It’s Time to Recognize Employees Are Stakeholders in Good Government

Last August, the Business Roundtable released an important document committing its members to a redefined “statement on the purpose of a corporation.” The statement highlights the commitment of member CEOs “to all of our stakeholders,” with a specific promise to employees to “compensate them fairly” and “provide important benefits.” The statement also committed to “supporting them through training and education that develop new skills for a rapidly changing world.” Finally, these CEOs promise to “foster diversity and inclusion, dignity and respect.”

The statement on the Roundtable website reads in part: 

Our Commitment to Our Employees and Communities

“Taking Care of Employees. Business leaders understand that a good job with good benefits provides economic security to employees and their families while also making a company a more attractive place to work. When companies have talented and diverse employees who feel secure at work and at home, both people and businesses perform at their best.”

“Investing in Our People. As technology evolves and the nature of work shifts, education and skills demands on both employees and employers are also shifting in new and challenging ways. America’s leading companies are tackling these challenges head on, investing in creative solutions to cater to the learning needs of employees, recruiting and hiring diverse talent and helping current and future workers grow in their careers.”

In a business journal, the statement was referred to as a sea change from the narrow purpose of benefiting shareholders. There was a time when the current statement would have been criticized as paternalistic (although there are important differences). It’s a significant shift from what has been called crony capitalism.  It's also a far cry from the union/management confrontations in the 1950s and 1960s.

Alex Gorsky, Chairman and Chief Executive Officer of Johnson & Johnson stated, ““This new statement better reflects the way corporations can and should operate today.”

Amid the unfolding pandemic, the Office of Management and Budget has recognized the need for decentralized planning and decision making in a statement on resuming federal operations:

“Given the diversity of Federal workforce missions, geographic locations and the needs of individuals within the workforce itself, this transition will require continued diligence and flexibility from federal agencies and the federal workforce.”

“When considering these new work arrangements, agencies should factor in operational constraints and employee needs — such as childcare and transportation. Where possible, agencies should employ creative and flexible solutions to meeting these needs.”

That statement is the most recent to recognize the need for flexibility in workforce management. The civil service system is based on centralized, one-size-fits-all control of personnel actions. When unexpected problems arise, the system does not allow local managers to respond adequately or quickly. Maybe that made sense a century ago but the philosophy today impedes government’s response to national crises and more broadly to good government.

There was a time when businesses relied on a similar philosophy. The 2005 article in FastCompany, “Why We Hate HR” said it all. Yes, HR offices deserved the criticism. HR can be an impediment to improving performance. Employment laws are also part of the problem. Those laws were passed half a century ago.

But today, leading companies define the role of HR very differently. It was described in a 2015 article by three prominent management consultants, “People Before Strategy: A New Role for the CHRO.” In their words, “the CHRO should help the CEO by building and assigning talent, especially key people, and working to unleash the organization’s energy.” 

That idea—that an organization, especially a government organization, has unleashed energy or that HR specialists are a catalyst—would be seen as a non sequitur by government’s critics. However, whenever there is a crisis of any type, government employees demonstrate their energy. That’s true at all levels of government and in all fields. The COVID 19 crisis is only the most recent. Responding to the devastation of hurricanes or last year’s forest fires in California confirm employees are ready when asked.

In business, companies are concerned about tapping unused capabilities and securing employee commitment to solving problems. That is the reason companies invest in engagement surveys. It’s the theme of all the websites on “best places to work.”

As an observer, it's been all too apparent that government suffers from a lack of trust on both sides.  Elected officials, both Democrats and Republicans, have expressed distrust of workers and workers reciprocate. The distrust is evident whenever changes in the civil service system are proposed. That’s often mixed with a lack of mutual respect. It's entrenched in the culture.  

There is a solution that is consistent with the Business Roundtable statement. It's exemplified in Germany where the philosophy of “co-determination” has contributed to the country’s economic growth and is required by law. Unions or employees (where unions are not involved) are represented on corporate boards. On shop floors, employees have “works councils” that are consulted on major decisions and on changes affecting employees. 

In addition to Germany, works councils are found in Britain, Austria, Netherlands, Italy, Belgium, Spain and Denmark.  

In this country, university faculty senates function in a co-determination role. At Penn State, as an example: 

“The University Faculty Senate is the representative body of Penn State’s faculty with legislative authority on all matters pertaining to the educational interests of the University and all educational matters that concern the faculties of more than one college. In addition, the Senate is recognized by the University as an advisory and consultative body to the President on all matters that may affect the attainment of the University’s educational objectives.”

In healthcare, the American Nurses Association has been promoting its Magnet recognition program that designates hospitals as great places for nurses to work. The ‘Magnet® journey’ is a “thorough and lengthy process, demanding widespread participation within the organization. Health care organizations find the journey to be a revealing self assessment, creating opportunity for organizational advancement, team building, and enhancement of individual professional self esteem.” In its discussion of the Magnet program, the ANA emphasizes “shared governance.”  

These ideas are not alien to the federal community. After the National Geospatial-Intelligence Agency was created, employee committees were heavily involved in developing the HR policies and practices. NGA was seen as the model when the Intelligence agencies worked to rethink HR systems a few years ago.

The fact is, employees want their organization to be successful. They take pride in working for a highly regarded organization. They want to play a role in sustaining that success, and they want their value recognized. Where there is mutual trust, employees are energized by challenges and ready to tackle problems. To borrow from the Roundtable statement, when employees feel empowered and secure, they perform at their best.

The pandemic and working from home has changed the way employees are managed. Global reports show it increases morale and productivity. Employees enjoy the flexibility. The OMB guidelines reflect the importance of considering employee needs and adopting “creative and flexible solutions.” In this new work environment, encouraging the formation of employee work councils to play a role in local planning would benefit both agencies and their employees. It will contribute to higher levels of trust and ownership of local operations. The Roundtable CEOs are correct: Taking care of and investing in people will pay off by unleashing an agency’s energy.