Human capital management in government: replacing government retirees.
Abstract: Faced with high levels of senior civil servant retirement in the coming years and limited by civil service requirements, government organizations often struggle to maintain the knowledge base of previous processes and results while promoting people who are truly interested in being leaders in an agency. Upcoming generations of public sector workers do not share the same motivation and workplace characteristics of current exiting civil servants, further complicating smooth transitions of leadership. Government personnel systems for the most part are inflexible and slow to hire, and retention methods for workers do not encourage succession planning. Against this backdrop, a five-phased human capital management system, using some of the best practices found in both public and private sector organizations, is proposed as a solution for replacing government retirees with workers who are prepared for their leadership and management roles.
Article Type: Report
Subject: Succession planning (Business) (Management)
Retirees (Management)
Human resource management (Models)
Author: Kochanowski, Yvonne J.
Pub Date: 06/22/2011
Publication: Name: Journal of Health and Human Services Administration Publisher: Southern Public Administration Education Foundation, Inc. Audience: Academic Format: Magazine/Journal Subject: Government; Health Copyright: COPYRIGHT 2011 Southern Public Administration Education Foundation, Inc. ISSN: 1079-3739
Issue: Date: Summer, 2011 Source Volume: 34 Source Issue: 1
Topic: Event Code: 200 Management dynamics Computer Subject: Company business management
Product: Product Code: 9918000 Business Personnel Management
Geographic: Geographic Scope: United States Geographic Code: 1USA United States
Accession Number: 304050541
Full Text: INTRODUCTION TO RETIREE REPLACEMENT

The government workforce at all levels is expected to shrink substantially over the next 10 years, driven by retirements of an aging civil servant population, reductions in pay causing workers to look elsewhere, and reallocation of positions (Rusaw, 2004; Ortiz, 2009). The numbers could be staggering, with up to half of senior civil servants retiring depending on the agency, level of government, and pundit-making predictions. This trend, while slowed by current economic challenges, is obvious from Federal departments to local special purpose districts; no government entity is immune. In light of this trend, there will be a significant drain of knowledge about efficacy in government processes due to retirements, and incoming leaders may not be well-prepared to step up to the activities required for effective practices.

Labeled as a brain drain (Kleeman, 2008) or in a more alarmist fashion a tsunami (Mancias, 2008), the outflow of government workers is complicated by previous efforts of government agencies and departments to reduce the size of government. Several factors have exacerbated the drain of knowledge: middle management positions left unfilled, jobs cut due to privatized or outsourced functions and processes, and less spent on training and development of those who remain (Rusaw, 2004). Institutional memory is being lost about how processes have evolved and where best to allocate scarce resources. Perhaps the alarmists are right in worrying that the government leaders of the future are not receiving preparation on how to lead in the scope of their current duties.

TRUTH IN NUMBERS

The lack of preparation of civil servants for promotion is not simply a recent phenomenon. Malek (1974) stated that development of public executives could not be perceived as only a passing fad, and that the failure of appointed officials to offer opportunities for careerists to develop their skills was largely to blame. In the mid-1970's, projected retirements were trending upwards with half of both Federal executives and middle managers who could be promoted eligible to leave civil service (Malek, 1974). The military was the one government agency deemed to be taking an active stance on preparation for advancement among its ranks.

Today the problem is the same, but much larger. By the 1990's, the then-named U. S. General Accounting Office (GAO) called for action on programs that would allow aging workers to take trial retirements or reduce hours of service to maintain some continuity and training opportunities for younger workers (GAO, 1993). Reality did not offer any chances for failure, because Baby Boomers would be retiring and Generation X which follows is considerably smaller.

More than 10 years later, the news became more dire. Greenfield (2007) noted that based on 2006 Census data 69 percent of Federal workers, 60 percent of state workers and almost 64 percent of local government workers were over the age of 40 (p. 1). Based on standard retirement calculations, this large cadre is either eligible to retire already or will be within the next 10 years.

Further, the positions themselves are changing, with a greater proportion of government positions requiring more knowledge workers with different education, skills, expertise and training than in decades past. Almost half of all civilian federal positions and more than two thirds of state and local government positions require a new breed of knowledge worker (Greenfield, 2007, p. 3). Knowledge workers in the private sector can earn 15-25 percent more than in similar government positions, shrinking the field of possible workers further (p. 5).

