Chapter 9: Human Capital

Human Capital in Government

• Human capital: the development of a strategy to recruit and retain the workers the government needs and to ensure that they produce strong and effective government programs.

• GAO noted in 2001 that lack of government attention to human capital was a major problem.

Challenges to Building Human Capital

• Lack of leaders committed to building human capital

• Lack of strategic human capital planning

• Weakness in acquiring, developing, and retaining talent

• Emphasis on rules and forms instead of results

Attempts to Build Human Capital

• Federal Office of Personnel Management (OPM), Office of Management and Budget (OMB), and the Government Accountability Office (GAO) have attempted reform.

• President George W. Bush made human capital central to his management agenda.

• OPM under President Clinton discarded the Federal Personnel Manual and a six-feet-long standard résumé form.

New Attempts to Alter the Personnel System

• Late 1990s: new attempts to make the personnel system more flexible and to link employee performance with agency mission– Broadbanding: collapses typically large

number of job categories in most government personnel systems into a far smaller number

– Giving flexibility to individual departments– Experiments with merit pay

Advantages of Broadbanding

• Flexibility in assigning workers to tasks

• Increased career development

• Ease of linking employee pay to performance

Disadvantages of Broadbanding

• Downgrading positions without downgrading the work

• Permitting managerial discretion, which could lead to abuse

• More tasks and more stress for workers

• Failure to reward increased productivity

Flexibilities for Individual Departments

• Congress has allowed some agencies exemptions from portions of the civil service law.

• Flexibility has been granted to the FAA and to the IRS.

• In 2002 the Department of Homeland Security was awarded some flexibility after President Bush championed flexibility and freedom.– Largest and broadest-scale waiver of civil service

policy yet granted

Experiments with Merit Pay

• Texas in 1985 abolished the merit council, and agencies were given flexibility in hiring and firing procedures for their employees.

• Georgia governor Zell Miller in 1996 abolished the state’s merit system and had employees serve at will.– At-will employment: employees have no civil service

protection and could be fired without benefit of standard civil service procedures.

– 2008 GPP survey of state government found Georgia at the cutting edge of management capacity.

Experiments with Merit Pay (continued)

• Florida in 2001 made changes to its civil service system.

• All three states have seen success, no widespread abuse, and no political interference in the hiring process.

Leadership Necessary for Reforms

• High performance in public agencies depends on leadership by top officials.

• The government has struggled with how best to recruit and reward its top leaders.

Political Leadership

• There are 3,000 political positions in the executive branch; 1,500 of these are at highest levels.

• The United States has a far larger number of political officials at the top of the bureaucracy than do other Western democracies. Why?

Political Leadership (continued)

– Because European countries have more administrative freedom.

– Or because some U.S. presidents bash bureaucracy and want instead to select their own employees.

• Paul Light’s recent study: the United States has more layers of leaders and more leaders at each layer.

Recruitment of Political Leaders

• Filling these positions is big task for a new president.

• Paul Light: it now takes as long, on average, to get an appointee into office as it does to have a child.

• Many political appointees have suffered from lack of experience in the federal executive branch and with no history of extensive management experience.

Turnover of Political Leaders

• Turnover: refers to political appointees serving only briefly in their posts– Average service of presidential appointee =

two years

• Rapid-fire turnover of political appointees creates many problems

Problems with Turnover

• Many presidential appointees leave shortly after adapting to the Washington environment.

• Rapid turnover undermines teamwork.• Staff has weak incentive to obey revolving

superiors.• Staffing the administration never really ends.• Large exodus occurs during president’s last year

in office.

Volcker Commission on Political Appointees

• Volcker Commission: included fifteen former top political appointees in 1989

• Recommendation: reduce number of presidential appointees from 3,000 to 2,000

• Recommendation: too many appointees serving brief periods of time may undermine the president’s ability to govern

Career Leadership

• Civil Service Reform Act of 1978 created the Senior Executive Service (SES) to provide career leadership.

• SES absorbed most of the previously GS-16 to GS-18 career and noncareer positions.

• SES consists of about 7,700 employees, mostly career officials but including 575 presidential appointees.

• SES includes the well-educated with average of long-term service in government.

Characteristics of the SES

• Each agency establishes qualification standards for SES positions.

• Each agency is required to establish performance-appraisal systems.

• Problems with SES include rapid turnover of political appointees, too much specialization, proliferation of new systems, compression of performance ratings and pay, and the never-ending lack of attention to the human capital problem.

Lack of Leadership at the Top

• Government’s big problem is a lack of leadership at the top of the bureaucracy.

• Salaries are inadequate for top federal officials.

• Yet citizens express dismay at the salaries paid to public officials.