Human Capital

Tools and Strategies for the Public Sector

Sally Coleman Selden

• Publisher: CQ Press
• Year: 2008
• ISBN:
  9781483370965
• Edition: 1
• Topic: Politique et relations internationales
• Subtopic: Affaires publiques et administration

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Chapter 1

With the shift from “human resources” to “human capital management” (HCM), public agencies are striving to strategically manage their workforces. Sally Selden’s groundbreaking book moves far beyond describing best practices and offers the context in which innovative practices have been implemented. She details how agencies are creating performance-aligned workforces by adopting systems and policies that are driven by their strategic missions.

This book covers core topics of personnel courses—including hiring, training, retention, performance, and recognition—but also includes integrated coverage on measuring success through assessment. Further helping readers grasp how HCM works, the book uses original data from the Government Performance Project and incorporates many comparative examples across a wide range of states, plus federal and municipal agencies. Unlike anything else available, Human Capital fills a critical gap for both students and public personnel professionals.

chapter 1

Introduction to Human Capital Management in Public Organizations

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Under the leadership of commissioner Jacqueline P. King, the Chicago Department of Human Resources is focused on making the city a great place to work. The department is leading the city into a new era of strategic thinking and planning. In 2006 the City of Chicago changed the name of the department from the Department of Personnel to the Department of Human Resources. The name change was one step in changing a transactional personnel department into a business partner to serve its client departments and applicants for city employment. The 2006 change included a budget increase of approximately three million dollars and an increase of approximately thirty-seven staff positions.

The City of Chicago employs approximately 39,000 people. The city is a large, complex, and demanding organization with a diverse recruiting environment comprising more than forty departments, multiple unions, diverse job types, varying processes, and high-volume hiring. It must meet the needs of various constituents while complying with federal mandates for the hiring process. The mandated hiring process significantly affects internal controls, the segregation of duties, auditing, security, and reviews.

Chicago’s current hiring process is cumbersome, paper intensive, and time-consuming. As part of its effort to become a strategic business partner, the Department of Human Resources has embarked on several projects to address the inefficiencies of the current process. Its goals include:

• improving the means of attracting applicants to increase the number of qualified candidates;
• improving the candidate application experience;
• decreasing time to hire; and
• improving monitoring and control to ensure that the hiring process is objective, transparent, and fully compliant.

The Department of Human Resources Hiring Process Redesign Initiative began in 2006 and includes three work streams:

• a new on-line application system;
• citywide job analysis; and
• citywide competency models.

The City of Chicago has over 1,500 job titles. The purpose of the citywide job analysis is to ensure that all of the job descriptions are current and conform to industry standards and to recommend consolidation of titles where appropriate. The city is developing a citywide Core Competency Model, as well as job-specific functional competencies. Chicago’s charge is not only to recruit specific talent, but to recruit individuals who are ethical, accountable, and loyal to the public interest.

Motivating and retaining excellent employees are also goals of the City of Chicago. In 2008 the Department of Human Resources will launch a citywide new-employee orientation program, as well as enhance its training and professional development programs. Commissioner King has said that the rewards of public service are not always material. They can be moral, psychological, or even spiritual. According to King, Chicago’s development programs will highlight and emphasize the rewards of public service.

The City of Chicago wants to continually find ways to improve its processes, including the posting of positions; recruiting, screening, and selection; hiring activities; and training and development. In transforming the Department of Human Resources, Commissioner King believes, the city will create a high-performing, values-based organization that will attract, motivate, and retain talented public service employees. The city’s ultimate goal, however, is to ensure that its improved processes have a direct and positive impact on service delivery to the taxpayers of Chicago.

The Chicago example illustrates the ways in which governments are changing how they operate their civil service systems, even in environments where change might not be expected. Chicago’s civil service is over one hundred years old, labor unions are strong, and politics is highly centralized in the political machinery (Kasperson 1965). These are all conditions that might create barriers to modernization. However, as illustrated throughout this book, the types of changes occurring in Chicago are happening throughout federal, state, and local governments.