The Federal Office of Personnel Management (OPM) projects that almost 4% of the Federal civilian workforce will retire each year for the next 10 years (OPM, 2008, p. 6). If the accuracy of past projections is any indication, this will mean that by 2016 less than 24% of the workers who were employed by the Federal government in 2006 will still be there. While about 25% of these workers will work past their eligible retirement age, this still leaves a large gap in educated and training workers promotion-ready for mission-critical positions (OPM, 2008).

Coupled with the increasing retirements and the changing positions, the job expectations of tomorrow's civil servants are different. Rowson (2009) listed these new expectations as "compensation, benefits, work-life balance, performance and recognition, and development and career opportunity" (p. 5), and reminded readers that the government process for hiring and retaining talent is not prepared for the onslaught. Franzel (2009) added that not only is government competing with the private sector for the knowledge workers needed today, but also government agencies at different levels are in competition with each other. He added that issues such as the geographic location of the government position and the quality of life in an area add another layer of complexity in attracting talent.

The changing face of the government worker requires agencies and departments to embrace greater diversity and actively recruit among ethnic groups that had been under-represented in the past (Eoyang, 2008). Toossi (2005) recommended greater emphasis on the growing Asian and Hispanic worker population and the design of specific programs to attract African-American workers to government service. Benowitz (2008) added to this changing labor force dynamic in his advice to build leadership development programs that transcend administrations and protect these programs from public budgeting inconsistencies. Clearly, a human capital management system of some kind will be required to address the coming brain drain at all levels of government.

A PRIVATE SECTOR-STYLE APPROACH

One proven method of human capital management from the private sector is a system of succession planning and talent management. The practices of succession planning, or planning to fill vacant positions by preparing those who are promotable, and talent management, or recognizing and nurturing employees for upward mobility, differ when applied in the public sector. Civil servants are often qualified for their positions through exams, and it is not unusual for a manager to move across departmental boundaries and into a new agency or discipline because that is the next available opening. Collective bargaining agreements require postings and testing for promotion and strictly prohibit showing favoritism to any individual for a position, even through cultivation of their skills and competencies. The system of appointment or election of senior management in a government agency leaves little incentive for those individuals to spend time cultivating talent. Finally, senior career managers who could fill this void are under the direction and workload allocation of those with who lack the inclination to manage human capital. Private sector models of succession planning and talent management therefore lack direct applicability in public sector organizations (Hebbert, 2009).

Research conducted on the concept of successful succession planning models in government organizations is sparse and focused on work plans for the workforce of eight to 10 years ago. The financial crisis and blooming budget shortfalls have torn attention away from this issue, so even the small percentage of agencies that were attempting to plan have had to focus instead on furloughs, reductions in force through attrition and hiring freezes, and reallocation of workers to fill critical slots in organizations. The planning horizon is now a just-in-time process, and managers must concern themselves with how to get their required activities completed. Planning to develop their people is a very low priority.

At some point in the future, though, workforce will again matter. Once budgets have eased and growth in programs again takes hold, senior career managers will look out over the cubicles to discover that their most experienced people have long since left the building, and the younger staff lack the knowledge, motivation and skills to step up to accelerated program needs. Despair and confusion may lead them to ask the obvious questions: Where did all of our good people go, and how do we train the young folks?

RESEARCH QUESTION

Based on a preliminary review of the literature, there appears to be limited empirical research on how government agencies transfer knowledge to incoming leaders when succession planning does not occur. Further analysis indicates that the public sector is not embracing talent management, a method utilized in the private sector, in developing the next generation of leaders. This paucity begs to be filled through the following research question: What system can government use to maintain its workforce institutional memory, and how can it ensure it selects and promotes the best-prepared leaders to fill mission-critical jobs?

TERMS DEFINED

Government organizations need to prepare to fill the leadership positions that will be vacated by retirees. It has been proven time and again in the private sector that coaching a replacement to prepare them to fulfill their new role is a sound method of assuring smoother transitions and better knowledge transfer (McCauley & Wakefield, 2006). Knowing what kinds of positions will become available and what skills will be required is a necessary foundation for this. However, due to the many limitations placed on the civil service workplace, these private sector tools prove difficult to implement. This article, which analyzes public sector practices in use and possible private sector best practices to emulate, will be the first step in determining possible directions for government. A common understanding of the terms used in this article will clarify some key concepts.

