost per employee; frequency of internal compliance reviews and error percentage. CAHRS Standard for Training and Development Definition. The location’s training and development programs equip employees with the requisite competencies to achieve current and future mission requirements and improve individual and organizational performance. Key Contributing Elements and Success Attributes Needs Assessment • The location periodically identifies the training, development, and/or education required to meet mission goals and objectives, fill critical skill gaps, and help employees fulfill their job expectations. Program Design, Delivery, and Evaluation • Training, development, and/or education policies, programs, and/or activities are designed to improve individual and organizational performance to accomplish current and future mission and leadership requirements. • Appropriate strategies and approaches are used to assure effective, efficient programs and/or activities to help employees improve performance and enhance career development. • The location delivers sufficient and timely training to meet priority needs. • Training and development programs and/or activities are evaluated to improve content, delivery, and timing. Illustrative Measures Accomplishments against training targets; percentage of competency gap closed; total training costs over headcount; percentage of employees/supervisors or managers trained; training days or hours; employee overall satisfaction with training; supervisor/manager overall satisfaction with training; cost per trainee; training expenditures as a percentage of total budget. CAHRS Standard for Work Environment and Employee/ Labor Relations Definition. The location provides a productive work environment by dealing with employees and recognized bargaining units in a fair and constructive manner and promoting a safe and supportive work environment.

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Key Contributing Elements and Success Attributes Work Life • The location’s work life policies, programs, and/or activities provide a framework for a supportive work environment necessary to achieve UC’s mission, goals, and objectives consistent with UC policies. • The location’s work life policies, programs, and/or activities promote work and family balance and contribute to UC as an employer of choice. Health and Safety • The location’s health and safety policies, programs, and/or activities provide a framework that promotes a safe and healthy working environment. • The location mitigates employee on-the-job injuries, minimizes worker compensation costs and absenteeism, and provides reasonable accommodation to employees with disabilities. Employee and Labor Relations • The location’s employee and labor relations philosophy, policies, programs, and/or activities pertaining to dispute resolution, conduct and discipline, work life enhancements, and collective bargaining provide an effective framework for creating and maintaining a constructive work environment consistent with UC policies, values, and other requirements. • The location’s employee and labor relations policies, programs, and/or activities result in a fair, constructive, and supportive work environment. Illustrative Measures Voluntary separation rate; contract negotiation timeliness; dispute processing timeliness; absenteeism; dispute resolution outcome ratio; employee satisfaction with work environment and work life programs; supervisor/manager satisfaction with employee/ labor relations; grievance resolution ratio, complaints, disciplinary actions; proportion resolved informally; injury loss time factor. Validating the Standards The Academy validated the clarity, completeness, importance, and appropriateness of the standards through multiple activities, including: • a validation survey completed by NAPA, UC Advisory Group, Chief Human Resources Officers at various UC locations, other key UC stakeholders,

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representatives of selected federal agencies and professional organizations, and individual experts • a NAPA-sponsored Executive Forum, composed primarily of HR executives and professional associations • NAPA-sponsored Performance and HR Consortia, which drew measurement and HR experts In each of these development and validation exercises, participants were asked specific questions regarding the clarity, completeness, and importance of the standards and their appropriateness for assessing HR contributions to mission accomplishment. In addition, the readiness reviews and self-assessments conducted at the pilot UC locations provided extensive feedback, which was used to refine and clarify the standards. These “dry runs” of the standards were important steps in the validation process, as well. In the end, NAPA had final responsibility for defining the HR standards. In doing so, it recognized that the standards would likely evolve over time as experience is gained in applying them in the “real world.” NAPA expects that some organizations may wish to expand definitions or add new areas of emphasis, based on individual circumstances and priorities. Readiness Review A readiness review is an informal self-help activity designed to prepare an organization for formal self-assessment. Organizations should complete a readiness review prior to launching a formal self-assessment. The readiness review entails: • Studying the HR standards. • Informally assessing HR performance against those standards. • Identifying remedial actions in preparation for more rigorous self-assessment. Unlike the self-assessment, a readiness review does not require documentation of conclusions, its results are not subject to peer review, and there is minimal reporting. An HR organization has considerable latitude in deciding how to carry out the readiness review. For example, it could choose to create assessment teams for detailed data gathering and analysis; forego extensive data collection and instead rely on the informed conclusions of HR managers and experts based on their in-depth operational knowledge; or use a combination of data collection and professional judgment. Guidelines for conducting readiness reviews are contained in the CAHRS Readiness Review Guide. Most readiness reviews will uncover areas that need improvement; the HR organizations will want to take reasonable steps to improve their operations prior to starting formal self-assessment. This may call for development of detailed action

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plans to bring HR operations more in line with the standards. Or it simply may be a matter of documenting processes that have never been written down or obtaining necessary information to support a conclusion. In keeping with the “continuous improvement” focus of CAHRS, sufficient time should pass between the readiness review and self-assessment in order to make progress. Experience at the UC pilot locations suggests a four-month interval would provide time to take some remedial steps, yet still keep the CAHRS process moving forward. Based on their experience during the development phase, the pilot locations all showed significant improvement from readiness review to self-assessment. Self-Assessment Self-assessment is a process in which an internally selected team compares its own operations to the HR standards and reaches conclusions about the extent to which the standards are being achieved. Unlike the readiness review, self-assessment: • requires support and documentation to back-up conclusions • results in a formal report • is subject to external peer review The CAHRS Assessor Guide contains rules and guidelines for assessing performance and summarizing results to determine the extent to which the standards have been met. After the first self-assessment, subsequent assessment teams will be responsible for following up on the remedial plans resulting from prior self-assessments, especially those designated as priority improvement efforts. An important difference between self-assessment and the readiness review is the extent of organizational leadership involvement. During the readiness review, HR departments are encouraged to communicate about review activities and obtain guidance from leadership on improvement priorities. The leadership role in self-assessment, however, is more defined, extensive, and formal because the self-assessment report is an organizational product, not simply an HR exercise. In self-assessment, a leadership representative is expected to: • • • •

work with HR to define HR challenges and priorities assure that the self-assessment report accurately reflects leadership views identify the high-priority improvement efforts sign the self-assessment report, along with the chief HR officer and selfassessment team leader

Following self-assessment, CAHRS moves to peer review and certification, at least during the initial cycle. After an organization has been certified as having

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met standards, these steps would be necessary only for recertification or if other circumstances warrant. As with the move from readiness review to self-assessment, an organization has options regarding when to move forward to peer review. For example, if a self-assessment reveals serious concerns or weaknesses, the organization may decide to take corrective actions prior to requesting a peer review. The location then would redo the relevant segments of the self-assessment report, while ensuring that other parts remain current and accurate. The subsequent peer review would be based on the revised self-assessment report. As a general guideline, peer review should commence within two months of the completion of the original or revised self-assessment report. Peer Review and Certification Peer review is a quality assurance process widely used in accounting, auditing, and other professions. it is also a familiar concept in academic, medical, research, and evaluation communities. In CAHRS, peer review is a top-level review by independent experts that: • ensures the integrity of an organization’s self-assessment by verifying the adequacy and accuracy of its conclusions • provides advice and suggestions for improving HR operations • identifies best practices. • forms the basis for a certification decision The end product of the peer review is a formal peer review opinion, which determines the extent to which an organization meets the CAHRS HR standards. Certification is based on a peer review opinion’s formal attestation that all applicable standards have been met. After considering alternatives for performing the peer review and certification functions, including drawing on a pool of individual HR experts, the panel concluded that the most effective and efficient option would be to have a nationally recognized organization known for its managerial and HR expertise perform both roles. The panel believed that an organizational opinion/certification would carry more weight and be more widely recognized than one rendered by a collection of individuals. Also, having the same organization perform both the peer review and certification steps streamlines the process and reduces costs. Further, the organizational approach avoids the administrative issues involved in scheduling, compensating, training, and ensuring consistency among individuals. The selected peer review/certification organization would be responsible for the composition, leadership, and training of the peer review teams.2 That organization would ensure that the team is composed of individuals who understand HR issues and appreciate the challenges inherent in managing complex organizations.

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Capability, credibility, trust, and independence in fact, as well as appearance, are core requirements. When a peer review team determines that a location has not met all applicable standards, the resulting peer review opinion will identify, on a standard-by-standard basis, those that substantially meet requirements and those that need improvement. This will encourage continuous improvement and eliminate redundancy because, to achieve certification, subsequent peer reviews would involve in-depth examination of only those standards previously found to need improvement. Those that passed during a previous peer review need only be surveyed and tested to ensure continued compliance. Understandably, certification reflects conditions that exist at the time of the peer review. The organization being certified is responsible for ensuring that it remains in compliance with the standards. Therefore, if an organizational, functional, or other major change occurs that could affect compliance with the standards in a material way, the organization must schedule a peer review to ensure that its certification remains valid. Absent this or other circumstances warranting a shorter time frame, recertification should occur every five years. The Academy has prepared a CAHRS Peer Review and Certification Guide that provides greater detail, including guidelines for conducting the site visit and drafting the peer review opinion. The CAHRS Cycle There is no predetermined timeline for stipulating how a location will move from readiness review through self-assessment to peer review and certification. The length of time will vary by location, and depends primarily on the amount of remedial work undertaken between the CAHRS phases. However, based on the experiences of the pilot locations, NAPA estimated that, when first implemented, the entire CAHRS process will take approximately twelve months from the readiness review to the issuance of a peer review opinion. After the initial cycle, locations no longer will do readiness reviews but will continue to perform self-assessments needed to obtain and sustain certification. A location will schedule self-assessments and associated peer reviews for those standards that have not yet received an unqualified peer review opinion. Once all standards have received an unqualified opinion and the location’s HR operations have been certified, the location need not seek recertification for five years, unless, as previously stated, circumstances warrant a shorter time frame. However, to retain certification during this five-year window, a location must conduct a formal self-assessment at the midpoint (two to three years). Over the course of 2008, the University of California will roll out this model and process to additional campuses, bringing the total number of locations to seventeen. The Academy plans to provide assistance and will serve as the peer reviewer and certifying body for the university.

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Notes 1. This chapter was drawn from National Academy of Public Administration, A Model and Process for the Certified Assessment of Human Resources Systems (Washington, DC: NAPA, 2007). The Academy panel conducting this study was chaired by Dr. Frank Thompson, Dean, Nelson A. Rockefeller College of Public Affairs and Policy, and Professor of Public Administration and Policy, Political Science, and Public Health, State University of New York at Albany. Other panel members included Dr. Joel D. Aberbach, Distinguished Professor of Political Science and Public Policy and Director, Center for American Politics and Public Policy, Institute for Social Science Research, University of California, Los Angeles; Dr. Edie N.G. Goldenberg, Professor of Political Science and Public Policy, Gerald R. Ford School of Public Policy, University of Michigan; Dr Jeff T.H. Pon, Chief Human Capital Officer, U.S. Department of Energy; Dr. Curtis J. Smith, Malcolm R. Meyers Distinguished Chair in Public Service, Wilson Center for Leadership, Hampden-Sydney College; and the Honorable David M. Walker, Comptroller General of the United States. Principal authors of the report were Alethea Long-Green, Patricia Cornwell Johnson, and Joan M. Dodaro. 2. During the pilot project, Academy HR experts not associated with the actual development of CAHRS performed the peer review function.

18 Using Data-Driven Human Capital Decisions to Improve Basic Personnel Functions Edward H. Stephenson Jr.

Today in the federal government, department and agency human capital (HC) offices are expected to be an integral part of the organization’s strategic planning and provide assistance to operational managers on how to address their HC challenges. But to do that, HC offices must first gain credibility by delivering basic HC services in an efficient and effective way. The HC office will have difficulty convincing agency leadership that it deserves “a seat at the table” if hiring processes are slow, basic personnel functions are error-prone, and paychecks are not accurate. A key to improving basic HC services is developing metrics on the delivery of such services to improve accountability and oversight. However, many organizations do not know how much it costs to deliver basic services, how long those processes take, or how satisfied its customers are. This chapter discusses the increased federal emphasis on measuring program results, the importance of data-driven HC decisions, and how the use of service-level agreements and HR dashboards can address process inefficiencies. Increased Focus on Measuring Results Over the last decade, federal departments and agencies have increasingly measured the results of their operations. Beginning with the Government Performance and Results Act (GPRA), continuing with the Program Assessment Rating Tool (PART), and finally the President’s Management Agenda (PMA), federal managers have been asked to develop goals and objectives and measure progress of programs and management (www.whitehouse.gov/results) (see Redburn, Shea, and Buss 2008). GPRA was enacted in 1993 to provide for the establishment, testing, and evaluation of strategic planning and performance measurement in the federal government, and other purposes. The act states that “(a) In carrying out the provisions of section 1105(a)(29), the Director of the Office of Management and Budget (OMB) shall require each agency to prepare an annual performance plan covering each program activity set forth in the budget of such agency.” The PART was developed early this decade to assess and improve program performance so that the federal government can achieve better results. A PART 263

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review helps identify a program’s strengths and weaknesses and to inform funding and management decisions in order to make the program more effective. The PART, therefore, looks at all factors that affect and reflect program performance including program purpose and design; performance measurement, evaluations, and strategic planning; program management; and program results. Because the PART includes a consistent series of analytical questions, it allows programs to show improvements over time, and allows comparisons between similar programs (www.whitehouse.gov/omb/mgmt-gpra/gplaw2m.html). Finally, PMA, established in the summer of 2001, is a strategy to improve the management of the federal government. It focuses on five areas of management: • • • • •

strategic management of HC competitive sourcing improved financial performance expanded electronic government budget and performance integration

Criteria have been developed for each management area, and agencies are rated each quarter on the current status of and progress in implementing each management agenda by the use of a green (success), yellow (mixed results), red (unsatisfactory) scoring system. The standards for strategic HC management are briefly discussed later in this chapter. These programs have increased emphasis on measuring results and provide an excellent foundation for a HC office to develop customer service metrics for its basic personnel functions. The Importance of Data-Driven Human Capital Decisions The Government Accountability Office (GAO) noted the importance of data-driven HC decisions in its model of strategic HC management (GAO 2002). Specifically, GAO listed data-driven HC decisions as one of eight critical success factors to improved HC management. GAO noted that “a fact-based, performance-oriented approach to HC management is crucial for maximizing the value of HC as well as managing risk.” GAO pointed out that organizations need to identify current and future HC needs, including the appropriate number of employees and their deployment across the organization. Such data not only are valuable for assessing workforce requirements, but also allow agency managers to spotlight areas for attention before crises develop. GAO points out that the cost of collecting data may be significant, however the costs of making decisions without the necessary information can be equally significant. The types of data that can be important to gather include: the size and shape of the workforce, skills inventory, attrition rates, projected retirement rates and eligibility, deployment of temporary employees, the use of contract workers, average period to fill vacancies, data on the use of incen-

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tives, employee feedback surveys, feedback from exit interviews, grievances, or acceptance rates of job candidates. One thing is clear from studies by the National Academy of Public Administration: the measurement of HC initiatives with solid data is difficult and is clearly one of the last management areas that agencies and departments have given attention to. Operational performance monitoring is a common challenge in public sector organizations as managers find it difficult to know what to measure. This is compounded by the fact that there is often a lack of appropriate data for accurate monitoring. The complexity and inherent inefficiency of many federal agencies’ HR processes cause a focus on completing tactical tasks rather than designing strategic approaches to organizational problems. Many federal organizations’ HR processes are paper-intensive, involve multiple exchanges between offices, and are handicapped by the lack of interoperable systems and by antiquated technology. Organizations Need to Develop an Accurate Picture of Their HR Processes An important first step for agencies in the move to data-based HC decisions is to gather information on how HR processes are being carried out, the costs of those operations, and the effectiveness of the services. Although there are a number of methodologies that can be used to gather this information, one is to identify the parts of the organization that are involved in specific HR processes and then analyze the cost of delivering the services. Such basic services to be studied include compensation and benefits administration, performance management, recruiting and staffing, and labor relations. This analysis should not only be focused on the human resource office but also on any other part of the organization involved in the human resource function. For example, operational parts of an agency frequently spend time on recruiting. Interviews should be conducted with key stakeholders across the organization, including officials responsible for information technology and finance. These interviews are important to gain an understanding of current service-delivery organizations, process hand-offs and ownership, costs, and technology. All costs need to be identified, including personnel costs, contractor costs, and the cost of space and information technology support. Frequently, staff may be performing multiple HR tasks. Estimates of time spent on various functions need to be gathered. One less time-consuming method is to interview individual unit managers and obtain estimates of their unit’s staff time for various functions. Obtaining expenses of contractors also is critical to accumulating all costs associated with the HR function. Some typical examples of HR function contractors in the federal government include activities involving recruiting, employee change of station, and payroll. The costs of services provided by the Office of Personnel Management (OPM), including benefit and retirement processing, also need to be

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estimated. It is important to remember that obtaining an exact cost is not necessary to conduct this analysis. Once the costs of basic HR functions have been developed, they should be compared with “best practices” elsewhere in the public and private sector. Information on “best practice” is available from various HR consultants and other organizations (e.g., Society for Human Resources Management and the Saratoga Institute). Once the cost of delivering the various HR services has been developed and compared with “best practices,” the agency can determine which functions need to be targeted for improvement. In addition to costs, the agency needs to gather data on the volume, timeliness, and other information on the various HR function activities, including hiring efficiencies, personnel action requests, and payroll processing errors. Customer satisfaction gathered from periodic manager and employee surveys is also important to analyzing the HR function. Federal agencies also are required to gather and report information on their HR function in connection with the Human Capital Assessment and Accountability Framework (HCAAF) (www.opm.gov/hcaaf_resource_center/2–2.asp) (see Table 18.1). The HCAAF consists of five standards with metrics including the merit system principles. Departments and agencies report this information quarterly, which is used as a part of the PMA scoring system for the department’s “score” on HC management. Having basic cost and effectiveness data for various HR services is invaluable to better management of the activity and can serve as a basis for decisions about how to provide the services, including whether private contractors should be considered. Service Level Agreements and an HR Dashboard Once HR activities have been analyzed and the costs determined, agencies are in a better position to develop strategies to improve the service. Two important components of an improvement strategy are: (1) the establishment of Service Level Agreements (SLAs), and (2) the establishment of an HR dashboard to monitor HR activities. The first component, SLAs, establishes minimum and target service levels for a specific HR function. For example, an SLA with an HR component could establish the minimum acceptable correction rate for processing personnel actions, time frames to hire a new employee, or the time to carry out a specific part of the hiring process. SLAs establish expectations and promote accountability while improving overall HR processes. They also provide an opportunity to measure and report performance. Service levels should be established for only critical performance indicators and just a few key performance indicators. The SLA process should not be simply an administrative exercise in data capture, analysis, and reporting. Service levels should be designed and carefully selected in connection with processes and activities that:

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Table 18.1 Human Capital Assessment and Accountability Framework Standard

Measures

Strategic Alignment

• Documented evidence of a current agency human capital plan that includes human capital goals, objectives, and strategies; a workforce plan; and performance measures and milestones.