HUMAN CAPITAL MANAGEMENT IN PUBLIC SYSTEMS

Human capital management (HCM) is an essential component of any public management system. It refers to the systems, policies, procedures, and practices of managing human capital within public organizations, whether merit or non–merit systems, civil or non–civil services. The term is often used interchangeably with “human resource management” and “personnel management.” However, practitioners, such as David Walker, comptroller general of the United States, and scholars use the term “human capital” to emphasize the importance of people to the success of government and the need to change the ways employers and organizations interact. In an extensive review of human capital efforts of federal agencies, the Center for Innovation in Public Service outlined four guideposts for human capital management. Organizations need to:

• recognize and manage employees as critical assets;
• strategically plan and manage staffing;
• prioritize/plan human capital costs for sustained investment; and
• openly engage employees via communication and collaboration channels. (Center for Innovation in Public Service 2006, 4)

The primary goal of human capital management is to create a performance-aligned workforce by adopting HCM systems, policies, procedures, and practices that are driven by, or aligned with, an agency’s strategic mission and that are internally consistent and integrated (Center for Innovation in Public Service 2006). In operation these practices are extensive and include strategic human capital and workforce planning, recruiting prospective employees, selecting employees and leaders, training and developing employees, managing employee rewards and recognition, evaluating employee performance, classifying positions, creating a positive and safe work environment (employee relations), and administering employee benefits.

The aim of this book is to engage public organizations in the strategic management of their human capital. The objective is to move away from a fragmented approach to human capital management and toward an approach that facilitates the integration of human capital into the overall strategic management of public agencies. This movement requires that human capital decisions be based on evidence or data. For that to occur, public organizations must establish performance metrics that will enable them to monitor, identify, and diagnose human capital opportunities and challenges. This chapter discusses

• how governments organize their human capital systems;
• how the scope of human capital activities has expanded; and
• a framework for planning, aligning, and assessing human capital management.

HOW GOVERNMENTS ORGANIZE THEIR HUMAN CAPITAL SYSTEMS

An organization’s human capital system comprises components that sometimes work together and sometimes clash. A public organization’s human capital system is embedded within larger political relationships, and its components are shaped by public opinion, legislation, regulations, union contracts, and history. Each political organization has its own unique set of environmental influences that need to be taken into account. Legislation, judicial decisions, executive orders, and regulations related to the merit system and labor relations all may come into play (for a thorough review of these issues see Ingraham 1995; Mosher 1968; and Van Riper 1958).

Prior to the passage of the Pendleton Act in 1883, elected officials largely decided who was appointed to work for the government (Hoogenboom 1959). Although originally the act only required a limited share of the “classified service” to be selected by competitive exam, it was extended over time to cover more and more employees. The classified service includes positions that are in the classified civil service with civil service protections, or that are covered by the merit system. Over time merit systems diffused through all levels of government and public bureaucracies, as political machines were transformed into professionally administered institutions (Hoogenboom 1959). Carolyn Ban and Norma Riccucci (2002) write, “Public personnel management, for better or worse, continues to embody the concept of merit. Notwithstanding, the nature of civil service and the personnel practices which sustain it have changed considerably since 1883.”

In addition to merit-based hiring, most civil service systems give employees other administrative and legal due process rights, such as a right to grieve or appeal an employment decision (e.g., on promotion or compensation) or a decision to discharge them for cause, and protection from partisan pressure and removal (Mosher 1968). In the past decade some governments have tried to eliminate the classified civil service. A few states, such as Georgia and Florida, have shifted at least part of the legal basis of their employment systems from a civil service structure to an employment-at-will model. Employment at will typically connotes an employer’s right to terminate an employee without a reason and an employee’s right to leave when she or he elects (Baucus and Dworkin 1998; Fulmer and Casey 1990).¹ The Department of Homeland Security has an at-will human capital system independent of the federal classified service. Although most governments operate a classified civil service or merit system, the percentage of employees covered by it varies. For example, in 2007, only 60 percent of Indiana’s state government was part of its classified civil service, whereas more than 99 percent of North Carolina’s workforce was covered by its merit system (GPP 2007). The administrative and legal protections that these systems provide public employees vary.

The structure of civil service systems also varies across governments, with some largely decentralized and others very centralized. The purported benefits of a centralized structure include equitable treatment of employees, consistency in the delivery of services, efficiency gains through economies of scale, and clear division of functions between the central human resource department and agencies. In the 1990s many scholars and practitioners pushed for central human resources departments to decentralize authority over some human resource practices to give more flexibility to public agencies and their managers (Kellough and Nigro 2006). Today responsibilities are often shared by a central human capital department or agency, such as the U.S. Office of Personnel Management (OPM), and other agencies, such as the U.S. Environmental Protection Agency and the U.S. Department of the Treasury.

