Week 2 - Assignment: Describe the Senior Leadership Team's Role in Managing the Agency's Mission and Week 3 - Assignment: Examine Senior Leadership's Actions Toward Improving Organizational Efficiency

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C h a p t e r 1

C O M P E T I N G P E R S P E C T I V E S O N P U B L I C P E R S O N N E L A D M I N I S T R A T I O N : C I V I L S E R V I C E , N O N S T A N D A R D W O R K A R R A N G E M E N T S , P R I V A T I Z A T I O N , A N D P A R T N E R S H I P S

Donald E. Klingner University of Colorado at Colorado Springs

a b s t r a C t This chapter (1) presents a historical perspective on public human resource management; (2) examines the effect of privatization and partnerships on traditional HRM values and systems; (3) discusses how privatiza- tion, partnerships and nonstandard work arrangements affect productivity, and (4) explores how the structure of HRM and the role of managers and HR managers changes under these alternative values, systems, and strategies.

a h i s t o r i C a l p e r s p e C t i v e o n p u b l i C h u m a n r e s o u r C e m a n a g e m e n t Public human resource management (HRM) in the United States can be viewed from at least four perspec- tives (Klingner, Nalbandian, and Llorens 2010). First, it is the functions (planning, acquisition, development, and discipline) needed to manage HR in public agen- cies. Second, it is the processes by which public jobs, as scarce resources, are allocated. Third, it is the interaction

among fundamental societal values that often conflict. These values are responsiveness, efficiency, employee rights, and social equity. Responsiveness means a budget process that allocates positions and therefore sets priorities and an appointment process that consid- ers political or personal loyalty along with education and experience as indicators of merit. Efficiency means staff- ing decisions based on ability and performance rather than political loyalty. Employee rights mean selection and promotion based on merit, as defined by objective measures of ability and performance, and employees who are free to apply their knowledge, skills, and abili- ties without partisan political interference. Social equity means public jobs allocated proportionately based on gender, race, and other designated criteria. Fourth, public human resource management is the embodiment of human resource systems: the laws, rules, organiza- tions, and procedures used to fulfill personnel functions in ways that express the abstract values.

Historically, U.S. public HRM systems developed in evolutionary stages or eras, analytically separate but,

C o p y r i g h t 2 0 1 6 . C Q P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 11/3/2021 2:52 PM via NORTHCENTRAL UNIVERSITY AN: 1945908 ; Richard C. Kearney, Jerrell D. Coggburn.; Public Human Resource Management : Problems and Prospects Account: s1229530.main.eds

C o m p e t i n g p e r s p e C t i v e s o n p u b l i C p e r s o n n e l a d m i n i s t r a t i o n 3

in practice, overlapping (see Table 1.1). As discussed in more detail below, in the patrician era (1789–1828), the small group of upper-class property owners who had won independence and established the national govern- ment held most public jobs. As this generation passed, an era of patronage emerged (1829–1882) during which public jobs were awarded according to political loyalty

Table 1.1 The Evolution of Public HRM Systems and Values in the United States

Stage of Evolution Dominant Value(s) Dominant System(s) Pressures for Change

Patrician Era (1789–1828)

Responsiveness “Government by elites” Political parties + Patronage

Patronage (1829–1882)

Responsiveness Patronage Modernization + Democratization

Professionalism (1883–1932)

Efficiency + Individual rights

Civil service Responsiveness + Effective government

Performance (1933–1964)

Responsiveness + Efficiency + Individual rights

Patronage + Civil service

Individual rights + Social equity

People (1965–1979)

Responsiveness + Efficiency + Individual rights + Social equity

Patronage + Civil service + Collective bargaining + Affirmative action

Dynamic equilibrium among four competing values and systems

Privatization (1980–present)

Responsiveness + Efficiency + Individual accountability + Limited government + Community responsibility

Patronage + Civil service + Collective bargaining + Affirmative action + Alternative mechanisms + Flexible employment relationships

Dynamic equilibrium among four progovernmental values and systems, and three antigovernmental values and systems

Partnerships (2002—present)

Responsiveness + Efficiency + Individual accountability + Limited government + Community responsibility + Collaboration

Patronage + Civil service + Collective bargaining + Affirmative action + Alternative mechanisms + Flexible employment relationships

Dynamic equilibrium among four progovernmental values and systems, and three antigovernmental values and systems

or party affiliation. Next, the increased size and com- plexity of public activities led to an era of professionalism (1883–1932) that defined public HRM as a neutral administrative function so as to emphasize moderni- zation through efficiency and democratization by allo- cating public jobs, at least at the federal level, on merit (Heclo 1977). The unprecedented demands of a global

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depression and World War II led to the emergence of a hybrid performance model (1933–1964) that combined the political leadership of patronage systems and the merit principles of civil service systems. Next, social upheavals (1965–1979) presaged the emergence of the people era in which collective bargaining emerged to rep- resent collective employee rights (the equitable treat- ment of members by management through negotiated work rules for wages, benefits, and working conditions), and affirmative action emerged to represent social equity (through voluntary or court-mandated recruitment and selection practices to help ameliorate the under- representation of minorities and women in the work- force). Thus, by 1980 U.S. public HRM could be described as a dynamic equilibrium among four competing values, each championed by a particular system, for allocating scarce public jobs.

t h e e m e r g e n t p a r a d i g m s : p r i va t i z a t i o n a n d p a r t n e r s h i p s The privatization paradigm emerged at the end of the 1970s when President Carter campaigned by running against the national government as a Washington “outsider.” Following his election, he proposed the 1978 Civil Service Reform Act on grounds that included poor performance in the public service and difficulty in controlling and directing bureaucrats. Beginning in 1981, the Reagan administration, though starting from fundamentally different values and policy objectives, continued to cast government as part of the problem. Consequently, this paradigm shift was marked by increasing reliance on market-based forces, rather than program implementation by government agencies and employees, as the most efficacious tools of public policy. The emphasis on economic perspectives and adminis- trative efficiency reflected the intense pressures on the public sector to “do more with less.” This caused gov- ernments to become more accountable through such techniques as program budgeting, management by objectives, program evaluation, and management infor- mation systems. It also caused efforts to lower expen- ditures through tax and expenditure ceilings, deficit

reduction, deferred expenditures, accelerated tax collec- tion, service fees and user charges, and a range of legisla- tive and judicial efforts to shift program responsibilities and costs away from each affected government.

The 1990s and 2000s brought continued efforts to reduce government—either by increasing its respon- siveness and effectiveness or by “shrinking the beast” and putting more resources in the hands of indi- viduals and businesses. These were exemplified by Vice President Gore’s National Performance Review (National Performance Review 1993a, 1993b), aimed at creating a government that “works better and costs less” through fundamental changes in organizational structure and accountability, epitomized by the terms “reinventing government” or “new public manage- ment” (Osborne and Gaebler 1992). The Republican Party swept into control of Congress in 1994, 2002, and 2010 as a result of a shift toward three emergent nongovernmental values: personal accountability, limited and decentralized government, and community responsibility for social services. Proponents of per- sonal accountability expect people to make individual choices consistent with their own goals and accept responsibility for the consequences of these choices, rather than passing responsibility for their actions on to society. Proponents of limited and decentralized gov- ernment believe that government is to be feared for its power to arbitrarily or capriciously deprive individuals of their rights. They also believe that public policy, ser- vice delivery, and revenue generation can be controlled efficiently in a smaller unit of government in a way not possible in a larger one. And for some, a reduction in government size and scope is justified by perceived government ineffectiveness; by a high value accorded to individual freedom, responsibility, and accountability; and finally, by a desire to devote a smaller share of personal income to taxes. The most significant conse- quence of the emergence of the third value (community responsibility), at least as far as public HRM is con- cerned, has the delivery of local governments social services through NGOs funded by taxes, user fees, and charitable contributions.

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Third-party social service provision has become more complex with an ideologically driven emphasis that directs contracting strategies towards faith-based organizations (FBOs). With the passage of the “charitable choice” component of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, charitable choice has expanded to include a range of federal programs, such as Temporary Assistance to Needy Families (1996); Welfare to Work Formula Grants (1997); Community Services Block Grants (1998); and drug abuse treatment programs (2000). The White House Center for Faith-Based and Communities Initiatives (CFBCI) and five similar offices in the Departments of Education, Justice, Health and Human Services, Labor and Housing and Urban Development were established to contract with faith-based agencies nationwide. According to a study conducted by the Rockefeller Institute of Government (2003), thirty-two states had also contracted with FBOs to provide some social services, and eight states had enacted legislation requiring the inclusion of FBOs in contracting. More recently, state departments of labor received direc- tives from the U.S. Department of Labor (DOL) CFBCI requiring the development of state DOL strategic plans specifically aimed at increasing the number of faith- based grantees by providing training and technical assistance to these organizations as they competed for service provision contracts.

This emerging partnerships paradigm rests on the same values of personal accountability, limited and decentralized government, and community responsibility for social services that characterized the privatization paradigm, with an added strategic emphasis on coope- rative service delivery among governments, businesses, and NGOs. The strategic element of this paradigm is undergirded by the belief that concrete results in pub- lic service delivery can only be achieved by the skilled deployment of human assets regardless of the framework within which it occurs. This new framework’s advocates also argue that the skilled deployment of human assets is best accomplished outside of the traditional civil service model. This has combined with anti-union sentiment,

due also to public and legislative pressure to reduce the negative impacts of health care costs and defined benefit pension systems on state and local governments. These pressures increased dramatically due to the ideological effects of “Tea Party” Republicans in the 2010 midterm congressional elections. Because state and local govern- ments depend heavily on property taxes, the collapse of real estate markets beginning in 2008 stressed their budgets. At the same time, the “Great Recession” of 2008– 2011 resulted in decreased equity prices and returns and thus posed a long-term threat to the financial solvency of public employee pension systems.

As a result of combined financial pressures and anti- union sentiment, many states are rethinking and rein- venting their public personnel systems, from far-reaching efforts in Georgia and Florida, the abolition of public sector collective bargaining in Wisconsin, and other more nuanced efforts to enhance third-party service delivery options (Selden 2006; Cayer and Kime 2006; Naff 2006; Hays, Byrd, and Wilkins 2006; Fox and Lavigna 2006; Nigro and Kellough 2006; Bowman, West, and Gertz 2006; Coggburn 2006; Battaglio and Condrey 2006).

Privatization and partnerships both rely upon the same two basic HRM strategies: using alternative orga- nizations and mechanisms to deliver public services, and increasing the flexibility of employment relationships for the remaining public employees through a variety of nonstandard work arrangements (NSWAs).

Alternative Organizations and Mechanisms These alternatives include purchase-of-service

agreements, privatization, franchise agreements, subsidy arrangements, vouchers, volunteerism, and regulatory and tax incentives (International City Management Association 1989). These are not new. But they are increasingly common, and they supplant traditional service delivery by civil service employees hired through appropriated funding of public agencies.

Purchase-of-service agreements with other govern- mental agencies and NGOs have become commonplace. They enable cities and counties to offer services within a

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given geographic area, utilizing economies of scale. They offer smaller municipalities a way of reducing or avoid- ing capital expenses, personnel costs, and political issues associated with collective bargaining, and legal liability risks. In addition, the use of consultants (individuals or businesses hired under fee-for-service arrangements on an as-needed basis) increases available expertise and managerial flexibility by reducing the range of qualified technical and professional employees that the agency must otherwise hire.

Privatization, as the term is generally used in the United States, means that while a public agency provides a particular service, the service is produced and deliv- ered by a private contractor (Savas 2000). It may result in the abolition of the agency (at times an intended ideo- logical goal). Privatization offers all the advantages of service purchase agreements but holds down labor and construction costs on a larger scale. It has become com- monplace in areas like solid waste disposal where there is an easily identifiable “benchmark” (standard cost and service comparison with the private sector) and where public agency costs tend to be higher because of higher pay and benefits (Kosar 2006; Siegel 1999; O’Looney 1998; Martin 1999).

Franchise agreements often allow businesses to monopolize a previously public function (e.g., cable TV and jitneys as a public transit option) within a geogra- phic area, charge competitive rates for it, and then pay the appropriate government a fee for the privilege. Cities encourage franchising because it reduces their own costs, provides some revenue in return, and results in continuation of a desirable public service.

Subsidy arrangements enable private businesses to provide public services funded by either user fees to clients or cost reimbursement from public agencies. Examples are emergency medical services provided by private hospitals and reimbursed by public health systems, and rent subsidies to enable low-income resi- dents to live in private apartments as an alternative to public housing projects.

Vouchers enable individuals to purchase public goods or services from competing providers on the open

market. For example, educational voucher systems allow parents to apply a voucher to defray the cost of education for their children at competing public or private institu- tions, as an alternative to public school monopolies.

Volunteers contribute services otherwise performed by paid employees, or not at all. These include commu- nity crime watch programs in cooperation with local police departments, classroom teachers’ aides who provide tutoring and individual assistance in many public schools, and community residents who volunteer services as individuals or through churches, and other nonprofit service agencies. Frequently, such contribu- tions are required to “leverage” a federal or state grant of appropriated funds. Though they would probably not consider themselves volunteers (and still less as public agency “clients”), prison inmates are often responsible for laundry, food service, and facilities maintenance.

Regulatory and tax incentives encourage the private sector to perform functions that might otherwise be performed by public agencies with public funds. These include the zoning variances for roads, parking, and waste disposal granted to condominium associations. In return, the association provides services normally performed by local government (e.g., security, waste disposal, and maintenance of common areas).

Nonstandard Work Arrangements All these alternative mechanisms provide public

services without using public employees and in many cases without using appropriated funds. Yet even in those cases where public services continue to be provided by public employees working in public agencies funded by appropriations, massive changes have occurred in employment practices. Chief among these are increased use of temporary, part-time, and seasonal employment and increased hiring of exempt employees (those outside the classified civil service) through employment contracts. Increasingly, public employers reduce costs and enhance flexibility by meeting minimal staffing requirements through career civil service employees and hiring other employees “at will” into temporary or part-time positions (Mastracci and Thompson 2005).

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These temps usually receive lower salaries and benefits than their career counterparts and are certainly unpro- tected by due process entitlements or collective bargain- ing agreements. Alternatively, where commitment and high skills are required on a temporary basis, employers may seek to save money or maintain flexibility by using contract or leased employees in exempt positions. While contracts may be routinely renewed with mutual approval, such “employees” may also be discharged at will in the event of a personality conflict, a change in managerial objectives, or a budget shortfall. These professional and technical workers usually receive higher salaries and benefits than can be offered to even highly qualified civil servants, and they enable mana- gement to cut personnel costs quickly if necessary with- out having to resort to seniority-based layoffs and the bureaucratic chaos precipitated by the exercise of civil service “bumping rights.”

As this trend continues, the workforce of the future will include multiple work arrangements for workers hired under different terms and conditions. At a mini- mum, these include traditional employees hired to “per- manent” full-time or part-time positions to civil service positions that may also be covered by collective bargain- ing agreements. They also include other workers hired to NSWAs—temporary workers (neither unionized nor covered by civil service), contract workers (hired through temp agencies, individual performance contracts, or contracts with their private employers), and volunteers.

Recalling that the first definition of HRM is the policies and procedures that determine how employees are managed, these multiple systems have developed because of the advantages they offer employers. We see a shift toward NSWAs because of their presumed greater flexibility, efficiency, and ideological conformance with market values. In practice, this means less concern for traditional hiring, training, and performance evaluation practices and more concern for contract-based employ- ment. Contract workers are expected to have current competencies. Because their work is time-limited by the terms of a contract, counseling and performance appraisal are less vital than under collective bargaining

or civil service systems. Given the lack of career empha- sis or protection, sanctions increasingly involve nothing more than the nonrenewal of a contract with individuals or with a firm.

The new strategies diminish employee rights. It is more likely that employees hired at will into temporary and part-time positions will receive lower pay and ben- efits and will be unprotected by civil service regulations or collective bargaining agreements. Whether or not the political neutrality of public employees suffers in this environment is unknown presently, but it seems logical to assume that as the criteria for success become more arbitrary or capricious, civil service employees— particularly those in mid-management positions— will begin to behave more like the political appointees whose jobs depend on political or personal loyalty to elected officials (Brewer and Maranto 2000).

The new strategies also threaten social equity (Wilson 2006). Pay comparisons over the past twenty years have uniformly concluded that minorities and women in public agencies are closer to equal pay for equal work than are their private sector counterparts. Managerial consultants are overwhelmingly white and male. Many part-time and temporary positions are exempt from laws prohibiting discrimination against persons with disabilities or family medical responsibilities.

These complex systems create conflicting expec- tations and accountability based on political, admini- strative, and market perspectives. An organization that primarily manages contracts may not be able to ade- quately manage performance. When an organization’s workforce includes both NSWA workers and traditional employees, the result is always complexity and often confusion and uncertainty over the psychological con- tract (terms of employment) between the organization and its employees.

t h e e f f e C t s o f p r i va t i z a t i o n , p a r t n e r s h i p s , a n d n s Wa s o n p e r f o r m a n C e The impact of the new strategies on efficiency has been mixed. On the plus side, the change in public agency

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culture toward identifying customers and providing market-based services increases productivity. And the threat of privatization or layoffs has forced unions to agree to pay cuts, to reduced employer-funded bene- fits, and to changes in work rules (Cohen and Eimicke 1994). But the personnel techniques that have become more common under these emergent systems may actually increase some personnel costs, particularly those connected with employment of independent contrac- tors, reemployed annuitants, and temporary employees (Peters and Savoie 1994). Downsizing may eventually lead to higher recruitment, orientation, and training costs and loss of the organizational memory and “core expertise” necessary to effectively manage contracting or privatization initiatives (Milward 1996). Minimum staffing usually results in increased payment of overtime and higher rates of employee accidents and injuries. As the civil service workforce shrinks, it is also aging. This means increases in pension payouts, disability retirements, workers’ compensation claims, and health- care costs.

