Chapter 4 Human Resource Management in the Federal Government During a Time of Instability
James R. Thompson University of Illinois–Chicago
Robert Seidner U.S. Office of Management and Budget
The period 2006–2014 can be characterized as one of instability in federal human resource management (HRM) practices and policies. The most significant reforms of the preceding period, the creation of separate personnel systems at the Departments of Homeland Security and Defense, were repealed. The substantial immunity that the federal workforce had enjoyed from the effects of the economic recession that began in 2008 ended when employee pay was frozen and pension contributions for new employees increased in 2011. A showdown between President Obama and congressional Republicans over an increase in the federal debt ceiling in the summer of 2011 forced agencies to develop contingency plans for a government shut-down; and although a shut-down was avoided at that time, the compromise that was reached simply postponed the showdown. Throughout 2013, hundreds of thousands of federal employees were furloughed without pay. The culmination occurred on October 1, 2013, when the lack of a budget forced much of the government to shut down for 16 days. These conditions contributed to the onset of the long-awaited “tsunami” of retirements by federal employees as members of the baby boom generation headed for the exits.
This discussion of recent HRM developments in the federal government is organized into three sections. The section on “Discontinuities” includes a discussion of those HRM developments that represent a departure by the Obama administration from the policies of its predecessor while the section on “Continuities” highlights programs where linkages between the Obama and Bush administrations can be identified. The section on “New Initiatives” reviews those areas of activity in which the Obama administration has left its own distinctive mark.
Discontinuities
Repeal of MaxHR and the National Security Personnel System
The exemption of the Departments of Homeland Security and Defense from key provisions of Title 5 of the United States Code in 2002–2003 was among the most radical changes to the civil service system in decades.1 The civil service has long been characterized by a relatively consistent set of employment rules across agencies.2 The intent was to create a sense of cohesion within the workforce and to counteract centrifugal tendencies. Although there had been occasional, small-scale exemptions to this policy over the decades, the creation of the MaxHR system at the Department of Homeland Security (DHS) in 2002 and the National Security Personnel System at the Department of Defense (DoD) in 2003 represented exemptions of such magnitude as to represent a change in the system itself.
DHS and DoD include a combined 46% of all civilian federal employees (Congressional Research Service 2011). Thus, when these agencies were exempted from portions of the Title 5 rules relating to compensation, performance management, and labor-management relations, it appeared to signal the demise of the traditional civil service model and the triumph of a “strategic” approach to HRM in which each agency would be allowed to customize HRM policies to the agency’s specific mission and strategy (Thompson 2006). However, such predictions proved to be premature. A coalition of federal employee unions successfully challenged both programs in court, and Congress subsequently withdrew authorization, leaving the pre-2002 status quo substantially in place.
Union opposition to the National Security Personnel System (NSPS) and MaxHR was provoked primarily by the proposed labor-management relations provisions, which would have narrowed the scope of issues subject to collective bargaining and provided for agency-specific and management-controlled labor-relations boards to resolve collective bargaining disputes (Thompson 2007a). A coalition of federal employee unions sued to stop implementation of MaxHR on the grounds that those rules would deny employees their statutory right to bargain over working conditions. The courts sided with the unions and forced DHS back to the drawing board. By the time the court case was resolved in 2006, the political landscape had shifted. Members of both parties in Congress called upon the department to consult with the unions on the terms of a new system. The department instead decided to put the entire initiative on hold while retaining the traditional Title 5 personnel rules. The few HRM changes that have been made at DHS since have been incremental rather than radical in nature.
Early developments at the Department of Defense paralleled those at DHS: Rules with provisions similar to those proposed by DHS were challenged by the unions in court on the grounds that they violated the right of employees to bargain collectively. Although a District Court decision favored the unions, a panel of judges of the U.S. Court of Appeals for the District of Columbia ruled in 2007 that the proposed rules were in compliance with the law and allowed NSPS implementation to go forward. After Congress intervened to suspend authority for the proposed labor-management relations provisions, the department determined that only nonbargaining unit personnel would be included in NSPS. By late 2008, over 200,000 such employees had been transitioned to NSPS. However, after President Obama took office in 2009, the federal employee unions prevailed upon their congressional allies to repeal NSPS entirely. In October 2009, President Obama signed the 2010 National Defense Authorization Act repealing NSPS and directing that all DoD employees who had transitioned to NSPS be converted back to the traditional Title 5 rules.
