Federal reform efforts keep repeating the same pattern. Tennessee offers a different model

The Pay Agent report released in December may have been missed by the media, but it contained recommendations important to the goal from a June 2025 OPM memo “to establish a high-performance federal workplace culture where excellent performance is celebrated and rewarded.”

It’s an important goal, one that is consistent with the argument in a 2018 National Academy of Public Administration report, “No Time to Wait: Building a Public Service for the 21st Century.”

The NAPA report emphasized that moving to a performance culture is a “fundamental transformation” from “an obsolete human capital system to one tuned to the future.” “Transformation” is the right word. This is culture change. However, the research makes it clear, culture does not change simply because leaders announce new policies.

Federal employees have heard versions of this argument for decades. Presidents of both parties have repeatedly promised stronger performance management, better accountability and improved recognition systems. The underlying challenge has remained consistent across administrations.

It’s not a new argument. Three decades earlier, two reports from commissions chaired by Paul Volcker, “Leadership for America: Rebuilding the Public Service” and “Urgent Business for America: Revitalizing the Federal Government,” argued the civil service system is “a barrier to effective government performance.”

President Carter was the driving force behind the Civil Service Reform Act, but it limited “merit pay” to supervisors (GS-13 through GS-15). President Clinton and the National Performance Review empowered employees and recognized their achievements, but those efforts are still rarely reflected in agency goal-setting systems. The Bush administration described human capital as “a long-standing, government-wide management weakness,” but attempts to introduce change collapsed. The Government Accountability Office first cited human capital management as high risk in 2001, and it remains on the list with “progress needed.”

There is also an unrecognized problem: the Merit Systems Protection Board, the “guardian of the merit system.” When it has a quorum and the usual staff, its decisions reinforce laws that are outdated. The laws deter change at all levels of government.

The harder question is what actually produces lasting change inside government workplaces.

Tennessee offers a working example

A state may not be the same as the federal government, but all civil service systems reflect a similar work management paradigm. In the mid-2000s, Tennessee’s civil service system, largely unchanged since the 1930s, was viewed as too process-heavy, too slow to hire and too difficult to remove poor performers.

To change that reputation, HR staff started with training sessions for the highest level of managers, focusing on “what was right for the business of state government.” Their argument was good management has to start at the top.

When newly elected Gov. Bill Haslam took office in 2011, he agreed with the planning and took the lead in promoting civil service reform. His background included years in private-sector management and two terms as mayor of Knoxville. Several of his department heads also had experience managing in large companies.

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.”

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 Act.

The law rewrote the state’s personnel statute and included a statutory mandate increasing agency flexibility. It retained just-cause termination protections along with grievance and appeal rights. It switched hiring to focus on skills and competencies and established a performance-based pay and evaluation system. It shifted state employment toward a model that emphasizes accountability, competence and recognition.

The planning started with Cabinet members undertaking a top-to-bottom review of each agency, asking first whether services could be provided more effectively and efficiently by the private sector and second whether government was delivering services effectively. Ineffective employment practices repeatedly emerged as barriers to performance.

Second, the deputy governor and human resource commissioner conducted an employee listening tour across the state to understand how to recruit and retain employees. Many of the same themes later appeared in the reform effort. Employees know what’s needed.

In combination, the initiatives sent a clear message — the goal was to improve government performance and civil service reform was a priority.

That was reinforced by specifying in the TEAM Act a requirement that performance management be based on SMART goals and outcomes. The intent was to link individual and team accountability through successive levels of management.

After the act was passed, the state invested three years in training and coaching managers and gathering feedback from employees and managers before transitioning to pay for performance. That sequencing was central to acceptance of the policy and its durability.

At first the Tennessee State Employees Association opposed the law, but negotiations produced amendments that led the organization to support it. Association leaders stood behind Haslam at the signing ceremony.

Another change, promoted by the HR commissioner, was a heightened focus on customers, which “transformed the culture through a statewide training program on customer service . . . written by a former Disney employee.”

Overall, in Haslam’s two terms, the changes transformed the state’s culture through management training, employee engagement and phased implementation.

Why federal reform efforts keep returning to the same problems

Looking back, it is not a new argument. The Volcker commissions argued the civil service system is “a barrier to effective government performance.”

That history has effectively “walled off” changing how employees are managed.

The Government Accountability Office has repeatedly identified human capital management as a high-risk area since 2001.

Despite repeated reform efforts, structural constraints, legal frameworks and institutional interpretation continue to slow or limit change.

The lesson for federal employees

Looking at Tennessee’s experience alongside federal reform history, several consistent elements emerge.

The state’s focus was improving management. It invested years in developing managers before shifting to performance pay.

The use of SMART goals provided structure for accountability and clarity for employees.

Research consistently shows that perceived fairness and recognition of strong performance can be more effective than marginal salary increases in driving motivation.

Tennessee’s approach worked in part because employees were included early and consistently in the process, creating ownership of the changes.

The broader lesson is not that one system is superior to another, but that management capacity, employee engagement and implementation design determine whether reform efforts succeed.

That remains the central challenge for federal workforce policy today.