Leadership and Knowledge • Competency gaps closed for management and Management leadership • Leadership and Knowledge Management Index • Merit-based execution of the Leadership and Knowledge Management system Results-Oriented Performance Culture

• SES performance/organizational performance relationship • Workforce performance appraisals aligned to mission, goals, and outcomes • Results-oriented performance culture index • Merit-based execution of the results-oriented performance culture system

Talent Management

• Competency gaps closed for mission critical occupations • Talent Management Index • Job Satisfaction Index • Merit-based execution of the talent management system

Accountability

• Documented evidence of a human capital accountability system that provides for annual assessment of agency human capital management progress and results, including compliance with relevant laws, rules, and regulations

• have a financial impact on the organization or employee if performance fails • can expose the organization to liabilities and litigation from unprocessed employee actions • help determine the quality of employee development activities Other areas to consider are those that significantly impact customer satisfaction. Table 18.2 lists some key attributes of SLAs. As these characteristics demonstrate, SLAs allow for negotiation but then set a service level in addition to defining roles and responsibilities. SLAs promote accountability as they establish a means to communicate expectations, results,

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Table 18.2 Characteristics of Effective Service Level Agreements Characteristics • Mutually agreed on and in writing • Establish two-way accountability for service • Define specific roles and responsibilities • Are negotiated and set agreements • Define clear criteria on which service is evaluated • Communicate the service expectations, results • Use for conflict resolution • Provide a platform to encourage continuous improvement • a living document

and conflicts in achieving set service levels. SLAs need to be viewed not only as a mechanism to uphold accountability but also as a means to encourage improvement. Regular monitoring of SLAs and improved communication on results and problem resolution may help to identify new opportunities for improvement. Conversely, SLAs can sometimes fail when an organization views the agreement more as a weapon than a tool. SLAs work because expectations and the criteria for measuring success are clearly defined for everyone involved. Employees need to recognize SLAs as a valuable tool rather than a mechanism through which leadership identifies failure. With the above information in mind, SLAs should be developed for key HR activities involving personnel actions, staffing, inquiry support, and customer satisfaction (see Table 18.3). As with other management data, the data gathered on human capital management must be linked to agency results. In addition, it is important that data gathered is current and gathered frequently, if not on a continuous basis. A complicating factor to obtaining HR metrics is the inadequate technology that faces many federal agencies. Thus developing information for SLAs and the monitoring of those agreements may initially require manual data-gathering activities. These manual data-gathering activities will not only provide the initial data for the SLA, but also will inform the organization’s technology plans and define the requirements for new technology when the resources become available. SLAs provide an informed context within which existing resources can be leveraged and used in a more strategic way. Another practice that can help to improve HR service activities is the creation of a computer-based HR “dashboard” that displays data regarding measures of critical HR activities. An effective HR dashboard provides an accurate snapshot of performance measures to enable better monitoring at the leadership level. The HR dashboard will also leverage the measures and reporting produced through the SLAs. Dashboards should evolve and change as management priorities change.

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Table 18.3 Examples of Hiring Service Levels Service level

Description

Time to fill versus standard

Days from open requisition to offer accepted divided by the standard time to fill

Diversity of slate

Percentage of candidates presented to manager who are diverse

Ease of use

Rating from customer survey who are satisfied with the hiring process

Quality of candidates

Percentage of candidates sent to manager who are interviewed

Time to bring selectee on board

Average time to provide notification, conduct inprocessing, and enter employee information into automated systems

Advantages of SLAs and an HR Dashboard The effective use of SLAs, coupled with a dashboard, has several advantages. For example, it sets appropriate expectations regarding services and delivery, establishes accountability for all pieces of the HR service delivery chain, and helps to pinpoint problem areas/weak links in the delivery chain. This in turn will allow HR management to make more educated decisions regarding workforce management and alignment with organization goals and objectives. Anecdotal evidence does not lend itself to better management decisions. Depending on the question or challenge, management may require different types of performance-related data. A formal performance management system provides the information necessary to improve decision making and prioritization, and allows organizations a basis of comparison to peers. There can be significant challenges in many federal organizations to developing and implementing SLAs and a dashboard. Many federal agencies have few such performance measures and little technology to gather such information efficiently. These metrics can be developed over time. Summary Federal agencies are seeking to improve their human capital functions both strategically and operationally. As a first step, HR departments need to ensure that the basic delivery of HR services are efficient and effective. Developing data on the cost and efficiency of these services is critical to improvement. With this data, SLAs can be established and an HR dashboard can be created. These are important tools to not only focus management attention on areas that work and those need-

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ing improvement, but also to hold HR employees and managers accountable for effective service delivery. References Government Accountability Office (GAO). 2002. A Model of Strategic Human Capital Management. Washington, DC: GAO, GAO-02-373SP, March. Redburn, F. Stevens, Robert Shea, and Terry F. Buss, eds. 2008. Performance Management and Budgeting. Armonk, NY: M.E. Sharpe.

19 Succeeding as a Strategic HR Partner A Practical Approach Tom Wimer

The role of today’s human resources professional has evolved into that of a consultant and trusted advisor, as have the competencies and skills required to be successful. The term “strategic HR partner” is used frequently by those in the profession trying to characterize their relationship to their “clients” and the position of their department on the modern organizational chart. Unfortunately, the term is often offered with little or no understanding of how to deliver on its implied proposition. Strategic HR takes on as many meanings as people you ask about it. Yet the focus on all things “strategic” often dismisses those things that are critical to supporting a successful organization, but are viewed as tactical or pedestrian. When that happens, it leads to the question, “What really is strategic HR?” Our view is that strategic HR is anything that helps move the organization toward its strategic objective. That may mean executing basic HR operations flawlessly, or it may mean working closely with key organization leaders to maximize the value of its human and intellectual capital. In either case, definitions of what is strategic are based on situations and real-time challenges rather than a preconceived notion propagated by the HR profession. The time has come for HR professionals to do more than try to become a strategic partner—it’s time to succeed! The following outline will show you how, using a proven methodology from one of the most successful human resources management services and consulting companies in the United States. First, Seek to Understand 1. 2. 3. 4.

Listen more than talk. Empathize; walk a mile in your client’s shoes. Don’t try to solve a problem before you know what it is! Understand the issues from your client’s perspective. Deal with the problem they present first. 5. Contemplate the customer’s perspective, then respond with a custom approach. 271

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6. Clarify—be sure that what you think you understand is in fact what your client has been telling you. Build a Business Case 7. Keep it simple! 8. Identify strategic elements of the solution and present them in a practical, easy-to-understand form. Being strategic does not have to be complicated. 9. Know the resources available to you and your customer. Create solutions that fit within the customer’s realities of money, time, people, and so forth. 10. Be flexible. Offer alternatives. Few things are absolute black or white. 11. Ensure solutions are actionable, measurable, and have a high probability of being implemented once accepted. 12. Again, keep it simple! Embrace Your Client as a Member of Your Team 13. Be first to reach out for help and inclusion from your customer. They like to be involved! 14. Respect the past. Don’t dismiss existing or previous actions before fully understanding why they were put in place to begin with. There is usually a reason. 15. Keep confidences and respect the client’s organizational and cultural protocol. 16. Everyone knows you’re smart—don’t make your customer feel less smart. 17. Communicate regularly, with the method and timing preferred by your customer, not just the way you feel most comfortable (that might mean face-to-face, telephone, e-mail, or some combination). 18. Earn your customer’s trust by acting in their best interest at all times. Remember, you are there to make them successful. Make sure they know that. Lead, But Don’t Push 19. Have a plan, but don’t be surprised or upset if it changes. Customers reserve the right to change direction! 20. Establish clear roles, timing, deliverables for each project and communicate status at all times. 21. Hold yourself, your team, and your customer accountable to your plan. Communicate the importance of staying on schedule, but understand that the realities of your customer’s environment may create unforeseen delays and diversions. It’s OK.

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22. When roadblocks surface, give your primary customer every opportunity to explain or fix the issue before going over or around them. Never use threats or name-drops to “motivate” your customer to action. 23. Protect yourself. Monitor progress against your plan and document every action for future reference, including changes to the plan and delays, who made them, and why. 24. Help lead your client down the path to the conclusions you are reaching. Show them how you are arriving at the conclusions, and often they will feel as though you are reaching these conclusions together. Deliver 25. Set the expectations—gain acceptance from both yourself and your client on what to expect of each other throughout. It’s OK to expect things from your client as long as they see the value in setting those expectations. 26. Do what you said your were going to do, when you said you were going to do it, for the price you quoted. 27. Never commit to unrealistic timing or technical deliverables. Don’t “reach” unless you are sure you have the resources, skills, and knowledge to deliver the highest-quality product/service. 28. It may be cliché, but surround yourself with the best and the brightest. If you don’t have the expertise or time to deliver on your customer’s expectations, find someone who does. 29. Avoid surprises. a. Communicate frequently with your customer. b. Monitor progress against your plan at every key milestone. Make sure your customer knows where you are as well. c. Give feedback on deliverables to your client in bites, not all at once. Give them a chance to absorb and digest your ideas. Do a reality check at every key milestone so as to avoid any surprise upon completion of the project. d. Vet a draft of your final deliverables with your customer before finalizing. Don’t present final recommendations before you have asked the following questions: i. Are these recommendations consistent with findings and discussion with our customer throughout our engagement? ii. Are these recommendations actionable and realistic. Can these recommendations be implemented with the resources available or attainable by our customer? iii. Do these recommendations put anyone or anything at risk? Political analysis of recommended actions is important.

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30. Present a polished, professional final product in the form and format that works best for your customer. Follow Up, and Take Credit for Success, but with Humility! 31. It’s OK to take credit for a job well done, but it is best done with humility. 32. Evaluate whether you have created raving fans. Thrilled customers are your best marketers. 33. Don’t rest on your last accomplishment. Follow up and keep focused on new and more creative ways to make your customers more effective. 34. A place at the table is not given to HR professionals, it has to be earned.

Part 6 Legislating Reform

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20 Legislating Innovation in Human Capital Management Lessons from the Department of Homeland Security Douglas A. Brook and Cynthia L. King

Legislation creating the Department of Homeland Security (DHS) in December 2002 marked the beginning of a historic innovation in human capital management (HCM) in federal government. It also provides important lessons for future human capital modernization efforts. How does innovation occur in HCM in the federal government? Innovation is “the alteration of what is established by the introduction of new elements or forms” (Oxford English Dictionary 1999, 853). Altering the established rules for personnel management (PM) in the federal government is challenging, but such innovations have occurred. The history of the civil service tells us that innovation—that is, new methods for managing civilian personnel—has resulted from structural changes, new regulations and rules, demonstration projects, management initiatives, and new government-wide policies. In most cases, opportunities for innovation require some sort of legislative authority. In enacting the Homeland Security Act of 2002 (HSA), Congress took a great leap forward in authorizing the new DHS to develop highly innovative approaches to HCM in conjunction with the Office of Personnel Management (OPM) and in consultation with its workforce. Although other, smaller agencies had previously been granted exemptions from provisions of Title 5, DHS was the first cabinet-level department to be granted authority to develop its own HCM system. HSA represents a departure from the traditional concept of a standard government-wide personnel system envisioned by the Civil Service Reform Act of 1978 (CSRA) and an entrance into a new era of HCM, one that allows department managers more flexibility in HCM. In this case the department was authorized to design a system that would include changes to compensation and performance management, adverse actions and appeals, expedited employee mobility, and new approaches to labor–management issues. How was the enactment of the DHS personnel system achieved, and what are the implications of this achievement for the design and implementation of innovative ways to manage the federal workforce? Our study suggests that legislating innova277

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tion is made more likely by aligning change with larger public and governmental objectives, and by controlling access to both the drafting process and the content of the legislative proposal. However, even though such strategies may enable the passage of the legislation in the short term, these same strategies may have negative consequences for the eventual design and implementation of an innovative HCM system. In this chapter, we describe the case of enactment of the HSA. We briefly explore the history of earlier attempts at management reforms by the Clinton and Bush administrations, and then we examine the particular circumstances and strategies associated with the HSA that led to the greatest civil service reform since the CSRA in 1978. Finally, we consider what has happened with human capital innovation since enactment of the HSA and ask whether the conditions that led to successful congressional enactment created challenges for design and implementation of human capital innovation at DHS. Personnel Management Innovation Agendas under Clinton and Bush Both Presidents Bill Clinton and George W. Bush came to office with management agendas that included innovative approaches to PM. President Clinton’s National Performance Review was critical of the complex, rigid, rules-based federal personnel system. In 1995, the Clinton White House proposed comprehensive PM reform legislation. The Personnel Systems Reinvention Act would have given agencies greater authority to design their own personnel systems. The Omnibus Civil Service Reform Act would have expanded the use of demonstration projects to experiment with issues such as paybanding and linking pay to performance. Neither bill managed to get sufficient support on Capitol Hill. Unsuccessful in passing this legislation, the Clinton administration then turned to existing authority for demonstration projects and other administrative means to create performancebased organizations.1 Similarly, Bush’s President’s Management Agenda (PMA) identified strategic management of human capital as the first of five government-wide initiatives (see Redburn, Shea, and Buss 2008). President Bush sought to develop “a meaningful system to measure performance. Create awards for employees who surpass expectations. Tie pay increases to results,” and promised, “[w]ith a system of rewards and accountability, we can promote a culture of achievement throughout the Federal government” (OMB 2002, 11). Initially, the PMA called on agencies to use existing authorities to create demonstration projects and other innovative HCM programs. Subsequently, the Bush administration sent to Congress the Managerial Flexibility Act to make statutory changes in HCM. The proposed act addressed such detailed matters of personnel administration as incentives for voluntary retirement and separation; bonuses for recruitment, relocation, and retention; and personal use of frequent flier miles and other travel promotional programs resulting from official

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travel. It also contained provisions for more demonstration projects and for OPM to develop innovative alternative personnel systems. The bill drew strong union opposition. American Federation of Government Employees (AFGE) Union president Bobby Harnage said, “There are seriously dangerous proposals in this package. One of the most stunning is a proposal to allow the OPM to bypass Congress by giving itself the authority to make permanent changes to Title 5. . . . AFGE strongly objects to OPM’s effort to usurp the authority of Congress in this manner” (AFGE 2001a). The Managerial Flexibility Act was never enacted into law, although many of its less controversial elements were approved in subsequent legislation. The PM policy environment, therefore, was one in which small-scale change was possible, but large-scale innovation failed to be enacted, often due to strong political opposition from public sector labor unions. That deadlock changed with enactment of HSA. The Homeland Security Act of 20022 The Bush administration’s bill, HR 5005, was introduced in the House on June 24, 2002. The House took up the bill on July 26, defeated six amendments on close party-line votes, and passed HR 5005 on a vote of 295–132. In the Senate, some tried to bring the bill quickly to the floor; however, it soon became clear that the bill was controversial, and that the PM provision was at the heart of the controversy. The primary reason for slow progress of the bill in the Senate was union opposition, and the PM provision became the central issue in the debate over passage of the entire HSA. Earlier action by the new Bush administration to revoke the Clinton-era labor–management partnerships, and to deny organizing rights at the Justice Department on national security grounds gave labor leaders reason to fear that the administration was pursuing an agenda to weaken the federal unions. The fight centered on the question of the president’s authority to abrogate collective bargaining agreements if he deemed it a national security necessity. Presidents have had this authority for over thirty years, but union leaders and their supporters feared its use by this administration in particular. The unions and their supporters tried to address this question through bill language that would restrict the president’s authority. In the Senate, a provision was added to limit the president’s ability to abrogate union agreements on national security grounds. Efforts to amend the president’s authority ultimately failed, but those arguments fueled debate. This debate was framed as national security vs. labor rights. As the Congress moved toward the mid-term elections, the differences between the administration and the unions became sharper and more difficult to resolve, notwithstanding claims by each that they were willing to negotiate and compromise. Both sides campaigned on the issue, and the failed reelection bids of two Democratic Senators, Max Cleland of Georgia and Jean Carnahan of Missouri, were perceived to have been significantly influenced by this issue (Brook and King 2007). When the election was over, the administration had gained a Republican majority in the

