The Trump administration’s ambitious plans to reorganize government highlight two core issues associated with maximizing performance. As described in guidance from White House Budget Director Mick Mulvaney, they are: 1) eliminating “barriers to hiring and retaining the workforce necessary to executive their missions” and 2) ensuring employee “performance expectations are appropriately rigorous . . . and effectively communicated." Agencies are also to review “the systems and structures currently in place . . . to support managers in managing employee performance.”
While the focus here is on maximizing employee performance, the requirement is inexorably intertwined with reducing the workforce. Logic argues for retaining the best performers and terminating the marginal employees. When the goal is to both reduce costs and improve performance, neither seniority-based layoffs or offering incentives for early retirement is the right policy.
Here’s the problem: It’s clear that government does not have the systems in place today to identify the best performers or rationalize staffing. But it’s not clear if the Office of Management and Budget fully appreciates that. A review of the systems used to manage performance, from the SES to the lowest levels, should include system design as well as barriers to their effective use. The barriers include insufficient training, workplace culture, and the absence of incentives to change behavior.
OMB’s guidance to agencies introduced two innovative (for government) requirements. One is holding managers and supervisors “accountable for managing employee performance and conduct.” The second is the establishment of “Real-Time Manager Support Mechanisms” and a “Manager Support Board” to provide advice and guidance to managers. Both represent a badly needed but fundamental change in the way agencies have handled performance management to this point. OMB has its work cut out for itself to integrate the ideas into day-to-day management.
An issue that stands out in the guidance is the emphasis on poor performers. There cannot be many who fail to meet expectations. In my experience in managing performance systems and conducting surveys of company practices, the number of poor performers rarely exceeds 2 or 3 percent. The outstanding performers are far more important. They are the focus of attention in high performance organizations.
The Revolution in Performance Management
In the private sector, performance management is undergoing a sea change, with the primary focus on providing frequent feedback and coaching. The change downplays the year-end rating—with ongoing feedback there should be no surprises—but companies always need a mechanism to identify their star performers and those who are unacceptable. There is a shift away from evaluating all employees using generic traits or dimensions, such as “teamwork,” and “communication.” Think of the new approach as coaching that’s tailored to different positions on a sports team.
Goal-based performance planning should be the basis for managing performance in every federal agency. There are a few job families where the practice does not fit—nursing and law enforcement are examples—but the practice is solidly consistent with holding employees accountable.
Every employee should be able to state in specific terms what he or she expects to accomplish. With the emphasis on metrics, the use of goals or outcomes is growing in government. The state of Tennessee, which has earned a reputation for good government, now requires employees to specify five or six “outcome” statements that are linked to agency goals and written using the SMART format (specific, measurable, achievable, realistic and time-bound).
Before Tennessee adopted the practice, performance ratings were as unreliable as those any in federal agencies: 85 percent of employees received ratings of were a 4 or 5 (5 is “outstanding”). But under the SMART system, during the most recent rating period, only 2.4 percent of employees were rated as 5; 36 percent were rated as 4. The ratings govern salary increases and the state’s employee association so far has been supportive.
The recognized best practice is relying on a combination of results and competencies—the knowledge, skills and abilities needed for high performance. Individual strengths and weaknesses are then used in career planning and workforce planning and, if necessary, could be the basis for layoffs.
Tennessee has made a strong commitment to manager and employee training, offering several online courses and webinars on performance, along with sessions on writing SMART outcomes and performance coaching. The state has proved that effective performance management is possible in government.
Pay as a Catalyst for Reform
The highest hurdle and a key to reform is likely to be replacing the General Schedule. The promise of financial rewards could be instrumental in helping managers and employees focus on achieving reform goals. Transitioning to pay for performance would also trigger improved performance.
The GS system is undoubtedly the primary barrier to hiring and retaining badly needed but high demand knowledge workers. Starting salaries and prospective career earnings are not competitive.
Added to that, the GS salary system:
- Is badly out of sync with trends in employee compensation in the nation’s labor markets
- Delays and prolongs the time needed to reorganize work units
- Cannot be administered as originally intended with current HR staffing levels
- Adds significantly to the time and cost to administer employee pay, and
- Fails to provide incentives to improve performance.
OPM adds to the problems with ineffective communication on pay issues.
The last truly comprehensive study comparing federal salaries with the pay levels for comparable private sector jobs was completed over 20 years ago. That makes pay far more contentious. Every worker wants to be paid fairly and to have their contribution recognized. The GS system is not currently designed or administered to reward good employees. But it needs to be if reform is to succeed.
Planning to Minimize Resistance
The National Geospatial-Intelligence Agency offers an excellent model for rethinking workforce management policies and systems. NGA was created in 1996 (it received its current name in 2003) and at the time, top management committed to adopting “best practice” HR policies and programs. They relied on a series of employee groups to develop those programs.
The key is management’s people philosophy—Are employees assets or costs?—and gaining employee commitment. The nuts-and-bolts of HR systems are relatively unimportant. NGA succeeded because their approach secured the “ownership” of the individuals involved and the trust of co-workers.
The NGA approach is consistent with common practice in education and healthcare organizations—when new HR policies or systems are needed, employee committees handle the planning.
Government has had too many failed or dysfunctional HR systems. Managers and employees know what’s working and what’s not. They know the impediments to improved performance. They know when a system is credible and fits their work environment. To be accepted as useful tools, manager buy-in is essential.
This is the second of two columns focused on President Trump’s executive order on government reorganization.