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Rebuilding Government’s Human Capital Should be a Priority

Too often, the argument for reform is vague or the benefits unclear; on balance employees expect to lose.

There is broad agreement the civil service system is dysfunctional. It impedes recruiting, talent management, and dealing with poor performers. It prevents agencies from being responsive to unexpected problems. It also prevents employees from fully using their abilities. The recent two-part report from the National Association of Public Administration, “No Time To Wait, Building a Public Service for the 21st Century,” solidly condemned the system. It restricts government’s performance.

But reform is a political third rail. Too often, the argument for reform is vague or the benefits unclear; on balance employees expect to lose.  

To broaden the understanding of the potential benefits, Steve Goodrich arranged a series of meetings in late June where former and current government executives could listen to Tennessee’s former Human Resources Commissioner, Rebecca Hunter, discuss the state’s workforce reform experience. The Tennessee story confirms government can become a high performance, employer of choice. It’s been a win-win for state employees and for Tennessee residents.

Anyone interested in reform, as well as those who may be skeptical, should watch the video of the discussion (https://www.napawash.org/news/watch-roundtable-on-civil-service-reform).

Tennessee’s success in transforming its workforce management strategy stands out among the several states that have initiated reform. The story is important because reform started with Governor Bill Haslam, a Republican, and his goal of building a “winning team.” As he commented in a speech, “Whether it’s in business, government or sports, the team with the best players wins.”

When Haslam began the first of his two terms in 2011, almost 40% of the state’s workforce would become eligible to retire within five years. There had been no salary increases in the prior three years. In Haslam’s two terms, each year hiring increased, salaries increased and participation in leadership programs increased. Today, 94% of state employees feel aligned with their agency’s mission and values.   

The Reasons for Tennessee’s Success

Rebecca Hunter’s comments highlight three reasons that help to explain the state’s success. First, this was Governor Haslam’s initiative. Previously he was the Mayor of Knoxville and before that a business executive. He understood the importance of a winning team and the commitment of employees, as well as the need to invest in the workforce. Civil service reform was an element in achieving the goal of better government. It was not an HR initiative as it has been in other states.

Second, the state made training and development a priority, both to make the state a more attractive employer and to make certain that employees had the knowledge and skills to perform at high levels.  Studies show developmental opportunities are essential to recruiting and retaining young employees. The goal was to create a learning organization.

Third, Hunter and her staff have been aggressive in rebuilding the state’s human capital. They made it a priority to be a valued resource to agencies that needed to address workforce problems. Helping to solve problems and satisfy their “customers” has been an overriding goal. 

The Winter Commission

There is a striking parallel between the Tennessee strategy and the recommendations in a forgotten 1993 report, “Hard Truths / Tough Choices:  An Agenda for State and Local Reform,” from the National Commission on the State and Local Public Service. The 26-member commission, led by former Governor William Winter, held hearings in six cities from a long list of witnesses.

The commission’s focus was broader than civil service reform. Their goal was “to drastically improve their [state and local public employers] capacity and performance [and] move us away from an encrusted and outmoded system of command and control and rule-bound management that emphasizes constraints and process at the expense of mission and results.” They saw “civil service paralysis” as part of a broader problem.

Three of the commission’s 10 recommendations, explained below, are relevant to federal workforce management today:

  1. Strengthen the executive leadership.
  2. Flatten the bureaucracy.
  3. Create a learning government.  

The Winter Commission believed that “the place to begin building high performance state and local government is at the top, with stronger executive leadership.” That dynamic was critical in Tennessee, where Governor Haslam led the reform effort; you cannot achieve the same results through an HR initiative alone.  

Eliminating unnecessary layers from the bureaucracy is also key. I can find only one time when a federal agency announced a plan to eliminate levels of management—the Defense Department in 2016, but the actual impact was apparently never reported. Delayering is a proven strategy in business to cut costs and empower employees to make job-related decisions.

As for creating a learning government, Tennessee made a major commitment to training and development, led by the first state Chief Learning Officer, Trish (“Doc”) Holiday. She has been recognized with a number of awards. The Commission fleshed out this recommendation with specific points:

  • Rebuild government’s human capital. This was central to Tennessee’s reform. Governor Haslam supported Commissioner Hunter in building what may be the strongest HR function in state government. HR’s accomplishments are posted each year as an annual report, and hiring has increased each year.
  • Create a new skills package. There’s widespread understanding that agencies need new skills and expertise. The Commission’s recommendation was years ahead of the current focus.
  • Create financial incentives for learning. Tennessee includes job-related competencies along with individual-performance goals in their performance management system. Ratings are linked to pay increases.
  • Encourage a new type of public manager. The transition to goal-based management was central to improving performance. The state invested three years in preparing managers effective at “coaching, benchmarking, listening, mentoring and championing” employees (the quote is from the Commission’s report.) There is a four-level Management and Leadership Learning Pyramid with over 90 hours of content to train supervisors.
  • Encourage a new style of labor-management communication. The adversarial climate between labor and management has predominated for too long, something the Winter Commission recognized. In Germany, unions have proven they can work with management to address workforce problems. Co-determination, the common reference, is closely related to the empowered performance culture that exists in organizations with profit sharing and group incentives. As the Commission argued, the top down, tight control management style of the past is antithetical to high performance.  

Time for a New Commission

The argument for reform has been made repeatedly over at least three decades. It was always “urgent business” (to borrow from the title of the second Volcker Commission report in 2003. But each time it was discussed and forgotten. It's time for a new commission, but one tied to a mandate for action. This time the need is driven by unalterable demographic trends. Government’s human capital problems are serious and in the absence of reform, will get steadily worse. Nurses, for example, should never fill in for correction officers, as was recently reported by USA Today

The authors of the NAPA report concluded, “There is no time to wait. The nation's problems are too urgent.  We need to build a human capital system that meets the needs of the nation’s 21st century government and we need to start now.” That succinctly makes the point that the answer has to be broader than civil service reform.

A similar report from the National Association of State Chief Administrators,Job One: Reimagine Today’s State Government Workforce,” argued, “as the public and private sectors battle for talent, government is falling too far behind in preparing for the workforce of the future . . . The really bad news? Across the board, states aren’t yet doing much beyond recognizing these challenges.”  The same statement could be made of federal agencies.

Across the diversity of government agencies at all levels, the problems are largely the same:  noncompetitive pay levels, an aging workforce and heavy retirements, fewer applicants, and an increasing skills gap. Experts have seen it coming for years. Legislation authorizing reform could be enacted tomorrow but years will be needed to plan, implement and prepare government’s executives, managers and employees for this new world.

The conclusions and recommendations reached years ago by the Winter Commission are relevant and could be the basis for change in federal agencies. Tennessee’s success confirms it’s a viable strategy.  Nothing in the report is ruled out for federal agencies and could provide a framework for a new commission.

But the magnitude of the crisis needs to be documented and brought to the attention of elected officials.  Accordingly, hearings similar to those supporting the Winter Commission recommendations could be facilitated by local Federal Executive Boards. Agencies could also host sessions focused on their specific human capital problems. The sessions would be similar to those now heard by the Federal Salary Council. They are also similar to the listening sessions Hunter and the Deputy Governor held across Tennessee.

Federal agencies need their own “winning teams” to address the problems confronting the nation.