Compensation and Classification
Although the demise of both NSPS and MaxHR represent a setback for those who regard the provisions of Title 5 as out of date, pressures for reform of the civil service system have persisted. The General Schedule system of compensation and classification has been subject to particular criticism. The General Schedule (GS) is widely regarded as outdated, overly rigid, not compatible with the needs of an increasingly professional workforce, and insufficiently sensitive to performance in matters of pay setting (Office of Personnel Management 2002).
In a 2012 report entitled “Bracing for Change: Chief Human Capital Officers Rethink Business as Usual,” the Partnership for Public Service (PPS) reported that “nearly all CHCOs [chief human capital officers] agreed that the current 1949-era GS pay and classification system is outdated and doesn’t meet the needs of a dynamic and changing 21st century workforce” (Partnership for Public Service 2012a: 16). The chief human capital officers expressed preference instead for a system of “paybanding.” With paybanding the narrow grades that characterize the General Schedule would be replaced with broad salary bands and managers would be permitted more discretion in setting the pay of their subordinates (Thompson 2007b). Under this approach there is less need for classification experts from the personnel office to make fine distinctions between the relative responsibilities of positions at different grade levels. Instead, a supervisor or manager equipped with some technical support can decide the band to which a position is assigned. Paybanding was first introduced to the federal sector in 1980 at a naval research facility in California and has subsequently been implemented in a number of additional agencies and units with generally positive results (Thompson and Seidner 2008).
The Renewal of Labor-Management Partnerships
In no area has the contrast between the Bush and Obama administrations been greater than in the area of labor-management relations. The Bush administration took a generally hostile stance toward the federal employee unions as exemplified by the proposed MaxHR and NSPS personnel rules, which would have significantly compromised the collective bargaining rights of employees in those two agencies. In 2001, soon after taking office, President Bush issued Executive Order 13203 repealing an executive order issued by his predecessor that mandated the creation of labor-management partnership councils throughout the government.3 In 2002, the Bush administration denied collective bargaining rights to employees in the newly created Transportation Security Administration.
As an early indicator of the Bush administration’s general demeanor on labor-management matters, the repeal of President Clinton’s executive order on partnerships took on special importance. Labor-management relations in the federal government have traditionally been adversarial in character. In 1993, as part of his effort to “reinvent” the federal government, President Clinton issued Executive Order 12871 creating a National Partnership Council and directing that similar councils be created within each of the major departments and agencies.4 The intent was to encourage an attitude of collaboration between labor and management in addressing workplace issues. A 2001 evaluation of the program found that the partnership initiative had improved the labor-management climate in many agencies and had resulted in a reduced number of grievances and unfair labor practice charges (Office of Personnel Management 2001). However, President Bush’s 2001 executive order dissolved the National Partnership Council and rescinded any “orders, rules, regulations, guidelines, or policies implementing or enforcing” EO 12871.
The partnership concept proved resilient, however. During his first year in office, President Obama issued Executive Order 13522 directing the creation of a new National Council on Federal Labor-Management Relations to include both union and management representatives and led by the director of the Office of Personnel Management (OPM) and the deputy director of OMB. With more than 60% of the Executive Branch unionized, a significant proportion of all federal employees are represented on the Council. Similar to the Clinton program, Obama’s executive order directed the creation of agency-level “forums” to “promote partnership efforts between labor and management in the executive branch.”5 Also similar to the Clinton program, attention has been directed to section 7106(b) of Title 5, which lists matters on which agencies may choose to bargain but on which they are not required to bargain. When President Clinton directed that bargaining take place on these “permissive” subjects of bargaining as part of EO 12871 he met with resistance from agencies. President Obama took a different approach, creating a set of eight “pilots” “to evaluate the impact of bargaining over permissive subjects under 5 U.S.C. 7106(b)(1).” Performance management practices (discussed further below) have also been a subject of discussion within the Council, with several unions partnering with their respective agencies to improve employee engagement and organizational effectiveness.
