Friday, 28 August 2009

The People Factor

 

   The other book I’ve been reading this holiday (thanks, Ray) is ‘The People Factor: Strengthening America by investing in public service’, by Harvard professor Linda Bilmes and IBM VP W Scott Gould.  This book suggests that investment in US public sector (particularly federal) employees has long been insufficient, and that the accumulation of this deficit  is now leading to a crisis point, which is compounded by:
  • Increased volume and complexity of government transactions
  • Old fashioned personnel systems
  • A lack of leadership
  • Changing demographics and particularly the retirement crunch’
  • A deep-rooted negative perception among young people about the federal government as an employer.

 

The need is therefore to “establish an environment in which people are recognised as the government’s core strategic asset” and to manage the US’ “enormous investment in human capital strategically to deliver the highest possible quality of government for everyone”.  The book defines using an employees’ human capital strategically as:

“Going far beyond simply paying him more or offering additional benefits.  It means leveraging his knowledge, performance and commitment as a federal government employee and a human being.”

 

The people factor

The ‘people factor’ that the book’s title refers to is offered as ‘shorthand’ for this approach, and consists of:

“A fundamental value system that focuses on motivating every worker by recognising his of her contribution to the success of the enterprise.

Organisations that embrace this philosophy tailor their personnel systems- how they recruit, train, evaluate, compensate, reward, and promote people – to the individual worker and the specific type of job.

Using this approach, federal government agencies can achieve gains in productivity similar to those achieved by the best private sector and military organisations.”

 

The book provides some examples of these benefits in chapter 2 (an excellent chapter - just ignore its recommendations for the Huselid / Becker / Beatty scorecard, and Jack Phillips’ ROI process, and use the HCM value chain)  and estimates that gaining the same benefits in the public sector would require an investment (“an investment in democracy”) of $10bn but that this would then produce a return of £300-600bn in productivity gains.

Some of the changes that are offered as solutions to the current problem include:

  • Slimming down the civil service but improving its quality, mainly through better training, including in management and leadership skills
  • Supporting this by more effective HR approaches (especially workforce planning, recruitment, managing poor performance, and reward – although not through performance based pay)
  • Upskilling HR practitioners and bringing in new HR talent from the private sector (in part because ‘it is difficult to image something you’ve never seen’).

 

 Going beyond the people factor to HCM

I agree with most of the suggestions made within the book, many of which could easily apply to the UK as well.  The only one that really gives me pause is a rather sweeping (and very costly) suggestion to increase the average pay of 7000 senior executives by about $35k each.  Earlier on the book the authors suggest that civil service employees should be motivated by the public good rather than a paycheck and I’d suggest federal government tries to make more of this opportunity to engage its leaders before simply throwing money at them (an approach that the UK’s experience suggests doesn’t necessarily result in the desired service improvements).

The book includes some nice examples of strategic HR - for example there’s a nice vignette explaining that the Federal Aviation Administration needs to “replace its entire workforce with highly skilled professionals – while at the same time safeguarding public safety and coping with increased air travel” which also describes how the FAA can meet this challenge by recruiting top-calibre candidates more quickly and investing in training (especially in state-of-the art, customised technology for simulating air traffic control) with all of this being supported by better mentoring, performance evaluation, feedback, supervision and a new ability to weed out poor performers early on.

Plus there are longer case studies on the Defence Logistics Agency and the Government Accountability Office.

But I’m not sure any of this is necessarily anything that I would recognise as strategic HCM.  Of course, not everything the federal government needs to do to improve the current situation does require HCM, but I think some of it will.  So I think it’s a shame that the authors have chosen to focus on the ‘people factor’ (rather than on human capital), particularly because I think the definition of this, ie “motivating every worker by recognising his of her contribution”, is quite weak.

There are probably two key opportunities that I don’t think are adequately addressed:

 

-   Developing organisational capabilities

The civil service contains a very broad range of organisations, and of functions.  I’d have liked to have seen more emphasis on the need for each of these organisations to define for themselves the sort of human capital that they need, and then to ensure they take the specific actions that developing this particular capital requires.

 

-   Differentiating talent

The book suggests that the complex environment in which the civil service operates requires federal workers to capture, manage and share knowledge quickly and effectively and that this requires new skills including agility, adaptability, creativity, flexibility, resourcefulness and speed of service.  But this can’t apply equally to all 15 million employees!

The book does note the need to reward and retain the best employees (the highest performers).  But I think much more could be done to identify which employees are really most important, and to treat them in different ways (differentiating the workforce isn’t something I always recommend, but in a workforce of 15m, it’s got to be an important strategy).

This I suppose, is what’s behind the book’s most innovative proposal, the development of a ‘core-ring model’:

“This refers to an organisation structure in which the ‘core’ of the workforce consists of a cadre of permanent career employees surrounded by a middle ‘ring’ of full-time and part-time temporary government workers, can can move in and out of government.  The third, outer ring is comprised of the traditional contract workforce provided by the commercial and nongovernmental sectors.”

 

I think this sort of structure would be useful (I’m less convinced by the other proposal for an HR passport which sounds incredibly bureaucratic – and could therefore anchor rather than change the current civil service culture) but I think the breakdown probably needs to go much further than this.

 

In overview, the book’s main recommendation that people are seen as the federal government’s main priority has got to be a good thing, and is certainly a welcome change in focus from my other Summer reading!

 

 

 

 

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