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Senate and enough support to pass the HSA with the personnel provision intact. In a post-election “lame duck” session, the Senate took up the bill. Last-minute compromises were made that required DHS to collaborate with unions before any rules were changed, required the president to notify Congress and wait ten days before waiving union agreements for national security reasons, and ensured that such waivers would be limited to a four-year period. The Senate passed the bill on a 90–9 vote on November 19, the House passed the amended bill on November 22, and President Bush signed it into law on November 25, 2002. What explains this enactment of broad authority for large-scale innovation in HCM when recent previous attempts had failed? Explanations can be found in the control the administration exercised over access to the drafting process and the content of the reform. The Bush administration’s proposal had an important strategic characteristic: control over access and content. Specifically, the proposal was drafted in secret and it made use of general language. This approach allowed the White House to control both access to the drafting process and to the full content of the reform proposal. Another explanation can be found in the alignment of the proposed innovation with larger and more salient public and governmental objectives. The administration’s arguments were more aligned with the apparent post-9/11 policy environment than were the arguments of the unions. Controlling Access In the aftermath of 9/11, the Bush administration initially opposed creation of a new department, but pressure was building for it in Congress. In response, the White House initially considered creating a new border protection agency by merging the Coast Guard, Customs Service, and Immigration and Naturalization Service. This proposal drew turf-conscious resistance from affected cabinet departments and was abandoned. Bush then instructed his chief of staff, Andrew Card, to develop a proposal for a homeland security department. Card organized a five-member White House staff group to develop a proposal for a new agency in secret, without consultations with agency heads or congressional leaders (Moynihan 2005). Meeting in the Presidential Emergency Operations Center (PEOC), the group developed a proposal in secret, thus sidestepping potential interference from cabinet members intent on keeping their departments intact, congressional leaders looking out for their committee jurisdictional interests, and interest groups like the public sector labor unions seeking to protect their collective bargaining rights. When the White House released its proposal to create a DHS by combining 22 existing agencies and 170,000 federal employees into a new cabinet-level department, it was issued as a concept paper rather than in formal legislative language. It addressed management issues only in general terms. A more traditional bill-drafting process might have involved staffing and coordination with affected departments and agencies, consultations with subject matter experts, careful drafting by legislative counsel, coordination and negotiation on

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Capitol Hill, and perhaps even contacts with interest groups. None of this took place while the White House staff group was drafting the original proposal, and the hurried effort to draft legislation left little time for extensive coordination and consultation. One result of this process is that the work of the staff group was easier and more expeditious. They were able to construct a proposal without the delays and inevitable negotiations and compromises that come with wider coordination. Working in secret also meant that potential political opponents were kept in the dark, unable to mobilize in opposition to a proposal they had not seen or did not know existed. Even though the process was less cumbersome in many respects, controlling access also had some negative implications. First, lack of expertise clearly affected the staff group’s work and raised some controversial issues that might have been avoided had personnel experts been consulted throughout the process. As one participant in the White House staff group, Bruce Lawlor, explained in an interview with the authors in September 2005, “We could not have constructed the intricacies of a new personnel system. We did not have the skill set to do that, so our design was to create as much flexibility as we could, so then we could bring it back and have the professionals finish the bill.” Even when the process was no longer so secretive and OPM staff was brought into the process to help draft the legislative language, timing constraints may have limited their ability to fully apply their expertise to the final product. OPM’s Ed Flynn in a June 7, 2007, e-mail to the authors, however, suggests that OPM was fully engaged and targeted their efforts to meet what they understood the administration’s objectives to be. “Director James and I, along with other members of her personal staff and OPM’s career staff, knew that the Administration desired a flexible approach. . . . We also knew that time was short, and that the legislative proposal was going to be developed quickly. For these reasons, we had already set in motion an effort among members of the OPM group to come up with an approach that would satisfy those objectives.” Controlling access and working in secret also invited outsiders to impute motives on the part of the administration, regardless of whether or not such motives were in play. Union leaders perceived political motivations in the PM proposal. For example, Bobby Harnage, in a March 31, 2005, interview with the authors, argued that the PM reforms were simply part of a larger agenda: “this Administration came into office . . . with the intent of carrying that extreme right-wing agenda. The American public was upset and wanted something done about the security of this country and they were willing to sign almost anything, as long as it would make us safer. So, it gave them [the Bush Administration] an opening.” But this claim was refuted in the authors’ September 2005 interview with White House staff group member Lawlor, who countered that “there was never, for a minute, any political motivation behind trying to change the civil service system. . . . The only direction he [Card] ever gave us was ‘Do the right thing. You do what you think is right. We’ll worry about the politics if it comes to that.’ ”

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Controlling Content When the White House released its proposal to create DHS, the proposal was issued as a concept paper rather than in formal legislative language and it addressed management issues only in general terms. Republican leaders in the House urged the White House to draft a DHS bill quickly in order to get the bill enacted before the one-year anniversary of 9/11. The White House staff group reassembled to write a bill, and the approach they took was to use simple wording and delegated authority. That is, rather than specifying the details of the new PM system, the Congress would delegate the authority for devising a new system to the department secretary and the director of OPM. Section (a) of the original PM provision contained just sixty-eight words: Notwithstanding any other provision of this title [Title 5], the Secretary of Homeland Security may, in regulations prescribed jointly with the Director of the Office of Personnel Management, establish, and from time to time adjust, a human resources management system for some or all of the organizational units of the Department of Homeland Security, which shall be flexible, contemporary, and grounded in the public employment principles of merit and fitness (U.S. Congress 2002).

Section (b) additionally required that any new PM system at DHS preserve equal employment or other employee rights and remedies, ensured the right to organize and bargain collectively, made certain pay provisions non-waivable, and set a five-year sunset provision on authority to issue new regulations (U.S. Congress 2002). No additional or more specific language was associated with the announcement of the homeland security proposal or included in the original draft. The details were to be left to post-enactment action by the DHS secretary and director of OPM. Controlling the content of the proposal meant that the administration’s bill, and even the final law, largely left the design and implementation of an innovative new HCM system to the secretary of DHS and the director of OPM. This provision represented an extraordinary delegation of authority that differed greatly from a central, integrated government-wide PM system. Additionally, the general language shielded the administration and its supporters from negotiations and political infighting over specific provisions of a new personnel system. Instead, they were able to argue in general terms for a flexible and contemporary new personnel system, leaving the details to be determined later. This approach, from a management standpoint, was certainly attractive given the complexity of melding 170,000 employees, 22 human resources offices, 77 collective bargaining agreements with 17 different unions, 8 payroll systems, and countless agency-specific laws regarding PM issues. Trying to write innovative but detailed legislation for HCM under these circumstances would have been challenging, to say the least. The rationale for the strategy was explained by OPM’s Ed Flynn in an e-mail of August 28, 2005, as follows:

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This was really an effort to create a framework that was different in both substance and character from previous efforts. Previous efforts largely were tinkering with the articles and provisions of Title 5. The legislative proposal for the department recognized the complexity and attempted, in effect, to set a new framework for HR management within the department.

In addition to avoiding matters of complexity, the use of general language limited the ability of interested parties, including some members of Congress, to write the specifics of HCM policy and practice. The final bill contained somewhat more language addressing PM flexibility than the original sixty-eight words, including an extensive section requiring collaboration with employee representatives. However, even with these specific provisions, the legislation was very general in its wording, allowing the secretary of DHS and the director of OPM wide latitude to design and implement an innovative new system for managing human capital in the newest cabinet department in the federal government. The “system requirements” section of the bill provided only that any new personnel system created under the bill “shall (1) be flexible; (2) be contemporary; (3) not waive, modify or otherwise affect [merit principles, equal employment opportunity, collective bargaining rights and certain other provisions of law]” (Public Law 2002, 107–296, November 25). Aligning with Public Priorities through Effective Argumentation By many accounts, the contentious battle over the PM reforms was over as soon as the returns came in on election night 2002, suggesting a general feeling that the election results signaled a powerful force in public approval for legislation in support of national security. The arguments, from each side of the debate, are informative in speculating why the administration was successful in aiding the defeat of two incumbent Democrats, both of whom opposed the PM changes and whose votes were critical in defeating the administration’s proposed amendments to the DHS legislation. During the 2002 campaign, Republicans specifically challenged some Democrats on the basis of their opposition to the president’s proposed PM reforms. One argument that the administration repeatedly made in campaign speeches was that their strategy for protecting America required them to have more control over federal personnel. For example, President Bush (2002a) argued that the personnel reforms were necessary because he needed the freedom “to put the right people at the right place at the right time to protect the American people.” However, the unions, particularly AFGE and the National Treasury Employees Union (NTEU), critiqued the administration’s strategy as disingenuous, and AFGE president John Gage additionally argued that the administration was anti-union. A Washington Post editorial endorsing Gage’s views noted: “It would be nice to believe the administration’s fervent denials of a plot to destroy the mostly Democratic unions. But before we do, we’d like to see some clearer arguments from the administration about what the elimination of union bargaining has to do with either the nation’s

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safety or civil service performance” (“Civil Service Reform” 2005). Former AFGE president Bobby Harnage used similar arguments: “Destroying the rights of federal employees will, in turn, destroy any attempt to provide skilled, well-trained, professional employees to guard our nation and its citizens” (McCallion 2003). The unions consistently argued to preserve workers’ rights to organize and collectively bargain. Additionally, within their argument, they held that the war on terror was being waged in support of freedoms that federal employees had a right to expect. For example, Harnage said that the “fight against terrorism, in which federal employees have always been on the front lines of the homeland, is about preserving our freedoms—including our right to organize—not destroying them” (Barr 2003). Thus, each side of the debate presented a strategy for providing national security. The administration wanted the flexibility to move people quickly where they were needed, and the unions argued that this strategy was unnecessary and threatened the rights and freedoms of federal workers. Regardless of the veracity of either argument, there was one key difference between them to which audiences might have responded—namely, how each side depicted the object of protection. The administration primarily focused on protecting the “American people,” and the unions primarily focused on protecting a subset of the American people, the federal employees. A further examination of the object of protection sheds additional light on the persuasiveness of the administration’s argument. The administration referred to its primary object of protection in several ways. For example, the administration consistently made references to the “American people” (Miller and Eilperin 2002), a collective and inclusive reference that applied to everyone. There were also numerous references to “homeland” (e.g., Friel 2002; Mitchell 2002), conjuring up a sense of familiarity and safety one associates with one’s home. Finally, there were several references to the object of protection as “you,” for example: the “Department [of Homeland Security] . . . is being created to secure you” (Bush 2002a). By using this personal pronoun, President Bush established a connection that invited the audience to identify with the object of protection not as an abstract entity, but rather each of us was the object of concern. Taken together, the administration’s references to the object of protection were inclusive, emotional, and specific. The unions, in contrast to the administration, characterized the object of protection as primarily the federal worker and only secondarily the American public. Consider these examples from Harnage: “When public employees’ rights and protections are compromised, so too is the safety and security of the public they serve . . . ; Homeland security requires a secure work force . . . ; Destroying the rights of federal employees will, in turn, destroy any attempt to provide skilled, well-trained, professional employees to guard our nation and its citizens” (McCallion 2003). In these examples, the federal employees are foregrounded as needing protection so that they, in turn, can protect the public. The protection they need draws upon the concept of security, but primarily in the sense of the federal employee’s own personal security rather than the security of the homeland per se. Their personal security requires that they ensure the protection of their rights as workers. As the

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union argument went, only when the union ensures protection for workers’ rights can those employees “guard our nation and its citizens.” In addition to descriptions of the objects of protection, each side also differed in how it conceived of and portrayed its own power. One key difference was in how they referred to the holder of power. For example, the administration argued that “a time of war is the wrong time to weaken the president’s ability to protect the American people” (Miller and Eilperin 2002), and “I don’t think you’ll ever be able to say that you’ve done all you can do to enhance security of this country if you don’t give a new secretary . . . flexibility” (Nakashima and Miller 2002, 15). In numerous other instances, Bush relied on the use of personal pronouns: “I need to have the ability to put the right people at the right place at the right time” (Friel 2002), “I would have the capacity . . . to suspend those rules” (Bush 2002b). In all these cases, the holder of power is an identifiable entity, one who can be held accountable for the power and subsequent actions the agent takes. The unions, as reform opponents, portrayed the holder of power primarily as a system or as abstract collectivities. For example, “the merit system” is held up as an entity that can ensure “protection for whistleblowers who alert Congress and the public to fraud, abuse, mismanagement, and threats to national security” (AFGE 2001a). In other examples, systemic collectivities are emphasized as the holders of power: “Federal employee unions have formally represented the vast majority of the federal workforce for forty years. Union membership has never been inconsistent with national security” (AFGE 2001b). From the perspective of the audience, it is plausible that the administration’s call for more power, in service to protecting the American people against threats to national security, was persuasive because of the direct relationship being drawn between the threat and who, specifically, was taking action to combat that threat. In the case of the unions, their portrayal of the entity that holds the power added another level of abstraction. Arguing for Innovation The arguments from each side in this debate provide clues as to why the administration may have been more successful in the fight over the human capital provisions of the HSA. Organizational change literature has long understood that urgency is a powerful motivator in changing behavior (e.g., Kotter 1996). September 11 provided the urgency to justify innovation in management reform, and the Bush administration provided a powerful set of arguments that positioned it as serving American’s best interests in providing national security. The unions portrayed the rights of the federal worker as critical to ensuring national security, drawing on history as evidence of the excellent work being done on the “frontlines” by government workers. But this argument, relying on abstract entities versus concrete individuals, likely did not align as well with the mood of the country. September 11 stopped us in our tracks: given this unique set of circumstances, innovation,

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personal accountability, and decisive (new) action was likely more persuasive than the status quo, regardless of history. The public, who may have had little or no previous understanding of PM issues in the federal government, was now viewing the issue through a lens colored by a terrorist attack. The Bush administration directly adjusted to that lens, whereas the union relied on arguments that assumed and asserted the value of the current system. Urgency opens minds to the idea of change, and thus the administration’s message of innovation was likely more palatable to a post-9/11 American public. Lessons for Legislating Innovation in HCM In many respects, the Bush administration employed some very effective strategies in its successful campaign to include HCM innovation in the HSA. At the outset, controlling both access and content set boundaries on the bill-drafting process and on the breadth and depth of topics that would be debated. By delegating authority for the design of an innovative human capital system to the DHS secretary and the director of OPM, the Congress was largely kept out of the minutia of federal PM. These strategies were especially useful for seizing the initiative and getting a proposal drafted quickly. When, eventually, a meaningful political and policy debate over the bill emerged, the argumentation and communication strategies had a significant impact. As the argument analysis shows, the administration’s ability to frame PM innovation in terms that were salient for an audience beyond the human resources policy community was clearly important to the successful passage of the legislation. The administration made its argument within the context of 9/11 and framed PM reform as essential to national security, thus raising a rather arcane issue of public administration to a higher level of public concern. At the same time, the union arguments remained bounded by more traditional issues of collective bargaining rights and PM practices. In this debate, arguments that a post-9/11 audience could more readily identify with provided the political support for innovation that prior arguments about PM policy could not accomplish. The lesson to be drawn from this case has to do with how proposals for change are presented and argued and the context in which they are debated. It is clear in this instance that significant change can be achieved when a management proposal is associated with matters of higher importance and wider support, such as protecting national security. Left inside the normal community of management policy experts, innovation is much more likely to be limited and incremental. Achieving legislative authority for large-scale innovation is made more likely by aligning change with larger public and governmental objectives in times of actual or perceived crisis. Implications for Design and Implementation The case of the HSA might seem to imply a complete formula for innovation in HCM—control the access and content, make use of delegated authority for design

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and implementation and, most importantly, make salient arguments associated with broader issues of public concern to exert pressure on Congress to pass reforms. However, this approach addresses only the question of enacting legislative authority for innovation; it does not necessarily guarantee successful design and implementation. The very process of controlling and limiting the debate in the legislative phase leaves a great deal of the policy work to be done during the design and implementation phases, by actors who more normally would administer, rather than make, personnel policy. The negotiations, compromises, and acceptance of policy outcomes that might be more expected to occur during the enactment phase are merely postponed rather than avoided altogether. This delayed policymaking permits the participants to pursue policy objectives that might have been more difficult to achieve in the more open legislative process, but these objectives ultimately get debated regardless. A brief look at the design and implementation of the new DHS HCM system illustrates some of the challenges introduced by the policy development methods highlighted in this case. Design and Implementation In the year following enactment, DHS and OPM worked to design the new HCM system for DHS. Design teams were formed consisting of eighty people from OPM and DHS, along with representatives from the three largest unions representing DHS employees—AFGE, NTEU, and the National Association of Agriculture Employees (NAEE). The teams worked full-time for nearly six months conducting research and consulting with subject matter experts, officials from other government jurisdictions, and public and nonprofit organizations. Sixty focus group and town hall meetings were held with DHS employees across the country, and two open public meetings of the DHS-OPM Senior Review Committee were held. During the formal regulatory review process, 3,800 comments were filed concerning the proposed regulations, and the design teams met for thirty days in formal “meet and confer” sessions overseen by the Federal Mediation and Conciliation Service (Cohen 2007). Writing and approving the new regulations took fifteen months. The administration pursued its innovative policy agenda in the design phase, including a new system for paybanding, a pay-for-performance system for DHS workers, and greater flexibility to move DHS employees to areas of greatest need. Continuing the national security versus collective bargaining rights debate, the administration proposed rules that meant that DHS management would no longer bargain with unions about the assignment of work, deployment of personnel, and use of new technology (Zeller 2005). The proposed rules also said that management could ignore the collective bargaining agreements, without consultation with the unions, if determined by management to be a matter of national security. The administration argued, once again, that the special national security character of the DHS required this extraordinary power to protect the homeland (Cohen 2007).

