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Workers are retiring ... with a lesser number to replace them. By Chace Anderson On the morning of March 6, 2003, Paul Volcker, who once had been chairman of the Federal Reserve Board and considered the second most powerful man in Washington, walked into the Rayburn House Office Building to testify before the House Government Reform Committee. The cigar-chomping Volcker, however, did not come to testify on the trinity of his professional career: monetary policy, gross domestic product, and fiscal management. He testified this day on what he believed was an impending crisis: government’s “inadequate recruiting, inability to attract those with specialized skills, scrimping on job and professional training, and inability to appropriately reward high performance.” The Volcker Commission described a government with a personnel system out of touch with market realities, a personnel system immune to performance, a vanishing talent pool, and organizational chaos, all of which contributed to a growing “disaffection and distrust of government” by its citizens. Although the commission directed its comments toward the federal government, many considered them just as true for state and local governments. This concern over human resource management unites what some may consider unlikely allies. Linda Hanifin-Bonner, executive director of the National Onsite Wastewater Recycling Association (NOWRA) and John Skinner, executive director of the Solid Waste Association of North America (SWANA), agree with Paul Volcker’s commission when it concluded: “As the government’s experienced workers depart for retirement or more attractive work, it creates an opening for new energy and talent, yet replacement streams are drying up. Left unchecked, these trends can lead to only one outcome: a significant drop in the capabilities of our public servants.” Rocks and Shoals It is not the amount of the population, however, but the timing of births that causes concern for human resource (HR) managers. According to the US Bureau of Labor and Statistics, there werer four statistical population events in the United States during the 20th century. The first event was the small number of births in the Flapper era of the 1920s and the Great Depression of the 1930s. The second was the “welcome home, soldiers” baby-boom of the late 1940s through the early 1960s. The third event was the modest increase in births from 1970s Watergate to Clinton’s inauguration. The final event was the massive migration to the United States starting in the 1970s and still going strong. Table 1 illustrates the effects of these events. These numbers caused Linda M. Springer, director of the US Office of Personnel Management (OPM), to predict that a “federal retirement tsunami” would hit the federal government’s shores with an estimated 60% of its workforce eligible to retire within a decade. Frank Bruckner has been working for Kimmel & Associates to place managers with clients since it was formed in 1981. He sees the lack of qualified managers in construction, solid waste, and energy fields. European energy companies are looking to enter the United States market, he says, but are worried about the limited number and quality of the workforce. In the construction industry, for instance, this shortage has created a salary environment whereby a “graduate of a construction management program will have a starting salary between $46,000 and $48,000; at age 30 the manager can expect between $90,000 and $100,000; and by 35 years of age a salary of $150,000 and a signing bonus,” says Bruckner. Gary Warner built wastewater treatment facilities for 35 years and tells audiences that, when he started in the industry, “trucks filled with people wanting to work would be behind his yellow trailer as it was pulled into town. Today no one follows the trailer,” says the Life Director of the Associated General Contractors of America, who now is president of Warner and Co., specializing in human resource and administrative issues in businesses. Create a Vacancy, and They Will Come, Maybe Many people, in fact, are increasingly seeing government as “slow in hiring, almost useless in firing, overly permissive in promoting, out of touch with actual performance in rewarding, penurious in training, and utterly absent in managing a vast and hidden workforce of contractors and consultants from both the private sector and the nonprofit sector who work side by side, desk by desk with the civil service.” Paul Light, a member of the Volcker Commission, writes elsewhere about a government whose workers have endured “a decade of downsizing, two decades of bureaucrat bashing, three decades of constant reform, four decades of increasing workloads, and five decades of pay and hiring freezes.” To see whether these characteristics had the cumulative effect of diminishing the chances of hiring top graduates, Light reviewed the placement of graduates from the top US public policy schools from the 1970s to the mid-1990s. He describes a trend in which the number of graduates going into government goes down over time while those entering nonprofits and privates went up. For the class of 1973–1974, Light found that 76% had first jobs in government, 11% in the private sector, and 12% took jobs with nonprofits. But by the time the class of 1993 came around, the numbers shifted: 49% went into government, 23% into private jobs, and 25% took positions with nonprofits. At Syracuse University, the Maxwell School of Citizenship and Public Affairs has been operating since 1924 and has consistently, of late, been ranked number-one by US News & World Report. Alexandra Bennett is the director of its career services. Although she supports the general notion that graduates are looking at a myriad of choices, she says that there is “less apprehension toward government today than previously, especially toward federal agencies.” The percentage of Maxwell graduates taking positions in the nonprofit sector has increased by 100% since 2001 and has done so consistently. Yet, the number of graduates taking jobs with local and state governments between 2001 and 2006 has decreased by 33%. The nonprofits, in most cases, do not match the salaries offered by government, yet the number of graduates looking into that sector continues to grow.
