What Federal HR Could Learn from Tennessee’s Reforms

I recently visited the state of Tennessee to review its award-winning human resources function and training program and the reforms state officials have made over a five-year period. I took a federal chief human capital officer and his deputy with me, so they could imagine the possibilities. While the state’s rules are somewhat different from those of the federal government, what Tennessee has accomplished is remarkable and there are lessons for federal civil service reform.

Tennessee has approximately 42,000 state employees responsible for a range of functions. Approximately 500 HR employees support the state workforce (a 1-84 ratio), including employee training and development, under a shared services model with the same functions as federal HR. While the state workers are not unionized, they do have a strong employee association that was engaged in the reform initiative.

The Transformation

To begin, Tennessee brought on a very effective executive as commissioner of HR, Rebecca Hunter. The position reports directly to the governor and is on equal footing with the heads of all state agencies. Hunter led with the Governor’s edict “to become the number one state for high quality jobs.” When she arrived in 2011, she worked to build a supportive coalition and took about three months to conduct a “walk around” to understand how HR supports the state. She saw common themes emerge consistent with what is common in the federal government, such as, “we can’t hire or fire people,” “non-performers are getting the same pay raises” as high performers, “my supervisor won’t talk to me,” “our employment practices are antiquated,” “deceased people are on certifications,” “performance ratings are inflated,” etc. Based on this feedback and workforce and service data, she inclusively planned a strategy.  

Next, Hunter’s staff quickly developed legislation to form the foundation for reform—The Tennessee Excellence Accountability and Management Act, or TEAM Act. They got the support of the Governor and other agency leaders, and then brought it directly to the legislators (Hunter met with each legislator). The result: In six months she had legislation enacted which addressed fair treatment, hiring, compensation, training, retention based on performance, and regulating political coercion.

With legislation in hand, Hunter did not attempt to make changes all at once, instead, she created a multi-year plan for changing the way the workforce was managed, compensated, and respected. For example, performance management was addressed in the first year, compensation in the second. She also built an effective HR management team as professional and energetic as she is. They used the budget process to tell success stories and explain challenges. They made decisions that let the customers know they were heard.

10 Major Changes

1. Hiring. Officials created a streamlined and repeatable hiring process where people are selected based on knowledge, skills and abilities, not on seniority. Candidate quality has increased, a minimum of 3 candidates must be considered for open positions and HR specialists meet with the customers to define needs every time a hiring action is required.
2. Compensation. All state employees are now compensated based on an occupational and market-based pay system. A compensation consulting firm designed and helped transition to a new model. As a result, salaries were increased as much as 4.8 percent for some occupations. With support from universities, all staff position descriptions were rewritten to include job skill requirements and competencies.
3. Performance. A new combined outcome and competency-based performance management system was implemented with great success. It eliminated numerical ratings and every employee had to have SMART goals (specific, measurable, achievable, relevant and time sensitive). It is supported by a black-belt leadership development program that takes approximately five years to complete. The performance management program is so successful that, for example, the state no longer has a telework policy. Employees do telework, but people are responsible for performance output and outcomes, not where they work in many cases. Pay increases are performance-based (some don’t get them). Managers can promote or demote employees, and more easily remove them when necessary.
4. At-will employment. Some senior employees can be removed within 10 days for cause or no cause.
5. Streamlined appeals. The time it took to adjudicate an employee claim was reduced from approximately 18 months to a required 60 days (15-days for the employee to file a claim, 30-days for HR to rule, and if arbitrated, 15 days for the arbitrators to issue a final ruling).
6. Training and development. The state developed an award-winning, research-based and fully assessed set of curriculums to meet workforce needs and prepare people for career advancement. Employees must compete for acceptance to programs, they are not automatically enrolled. The Director of Learning and Development told me “our focus is on elevating and growing people, not fixing the broken.” I was astounded at how well the state is able to maximize a modest training budget.
7. Customer service. HR has partnership agreements with its customers that focus on outcomes and mutual roles, not in-the-weeds metrics. They guide trust rather than support an HR dictatorship. For example, when I asked them what their average time is to hire, the answer was “I don’t know, we don’t measure it. I guess its 30-45 days. Our customers are so satisfied why would we measure that?” The data supports that; the customer satisfaction rating for HR exceeds 80 percent.
8. Investment in HR. The state made a big investment in reorienting the HR workforce to a more customer-centric and consultative function. An internal HR certification program, profiles of “model behaviors,” and an annual HR conference helped drive the changes. All HR personnel are now generalists and not pigeon-holed into separate disciplines, allowing for organizational agility and a stronger workforce able to address surges, backups, and customer needs.
9. Transparency. An HR dashboard provides state leaders with key metrics on a monthly basis. The data covers a range of things, including service levels, operations, bench strength, demographics, employee engagement, talent management, performance management and satisfaction ratings. The data is even benchmarked against private sector metrics.
10. Technology. The state uses a number of tools to manage HR, access data, and assess and report performance. They use technology to manage processes, communicate status and results, make decisions, engage customers and report results.  

The investment in time, money, and effort has paid off, earning the Baldridge Award for Quality. But much more impressive was the people we met. From Commissioner Hunter to her managers, staff and administrative personnel, the energy, professionalism, high standards, and forward thinking was palpable. You could feel it in the air and see it in the data with a 96 percent transactional accuracy rate and an 80 percent customer satisfaction rating. The HR staff we encountered exuded the energy of an award-winning high performing organization—with salaries considerably lower than those of federal employees.

The federal government could learn a lot from Tennessee. Imagine an annual employee engagement survey participation rate of 95 percent with 95 percent of respondents recommending the state as a great place to work.

Changing HR takes skill, logic, energy, respect for the workforce and the mission, a focus on outcomes and performance, the ability to address non-value-added activity, and commitment by all stakeholders, including lawmakers. But it can be done. Tennessee has proved it.