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The unions fought back. Despite all of this consultation and collaboration, the day after the new regulations were announced on January 27, 2005, the unions filed suit to prevent implementation of the first phase of the new DHS personnel system. Once again, the debate centered on questions of national security versus collective bargaining rights. Invoking national security had been an effective strategy in the legislation phase and in the design phase, but proved insufficient in the next phase within the legal arena. A series of court actions has prevented implementation of the new system for DHS employees covered by collective bargaining agreements. On August 12, 2005, the U.S. District Court ruled that the DHS proposed regulations failed to ensure collective bargaining as required in the HSA, and that the new rules failed to provide adequate due process for appeals to disciplinary actions. DHS appealed this decision, and in June 2006, a federal appeals court upheld the ruling of the District Court. DHS and the solicitor general did not appeal further. The court essentially ruled in favor of the union’s argument that if DHS management could unilaterally abrogate labor contracts, then, in fact, there was no effective contract and no real collective bargaining as required in the HSA. The national security argument that was so effectively used in the political and policy arenas has not been successful in the courtroom. Arguments surrounding collective bargaining rights, which did not resonate in earlier phases, were persuasive in the courts. They were found to be required by law, notwithstanding other national security authorities. For the unions, the argument had finally been turned around. In the wake of these decisions, DHS attempted to implement its new system for nonunion employees, but encountered significant administrative delays. Its original plan, called MaxHR, has been replaced by the Human Capital Operations Plan, which moves more cautiously toward implementation, beginning with a 2008 pilot program for intelligence workers (Ballenstedt 2007). At the same time, congressional support has been diminishing. For fiscal year 2005, the administration’s request for $133.5 million for DHS human resources was cut to $70 million in the House and Senate appropriations committees, and further cut to $43.2 million in conference committee (Dizard 2004). For FY 2007, Congress cut the administration’s $71.5 million request to $25 million, nearly $4 million less than appropriated in FY 2006 (Rutzick 2006). In March 2007, an amendment added in committee to the annual homeland security authorization bill would repeal the new DHS pay-forperformance personnel system. That bill would also direct DHS to replace the term “human capital” with terms such as “workforce,” “personnel,” and “employee,” and integrate its use throughout the department (U.S. Congress 2007). The difficulties at DHS have wider implications as well. The similarly innovative National Security Personnel System in the Department of Defense has also been affected by lawsuits. On November 7, 2005, thirteen labor organizations representing more than 350,000 employees of the Department of Defense (DoD), filed a lawsuit challenging labor relations portions of the regulations regarding requirements for collaboration with employee representatives, collective bargain-

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ing rights and independent review. The DoD began implementing NSPS only for non-bargaining unit employees while it awaited the outcome of the litigation affecting employees in its collective bargaining units. On February 27, 2006, the U.S. District Court ruled in part for both the union and DoD on some matters but permanently enjoined the department from implementing regulations dealing with adverse actions, appeals, and labor relations (AFGE v. Rumsfeld, 16). However, in contrast to the DHS case, on May 18, 2007, the U.S. Court of Appeals for the District of Columbia reversed the judgment of the District Court and upheld all aspects of the regulations in the appeal. This creates at least mixed policy and legal situations vis-à-vis the DHS case. Like DHS, NSPS is also being challenged on Capitol Hill. The FY 2008 Defense Authorization bill, for instance, contained language to repeal DoD’s authority to establish a new labor relations system under NSPS and require that any new pay-for-performance system in DoD be consistent with existing federal labor relations law. The president threatened to veto the bill over this provision. Additionally, the administration’s hope to expand innovative HCM throughout the federal government is stalled not only because of the delays and legal issues described above, but also because there appears to be little interest on Capitol Hill for taking up the proposed Working for America Act. Conclusion The drive for HCM innovation at DHS provides a case study in how such legislation can be effectively drafted, presented, and argued. The subsequent challenges for designing and implementing a new personnel system at DHS suggests that innovation remains difficult to accomplish. Additionally, the tactics and arguments that were effective in enacting innovation through legislation may not be equally effective in the implementation phases of innovation. Is it possible that legislative enactment strategies are in conflict with implementation success? In this case, Congress approved PM reform, not because there was broad agreement on a new policy, but because the political imperatives were strong due to the controls and argumentation employed by the administration. The HSA was enacted without achieving true policy consensus about what human capital innovation in DHS really meant. Therefore, interested parties, including organized opponents, had continued motivation to sustain the debate into the design and implementation phases, using (in this case) the courts to support their policy choices and resolve their policy differences. Furthermore, in the absence of policy consensus, changes in the political environment can lead to changes in congressional support. At this writing, the future of innovative HCM at DHS is very uncertain. Administrative difficulties and court cases have delayed implementation for over two years, and support from Congress is waning while, at the same time, the five-year deadline for innovation contained in the HSA is fast approaching. Inevitably, the political imperatives of debate, negotiation, and compromise must ultimately be confronted in the open for innovation to succeed.

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Notes 1. For a more complete discussion, see Thompson (2001) and Ingraham (1997). 2. For a full discussion of enactment of HSA see Brook and King (2007) and Brook et al. (2002).

References American Federation of Government Employees (AFGE). 2001a. “Management Flexibility Act Does Nothing to Address Human Capital Crisis.” Press release dated October 15. ———. 2001b. “Faulty Premises Make for Bad Amendments: Oppose Anti–Collective Bargaining Rights Amendments and Support the Homeland Security Bill (S2452).” AFGE Homeland Security Talking Points. AFGE v. Rumsfeld, 422 F. Supp. 2d 16; 2006 U.S. Dist. LEXIS 7068; 179 L.R.R.M. 2082 (February 27, 2006). Ballenstedt, Brittany R. 2007. “DHS Scales Back Pay for Performance Ambitions.” GovExec.com: Daily Briefing February 28, 2007. Available at www.govexec.com/ dailyfed/0207/022807bl.htm (accessed April 2, 2007). Barr, Stephen. 2003. “National Security Concerns Wipe out Union Rights at Mapping Agency.” Washington Post, February 10: B2. Brook, Douglas A., and Cynthia L. King. 2007. “Civil Service Reform as National Security.” Public Administration Review (May–June): 397–405. Brook, Douglas A, Cynthia L. King, David Anderson, and Joshua Bahr. 2002. Legislating Civil Service Reform: The Homeland Security Act of 2002. Monterey, CA: Center for Defense Management Reform. Bush, George. 2002a. “Remarks at Southwest Missouri State University.” Weekly Compilation of Presidential Documents. October 18. ———. 2002b. “Remarks in Savannah, Georgia.” Weekly Compilation of Presidential Documents. November 11. “Civil Service Reform.” 2005. Washington Post, January 31: A20. Cohen, Steven. 2007. Interview with authors. March 30. Dizard, Wilson P. 2004. “Funding Cuts Slow DHS Personnel Systems.” Government Computer News, October 28. Friel, Brian. 2002. “Bush, Unions Tangle over National Security Exemption to Labor Laws” [electronic version]. Government Executive, August 16. Available at www.govexec.com/ dailyfed/0802/081602b1.htm (accessed February 2, 2007). Ingraham, Patricia W. 1997. “A Laggards Tale: Civil Service and Administrative Reform in the United States.” Paper Prepared for the Conference on Comparative Civil Service Reform, Indiana University, Bloomington, IN, April 5–8. Kotter, John P. 1996. Leading Change. Boston: Harvard Business School Press. McCallion, Gail. 2003. “Homeland Security: Data on Employees and Unions Potentially Affected.” Congressional Research Service, the Library of Congress, RS21268. Washington, DC. Miller, Bill, and Juliette Eilperin. 2002. “House Approves Homeland Security Bill; Bush Gets Flexibility to Shape, Manage New Department.” Washington Post, July 27, A01. Mitchell, Charlie. 2002. “Senators Question Bush Effort to Loosen Civil Service Rules” [electronic version]. Government Executive, June 20. Available at www.govexec.com/ dailyfed/0602/062002cd1.htm (accessed February 2, 2007). Moynihan, Donald P. 2005. “Homeland Security and the U.S. Public Management Policy Agenda.” Governance: An International Journal of Policy, Administration, and Institutions 18(2): 178. Nakashima, Ellen, and Bill Miller. 2002. “Bush to Ask Workers for Flexibility on Homeland

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Security: President’s Pep Talk to 3,000 Employees to Include Appeal on Civil Service Rules.” Washington Post, July 10: 15. Office of Management and Budget (OMB). 2002. President’s Management Agenda: Fiscal 2002. Washington, DC: Executive Office of the President. Oxford English Dictionary. 1999. 2nd ed. Oxford: Oxford University Press. Redburn, F. Stevens, Robert Shea, and Terry F. Buss, eds. 2008. Performance Management and Budgeting. Armonk, NY: M.E. Sharpe. Rutzick, Karen. 2006. “Congress Withholds Millions from DHS Personnel System.” GovExec. com Daily Briefing, October 2. Available at www.govexec.com/dailyfed/1006/100206r1. htm (accessed February 15, 2007). Thompson, James R. 2001. “The Civil Service under Clinton: The Institutional Consequences of Desegregation,” Review of Public Personnel Administration 21(2) (Summer): 87–113. U.S. Congress. 2007. House. 109th Congress, 1st Session. HR 1684, Department of Homeland Security Authorization Act for FY 2008. ———. 2002. House. 107th Congress, 2nd Session. HR 5005, Section 761, introduced June 25, 2002. ———. 2001.”Freedom to Manage Act Legislative Proposal, October 17, 2001.” Available at www.whitehouse.gov/news/releases/2001/10/20011017–13.html (accessed March 27, 2007). Zeller, Shawn. 2005. “DHS Personnel System Unveiled.” GovExec.com. Available at www. govexec.com/dailyfed/0105/012605szl.htm (accessed March 31, 2007).

21 The Human Capital “Crisis” in the Federal Government A Modest Proposal Alan P. Balutis

The life of a public sector executive is rewarding and challenging. The author knows this first hand, having served in government—at what was then still the Department of Health, Education and Welfare (HEW) and then at the Department of Commerce—for twenty-eight years. We are indeed fortunate to have people in public service today who are devoting their careers—even their lives—to trying to solve some of the greatest problems and challenges facing our nation and our society. These professionals work long hours and are often underpaid when compared to their private sector counterparts. Their effectiveness is hampered by a fifty-year-old personnel system and antiquated administrative rules long ago discarded by the private sector. Most public sector executives are proud of what they do. This does not mean they are not concerned about the future. They face a growing list of issues and concerns that are paralyzing their ability to perform. • A staggering number of public sector employees are eligible for retirement, yet there is a shortage of actionable plans to cope with the inevitable. • Strategic management of human capital is nearly nonexistent. Public sector compensation, benefits, training, and career development are probably twenty years behind common private sector practices. • Recruitment of the “best and brightest” is rare. The public sector simply cannot compete with the private sector in terms of starting compensation, training, and career development. • Not so long ago, the public sector was the best place to be if you wanted to work with advanced technology. This is no longer true, as the public sector has failed to keep pace with technological advances. • The public sector has a reputation for failed technology programs. Seldom does a week go by that some newspaper does not report the cancellation of a multimillion-dollar technology program. The public sector simply doesn’t have the talent base to manage these programs. 292

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• Although the public sector has spent billions on information technology (IT), there are critical systems that continue to operate with decades-old technology. • Often, the “work around” for failed human capital and technology strategies has been to contract out to private sector companies. This has been great for those companies doing business with the public sector, but there is little discernible proof that this approach has benefited the taxpayer. These issues are only the tip of the iceberg. While the public sector continues to fall behind its counterparts in the private sector, expectations and demands continue to grow. Taxpayers, Congress, and the White House continue to place demands on the public sector to deliver more—often with less. As Professor Donald Kettl put it recently, “At the core is a fundamental problem. The current conduct of American government is a poor match for the problems its must solve. If government is to serve the needs of its citizens in the twenty-first century, it must reconfigure itself—to shift the boundaries of who does what and even more important, how its work gets done” (Kettl 2007, 5). In her recent book presenting a new way of governing, Al Gore’s reinventing-government czarina Elaine Kamarck (2007) puts it even more bluntly: On September 11, 2001, the United States experienced the largest terrorist attack on its soil in history, and the obsolescence of the government was put into stark relief. Organizations that had defeated the Nazis, the Japanese, and then the soviet Union were no match for a handful of terrorists. . . . Four Septembers later the government failed once again. When a massive hurricane hit New Orleans, the wealthiest government in the world was caught unaware and unprepared. In the pictures beamed around the world, the U.S. government looked no more competent than one in the third world when it came to protecting the health and welfare of its citizens.

The Impending “Crisis” Over the last few decades each presidential administration has included a program designed to reform and improve the management of our government: The Grace Commission and Reform ’88 under Ronald Reagan, A Thousand Points of Light under George Bush, the National Performance Review and Reinventing Government under Bill Clinton and Al Gore, and currently the President’s Management Agenda under George W. Bush. Invariably, this reform agenda has centered on similar principles: efficiency, effectiveness, and economy (saving money and/or people) (see Redburn, Shea, and Buss 2008 for a review of these issues). In recent years, another common thread has been the power of IT to enable these reform objectives. The new president coming into office in January 2009 will face what the current head of the Office of Personnel Management (OPM) has called a retirement

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tsunami. Baby boomers heading toward retirement from the federal workforce are a concern not only for human capital planners but also for many government program managers. OPM projections show that nearly 61,000 full-time permanent federal employees will retire in FY 2008 and that the number of retirements will peak between 2008 and 2010—just as an incoming president is seeking to launch the new administration. Loss of experienced contracting officers and program/project managers is already being felt, according to a recent report by the Federal Acquisition Institute (FAI). Crunch time for the federal acquisition workforce may come a bit later than noted above; retirement eligibility for contracting officers jumps sharply from 13 percent becoming eligible this past year to 54 percent in 2015. For government procurement, a wave of retirements could be especially critical. Contracting officers oversee about $400 billion a year in spending, and there are concerns that not enough mid-career professionals will be left to replace retirees because of budget and staff cuts in the 1990s that thinned those ranks. Ironically, many of those cuts came as a result of the National Performance Review and its efforts to streamline and flatten government. Staff shortages in the acquisition and program management fields have already been pointed to by the Government Accountability Office (GAO) and various inspectors general as the cause of cost overruns, schedule delays, and project failures and shortcomings at the Department of Homeland Security (DHS), the Department of Defense (DoD), and the Federal Emergency Management Agency (FEMA), among others. The federal acquisition workforce hardly grew at all during the past year—in stark contrast to the growth rate in contracting dollars and actions—according to recent data. OPM data analyzed by FAI showed that the number of procurement professionals in government rose less than 1 percent in FY 2006. The authors said new statistics support observations that acquisition workloads have grown larger and more complex, and agencies need to identify crucial skills, recruit and retain employees, and plan for change as the nature of acquisition work continues to evolve. The number of federal acquisition personnel has increased about 3 percent since FY 1999 while federal contracting dollars more than doubled during that same period (“Size of Contracting . . .” 2007). According to many experts, 60 percent of the federal government’s rank-andfile workforce and 90 percent of its top managers will be eligible to retire in the next decade. The nation risks losing a huge portion of government’s most precious asset—its people—along with continuity, important technical expertise, and critical institutional knowledge. But that is not the entire story. State and local governments also report a looming talent crisis of even larger proportions. In fact, the entire U.S. workforce is getting older, with record numbers of baby boomers retiring. At the same time, the next generation of American workers is a smaller percentage (16 percent) of the total population when compared to the baby boom generation that will retire (25 percent). So, as Tom Shoop noted in a recent opinion piece in Government Executive

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magazine, “The Federal government has a problem with its personnel or its workforce, or its human capital, or whatever term of art you choose . . . agencies face a crisis of epic proportions as baby boomers begin to retire” (Shoop 2007a, 70). And this problem is exacerbated by two associated issues—an increased reliance on the private sector and the challenge of recruiting new talent to the government workforce. In 1961, as government’s reliance on contractors grew, President Dwight Eisenhower cautioned against the concentration of power in the hands of the military-industrial complex. The warning against blending government and private interests remains valid—especially today. Because of efforts to downsize the federal workforce without similarly reducing its functions, a greater reliance on the private sector has become inevitable. This problem is especially telling in such areas as intelligence, defense, and IT. The Central Intelligence Agency (CIA) and many other intelligence agencies were downsized and given personnel limits during the 1990s, so they turned to contractors for staffing surges after the September 11, 2001, attacks. For example, one new Pentagon agency, the Counterintelligence Field Activity (CIFA), was established in February 2002 to coordinate Defense Department counterterrorism and counterintelligence activities. In FY 2007, CIFA was staffed 70 percent by contractors. The CIA, acting under pressure from Congress, has decided to trim its contract staffing by 10 percent to “curb what critics have decried as the growing privatization of U.S. Intelligence work” (“CIA Plans . . .” 2007, A2). Contractors currently make up about one-third of the CIA workforce. At DoD, there has been an increase in reliance on contractors to maintain operations in the past decade because DoD’s personnel have been pulled away on military duty, according to a report by GAO. DoD officials told GAO that the federal government policy of relying on the private sector for commercial services that are not inherently governmental also contributed to this increase (“GAO: DoD Relying More . . .” 2007). Following relatively constant spending from FY 1995 to FY 2000, monies going to the private sector increased 57 percent from FY 2000 to FY 2005. In this same period, the federal government’s demand for complex technology has soared. But, as the Wall Street Journal noted recently, “Washington often doesn’t have the expertise to take on new high-tech projects, or the staff to oversee them. As a result, officials are increasingly turning to contractors . . .” (“Is U.S. Government Outsourcing . . .” 2007, A1). The Journal goes on to note that while the government still buys office supplies and furniture, it now relies on others for much of its sophisticated technology work. So-called “system integrators” now pull together complex IT networks for the DoD, Homeland Security (DHS), and most other government entities—managing the project, conducting testing, and so on. DHS Inspector General Richard Skinner is quoted in the article, saying, “Our ignorance is their gain,” as he discusses oversight of a $30 billion electronic “fence” being built along the US-Mexican border (“Is U.S. Government Outsourcing . . .”

