A new report reflecting the views of 55 top human capital officers in the federal government suggests that the degree of difficulty for federal managers trying to hire and retain the talent government needs to operate today is perhaps higher than ever. Intensifying budget pressures could, however, be the spark needed to reform a stranglehold of antiquated federal hiring and pay practices.
The severity of federal human resources challenges is hard to understate.
Three out of four (72%) of the HR officials interviewed for the report are bracing for workforce reductions due to budget cuts. Chief human capital officers (CHCOs) are also contending with higher employee turnover, limited options for outsourcing and widening gaps in agency leadership skills.
“What is clear now is that we can’t keep doing business as usual with regard to the management of the federal workforce and expect to succeed,” said John Palguta, vice president for policy and research at the Partnership for Public Service, which together with Grant Thornton LLP, issued the report today.
Palguta personally interviewed each of the human resources officials for the report. Summing up what he heard, Palguta said CHCOs aren’t bemoaning their circumstances so much as assessing how to contend with reality – including the government’s General Schedule pay system, which was created in 1949 and has grown increasing dysfunctional.
“Previously, many federal HR leaders had simply suggested ‘blowing up’ the General Schedule pay and job classification system and adopting in its place a government-wide variation of one of the existing alternative pay systems currently in use in selected federal organizations,” Palguta told AOL Government.
“However, a number of the CHCOs had worked in federal organizations with an alternative pay system and they recognized that a new pay system alone is not a panacea and that if government is not careful, it could make the situation worse, ” said Palguta. “The HR leaders we interviewed this year were much more likely to talk about the need for pay change in the context of the need for culture change, along with a carefully thought-out approach to both the design as well as the implementation of a new system,” he said.
Recommendations to make civil service reforms are certainly not new, said Robert Shea, a Grant Thornton principal, and former associate director in the Executive Office of the President during the Bush Administration.
“It’s an area where I broke my pick in the last administration,” Shea said, who saw both troubling messages and reason for optimism in the report.
“The impact of the budget on declining work forces is more acute than ever,” he said. “But even that is compounded by the fact that federal employees have become the punching bag de jour – frankly by both parties. You don’t have a lot of organizations who willingly demean their employees as a strategy for achieving breakthrough performance,” he said dryly.
At the same time, the circumstances facing government leaders may open a window for reforms that were not possible in the past and Shea suggested leaders ought “not let a good crises go to waste.”
Even if pay and hiring reforms could be enacted, such discussions wouldn’t even get started until after the fall elections, said Palguta.
And in the meantime, it’s clear that “while the job of a CHCO has never been easy, it has actually become even harder to be successful,” Palguta said.
One example that concerned Shea in particular was the dramatic jump in proportion of (CHCOs) who thought agency line and operations managers lacked, or had limited managerial and supervisory competence compared to the last time CHCOs were surveyed in 2010.
Two years ago, only 16% of CHCOs felt managers lacked or had limited managerial or supervisory competence; in the newest survey, that figure jumped to 33%, according to the report.
That’s a challenge that not only human capital specialists must confront but federal agencies as a whole in their efforts to accomplish their missions.
Among the top challenges CHCOs said they are contending with:
Declining budgets. When resources are constrained, there are fewer employees to do the work, limited options for contracting out or investing in technology, and training budgets are under fire.
Higher employee turnover. Government-wide, retirements are up approximately 25 percent from a year ago, indicating that the long-anticipated retirement wave has hit. Turnover may remain high for a while due to the combined impact of an aging
workforce, a two-year pay freeze with threats of an extension, rising anti-government sentiment and increasing workloads.
Inadequate succession planning. The inability to replace quickly, or at all, the knowledge and expertise of departing employees exacerbates the impact of those departures. Several CHCOs thought their succession-planning programs were paying off, but most admitted they weren’t keeping pace with the organization’s needs and that the talent pipeline wasn’t sufficient.
Lack of key HR competencies. Gaps in the competencies needed by many HR staffs are a continuing concern, although progress is being made in closing those gaps.
Gaps in agency leadership skills. Many senior leaders may leave within the next two years due to retirement or the election fallout. CHCOs thought that too few mid-level managers and supervisors have the leadership capabilities to fill their shoes.
The Way Forward
CHCOs were equally clear, however, about what the government needs to do to help agency
leaders navigate through these tough times more effectively. Their recommendations included:
Reform the civil service system. Take advantage of the current climate and
the post-election transition to develop, promote and implement changes in recruiting, retaining and rewarding the most capable and productive employees.This includes:
• Pay and compensation reform. Rethink the federal job-classification system and develop a new approach for setting federal pay that allows government to cost-effectively compete for talent and to encourage and reward exceptional performance among current employees.
• Hiring. Reform and simplify the laws underlying the federal hiring system.
• Veterans preference. Update the outmoded veterans preference law.
• Merit systems protections. Better balance due process protections by ensuring employees are protected from arbitrary and non-meritorious personnel actions, while providing managers with the tools they need to deal effectively with nonperforming or underperforming employees.
Stay the course on initiatives that are –achieving results. Resist the temptation to save resources by backing away from initiatives and improvement efforts that are achieving results, such as the investment in hiring-process improvements and leadership development. Instead, reduce costs through innovation and collaboration.
Improve succession planning. Most federal agencies need to update and improve their succession plans and arrange for knowledge transfer and continuity of operations. OPM could assist by identifying agencies with good succession-planning efforts underway and creating opportunities for agencies to share approaches with others. Plan now for political transition, no matter who is in office on Jan. 20, 2013.
Increase standardization of HR IT and use of shared services. The government can no longer afford to have individual agencies develop and maintain all their own unique systems. Several CHCOs noted they would welcome increased leadership from both the Office of Personnel Management and the Office of Management and Budget on this issue.
Use available data and metrics. Agencies should continue and expand their use of data to engage employees, increase transparency and accountability, enhance performance management, and hold employees and managers accountable.
A copy of the full report is available here.