What is emerging, then, is a human resource frame- work that paradoxically embraces both collaborative and control-oriented managerial styles, exposing the underlying tensions inherent in the values of moni- toring (compliance) and empowerment (outcomes). The tensions are evidenced by the debates over the desire to maintain control mechanisms associated with tra- ditional civil service systems (risk adversity) and the strategic attractiveness of responsiveness and mana- gerial empowerment (stewardship). Yet rising levels of ambiguity and turbulence at the national and state levels of government demand understandings that move beyond either/or thinking (Kisfalvi 2000).

Opposing and interwoven elements are evident throughout government as citizens and public officials struggle with the coexistence of authority and democ- racy, efficiency and creativity, freedom and control (Lewis 2000). The new HRM paradigm may be increasingly about the management of both control and collaboration and, more critically, about developing understandings and practices that accept, accommodate, and even

encourage these tensions. As an example, increasingly state government agencies are using a model of collabo- rative social service provision and approaches to address- ing social problems. These often involve overlapping partnerships with various public sector organizations, a recognition that the complexity of social issues is in part due to its residence within an interorganizational frame- work, and a recognition that these problems cannot be tackled by any one organization acting alone. These new and often confusing organizational relationships suggest that HR managers will not only need to manage control and collaboration simultaneously but also become much more sophisticated in the competencies needed to work across organizational boundaries (Klingner 2008).

However, collaboration brings its own sets of prob- lems in that contract compliance, rather than traditional supervisory practices, becomes the primary quality control mechanism. This creates a real possibility of fraud and abuse (Moe 1987). In this regard, state and local governments’ experience suggests that privatiza- tion and service contracting outcomes are most likely to be successful when governments:

• Pick a service with clear objectives that can be measured and monitored

• Use in-house or external competition and avoid sole source contracting

• Develop adequate cost accounting systems to com- pare service alternatives and monitor contractor performance

• Consider negative externalities such as impacts on an existing workforce, impacts on the local economy, other governments or functions, gov- ernmental policies, or certain societal groups (Siegel 1999)

The impact of contemporary HRM strategies on the last traditional value (political responsiveness) is also problematic. Public-private partnerships raise fundamental accountability and performance issues for elected officials and public managers (Klingner, Nalbandian, and Romzek 2002). The emergent values

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and systems alter the fundamental role of government by placing greater emphasis on individuals and by shifting the focus of governmental social service delivery from a national to a state and local level. Continual budget cuts and pressures can result in a budget-driven rather than mission-driven agency. Budget-driven agen- cies that address public problems with short-term solu- tions designed to meet short-term legislative objectives are not likely to be effective. Long-range planning, or indeed any planning beyond the current budget cycle, is likely to become less important. Agencies will not be able to prepare effective capital budgets or to adequately maintain capital assets (human or infrastructure).

The conflict between traditional and emergent paradigms represents a fundamental conflict over the appropriate role of government in society. Supporters of privatization and partnerships see them as an oppor- tunity to reduce the size of government (“downsizing”) and reaffirm the basic competitive advantage of market-based models and the legitimacy of individual accountability and community responsibility. Critics see them as a retreat from hard-won historical advances in health, education, and welfare, and the acceptance— implicit or explicit—of increased income inequality and lack of opportunity for our country’s poorest and most disadvantaged citizens. For them, the elected and appointed officials who preside over the dismantling of social and public infrastructure for the sake of short- term political gain are abdicating their responsibility to the public welfare. Realistic budget and policy analysis requires that Republicans agree to raise at least some taxes and simplify the tax code by reducing loopholes and that Democrats agree to reduce some entitlement programs (e.g., Social Security and Medicare) by tying them to income or life expectancy. The alternative is an increased national debt that increasingly undermines economic growth and represents a profoundly inequi- tably transfer of wealth from future generations to current ones. Our current national political stalemate (2010–?), based on Republican control of the House and Democratic control of the Senate and presidency, represents the failure of both parties to engage in the

fundamental legislative process of rational decision making based on common acceptance of facts and compromise among competing values.

t h e C h a n g i n g s t r u C t u r e a n d r o l e o f p u b l i C h u m a n r e s o u r C e m a n a g e m e n t Three main groups share responsibility for public HRM. Political leaders are responsible for authorizing personnel systems and for establish ing their objec tives and funding levels. Personnel directors and specialists design and implement personnel systems or direct and help those who do. In civil service systems, they usually work within a personnel department that functions as a staff support service for manag ers and supervisors. Their main responsibility is achieving agency goals within a prescribed budget and a limited number of positions. HR directors and specialists both help line managers to use human resources effectively and con- strain their personnel actions within the limits imposed by political leaders, laws, and regulations. Managers and supervisors are responsi ble for implementing the rules, policies, and procedures that constitute personnel sys- tems, as they work with employees on a day-to-day basis.

While the basic HRM functions remain the same, the relative emphasis among functions and how they are performed differ depending on the system. HR under a patronage system heavily emphasizes recruitment and selection of applicants based on personal or political loyalty. Once hired, political appointees are subject to the whims of the elected official. Few rules govern their job duties, pay, or rights, and they are usually fired at will. Nor is development a priority.

In a civil service system, HR is a department or office that functions as an administrative support service to the city manager, school superintendent, hospital director, or other agency administra tor. Because civil service is a complete system, HR has a balanced emphasis on each of the four major personnel functions—planning, acqui- sition, development, and sanction. HR is responsible for maintaining the classification system of positions that have been categorized according to type of work and level of responsibility. The pay system is usually tied to

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the classifica tion system, with jobs involving similar degrees of difficulty being compensated equally. HR is also responsible for developing and updating the agen- cy’s retirement and benefits programs. It also handles eligibility and processing of personnel action requests (retirements and other related changes in job status). HR is responsible for advertising vacant or new positions, reviewing job applications, administering written tests, and providing a ranked list of eligible appli cants to man- agers in units where vacancies actually exist. After the manager conducts interviews and selects one applicant, HR then processes the paperwork required to employ and pay the person. HR is responsible for orient ing new employees to the organization, its work rules, and the benefits it provides. It may conduct training itself or contract for it. HR implements employee grievance and appeals procedures, advises supervisors through- out the organiza tion of appro priate codes of conduct for employees, establishes the steps necessary to discipline an employee for violations of these rules, and develops procedures to follow in the event the employee appeals this disciplin ary action or files a grievance. If employees are covered by a collective bargaining agreement, HR is usually responsible for negotiating the agreement (or hiring an outside negotiator who performs this function), bringing pay and benefit provisions into accord with con- tract provisions, orienting supervisors on how to comply with the contract, and representing the agency in internal grievance resolution or outside arbitration procedures.

HR is responsible primarily for implementing HR acquisition rules emphasizing social equity for minori- ties, women, and persons with disabilities. Thus, it most heavily affects recruitment, selection, and promotion policies and procedures. The affirmative action director shares responsibility with the personnel director in this area. Once members of these protected classes are hired, other personnel systems (civil service or collective bargaining) influence the ways planning, development, and discipline occur.

In general, reliance on NGOs reduces the abso- lute number of public employees, thereby reducing the HR department’s functions. But it also increases

the importance of planning and oversight because these are necessary to estimate the type and number of contract employees needed to provide a desired level of service, develop requests for proposals to outside contractors, evaluate responses to proposals by comparing costs and services, and overseeing contract administra tion. HR directors, staff, and managers work increasingly with citizen volunteers and community- based organizations to supplement paid staff. In these cases, public managers need to become more skilled in recruiting, selecting, training, and motivating volunteer workers (Pynes 2009).

Flexibility in employment relationships is achieved primari ly by the increased use of tempo rary, part-time, and seasonal employ ment and by increased hiring of exempt employees (those outside the classified civil service) through employment contracts. Employee deve lopment is largely irrelevant: Most contingent workers are hired with the skills needed to perform the job immediately. Objective performance evaluation may still be required to maintain effectiveness, but not to maintain equity or discipline. Because at-will employees have no job retention rights, it’s easy for employers to control the terms of the relationship. If employees do their jobs adequately, they get paid; if not, they are simply released at the end of their contract and not called back when workload once again increases.

The evolution of public personnel management in the United States adds emergent systems without replacing their predecessors. Instead, new and emergent systems interact and conflict in ways that reflect the dynamic interaction of laws, conditions, and policies. But regard- less of the particular system or combination of systems that control HR policy and practice within a particular agency, the organizational structure and relationships within which public HR functions are carried out are established and regulated by law. Usually, the organiza- tion of public HRM follows a pattern that is tied closely to the evolution of personnel systems themselves. In the United States nationally, this process was represented by passage of the Pendleton Act (1883) and creation of the U.S. Civil Service Commission. This in some cases

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followed and in other cases encouraged the establish- ment of similar state and local civil service agencies. As public personnel management tried to unify the oppo- sing roles of civil service protection and management effectiveness, the organizational location and mission of the central personnel agency became increasingly significant. In some cases it remained an independent commission. In others, it split into two agencies like the U.S. Merit Systems Protection Board and the U.S. Office of Personnel Management, one responsible for protecting employees against political interference under civil service rules, and the other responsible for administering and enforcing the chief executive’s HRM policies and practices in other executive branch agen- cies. As collective bargaining and affirmative action emerged as separate personnel systems, separate agen- cies were often created at all levels of government to focus on these responsibilities. Other agencies like a Department of Labor (federal, state, or local) may have additional personnel responsibilities for regulating public employee pay, benefits, and working conditions. Often, these agencies have conflicting or overlapping roles in particular HRM functions.

Over time, the role of HR in public agencies has evolved with changes in the political and administra- tive context. The primary roles have been watchdogs against the spoils systems, collaboration with legisla- tive restrictions, cooperation with management, and compliance with legislative mandates. During the professionalism era (1883–1932), HR professionals championed merit system principles because public HRM was generally viewed as a conflict between two systems, one evil and the other good. Public HR managers were considered responsi ble for guarding employ ees, appli cants, and the public from the spoils system. This required knowledge of civil service policies and procedures and the courage to apply them in the face of political pressure.

During the performance era (1933–1964), HR sought to maintain efficiency and accountability, and legislators and chief executives sought to maintain bureaucratic compliance through budgetary controls and position

management. Through such devices as personnel ceilings and average grade-level restric tions, it became the role of public personnel management to control the behavior of public managers and to help assure com- pliance with legislative authority. In effect, it was the responsibility of HR to synthesize two distinct values (bureaucratic compliance as the operational definition of organizational efficiency, and civil service protection as the embodiment of employee rights). There was ten- sion between them because they were both symbiotic and con flicting. And together with the value of bureau- cratic neutrality, they supported the concept of political responsiveness.

During the people era (1965–1979) the focus of public HRM shifted to consultation as HR managers demanded flexibility and equitable reward allocation through such alterations to classification and pay systems as rank- in-person personnel systems, broad pay banding, and group performance evalua tion and reward systems. This trend coincided with employee needs for utiliza tion, develop ment, and recognition.

In the privatization era (1980–present), public HR still works consultatively with agency managers and employ- ees and with compliance agencies. But its role and objectives are more contradictory. First, HR is required, more than ever, to manage government employees and programs in compliance with legislative and public man- dates for cost control. Given the common public and legisla tive presumption that the public bureau cracy is an enemy to be controlled rather than a tool to be used to accomplish public policy objectives, its authority may be diminished by legislative micromanagement, or the value of cost control may be so dominant as to preclude concern for employee rights, organizational efficiency, or social equity. Second, HR may work increasingly with volunteers and NGOs (particularly FBOs). Because many public employees (particularly school teachers and administra tors, police, and firefighters) are still covered by union contracts and collective bargaining agreements, civil service and colle ctive bargaining are still important. But as risk management, cost control, and management of other types of employment contracts

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12 t h e s e t t i n g

become more impor tant, a calculating perspective of the joint possibili ties for organiza tional productivity and individual growth tends to supplant a uniform and idea- listic view of public services motivations. This represents a narrowing of the public HR perspective.

Third, and somewhat paradoxically, even as this minimalist view of personnel management emerges, there are countervailing pressures to develop an employment relation ship characterized by commitment, teamwork, and innovation. Productivity is prized, risk taking is espoused, and variable pay systems that reward indi- vidual and group performance are touted. Perhaps the key to the paradox is the emerging distinc tion between “core employees” (those regarded as essential assets) and “contingent workers” (those regarded as replaceable costs). It is likely that public HR success will continue to require the ability to develop two divergent personnel systems, one for each type of worker within a dual labor

market system and to maintain both at the same time despite their conflicting objec tives and assumptions.

With the emergence of the partnership era (2002– present), public HR is increasingly expected to operate within a framework of structures, process, and people that are to a large extent outside of immediate control yet are part of the collective enterprise. The ability to manage tensions will be the defining charac- teristic in shaping and managing collaborative agendas. Managing these tensions will be even more difficult as frequent changes in government policy and in part- ner organizations impact the roles of and job changes for public sector employees. Recognizing the effects of emerging structures and processes on employment systems, mobilizing and capacity building will be the benchmarks of collaborative success.

The impact of changing values and systems can be seen in Table 1.2.

Table 1.2 The Role of Public Human Resource Management in the United States

Stage of Evolution Dominant Value(s) Dominant System(s) HRM Role

Patrician Era (1789–1828)

Responsiveness “Government by elites” None

Patronage Era (1829–1882)

Responsiveness Patronage Recruitment and political clearance

Professional Era (1883–1932)

Efficiency + Individual rights

Civil service “Watchdog” over agency managers and elected officials to ensure merit system compliance

Performance Era (1933–1964)

Responsiveness + Efficiency + Individual rights

Patronage + Civil service

Collaboration with legislative limits

People Era (1965–1979)

Responsiveness + Efficiency + Individual rights + Social equity

Patronage + Civil service + Collective bargaining + Affirmative action

Compliance + Policy implementation + Consultation

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Stage of Evolution Dominant Value(s) Dominant System(s) HRM Role

Privatization Era (1980–present)

Responsiveness + Efficiency + Individual accountability + Limited government + Community responsibility

Patronage + Civil service + Collective bargaining + Affirmative action + Alternative mechanisms + Flexible employment relationships

Compliance + Policy implementation + Consultation + Contract compliance + Strategic thinking about HRM

Partnerships (2002—present)

Responsiveness + Efficiency + Individual accountability + Limited government + Community responsibility + Collaboration

Patronage + Civil service + Collective bargaining + Affirmative action + Alternative mechanisms + Flexible employment relationships

Compliance + Policy implementation + Consultation + Contract compliance + Strategic thinking about HRM + Tension management + Boundary spanning

C o n C l u s i o n Public HRM can be viewed from several perspectives. First, it is the planning, acquisition, development, and discipline functions needed to manage human resources in public agencies. Second, it is the process by which public jobs are allocated as scarce resources. Third, it reflects the influence of seven symbiotic and competing values (political responsiveness, efficiency, individual rights, and social equity under the traditional pro- governmental paradigm; and individual accountability, downsizing and decentralization, and community res- ponsibility under the emergent privatization and partner- ships paradigms) over how public jobs should be allocated. Fourth, it is the personnel systems (i.e., laws, rules, and pro- cedures) used to express these abstract values—political appointments, civil service, collective bargaining, and affir- mative action under the traditional model; and alternative mechanisms and flexible employment relationships under the emergent privatization and partnerships paradigms.

Conceptually, U.S. public HRM can be understood as a historical process through which new systems emerge to champion emergent values, integrate with

the mix, and in turn supplement—but not supplant or replace—their predecessors. From a practical perspec- tive, this means that the field of public HRM is laden with contradictions in policy and practice resulting from often unwieldy and unstable combinations of values and systems and fraught with the inherent difficulties of uti- lizing competitive and collaborative systems to achieve diverse goals. Civil service is the predominant public HRM system because it has articulated rules and proce- dures for performing the whole range of HRM functions. Other systems, though incom plete, are nonetheless legitimate and effective influences over one or more HRM functions. While HR functions remain the same across different systems, their organizational location and method of performance differ depending upon the system and on the values that underlie it.

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Service Reform in the States: Personnel Policies and Politics at the Subnational Level. Albany, NY: SUNY Press, pp. 145–170.

Brewer, G., and R. Maranto. 2000. Comparing the Roles of Political Appointees and Career Executives in the U.S. Federal Executive Branch. American Review of Public Administration, 30(1), 69–86.

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Accountability. American Review of Public Administration, 32(2), 117–144.

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16

C h a p t e r 2

W H A T E V E R Y P U B L I C S E C T O R H U M A N R E S O U R C E M A N A G E R S H O U L D K N O W A B O U T T H E C O N S T I T U T I O N

David H. Rosenbloom American University

Joshua Chanin San Diego State University

C onstitutional law is central to public human resource management (PHRM) at all levels of American government. Judicial branch interpretation of constitutional law regulates in one way or another merit examinations, recruitment, selection, training, promotions, affirmative action and diversity efforts, drug testing, and disciplinary procedures. These court decisions are not just another concern to be balanced among the many competing pressures that public managers face; they form the basis of our public admin- istration and are central to its operation. Because public administrators take an oath to support the Constitution, the values embodied in constitutional law decisions are ethical and normative guides for the exercise of administrative discretion (Rohr 1978, 1986). If indi- vidual administrators or local governmental agencies violate the constitutional rights of applicants or employ- ees, they are subject to legal action and may be held lia- ble for monetary damages. Consequently, public human resource managers are expected to maintain a sophis- ticated knowledge of constitutional law. This chapter

explains the basic structure underlying current consti- tutional doctrine and reviews the leading cases in the areas of greatest concern to today’s PHRM. The follow- ing eight sections will rely on an up-to-date survey of relevant case law to familiarize those interested in PHRM with the application of the U.S. Constitution’s First, Fourth, Fifth, and Fourteenth Amendments to public employment; as well as with the structure of pub- lic administrators’ potential liability for constitutional torts arising out of breaches of their subordinates’ or others’ constitutional rights. The chapter concludes with a brief summary of these constitutional concepts and a few examples of the critical role constitutional law plays in maintaining the integrity of our public administration.

