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The skills gap is just the tip of the iceberg.

The new report from the National Academy of Public Administration, “No Time To Wait, Part 2: Building a Public Service for the 21st Century,” reinforces the importance of rebuilding the federal workforce, the theme of my recent column, “The Skills Shortage and Federal Compensation.” The problem, as summarized in the report’s Foreword by NAPA President Terry Gerton, is fundamental:

“Over time, the alignment between the government’s mission, strategy, and tactics on one hand, and the capacity of its workforce on the other, has fallen further out of sync. The result has been an accumulating series of program failures that have grown into a genuine national crisis.”

To call it a national crisis is not hyperbole. Human capital management leads the 2017 list of GAO’s high-risk areas and workforce management is integral to each of the areas on the list. GAO’s focus was limited to the skills gap. In its report, GAO concluded, “OPM and agencies have not yet demonstrated sustainable progress in closing skills gaps.” It's been on the high-risk list for 16 years.

The skills gap needs to be seen as the tip of the iceberg. Skills alone cannot produce improved performance. The Office of Personnel Management describes the problem on its website with this formula:

Performance = Capacity x Commitment

According to OPM’s website, “In a work setting, the capacity to perform means having available the competencies [skills], the resources [technology is an essential tool], and the opportunity to complete the job [empowered to make decisions]. If employees are missing these, the work will not get done and the results will not be achieved.” Commitment is synonymous with engagement.

That is central to NAPA’s argument that government needs to change “from a culture of compliance to a promise of performance.” Compliant employees do not perform at their best.

The situation is exacerbated by the exodus of experienced workers—roughly 600,000 are eligible to retire or soon will be eligible—and the slow pace of adding replacement workers. The demographics contribute to the problem.

HR Should Lead

Government has serious workforce problems. Agencies are losing institutional knowledge. NAPA stressed the need for culture change. President Trump and the Office of Management and Budget have initiated reform to make government “more efficient, effective and accountable.” The needed changes are extensive and will affect working relationships and careers. No one is likely to be surprised if managers and employees do not readily acquiesce and get on board. Converting the organizational changes into performance gains will be a challenge requiring people management expertise.

The NAPA report recognizes that “human capital reform should start with human capital professionals.”  The report also recognizes “human capital officers are frequently left out of strategic discussions at the department and agency level [mainly] because human capital tends too often to be regarded as a subsidiary check-the-box function, not an integral part of agency leadership.”

That should not be read as criticism of the HR community. The function was planned to support the regulatory mandate, complete compliance-driven tasks, and administer HR processes and systems. Being a catalyst for change has not been in the job descriptions. The view of HR shared by executives and managers will be a hurdle for gaining acceptance and respect in a new role.

The fact is HR specialists in the private sector have similar difficulty discarding the traditional role. Nonetheless, a new HR role has emerged in companies that recognize employees as valued assets.

Government should look closely at what’s unfolding in the private sector. The books and articles arguing for redefining HR started to appear a decade ago. The best are authored by experts who work regularly with senior business executives. That gives them a broader view of the linkage between workforce management and organization success.  

Two Harvard Business Review articles stand out. The first, “It’s Time to Split HR” by Ram Charan in 2014, discussed creating two units—one focused on strategy and the second on HR’s administrative work—that is similar to the Office of Management and Budget’s proposal. A year later, Charan joined with two executive advisers to present a compelling argument in “People Before Strategy: A New Role for the CHRO.” The split was not mentioned in the second article.

That new role described in the second article calls for the HR officer to meet regularly with the chief executive and chief financial officers: “The CHRO should work with the CEO and CFO to examine why the organization might not be performing well in achieving its goals.” In assessing progress, the meetings will help identify problems early and plan appropriate action steps. The authors argue “most organizational problems are people problems.” They suggest a new goal: “unleashing the organization’s energy.”  

Within agencies, the meetings presumably would be led by the top management official such as the under secretary for management. In addition to the CHCO and CFO, other functional leaders, such as chief information officers, should be at the table when the agenda involves their area. The meetings could involve contractor executives as well. Workforce plans should reflect the priorities of each agency.

OPM would be accountable for developing the people management policies, systems and practices to attract well qualified talent, support their continued growth and development, institutionalize recognition and reward practices, and commit to maintaining a work experience that contributes to employee commitment. They can also arrange for coaches to improve manager effectiveness. All of that should be organized as a Center of Excellence, staffed with experienced specialists who work as consultants to agencies.

A caveat is that the workforce problems cannot be solved without close collaboration between HR offices and leaders in other functions. Identifying core occupational competencies or needed training, for example, requires the input of experts in those functions.

Others can decide if OPM should be broken up. However, there are no similar proposals to split finance between strategy and accounting.

Wherever housed, HR’s administrative work should be organized as a service center, dedicated to efficiency and resolving employee concerns. Metrics are available to monitor performance. Team incentives based in part on customer satisfaction would be useful.

Investing in People as Assets

Recently I asked Wharton’s Peter Cappelli, “Why do you think government finds it easier to invest in new technology than in people?” His response highlighted a basic flaw in government’s workforce management philosophy. He made the simple point that technology is seen as an investment and spending on employees is seen as an administrative expense.  

It’s clearly easier to justify spending for technology because it’s expected to improve performance. With administrative expenses, leaders reluctantly agree to spend what’s necessary but usually try to limit or reduce the outlay.  

Of course, there is a long list of companies marketing software and hardware, and others ready to install it.  HR’s advocates do not have the same receptive audience.

The skills shortage and program failures fully justify investment in rebuilding the workforce and replacing ineffectual HR policies and systems. That investment will pay off for the country.  

To reiterate from the NAPA report, the investments “should start with human capital professionals.” An early step should be a literature review of best HR practices. OPM should also conduct a survey of Senior Executive Service members and managers to learn what they think of current HR practices. Those leaders are keenly aware of the shortcomings in workforce management and would have valuable insight for prioritizing the challenges. That information could then be used to plan a new HR function.