The Replacements

VHA grooms a younger generation to ride out the retirement wave.

At the start of this millennium, talk of an impending management crisis began to circulate in federal government. Forecasters said agencies were not equipped to meet a massive wave of retirements slated to surge through 2010. Now, eight years later, many departments still are considered ill-prepared for an exodus of seasoned employees with critical skills and knowledge.

In November, a survey conducted by global technology firm Tandberg found that most federal managers are not taking the retirement swell seriously enough, instead considering the Iraq war, the transition to a new administration, and looming health care and Social Security crises as government's most critical challenges.

But the Veterans Health Administration considers retirements one of its most pressing hurdles. With the average employee age at 48.3 years and rising, VHA has ingrained succession planning into its agencywide strategic and operational plan.

In the late 1990s, "we started to look around and realized we had an impending crisis," says Kenneth J. Clark, chairman of the workforce planning committee at VHA. "There are obviously a lot of baby boomers and not a lot of people in the pipeline ready to assume those roles."

After studying other organizations and the private sector, VHA released its first succession plan in 2001. While it has been modified since then, the strategy establishes a foundation for projected needs in hiring and knowledge retention through 2013, when 86,500 of VHA's 225,000 employees will be eligible to retire. That figure includes 90 percent of senior executives.

In fact, the entire health care industry is facing brain drain. By 2014, job openings in health care are expected to grow by 26 percent (1.8 million), twice the rate of all occupations, the Bureau of Labor Statistics reports. More than 3 million new workers will be needed by 2014 to fill the void. Like much of the industry, VHA's major workforce drivers include increased demands from an aging population. Nurses, medical officers, pharmacists and physical therapists are considered mission-critical occupations at VHA from year to year.

With so many senior executives nearing retirement, the agency is focusing heavily on knowledge transfer and leveraging technology to meet much of that need, says Joleen Clark, deputy chief of the management support office. Because much of the health care workforce is mobile, many facilities offer employees video presentations and information on topics such as long-term care, patient privacy and leadership through a content distribution network. Another facility posts podcasts to the Web.

The network "ensures consistent training and messages are received agencywide when addressing specific topics," she says. "It also allows education and training staff at the local level to use this material in face-to-face programs."

The knowledge transfer plan includes an intranet, which links every VHA facility in the country. It provides information on training and certification needed for career progression and allows mentors, employees and students to join chat rooms and ask questions, says Lawrence Bifareti, director of workforce planning and organization development.

The agency also launched a program to train and certify senior leaders to be mentors. Now every program has a link to a mentor or coach to help younger employees develop professionally.

Equally important to knowledge transfer, however, is recruiting and retaining new employees, Ken Clark says. "The preponderance of our effort over the last seven years has really focused on bringing new people in, trying to get them into the leadership pipeline and assisting them to move into higher levels of responsibility," he says. The result has been a series of leadership development programs to prepare younger workers for management roles.

Meanwhile, entrance and exit surveys have helped VHA determine what motivates the younger generation. Most employees cite advancement opportunities, benefits, job stability and the mission of serving veterans as their top reasons for staying on the job.

One of the benefits Joleen Clark believes has enticed workers is student loan repayments, which are offered in exchange for a service obligation. The agency also works with Monster, a job search firm, and the Office of Personnel Management to post vacancy announcements on USAJobs. "Younger employees access information about jobs in a very different way than I might," Ken Clark says. "We need to be responsive to that."

And, like much of federal government, VHA is placing a strong emphasis on pay for performance. Pending OPM approval, the agency plans to roll out a demonstration project for some nonbargaining workers in 2008. The system will link salary increases to annual employee performance ratings.

The agency already has a five-tier performance management system instead of the pass-fail approach many agencies use. VHA is looking to the Federal Aviation Administration, which implemented pay reform in the 1980s, as a model. But officials are proceeding with caution because FAA's system has not been free of labor-management tensions and other challenges.

Joleen Clark admits she is wary of implementing pay for performance because of its potential for subjectivity. "I could see something like this having a very negative effect on employee satisfaction," she says, "if the perception is that supervisors are not being fair to employees, or the opposite-overrating those who are barely performing to avoid complaints."

Beyond pay for performance, VHA is waiting for OPM approval on two other initiatives that would ease the sting of retirements. One is to bring retirees back to fill vacancies in mission-critical jobs without an offset to their annuities. The other is to create an emergency reserve corps that would allow retirees to return to work in the event of a national disaster. Current employees "who have their skills up to par and are generally more mobile can respond to the disaster areas," Joleen Clark says. "And the people we've brought back as re-employed annuitants can fill those slots."

With the succession plan now entering its seventh year, officials are pleased with the progress. The key, she says, is to view the plan not as a one-time process, but rather as one that develops over time. "It's a continuum in building, not what will be the flavor of the month," she says. "You really need to holistically look at the process continually every year."

More specifically, Ken Clark says, succession planning and leadership development must be a function of top officials and linked to the agency's overall strategic and operational plan. "Oftentimes, organizations find a disconnect between the workforce they're trying to find and the things they're trying to accomplish," he says. "We've made sure those two things are linked."