C o n s t i t u t i o n a l D o C t r i n e Constitutional law has not always been central to the operation of our public administrative agencies. As surprising as it may seem, prior to the 1950s public employees in the United States had very few federally

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protected constitutional rights, and even less of an ability to assert these rights effectively within the framework of their employment. These public positions were governed by the “doctrine of privilege,” a constitutional reasoning that held that because public employment was a privilege rather than a right, it could be offered on almost any terms the governmental employer saw fit, no matter how arbitrary. Not having a right to a position in the public service, the employee, upon dis- missal, lost nothing to which he or she was entitled. As Justice Oliver Wendell Holmes made clear in an early case establishing the constitutionality of disciplining public employees for the content of their speech, “The petitioner may have a constitutional right to talk politics, but he has no constitutional right to be a police- man” (McAuliffe v. New Bedford 1892: 220). Under this approach, the Constitution failed to provide public employees and applicants with the very basic protections enjoyed by private citizens.

Although the doctrine of privilege had a certain logic, it also ignored the realities of citizens’ interactions with government in the modern administrative state. If the Constitution did not protect public employees and applicants fired or denied jobs for virtually any reason, would not the same principle apply to other kinds of privileges, such as welfare benefits, government con- tracts, passports, public housing, drivers’ licenses, and so forth? Could those be denied, as public employment sometimes was, partly because the individual favored racial integration, read Tom Paine or The New York Times, failed to attend church services, or engaged in a host of nonconformist and unconventional activi- ties (Rosenbloom 2014: 119–122)? To the extent that “big government” creates a dependency of the people on government benefits, which were considered privi- leges, strict adherence to the doctrine of privilege would enable government to attach conditions to their receipt that could undermine recipients’ constitutional rights. For instance, eligibility for unemployment benefits could require one to be willing to work on Saturday in violation of her constitutional right to free exercise of religion (Sherbert v. Verner 1963).

Notwithstanding a variety of twists and turns in the development of case law since the 1950s, the courts eventually developed an alternative method for analy- zing the constitutional rights of public employees. The fundamental underlying premise is that “the govern- ment’s interest in achieving its goals as effectively and efficiently as possible is elevated from a relatively sub- ordinate interest when it acts as sovereign [dealing with citizens] to a significant one when it acts as employer. The government cannot restrict the speech of the pub- lic at large just in the name of efficiency. But where the government is employing someone for the very purpose of effectively achieving its goals, such restrictions may well be appropriate” (Waters v. Churchill 1994: 675). The contemporary approach, generally termed the “public service model,” calls on judges to balance four often competing concerns: (1) the public employee’s or appli- cant’s interests as a member of the political community in exercising constitutional rights and enjoying consti- tutional protection from arbitrary, discriminatory, or repressive treatment by the governmental employer; (2) the government’s interest as an employer in hav- ing an efficient and effective workforce; (3) the public’s interest in the operation of public administration and government more generally; and (4) the judiciary’s inter- est in avoiding undue involvement in day-to-day PHRM decisions (Harvard Law Review 1984; Garcetti v. Ceballos 2006; Rosenbloom 2014: 149–152).

Importantly, depending on the specific circum- stances, the public’s interest can coincide with either that of the employee or the government. For instance, the public shares a strong interest in robust First Amendment protection of whistle-blowers who alert the media to gross governmental mismanagement or government-created or -abetted dangers to the community’s health or safety. Conversely, the govern- ment and the public share an interest in having very limited constitutional constraints on the dismissal of inefficient, dishonest, or unreliable civil servants. It is important to note that under the public service model all public employees can assert some of the rights they have as citizens or legal residents against

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their governmental employers. Consequently, the term at-will employment is a misnomer in the public sector. It refers to employees who lack a property right or interest in their positions (e.g., those who lack civil service protections against arbitrary treatment). Such employees have no constitutional procedural due pro- cess protections against dismissals or other adverse actions for ordinary work-related causes, such as ineffi- ciency or insubordination. However, due process also applies to liberty interests and public employees retain First, Fourth, Fifth, and Fourteenth Amendment rights to some degree of freedom of speech, association, and exercise of religion, privacy, and equal protection of the laws.

Despite its imperfections, the public service model is certainly an advance over less complicated approaches such as the doctrine of privilege. However, because this approach requires a subjective and often elaborate bal- ancing of the interest of employees, government, and the public, reasonable judges and human resource managers will often disagree on what the Constitution requires in specific circumstances. Judicial decision making under the public service model not only has the potential to cause disagreement; it can also generate constitutional decisions that are difficult to follow and apply to specific personnel decisions. As then Supreme Court Justice, and later Chief Justice, William Rehnquist noted:

This customary “balancing” inquiry conducted by the Court . . . reaches a result that is quite unobjec- tionable, but it seems to me that it is devoid of any principles which will either instruct or endure. The balance is simply an ad hoc weighing which depends to a great extent upon how the Court subjectively views the underlying interests at stake. (Cleveland Board of Education v. Loudermill 1985: 562)

Rehnquist was specifically addressing procedural due process issues involved in the dismissal of a munic- ipal employee. Much the same can be said of judicial decision making regarding free speech and other areas under the public service model, as is demonstrated by

the following review of the contemporary constitutional law of public personnel.

F r e e D o m o F s p e e C h Rankin v. McPherson (1987) outlines the current approach for analyzing public employees’ constitutional rights to nonpartisan free speech. Ardith McPherson was a nineteen-year-old probationary clerk in the office of Constable Rankin in Texas. While talking with a coworker (who was apparently also her boyfriend) shortly after the assassination attempt on President Ronald Reagan, she remarked, “Shoot, if they go for him again, I hope they get him” (322). Another office employee overheard her remark and reported it to Constable Rankin, who fired McPherson after she admitted making the comment. Believing that the dismissal violated her right to free speech under the First and Fourteenth Amendments,1 McPherson sued for reinstatement, back pay, and other relief. In analyzing the case, the Supreme Court’s majo- rity noted that “even though McPherson was merely a probationary employee, and even if she could have been discharged for any reason or for no reason at all, she may nonetheless be entitled to reinstatement if she was discharged for exercising her constitutional right to freedom of expression” (324). This is an example of why so-called at-will employment is an inapt term in contemporary PHRM.

The Court went on to explain the logical structure of public employees’ right to free speech, beginning with whether the employee’s remark touched on a matter of public concern (that is, of potential interest to the public). If a remark relates to a matter of public concern, it is con- sidered of value to the public’s informed discussion of government and public policy. Such comments are part of the free marketplace of ideas that is vital to the operation of our constitutional democracy. By contrast, statements of purely private concern, such as what one employee thinks of another’s personality, intelligence, or clothes, are afforded minimal (if any) protection when they inter- fere with the proper functioning of government offices.

In Rankin, a 5–4 majority concluded that McPherson’s remark touched upon a matter of public concern. It had

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been made in the context of a discussion of Reagan’s policies, and McPherson, an African American, appa- rently offered it as a way of punctuating her disdain for the administration’s approach to minorities.2 Next, upon determining that McPherson’s comment touched on a matter of public concern, the Court proceeded with the balancing required by the public service model. When weighing the government’s interest in discharging an employee for statements that somehow undermine the mission of the public employer, courts must consider the responsibilities of the employee within the agency. An employee’s burden of caution and responsibility for the words he or she speaks will vary with the extent of authority and interaction with and accountability to the public that the employee’s role entails. Where, as in McPherson’s case, “an employee serves no confiden- tial, policymaking, or public contact role,” the potential harm to the public office due to that employee’s private speech is minimal and is outweighed by the employee’s First Amendment rights (328).

Public employees’ free speech protections include a right to “whistle-blow,” which generally involves alert- ing elected officials or the public to gross waste, fraud, abuse, mismanagement, or specific government-created or abetted dangers to the health, security, or safety of the community. The Supreme Court has reasoned that due to their positions inside government, public employees are sometimes uniquely able to contribute to the “free and open debate, which is vital to informed decision-making by the electorate” and “accordingly it is essential that they be able to speak out freely with- out fear of retaliatory dismissal” (Pickering v. Board of Education 1968: 571–572).

A public employee’s First Amendment protection for whistle-blowing and speaking out about their agencies’ decision making and performance was narrowed by the Court’s decision in Garcetti v. Ceballos (2006). There, the Court held that the First Amendment does not protect public employees’ speech made pursuant to their pro- fessional duties, regardless of whether the content of the remarks is deemed a matter of public concern. In the 5–4 Garcetti holding, the Court’s conservative majority

conjured up the doctrine of privilege in determining that “Restricting speech that owes its existence to a public employee’s professional responsibilities does not infringe any liberties the employee might have enjoyed as a pri- vate citizen. It simply reflects the exercise of employer control over what the employer itself has commissioned or created” (Garcetti v. Ceballos 2006: 421–422). In short, a public employee’s expression as part of his or her work product does not enjoy First Amendment protection.3

The Court’s majority opinion in Garcetti drew a con- fusing distinction between the rights of individuals as public employees and as citizens: “refusing to recognize First Amendment claims based on government employ- ees’ work product does not prevent them from participat- ing in public debate. The employees retain the prospect of constitutional protection for their contributions to the civic discourse. This prospect of protection, however, does not invest them with a right to perform their jobs however they see fit” (Garcetti v. Ceballos 2006: 422). This seems to suggest that whistle-blowers have more consti- tutional protec tion in their role as private citizens than they do as public employees. In other words, an employee garners more First Amendment protection if he or she raises a concern through external channels such as the media rather than through the professional chain of com- mand or other internal channels established to protect whistle- blowers. Furthermore, rather than relying on the First Amendment to shield them from retaliatory action, the Court urged public employees who whistle-blow to familiarize themselves with and rely on protective stat- utes, such as the federal Civil Service Reform Act of 1978, as well as relevant state and local statutory provisions. If a statement is covered by the terms of such statutes, it is automatically considered a matter of public concern and the government is prohibited from retaliating, regardless of how disruptive the comments may be.

In Lane v. Franks (2014: 2), the Court attempted to further clarify the Garcetti holding by drawing a distinc- tion between work product speech and “speech [on a matter of public concern] that simply relates to public employment or concerns information learned in the course of public employment,” which continues to enjoy

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constitutional protection. In practice, however, distin- guishing between speech that is part of a work assign- ment and speech resulting from something learned on the job is sometimes likely to be difficult. Consequently, public sector human resource managers should be cau- tious in applying the Garcetti and Franks rulings.

Public employees’ constitutional right to free speech does not extend to partisan management or campaign- ing. In the Supreme Court’s view, the governmental interests in workplace efficiency and the appearance of partisan neutrality outweigh the damage that gov- ernmental restrictions on political activity do to pub- lic employees’ rights. Such measures also protect civil servants from being coerced by elected and politically appointed officials to support parties and candidates (United Public Workers v. Mitchell 1947; Civil Service Commission v. National Association of Letter Carriers 1973). The Court has given wide berth to governmental employers in this policy area by allowing considerable flexibility in the drafting of restrictions (Broadrick v. Oklahoma 1973).

Of course, the fact that political neutrality regula- tions are apt to be constitutional does not mean that governments will choose to impose them. The trend has been away from comprehensive restrictions on public employees’ participation in partisan activities. For example, the 1993 Federal Hatch Act reform mod- ified a variety of restrictions, some of which reached back to the early 1900s (see Rosenbloom 1971: 94–110). The Hatch Act reforms allow most federal employees to distribute partisan campaign literature, make speeches, hold offices in political organizations, stuff envelopes with campaign literature, make phone calls as part of a partisan political campaign, and solicit votes (though not funds). The amended law does not extend to mem- bers of the Senior Executive Service, however, and exempts some agencies, including the Merit Systems Protection Board, and positions, such as Administrative Law Judge, on grounds that overt partisanship would undermine their missions or functions. The Hatch Act Modernization Act of 2012 reduced restrictions on state and local employees’ right to run for partisan office

and exempted District of Columbia employees from many of the Hatch Act restrictions previously applying to them. The federal Office of Special Counsel receives complaints of violations of the Hatch Act and provides advisory opinions on its application.

Can whistle-blowing and related speech on matters of public concern always be distinguished from partisan expression? The answer is clearly no, but the Supreme Court has yet to be confronted with the need to create a legal distinction between them. In terms of PHRM, therefore, some uncertainty remains in this area, espe- cially during electoral campaign periods.

Applying the public service model to employees’ speech can sometimes be further complicated by dis- putes over the exact content of the remarks at issue. In cases where the interpretations of speakers and bystand- ers differ, the public employer is permitted to act on what it reasonably believes was said, even in the absence of substantial evidence. The Supreme Court case law requires merely that the employer take reasonable steps to find out what the employee may actually have said. However, the Court’s guidance in this area has been exceptionally vague: “only procedures outside the range of what a reasonable manager would use may be con- demned as unreasonable” (Waters v. Churchill 1994: 678).

It is clear that the Supreme Court has given public human resource administrators much to think about regarding the scope of public employees’ constitu- tionally protected speech. In sum, the following must be considered: What did the employee actually say? Were the remarks on a matter of public concern? Were they made pursuant to an employee’s official duties as opposed to being based on something that he or she may have learned on the job? What was the specific context in which they were uttered? What is the nature of the employee’s position with reference to confiden- tiality, policy making, and public contact? What is the relative value of the remarks to the public discourse? How great are the remarks’ potential for disruption? To these factors must be added others from earlier case law, including whether the speech involves prohibited political partisanship, suggests disloyalty to the United

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States, or is so without foundation that the employee’s basic competence is called into question. Under the circumstances, it is not surprising that the Supreme Court admits, “competent decision-makers may reason- ably disagree about the merits of a public employee’s First Amendment claim” (Bush v. Lucas 1983: note 7).

F r e e D o m o F a s s o C i a t i o n The contemporary constitutional law regarding public employees’ First Amendment right of freedom of associa- tion is also central to some aspects of PHRM. In general, public employees’ right to join organizations voluntarily (including political parties, labor unions, and even extremist racist and other antisocial groups) is well estab- lished, as is their right to refrain from associating with or supporting organizations (AFSCME v. Woodward 1969; Elfbrandt v. Russell 1966; Shelton v. Tucker 1960; Elrod v. Burns 1976; Abood v. Detroit Board of Education 1977). However, two areas of PHRM that have been specifically “constitutionalized” in this context should be noted.

First, it is possible for union security agreements to violate public employees’ constitutionally protected freedom not to associate; no public employee can be required to join a union as a condition of holding his or her job. However, an agency shop is permitted: This arrangement requires nonunion members to pay a “counterpart” or “fair share” fee to the union that rep- resents their collective bargaining unit. In Abood v. Detroit Board of Education (1977) the Supreme Court “rejected the claim that it was unconstitutional for a public employer to designate a union as the exclusive collective-bargaining representative of its employees, and to require nonunion employees . . . to pay a fair share of the union’s cost of negotiating and administer- ing a collective bargaining agreement” (Chicago Teachers Union v. Hudson 1986: 243–244). But the Court also held that “nonunion employees do have a constitutional right to ‘prevent the Union’s spending a part of their required service fees to contribute to political candidates and to express political views unrelated to its duties as an exclu- sive bargaining representative’” (Chicago Teachers Union v. Hudson 1986: 244).

Certain procedural safeguards accompany a public employee’s First Amendment protection against being compelled to underwrite a union’s political agenda. In the Supreme Court’s words, “the constitutional require- ments for the Union’s collection of agency fees include an adequate explanation of the basis for the fee, a rea- sonably prompt opportunity to challenge the amount of the fee before an impartial decision maker, and an escrow account for the amounts reasonably in dispute while such challenges are pending” (Chicago Teachers Union v. Hudson 1986: 249). In Knox v. Service Employees International Union (2012), the Supreme Court added the requirement that “when a public-sector union imposes a special assessment or dues increase,” as opposed to annual dues, “the union must provide a fresh . . . notice [to nonmembers in the bargaining unit] and may not exact any funds from nonmembers without affirmative consent” (Knox v. Service Employees International Union 2012: 22). In other words, with special assessments and increases, the nonmember employees must have the opportunity to opt in before the union can deduct funds from their paychecks rather than to opt out afterward. Knox strengthens public employees’ First Amendment right not to be compelled to support causes that they oppose. Undoubtedly, though, it will make it more difficult for unions to raise funds to oppose unforeseen political initiatives, such as efforts to reduce public employees’ compensation to limit state or local govern- mental budgetary shortfalls.

Second, beginning with its holding in Elrod v. Burns (1976), the Court began to establish substantial consti- tutional barriers to the use of political partisanship in public personnel decisions. Elrod was triggered when the newly elected sheriff of Cook County, Illinois, fired or threatened to dismiss sheriff’s office employees who were not members of or sponsored by the Democratic Party. The employees bringing the suit were all Republicans holding non-civil service positions and had no statutory or administrative protection against arbitrary discharge. The Court held for the first time that patronage dismissals could violate public employees’ freedom of association and belief. However, it was divided and unable to form

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a majority opinion on the standard that the government must meet when dismissing someone based on partisan affiliation.

Four years later, in Branti v. Finkel (1980), the Court revisited the issue of patronage dismissals. Two employ- ees of the Rockland County, New York, Public Defenders Office were dismissed solely due to their affiliation with the Republican Party. The Court’s majority now agreed that “the ultimate inquiry is not whether the label ‘policy maker’ or ‘confidential’ fits a particular posi- tion; rather, the question is whether hiring authority can demonstrate that party affiliation is an appropriate requirement for the effective performance of the pub- lic office involved” (518). This standard places a heavy burden of persuasion on elected officials and political appointees who would dismiss employees based on their partisan affiliation.