Brain drain. Brain drain is defined by Stone (2008) as the loss of retirees' knowledge that is not or cannot be passed down to those who follow. This lost knowledge includes competencies, field of specialty, and agency specific information. What a department or agency does and more importantly, why and how it does it, disappears with the retirement.

Leadership development. Rusaw (2004) describes leadership development as the ability of mentors and coaches to train upcoming workers through continuous learning, promoting dialogue, encouraging collaboration, and sharing. This links less experienced workers to the strategies and systems, as well as allowing their input as part of the growing process. Organizational memory is therefore established and the organization itself becomes a learning and evolving entity.

Mentoring. In a study of high-performing organizations, Winston (2008) described mentoring as the ability to attract the right talent, encourage them to develop their natural skills as well as new ones, and reward excellence. The vehicle to execute this is leadership that nurtures workers' self-confidence and allows them to make both decisions and mistakes as part of their learning process.

Organizational memory. The term organizational memory is used to describe the common beliefs and values, information about processes and policies, and guidelines for the future (Rusaw, 2004). It moves beyond the memories of individuals and focuses on the collective. It is the basis for a learning organization, one that is constantly updating the skills of its workers.

Succession planning. Aligning mission and goals with human capital required to meet those goals is the core of succession planning (Butler & Roche-Terry, 2002). Past this, it is a system for deliberate identification of the needs of the organization with the talent that is coming up through the ranks. It is prepared for contingencies, such as a sudden vacancy in a key position, through the planning process itself.

Talent management. The concept of talent management encompasses many of the other workforce terms noted here, including succession planning, workforce planning, and mentoring (Bingham, 2008). It matches finding people with organizational goals and assessment of openings. The American Society for Training and Development (as cited in Bingham, 2008) "defines talent management as an organizational approach to leading people by building culture, engagement, capability, and capacity through integrated talent acquisition, development and deployment processes that align with business goals" (p. 81).

Workforce planning. Workforce planning is comprised of a system of job classification; worker recruiting, testing and hiring; and building a performance culture (Selden, Ingraham & Jacobson, 2001). This planning should include both the needs of the various agencies and departments within the government structure and the unique characteristics of the market in which that organization functions.

UNIQUE PUBLIC SECTOR ISSUES

In 2009, The Center for State and Local Government Excellence (CSLGE) conducted a survey with the members of the International Public Management Association for Human Resources and the National Association of State Personnel Executives. In its series of questions asked of these government personnel officers, CSLGE wanted to know how many departments, agencies or government entities have workforce development plans. Fifty-six percent of those responding said that their entity did not have a workforce development plan. However, half noted that they had a significant number of people, at least 20% or more, eligible to retire in the coming years. While some are delaying retirement based on today's economic conditions ("Public sector employees," 2009), this still leaves significant gaps in the workforce. Planning ot fill the gaps therefore becomes a priority for public sector leaders.

Government organizations have taken a range of preparations to address this coming change. With one in five government workers eligible to leave in more than half of the states in the U.S. (Barrett & Greene, 2005), some states are being proactive, and others are doing nothing. Georgia, for example, includes workforce planning as a module of its annual strategic planning and budgeting process. Maryland and Arizona focus on training as a means of addressing upcoming workforce issues. Still other states, though, disincentivize workers through poor pay, lack of performance feedback, and criticisms of civil servants as deadbeats.

The ability to address succession planning, workforce planning and talent management issues can be modeled on private sector efforts that have proven successful. This model, proposed as a human capital management system, incorporates various characteristics to ensure human assets are in place for all critical government leadership and management functions. This article proposes components that build upon one another, with aspects of knowledge worker classification, personnel authority, succession planning, workforce planning, and talent management through leadership and mentoring. All of these components are necessary for an effective human capital management system. These components are discussed below, followed by a section identifying their use in a public sector human capital management model.