Why? Linda Hanifin-Bonner, NOWRA’s executive director, sees state and local financial instability as a real concern for graduates thinking about joining those two levels of government. The rising costs of pensions and health benefits are creating turmoil in some states, she says. Martin O’Malley, governor of the State of Maryland, where NOWRA is based, has ordered all unfilled positions frozen, $200 million in budget cuts, and a reduction in funding as mandates. Maryland has a $1.5 billion shortfall. “These cuts,” Hanifin-Bonner says, “come at a time when the federal government is increasing unfunded stringent wastewater regulations.” There will be more work with less people and funds to carry it out. Four out of every five wastewater employees work for government, and most feel the financial pressures. Maryland is just another in an endless series of government bodies to announce a financial crisis. In 2005, 281 jurisdictions in the state of Washington found themselves in a “perfect financial storm,” says Mary Place, who was then president of the Association of Washington Cities. Between a growing population and capped revenue, 90% of the cities said they were having budget problems, with 73% of those declaring that they were worse off in 2005 than in 2000. Many Oregon counties currently are running from a similar financial storm. Jackson County closed its public libraries as of April 2007 because of budget problems. Joesphine County has had its revenues drop by 69% this year and has implemented draconian measures, making it a libertarian’s dream government but a manager’s nightmare. Even cities that appear financially stable often have their employees go for years at a time with no cost-of-living increase or otherwise prohibit them from moving up a step in the compensation ladder. The growing sense of government’s financial stress is “certainly a deterrent in attracting intelligent people to work in this industry” says Hanifin-Bonner. “I use to tell young people,” says Dave Myers, who recently retired as director of the Monterey Regional Waste Management District, “that public service was a great profession with secured retirement and health benefits. But these benefits are increasingly coming under pressure from local and state jurisdictions looking to save money.” Young recruits are skeptical as to whether these benefits will continue. The financial burden of pensions and medical benefits certainly is not isolated to governments. Recent headlines regarding General Motors and Ford prove this. Although financial instability probably is not a clear and decisive line of demarcation between government and private sectors, it must be considered a force among prospective employees. If graduates are increasingly taking a look at lower-paying nonprofit jobs and if nonprofit, private, and public employers have increasing financial pressure, what accounts for this growing trend away from government? The Concours Group out of Texas has done research giving us a window into cultural changes of our workforce that may account for some of the reasons. The Concours Group has produced a series of publications including its 400-page Handbook of The New American Workforce that took three years and $2.3 million to complete and retails for $3,995. As reported by Eric McNulty, managing director of Harvard Business School Publishing, the characteristics of the workforce break down as follows: Under 35: This group believes in active choice. It wants to be in position to make decisions. Although not brand-loyal, this group identifies with its immediate managers. Members of this group are tempted to leave organizations for various reasons and employers should create ways to allow these people to leave and come back with no penalties. Between 35 and 54: In a television commercial, Dennis Hopper stands on a beach holding a dictionary reciting the definition of retirement. In disgust, he slams the book shut and throws it on the sand, declaring that he is of the generation that will rewrite the definition of retirement. He is speaking to this age group. Its members are antiauthoritarian, idealistic, and distrusting of leadership. They demand merit-based systems and demand to have a say in decisions. And “... if they fail to believe in the mission, they will disengage ... and become unproductive.” These workers need opportunities to get rejuvenated within the organization. 55 and over: Traditional values, such as expecting fellow workers to “pay their dues,” are held dear by this age group. They have a stronger sense of social skills compared to the younger groups. This group trusts authority and, perhaps, is the last group traditionally loyal to a company brand. McNulty points out that no group is as distinct as labeled, and he tugs at a thread running from college-educated workers in their early 20s to their mid-50s. According to the Families and Work Institute, 77% of workers with children consider their priorities to be family-oriented rather than work-centered. Places of work must develop programs for this group that are without career penalties. Reflecting on 40 years in the waste business, Dave Myers has seen the transition from the traditional job culture to a “flexible organizational structure where the young and brightest seem to be attracted. They want the Google workday,” referring to the Internet search engine company known for its value-oriented work environment where play and work meld together. “In comparison,” Myers says, “public sector jobs just don’t seem too exciting.” Recruitment Recruitment of young supervisors and managers is important but poorly done by all levels of government. Lisa Chice, a student at the Maxwell School, who is about to graduate, says there is very little recruitment by local and state governments at her school. She also describes an application process for a government job as “impenetrable.” Governmental associations, such as the International City/County Management Association (ICMA), are beginning to evaluate both external and internal recruitment techniques, advising its members to take action. Created in 1914, at the height of the Progressive era, which promoted the increased use of professional management and data in public management to contain old-boy corruption and seat-of-the-pants decision making, the ICMA has approximately 8,200 members. The ICMA recognized the human resource problem and held two summits. The first summit brought management of local governments and recruiters together. Each side explained