In another labor relations matter, the Obama administration reversed the decision by the Bush administration to deny collective bargaining rights to the 40,000-plus airport screeners employed by the Transportation Security Administration. In November 2012, those employees approved a contract negotiated by the American Federation of Government Employees, which the employees had selected as their bargaining agent (Davidson 2012).
The “Deprivileging” of Federal Employees
Until 2011, federal employees had experienced only limited repercussions from the effects of the Great Recession of 2008–2010. Government data shows that whereas the number of state and local government employees dropped by over 500,000 between July 2008 and July 2011, federal government employment actually increased by 86,000 jobs during this same period.6 This disparity could be attributed to the fact that unlike state and local governments, the federal government can run budget deficits. In fact, the Obama administration made deficit funding a part of its strategy for counteracting the effects of the recession. However, by 2011, political pressure to reduce the size of the deficit grew and as part of deficit reduction negotiations between Congress and the president, the pay of federal employees was frozen effective January 1, 2011. The pay freeze was subsequently extended for three years, ending when federal employees were granted a 1% increase in 2014. Also as a consequence of the deficit reduction negotiations, federal employees hired after December 31, 2012, will contribute 3.1% of their pay to the cost of their pensions, up from.8% for employees hired before that date (Lunney 2012a).
Proponents of the pay freeze have contended that federal employees are overpaid relative to their private sector counterparts. A 2010 study by the Heritage Foundation concluded that the total compensation of federal employees with health and retirement benefits included is 30%–40% higher than that of their private sector counterparts (Heritage Foundation 2010). A subsequent report by the Congressional Budget Office found that while employees at lower pay levels were overpaid relative to their private sector counterparts by approximately 15%, employees at higher levels were underpaidby as much as 25% (Congressional Budget Office 2010).
The debate over federal pay and the imposition of a freeze on federal pay signifies a sharp departure from past practices. In the past, with the federal workforce widely distributed geographically, political considerations had mitigated in favor of an attitude of accommodation between the two parties with regard to federal pay. The change symbolized by the 2011 pay freeze and subsequent pronouncements critical of federal employees was driven in part by the aggressive antigovernment ideology espoused by members of Congress associated with the Tea Party movement.7 For federal employees the shift in attitudes has meant that positive aspects of the federal work environment once taken for granted are increasingly at risk.
Workforce Planning and Management
A central element of President Bush’s “President’s Management Agenda” was the “strategic management of human capital,” to which workforce planning was central (Office Management and Budget 2002). Although such planning remains a priority, its execution has proved problematic in light of the turbulent political environment. Congress did not pass a single timely budget during the first six years of the Obama administration. Instead, each year saw “continuing resolutions” that simply pushed decisions forward for several months. Further, each such resolution kept funding at the same level as the previous period, thus equating to cuts in agency budgets because of the failure to reflect increased costs built into contracts, inflation, and unforeseen costs.
Between 2009 and 2013 the federal government was within hours of shutting down three different times because of budget disputes with the threat finally becoming a reality in October 2013. Occasional furloughs have occurred at agencies such as at the Federal Aviation Administration where more than 3,000 employees were sent home after their 26th temporary budget failed to pass in Congress. The most notorious of the budget scuffles started with the 2011 debate over the debt-ceiling limit. What is normally a procedural move to approve an increase in the debt ceiling morphed into an epic political debate over the size of government. Agencies were left to plan for a possible government shut-down. The settlement, dubbed “sequestration,” called for $109 billion in automatic, across-the-board spending cuts on January 2, 2013, that would translate to a cut of approximately 8.5% for most departments. Instead of thinking 5–10 years ahead as rational planning would dictate, agencies have been left in constant crisis mode with decisions required about each project and employee. Senior leadership in each agency has had to divert their attention to this effort, and employee morale has plummeted.