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2007, A10). Given the growing shortages of government acquisition professionals and certified project managers, the chances for cost overruns, schedule delays, and designs that don’t work increase considerably. As a result of all the above, the number of private federal contractors has grown to 7.5 million, four times bigger than the federal civilian workforce itself, according to Paul Light of New York University (“Is U.S. Government Outsourcing . . .” 2007, A10). The risk of this approach, in the words of Warren Suss, a Pennsylvania-based IT consultant, is that the government could wind up “outsourcing its brain.” The federal government is the nation’s largest employer. But over the next five years it will lose more than 550,000 employees. With this kind of turnover looming, government needs to expand the search for talent. But the market for recruits has never been more competitive, and government employers are locked in a fierce contest with the private sector. The prospect of finding a government job is similar to looking for pirate treasure: somewhat difficult to believe in, impossible to find, and hard to acquire (“Wanted: New Talent . . .” 2005, 21). The problems go deep. Less than half of respondents in recent national surveys express an interest in working for the federal government, and a much smaller number say they know how to go about applying. While the number of job applications from outside government hired at the GS-12 to GS-15 levels is increasing, the percentage of such jobs open to outside applicants has declined. With the economy strong, more recent college graduates are attracted to the greater compensation of the private sector. And the government’s lengthy and difficult job application process, including the amount of time needed to obtain security clearances, does not inspire college grads to join the federal workforce. In a recent article in the PA Times, Bob LaVigna recounts several successes in attracting retiring baby boomers from the private and nonprofit sectors to public service. One of those successes, a CPA with almost thirty years of experience in the private sector, had forgotten she had even applied to the Internal Revenue Service when she was called for an interview—more than a year later (LaVigna 2007, 7). And this was a success? Crisis or Opportunity The Chinese write the word crisis with two characters, one of which means danger and the other opportunity. Many people share the concerns outlined above about the unprecedented level of baby boomers heading toward retirement from the federal workforce. But this pending workforce crisis, this pending retirement tsunami, must also be viewed as a tremendous opportunity—an opportunity to reshape the federal government, to flatten hierarchies, to remake the way government interacts with its citizens and vice versa, and to change the culture of the bureaucracy. It is an opportunity to make government a high-performance organization, to create a more resilient workforce and to make government itself more resilient. It is an opportunity to create a twenty-first-century government driven by a twenty-firstcentury workforce. It is an opportunity that hasn’t presented itself since the Hoover

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Commission studies of 60+ years ago, and likely won’t present itself again for another generation. Consider how the world has changed in the last 25 to 30 years, since the work of the Grace Commission and the launching of the Reform ’88 initiative in the Reagan administration. The first microcomputers were just being introduced, and personal computers were mostly the realm of hobbyists. People came to work at a central office; a major role of the General Services Administration (GSA) was to manage or build the multitude of federal buildings and offices to house all those workers. Most businesses were local or within driving distance. Mobile telephones existed only as car phones for the well-to-do. Telework was largely unknown. Telework is no longer just a way to keep up with the private sector and create a flexible work environment for federal workers. It is the cornerstone of continuity of operations planning (COOP). In fact, the two terms have become so intertwined that a new word—TeleCOOP—has entered the management vernacular as the government looks toward telecommuting as a necessary way of dealing with disasters, particularly long-term emergencies such as pandemic flu, risk mitigation of human assets, and “social distancing.” Research was conducted through books and libraries. Contrast that with the world today and what the Gartner group terms “Future Worker 2015.” Long-distance travel is common. Personal computers and cell phones are ubiquitous. Telework is routine. Business partners are as likely to live on different continents as in different cities. Research reports are built with graphics, sound, and multimedia that have been gathered within minutes on the web or through electronic interactions (Gartner Group 2006). In a twenty-first-century government, human resource and management policies could become a differentiator in government’s ability to attract the best workers (regardless of where these workers live and “when” they work), and to support workers’ expectations that the same productivity, multitasking, and mobility tools with which they grew up at home should also be in the workplace. Technology cannot only be a powerful enabler of such policies, but in the twenty-first century it has already proven to be the catalyst for new business paradigms. Technology has enabled revolutionary business models and elevated citizen/ customer expectations. It has affected everything from the availability of secure communications “anywhere, anytime” (broadband and wireless), to the network phenomenon changing when, where, and how we collaborate and transact business, to rich and social media concepts (video anywhere, presence awareness and instant messaging, podcasts, wikis, blogs, shared bookmarks, etc.), changing how we experience each other and transactions. Governments must now change their business models from those of the last 50+ years to those that will characterize the twenty-first century and beyond. They must uncouple business processes and workers from their government offices, establish mobility policies, and institute programs and business practices that incorporate enabling technologies such as those noted above. They must change paradigms for:

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• The workplace, how real estate and facilities are managed, and for reducing costs • Citizen and employee productivity • Human capital management, employee recruitment, retention, career mobility, and graceful retirement • Business resiliency and mobility • Preservation of the natural environment, current fuel and energy consumption, and reducing congestion on our roads and highways • Social inclusion—how all citizens, regardless of economic status or locale (rural or urban), interact, receive services, and voice their rights • Economic development in the global marketplace and managing innovation • Healthcare—comprehensive, affordable, effective, and timely for every citizen Our next president will have an opportunity to reshape the government, public service, and the policies that limit our global competitive posture. In January 1961, President John F. Kennedy, in his inaugural address, inspired a whole generation of young people to enter public service with his call to “ask not what your country can do for you—ask what you can do for your country.” Almost fifty years later, in January 2009, our new president must rally and challenge a new generation to join him in creating a twenty-first century government. There is no reason the government cannot operate with as much speed, responsiveness, and resiliency as the private sector. In fact, there is no reason government should not be the leader when it comes to technology adoption, human capital management, and service delivery. But are such issues beginning to make their way into our presidential campaign discourse? It is to a discussion of this question that we now turn. Current Political Environment While the 2008 presidential election is still months away, there is increasing evidence that management of the federal government may actually become a key issue in the candidates’ debate. And, as Tom Shoop has noted in a recent article in Government Executive magazine, “the debate is shaping up to be not just a battle of sound bites, but a genuine discussion about how to improve the government’s underlying capacity to address the challenges facing the country” (Shoop 2007b, 50). At about the same time, John Fund of the Wall Street Journal’s online opinion journal—interviewing former Republican senator and current television actor Fred Thompson—wrote that “the Federal government’s ability to function effectively would likely be a major theme” in a Thompson campaign for the presidency. Thompson, who headed what was then called the Governmental Affairs Committee during his term in the Senate, told Fund that the next president needs to “get

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down in the weeds and fix a civil service system that makes it too hard to hire good employees and too hard to fire bad ones” (Shoop 2007b, 50). On the Democratic side of the spectrum, Senator Hillary Rodham Clinton (DNY) has co-sponsored legislation to create a U.S. Public Service Academy—the equivalent of West Point or the Naval Academy—for civil servants. The measure would dedicate $205 million to fund a 5,000-student institution aimed at producing high-quality federal employees. More recently, Senator Clinton delivered what her staff described as a major policy address at the New Hampshire Institute of Politics at Saint Anselm College. In that speech she laid out a ten-point agenda for government reform, including making it possible for virtually every government service and transaction to be paperless. So what are some of the characteristics of this new “transformed,” “twenty-firstcentury” government? The outlines are becoming clearer—but no real model has yet to be operationalized. What are some of the elements of such a government? They have been framed in our own “The Connected Republic 2.0,” as well as by former Clinton-Gore “re-inventor” Elaine Kamarck in her new book the End of Government . . . as we know it (2007), by Donald Kettl of the University of Pennsylvania in his essay “The Next Government of the United States,” and by several others—most notably from the IBM Center for the Business of Government. If one were to summarize these works, here is what one might say: • Government is being transformed by several trends: (1) the “rules of the game” are changing in human capital, financial management, and organization structure; (2) there is an increased use of performance management; (3) governments are taking market-based approaches, such as competition, choice, and incentives; (4) government is moving from business as usual to performing on demand; (5) citizens are being more engaged; and (6) governments are using collaborative networks and partnerships to deliver services and solutions (Abramson, Breul, and Kamensky 2006). • These trends—and the deep challenges facing the nation—drive government to reconfigure itself to serve the needs of its citizens in the twenty-first century. As Kettl has so ably put it: “At the core is a fundamental problem: the current conduct of American government is a poor match for the problems it must solve” (Kettl 2007, 9). Thus, Kettl notes five imperatives for the performance of government in the twenty-first century: (1) a policy agenda that focuses more on problems than on structures; (2) political accountability that works more through results than on processes; (3) public administration that functions more organically, through heterachy, than rigidly through hierarchy; (4) political leadership that works more by leveraging action than simply by making decisions; and (5) citizenship that works more through engagements than remoteness (Kettl 2007, 9). • This new, transformed, on-demand government has some different characteristics than today’s government. It is responsive, agile, resilient, flexible,

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dynamic, flatter, more connected, less hierarchical, dynamic, seamless, more personalized, and transparent. • The modern methods of policy implementation fall into three general categories: reinvented public sector organizations, government by network, and government by market (Kamarck 2007, 11). My colleagues in the Business Solutions Group have summarized this well: All of this will have a major impact on what it is like to work in the public sector. There will be a gradual evolution of new forms of coordination and control. Governments will place a premium on the skills of orchestration and facilitation and the ability to recognize the credibility and authority of sources of policy insight and advice that live outside the formal structures of the public sector. It will also involve developing new accountability methods that can match the radically dispersed and collaborative nature of public purpose work. Governments will need to make their own workplaces flatter, more connected and less hierarchical, and more in tune with the values and behavior of the talented people that need to be attracted to the public sector (Stewart-Weeks and Johnston 2007, 12).

What Should We Do? As noted earlier, the 2008 presidential candidates have begun to lay out their plans for “reforming government” and “cleaning up Washington.” Many of these ideas, however, target federal employees. Pondering the implications of a projection that almost half the civilian workforce would retire during the next two presidential terms, Rudolph Giuliani suggested in a speech at the Heritage Foundation that he would “seek to replace only half of them” (Barr 2007, D4), thus saving $70 billion a year. Others focus on government contractors. Democrat Hillary Clinton would cut 500,000 government contracting jobs and save $10 to $18 billion a year. Still others lack specificity at this early stage. Former Republican governor of Massachusetts Mitt Romney says, “Washington is broken,” and we need to “cut out the unnecessary and the wasteful” (Barr 2007, D4). Former Senator John Edwards pledges to root out waste and cronyism, and Senator Barack Obama also vows to crack down on government waste. But a few have offered up specifics and plans. As noted earlier, Senator Clinton has laid out a ten-point agenda for government reform (Clinton 2007). And Republican presidential contender John McCain has outlined a comprehensive platform for government management reforms, describing steps he would take to boost federal pay, speed firings, tie program funding to yearly evaluations, and toughen acquisition rules (McCain 2007). Following are some proposals for the cast of presidential candidates: Keep It Moving The Bush administration deserves recognition for its sustained, high-level attention to management reform and improving government through the President’s Man-

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agement Agenda (PMA). So we should continue to push for clean audits, faster closing of the government’s books, tying funding decisions to annual evaluations through the Program Assessment Rating Tool (PART), and the like (this program is covered in Redburn, Shea, and Buss 2008). Use of a red-yellow-green quarterly scorecard may have outlived its usefulness, but there should be some mechanism to monitor, report on, and compare agency performance. Do Even More In certain areas, however, we need to step up the pace. The three areas ripe for an incoming administration to focus on are e-government, transparency, and mobility. It has been twelve years since the government went online. Leaving government in 2001, the author completed an inventory of e-government initiatives and proposed where we could be in the next few years, arguing that the primary manner in which client services could be improved is through single points of access by clients to multiple sources of services, a coherent whole-of-enterprise vision of client services, electronic delivery of services and public kiosks, and one-stop shops and agency-to-agency cooperation (Balutis 2001). Sadly, we haven’t moved to e-invent or transform government and there is much to be done to make government both more service oriented as well as more citizen centric. An excellent blueprint for implementing digital government has been laid out by Robert Atkinson of the Information Technology & Innovation Foundation (Atkinson 2006); it should be “must reading” for the incoming transition team. Atkinson says that governments must think of themselves less as direct providers of e-government services and more as enablers of third-party integrators that package cross-agency information and services in user-friendly ways. The Bush administration has taken steps to make government more transparent— setting up a website to post the PART scores and results, and beginning to put financial data online. That too should be “turbo-charged” as we require government agencies to publish their budget, contracts, grants, and performance data online and in real time. Finally, agencies need to move out aggressively to make use of telework—to attract and recruit talented young people (“Mobility . . .” 2007), reduce traffic congestion and vehicle emissions, increase productivity, and make government more resilient. As mobile technologies have grown even more capable throughout recent years and the total cost of ownership of personal computers has dropped, the government must recognize the potential to benefit both the organization and the individual employee. As noted earlier, human resources and management policy could become a differentiator in government’s ability to attract the best workers—regardless of where these workers live and when they work. As the author’s daughter—four years out of college and employed by a small IT project management software firm—put it: “Work is something you do, not someplace you go.”

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Too Many Chiefs As Congress has sought to improve government management, and agency functional communities have sought to enhance their stature, we have seen a proliferation of “chiefs.” At present most agencies have a chief information officer, a chief technology officer, a chief human capital officer, a chief information security officer, a chief acquisition officer, and a chief financial officer. throw in a stray assistant secretary of administration, a director for policy and planning, and an inspector general to oversee the whole mess and one has started to slice the administrative management bologna pretty thin. Perhaps it is time to return all the management arrows to a single quiver—either beneath an undersecretary for management or perhaps, as David Walker, head of GAO, has proposed, a term-appointed chief operating officer whose only role is management operations. While we’re at it, it might be worthwhile to consider breaking out the management side of OMB—linking it up with much of OPM, GSA, the Defense Acquisition University, and parts of Treasury’s Financial Management Service—and creating an Office of Federal Management to oversee the needed dramatic reforms. A Modest Proposal Finally, there are three things an incoming president and his newly appointed director of federal management might do. First, establish a twenty-first-century Hoover Commission to rethink government today. Private sector management is dramatically different than it was 50 or 60 years ago; it’s different than it was even 10 to 15 years ago. But government is largely the same—wedded to old ways of managing its people and its processes. It is time for a fundamental rethinking of how government is organized, how it partners with the private and nonprofit sectors, how it manages its processes and its people and the like. The original bipartisan Hoover Commissions, headed by the respected former president, were appointed from 1947–49 and again from 1953–55 to find ways to reduce the number of government agencies and increase their efficiency in the post–World War II and post–Korean War periods. The commissions were composed equally of Democrats and Republicans; aided by a body of experts, they reviewed the entire federal government and made recommendations for streamlining and trimming costs. The challenges today are no less daunting, and there hasn’t been a similar broad look at our government in over fifty years. Second, commission a study with the title “Government Worker: 2015”—perhaps modeled after the excellent Gartner Group report cited earlier. Computerworld recently published its fourteenth annual “The 100 Best Places to Work in IT 2007” (Brandel 2007). Fairfax County Public Schools placed tenth, and the U.S. Postal Service came in at number 83; otherwise, no government agencies made the list. But government needs to become an employer of choice; one with well-defined

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career paths, access to the right tools and technologies, training and development programs, work/life balance, fair performance evaluation processes, and all the things that make an organization a desirable place to work. And last, but not least, provide early-out authority across government, to encourage the remaining baby boomers to retire from public service. What? Why do such a counterintuitive thing—especially given the points raised earlier? Because despite all the graphs and trend lines promulgated by credible private and public sources, the average age of government employees continues to increase. And while employee loyalty and staff retention rates in the federal government can only be envied by the private sector, a changing of the guard is long overdue. Again and again, at conference after conference, when we are asked what the government needs in order to change, the answer is not new legislation, or regulation, better systems, or another presidential initiative—although all are important. the common answer is, “We need to change the culture.” And to change the culture, we need to change old thinking, old ways of doing business, old management styles. We need to change many of the senior people. It is time for them to go. It is time for them to go so that a new generation can take root and begin to lead the government to a more mission-oriented, solution-minded, enterprise-wide approach to current challenges. This new generation is more open to information sharing and collaboration through blogs or wikis—more of a Web 2.0 approach. Don Tapscott, co-author of Wikinomics: How Mass Collaboration Changes Everything (2006) dubs this “the Net Generation” and “the Wiki Workplace” (“An Interview . . .” 2007). Many of these new recruits will be first- and second-generation Americans; many will be women and minorities. Again, this is an opportunity to embrace multiculturalism in a connected, integrated, federal government community. Conclusions The next president will face great challenges: continuing the war on terror, increasing economic competition from emerging world powers like China and India, rising energy costs, environmental concerns, and the enormous expense of Social Security, Medicare, and Medicaid for the baby boom generation. The budget pressures will be immense. But of equal importance is the fact that this will require a twenty-firstcentury government, a transformed on-demand government—responsive, resilient, flatter, more connected, seamless, and more transparent. References Abramson, Mark D., Jonathan D. Breul, and John M. Kamensky. 2006. “Six Trends Transforming Government.” Washington, DC: IBM Center for the Business of Government, Special Report Series. Atkinson, Robert D. 2006. “Turbo-Charging E-Government.” Public CIO (June/July): 39–45.

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Balutis, Alan P. 2001. “E-Government 2001.” Public Manager (Spring and Summer). Barr, Stephen. 2007. “The Candidates Sound Off on Government Jobs.” Washington Post, June 4, D4. Brandel, Mary. 2007. “The 100 Best Places to Work in IT 2007.” Computerworld, June 18. “CIA Plans Cutbacks, Limits on Contractor Staffing.” 2007. Washington Post, June 11, A2. Clinton, Hillary. 2007. “Remarks on Government Reform.” At Institute of Politics, St. Anselm College, New Hampshire, April 13. “GAO: DoD Relying More on Contractors.” 2007. Federal Computer Week, May 21. Gartner Group. 2006. “Future Worker 2015: Extreme Individualism.” Washington, DC: Gartner Group Consultants. “An interview with ‘Wikinomics’ author Don Tapscott.” 2007. www.fcw.com, May 7. “Is U.S. Government Outsourcing Its Brain?” 2007. Wall Street Journal, March 30, A1. Kamarck, Elaine C. 2007. The End of Government . . . As We Know It: Making Public Policy Work. Boulder, CO: Lynne Reinner. Kettl, Donald F. 2007. “The Next Government of the United States: Challenges for Performance in the 21st Century.” 2008 Presidential Transition Series. Washington, DC: IBM Center for the Business of Government. LaVigna, Bob. 2007. “The Search for Talent: Attracting Baby Boomers to Govt.” PA Times, March 7. McCain, John. 2007. “Remarks on Government Management Reforms.” In Oklahoma City, Oklahoma, May 21. “Mobility Cited as Key to Recruiting Top Science Talent.” 2007. Government Executive, May 9. Redburn, F. Stevens, Robert J. Shea, and Terry F. Buss, eds. 2008. Performance Government and Budgeting. Armonk, NY: M.E. Sharpe. Shoop, Tom. 2007a. “People Problem.” Government Executive, May 1, 70. ———. 2007b. “Running Against Dysfunction.” Government Executive, April 15, 50. “Size of Contracting Workforce Holds Steady.” 2007. Government Executive, June 5. Stewart-Weeks, Martin, and Paul Johnston. 2007. “The Connected Republic 2.0.” March 12. “Wanted: New Talent in IT.” 2005. Federal Times, April 4, 21.