the realities in attracting people to the workforce. Recruiting firms felt they had a vested interest in partnering with cities to reach out to universities and promote local government. Mary Kyle, deputy director personnel for the City of Phoenix, AZ, also states the need for external recruitment: “Local government must have a consistent presence at universities if it wants to attract the most qualified.” According to the Maxwell School’s career development director, Phoenix has consistently been one of the more progressive cities in terms of attracting graduates. Chice thinks the internships are valuable but too few cities actually do them. Many organizations are urging jurisdictions to begin recruiting new management personnel as law firms have recruited associates for decades. Internships provide employer and prospective employee a chance to see whether there is compatibility. Phoenix has been doing the internships for the last 50 years. SWANA implemented an internship program with the University of Maryland. The students get a stipend, and the internship provides both SWANA and the students time to see whether the employer and the individual fit. “Most of our hires over the past four years,” Skinner says, “have come from this internship program.” State governments, such as those of Florida and North Carolina, have begun to develop civic education programs for K-12 to allow young students to become familiar with government works. California and Florida have created statewide mentoring and coaching programs for young people wanting to step into management leadership roles. New Jersey provides scholarships to students at the high school, undergraduate, and graduate levels who show an interest in local government. Uncle Sam, however, spent $36 million in 2006 to help 5,755 new hires pay college loans. Thirty-four agencies of the federal government attract prospective employees by helping them pay down their existing student loans according to Ken Oliver, special assistant for the US Office of Personnel Management. Recruitment also has an internal side to it. In 2006, the City of San Bernardino, CA, for instance, began to draft a formal process to incubate managers from within. The existing management structure identifies potential managerial talent and places these people into an “acceleration pool” of employees. A mentor program begins whereby the identified employee discusses the field of management while going through nuts-and-bolts classes that detail the foundations of a manager’s duties. Those in the “accelerated pool” meet with city managers, politicians, and business leaders to gain a broader sense of managing within the context of a community. Work Culture There are two variables in what some consider the problem with public sector work culture. The first is the political reality of the system itself and the other is the archaic structure of the work system. The difference between private and public bureaucracies is that the latter “are answerable to several different constituencies with different objectives. ... An agency may be formally answerable only to the executive (say), but in practice Congress, courts, media, and organized lobbies, all have a say,” writes Princeton University Economics Professor Avinash Dixit. The distinct difference is not that the private sector has no other answerable organizations such as media, courts, and lobbies but that the level of their influence is mitigated by the overall tethering to a performance outcome. One can almost hear the collective moans of readers thinking back to their performance audits or measuring productivity initiatives or the agonizing weeks spent “discovering” the mission of their departments. As bad as these seem, they are the growing checks and balances to the excesses of the political universe our public work serves within. The ideal public managers would use each side of their brains. The one side processes activity management through a calculus of expense, revenue, equipment, labor, and time. The other side of the brain takes the same activity and sends it through a political filter of votes, perception, potential opposition, and linkage to other items on the political table. One does not necessarily supersede the other but acts, rather, as a check to the excesses of the other. Those who deal only in the political have little or no budget restraint and supervisors under them lose sight of the mission and goals by which to work. On the other hand, those who stick to numbers as a religious faith may subvert the public good to maintain those numbers, hence ruin their political good will. When HR managers discuss the second element to retaining those recruits within public works and wastewater departments, they gingerly suggest what Warner squarely says is the construction business’s inability to understand and change accordingly to the new type of workforce coming into the market. HR managers politely refer to public works and wastewater departments controlled by people who like to do things the way they have always done them. Creating a flexible work environment that allows for the changing priorities in values seems to be slow coming within this culture. These changes have to do with being inclusive from budget formation to decision making. Young supervisors and managers want to be in an organization where they have input into the forming of the mission, the setting of expectations, and the measurement for success. They want to have the ability to make decisions within that matrix to achieve the goals. They want an organization that is alert to industry changes and where information is shared, not horded by a few. The incoming group of young managers has shown that they want merit-based pay, not the step-by-step increases that provide limited financial incentive to maximize output. A solid waste manager in the public sector recalls one particular year when he had received a top-notch evaluation. His reward was a raise of 11 cents per hour. After a few years, he says, he had gotten stale and his performance went down to the point where he was put on probation. At the end of the year, he received an increase of 67 cents per hour. Upon realizing the significance, he went home and thought about the message in that contrast. We all need to think about that message if we want to attract the best and the brightest. Chace Anderson is a consultant with Gershman, Brickner and Bratton, Inc. MSW - September/October 2007
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