The next patronage case to reach the Supreme Court was Rutan v. Republican Party of Illinois (1990). The gov- ernor of Illinois ordered a hiring freeze prohibiting state officials from filling vacancies, creating new positions, or recalling furloughed employees without his “express permission.” About 5,000 positions became open annu- ally and several employees who were denied promo- tions, transfers, or recalls charged that the governor was “operating a political patronage system” by granting permission to fill openings only with employees hav- ing “Republican credentials” (62, 67). The Court held that “the rule of Elrod and Branti extends to promotion, transfer, recall, and hiring decisions based on party aff i- liation and support” (79). Accordingly, for most intents and purposes, partisanship is an unconstitutional justi- f ication for taking public personnel actions.

In reaching these decisions regarding public emplo- yees’ freedom of association, the Supreme Court consid- ered the various claims that union security arrangements strengthen labor-management relations and that patro- nage promotes democracy and loyalty to elected offi- cials, as well as governmental efficiency. However, using the public service model, the Court concluded that these interests could be secured by means that were less invasive of public employees’ First Amendment rights.

The patronage cases illustrate that constitutional law is forever changing and that even “a practice as old as the Republic” may eventually succumb to new constitu- tional thinking (Elrod v. Burns 1976: 376).

p r i va C y The Fourth Amendment affords protection to private individuals against “unreasonable” government searches and seizures. Traditionally, courts have addressed Fourth Amendment issues in the criminal justice con- text. During the 1980s, however, as drug testing became common practice, the scope of the amendment’s applica- tion to public employees emerged as an important issue in PHRM. In law enforcement cases, the amendment requires that searches and seizures be pursuant to war- rants, or, where these are impracticable, probable cause (reasonable suspicion that an individual is engaged in criminal wrongdoing). In applying the public service model, courts have construed the Fourth Amendment to permit government employers to meet a much lower standard to justify administrative (non-law enforcement) searches. Consistent with the public service model, this lower threshold both manifests and facilitates the government’s significant interest in the performance of its employees and the efficiency of its agencies.

In O’Connor v. Ortega (1987), a divided Supreme Court held that “individuals do not lose Fourth Amendment rights [against unreasonable government searches and seizures] merely because they work for the government instead of a private employer” (723). The justices also agreed that the relevant threshold question is whether the employee has a reasonable expectation of privacy in the workplace. Such an expectation is defined as one that, according to the courts, society is prepared to share. If there is no reasonable expectation of privacy, then the search will not violate the Fourth Amendment. If there is such an expectation, then the search must be reason- able in its inception and scope. In practice, this approach often requires that judges analyze cases individually on their own merits rather than according to broad principles. O’Connor requires that workplace searches of offices, desks, files, and so forth be based on a reasonable

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suspicion that an employee may have engaged in behav- ior for which discipline would be appropriate.

In City of Ontario v. Quon (2010), the Supreme Court extended O’Connor’s logic to the “electronic sphere” (760). The extent to which a governmental employer can obviate its employees’ Fourth Amendment protec- tions against administrative searches through policy statements regarding expectations of privacy remains uncertain. In Quon, Ontario’s “Computer Policy stated that ‘[u]sers should have no expectation of privacy or confidentiality when using’ City computers” (758). Whether that policy extended to Quon’s text messag- ing was in dispute. However, the Court held that even if Quon had a reasonable expectation in his texting, the City’s search of his messages was reasonable in its incep- tion and scope because “a reasonable employee would be aware that sound management principles might require the audit of messages to determine whether . . . pager[s] [were] being appropriately used” (762). While ruling against Quon based on the specific facts of the case, the Court left open the issue of when, if ever, public employees might have a reasonable expectation of privacy in their use of government owned computers, pagers, and other electronic devices because “[a] broad holding concerning employees’ privacy expectations vis-à-vis employer-provided technological equipment might have implications for future cases that cannot be predicted” (760).

The Supreme Court has also held that in certain cases where the “special needs” of the government outweigh the privacy rights of individuals, public employers may conduct warrantless searches, even in the absence of a reasonable suspicion that an employee has engaged in wrongdoing. In most of these situations, the govern- ment’s interests (as well as the public’s) are asserted through suspicionless drug-testing programs, which randomly test certain public employees, regardless of whether there is a reasonable basis for believing that any of these employees use illegal drugs. For example, in Skinner v. Railway Labor Executives Association (1989), the Court held that the Federal Railroad Administration (FRA) may subject certain railroad employees, although

working for private corporations, to random, suspi- cionless blood and urine tests for the presence of drugs or alcohol. The Court reasoned that the government’s legitimate interest in protecting its citizens from railroad employees under the influence of alcohol or drugs sig- nificantly outweighed the Fourth Amendment privacy interests of the employees. In National Treasury Employees Union v. Von Raab (1989), the Court extended this ratio- nale to those public employees who carry firearms or are engaged in drug interdiction. Accordingly, the Court noted that such employees have a reduced expectation of privacy “by virtue of the special, and obvious, physical and ethical demands of those positions” (711). HIV and other health-related testing programs present similar legal issues. In this context, blood- and urine-testing regimes must be reasonable in terms of purpose and procedure. However, as such practices become more common it is increasingly difficult for employees and applicants to claim that they violate a reasonable expec- tation of privacy (see, e.g., Fowler v. New York 1989).

Further, anyone engaged in law enforcement, public safety, and national security positions can be subjected to a reasonably designed suspicionless drug-testing program. Public human resource managers should rem- ember that such testing programs are only for admini- strative objectives, such as greater cost- effectiveness, safety, health, and productivity. Searches for potential criminal punishment require warrants or probable cause, without which evidence generated by them usually may not be used as a basis for prosecution.

l i b e r t y The broad issue of public employees’ constitutional liberty has also been the subject of significant litigation. This area of jurisprudence, called substantive due process, focuses on the meaning of the word liberty in the Fifth and Fourteenth Amendments, which respectively prohibit the federal government and states (and their political subunits) from depriving anyone within their jurisdic- tions of life, liberty, or property without due process of law. Courts have interpreted the due process clause to include those fundamental rights that are “implicit in

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ordered liberty” and are “deeply rooted” in our society’s history and traditions. Many of these rights, including, for example, the right to use contraception or the right to travel, are not mentioned explicitly in the text of the Constitution.

It is common, even natural, for government employ- ers to exercise control over public employees, par- ticularly where matters of public policy, workplace efficiency, and employee morale are concerned. To this end, Senator Sam Ervin found that in the 1960s public employees were requested “to lobby in local city councils for fair housing ordinances, to go out and make speeches on any number of subjects, to supply flower and grass seed for beautification projects, and to paint other people’s houses” (United States Senate 1967: 9). Today, it is more common for federal employers to pressure employees to participate in blood drives, charitable cam- paigns, and similar programs. A court will deem such conditions unconstitutional only if they are found to violate an employee’s fundamental rights, or if the court determines the conditions to be nothing more than ten- uously connected to the interests of the government (see United States v. National Treasury Employees Union 1995). The liberty interests of public employees have the poten- tial to affect government employment practices, but to date have not done so significantly. Public employees’ reproductive decisions are an exception; their grooming preferences and residency requirements illustrate the general tendency.

Cleveland Board of Education v. LaFleur (1974) focused on the constitutionality of a policy requiring mandatory, unpaid maternity leave for public school teachers. The Court found the mandatory leave policy unconstitution- ally restrictive, but used language broad enough to provide protection for public employees’ reproductive choices. The Court stated that it “has long recognized that freedom of personal choice in matters of marriage and family life is one of the liberties protected by the Due Process Clause of the Fourteenth Amendment” and that “there is a right ‘to be free from unwarranted governmental intrusion into matters so fundamentally affecting a person as the decision whether to bear or beget a child’” (639).

In the Court’s view, the liberty to bear children must remain free of undue or purposeless governmental inter- ference. Choices with regard to grooming and residence have been given lesser protection. In Kelley v. Johnson (1976) the Court found no constitutional barrier to grooming regulations applying to male police officers. Although a lower court held that “choice of personal appearance is an ingredient of an individual’s personal liberty” (241), the Supreme Court placed the burden of persuasion on the employee challenging the regulation to “demonstrate that there is no rational connection between the regulation . . . and the promotion of safety of persons and property” (247). The challengers were unable to do this despite the government’s questionable rationale: The government claimed that the grooming standards would make the police more readily identi- fiable to the public (ignoring, apparently, that police officers wear uniforms) and that they would promote esprit de corps, despite the police union’s vehement opposition to them.

Finally, in McCarthy v. Philadelphia Civil Service Commission (1976), the Court upheld the constitution- ality of residency requirements for firefighters. It did so without much discussion and in the face of petitioner McCarthy’s rather compelling concern for the well- being of his family. The decision remains good law and, consequently, public employees can be required to live within the jurisdictions in which they work or a specified distance from it. Though these issues are not frequently litigated and are no longer capturing headlines, the prin- ciples are still very much alive in current constitutional jurisprudence; public sector human resource managers should understand and follow the law established in this line of cases.

e q u a l p r o t e C t i o n Contemporary equal protection analysis under the Fourteenth and Fifth Amendments is of critical impor- tance to PHRM. Equal protection doctrine regulates government affirmative action policies, procedures having a disparate impact on different social groups, and overt discrimination against individuals based

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on race, ethnicity, citizenship, gender, age, and other factors. The threshold question in an equal protection inquiry is whether a law, policy, decision, custom, or practice classifies individuals according to some cha- racteristic such as race, gender, wealth, residency, or education. Such categorizations—either explicit or implicit—must be present in order to justify an equal protection challenge.

What distinguishes an actual classification, such as one created by law, from practices that are ostensibly neutral but have a disparate impact on different catego- ries of people, such as racial groups or males and females? The Court addressed that difference in Washington v. Davis (1976), a case in which unsuccessful candidates for the Washington, DC, police academy sued on grounds that the department’s use of an exam testing verbal skills, which African Americans failed disproportionally, amounted to a racially discriminatory hiring practice. In finding for the police department, the Supreme Court made clear that public human resource practices that appear neutral on their face but bear more harshly on one racial group than another, as has often been the case with merit examinations, will not be unconstitutional simply because of their disparate impact. To violate the equal protection clause, public practices must mani- fest a discriminatory purpose of some kind. The Court emphasized that such a purpose need not be “express or appear on the face of the statute” and made clear that it could be “inferred from the totality of the relevant facts” (Washington v. Davis 1976: 241–242). Such implicit clas- sifications are treated identically to explicit ones. Once they have determined that a classification exists, courts rely on a three-tiered structure to determine its consti- tutionality. What follows is a brief description of this framework, with a particular focus on the application of each tier in the context of PHRM.

Suspect Classifications Courts consider legal classifications based on race or

ethnicity as “suspect,” or highly likely to violate equal protection principles. These suspect classifications, historically employed to disadvantage members of

minority groups, can be very difficult for governments to justify. Reviewing courts subject laws that create sus- pect classifications to “strict scrutiny,” the most intense and exacting form of judicial review. In these cases, the government will bear a heavy burden of persuasion and receive little if any deference. Courts deem suspect clas- sifications constitutional only if they are found to serve a compelling governmental interest and are “narrowly tailored” to achieve that purpose. To date, workforce diversity has not been considered a compelling gov- ernmental interest by the Supreme Court.4 Affirmative action for members of minority groups may be viable if its purpose is to remedy past, proven discrimination against racial or ethnic groups. The leading case in this area is United States v. Paradise (1987), in which a federal judge imposed hiring and promotion quotas for African Americans in the Alabama Department of Public Safety. The case so divided the Supreme Court that it was unable to form a majority opinion. Nevertheless, most of the justices agreed that the remedy was a constitu- tional means to overcoming decades of discrimination and resistance to equal protection in the Alabama state patrol. A majority also agreed that the relief was adequately narrowly tailored.

In the public personnel context, narrow tailoring requires that five conditions be met:

1. Less drastic and equally efficacious remedies, such as fines, are impractical or unavailable.

2. There must be a fixed stopping point at which use of the classification ends. This may be based on time, for example, three to five years, or successful remediation of the previous violation of equal protection, such as minorities having gained 25 % of the positions the governmental workforce involved.

3. The quotas, goals, or targets must be proportio- nate to the racial and/or ethnic composition of the relevant population or workforce base. For example, a 25 % quota for African Americans would be disproportionate in Vermont, but not in Alabama.

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4. Waivers must be available so that if the agency is unable to find qualified candidates then it will not be forced to hire or promote incompetents, on the one hand, or remain understaffed, on the other.

5. The approach cannot place a harsh burden on “innocent third parties.” The general principle is that those employees to whom the classification does not apply (e.g., non-minorities) should not be made objectively worse off by the government’s efforts to promote inclusion and diversity, as in affirmative action. Consequently, firing or furloughing nonminorities to free up positions for minorities is considered a harsh burden, whereas not providing training to nonminorities, which reduces their opportunities for advancement but does change their rank, pay, or other working conditions, is not (see Wygant v. Jackson Board of Education 1986; United Steel Workers of America v. Weber 1979).

In Grutter v. Bollinger (2003), dealing with affirmative action for applicants to the University of Michigan Law School, the Court added a sixth condition that logically applies in the public personnel context as well: that each candidate be afforded an individualized assessment of his or her qualifications.

It is important to note that racial and ethnic classi- fications are considered suspect even if their purpose is to enhance minority employment opportunities. At various times since the 1970s, when the Supreme Court began hearing affirmative action cases, efforts have been made to distinguish between classifica- tions based on “invidious discrimination” and those that are deemed “benign,” or intended to promote the employment interests of minorities and women. In Adarand Constructors v. Pena (1995), a 5–4 majority of the Supreme Court deviated from previous Court juris- prudence and defied considerable academic and pundit commentary suggesting that benign racial or ethnic classifications pose little threat to equal protection because they lack a discriminatory purpose. The Court held that “all racial classifications, imposed by whatever

federal, state, or local governmental actor, must be ana- lyzed by a reviewing court under strict scrutiny” (227). In the majority’s view, requiring such scrutiny is the only way to ensure that there is no intent to discriminate, or if there is one, it is somehow justified by a compel- ling governmental interest and is narrowly tailored.5 In a concurring opinion, Justice Clarence Thomas took pains to explain that, in his view, the entire distinction between invidious and benign was untenable and irre- levant: “government-sponsored racial discrimination based on benign prejudice is just as noxious as dis- crimination inspired by malicious prejudice. In each instance, it is racial discrimination, plain and simple” (241). In Johnson v. California (2005), a case involving prison administration, the Supreme Court held that racial classifications purported to be neutral rather than invidious or benign are also subject to strict scrutiny.

Quasi-Suspect Classifications Classifications based on biological sex are “quasi-

suspect” and subject to an intermediate level of scrutiny. In these cases, the burden of proof is on the government to show that the classification is substantially related to the achievement of important governmental objectives. Originally, courts considered these classifications non- suspect and evaluated them using a much less rigorous standard of review. As society and the judiciary became more conscious of the discriminatory effects of efforts to “protect” women from long working hours, physically demanding jobs, participating on juries in cases involv- ing depravity, and so on, these classifications were raised to an intermediate level. In practice, courts evaluate sex-based classifications using a standard comparable to that of a strict scrutiny review, requiring govern- ments to provide an “exceedingly persuasive justifica- tion” for their use (United States v. Virginia 1996: 533). Intermediate scrutiny poses a challenge to government employment practices based on traditional thinking about “male” and “female” jobs, workplace behavior, physical strength, and other capacities. Practices based on outdated perceptions of gender roles may be vulner- able to constitutional challenge. Although it is currently

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easier in a technical sense to justify affirmative action for women than for racial or ethnic minorities because classifications based on biological sex do not receive strict scrutiny, public sector human resource managers should be alert to the likelihood that such programs will be unconstitutional in the absence of a very strong governmental interest.

Nonsuspect Classifications The federal courts consider classifications based on

residency, wealth, age, education, and similar factors to be nonsuspect. Public policies use such classifica- tions frequently and for a variety of reasons—eligibility for benefits of some kind such as social security, voting, drivers’ licenses, and so forth. Judges subject these clas- sifications to a lower level of scrutiny through what has become known as the “rational basis” test. The burden of persuasion is generally on the challenger to show that such classifications are not rationally related to the achievement of a legitimate governmental purpose. Courts typically grant a great amount of deference to the judgment of lawmakers and governmental employ- ers in such cases. For instance, the Supreme Court found a rational connection between the state’s inter- est in public safety and its policy requiring police offi- cers to retire at age fifty. No equal protection violation was found, despite the fact that many officers would be physically and mentally fit to continue in their jobs well beyond age fifty (Massachusetts Board of Retirement v. Murgia 1976). At present, classifications based on sexual orientation are nonsuspect. However, as with other nonsuspect classifications, they must serve a legitimate governmental purpose.

p r o C e D u r a l D u e p r o C e s s In addition to their substantive aspects, the due pro- cess clauses of the Fifth and Fourteenth Amendments guarantee certain procedural rights to individuals being deprived of life, liberty, or property by the federal or a state or local government. In determining the extent of procedural due process to be afforded in administrative matters, courts balance three factors: (1) the individual’s

interests at stake; (2) the risk that the procedures used, if any, will result in an erroneous decision, and the probable value of additional procedures in reducing the likelihood of error; and (3) the government’s interests, including administrative burdens and financial costs, in using the procedures in place. The underlying assumption in this formula is that although additional procedures will gen- erally reduce mistakes, they also add costs. For example, the high cost of guaranteeing a full-fledged adjudicatory hearing, which includes the right to witness confronta- tion, cross-examination, and legal representation, might be considered necessary in cases where the interest at stake is substantial enough to require a very low error rate. Conversely, where an individual’s interest is min- imal, the government may be required to provide noth- ing more than notice of the decision-maker’s rationale and an opportunity to challenge the decision in writing. Cases involving the rights of public employees illustrate that procedural due process balancing takes place within the framework of the public service model.