Part 7 Concluding Thoughts

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The Path of Reform Challenges and Opportunities Hannah S. Sistare

As with all reform movements, the path for those seeking to impact the public workforce has been uneven. Progress is hard fought and implementation unsure. Certainly that has been the case for the implementation of the most recent set of reforms enacted by Congress. Yet as the chapters in this book demonstrate, despite setbacks, the reform movement flourishes, ideas flow, and change happens. Today there is far-reaching understanding of the national security and other demands on government and also of government’s need to do a better job in meeting them. The energy, excitement, and creativity that drive today’s government reform movement are evident in this book. From the grandest concepts to the most detailed execution plan, these authors are clearly committed to fostering workers and workforces that are motivated and equipped to get the public’s work done. They have outlined the challenges—global, practical, and political—and their work is evidence of the opportunity for progress. Perhaps never before has there been such broad recognition of the importance of the people who do the work of government and how they are supported and managed. And among our public leaders, there is now an ongoing heightened interest in the field of human resources. A New Vision of the Process of Reform Looking behind the reform efforts described in this book, one can see that the current efforts to improve the way government accomplishes its work are different from those that preceded them. In reality, the base of our “modern” civil service system was established in 1883 with the adoption of the Pendleton Act. Though that system has been expanded, enhanced, and prescribed in numerous statutes, regulations, and processes in the intervening years, its underlying principles were established 125 years ago. The U.S. Civil Service merit system was established to replace a spoils system that left the national government with public employees unqualified for their jobs. Congressional battles with the executive over the right to appoint and remove government employees resulted in Congress’s attempt to remove President Andrew Johnson from office. By 1881, public demand for reform—spurred by the newly formed National Civil Service League, led to the enactment of the Pendleton Act 307

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in 1883. This act established the merit system, competitive examinations, and a bipartisan Civil Service Commission. Over the years the concept and reality of a lifetime career in the federal civil service took hold, greatly enhanced by significant job security, protections against non-meritbased personnel actions, the right to organize (first legislated in 1912), decent pay, and, beginning in 1920, a retirement system to provide career government workers with security in their later years. Postwar reforms made it more attractive for new college graduates to join the civil service, and in 1961 President John F. Kennedy issued a call to serve to the nation’s future leaders. The great change from a government consisting primarily of clerks to a government of technical experts, managers, and leaders was under way. Yet despite the significant reforms enacted in 1978, at the beginning of the twenty-first century civil service policies and practices were still better suited for a government with predominantly clerical functions. The Civil Service Act of 1978 was the result of a hard fought reform movement led by individuals who saw the need to make government more responsive and better equipped to deal with new world challenges. The cold war, emerging global economic competition, technological and scientific advances all increased the need for new skills and experience. The 1978 reforms created the Office of Personnel Management and several new oversight organizations, replacing the old Civil Service Commission. Many of the more visible reforms increased the protections of the merit system. Many others aimed to accomplish the same purposes of the reforms enacted in 2002, including a new emphasis on performance and more flexible, less rule-bound systems. It established the Senior Executive Service, designed to be an elite group of mobile leaders, motivated by rewards for performance and results. As with the Pendleton Act, the 1978 law was followed by a period during which some of the reforms took hold and were enhanced, and others were more difficult to implement. But again, once that effort was completed, the job was considered done and reformers moved on to other issues. Visionaries such as Paul Volcker recognized from their own experience in government that the job was far from “done.” He was a member of the federal workforce during the period of the 1978 reforms and was appointed chairman of the board of the Federal Reserve in 1979. When he left that position in 1987, one of his first actions was to assemble the bipartisan National Commission on the Public Service, made up of experienced government leaders. What became known as the first Volcker Commission undertook a detailed examination of the federal civil service and issued extensive recommendations. Yet it was ten years before there was sufficient enthusiasm for the enactment of far-reaching change. National Commission on the Public Service 2001–2002 The case for the present-day reform agenda was made by the second Volcker Commission in its 2002 report, Urgent Business for America: Revitalizing the

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Federal Government for the 21st Century (see the summary of the 2002 National Commission on the Public Service recommendations below). The commission was assembled by Paul Volcker and the Center for Public Service at the Brookings Institution in early 2001 because Volcker and the center’s director, Paul Light, sensed readiness for change—even in the months preceding 9/11—and moved quickly to capture it. The commissioners who agreed to serve were veteran government and private sector leaders—Democrats and Republicans—who were united in an effort that they saw as critical to the ability of government to fulfill its responsibilities. The commission’s recommendations focused particularly on the importance of the organization of government, attracting and supporting the necessary leadership, and improving government operations to allow government to attract, retrain, and make the optimum use of the talent for the workforce (National Commission on the Public Service 2003). A Case Study for Twenty-First-Century Reform The Department of Homeland Security was created as the commission did its work. It serves as something of a case study to support the commission’s recommendations for change and to demonstrate potential pitfalls as reforms are adopted. The commission’s recommendations for the reorganization of government stemmed from its conclusion that government performance would be enhanced by an organizational focus on mission. It envisioned a limited number of mission-centered departments made up of smaller operating units with considerable independence of operating authority. The Department of Homeland Security, created in 2002, embodied several of the commission’s recommendations: it combined missions then spread across government into a single organization; it put a focus on performance; and it elevated the role of human capital leadership both at the new department and government-wide. As the commission anticipated, it would take time and considerable effort for such a major reorganization to bring about performance benefits. The transition to the new department was stymied by the failure to enact reforms in the appointments and leadership process. The ratio of political appointees to career employees was high; the problems with the appointments process grew; and layers separated top policy leaders from top career leaders. Beyond that, the caution that several dysfunctional agencies do not combine into a high-functioning one was proven many times over. The performance management and pay system envisioned for the new department, with its roots in the 1978 reforms, met much resistance, and the degree to which the system will be implemented is uncertain. Key Reform Issues Going Forward Several of the issues described in this book are strong candidates to lead the human resources reform agenda going forward.

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The first is the multisector workforce. Never has such a wide-scale change taken place in the public workplace with so little understanding of how to do it well. While more or less of the government’s work may be done by third parties over time, the multisector workforce is now a permanent part of how government’s work is done, and its processes are clearly in need of administrative and management reform. As a first step, policymakers need to develop a consensus as to which core competencies the federal workforce should retain and which are appropriately performed by workers in other sectors. The next is performance management. Despite the uncertain future of the systems partially developed and implemented at the Department of Homeland Security and the Department of Defense, the right performance management system will enhance both the workforce and what it can accomplish. The third issue of importance, arguably the one on which all else rests, is talent management, the need to improve how and where government will get the talent it needs. Despite several years of effort, this problem remains unresolved. The challenges extend from getting the new college graduate in the door and on the job, all the way to placing highly qualified individuals in government leadership posts and treating presidential appointees with respect throughout the appointment process. A fourth issue—one that was a key focus of the Volcker Commission’s 2003 recommendations—is the organization of government. Despite a very rocky start with the Department of Homeland Security, the underlying benefit of identifying and focusing on key government missions still stands and Homeland Security has provided reformers with many lessons in how to do it better. The federal government has daunting tasks and limited resources. It must focus its efforts as effectively as possible. Lessons for the Challenges and Opportunities Ahead The experience and insights of the authors of this book have provided us with lessons for reform efforts ahead. Lessons First, we must make the reform effort ongoing. Sustain the effort. Creative approaches and efforts should never rest—the federal government should be a leader, not a distant follower, in utilizing strategic human resources to improve management and results. Second, it is important that we take the time to understand and work with the culture of the workforce and workplace. Lay the groundwork with all those affected. Meaningful change requires it. Third, meaningful change requires the trust of those affected. They must believe it is fair, justified on the merits, and motivated by the general good.

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Challenges We must find accommodation between retention of the merit-based system and the imperative to have the workforce in place at the time necessary to do the job. Procedures instituted over the last 125 years to assure a merit-based system today make the system too process-bound to be responsive or attractive to today’s workers. This is one of many reforms that will benefit tremendously from a reduction in political partisanship. Today, partisanship is so intense that federal workers and the public at large find it difficult to trust the motivations of those championing change. Opportunities As Paul Volcker said in opening the second National Commission on the public Service, “there is an excitement in the air” created by the knowledge that the tools and means to improve public service are at hand and that the desire to continue in that great tradition has captured the imagination and energy of academics, practitioners, and policymakers. The chapters in this book are strong evidence of this trend and the opportunity it provides for positive change. Appendix: Recommendations of the National Commission on the Public Service,1 2001–2002 The Organization of Government Fundamental reorganization of the federal government is urgently needed to improve its capacity for coherent design and efficient implementation of public policy. 1. The federal government should be reorganized into a limited number of mission-related executive departments. 2. the operating agencies in these new executive departments should be run by managers chosen for their operational skills and given the authority to develop management and personnel systems appropriate to their missions. 3. The President should be given expedited authority to recommend structural reorganization of federal agencies and departments. 4. The House and Senate should realign their committee oversight to match the mission-driven reorganization of the executive branch. Leadership for Government Effective government leadership requires immediate changes in the entry process for top leaders and the long-term development of a highly skilled federal management corps.

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  5. The President and Congress should develop a cooperative approach to speeding and streamlining the presidential appointments process.   6. Congress and the President should work together to significantly reduce the number of executive branch political positions.   7. The Senior Executive Service should be divided into an Executive Management Corps and a Professional and Technical Corps.   8. Congress should undertake a critical examination of “ethics” regulations imposed on federal employees, modifying those with little demonstrated public benefit.   9. Congress should grant an immediate and significant increase in judicial, executive, and legislative salaries to ensure a reasonable relationship to other professional opportunities. 10. Congress should break the statutory link between the salaries of members of Congress and those of judges and senior political appointees. Operational Effectiveness in Government The federal workforce must be reshaped, and the systems that support it must be rooted in new personnel management principles that ensure much higher levels of government performance. 11. More flexible personnel management systems should be developed by operating agencies to meet their special needs. 12. Congress and the Office of Personnel Management should continue their efforts to simplify and accelerate the recruitment of federal employees. 13. Congress should establish policies that permit agencies to set compensation related to current market comparisons. 14. Competitive outsourcing should follow clear preset standards and goals that advance the public interest and do not undermine core competencies of the government. Note 1. The commission members are: Paul A. Volcker, Chairman, and former Chairman U.S. Federal Reserve Board Charles Bowsher, former Comptroller General of the United States Bill Bradley, former U.S. Senator from New Jersey Frank C. Carlucci, former Secretary of the U.S. Departments of Defense and Health,   Education and Welfare Kenneth M. Duberstein, former White House Chief of Staff Constance Horner, former Director, U.S. Office of Personnel Management Franklin D. Raines, former Director, U.S. Office of Management and Budget Richard Ravitch, former Chair, New York State Urban Development Corporation and   Chair New York Metropolitan Transportation Authority

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Robert E. Rubin, former Secretary of the U.S. Treasury Donna E. Shalala, former Secretary of U.S. Department of Health and Human Services Vin Weber, former Member U.S. House of Representatives

References National Commission on the Public Service. 2003. Urgent Business for America: Revitalizing the Federal Government for the 21st Century. Washington, DC: National Commission on the Public Service. Available at www.napawash.org/si/PDFs/VolckerJan03. pdf (accessed 1/15/08).

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About the Editors and Contributors

Alan P. Balutis is a Distinguished Fellow and Director, North American Public Sector for Cisco Systems’ Business Solutions Group. Most recently, he was President and Chief Executive Officer, Government Strategies, of a leading market research firm, INPUT. Before that, he served as COO of a small minority-owned firm. From 2001 to 2003, he headed a major public sector IT industry association, the Industry Advisory Council (IAC), as well as its parent group, now known as the American Council for Technology. Balutis is a founding member of the Federal CIO Council. He spent his twenty-eight-year federal career at the Department of Commerce, where he headed its management and budget office and was its first chief information officer, and at the Department of Health, Education and Welfare (now the Department of Health and Human Services). Balutis is a five-time Federal Computer Week FED 100 winner, and a member of both the Government Computer News and Federal Computer Week halls of fame. He is also an Academy Fellow. Douglas A. Brook is professor of public policy and director of the Center for Defense Management Reform in the Graduate School of Business and Public Policy at the Naval Postgraduate School. In the George H.W. Bush administration, he served as Assistant Secretary of the Army (Financial Management) and as Acting Director of the Office of Personnel Management. Brook holds a PhD in Public Policy from George Mason University and MPA and BA degrees from the University of Michigan. Terry F. Buss, PhD, is distinguished professor of public policy at the Heinz School of Public Policy and Management at Carnegie Mellon University in Australia and immediate past program director at the National Academy of Public Administration (NAPA). He has held positions as: Dean, School of Policy and Management, Florida International University; Policy Director, Community Development and Planning, U.S. Department of Housing and Urban Development; Senior Policy Analyst, Congressional Research Service; Senior Strategy Advisor, World Bank; Senior Policy Advisor, Council of Governors’ Policy Advisors; project director for U.S. Information Service and U.S. Agency for International Development in ten countries; director of policy research centers at Ohio State, Youngstown State, and University of Akron; director of public management departments at 315

316

About the Editors and Contributors

University of Akron and Suffolk University. He was also a two-time Fulbright Scholar in Hungary. Joan M. Dodaro is a senior advisor at the Academy. She has served in the Senior Executive Service; and as Assistant Comptroller General for Operations, and Deputy Assistant Comptroller General for Human Resources at the Government Accountability Office. Elwood F. “Ed” Holton III, EdD, MBA, is the Jones S. Davis Distinguished Professor of Human Resource, Leadership and Organization Development in the School of Human Resource Education and Workforce Development at Louisiana State University where he coordinates their BS, MS, and PhD degree programs in Human Resource and Leadership Development. In 2004, he was inducted into the International Adult and Continuing Education Hall of Fame in recognition of his career-long contributions to the field. In 2002, he was named the Outstanding HRD Scholar by Academy of Human Resource Development, one of the most prestigious scholarly awards in the field. His research focuses on strategic human capital development, workforce development policy, analysis and evaluation of organizational learning and performance systems, improving learning transfer systems, management and leadership development, and HRD policy and strategy. Patricia Cornwell Johnson is a project director at the National Academy of Public Administration. She served in the Senior Executive Service; and as Director, Office of Human Resources, U.S. Equal Employment Opportunity Commission. Johnson has also held positions with Washington Metropolitan Area Transit Authority (WMATA); Labor Relations Counsel, McDonald’s Corporation; Regional Field Attorney, National Labor Relations Board. Cynthia L. King is assistant professor of management communications and associate director of the Center for Defense Management Reform in the Graduate School of Business and Public Policy at the Naval Postgraduate School. She studies the interaction between language and influence in public and private organizations. Prior to obtaining her PhD, she held positions in operations and sales management in high-tech consulting firms in Seattle, Washington. King holds a PhD in communications and an MS in technical communications from the University of Washington. Alethea Long-Green is a program area director of human capital studies at the Academy. She is a former Director of Human Capital Planning and Management, U.S. Department of Commerce; Director of Human Resources, Chief of the Workforce Effectiveness Division, U.S. Patent and Trademark Office; President, Strategic Technical Resources, Inc.; Vice President, Tech International, Inc.; and a consultant with various contractors to the Department of Defense.

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Sharon H. Mastracci is an assistant professor in the College of Urban Planning and Public Affairs’ program in public administration at the University of Illinois in Chicago. She studies occupational segregation by gender, gendered dynamics in the workplace including public and nonprofit workforce diversity initiatives, personnel management strategies involving nonstandard working arrangements, and emotional labor in public sector jobs. She is the author of Breaking Out of the Pink Collar Ghetto: Policy Solutions for Non-College-Educated Women (2004). She is also co-author of Emotional Labor: Putting the Service in Public Service (2008), a theoretical and empirical examination of the demands placed upon public servants to do their jobs through management, control, or influence over their own and others’ emotive states. Laurie J. May is a project director at the Academy. She previously served as the Director of the Organizational Management and Integrity Staff at the U.S. Environmental Protection Agency. As the Program Management Officer for the Superfund, solid waste, Brownfields, chemical emergency preparedness and prevention, oil spill, and underground storage tank programs, May directed a staff and provided organizational leadership and policy direction for the full range of management issues, including financial integrity, fraud prevention, organizational and management improvement, human resources management, audits, and ethics. She has served as a confidential management advisor to numerous presidential appointees across the Environmental Protection Agency and is the recipient of EPA’s Excellence in Management Award. May is a Phi Beta Kappa graduate of Duke University. Bruce D. McDowell PhD, is a project director and Fellow at the Academy. He is also president of Intergovernmental Management Associates. He has held former positions with the U.S. Advisory Commission on Intergovernmental Relations, including director of government policy research. He was former director of governmental studies at the National Council on Public Works Improvement. He was director of the regional management information service at the Metropolitan Council of Governments and senior planner at the Maryland National Capital Park and Planning Commission. J. Christopher Mihm is the Managing Director for Strategic Issues at the U.S. Government Accountability Office. He leads GAO’s work on governmentwide issues designed to support the transition to a more results-oriented and accountable federal government. Strategic Issues addresses such topics as governance and federal agency transformations, budgeting and the nation’s long-term fiscal outlook, human capital management, intergovernmental issues, regulatory policy, the decennial census, and federal tax policy and administration. He is the Chair of the Board of Directors of NAPA and a Fellow at the Academy.