Knowledge Workers and Their Talent Impact

Forming the basis for any type of workforce planning or human capital management system involves recognition of the types of workers needed, their skills, and their availability. As noted earlier in this article, government workers are most often knowledge workers with characteristics of education, skills development and hands-on experience vital to their success. How then can current and future open positions be classified and planned? Identifying what is needed forms the basis for planning in any sector.

Successful workforce planning creates a system that makes the application process easy and accessible, nurtures up and coming talent, and aligns the organization's values with the commitment to plan (Conger & Fulmer, 2003). The infrastructure to compete for knowledge workers, who are also in ever-growing demand in private businesses, must also be considered in the public sector. Benefits and compensation, training, upward mobility, opportunities to advance and expand skills, and location and family considerations all serve as attractants to knowledge workers (CSLGE, 2009; Franzel, 2009).

Knowing what will be lost when a senior civil servant leaves leads to workforce planning opportunities as well. Mancias (2008) documented a series of questions used at the Tennessee Valley Authority to identify knowledge clusters, methods of sharing key data with incoming staff. These questions included general questions about skills, training and resources that people need for a position. Inquiries about the facts of the job are coupled with more specific questions about tasks for the position. These facts could be lists that are used, containing inventories, systems, or outside contacts. The final set of questions was labeled as pattern recognition knowledge and deals primarily with how problems are diagnosed and decisions are made (Mancias, 2008). Taken together, the responses draw a more accurate picture of what can be expected of the knowledge worker in that position.

Workforce Planning Cycle

Government has recognized the importance of workforce planning, though the adoption of these practices has been slower in many jurisdictions. Analyzing Federal civil servant employment practices, GAO issued a report in 1993 that captured the essence of what needed to be accomplished in a workforce planning cycle. It noted that workforce planning needed to identify the positions, skills and number of people needed by position so that workers could be identified or hiring planned to fill those slots. This included a program for recruiting, training and then retaining the knowledge workers that fit the requirements. Assessing the costs of this approach, GAO stated that some modifications to the personnel functions of government departments would be required (GAO, 1993). While some agencies have taken this advice, many others are still filling positions just-in-time rather than with planning and forethought.

Taking a page out of private sector playbooks, Huselid, Beatty, and Becker (2005, as cited in Harvard Business Review on Talent Management, 2008) provided more specific guidance. Major corporations such as GE, Microsoft and IRB approach workforce planning by identifying positions based on their strategic importance. Documenting the defining characteristics of those positions, the scope of authority, and methods of compensation such as pay-for-performance is the first step in workforce planning. Organizations then assess what the consequences are of placing the wrong person in the job, and what characteristics the right person would need to have to be successful. Existing and new personnel are then assessed for the correct match for these strategic positions, and formal succession planning occurs to prepare them for the job.

Identifying what attracts younger knowledge workers to the public service field is also important. The hiring process needs to be streamlined, as knowledge workers who are applying for both public and private sector positions often accept a job in business long before the government entity has even sent out notices of consideration (Bransford, 2008). Entering into recruitment, the act of looking for people even when jobs are not currently available, is also a tactic that public sector could use. Coordinating the mission of the department of agency with the workforce needs it will have to achieve that mission should be part of the annual planning process (Trahant, 2008-09). Federal offices as diverse as the U. S. Office of Personnel Management, the U. S. Department of Housing and Urban Development, and the Internal Revenue Service have undertaken various forms of these human capital management systems, with significant success in hiring and retaining younger knowledge workers (Trahant, 2008-09). Treating the employee as a customer is another facet that attracts knowledge workers, particularly younger generations just entering the public service field (Trahant, 2009).

Succession Planning Process

Growing internal talent is a component overlapping human capital management that builds upon understanding the workforce needs. Succession planning as applied in the private sector assumes that the right people have been hired, so they have the basic skills, built upon with the experiences they have internally, to be able to move forward. Further, the positions themselves have been analyzed to establish an inventory of what a person in that job needs to know and be able to do to be successful. Matching talent to position in a deliberate manner that plans ahead for both scheduled changes and contingencies in emergencies is where succession planning enters the cycle.

Palma (2009) suggested a six-phase succession planning cycle that functions both as a means of filling positions in the future and a method of continuous improvement to the process. The first phase is creating a team from leadership that is committed to following this cycle. It is then essential to open up lines of communication between layers of management in the organization so that upcoming talent can be identified.