In Board of Regents v. Roth (1972), the Supreme Court identified four individual interests that would give public employees a right to a full hearing in dismissals: (1) where the dismissal was in retaliation for the exercise of constitutionally protected rights, such as freedom of speech; (2) “where a person’s good name, reputation, honor or integrity is at stake because of what the gov- ernment is doing to him” (573); (3) where the dismissal diminishes a public employee’s future employability; and (4) where the employee has a property right or prop- erty interest in the position, such as tenure or a contract.

The public service model is important in determi- ning both the timing and the nature of the hearing. In Cleveland Board of Education v. Loudermill (1985), the Supreme Court held that a security guard who allegedly lied on his application was entitled to notice of the allega- tions, an explanation of the employer’s evidence, and an opportunity to respond—all prior to being terminated. The Court noted that Loudermill had a property right in his job by virtue of being a “classified civil servant.” The pretermination requirement is an “initial check against mistaken decisions—essentially, a determination of

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whether there are reasonable grounds to believe that the charges against the employee are true and support the proposed action” (545–546). This serves the inter- ests of the employee as well as those of the public and the government. In cases involving employment termi- nations, such as those at issue in Roth and Loudermill, a pretermination hearing frequently helps the state avoid additional personnel costs caused by unnecessary turn- over and complex posttermination litigation.

A court’s procedural due process balancing changes when employee suspensions are at issue. In Gilbert v. Homar (1997), the Supreme Court reasoned that no due process was required prior to suspending a law enforce- ment officer who had been charged with a felony. In this case, the governmental and public interests in an effective workforce outweighed those of the employee. As the Court explained, “So long as a suspended employee receives a sufficiently prompt post-suspension hearing, the lost income is relatively insubstantial, and fringe benefits such as health and life insurance are often not affected at all” (932). The Court also noted that the government has rea- sonable grounds for suspending an employee who has been formally charged with criminal behavior.

An adverse action triggering procedural due process protections may be based on a mix of factors, some of which involve constitutional rights and others that do not. For instance, an employer may also consider an employee who has engaged in controversial speech to be incompetent or disruptive for reasons unrelated to his or her remarks. In such a case, the employer will have the opportunity to demonstrate “by a preponde- rance of the evidence that it would have reached the same decision . . . even in the absence of the pro- tected conduct” (Mount Healthy School District Board of Education v. Doyle 1977: 287).

Because procedural due process analysis considers the probability that the government is acting in error, the public employer will often investigate an employee before taking disciplinary action. In LaChance v. Erickson (1998), the Supreme Court held that employees sus- pected of lying to or attempting to mislead investigators in an effort to defend themselves may be disciplined

for their falsehoods without any violation of their due process rights. Courts have determined that the due pro- cess “right to be heard” does not protect an employee from sanctions resulting from lying. However, where an investigation may lead to criminal charges, the public employee does maintain the right to remain silent under the Fifth Amendment.

As in other areas, the public service model’s balanc- ing approach in procedural due process cases provides public sector human resource managers with a rough set of guidelines, but it may not prove sufficient to inform particular administrative decisions. Individual facts and circumstances may ultimately determine close legal questions. For example, it is difficult in the abstract to know how quickly after suspending an employee an employer must provide a hearing in order to meet the current “prompt post-suspension hearing” requirement. As always, the best way to keep track of answers to such questions is to follow the case law in one’s jurisdiction, including rulings by the federal district courts and courts of appeals in one’s judicial circuit.

l i a b i l i t y It cannot be overemphasized that a public manager’s need for knowledge and understanding of relevant con- stitutional doctrine is much more than academic. As a result of several Supreme Court decisions over the past three decades, such knowledge has become a positive job requirement (Rosenbloom, O’Leary, and Chanin 2010: 271–287). Today, a public sector manager occupying a position at any level of government may well be person- ally liable for compensatory and even punitive damages, if found to have violated “clearly established . . . consti- tutional rights of which a reasonable person would have known” (Harlow v. Fitzgerald 1982: 818; see also Smith v. Wade 1983; Hafer v. Melo 1991). “Clearly established” in this context itself is not altogether clearly established. In Hope v. Pelzer (2002) the Court held that “clearly established” does not require a judicial precedent in a case with materially similar facts, only that the public employee has “fair warning” from constitutional law and values that his or her behavior will violate someone’s

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rights. However, in Reichle v. Howards (2012), “clearly established” was defined as such “that every ‘reasonable official would [have understood] that what he is doing violates’” a right (Reichle v. Howards 2012: 2093; brackets in the original text). The Supreme Court essentially reit- erated this standard with reference to police in Plumhoff v. Rickard (2014): “a defendant cannot be said to have violated a clearly established right unless the right’s contours were sufficiently definite that any reasonable official in the defendant’s shoes would have understood that he was violating it” (2023).

An exception to personal liability exists for federal personnel in some cases where the individual whose rights have been violated is able to obtain a remedy in alternative fashion established by legislation or, presum- ably, executive order, such as through appeal to the Merit Systems Protection Board (Bush v. Lucas 1983). Moreover, public employees have absolute immunity from civil suits for damages for violations of individuals’ constitutional rights when they are performing adjudicatory functions, such as hearing examiners or “prosecuting” adverse actions (Butz v. Economou 1978; Forrester v. White 1988; Burns v. Reed 1991). Nevertheless, it must be emphasized that absolute immunity attaches to the specific function rather than the job title. Thus, a hearing examiner has absolute immunity when engaged in adjudication, but not when hiring or firing his or her secretary.

In addition to the federal constitutional principles outlined in this chapter, public sector human resource experts must be aware of state constitutional law, which may also affect public sector human resource matters. Where a state’s protection of public employees’ rights such as privacy or substantive due process exceeds that of the federal Constitution, state and local governments must meet the higher state standard. Public managers at all levels of government may avoid liability by exercising their constitutional “right to disobey” any order request- ing implementation of an unconstitutional law or policy so as to prevent infringement of others’ protected rights (Harley v. Schuylkill County 1979). This ability, of course, is premised on an understanding of the constitutional rights at issue and a facility with the public service model

for balancing all the interests at stake. Gaining reason- able knowledge of the constitutional law—both state and federal—that governs one’s actions is the best way to avoid violating rights. Public managers need not be lawyers, but they must develop the ability to recognize if and when decisions, actions, procedures, or policies run afoul of the law.

C o n C l u s i o n Contemporary efforts to improve public sector perfor- mance serve two components of the public service model—the governmental and public interests. However, the interests and rights of employees may receive limited attention. The tools of contemporary public administration—downsizing, performance mea- surement and management, newer electronic commu- nication technologies and social media, outsourcing, competitive sourcing, and collaborative governance arrangements—can increase the immediacy of the Constitution in dealing with human resources. For instance, downsizing and competitive sourcing can bump up against procedural due process and equal protection rights. Where civil service status or other property interests in employment are involved, dis- missals cannot constitutionally be arbitrary, capricious, discriminatory, or unauthorized by law. If individual employees are picked as targets for reductions in force, they will almost certainly have substantial due process rights. Depending on the circumstances, and especially in cases where agencies have been under court order to increase diversity (as in United States v. Paradise), down- sizing that has a harmful impact on the employment interests of minorities or women will be subject to challenge under the equal protection clause.

In an age in which employers can monitor employees’ computer usage, including key strokes, email, and use of pagers and other communication devices, new Fourth Amendment privacy questions are certain to arise, as in Quon.

Outsourcing and collaborative governance present a special set of constitutional issues when they involve a public function (such as incarceration) or so entwine

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30 t h e s e t t i n g

the government and a private organization that it is impo ssible to tell where one begins and the other ends (e.g., public-private partnerships). In those cir- cumstances, under current “state (i.e., governmental) action” doctrine, at the state and local levels, the private organization and its employees may well become liable for violating individuals’ constitutional rights. A private individual working directly for a state or local government is likely to have the same qualified immu- nity as public employees (Filarsky v. Delia 2012). Yet one working for a private organization under contract with a government may not. For example, in Richardson v. McKnight (1997), a prison guard employed by a private prison management firm was held to a higher liability standard. Unlike a public employee, he was subject to liability for violating prisoners’ constitutional rights regardless of whether they were clearly established or a reasonable person would have known of them. Private organizations that become state actors by virtue of their contractual or other cooperative arrangements with the federal government are not liable for money damages in constitutional tort suits (Correctional Services Corporation v. Malesko 2001). Neither are their employees, at least in so far as state tort law offers an alternative through which the injured party may be compensated (Minneci v. Pollard 2012).

A human resource expert aware of constitutional principles and current doctrine could bring this consti- tutional dimension to bear on organizational decisions concerning outsourcing and collaborating with private entities. Will the private organizations, whether for profit or nonprofit, seeking government contracts be working in policy or program areas in which consti- tutional rights are relevant? Will their organizational cultures and staffing levels ensure that such rights will be protected? Could they and their employees with- stand liability suits? Would it be better public policy to keep the function within a government agency in order to make sure that the employees are properly trained with respect to their constitutional responsibilities?

By taking a proactive role in alerting decision-makers to constitutional issues, particularly those presented in First, Fourth, Fifth, and Fourteenth Amendment

jurisprudence, public sector human resource experts will not only protect individual rights but also reduce susceptibility to lawsuits. Incorporating a constitutional dimension into public administration will give manag- ers better and more consistent information and skills to protect employees’ rights as well as to achieve organi- zational goals within the framework of our democratic- constitutional government.

n o t e s 1. The first ten amendments to the Constitution, known as

the Bill of Rights, apply directly to the federal government. The Fourteenth Amendment, which was ratified in 1868, prohibits the states (and their political subunits) from vio- lating many of these rights as well. The due process clause of the Fourteenth Amendment protects individuals from the deprivation of life, liberty, or property by sub-national governments. Over the years, the term liberty has been read by the Supreme Court to “incorporate” much of the Bill of Rights, including the First and Fourth Amendments, which are of particular importance to PHRM. This is why McPherson can argue that her First Amendment rights, which are incorporated into the Fourteenth Amendment, have been violated. Because the Fourteenth Amendment is what applies the First Amendment to state and local gov- ernments, she argues that it has been violated as well. As is discussed later in the chapter, the Fourteenth Amendment also prohibits the states and their subunits from depriving any person within their jurisdiction “equal protection of the laws.” Known as the equal protection clause, this pro- vision is interpreted to apply to the federal government through the word liberty in the Fifth Amendment, a process called “reverse incorporation.”

2. Connick v. Myers, 461 U.S. 138 (1983), establishes that courts must consider a public employee’s comment in its original context when evaluating whether the comment touches on a matter of public concern.

3. The Court noted that an exception might be made for faculty at public universities and colleges, whose work product involves teaching and writing.

4. In Grutter v. Bollinger (2003), the Supreme Court held that diversity in higher education can constitute a compelling governmental interest. The Court’s reasoning would seem to apply to diversity in public sector human resource man- agement as well: “In order to cultivate a set of leaders with legitimacy in the eyes of the citizenry, it is necessary that

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the path to leadership be visibly open to talented and quali- fied individuals of every race and ethnicity” (332).

5. As an interesting and relevant aside, courts may also hold local governments and agencies liable for monetary dam- ages when their policies are closely connec ted to violations of individuals’ constitutional rights, regardless of whether those rights can be said to be clearly established or should be reasonably known (Monell v. New York City Department of Social Services 1978; Pembaur v. Cincinnati 1986).

r e F e r e n C e s Abood v. Detroit Board of Education, 431 U.S. 209 (1977). Adarand Constructors v. Pena, 515 U.S. 200 (1995). AFSCME v. Woodward, 406 F.2d 137 (8th Cir. 1969). Board of Regents v. Roth, 408 U.S. 564 (1972). Branti v. Finkel, 445 U.S. 507 (1980). Broadrick v. Oklahoma, 413 U.S. 601 (1973). Burns v. Reed, 500 U.S. 478 (1991). Bush v. Lucas, 462 U.S. 367 (1983). Butz v. Economou, 438 U.S. 478 (1978). Chicago Teachers Union v. Hudson, 475 U.S. 292 (1986). City of Ontario v. Quon, 560 U.S. 746 (2010). Civil Service Commission v. National Association of Letter

Carriers, 413 U.S. 548 (1973). Cleveland Board of Education v. LaFleur, 414 U.S. 632 (1974). Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985). Connick v. Myers, 461 U.S. 138 (1983). Correctional Services Corporation v. Malesko, 534 U.S. 61 (2001). Developments in the Law—Public Employment. 1984. Harvard

Law Review, 97(7), 1611–1800. Elfbrandt v. Russell, 384 U.S. 11 (1966). Elrod v. Burns, 427 U.S. 347 (1976). Filarsky v. Delia, 132 S.Ct. 1657 (2012). Forrester v. White, 484 U.S. 219 (1988). Fowler v. New York, 704 F. Supp. 1264 (S.D.N.Y. 1989). Garcetti v. Ceballos, 547 U.S. 410 (2006). Gilbert v. Homar, 520 U.S. 924 (1997). Grutter v. Bollinger, 539 U.S. 306 (2003). Hafer v. Melo, 502 U.S. 21 (1991). Harley v. Schuylkill County, 476 F. Supp. 191 (E.D. Penn 1979). Harlow v. Fitzgerald, 457 U.S. 800 (1982). Hope v. Pelzer, 536 U.S. 730 (2002). Johnson v. California, 543 U.S. 499 (2005). Kelley v. Johnson, 425 U.S. 238 (1976). Knox v. Service Employees International Union Local 1000, 132

S.Ct. 2277 (2012).

LaChance v. Erickson, 522 U.S. 262 (1998). Lane v. Franks, U.S. 134 S.Ct. 2369 (2014). Massachusetts Board of Retirement v. Murgia, 427 U.S. 304 (1976). McAuliffe v. New Bedford, 155 Mass. 216 (1892). McCarthy v. Philadelphia Civil Service Commission, 424 U.S.

645 (1976). Minneci v. Pollard, 132 S.Ct. 617 (2012). Monell v. New York City Department of Social Services, 436

U.S. 658 (1978). Mount Healthy School District Board of Education v. Doyle, 429

U.S. 274 (1977). National Treasury Employees Union v. Von Raab, 489 U.S. 656

(1989). O’Connor v. Ortega, 480 U.S. 709 (1987). Pembaur v. Cincinnati, 475 U.S. 469 (1986). Pickering v. Board of Education, 391 U.S. 563 (1968). Plumhoff v. Rickard, 134 S. Ct. 2012 (2014). Rankin v. McPherson, 483 U.S. 378 (1987). Reichle v. Howards, 132 S.Ct. 2088 (2012). Richardson v. McKnight, 521 U.S. 399 (1997). Rohr, John. 1978. Ethics for Bureaucrats. New York, NY: Marcel

Dekker. Rosenbloom, David H. 1971. Federal Service and the Constitution.

Ithaca, NY: Cornell University Press. ———. 2014. Federal Service and the Constitution (2nd ed.).

Washington, DC: Georgetown University Press. Rosenbloom, David H., Rosemary O’Leary, and Joshua Chanin.

2010. Public Administration and Law (3rd ed.). Boca Raton, FL: CRC/Taylor & Francis.

Rutan v. Republican Party of Illinois, 497 U.S. 62 (1990). Shelton v. Tucker, 364 U.S. 479 (1960). Sherbert v. Verner, 374 U.S. 398 (1963). Skinner v. Railway Labor Executives Association, 489 U.S. 602

(1989). Smith v. Wade, 461 U.S. 30 (1983). United Public Workers v. Mitchell, 330 U.S. 75 (1947). United Steel Workers of America v. Weber, 443 U.S. 193 (1979). United States Senate. 1967. “Protecting Privacy and the Rights

of Federal Employees” S. Rept. 519. 90th Cong., 1st Sess. August 21.

United States v. National Treasury Employees Union, 513 U.S. 454 (1995).

United States v. Paradise, 480 U.S. 149 (1987). United States v. Virginia, 518 U.S. 515 (1996). Washington v. Davis, 426 U.S. 229 (1976). Waters v. Churchill, 511 U.S. 661 (1994). Wygant v. Jackson Board of Education, 476 U.S. 267 (1986).

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32

C h a p t e r 3

T H E D E A T H A N D L I F E O F P R O D U C T I V I T Y M A N A G E M E N T I N G O V E R N M E N T

Albert Hyde San Francisco State University

Frederik Uys University of Stellenbosch, South Africa

I n t r o d u C t I o n : W h y d o e s n ’ t p r o d u C t I v I t y M a t t e r t o p u b l I C s e C t o r h u M a n r e s o u r C e M a n a g e M e n t ?

“As society makes demands beyond the private sector’s ability to fulfill, government responds with two tools— regulation or money. But both approaches are incur- ring greater frustrations. We are coming to realize that we have a more finite resource base than previously suspected. Public expenditure may simply bid up the price rather than improve the results.

Thus we understand why it is that as government grows more expensive, not only public sector, but also total national productivity may decline. This effect is not inevitable; government is not necessarily less productive than other sectors of the economy. In fact, government often plays a catalytic role, enhancing the productivity of business. But unless government incorporates a pro- ductivity consciousness in all of its activity, it will tend to grow stagnant as it grows larger.”

—George Gilder, National Commission on Productivity and

Work Quality, 1975, Public Productivity Review, 1(1), 6.

W riting for the inaugural issue of a new public sector journal in 1975 devoted to government productivity management, George Gilder warned of an impending era where the economy of the United States could be significantly threatened in terms of its compe­ titiveness, growth, and ultimately its standard of living. Gilder was greatly concerned, as were many economists, business executives, and political leaders at that time, with the emergence of a new period of stagnation in productivity in the U.S. Coming out of the Second World War with minimal damages to its industrial infrastructure, the U.S. would become the dominant economy of the world. This was fueled by average annual rates of national productivity growth of 2.8% from the late 1940s to early 1970s. So when productivity rates fell by more than half to 1.1% in the 1970s (and, more significantly, the U.S. lagged behind emerging reindustrialized competitors Japan and Germany), and despite much national consternation could still improve to only 1.4% in the 1980s, various commissions were formed to find solutions to the “productivity crises.”