Labor relations—the spectrum of interactions among public employees, public managers, and institutions (governments and unions)—also influence today’s public human capital systems. The academic literature on labor relations is vast. There is great variation in labor relations across governments, depending on the extent of unionization; the scope, nature, and number of issues over which unions bargain; the laws that govern collective bargaining processes; the locus of authority to negotiate labor contracts; and the contentiousness of the bargaining process. In some governments, employees may join a union, but the union has no formal authority to negotiate employment contracts on behalf of its members. In governments where collective bargaining is allowed, there are often restrictions on which employment actions can be bargained. As with merit systems, there is not a common legal framework governing the labor relations of state and local governments (see Cayer 1996).

CHANGING PERSPECTIVE

Historically public personnel management had a strong functional focus that emphasized the administration and regulation of civil service and other public personnel systems and policies—such as job classification, hiring, discipline, performance evaluation, training, and compensation—used to manage people in an organization (Pynes 1997). Public personnel agencies were typically organized into the aforementioned functions, with limited integration across the functions (Wright and McMahan 1992). Although some continue to view human resources traditionally, increasingly public organizations are integrating the traditional responsibilities of managing personnel systems with strategic human capital management (Center for Innovation in the Public Sector 2006).

A strategic human capital perspective suggests that an organization is forward thinking and conceives of its human capital as a valuable asset to the government. It implies that human capital can play a strategic role in the organization’s success. Wright and McMahan (1992, 298) define it as “the pattern of planned human resource deployments and activities intended to enable the [organization] to achieve its goals.” As a result of this shift in the field, HCM departments are shifting from a preoccupation with policing the merit or civil service system and its rules to a broader human resources or human capital perspective that emphasizes planning, collaboration, and partnership with public leaders and managers to achieve government and agency goals (U.S. GAO 2002; Selden, Ingraham, and Jacobson 2001). Human capital management staff are moving away from primarily making operational decisions to acting as consultants to other departments and managers, designing and delivering policies and programs that give managers the tools and training they need to perform effectively in their positions. Below are three examples that illustrate the new role that central human resource offices are assuming.

The Office of Personnel Management is leading the federal government initiative on strategic management of human capital. In conjunction with the Office of Management and Budget (OMB) and the Government Accountability Office (GAO), OPM has developed a Human Capital Assessment and Accountability Framework to provide consistent guidance on human capital management for federal agencies (see Box 1.1).

BOX 1.1

Five Systems of the Human Capital Assessment and Accountability Framework

Strategic Alignment (Planning and Goal Setting). A system led by senior management—typically the chief human capital officer (CHCO)—that promotes the alignment of human capital management strategies with agency mission, goals, and objectives through analysis, planning, investment, measurement, and management of human capital programs.

Leadership and Knowledge Management (Implementation). A system that ensures continuity of leadership by identifying and addressing potential gaps in effective leadership. It implements programs that capture organizational knowledge and promote learning.

Results-Oriented Performance Culture (Implementation). A system that promotes a diverse, high-performing workforce through the use of effective performance management systems and awards programs.

Talent Management (Implementation). A system that addresses competency gaps, particularly in mission-critical occupations, through programs to attract, acquire, develop, promote, and retain quality talent.

Accountability (Evaluating Results). A system that contributes to agency performance by monitoring, and evaluating the results of, its human capital management policies, programs, and activities. It analyzes compliance with merit system principles and identifies necessary improvements.

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Source: U.S. Office of Personnel Management, www.opm.gov/hcaaf_resource_center/assets/HCAAF_1_Intro.pdf.

The Georgia Merit System partners with state agencies to hire, train, and retain the workforce. It provides leadership for workforce planning and development, mediation and employee relations services, work-life services, training and organizational development, compensation and staffing services, salary development, recruitment and testing services, and consultation services. It develops products and services for the enterprise of state government but also customizes services for individual agencies, provides policy development and analysis, and provides employee benefits and financial security services (GPP 2004).

Washington State’s Department of Personnel (DOP) leads in bui...