The third phase requires the organization to retain and recruit the talent it needs. Methods to achieve this include mentoring talent and helping them to plan a career path within the organization and perhaps even across departmental boundaries. Identifying the skills and competencies they will need in a future position and assessing how they are advancing in those skills are also required. Formal education is the final component to support this particular phase (Palma, 2009).

The last three phases close the continuous quality loop. Once the succession plan is implemented (phase four), the program is assessed to determine if it is truly helping talent to advance internally. Based on this assessment, the succession planning process can be adjusted to maximize its effectiveness, which is the final phase of Palma's (2009) cycle. He offers a final word of caution: While it is easy to set this aside based on other pressing organizational priorities, ignoring succession planning can create bigger problems in the future when gaps in leadership occur.

Applied Talent Management

What is needed in most government organizations is the ability to create talent factories, a conscious system that matches workforce planning and succession planning within the framework of supporting structures of leadership and mentoring needed to make this marriage work. Among the areas that organizations need to self-assess their effectiveness, Ready and Conger (2007, as cited in Harvard Business Review on Talent Management, 2008) list all of the major human capital management features listed above: knowing what skills will be required, identifying and grooming people to fill those positions, training and career development, and organizational commitment to keeping the system going. This mechanism is not uncommon in businesses large and small. Implementing a talent management system in the public sector may be much harder to accomplish when agendas, political directions, and funding shift on a regular basis.

Berger and Berger (2004) compiled documentation on various aspects of talent management, identifying a series of building blocks required to make the system work. While these best practices focused primarily on private sector corporations, there are lessons learned for the government sector as well. They suggest several facets: planning for talent, succession planning, coaching and mentoring, training and development, compensation and benefits, and structures to support monitoring. What could this kind of system look like in the public sector?

PUBLIC SECTOR HUMAN CAPITAL MANAGEMENT

Consider for a moment a manufacturing production line. Raw materials enter at one end, and a finished good comes out the other. In between, processes vital to production of the end product are performed. The equipment and processes are considered assets, and so too are the raw materials and work in process, all the way through to the finished good itself. If human capital can be considered an asset, it makes sense to have government, or any organization for that matter, produce the best possible product at the end.

A human capital management system applied in the public sector is comprised of various components that allow government entities to have the right people available at the right time to fill the right positions in the organization. It ties agency mission to workforce planning, and encourages succession planning as a mechanism to advance people to their highest potential. Given the differences in government processes, though, it will look somewhat different from the talent management systems embraced in the private sector. The following five-phased process, beginning with planning components and then combining them into a comprehensive method of managing human asset talent, can enhance human capital management practices in public sector agencies and departments.

Strategic and Tactical Plan

The first step in creating this system is planning. The strategic and tactical plan of the government organization should be combined with the organization chart. What major initiatives, programs, and services will be provided in the coming years? To provide these products, what types of processes will be followed? Based on the processes, what skills will people need to have? How many people will be needed for the processes to function? Programs that will sunset and individuals who will retire are two significant areas that need to be highlighted.

One concern that government faces is the uncertainty of functions and processes because of changing political agendas and funding. However, this could be an overstatement of the speed of change. A new administration with newly elected and appointed officials still transitions into office; a coup does not occur with mass process change overnight. Part of the transition plan should be an assessment of how programs and processes might change in the short term. This can then be used to update the tactical plan and the skills and numbers of workers required.

Longer-term changes are even easier to handle. These changes could be due to legislative changes, technological advancements, or process modifications. In any of those cases, however, change is not immediate; there is a timeline for the change to occur. Again, part of that period can be used to update assumptions about skills and numbers.

Position/Skills Inventory

Once the agency or department knows how many people it needs with predetermined types of skills, it needs to determine what assets it currently has. The challenge here might be in identifying the skills people already have, along with their capacity to grow into new competencies. A system of assessing and measuring skills will need to be implemented to assure that the inventory can identify potential candidates for advancement. This skills inventory must also include an assessment of the capacity of that individual to continue to advance so that they can be groomed to move up long before the position is ready for them.