In the center of all this was the public sector. The post–World War II period in the United States is his­ torically regarded as a new plateau for the public sector

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because government was bigger at all levels. Federal, state, and local governments would account for 25% of national gross domestic product and government organizations were larger; employing some 2.4 million federal, 1.5 million state, and 4.8 million local govern­ ment workers1 (Shafritz and Hyde 2012: 80). Those levels beginning in the 1970s were now being seen in the context of larger U.S. economic change and global competiveness.

Victor Fuchs in his definitive economic assessment of the post–World War II era noted that this period marked the emergence of the world’s first service econ­ omy. U.S. employment would increase from 57 million jobs to nearly 75 million jobs by 1967, and the vast majority of the new jobs added to the economy would be in the service industry. Government’s now nearly 9 million workers were a significant part of a now larger American workforce where more than half provided services as opposed to producing things. Among many implications, Fuchs noted two other key points: First, he noted that unlike the industrial production sector where quality of labor inputs was at best stable or declining, the quality of the labor inputs (education and skill levels) was increasing. Second, he pointed to several service industry examples and noted that while overall productivity levels showed modest annual increases, measurements of productivity, quality, and technology demanded more analysis to understand service sector differences and would require more robust measurement techniques (Fuchs 1968: 3–4). In a truly classic case, he compared beauty shops to barbershops (sorry, that is what they were called in the 1960s) and found beauty shops a benchmark of service growth, high quality and variety of services offered, and high productivity (and low idle time) while the barbershop was at best a hold­over place of stable tech­ nology, minimal range of service, and low productivity (Fuchs 1968: 6).

The student of public sector human resource man­ agement (HRM) in the modern era may well wonder what this old historical crisis about economic growth and productivity, barbershops, and the rising services industry has to do with current HRM theory and practice.

After all, not many HRM books devote much attention to productivity or how it is defined and measured, much less how it can be applied to sustain performance or drive innovation. But the larger point is that for over 25 years—from 1967 to 1994—productivity was sys­ tematically measured in most of the federal government agencies and test measured across a good sample of state and local governments. Public management in the last third of the 20th century expended some credible effort in gauging labor inputs, output, and costs while grappling with how to measure the quality and value of government effort.

An understanding of the basics of productivity management (i.e., goals, objectives, metrics, and applica­ tions), why productivity programs were abandoned, and how productivity management integrates technology and information resources goes beyond simple lessons learned. This chapter has three learning objectives for public sector human resource managers and students:

• First, how government organizations work is still important. In a current era where high performance and outcomes­focus dominate, the tendency is to just look at results and ignore the means. But government agencies and their partners and contractors need to focus on the means and the ends—in part because they are also high­reliability organizations and because resources are going to be more limited as govern­ ment budgets tighten to meet rising debt limita­ tions. If government is to be “competitive” in an all but certain era of growing resource scarcity and chronic fiscal stress, it must be able to demon­ strate some sense of “productivity consciousness.” Further, if government expenditure is going to come under increased scrutiny and fiscal pres­ sure, it would help to have “productivity growth” re­established in public management so that it can demonstrate the return on investment for both its workforce and the intermediate outputs it uses through contractors and suppliers.

• Second, in this new century an increasingly loud and polarizing political debate about the role,

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34 t h e s e t t I n g

size, debt levels, and effectiveness of government programs now includes questions and challenges about the compensation levels, work value, and performance levels of public sector workers. The latter is the essence of productivity, which might contribute essential information and objective analysis to balance the often overheated rhetoric dominating current discussions.

• Third, the development of much more sophis­ ticated productivity methodologies that include capital intensity, labor composition, R&D levels, and multifactor productivity that show the effects of technology, efficiency, resource real­ location, and other capital­labor interactions. This offers public sector human resource man­ agers new perspectives on innovations, quality, and service growth. A better understanding and potential application of current productivity metrics offer an opportunity to reassess the value proposition of government effort and its service work ethic. They also can shed light on the value of different strategies for workforce composition and work disposition; for example, are part­ time or contract employees as productive as full­time employees, and are employees who tele­ work as productive as employees who come to offices every day?

For a beginning, this chapter returns to the 1960s, a period in the United States where confidence in government was high and government agencies were expanding their roles and tackling a range of new social and economic problems. Overlapping interests of congressional members and political and business leaders about slowing national productivity rates and economic anxieties over rising inflation and unem­ ployment rates would ultimately result in the estab­ lishment of a productivity measurement program for the federal government. By the early 1970s the newly reformed Office of Management Budget would take the lead in establishing a statistical reporting system that began with data that would cover about half of the federal civilian workforce for a base year in 1967

and reach almost nearly 70% by 1994 (Fisk and Forte 1997: 19–20).

h o W t o M e a s u r e p r o d u C t I v I t y I n g o v e r n M e n t a n d W h y ? Measuring productivity is essential to any serious econ­ omy. Any nation that desires to be competitive, provide an adequate standard of living for its citizens, and generate some level of wealth transfer for its future gen­ erations begins with a goal of meeting a level of produc­ tivity growth that will cover its birth and immigration rates and provide for its elderly citizens—conventionally about 2%. Productivity growth is also traditionally cor­ related with compensation and employment. Throu­ ghout most of the 20th century, rates of productivity change were “procyclical”—meaning productivity rates increased during periods of economic growth and expansion but tended to contract during business downturns (McGratten and Prescott 2012).

Following the Second World War, productivity growth in the U.S. was solid and substantial, outstrip­ ping most of the international competition. When the great productivity slowdown hit the U.S. in the 1970s, the discussion of what government should do to foster productivity largely focused on what were perceived failings in government economic and regulatory policies that were seen as hampering private sector productivity growth. Critics of government pointed to deficit spen­ ding, byzantine tax systems, regulatory interventions in markets, and lack of effective public investment in research & development (R&D) and education. Some of these criticisms—or “unnecessary burdens” as they were called in a 1984 White House Conference—are “the usual suspects,” so to speak (White House Conference 1984: 4). However, underlying this reexamination of private and public sector poor performance was the recognition that the United States was in the midst of a major transition to a new economy—one based pri­ marily on services and information—and that the old industrial management and workforce control systems and strategies were no longer adequate.

In the early 1970s, congressional interest led directly to creating a formal productivity measurement program

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in the federal government (Fisk and Forte 1997: 19). While the politics and institutional arrangements that surrounded the program to be launched by the Office of Management Budget, the Office of Personnel Management (then the Civil Service Commission), and the Government Accountability Office (then named the General Accounting Office) with measurement via the Bureau of Labor Statistics is interesting, the focus here is on the who, what, and how of measurement.

Once baselines were created with the measure­ ment system, the program (usually acronymed FPMP for the Federal Productivity Measurement Program) would include about half of the civilian federal work­ force at the start and reach about two­thirds of the workforce by the mid­1970s (Fisk and Forte 1997: 20). There were some major missing agencies, such as the intelligence agencies, the State Department, and large portions of the Defense Department. But even among these excepted agencies, some support functions were included for measurement (logistics and administrative support for Defense, contractors for NASA, etc.).

Determining what would be measured was seen as the real challenge. Agencies had to designate some form of final output. The primary focus was on some form of physical count—such as volume of mail for the Post Office, or number of inspections, claims or

invoices paid, student days taught, licenses processed, health care visits, and so on. To be fair, this challenge to identify outputs was neither a formidable nor a new phenomenon for government. The prevailing bud­ geting system for the federal (and many state govern­ ments) coming out of the midcentury was performance budgeting, which included extensive program work output measurements both as efficiency indicators and the basis for using work measurement to establish staff­ ing levels for programs. Performance budgeting was a precursor for productivity management; as one early budgeting textbook noted, “The contentions for the new productivity field in the 1970s are very reminis­ cent of the earlier claims for performance budgeting. Performance budgeting sought to establish manage­ ment’s right and responsibility to ascertain how much work was being accomplished, at what cost, and for what results as measured against specified performance standards. In the 1970s the questions are still the same, only it seems they are being asked by different people” (Hyde 1978: 78).

Under the FPMP, agencies established different program output measurements and integrated them into a final organizational output index. Box 3.1 outlines the calculation elements that are part of conventional productivity measurement.

Traditional Productivity Measurement Output Metrics Input Metrics

Y= f(L, C, IX)t

Where,

Y = Output L = Labor C = Capital IX = Intermediate Products

Output per employee year

Final Output (Tangible)

Examples:

• Post Office: Mail Volumes • Social Services: Claims Paid • Forest Service: Fire Acres

Or Intermediate Activities

(Contracts, Personnel, Supply, Maintenance, Investigations, etc.)

Number of employee years

Compensation per Employee

Unit Labor Costs

No estimates of capital or computing included

Source: Federal Productivity Measurement Program (FPMP) (1972–1994).

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36 t h e s e t t I n g

Labor was measured by counting the total number of employee years, compensation levels for each employee year, and a unit labor cost. The resulting calculation is then indexed at 100 for the first measurement year for the FPMP, as illustrated in Figure 3.1 which shows changing rates of federal productivity versus the private sector over the period. Federal productivity actually rose by a respectable rate of 1.5% annually from 1967 to 1982 before slowing to a .6% annual rate during the “produc­ tivity slowdown” era from 1982 to 1994. The 1.5% rate slightly exceeded private sector productivity of 1.4% but trailed the private sector rate of 1.3% in the next period.

In commenting on what this quarter century of productivity output data shows, some major qualifica­ tions must be noted. First, the labor input in the federal

productivity calculation (shown in Table 3.1) was an aggregate workforce input number. It did not include submeasures of capital, equipment, technology, or other factors that could affect outputs. Second, while the cost of labor input numbers did include full wage numbers (salary, benefits, incentives, etc.), qualitative submea­ sures of skill levels or qualifications were not included. Third, labor functions were measured in the FPMP but with an aim of showing productivity comparisons across different functions. FPMP provided average annual productivity rates for 24 federal occupational groups, with two functions showing negative productivity index rates: electric power utility personnel and medical ser­ vices. These are also the two functions with the highest unit labor costs compared with the function (Finance)

Figure 3.1 FPMP Annual Rates of Change—Labor Productivity in Federal Government vs. U.S. Private Sector Rates, 1967–1994

−5

−4

−3

−2

−1

0

1

2

3

4

5

1967 1971 1975 1979 1983 1987 1991

US Private Sector Federal

Source: U.S. Monthly Labor Review, May 1997, and U.S. Bureau of Labor Statistics, Labor Productivity Database (data.bls.gov/time series/PRS85006092).

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t h e d e a t h a n d l I f e o f p r o d u C t I v I t y M a n a g e M e n t I n g o v e r n M e n t 37

with the highest productivity, which had the lowest unit labor costs; this points to the sensitivity of the FPMP to wage factors.

In productivity management terms, this effort by the FPMP certainly qualified as a good start. It demon­ strated that federal productivity levels were certainly in line with the national experience and in the same league as the private sector. While the data qualifications weren’t trivial, there was a decent foundation to make assessments about federal productivity contributions in macroeconomic terms and solid trend data for agencies to review unit productivity performance levels.

However, in 1994, the FPMP was a victim of a major round of federal budget cuts and the Bureau of Labor Statistics suspended the measurement side of the pro­ gram. Thereafter, no systematic productivity measure­ ment would be undertaken at the federal level except for the U.S. Postal Service. It is certainly safe to say that few managerial tears were shed on the loss of the federal productivity program. And, as will be noted, the dismantling of the FPMP did not leave a vacuum. Following the National Performance Review at the outset of the Clinton­Gore administration in 1993, total quality management2 was essentially the succes­ sor to productivity management. Quality management was a better or perhaps more comfortable fit for most federal agencies, with its blend of participatory man­ agement groups and measurement methodologies that appealed to a predominantly white collar workforce and to labor groups that championed labor­management partnerships.

Before assessing the federal productivity manage­ ment effort, productivity efforts at the state and local level should also be mentioned. While no systematic effort was made to report on subnational public produc­ tivity levels, there was interest in testing measurement strategies and methodologies. BLS—as their exemplary 1998 final study attests—selected ten different state and local services to develop and report productivity statistics on. While the big three (police, fire, and education) were excluded from the study—the range of services stud­ ied made quite clear that calculating productivity was

both feasible and methodologically defensible. These early investigations grappled with how to determine output measurements for services ranging from more blue collar–oriented activities in enterprises (utilities and transit services) to mostly white collar (parole and corrections to employment and social services). BLS also chose three services where numerous private sector systems existed for comparison. Table 3.1—taken from the 1998 study—highlights the comparisons.

In the three state and local services in which public and private sector comparisons were made, public sector productivity tracked and compared favorably. But it should be noted that these three services were among the least personnel intensive. The service area with the lowest productivity rates was local jails, although the longer­term counterpart of state prisons had better productivity rates even though labor inputs were about the same. BLS’s assessment of the corrections area (jails and prisons) is all the more interesting because it devel­ oped means to account for overcrowding. Further they pointed to the recidivism issue—which they weren’t able to factor in a meaningful way—which would clearly alter the output measurement. Another interesting distinction drawn in this productivity study was how mass transit productivity rates showed improvement when the output metric was vehicle revenue miles as opposed to number of trips.

One final contribution—worth further reflection— was BLS’s estimates of rates of labor intensity for gov­ ernment services. Although this was soon to change with the full arrival of the computer and Internet technology era starting around 1995, Figure 3.2 (which calculated for one baseline year, 1992) shows labor compensation as the percentage of total operating expenditures for different government functions. Human resource man­ agers, of course, would appropriately point to functions like police, fire, and education and conclude that when over 80% of the operating budget is human resources, the quality and skill levels of those resources are paramount. Productivity management advocates would certainly concur but add that tracking the labor productivity rates of these invaluable assets is also critical.

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38 t h e s e t t I n g

While the agency productivity output and labor costs measurements were the primary quantitative emphasis, BLS also attempted more qualitative evaluations. Agency

managers were surveyed about their explanation for shifts in productivity that perhaps foretold of the per­ ceived value of FPMP as an important human resources

Table 3.1 Annual Labor Productivity—State & Local Governments—10 Functions over Select Years

Service (Years Measured) Output

Labor Input

Labor Productivity

(Government)

Comparison Labor Productivity

(Private Sector Counterparts)

Electric power (1967–1992)

3.6% 1.5% 2.1% 2.3%

Natural gas (1974–1992)

–0.7% 0.9% –1.6% –2.2%

Water supply (1967–1992)

1.8% 1.2% .6%

Mass transit (passenger trips) 1967–1992

.5% 2.6% –2.1%

Mass transit (vehicle revenue miles) 1967–1992

2.2% 2.6% –.5%

Alcohol beverage sales (1967–1992)

–.1% –1.2% 0.9% 0.9%

State prisons (1973–1992)

7.8% 7.8% .1%

Local jails (1970–1992)

4.7% 7.3% –2.4%

Juvenile institutions (1971–1992)

.3% 1.4% –1.1%

Unemployment insurance (1967–1992)

3.7% 2.3% 1.3%

Employment services (1972–1987)

0% –.9% 1.0%

Source: U.S. Bureau of Labor Statistics, 1998, Measuring State and Local Government Productivity: 9.

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t h e d e a t h a n d l I f e o f p r o d u C t I v I t y M a n a g e M e n t I n g o v e r n M e n t 39

managerial tool. Fisk and Forte in their closing assess­ ment of the FPMP note that most agencies explained major shifts in productivity levels as driven by workload volatility and technology. In the 1970s unforeseen politi­ cal, financial, or environmental events were identified as the primary driving forces that would cause an agency to ramp up or scale down work efforts and staffing levels, which would then shifted productivity levels. Later, in the 1980s agency comments pointed to major changes in office automation and computing as major driving forces (Fisk and Forte 1997: 27). In other words, productivity measurement wasn’t seen as having much of an effect other than to register the impacts of external factors.

Another political development may have also shaped this managerial disinclination toward productivity mea­ surement. In 1985 the Reagan administration promu­ lgated an executive order as part of his newly re­elected administration’s federal management improvement pro­ gram. Entitled the President’s Productivity Improvement Program, the 23 designated primary federal agencies under OMB’s direct purview were to institute formal programs that would establish a productivity office and publish a productivity improvement plan with a formal measurement system. On the first page on the executive order draft, OMB announced that a 20% improvement goal by 1992 for all agencies would be set. Further in the

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Liquor Sales

Welfare

Gas

Electric Power

Housing

Solid Waste

Sewerage

Water

Air Trans

Health

Water Trans

Parks & Rec

Nat. Resources

Transit

Highways

Finance

Hospitals

Libraries

Corrections

Education

Fire

Police

8.8%

11.6%

14.3%

17.6%

26.9%

34.5%

38.6%

39.1%

41.0%

42.1%

45.9%

54.3%

58.0%

60.6%

61.3%

62.2%

65.9%

66.0%

76.5%

82.8%

89.5%

90.4%

Figure 3.2 Personnel Compensation as Percentage of Total Operating Expenditures for Select State and Local Government Functions, 1991–1992

Source: U.S. Bureau of Labor Statistics, 1998, Measuring State and Local Government Productivity: 23.

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40 t h e s e t t I n g

document, OMB proclaimed that these implemented productivity goals would “be translated into projected cost savings” (Wright 1984).