318

About the Editors and Contributors

Vicki A. Novak joined the Partnership for Public Service in 2006 as a Senior Consultant after working for the federal government for thirty-five years. Novak spent the last half of her career at NASA Headquarters in human resources leadership positions, the last being Chief Human Capital Officer. She served in human resources positions at the Departments of Commerce, Housing and Urban Development, and Transportation. Novak received many awards, most notably Presidential Rank Awards for Distinguished and Meritorious Executive Service, three NASA Outstanding Leadership Medals, several NASA Exceptional Achievement Medals, and the Department of Transportation’s Secretarial Award for Meritorious Achievement. She received her BA from the University of Tennessee. Sean C. O’Keefe is Chancellor of Louisiana State University. He has held positions as Administrator, National Aeronautics and Space Administration; Deputy Director, U.S. Office of Management and Budget; Louis A. Bantle Chair in Business and Government Policy, Maxwell School of Citizenship and Public Affairs, Syracuse University; Special Assistant to the Senior Vice President for Research, Dean of Graduate School, Professor of Business Administration, Pennsylvania State University; Secretary of the Navy; Comptroller and Chief Financial Officer, U.S. Department of Defense; and Staff Director, Senate Defense Appropriations Subcommittee. Tim Rutledge, PhD, is the owner and publisher of Mattanie Press. He is a consultant, trainer, and speaker in all aspects of Human Resource Development. He is the author of the book Getting Engaged: The New Workplace Loyalty (2005). Rob Seidner is a Public Administration PhD student at the University of Illinois– Chicago. He earned his MBA from Brandeis University’s Heller School for Social Policy and Management, as well his BA from Brandeis. He entered federal service as a Presidential Management Fellow, where he specializes in human capital management. He has lectured extensively on public service careers and serves on the boards of multiple interagency committees. His previous background was in nonprofit communications and fund-raising. Myra Howze Shiplett is President of RandolphMorgan Consulting LLC. Prior to forming her own consulting firm, Ms. Shiplett was the Director of the National Academy of Public Administration’s Center for Human Resources Management. Before joining the Academy in 1999, Ms. Shiplett spent more than thirty years as a federal executive working for both the executive and judicial branches of the federal service. Michael Simpson, a service-oriented science policy integrator with thirty years’ experience in the legislative, federal, private sector, and academic arenas, is dedicated to informing policy-making by working with policymakers, the public, educators,

About the Editors and Contributors

319

and students. He is a Senior Analyst at Computer Sciences Corporation. As a professional staff member of the Congressional Research Service (a nonpartisan support agency of the U.S. Congress), a staff member of the U.S. House of Representatives, and as an American Association for the Advancement of Science Congressional Science Fellow, he has worked with members of Congress, staff, and the public, informing and facilitating the process of making and implementing science policy. Simpson received a Doctor of Environmental Sciences and Engineering from the University of California at Los Angeles. Hannah S. Sistare is a student and practitioner of public policy formation and implementation, focusing particularly on government reform. She served as Vice President of Academy Affairs at the National Academy of Public Administration, where she worked with Academy Fellows on governance projects and on outreach to the human resources community. She also managed the Volcker Commission Implementation Initiative at the Academy, a project designed to advance the goals of the National Commission on the Public Service (Volcker Commission) following the release of its 2003 report, Urgent Business for America: Revitalizing the Federal Government for the 21st Century. In 2002 she was the commission’s Executive Director, overseeing its work at the Brookings Institution Center for Public Service. Sistare is a veteran of Capitol Hill, serving from 1997–2001 as Staff Director and Counsel to the Governmental Affairs Committee for its Chairman, Senator Fred Thompson. Previously she was Chief of Staff and Legislative Director for Senator Charles H. Percy and Legislative Director to Senate Minority Leader Hugh Scott. Her Executive Branch service includes Special Council to the Secretary of Health and Human Services in 1995 and Economist at the Bureau of Labor Statistics, U.S. Department of Labor. She has taught courses in public policy and politics at American University and George Washington University. Sydney Smith-Heimbrock is a doctoral candidate in political science at Miami University of Ohio. She served with the National Academy of Public Administration during her candidate development program for the Senior Executive Service. She is currently with the Office of Personnel Management. Daniel Spikes was a Foreign Service Officer for twenty-five years. His assignments included Rome, Poznan, Budapest, Naples, and Washington, D.C. Edward H. Stephenson, Jr., is a project director with the National Academy of Public Administration, focusing on strategic human capital management. He has led and worked on Academy engagements involving human capital management at the Department of Homeland Security, the U.S. Agency for International Development, the Federal Bureau of Investigation, and the National Aeronautics and Space Administration. Prior to his work with NAPA he spent more than thirty years with

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About the Editors and Contributors

the Government Accountability Office assisting federal agencies on topics including management and human capital. He led the development of a model of strategic human capital management—which has been used as the basic framework for several federal agencies and was a key document used by the Office of Personnel Management to develop the human capital standards of success. Stephenson also spent three years on the staff of the District of Columbia Control Board where he worked with D.C.’s Human Resource Director to revise personnel policy related to mid- and senior-level District employees. Stephenson has a BS in Industrial Management from Purdue University and an MBA in Quantitative Analysis from George Washington University. John Stroup is a Research Fellow at the Federal Executive Institute. He is completing a doctoral dissertation at the University of Virginia. James R. Thompson is Associate Professor in the Graduate Program in Public Administration at the University of Illinois–Chicago, where he teaches courses in public personnel management, information technology, and public management. Prior to obtaining his PhD at the Maxwell School of Citizenship and Public Affairs at Syracuse University in 1996, he worked in local government in New York State at the city and county levels. At UIC, his research has focused on organizational change and bureaucratic reform in the public sector. He has also done extensive research and writing on the modernization of human resource management practices in government. Joseph Thompson is a project director at the Academy and President, Aequus, Inc., a management consulting firm. He is former Under Secretary for Benefits, U.S. Department of Veterans Affairs; Director, VA Regional Office, NY; and Chairman, Federal Executive Board, NY. Paul A. Volcker served in the federal government for almost thirty years during five presidential administrations. Appointed as Chairman of the Board of Governors of the Federal Reserve System by President Jimmy Carter in 1979, he was re-appointed by President Ronald Reagan in 1983. After leaving the Federal Reserve in 1987, he became Professor of International Economic Policy (now emeritus) at Princeton University and served as Chairman of the firm of James D. Wolfensohn & Co. until his retirement in 1996. Recently he has been called upon to lead an independent investigation into the Iraqi Oil for Food Program of the United Nations and a review of the World Bank’s anti-corruption efforts. He is Chairman of the Board of Trustees of the Group of 30 (G30), an international organization that examines the impact of economic and financial decisions by the public and private sectors. As Chairman of the first National Commission on the Public Service (the “Volcker Commission”) in 1988 and the second Volcker Commission in 2002, he established himself as one of the nation’s strongest advocates for the revitalization of the public service.

About the Editors and Contributors

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David M. Walker became the seventh Comptroller General of the United States and began his fifteen-year term when he took his oath of office on November 9, 1998. As Comptroller General, Mr. Walker is the nation’s chief accountability officer and head of the U.S. Government Accountability Office (GAO). Prior to his appointment Mr. Walker had extensive executive-level experience in both government and private industry. He served as a Public Trustee for Social Security and Medicare from 1990 to 1995 and was Assistant Secretary of Labor for Pension and Welfare Benefit Programs from 1987 to 1989. Mr. Walker is the author of Retirement Security: Understanding and Planning Your Financial Future (1996) and a co-author, with Brian Friedman and James Hatch, of Delivering on the Promise: How to Attract, Manage and Retain Human Capital (1998). He is certified public accountant with a BS degree in accounting from Jacksonville University and a Senior Management in Government Certificate in public policy from the John F. Kennedy School of Government at Harvard University. He has received honorary doctorate degrees from several colleges and universities, including his alma mater. He is a Fellow of the National Academy of Public Administration. Tom Wimer is the founder, President, and CEO of KnowledgeBank, Inc., one of the fastest growing providers of human resources management outsourcing and consulting services in the United States. KnowledgeBank has successfully served clients in every major industry, including commercial/private sector, not-for-profit, and state and federal government agencies. Wimer’s relentless quest for HR business process improvement ultimately led him to form KnowledgeBank and was also the driving force in his successful career as human resources leader in industry. Prior to forming KnowledgeBank, Wimer spent nearly twenty years with Exxon Mobil, General Electric, and The Dial Corporation. He was recognized as an innovator and champion of the business-oriented HR organizational model, focused on exceptional customer support, service delivery excellence, and value. Wimer holds an MS in Human Resources Management from LaRoche College in Pittsburgh, PA, and a BS in Business Management from Marshall University. Kitty Wooley completed the Council for Excellence in Government’s leadership development program in 2002. After graduation, she served two years on the Senior Fellows Board, where she helped design and implement the Senior Fellows Award Program. At the U.S. Department of Education, she co-founded Conversations With Leaders, a monthly 90-minute session that brings all interested employees into contact with effective senior leaders. In 2003, with a DHS colleague, she planned a dinner that inaugurated “Senior Fellows and Friends,” a cross-sector leadership dinner experiment that is focused on improving government. A variety of projects have enabled Wooley to hone skills in crosscutting analysis, the communication of complicated subjects to nonexperts, the connection of colleagues across agencies, leadership, and followership. During the past two years, she was privileged to assist in the development of Young Government Leaders, an interagency network that

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About the Editors and Contributors

seeks to “educate, inspire, and transform the future leaders of the Federal Government.” It is her hope that this talented incoming group, in partnership with motivated mid-career professionals, will apply the best of themselves to the transformation of government to meet twenty-first-century challenges. Ruth T. Zaplin is president of The Zaplin Group, an international organization that specializes in leader and organization development. She was a senior advisor with the National Academy of Public Administration in Washington, D.C. Prior to joining the Academy, Zaplin was a senior manager with BearingPoint’s International Public Services. Before joining BearingPoint, she served as the Executive Director of The Program for Women and Families, an organization whose mission is the reintegration of female offenders and other at-risk populations into society. She has developed and led enterprise-wide transformation plans, large-scale government reform, workforce restructuring, and work redesign initiatives in both the public and private sectors. Her background includes executive leadership of a nationally known nongovernmental organization, university-level teaching, and social science research in criminal justice. Zaplin authored Female Offenders: Critical Perspectives and Effective Interventions (1998; second edition 2007). She holds a doctorate in public administration, and is an executive coach and a member of the International Coach Federation.

Index

A Accountability most efficient organization (MEO), 49, 50t, 51 multisector workforce challenges, 26, 39–40 See also U.S. Government Accountability Office (GAO) Acquisition Federal Acquisition Regulations (FAR), 26–27, 46–47, 53 multisector workforce challenges, 26–27, 33–34, 40 staff training, 33–34 American Federation of Government Employees (AFGE), 214–15, 279, 283–84, 287 Armed Forces Communications and Electronics Association, 134 Ash, Elizabeth, 135 Assistance for Individuals Delivering for America Act (2005), 71 Atlantic Monthly, 203 B Baby boomers, 217–18, 294–95, 303 Baker, Susie, 134 Base Realignment and Closure (BRAC), 42 Best practices most efficient organization (MEO), 53–54

Best practices (continued) multisector workforce challenges, 31–35, 39–43 organizational transformation, 127–29 strategic human capital management (SHCM), 90–91 Bush, George W., 67, 94–95, 278–80, 286, 293, 300–301 Buyer’s job market, 171, 172–73 C California earthquake (1994), 59, 60t, 67 Card, Andrew, 280 CareerBuilder, 190 Career Development Program for Foreign Service, 203–4 Central Intelligence Agency (CIA), 295 Certified Assessment of Human Resources Systems (CAHRS) assessment cycle, 261 certification, 246, 247f, 260–61 employee compensation, 248, 249f, 255–56 employee training, 248, 249f, 256 Employment and Talent Management Standard, 248, 249f, 250t employment management, 248, 249f, 254–55 human resource standards, 247–48, 249f, 250t, 251–57 labor relations, 248, 249f, 256–57 model overview, 249f model process, 246, 247f 323

324

Index

Certified Assessment of Human Resources Systems (CAHRS) (continued) operations, 249f, 253–54 peer review, 246, 247f, 260–61 readiness review, 246, 247f, 258–59 research overview, 81, 245–46 self-assessment, 246, 247f, 259–60 standards validation, 246, 247f, 257–58 strategic management, 248, 249f, 252–53 system-wide management, 248, 249f, 251–52 work environment, 248, 249f, 256–57 Chief Human Capital Officer (CHCO), 99, 100, 108, 142 Chief Human Capital Officer (CHCO) Council, 16, 18, 142 Chief Human Capital Officers Act (2002), 97, 127 Civil Rights Act, Title VII, 80 Civil Service Commission, 307–8 Civil Service Reform Act (CSRA) (1883), 3–4 Civil Service Reform Act (CSRA) (1978), 4, 147, 148, 277, 308 Clinton, Bill, 3, 278, 293 Clinton, Hillary Rodham, 299, 300 Columbia Accident Investigation Board (CAIB), 108–9 Columbia space shuttle, 108–9 Communication strategy, 35 Community Security Act (2004), 71 Comptroller General, 17 Computer Sciences Corporation (CSC), 234, 236–37 Concession employees, 31 Contingency theory, 90–91 Contingent work arrangements. See Nonstandard work arrangements (NSWA) Contracting officer (CO), 46, 47, 48 Contracting officer technical representative (COTR), 40 Contract workers, 29, 31 Conversations About Leading (CAL), 138–139, 142 Cooperating associations, 31

Cooperative Environmental Study Unit (CESU), 31 Council for Excellence in Government, 134, 138 Counterintelligence Field Activity (CIFA), 295 Customer contact, 180 D Data-driven human capital decisions human resource “dashboard,” 268–69 importance of, 264–65 organizational processes, 265–66 program evaluation, 263–64 research overview, 8, 263 service level agreement (SLA), 266–68, 269 Defense Special Weapons Agency, 234 Defense Technology Security Administration, 234 Defense Threat Reduction Agency (DTRA) agency background, 234–35 agency challenges, 235–36 Blue Ribbon Panel (BRP), 236–37 Computer Sciences Corporation (CSC), 234, 236–37 organization chart, 235f Points of Contact (POC), 236–37 programming, planning, budgeting, and execution (PPBE) system, 237, 241n5 program objectives memorandum (POM), 237, 241n5 research overview, 7–8, 234 strategic workforce plan (SWP), 236–41 Director General of the Foreign Service, 204 Director of National Intelligence (DNI), 132, 133, 203–4 Disaster Credit Management System (DCMS), 58, 67, 68 Disaster Loan Program (SBA) California earthquake (1994), 59, 60t, 67 economic injury loan, 55 Florida hurricanes, 56–57, 59, 60t

Index Disaster Loan Program (SBA) (continued) Gulf Coast hurricanes (2005), 55–67 loan process application costs, 63 closing, 59 collection, 59 disbursement, 59, 65 intake, 57–58 loan servicing, 59 loss verification, 58–59, 63, 64f outreach, 57–58 underwriting, 59 loan provisions, 55, 73n3 mitigating circumstances agency reorganization, 66–67 disaster preparation, 67 information system capacity, 67 loss verification restructurization, 67 physical disaster loan, 55 policy options National Guard model, 72, 73n13 privatization, 67, 69 process automation, 68–69 process reengineering, 69 reserve corps, 69–70 tax incentives, 70–72, 73n11 policy recommendations, 72–73 research overview, 5–6, 55–57 surge capacity, 59–61, 62t, 63, 64f, 65–67 productivity, 63, 64f, 65–66 staffing, 60–61, 62t, 63 Disaster Recovery Center (DRC), 56–58, 61, 63, 65–66, 68, 73n7 Diversity Advisory Council, 135 Dow Jones Industrial Average, 77

325

Employee retention/engagement achievement recognition, 182–83 buyer’s job market, 171, 172–73 differentiated workforce, 173–75 employee compensation, 175–76 employee exit, 170 engagement defined, 172 engagement elements, 178–79 flexible working conditions, 179–80 individual learning, 179–80 customer contact, 180 mentors, 180 showcases/displays, 180 skunk works, 180 key-employee criteria, 174–75 loyalty, 171 managerial role, 176–77 mission statement, 178–79 older workers, 183 performance differentiation, 180–81 research overview, 170 retention interviews, 181–82 seller’s job market, 171, 184 tracking talent, 175 vision statement, 179 Employee support, 51–52 End of Government, The (Kamarck), 299 Environmental Protection Agency (EPA), 133 Equal Employment Opportunity Commission (EEOC), 16 Europe. See International leadership competency Executive coaching, 124–27 Executive core qualifications (ECQs), 206, 211, 212n4

E F Earned Income Tax Credit (EITC), 71 Edwards, John, 300 E-government, 301 Eisenhower, Dwight, 295 Employee Advisory Council (EAC), 85 Employee compensation, 175–76, 248, 249f, 255–56 See also Paybanding demonstration projects

Facebook Marketplace, 239, 242n9 Federal Acquisition Institute (FAI), 294 Federal Acquisition Regulations (FAR), 26–27, 46–47, 53 Federal Activities Inventory Reform (FAIR) Act (1998), 45, 48, 52–53 Federal Aviation Administration (FAA), 139