Most government personnel systems hold information that reflects the "rank" of employees. Data about positions held, length of service, and personal demographics along with performance evaluation ratings are captured, but information about what competencies were required in those past positions might not be linked in. Further, the skills and capabilities inventory mentioned above would also need to be aligned with the individual's information for a database to be able to supply human capital management information. Assessing the information technology available and working to build linked systems will therefore be important for government entities to be successful in this inventory.

One fact to keep in mind is that a broader database will produce a much richer pool of talent from which to select. In other words, if the personnel function is decentralized and no common database inventory of employees exists, that agency or department is limited to what and, more importantly, who exists within the smaller database. A system that spans departments and agencies will be much more effective in spotting the right talent, even if it means an internal transfer is required.

Workforce Plan

The workforce plan is the point where data are matched in the human capital management system. The public sector organization knows what kinds of workers it will need from the strategic and tactical plan assessment. It knows what inventory it has "in stock" to fill "orders". Matching this part should be relatively easy, as long as the skills of the individuals are part of the personnel inventory.

Once matching has occurred, the gaps become clearer. Organizations should pay particular attention to the retirement gaps that are looming. Setting this gap analysis against the backdrop of a timeline will identify crises and emergency requirements to fill positions quickly. The workforce plan then becomes a matter of filling the gaps that have been identified in time for some transition to occur.

Career Development and Succession Plan

Once the right people are in place, advancement readiness development is the next step. It was noted earlier in this article that government does poorly at recruiting before a position is open. This applies as much to internal promotions or transfers as it does to external hiring. The critical factor in good succession planning is identifying people before they are needed, and then helping them to become ready to step up. This may require a cultural shift in many public organizations that currently only begin looking for someone when a position stands vacant.

Using the gap analysis and timeline from the workforce plan, the needs for people of particular skills and competencies at some point in the future are identified, and the people who might fill the order are also noted. It is time to approach those individuals with a formal career development strategy so that they are groomed for succession when the position is available. This strategy includes mentoring and coaching, training as required, exposure to a variety of tasks and activities, and hands-on experience.

The mentoring function is a leadership commitment. This means time is set aside in the mentor's schedule to provide education and guidance to the mentee. Similarly, the mentee must be given time in the schedule to work on new skills and cross-training. Training may include both informal "ride-alongs" to gain knowledge about what is required in the job, as well as formal education to fill in skills that might not have been needed before.

There is no single best format or checklist of activities for a good career development and succession plan because each plan is unique to the individual, their attitudes and learning style, their mentor/coach, and the skills and position they are preparing for. In some cases, there may not be a specific position in mind, but the plan instead will help them to achieve a level of skills that readies them for a range of positions or a rank within the organization. This phase, though, keeps the human capital pipeline filled with people prepared to advance in the government organization.

Feedback and Monitoring

No system that has performance as a cornerstone can function without a feedback loop, measuring successes and adjusting as required to accommodate changing circumstances. These monitoring systems include not only measures of accuracy of projections and validity of assumptions but also the outcomes that are derived. Each aspect of the human capital management system needs measurable benchmarks and notable milestones for monitoring.

Take, for example, positions/skills projections. Each year, the methods of projecting needs within the workforce can be adjusted to reflect what has been learned about the assumptions used to make the projections and their accuracy. The skills and performance of individuals who have been invited to develop specific experience in preparation for moving up can also be assessed. This dynamic system allows for flexibility and maneuverability as well as structure. Government is good at measuring things, so this task should be easy to establish, given the right technology tools.

IMPLICATIONS FOR THE FUTURE

A human capital management system, a production line to ensure that the right people are ready to move up when the time calls for promotion, can be adopted in the public sector. The systemic limitations of old traditions of personnel management and political will asserting itself over efficient practices are trumped by the growing need to find workers who can fill upcoming gaps due to the large number of retirements and who can lead government agencies and departments in the future. Without this type of system, positions will be left unfilled and government services will be lacking. Ultimately, every citizen will suffer due to the lack of services. If that is the case, government has failed in its duty to protect every citizen, and that is a result that is both unacceptable and avoidable.

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Winston, M. G. (2008). Leadership development through thick and thin. Leader to Leader, 2008(48), 8-13. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=31395173&site= ehostlive&scope=site

YVONNE J. KOCHANOWSKI

Capella University
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