Federal agency managers certainly understood and both resented and resisted this type of “productivity math”—where productivity gains were “pre­ordered” to be used to decrease agency budgets as opposed to increasing service quality, investing in agency capabi­ lities, or supporting innovation efforts. NASA, having launched a major contractor and agency effort around productivity improvement a year earlier, was typical of agency response—notifying OMB that under this pro­ gram they were essentially being penalized for their efforts and therefore were disinclined to participate (NASA­JSC 1985). As the Reagan administration’s poli­ tical capital was diverted to other more pressing matters (the Iran­Contra affair, etc.), the OMB initiative was set aside and quietly left to expire at the end of Reagan’s second term.

There is a long history of “lapsed” public sector man­ agement efforts driven by executive mandate to reduce agency budget levels whether at the federal or state government level. Politically, programs launched from auspices of one executive are almost always let go when a new administration takes over. However, this instance entails the additional peril of using productivity mea­ surement primarily as a budget tool for cost­cutting as opposed to a management reinvestment tool for ser­ vice quality improvement, upgrading infrastructure or technology, or enhancing public service commitment. The latter is what makes productivity management an important management tool—its use in ensuring that economies and industries innovate and grow, and don’t stagnate.

o l d l e s s o n s l e a r n e d — n e W Q u e s t I o n s n e e d e d As mentioned, budget cutbacks in the first two years of the Clinton administration would result in termina­ tion of the federal productivity measurement effort. In addition to changing budget priorities, new manage­ ment initiatives (some call them fads) like total quality

management, and lack of political support from agency managers with long memories about the ill­fated OMB 1985 productivity program, the productivity environ­ ment itself was changing. For the student of human resources management to make sense out of the change in the 1990s and in order to draw appropriate lessons for the future, five factors need to be examined.

First and foremost, national productivity improved dramatically, emerging out of its two­decade slumber. Driven primarily by new technology and capital invest­ ment, private sector productivity annual growth rates reached 2.1% in the mid­1990s and over 2.5% by 2000, as Figure 3.3 illustrates. Debates among economists about Robert Solow’s famous query in 1987—“You can see the computer age everywhere but in the productivity statis­ tics”—now shifted from what the problem was to what was now driving the solution and whether it would last (Brynjolfsson 1993). In the late 1990s, after productiv­ ity soared nationally and federal government budgets reached surplus levels for the first time in seemingly decades, interest in productivity plummeted.

It also should be noted that productivity measure­ ment also changed in an effort to capture the increas­ ing complexity of the now ascendant digital revolution. Coming out of the productivity slowdown period, there remained great concern that a services­dominated economy would hamper productivity and economic growth (Baumol, Batey Blackman, and Wolff 1989). Remarkably, economists looking at productivity trends in a so­called stagnant sector found—as a Brookings symposium of leading economists noted—“services now lead the way.” The consensus estimate was that ser­ vice industries contributed over 73% of labor productiv­ ity growth in the 1990–2000 period and 76% of U.S. total productivity growth (Triplett and Bosworth 2004: 2).

Obviously U.S. productivity growth improved dra­ matically, as Figure 3.2 shows. Not quite as obvious was why, given the new domination of services in the U.S. economy. During the 1990s the American eco­ nomy added more than 19 million jobs while manu­ facturing goods production sectors were basically flat. This doesn’t mean that manufacturing productivity

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t h e d e a t h a n d l I f e o f p r o d u C t I v I t y M a n a g e M e n t I n g o v e r n M e n t 41

decreased. Quite the opposite: Since 2000, U.S. manu­ facturing jobs have declined by over 30% while manufa­ cturing output has increased by almost 50% (de Rugy 2011). Basically, the U.S. manufacturing labor force has dropped to under 12 million workers who are now producing the equivalent total output as the previous 17 million workforce.

u . s . M a n u f a C t u r I n g : o u t p u t v s . J o b s s I n C e 1 9 7 5 To many economists and management analysts, it was clear that something else was in play. It became increas­ ingly obvious that the impact of “other dimensions” of productivity had not been adequately measured before. To be fair, organizational purchases of capital—even computers and other technology investments—were part of the productivity equation that included the total costs of labor and capital equipment. As economists debated both if and when the investments made by the U.S. in both the private and public sector would mate­ rialize up to the mid­1990s productivity turnaround, pressure mounted to augment the methodology for

measuring productivity. The resulting metric called multi-factor productivity still produced an output ratio per labor hour, but it was expanded to include labor­capital interactions to estimate what contributions were made by technology, other efficiency actions, and resource reallocations.

Currently—if one looks at the 2011 multifactor productivity trends from the U.S. Bureau of Labor Statistics of U.S. national averages (excluding govern­ ment services)—the following larger view is possible (Figure 3.4). The introduction of multifactor produc­ tivity not only enlarged the organization view of capital and labor resources, it also provided a means for assess­ ing different strategies for human resource investments. Capital intensity also included a separate breakout for the contribution of information processing equipment and software. So, for example, a state government’s motor vehicle registration and licensing department could reassess how to align its technology support, capital equipment ratios, workforce mix of service emplo­ yees and contractors, and Internet services provision to achieve the most optimal productivity levels.

0

1

2

3

4

5

A v e ra

g e a

n n

u a l

p e rc

e n

t c

h a

n g

e

2.8

1.1 1.4

2.1

2.5

1.8

1947-73 1973-79 1979-90 1990-2000 2000-2007 2007-2011

Figure 3.3 U.S. National Rates of Average Productivity Growth, 1947–2011, Private Sector Nonfarm business (excludes all levels of government)

Source: Bureau of Labor Statistics (2011).

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42 t h e s e t t I n g

A second factor entailed internal shifts in public sec­ tor workforces. The movement towards a super­majority white collar workforce had been underway for some time. Government agencies at all levels contracted out support functions and blue collar jobs, accelerating this trend. By the mid­1990s, the federal workforce was below 15% blue­collar positions; by 2010 the percentage went below 10%. But much more importantly, government work­ forces were becoming more highly compensated as aver­ age grade levels increased. Productivity measurements capture this of course when labor costs are attached to labor hours. So when viewing the FPMP statistics in Table 3.1, both the effects of annual salary increases given across the board to the workforce and rising costs from promotions and labor compositions are in play.

Figure 3.5 shows a 50­year decadal perspective of how the federal workforce has shifted from a 50%–25% split

between the lowest six grades and the highest five grades, By the end of the FPMP, the split was 30% for lowest grades and 45% for the top five for white collar workers. In 2014, the top five grades accounted for just under 62% of the federal workforce. Of course, those grade increases reflect higher education levels, greater skill qualifications, longer tenure, and an older force. But similarly, productiv­ ity measurement using today’s methodologies are capable of measuring impacts of labor composition and if in place might have been useful in assessing the impacts of these shifts. For example, one factor often mentioned in looking at current workforce dynamics in government is contract management. Instead of framing the question in terms of staffing—that is, aligning employee grade levels with the level and award amounts of contracting—the producti­ vity question might produce a different assessment of the optimal mix of organizational and contractual staffing.

Figure 3.4 National Productivity Growth Rates for Private Nonfarm Business Sector, 1987–2011

0

1 9 8 7 -1

9 9 0

1 9 9 0 -1

9 9 5

1 9 9 5 -2

0 0 0

2 0 0 0 -2

0 0 7

2 0 0 7 -2

0 1 1

1 9 8 7 -2

0 1 1

0.5

1

1.5

2

2.5

3

Multifactor Productivity Labor Composition Contribution Capital Intensity Contribution

Source: Bureau of Labor Statistics, May 9, 2012 Office of Productivity and Technology.

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t h e d e a t h a n d l I f e o f p r o d u C t I v I t y M a n a g e M e n t I n g o v e r n M e n t 43

So externally the national productivity picture brightened, and internally the labor structure of many government organizations shifted toward a high quality in terms of human factors workforce. Two other factors emerged in the 1990s that pushed the demise of produc­ tivity management. The advent of quality management, already mentioned, in effect superseded productivity. Quality management in the public sector also got some help from a major effort in the American service indus­ try to embrace the principles of quality management. Telecommunications, banking, insurance, and even health care organizations began to develop their own versions of quality with a distinct service focus. These industries all had major counterparts in the public sec­ tor at federal, state, and local levels (along with being suppliers, contractors, and partners), and they strongly encouraged benchmarking and sharing of best practices

with government agencies. Many of these service indus­ try corporations helped fund studies on quality practices among state and local governments and set up advisory committees to help launch government­wide efforts.

At the federal level, when the September 1993 National Performance Review report was issued, quality management was not a primary reference point. How­ ever the report’s second chapter—“Putting Customers First”—was quality management 101 from top to bot­ tom. The administration issued Executive Order 12862 embedding all of these quality expectations into agency management requirements. All federal agencies deal­ ing with the public were required to identify their cus­ tomers, set quality standards for service, survey their customers, and act to make government services “equal to the best in business.” Unlike the aforementioned for­ mal productivity programs where improvements might

Figure 3.5 Grade Level Change in the Federal Government in the Civilian White Collar Workforce by Decade, 1962–2014

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

GS 1-3 GS 4-6 GS 7-10 GS 11-13 GS 14-15

1962 1972 1982 1992

PFMP Ends 2002 2012 2014

Source: Compiled by the authors using federal employment data from www.fedscope.opm (2002, 2012, 2014), the 1962, 1972 Civil Service Commission Federal Civilian Workforce Statistics Report, and the 1982 and1992 Office of Personnel Management Federal Civilian Workforce Statistics Reports.

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44 t h e s e t t I n g

be translated into cost savings and staffing reductions, quality improvements were reinvestments in the agency’s performance.

Quality management also was highly compatible with the aims and natural interests of a highly skilled workforce. Quality management called for very high levels of workforce participation or what was gener­ ally called “empowerment.” Workers at all levels were expected (and trained) to join together in any number of variations of quality groups or project efforts to analyze quality problems (improvement teams) or to devise new solutions (process redesign teams). Most of these teams operated outside of the classic formal hierarchical and representation structures of government bureaucracy. Many of the efforts included contractors, partners, and even client and customer groups.

Essentially, the core dimensions of quality management—internal process measurements, external customer focus, employee participation, and contrac­ tor involvement—were all highly compatible with the public management premises and goals embodied in the Reinventing Government movement. For much of the decade, quality management was seen as a preferred framework for organizational change that emphasizes work groups and processes with a customer focus that was superior to more formal organizations focused on work through functional specializations. But formal quality management would face a similar fate as produc­ tivity with the presidential election change in 2000. One of the first acts of the Bush administration was to issue an executive order ending labor­management partnerships. While the executive order neither prevented government agencies from labor consultations nor promoting qua­ lity program aspects, the management emphasis at the federal level shifted to competitive government, tech­ nology innovations, new personnel systems, and new budget priorities.

A fourth factor—the emergence of performance results management—also played a pivotal role in pro­ ductivity’s demise as both management change strategy and methodology for assessing performance. Following passage of the Government Performance Results Act

in 1993, federal agencies went through a five­year trial period putting in a budgeting system that asked agencies to prepare five­year strategic plans with performance goals based on outcomes. Indeed, reliance on outputs— the core numerator in productivity metrics—was seen as a problem with underperformance. Both the Office of Management and Budget and the GAO (then the General Accounting Office—soon to be renamed the Government Accountability Office) championed this new direction.

There were few dissenters. It was difficult to argue with the strong current of performance management— or, as an assessment of the demise of FPMN by the research staff at the Minneapolis Federal Reserve Bank quoted one Beltway expert, “I don’t care how fast a gov­ ernment worker goes through a pile of paper until I know whether the pile of paper needs going through in the first place . . . . productivity numbers tell me nothing until I have a measure of the benefit” (Wirtz 2000: 6). So the federal emphasis (and many state governments likewise pursued performance results budgeting variations) was on measuring the effects—or social outcomes—of gov­ ernment programs. Productivity was equated with more simplistic efficiency while performance was to be best understood in terms of measuring effectiveness.

This is a pivotal issue that productivity management has always recognized but been unable to reconcile. One of the most influential early management theorists in productivity—Michael Packer3—addressed this in an MIT white paper in 1982 aptly titled “What’s Wrong with Organizational Productivity Analysis?” Packer sorted through the different measurement issues highlighting the degrees of difficulty and reliability in various service industry and government organizations, especially those with substantial R&D efforts, intelligence roles, or those that produce more intangible outputs. He also noted all the objections that managers would have about mea­ surement and data analysis methods, especially if the numbers were going to be used to make comparisons to other private sector entities. But his point was that man­ agers weren’t going to be impressed by simply knowing how the organization’s current productivity rates were

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t h e d e a t h a n d l I f e o f p r o d u C t I v I t y M a n a g e M e n t I n g o v e r n M e n t 45

trending. Packer urged that organizational productivity data be used to interpret the range management flexibil­ ities and potential scale of improvement and innovation in the same vein that business enterprises use market research and economics (Packer 1982: 9–10).

Packer’s concerns are still valid today. If human resource managers want to understand how much pro­ gress is being made in pursuit of organizational goals and concurrently how effective the use of human, capital, technology, and information resources is, they will need analytical tools for measuring productivity. Productivity analytical tools go beyond simply adopting a vocabulary of management efficiency used to proclaim that new initiatives (the movement to cloud computing in govern­ ment comes readily to mind) will make the workforce more productive.

But perhaps a case example is needed to illustrate this point. Federal agencies today are striving to comply with requirements to allow teleworking in their agen­ cies. Most use surveys of workers in their teleworking programs that show higher job satisfaction, more time spent doing task work, and less time doing administra­ tive work. A study at the Patent and Trademarks Office found teleworking employees processed more patent applications per year than their in­office counterparts, according to the Commerce Department Office of Inspector General. That makes them more or equally productive, except that the Inspector General noted that teleworkers didn’t process applications at a greater rate; they simply reviewed patents for more hours than their office­bound counterparts (U.S. Dept. of Commerce 2012). Of course, the program is successful on a number of other fronts, but in terms of Packer’s organizational productivity analysis framework challenge, the questions still remain: How productive is teleworking and how do you know?

This basic human resource management question deserves more than subjective answers. In another detailed assessment of teleworking using national government employee survey data, Mahler provides a sterling examination of the benefits of teleworking programs and questions whether there may be a rift

between those who are and those who are not allowed to participate. The survey results point to strong agree­ ment that those who telework report higher levels of job satisfaction and improved personnel productivity (Mahler 2012: 413). But how do they know, since there are no basic quantitative measurements of organiza­ tional, unit, or much less individual productivity in place? No disparagement of teleworking or any other form of flexible work arrangements using new tech­ nologies is intended; the point is simply to reinforce the need for organizational productivity measurement, especially in government services.

There remains an unranked fifth factor that, despite a great amount of activity that occurred and continues to be made, is of less certain significance. This would include organizational change management strategies based on participatory management in the workplace. When these “change strategies” have been charted in the private sector, results in terms of productivity mana­ gement are mixed.

Some change management strategies have pursued linking compensation to productivity. Results here have generally followed Blinder’s conclusion that chang­ ing the way workers are treated increases productivity more than changing compensation practices (Blinder 1990: 13). A 1999 NBER–MIT metastudy on produc­ tivity improvement concluded that progressive human resource policies and practices produced little net orga­ nizational productivity benefits, as increased labor costs tended to offset increases in productivity improvements, where they were measured (Lester 1999) or even resulted in lower performance and diminished organizational reputation (Keating et al. 1999).

Other multiple organizational case reviews are more positive, as Black and Lynch have noted in a 2004 Fed­ eral Reserve Bank of San Francisco research note. They found that those organizations supporting workplace innovations—specifically work teams, more flexible job definitions, and up­skilling of the workforce—tended to be more productive than traditional organizations (Black and Lynch 2004: 2), These efforts also have multi­ ple objectives—to support workforce retention, enhance

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46 t h e s e t t I n g

morale, and promote engagement and commitment to organizational values. Of course, in government agen­ cies where productivity is no longer measured, these are the only managerial objectives that remain.

a C o n C l u d I n g n o t e a n d a p o s t s C r I p t This chapter, despite its odd title, began with three objec­ tives and a hope. The objectives were to recast productiv­ ity measurement methods and management strategies to promote better understanding of several key debates about whether governments are competitive, workforces are compensated appropriately, and organizations are using their resources optimally.

It’s already clear that the national debate about the size and role of government is most likely to be argued on political grounds. Whatever the shape of the 2016 federal budget, discretionary program spending or the remaining programs after entitlements and interest requirements are destined to be further crowded in the coming decade. This was apparent back in 2006 when McKinsey published a study calling for a renewal of the federal productivity program so that federal produc­ tivity could be part of what they called “performance transparency” (Danker et al. 2006). That the study was basically ignored, even by the largely pro­business Bush administration, proves once again that sector productiv­ ity comparisons are neither compelling nor convincing.

However, the organizational productivity challenge is going to be of increasing interest. As the public­private pay comparability debate continues, human resource managers are going to face increasing pressure (and media scrutiny) to explain how staffing, productivity, and compensation levels are linked. Debates about the necessary numbers of police, teachers, nurses, and other public work functions are going to go deeper than arguing trends in crime rates, test scores, and health care outcomes. Many government functions are already on the defensive about why well­intentioned efforts are not always translating into improved out­ comes. Governments may find that to obtain additional resources to achieve better results, they will have to demonstrate that their good intentions are matched by

high productivity levels and optimal use of resources. This will become even more apparent as technology alters every aspect of work from content to methods to work skill competencies.

Public managers may well want to revisit the current quality of performance paradigm in which being respon­ sive and delivering services that meet citizen preferences seems to be all that matters. The means (i.e., produc­ tivity) in which organizations determine that the right things are being done using the right mix of resources most efficiently is also essential. Again, this is going to be even more critical as technology and connectivity transform the production and service processes. Public services, especially those that are human interaction intensive, are not going away. However, productivity measurement can provide human resource managers with critical information about how to use technology shifts in support of the next stages of public service innovation. Hopefully, the need for organizational pro­ ductivity metrics and opportunity for using multifactor productivity analysis in the public sector will bring pro­ ductivity management back to the forefront of human resources management.

