Former Tennessee Gov. Bill Haslam (R) is interviewed in Nashville in December.

Former Tennessee Gov. Bill Haslam (R) is interviewed in Nashville in December. Mark Humphrey / AP

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One State's Proven Strategy for Civil Service Reform

Under the leadership of former Gov. Haslam, Tennessee succeeded in shifting to outcomes-based management.

Former Tennessee Gov. Bill Haslam initiated civil service reform in 2011, the first year of his two-term administration, and under his leadership the initiative was a solid success that is relevant at all levels of government.  The Republican former Mayor of Knoxville was a business executive prior to entering politics. His Cabinet included a couple of former executives from large companies. That’s important to the story.

The state’s circumstances mirrored those of the federal government. Tennessee’s civil service law dated to 1939. The state was known as a laggard in moving away from archaic employment practices. When Haslam was inaugurated, 40 percent of the state workforce would be eligible to retire within five years. State hiring was mired in extended delays. Pay and promotions were based on seniority. The skills shortage, declining interest in government careers and an aging workforce portended future performance problems.

One of Haslam’s announced goals was to build a “winning” workforce.  As he commented in a speech, “Whether it’s in business, government or sports, the team with the best players wins. Unfortunately, in Tennessee state government . . . the rules don’t allow us to go out and recruit great players.”

Defining the Case for Reform

Haslam’s Cabinet undertook three initiatives that reinforced the need for reform and led to passage in 2012 of the Tennessee Excellence, Accountability and Management (TEAM) Act. 

First, each Cabinet member undertook a top to bottom review of his or her agency, asking first if there were services that could be provided more effectively and efficiently by the private sector and second, if government should be providing the service, is it being provided effectively and efficiently? In each agency ineffective employment practices were high on lists of barriers to improved performance.

Second, the deputy governor and human resource commissioner went on an employee listening tour, traveling to major cities in Tennessee to hear how to recruit and retain the best employees. Many of the practices addressed in the civil service overhaul surfaced in these meetings.

Finally, the commissioner of finance & administration (a former corporate CEO) was surprised to find that citizens were not seen as customers. He created a taskforce of Cabinet members to focus on better serving the government’s customers. They met monthly to discuss the need for change.

In combination the initiatives sent an important message—in Tennessee civil service reform was a priority and the goal was improved government performance. Over the eight years Haslam was governor, the state invested in developing that “winning” workforce. The HR commissioner is a member of the Cabinet and took the lead in planning and gaining support for new practices related to workforce management, but it was clear from the start that the governor was the champion for reform.

That was reinforced by an unusual strategy: including in the TEAM Act a requirement that state employee performance management be based on S.M.A.R.T. (specific, measurable, achievable, relevant and time-sensitive) goals and outcomes. The intent was to have a system that reinforced employee accountability.  Outcomes-based management is effectively universal in the business world. The strategy also avoids the “HR made me do it” excuse. Specifying its use in the law made it a management priority. 

After the 2012 Tennessee law was passed, the state invested three years in training and coaching managers, and in securing feedback from managers and employees to fine-tune the outcomes-based management approach. The state’s pay system was not addressed in the TEAM Act but Haslam had expressed strong support for moving away from HR practices linked to seniority. The answer was simple: the state eliminated step increases and linked performance ratings to pay increases and bonuses. 

At first the Tennessee State Employees Association opposed the law but after weeks of negotiations the group was able to secure enough amendments to support it and stood behind Haslam at the signing ceremony.

Outcomes, Accountability and Performance Management

Goal-based management is effectively universal in business, but it’s still not widely used in government, though the Office of Personnel Management website does include recently added resources related to the use of goals and outcomes. Several times in conversations public employees have told me goal setting was not practical with their jobs. There are job families where this is true; however, every employee should be able to state what they are expected to accomplish or what would be seen by a supervisor as a fully satisfactory performance. Tennessee has confirmed this can be done in government.

In the business world, consistently beating goals is important to career success. Cash rewards reinforce focusing on goals. Goal-based management is effective, however, only when employees are empowered to tackle job-related problems. A growing number of workers are self-managed. Managing with goals enables employees to show their initiative and demonstrate their value.

Goal-based management changes the understanding of accountability. The word “accountability” suggests an abstract ownership or willingness to admit mistakes. In government, it’s used frequently by political opponents as a punitive comment. References to accountability are rare in discussions of achievements.  

With goals, accountability is assumed and front-loaded. Employees know they are accountable for achieving assigned goals. That has a subtle impact on the way executives, managers and employees approach their day-to-day collaboration. When all staff members understand agency goals, are kept informed of progress or roadblocks, and understand how their work efforts contributes to achieving the goals, it changes the workplace dynamics. In Tennessee it shifted the culture to support continuous improvement.

Outcomes management also makes accountability real. In discussing and defining expected outcomes employees make an emotional commitment—ownership—to performance expectations. Their sense of job satisfaction is tied in part to their accomplishments. When they know there will be consequences—positive and negative—for meeting or surpassing expected outcomes, it makes accountability more than a politically correct word.

It was also important to highlight the ties between outcomes and the customers of the state. That carried over to internal customers as well. It reinforced the impact of agency actions on people across the state.

HR Played a Central Role

Governor Haslam launched civil service reform but the HR commissioner, Rebecca Hunter, and her staff should be credited with redefining HR’s role and conceiving new policies. Her office was focused on making “Tennessee the No. 1 state in the Southeast for high-quality jobs.” The office and members of her staff have won awards.

To support the TEAM Act, HR created a statewide four-level certification program for all supervisors to advance their leadership skills and to create a formal career ladder to move up the leadership ranks. The Level 1 certification became mandatory for people entering supervisory roles for the first time. 

Another key prompted by the listening tour was the recognition that each agency has its own workforce problems, culture and stakeholders. Creating agency-specific leadership academies, was important to the strategy. The academies grew to 26 over Haslam’s two terms in office. Today HR routinely works with agencies to solve workforce problems. This not the storied “Why We Hate HR.”

Leadership is the Key

Governor Haslam made improving the operations of state government a major focus of his administration.  Rather than freezing pay or hiring, he chose to invest in the workforce. In changing the law, he transformed government to focus on performance. 

Civil service reform is possibly the most complex of all organizational change projects. The needs and the opportunities are different in each agency. Employee and stakeholder resistance are inevitable. However, as Tennessee confirms, reform can benefit government and employees.

The federal government is confronted by workforce problems that promise to get progressively worse. The reasons are well documented. Top management leadership is required.