Are Agencies Ready for the New HR?

Congressman Gerald Connolly’s proposed legislation, Strengthening the Office of Personnel Management Act, is essential to empowering and rebuilding the federal workforce. It’s consistent with the emerging importance of HR’s role in business management.

That role was championed in a recent book, Talent Wins: The New Playbook for Putting People First, by three of the country’s most prominent management consultants, Ram Charan, Dominic Barton and Dennis Carrey. The importance of their argument is affirmed by the long list of major company CEOs that endorsed the book. This is an ideal juncture to consider the relevance of their argument to government.

For government, strengthening OPM is central to President Biden’s management agenda. His top priority is “strengthening and empowering the federal workforce.” Previous administrations have voiced similar goals but those initiatives have been largely unproductive. It’s time to acknowledge that OPM and the civil service system are a barrier to effectively using talent. Strengthening OPM will be the key to realizing the president’s vision.

The book opens with a discussion that captures government’s talent management problem:

“Most executives today recognize the competitive advantage of talent, yet the talent practices their organizations use are vestiges of another era. They were designed for predictable environments, traditional ways of getting work done, and organizations where lines and boxes defined how people were managed … Companies must deploy talent in new ways. In fact, talent must lead strategy. In our opinion, putting talent first means a complete transformation of the way most companies have done business for decades.”

The authors argue, “Something this big is a job for the CEO. Simply put, reimagining and leading a people-first company cannot be delegated to anyone else in the organization.”

Nowhere is their argument more relevant than in government. No business, large or small – or any entity trying to achieve goals – would rely on unchanged management practices for more than 70 years.

Government is clearly not a business; even the largest companies do not have to address problems as difficult as those confronting the country. The COVID-19 crisis highlighted the importance of employing qualified, committed front line workers. The public depends on federal employees for everything from airport security to weather forecasting to food safety. 

The focus on talent is not another “soft” or “feel good” idea. The business purpose is to improve performance. As the book’s authors argue: “People, not companies, generate value.” Numerous studies have confirmed that investing in employee capabilities and creating a supportive, positive work experience pays off with higher performance.  

The most recent Gallup studies show, “Across companies, business/work units scoring in the top half on employee engagement more than double their odds of success compared with those in the bottom half. To focus on selected performance metrics, a comparison of employers with top-quartile and bottom-quartile engagement scores shows a 14 percent difference in productivity, 81 percent lower absenteeism, and 41 percent better quality (fewer defects). In government, improved employee engagement would translate into lower operating costs and better results. 

OPM’s focus on engagement is on target but as the president’s management agenda illustrates, a large majority of agency scores are below comparable scores in the private sector average. To state the obvious, high performing companies score well above the average. Realistically there is no barrier preventing agencies from raising engagement scores. It starts with holding executives and managers accountable for making that happen.

The PMA reiterates and broadens a previous executive order, which state “The federal government must be a model for diversity, equity, inclusion, and accessibility, where all employees are treated with dignity and respect” but restates it in a broader context, making the point that agencies need almost desperately to add younger workers to replace the large numbers of employees approaching retirement.

This is about more than fairness. There is a growing body of evidence showing that diverse, equitable, inclusive and accessible workplaces yield higher-performance. Companies in the top quartile of gender diversity and those in the top quartile of racial and ethnic diversity typically generate financial returns above their national industry medians. Prominent companies got on this bandwagon several years ago. Many now link executive bonuses with achieving diversity goals. 

The reality is that when talented employees are precluded from moving into new positions or otherwise prevented from fully developing and applying their capabilities they lose and their employer loses.  Discrimination has held back women and employees from non-white racial and ethnic groups for too long. It’s both unfair and costly. As an older, white male, I can empathize with men in positions of seniority but recognize the practices of the past are at odds with today’s emphasis on creating performance cultures.  

Leadership Is Essential

The authors emphasize that leadership is critical: “Simply put, reimagining and leading a people-first company cannot be delegated to anyone else in the company.” They recommend creating a “G3” -- a group composed of the CEO, the chief financial officer and the chief human resources officer -- “as committed, talented and empowered as the CFO.” The important point is that the CHRO should be involved in all organizational and operating decisions.

President Biden has made his people management goals and priorities clear in a series of executive orders. The job of accomplishing Biden’s goals falls to the President’s Management Council working with chief management officers. They should be accountable to the president for achieving those goals.

The legislation introduced by Connolly would create a federal advisory committee “to help the [OPM] Director better understand stakeholder needs, concerns, and ideas as they relate to OPM’s policymaking and operations.” Advisory committee appointees should be recognized leaders in human capital management in other sectors. 

Assuming the White House is open to the best thinking in other sectors, the committee could be invaluable in floating ideas for improving the civil service system. As with other advisory committees, OPM should have no trouble securing agreement from leaders in the HR community to serve. Their purpose would be to bring the best HR thinking and ideas to government.

This inflection point, to use Biden’s phrase, would be an opportune time to initiate an assessment of government’s HR policies and practices. It's not clear when, if ever, an assessment has been completed. It’s time for government to decide what’s working and what’s broken. 

The past two decades have seen a revolution in the role of HR and the practices governing talent management but it’s been ignored by government.  

Strengthening HR’s Digital Capabilities

Connelly’s proposal would require that future OPM directors “be selected without regard to political affiliation and that he or she have human capital and leadership expertise.” That experience should include time actually leading an HR function that has a unified digital platform. Digitalization is key to how a modern HR function operates and what it is capable of delivering.

From Talent Wins, ‘if your CHRO is not a first-rate business leader whom you [the CEO] can trust completely, your company’s HR department will never become more than a source of administrative support … It’s not about building out an HR department. It’s about building out an HR capability.”

Improving service and reducing costs on the transaction side of HR is clearly important. The Trump administration recognized that. However, as the authors argue, streamlining “without investing in the strategic/delivery side is a recipe for disaster” and delivery is linked to technology skills and methods.

Where talent leads strategy, the HR office “must arm itself with cutting-edge, talent-oriented, data-based IT, which lets you understand your workforce better than ever before.” In the future, analytics can enhance HR delivery in several ways: 

1. Recruiting: linking to social media, resumes, and other public data to find job candidates, using AI to sift through individual social media (with permission) to identify jobs that match their skills, experience, and personalities. Data analytics can also be used to identify discrimination.
2. Retention: Crunching data to discover who might be considering leaving the company and why.  Google for example cut the attrition of new mothers in half by lengthening maternity leave from three to five months. Analytics can also help to identify employees dissatisfied with their work experience.
3. Career Development: Looking at a variety of data over time to discover talented internal candidates whose growth should be accelerated. The software can monitor, for example, time spent in meetings, interactions with managers, performance reviews, and performance metrics.
4. Performance Management: The best practice today is continual coaching, and apps can track performance progress and provide several ways for supervisors to provide current feedback.
5. Culture Transformation: “Driving a people-first organization means learning, and then fostering, the kinds of behaviors that help employees do their best collaborative work.” Another study at Google, for example, found the most productive teams were ones in which everyone had an opportunity to voice their ideas. 

Redefining HR’s Focus

Another widely respected consultant, David Ulrich, has written frequently on HR’s role. A key point for Ulrich is that HR has to shift its traditional focus from jobs and individual employees to focus on “how those individual people join together to create successful organizations.” He argues that, 

“Isolating and improving a single HR practice area (e.g., hiring people, orienting new employees, training employees, or paying employees) is not enough; HR must emphasize the integration or bundling of the separate HR practices into integrated solutions and patterns, often called high performance work systems.

That would be invaluable to the functioning of government.