326

Index

Federal Career Intern Program (FCIP), 197 Federal Emergency Management Agency (FEMA), 56–57, 58, 69, 72, 78, 194, 294 Federal Executive Institute, 207 Federal Human Capital Scorecard (FHCS), 15, 20 Federal Mediation and Conciliation Service (FMCS), 172, 287 Federal Vacancies Reform Act (1998), 192 Florida hurricanes, 56–57, 59, 60t Foundations, 31 Frenz, Mike, 140 Friel, Brian, 140 Full-time equivalent (FTE) employees, 38 G GAO Human Capital Reform Act (2004), 81 GAO Personnel Act (1980), 80 General Schedule (GS), 20, 79, 80, 147, 148, 150, 153, 168, 168n2 General Services Administration (GSA), 297 Giuliani, Rudolph, 300 Governance structure, 27, 42–43 Government College Relations Council (GCRC), 185, 193–99 Government Ethics Reform Act (1989), 192 Government Executive, 132, 140, 294–95, 298 Government Performance and Results Act (GPRA) (1993), 3–4, 91, 263 Government transparency, 301 Green rating, 86, 98 Gulf Coast hurricanes (2005), 55–67, 77–78 H Hallett, Stephanie, 135 High-performance work systems (HPWS), 87–88 Hiring process, 186–93 Hiring Tool Kit, 18

Hiring trends, 218–19 Hispanic Americans, 18–19 Homeland Security Act (2002) access control, 280–81 content control, 282–83 enactment, 279–80 human capital management innovation, 279–89 labor unions, 280, 281, 282–85, 287–89 public-priority alignment, 283–85 Hoover Commission, 296–97, 302 Human capital, 27, 41 Human Capital Assessment and Accountability Framework (HCAAF), 96, 240–41, 266, 267t Human capital challenges leadership, 14–16 organizational culture, 14, 19–20 recruitment, 14, 18–19 research overview, 4–5, 13–14 strategic human capital planning (SHCP), 14, 16–17 Human capital crisis e-government, 301 employment issues, 292–93 government transparency, 301 impending crisis, 293–96 political environment, 298–300 reform opportunity, 296–98 reform recommendations, 300–303 research overview, 9, 292–93 retirement trends, 293–95, 303 telework, 297, 301 Human Capital Operations Plan, 288 Human capital reform case study, 309 challenges, 311 government organization, 310 key reform issues, 309–10 lessons, 310 multisector workforce, 310 new vision, 307–8 opportunities, 311 performance management, 310 recommendations, 308–9, 311–12 talent management, 310 Human capital theory, 78, 88–89

Index Human resources assessment. See Certified Assessment of Human Resources Systems (CAHRS) I Information technology (IT) human capital crisis, 295, 297, 301 most efficient organization (MEO), 46, 49 U.S. Government Accountability Office (GAO), 82 Intellectual capital, 89 Intergovernmental Personnel Act (IPA) (1970), 237, 241n6 Internal Revenue Service (IRS) Disaster Loan Program (SBA), 58 networked leadership models, 139 nonstandard work arrangements (NSWA), 216, 224–25 recruitment, 187, 190 International Association of Fire Chiefs, 71 International leadership competency competency theories, 202–6 consortium research, 206–12 research overview, 7, 202 International Time Recorder Company, Ltd., 181–82 J Jacobson, Don, 139 Johnson, Andrew, 307–8 K Kamarck, E., 299 Kennedy, John F., 308 Kleeman, Roz, 140 L Labor’s Effective Advocates for Development (LEAD), 133 Labor unions Homeland Security Act (2002), 280, 281, 282–85, 287–89

327

Labor unions (continued) human resources assessment, 248, 249f, 256–57 most efficient organization (MEO), 52 nonstandard work arrangements (NSWA), 214–15 See also specific labor union Leadership executive coaching, 124–27 human capital challenges, 14–16 organizational transformation, 114, 115–18, 124–27 See also International leadership competency; Networked leadership models Legal structure, 27, 42–43 Letter of obligation (LOO), 46, 48, 54 Line of sight, 19 Lowey, Nita, 71 M Managerial role, 34–35 Managerial training, 32–33 McBride, Christian, 139 McCain, John, 300 Megatrends (Naisbitt), 133 Mentors, 180 Merit System Principles, 188 Merit System Protection Board (MSPB), 192 Microsoft Corporation, 214 Mihm, Chris, 140 Miriam’s Kitchen, 135 Mission statement, 178–79 Most efficient organization (MEO) accountability, 49, 50t, 51 agency challenges, 46–53 agency modification, 52–53 best practices, 53–54 employee support, 51–52 establishment, 46–49 labor unions, 52 letter of obligation (LOO), 46, 48, 54 organizational structure, 45–46 research overview, 5

328

Index

Multisector workforce challenges accountability, 26 acquisition, 26–27 acquisition staff training, 33–34 best practices, 31–35 communication strategy, 35 governance structure, 27 human capital, 27 legal structure, 27 management models, 28–31 managerial role, 34–35 managerial training, 32–33 organizational culture, 28 research overview, 5, 25–26 social equity, 27–28 values, 27–28 See also National Aeronautics and Space Administration (NASA) N Naisbitt, J., 133 National Academy of Public Administration (NAPA) Center for Human Resources Management (HRM) Center, 4 data-driven human capital decisions, 265 Disaster Loan Program (SBA), 56–57, 68, 73n6 international leadership, 207 most efficient organization (MEO), 46, 52 multisector workforce challenges, 25–28, 37–44 networked leadership models, 134 nonstandard work arrangements (NSWA), 215 publications, 37–39 strategic human capital management (SHCM), 92t, 93 National Aeronautics and Space Administration (NASA) human capital challenges, 18–19 multisector workforce challenges accountability, 39–40 acquisition, 40 best practices, 39–43

National Aeronautics and Space Administration (NASA) multisector workforce challenges (continued) governance structure, 42–43 human capital, 41 legal structure, 42–43 management, 37–39 organizational culture, 43 recommendations, 43–44 social equity, 41–42 values, 41–42 nonstandard work arrangements (NSWA), 224 strategic human capital management (SHCM) green rating, 86, 98 human resource transformation, 108 implementation events, 108–9 Strategic Human Capital Implementation Plan (SHCIP), 100–101, 105, 106–7t strategic human capital planning (SHCP), 99–101, 102–4t, 105, 106–7t, 108 success factors, 109–10 National Association of Agriculture Employees (NAAE), 287 National Association of Colleges and Recruitment, 194 National Civil Service League, 307–8 National Commission on the Public Service 2001–2002, 192, 308–9, 311–12 National Defense Authorization Act (1995), 148 National Guard, 72, 73n13 National Institute for Standards and Technology (NIST), 148, 149t, 151t, 154, 155t, 156t, 157, 158t, 159t, 160, 161t, 162–67 National Institutes of Health (NIH), 46, 48, 49 National Journal, 140 National Labor Relations Board (NLRB), 52 National Leadership Council, 34 National Oceanographic and Atmospheric Administration, 148

Index National Park Service (NPS), 26, 28, 29t, 30–35 National Performance Review, 278, 294 National Security Personnel System (NSPS), 147, 148, 238, 242n7, 288–89 National Treasury Employees Union (NTEU), 283, 287 National Volunteer Fire Council (NVFC), 71–72 Naval Air Warfare Center Weapons Division (China Lake, California), 148, 149t, 151t, 154, 155t, 156t, 157, 158t, 159t, 160, 161–67 Networked leadership models current trends, 133 leader recommendations, 141–42 networked groups, 133–41 networking generation, 132–33 networking value, 131–32 research overview, 6, 131 Nonstandard work arrangements (NSWA) contingent work arrangements, 219–20, 221f, 222 hiring trends, 218–19 labor unions, 214–15 personnel costs, 225–28, 229f, 230, 231f policy recommendations, 232 research overview, 7, 214–17 retirement trends, 217–18 succession planning, 215–19 workforce changes, 222–31 workforce characteristics, 217–19 Nuclear Regulatory Commission (NRC), 17 O Office of Capital Access (OCA), 59 Older workers, 183 On-Site Inspection Agency, 234 Organizational culture, 14, 19–20, 28, 43 Organizational transformation best practices, 127–29 executive coaching, 124–27 leadership development, 114, 115–18, 124–27 research overview, 6, 114–15

329

Organizational transformation (continued) strategic human capital management (SHCM), 114, 118–20 strategic succession management, 114, 120, 121f, 122–24, 127–29 P Partnership for Public Service, 83 Parzych, Tracy, 181–82 Paybanding demonstration projects employee satisfaction, 161t, 162 evaluation measures, 150, 153 organizational impact, 162–63, 164f, 165–67 project costs, 162, 163t project lessons, 168 project objectives, 150, 151–52t project origins, 148, 168n1 project outcomes, 153, 154, 155t, 156t, 157, 158t, 159 project overview, 149t research overview, 6, 147–48 supervisor perceptions, 159–62 Pendleton Act (1883), 307–8 Performance-based pay system, 19–20 Presidential Emergency Operations Center (PEOC), 280 Presidential Management Fellows Program (PMF), 197 Presidential Transition Act (2000), 192 President’s Management Agenda (PMA) data-driven human capital decisions, 263, 264, 266 human capital challenges, 15 human capital crisis, 300–301 strategic human capital management (SHCM), 86, 94t, 95, 99, 278 Principle of Scientific Management (Taylor), 203 Privatization, 67, 69 Processing and Disbursement Center (PDC) (Texas), 57–58, 61, 66 Program Assessment Rating Tool (PART), 263–64, 301 Prohibited Personnel Practices, 188 Public Manager, 133–34

330

Index Q–R

Quinn, Megan, 133, 134 Reagan, Ronald, 293, 297 Recruitment employee retirement rate, 185–86 Government College Relations Council (GCRC), 185, 193–99 hiring process, 186–93 human capital challenges, 14, 18–19 research overview, 7, 185 talent pipeline, 187 Red Cross, 57 Reduction-in-force (RIF), 38, 42 Request for proposal (RFP), 47 Ressler, Steve, 133, 134 Retirement trends, 185–86, 217–218, 293–295, 303 Rockefeller, Jay, 71 Romney, Mitt, 300 Royal Canadian Mounted Police (RCMP), 123 Royal Dutch/Shell Group, 122 S Saratoga Institute, 266 School for Public Affairs (Columbia University), 191 Second Life, 239, 242n8 Seller’s job market, 171, 184 Senior Executive Service (SES), 19–20, 206, 207, 308 Senior Fellows and Friends (SFF), 139–41 Service level agreement (SLA) data-driven human capital decisions, 266–68, 269 most efficient organization (MEO), 49, 50t, 51 Showcases/displays, 180 Skelly, Thomas P., 139 Skunk works, 180 Small Business Administration (SBA). See Disaster Loan Program (SBA) Small Business Development Centers (SBDC), 70

Social equity, 27–28, 41–42 Social Security Administration (SSA), 128, 186, 187, 216 Society for Human Resources Management, 266 Spahr, Adrienne, 134 Strategic human capital management (SHCM) best practices, 90–91 contingency theory, 90–91 empirical research, 87–88 government evolution agency models, 95–98 origins, 91, 92t, 93–95 human capital theory, 88–89 intellectual capital, 89 National Aeronautics and Space Administration (NASA), 98–110 organizational transformation, 114, 118–20 origins, 86–87 professional competency, 98 public sector research, 89–90 research overview, 6, 86 theoretical foundations, 86–91 Strategic human capital planning (SHCP) human capital challenges, 14, 16–17 National Aeronautics and Space Administration (NASA), 99–101, 102–4t, 105, 106–7t, 108 U.S. Government Accountability Office (GAO), 84 Strategic human resource partnership defined, 271 guidelines, 271–74 research overview, 8–9 Strategic succession management, 114, 120, 121f, 122–24, 127–29 Student Educational Employment Program (SEEP), 239, 242n10 Succession planning nonstandard work arrangements (NSWA), 215–19 organizational transformation, 114, 120, 121f, 122–24, 127–29 Supporting Emergency Responders Volunteer Efforts (SERVE) Act (2005), 71–72

Index T Tapscott, D., 303 Tax incentives, 70–72, 73n11 Taylor, F. W., 203 TeleCOOP, 297 Telework, 297, 301 Transportation Security Administration (TSA), 224–25 Trinka, Jim, 139 U University of California (UC). See Certified Assessment of Human Resources Systems (CAHRS) U.S. Agency for International Development (USAID), 135, 205 U.S. Air Force, 19 U.S. Bureau of Labor Statistics (BLS), 219–20 U.S. Civil Service, 206, 207 U.S. Coast Guard, 26, 29–30, 31–35 U.S. Department of Agriculture (USDA) Executive Potential Program, 26 international leadership, 205 nonstandard work arrangements (NSWA), 221f, 222, 224 U.S. Department of Commerce (DOC) international leadership, 205 nonstandard work arrangements (NSWA), 221f, 222 paybanding demonstration project, 148, 149t, 150, 151–52t, 154, 155t, 156t, 157, 158t, 159t, 160, 161t, 162–67 U.S. Department of Defense (DOD) Homeland Security Act (2002), 288–89 human capital challenges, 14 human capital crisis, 294, 295 National Security Personnel System (NSPS), 147, 148, 238, 242n7, 288–89 nonstandard work arrangements (NSWA), 220, 221f, 222, 227, 228

331

U.S. Department of Defense (DOD) (continued) paybanding demonstration project, 147, 148, 149t, 152t, 154, 155t, 156t, 157, 158t, 159t, 160–61, 162–67, 168n4 recruitment, 188 See also Defense Threat Reduction Agency (DTRA) U.S. Department of Education (DOE) multisector workforce, 26, 28, 29t, 30, 31–35 networked leadership models, 138, 139 U.S. Department of Energy (DOE), 222 U.S. Department of Health and Human Services (HHS) networked leadership models, 138–39 nonstandard work arrangements (NSWA), 221f, 222, 228, 229f, 230 U.S. Department of Homeland Security (DHS) human capital challenges, 14 human capital crisis, 294, 295 human capital management innovation guidelines, 286–89 legislating innovation, 277–78, 279–86 human capital reform, 309 networked leadership models, 133, 139 nonstandard work arrangements (NSWA), 220, 221f, 222 recruitment, 188 See also Homeland Security Act (2002) U.S. Department of Housing and Urban Development (HUD), 220, 221f, 227, 230, 231f U.S. Department of Interior (DOI) multisector workforce challenges, 30 nonstandard work arrangements (NSWA), 221f, 222 publications, 122 strategic succession management, 122 U.S. Department of Justice (DOJ), 216, 220, 221f, 224, 228, 229f, 230, 232 U.S. Department of Labor (DOL) networked leadership models, 133 nonstandard work arrangements (NSWA), 221f, 222

332

Index

U.S. Department of State human capital challenges, 17 international leadership, 203, 205 networked leadership models, 134, 135, 136–37f, 138, 139, 142 nonstandard work arrangements (NSWA), 221f, 222 Senior Foreign Service, 203 State Department Affinity Group, 135–36 U.S. Department of the Treasury networked leadership models, 138–39 nonstandard work arrangements (NSWA), 220, 221f, 222, 230 U.S. Department of Transportation (DOT), 221f, 222 U.S. Federal Executive Board (FEB), 185, 195–96, 199 U.S. Foreign Service, 203–5 U.S. Forest Service, 46, 48, 49 U.S. Government Accountability Office (GAO) data-driven human capital decisions, 264–65 Disaster Loan Program (SBA), 55, 67, 77–78 human capital challenges, 13–20 human capital crisis, 294, 302 human capital reform initiatives, 80–85 leadership, 84–85 organizational challenges, 77–80 networked leadership models, 134, 140 nonstandard work arrangements (NSWA), 220 paybanding, 80 strategic human capital management (SHCM), 92t, 93, 94, 95, 96t, 97t, 99, 100–101 U.S. Office of Civil Rights, 135 U.S. Office of Disaster Assistance (ODA), 55–70, 73n2 U.S. Office of Federal Student Aid (FSA), 26, 28, 29t, 30, 31–35 U.S. Office of Management and Budget (OMB) agency oversight, 3

U.S. Office of Management and Budget (OMB) (continued) Circular A-76, 45, 46–47, 53, 67 data-driven human capital decisions, 263 most efficient organization (MEO), 45, 46–47, 53 strategic human capital management (SHCM), 86, 92t, 95, 98, 99, 100, 101 U.S. Office of Personnel Management (OPM) Central Personnel Data File (CPDF), 220, 221f, 223f, 227, 228f, 229f, 230f, 231f data-driven human capital decisions, 265–66 Disaster Loan Program (SBA), 60, 67 establishment, 308 executive core qualifications (ECQs), 206, 211, 212n4 Homeland Security Act (2002), 14, 15–16, 17, 18, 277, 281, 282, 283, 286, 287 Human Capital Assessment and Accountability Framework (HCAAF), 96, 240–41, 266, 267t human capital challenges, 14, 15–16, 17, 18 human capital crisis, 293–94 international leadership, 206, 211 networked leadership models, 134 nonstandard work arrangements (NSWA), 215, 216, 220, 224, 227 paybanding demonstration projects, 148 publications, 227 recruitment, 186, 188–89 strategic human capital management (SHCM), 92t, 95, 96, 97–98, 99, 100, 101, 105 U.S. Public Service Academy, 299 USAJOBS, 18 V Values, 27–28, 41–42 Veterans Affairs (VA), 221f, 222, 230, 231f

Index Veterans Health Administration (VHA), 124 Veterans’ Preference Act, 188 Vision statement, 179 Volcker, Paul, 308–9

333

Woodrow Wilson School of Public and International Affairs (Princeton University), 191 World Bank, 135 Y–Z

W Walker, Katherine, 134 Wall Street Journal, 140, 295, 298–99 Washington Post, 191, 192, 283–84 Wikinomics (Tapscott), 303

Young Government Leaders (YGL), 133–35, 141 Young Professionals Society (YPro), 135, 136–37f, 138, 142 Zimmermann, Jackye, 138