Finally, it is altogether fitting and indeed ironic, that there is a renewed debate about national productivity levels. In this new decade since 2010, U.S. productivity growth rates have slumped dramatically, to dismal levels, even below the terrible 1970s (Blinder 2014):

1870–2013 2.3%

1948–1973 2.8%

1973–1995 1.4%

1995–2010 2.6%

2010–2013 0.7%

While economists have been somewhat surprised by this and there is disagreement about the causes, this time there is consensus about the long­term consequences and potential negative effects. Governments will also find that they are part of the debate about what to do.

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t h e d e a t h a n d l I f e o f p r o d u C t I v I t y M a n a g e M e n t I n g o v e r n M e n t 47

Robert Solow, of the “computers and productivity” link­ age mentioned earlier, noted in a recent interview that what is most different now is the recognition that what drives productivity growth most is management differ­ ences. Paraphrasing Solow, it’s not how capital intensive or technological advances that matter most. It’s “failure in management decisions”—the inability or unwilling­ ness to rethink and reallocate tasks within organizations to compete successfully (Solow 2014). Of course, that reallocation of tasks to an organization’s workforce is the essence of human resources management and a reminder of why productivity measurement matters.

n o t e s 1. The 9 million total government workers in the 1970s com­

pares with 14 million total full­time government workers (there are also over 5 million part­time employees) accor­ ding to the last available census of government in 2012. About 90% of that growth has been in state and local government (U.S. Census 2014).

2. Although the literature on quality management in the pub­ lic sector is extensive—beginning with quality circles in the 1980s merging into full blown total quality management programs in the 1990s, an Executive Order mandating customer service quality standards and reviews—that goes beyond the scope and space allotted for this review.

3. Michael Packer died in the World Trade Center in New York City during the September 11 terrorist attacks; he was delivering a keynote address at a conference there.

r e f e r e n C e s Baumol, William J., Sue Anne Batey Blackman, and Edward

Wolff. 1989. Productivity and American Leadership. Cambridge, MA: MIT Press.

Black, Sandra A., and Lisa M. Lynch. 2004. Workplace Practices and the New Economy. Federal Reserve Bank of San Francisco, CSIP Notes Number 2­4­10, April.

Blinder, Alan S. 1990. Paying for Productivity. Washington, DC: Brookings Institution Press, 13.

Blinder, Alan S. 2014. The Unsettling Mystery of Productivity. Wall Street Journal, November 24.

Brynjolfsson, Erik. 1993. The Productivity Paradox of Information Technology: Review and Assessment. Communications of the ACM, December.

Danker, Tony, Thomas Dohrmann, Nancy Killefer, and Lenny Mendonca, L. 2006. How Can American Government Meet Its Productivity Challenge? McKinsey & Company, July.

Dertouzos, Michael L., Richard K. Lester, and Robert M. Solow. 1989. Made in America: Regaining the Productive Edge (MIT Commission on Industrial Economy). Cambridge, MA: MIT Press.

De Rugy, Veronique. 2011. U.S. Manufacturing: Outputs vs. Jobs since 1975. Mercatus Center White Paper, George Mason University, January.

Fisk, Donald M. 1985. The Federal Productivity Measurement System: The Process and Selected Statistics. Management Science and Policy Analysis Journal-Letter, 2(3).

Fisk, Donald, and Darlene Forte. 1997. The Federal Productivity Measurement Program: Final Results. Monthly Labor Review, May, 19–28.

Fuchs, Victor. 1968. The Service Economy. New York: National Bureau of Economic Research/Columbia University Press, 1968.

Gilder, George. 1975. Public Sector Productivity National Commission on Productivity and Work Quality. Public Productivity Review, 1(1), 4–8, 6.

Hyde, Albert C. 1978. Performance Budgeting. In Government Budgeting: Theory, Process, Politics. Oak Park, IL: Moore Publishing, 77–81.

Keating, Elizabeth K., et al. 1999. Overcoming the Improvement Paradox.” European Management Journal, 17(2), 120–134.

Lester, Richard K. 1999. The Productive Edge. New York: Norton. Mahler, Julianne. 2012. The Telework Divide: Managerial

and Personnel Challenges of Telework. Review of Public Personnel Administration, 32(4), 407–418.

McGratten, Ellen R., and Edward C. Prescott. 2012. The Labor Productivity Puzzle. Federal Reserve Bank of Minneapolis, Working Paper 694, May.

NASA­JSC. 1985. An Assessment of NASA’s Productivity Management Program—Johnson Space Center. University of Houston Clear City Consulting Report, ed. Albert C. Hyde, July.

National Academy of Sciences. 1979. Measurement and Interpretation of Productivity. Washington, DC: NAS.

Packer, Michael B. 1982. What’s Wrong with Organizational Productivity Analysis? MIT Laboratory for Manufacturing and Productivity, Paper LMP­MRP­81–15, July.

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Shafritz, Jay M., and Albert C. Hyde. 2012.  Classics of public administration, 7th ed. Boston: Wadsworth.

Solow, Robert. 2014. Prospects for Growth: An Interview. McKinsey Quarterly, September.

Triplett, Jack E., and Barry Bosworth (Eds.). 2004. Productivity in the U.S. Services Sector: New Sources of Economic Growth. Washington, DC: Brookings Institution Press.

U.S. Census. 2014. 2012 Census of Governments: Employment Summary Report, G12­CG­EMP, edited by Lisa Jessie and Mary Tarleton, March 6.

U.S. Department of Commerce, Office of Inspector General. 2012. The Patent Hoteling Program Is Suc ceeding as a Business Strategy. Report OIG­12­018­A. February.

U.S. Department of Labor, Bureau of Labor Statistics. Measuring State and Local Government Productivity: Examples from Eleven Studies. Bulletin 2495. June.

White House Conference on Productivity. Productivity Growth: A Better Life for America. April.

Wirtz, Ronald. 2000. Icebergs and Government Productivity. Minneapolis Federal Reserve Bank. June. Available at https://www.minneapolisfed.org/publications/the­ region/icebergs­and­government­productivity. Accessed on November 7, 2012.

Wright, Joseph R. Jr. 1984. Memorandum on Productivity Improvement Program. Office of Management and Budget, September 27.

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49

C h a p t e r 4

H U M A N R E S O U R C E M A N A G E M E N T I N T H E F E D E R A L G O V E R N M E N T D U R I N G A T I M E O F I N S T A B I L I T Y

James R. Thompson University of Illinois–Chicago

Robert Seidner U.S. Office of Management and Budget

T he period 2006–2014 can be characterized as one of instability in federal human resource management (HRM) practices and policies. The most significant reforms of the preceding period, the creation of separate personnel systems at the Departments of Homeland Security and Defense, were repealed. The substantial immunity that the federal workforce had enjoyed from the effects of the economic recession that began in 2008 ended when employee pay was frozen and pension contributions for new employees increased in 2011. A showdown between President Obama and congres­ sional Republicans over an increase in the federal debt ceiling in the summer of 2011 forced agencies to develop contingency plans for a government shut­down; and although a shut­down was avoided at that time, the compromise that was reached simply postponed the showdown. Throughout 2013, hundreds of thousands of federal employees were furloughed without pay. The culmination occurred on October 1, 2013, when the lack of a budget forced much of the government to shut down for 16 days. These conditions contributed to the onset of the long­awaited “tsunami” of retirements by

federal employees as members of the baby boom gene­ ration headed for the exits.

This discussion of recent HRM developments in the federal government is organized into three sections. The section on “Discontinuities” includes a discussion of those HRM developments that represent a departure by the Obama administration from the policies of its pre­ decessor while the section on “Continuities” highlights programs where linkages between the Obama and Bush administrations can be identified. The section on “New Initiatives” reviews those areas of activity in which the Obama administration has left its own distinctive mark.

Discontinuities Repeal of MaxHR and the National Security Personnel System

The exemption of the Departments of Homeland Security and Defense from key provisions of Title 5 of the United States Code in 2002–2003 was among the most radical changes to the civil service system in decades.1 The civil service has long been characterized by a relatively consistent set of employment rules across

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50 t h e s e t t i n g

agencies.2 The intent was to create a sense of cohesion within the workforce and to counteract centrifugal ten­ dencies. Although there had been occasional, small­scale exemptions to this policy over the decades, the creation of the MaxHR system at the Department of Homeland Security (DHS) in 2002 and the National Security Personnel System at the Department of Defense (DoD) in 2003 represented exemptions of such magnitude as to represent a change in the system itself.

DHS and DoD include a combined 46% of all civi­ lian federal employees (Congressional Research Service 2011). Thus, when these agencies were exempted from portions of the Title 5 rules relating to compensation, performance management, and labor­management relations, it appeared to signal the demise of the tradi­ tional civil service model and the triumph of a “stra tegic” approach to HRM in which each agency would be allowed to customize HRM policies to the agency’s spe­ cific mission and strategy (Thompson 2006). However, such predictions proved to be premature. A coalition of federal employee unions successfully challenged both programs in court, and Congress subsequently with­ drew authorization, leaving the pre­2002 status quo substantially in place.

Union opposition to the National Security Personnel System (NSPS) and MaxHR was provoked primarily by the proposed labor­management relations provisions, which would have narrowed the scope of issues subject to collective bargaining and provided for agency­specific and management­controlled labor­relations boards to resolve collective bargaining disputes (Thompson 2007a). A coalition of federal employee unions sued to stop implementation of MaxHR on the grounds that those rules would deny employees their statutory right to bargain over working conditions. The courts sided with the unions and forced DHS back to the drawing board. By the time the court case was resolved in 2006, the polit­ ical landscape had shifted. Members of both parties in Congress called upon the department to consult with the unions on the terms of a new system. The department instead decided to put the entire initiative on hold while retaining the traditional Title 5 personnel rules. The few

HRM changes that have been made at DHS since have been incremental rather than radical in nature.

Early developments at the Department of Defense paralleled those at DHS: Rules with provisions similar to those proposed by DHS were challenged by the unions in court on the grounds that they violated the right of employees to bargain collectively. Although a District Court decision favored the unions, a panel of judges of the U.S. Court of Appeals for the District of Columbia ruled in 2007 that the proposed rules were in compli­ ance with the law and allowed NSPS implementation to go forward. After Congress intervened to suspend authority for the proposed labor­management relations provisions, the department determined that only non­ bargaining unit personnel would be included in NSPS. By late 2008, over 200,000 such employees had been transitioned to NSPS. However, after President Obama took office in 2009, the federal employee unions pre­ vailed upon their congressional allies to repeal NSPS entirely. In October 2009, President Obama signed the 2010 National Defense Authorization Act repealing NSPS and directing that all DoD employees who had transitioned to NSPS be converted back to the tradi­ tional Title 5 rules.

Compensation and Classification

Although the demise of both NSPS and MaxHR represent a setback for those who regard the provisions of Title 5 as out of date, pressures for reform of the civil service system have persisted. The General Schedule system of compensation and classification has been sub­ ject to particular criticism. The General Schedule (GS) is widely regarded as outdated, overly rigid, not compatible with the needs of an increasingly professional workforce, and insufficiently sensitive to performance in matters of pay setting (Office of Personnel Management 2002).

In a 2012 report entitled “Bracing for Change: Chief Human Capital Officers Rethink Business as Usual,” the Partnership for Public Service (PPS) reported that “nearly all CHCOs [chief human capital officers] agreed that the current 1949­era GS pay and classification system is outdated and doesn’t meet the needs of a dynamic

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h u m a n r e s o u r C e m a n a g e m e n t i n t h e f e d e r a l g o v e r n m e n t 51

and changing 21st century workforce” (Partnership for Public Service 2012a: 16). The chief human capital officers expressed preference instead for a system of “paybanding.” With paybanding the narrow grades that characterize the General Schedule would be replaced with broad salary bands and managers would be per­ mitted more discretion in setting the pay of their subordinates (Thompson 2007b). Under this approach there is less need for classification experts from the per­ sonnel office to make fine distinctions between the relative responsibilities of positions at different grade levels. Instead, a supervisor or manager equipped with some technical support can decide the band to which a position is assigned. Paybanding was first introduced to the federal sector in 1980 at a naval research facility in California and has subsequently been implemented in a number of additional agencies and units with generally positive results (Thompson and Seidner 2008).

The Renewal of Labor-Management Partnerships

In no area has the contrast between the Bush and Obama administrations been greater than in the area of labor­management relations. The Bush administra­ tion took a generally hostile stance toward the federal employee unions as exemplified by the proposed MaxHR and NSPS personnel rules, which would have signifi­ cantly compromised the collective bargaining rights of employees in those two agencies. In 2001, soon after tak­ ing office, President Bush issued Executive Order 13203 repealing an executive order issued by his predecessor that mandated the creation of labor­management part­ nership councils throughout the government.3 In 2002, the Bush administration denied collective bargaining rights to employees in the newly created Transportation Security Administration.

As an early indicator of the Bush administration’s general demeanor on labor­management matters, the repeal of President Clinton’s executive order on partner­ ships took on special importance. Labor­management relations in the federal government have traditionally been adversarial in character. In 1993, as part of his effort to “reinvent” the federal government, President Clinton

issued Executive Order 12871 creating a National Partnership Council and directing that similar councils be created within each of the major departments and agencies.4 The intent was to encourage an attitude of col­ laboration between labor and management in address­ ing workplace issues. A 2001 evaluation of the program found that the partnership initiative had improved the labor­management climate in many agencies and had resulted in a reduced number of grievances and unfair labor practice charges (Office of Personnel Management 2001). However, President Bush’s 2001 executive order dissolved the National Partnership Council and rescinded any “orders, rules, regulations, guidelines, or policies implementing or enforcing” EO 12871.

The partnership concept proved resilient, how­ ever. During his first year in office, President Obama issued Executive Order 13522 directing the creation of a new National Council on Federal Labor­Management Relations to include both union and management representatives and led by the director of the Office of Personnel Management (OPM) and the deputy director of OMB. With more than 60% of the Executive Branch unionized, a significant proportion of all federal employees are represented on the Council. Similar to the Clinton program, Obama’s executive order directed the creation of agency­level “forums” to “promote part­ nership efforts between labor and management in the executive branch.”5 Also similar to the Clinton program, attention has been directed to section 7106(b) of Title 5, which lists matters on which agencies may choose to bargain but on which they are not required to bargain. When President Clinton directed that bargaining take place on these “permissive” subjects of bargai ning as part of EO 12871 he met with resistance from agencies. President Obama took a different approach, creating a set of eight “pilots” “to evaluate the impact of bargain­ ing over permissive subjects under 5 U.S.C. 7106(b) (1).” Performance management practices (discussed further below) have also been a subject of discussion within the Council, with several unions partnering with their respective agencies to improve employee engagement and organizational effectiveness.

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52 t h e s e t t i n g

In another labor relations matter, the Obama administration reversed the decision by the Bush administration to deny collective bargaining rights to the 40,000­plus airport screeners employed by the Transportation Security Administration. In November 2012, those employees approved a contract negotiated by the American Federation of Government Employees, which the employees had selected as their bargaining agent (Davidson 2012).

The “Deprivileging” of Federal Employees

Until 2011, federal employees had experienced only limited repercussions from the effects of the Great Recession of 2008–2010. Government data shows that whereas the number of state and local government employees dropped by over 500,000 between July 2008 and July 2011, federal government employment actu­ ally increased by 86,000 jobs during this same period.6 This disparity could be attributed to the fact that unlike state and local governments, the federal government can run budget deficits. In fact, the Obama adminis­ tration made deficit funding a part of its strategy for counteracting the effects of the recession. However, by 2011, political pressure to reduce the size of the deficit grew and as part of deficit reduction negotiations between Congress and the president, the pay of federal employees was frozen effective January 1, 2011. The pay freeze was subsequently extended for three years, end­ ing when federal employees were granted a 1% increase in 2014. Also as a consequence of the deficit reduction negotiations, federal employees hired after December 31, 2012, will contribute 3.1% of their pay to the cost of their pensions, up from .8% for employees hired before that date (Lunney 2012a).

Proponents of the pay freeze have contended that federal employees are overpaid relative to their pri­ vate sector counterparts. A 2010 study by the Heritage Foundation concluded that the total compensation of federal employees with health and retirement benefits included is 30%–40% higher than that of their private sector counterparts (Heritage Foundation 2010). A subsequent report by the Congressional Budget Office

found that while employees at lower pay levels were overpaid relative to their private sector counterparts by approximately 15%, employees at higher levels were underpaid by as much as 25% (Congressional Budget Office 2010).

The debate over federal pay and the imposition of a freeze on federal pay signifies a sharp departure from past practices. In the past, with the federal workforce widely distributed geographically, political consider­ ations had mitigated in favor of an attitude of accom­ modation between the two parties with regard to federal pay. The change symbolized by the 2011 pay freeze and subsequent pronouncements critical of federal employ­ ees was driven in part by the aggressive antigovernment ideology espoused by members of Congress associated with the Tea Party movement.7 For federal employees the shift in attitudes has meant that positive aspects of the federal work environment once taken for granted are increasingly at risk.

Workforce Planning and Management

A central element of President Bush’s “President’s Management Agenda” was the “strategic management of human capital,” to which workforce planning was central (Office Management and Budget 2002). Although such planning remains a priority, its execution has proved problematic in light of the turbulent political environ­ ment. Congress did not pass a single timely budget during the first six years of the Obama administration. Instead, each year saw “continuing resolutions” that simply pushed decisions forward for several months. Further, each such resolution kept funding at the same level as the previous period, thus equating to cuts in agency budgets because of the failure to reflect increased costs built into contracts, inflation, and unforeseen costs.

Between 2009 and 2013 the federal government was within hours of shutting down three different times because of budget disputes with the threat finally becom­ ing a reality in October 2013. Occasional furloughs have occurred at agencies such as at the Federal Aviation Administration where more than 3,000 employees were sent home after their 26th temporary budget failed to

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