The Retirement “Tsunami”
The continuing crisis over the federal budget may have been a factor in the decision of many retirement-age feds to finally pull the plug. The so-called retirement “tsunami” had been anticipated since the early 2000s as large numbers of baby-boom generation employees approached retirement age. Little evidence of such a tsunami emerged until 2011, however, when 105,000 retirement applications were filed by federal employees, a 24% increase over 2010 levels. From January 1–September 30, 2012, OPM processed more than 93,000 retirement applications, 10,000 more than they had in a comparable period the year before (Lunney 2012b). With retirements continuing at an annual rate of approximately 100,000, the federal government is losing about 5% of its workforce each year.
The retirements have left some agencies stretched thin. Agencies generally aren’t allowed to hire until the incumbent has officially left the payroll, meaning there is no chance to train a replacement in the interim. Further, agencies have been reluctant to hire in light of continuing uncertainty over the budget.
Continuities
Notwithstanding these “discontinuities,” in some areas of activity the Obama administration has built on the work of its predecessor including those of workforce engagement and the “blended” or “multisector” workforce.
Workforce Engagement
The issue of worker engagement has gained prominence in the federal HRM community in recent years largely as a consequence of the efforts of the Partnership for Public Service (PPS), a nonprofit organization that promotes government service. Beginning in the mid-2000s, PPS has issued an annual report entitled Best Places to Work in the Federal Government.8 The report compiles data from the Office of Personnel Management’s Federal Employee Viewpoint Survey (FEVS) to calculate a Best Places to Work “score” for each federal agency based on an index that measures employees’ agreement or disagreement with three statements included in the survey:
· I recommend my organization as a good place to work.
· Considering everything, how satisfied are you with your job?
· Considering everything, how satisfied are you with your organization?
The PPS describes its index as one of “employee satisfaction and commitment” rather than as one of “engagement.” However, the job attitudes assessed correspond to those used in other studies where worker engagement is a focus. For example, the Merit Systems Protection Board (MSPB) issued a 2008 report entitled “The Power of Federal Employee Engagement” in which it devised a measure of engagement based on “pride in one’s work or workplace,” “satisfaction with leadership,” “opportunity to perform well at work,” “satisfaction with the recognition received,” “prospects for future personal and professional growth,” and “a positive work environment with some focus on teamwork” (Merit Systems Protection Board 2008).9 According to the MSPB, “engaged employees are absorbed intellectually and emotionally in their work and vigorously invest their best efforts in producing the outcomes needed for the organization to achieve its goals” (Merit Systems Protection Board 2009: i).
The Best Places to Work report has garnered attention in part as a consequence of the rankings generated. Separate rankings are generated for large agencies, medium agencies, small agencies, and agency “subcomponents.” The media have picked up on the results to highlight those agencies at both the top and bottom of the rankings. Particular prestige is accorded those agencies that score well.
The rankings have also served to stimulate some agencies to make improving engagement a priority. For example, the U.S. Department of Transportation (DOT) ranked near the bottom of the rankings in 2009. Then-Secretary LaHood set as a priority the goal that the department be among the top-rated large agencies. A constant focus on improvement led to programs such as IdeaHub, a portal where any employee can make a suggestion on which other employees are then allowed to vote. If enough employees agree, the secretary’s Innovation Council explores implementation. DOT implemented more than 40 suggestions in three years. Also, SES members were required to adopt new employee communication tactics, including hosting listening sessions to hear feedback. Since DOT started to focus on engagement, it has become one of the top ten places to work in government.
In part as a consequence of the continued attention being directed at working conditions, employee engagement was made one of the metrics in the President’s Management Agenda. Also, whereas results of the FEVS were only available at the agency level, OPM now releases FEVS results for more than 20,000 organizational units, along with trend data and index scores for employee engagement and global satisfaction. Agencies are increasingly able to use the data to link to mission outcome and target specific areas for improvement.
