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Guest Blog: The Obama Workforce Agenda

The following guest blog post is submitted by our board member, Russell Klosk:

Even as we all watched the swearing in of our 44th President with the hope that things are going to get better,  we are grappling with current business and human resource environments plagued  by the  global economic recession and the worry that it will turn into the 2nd great depression.   The new administration looks to put its mark on the governance of the human capital function within the federal workforce,  and both a new administration and a new Congress take up the cause of reform of the laws that govern our workplaces.

It is in that spirit, and with an eye toward what the future MIGHT hold between the Obama administration and the 111th congress that I thought I would take a moment to put to paper some of the debates and intentions already taking place, and those that look like they will have traction.  My intent here is not to be all inclusive nor predict the future, but it seems likely some of it will come to pass, and as it does the HR environment will once again shift.   With that in mind,  I offer a discussion of the following workforce  items on the agenda of the new administration:

Potential Impacts on the Federal workplace:

1.    Obama has named Nancy Killifer, who comes out of McKinsey & Company with a fantastic reputation, as his Chief Performance Officer for the entire federal government.  This position does not currently exist, and while the President has the power to create it, for it to have any real teeth Congress is going to have to enable an individual in this role to have oversight over much of the executive branch.   That is a debate that is scheduled to be taken up in committee in early February.

Nonetheless, what Obama is envisioning is someone who can go through the government in a comprehensive way and increase performance by looking at certain functions holistically as a federal wide activity instead of an agency by agency activity.   Among other impacts this will focus on the acquisition process in general, in the human capital space the talent acquisition, promotion, and rewards (compensation / pay for performance) process, and logistics in general.   Other areas will certainly fall under the purview but have not yet been defined.  If you’d like to know more about what people like this typically do in the private sector go to www.chiefperformanceofficer.com and you will find a bevy of information

2.    Office of Personnel Management: Obama is interested in continuing President Bush’s formulation of Federal Centers of Excellence.  Among these are having one agency which is responsible for transactional level activity for key functions such as Finance, Accounting, Human Resources, etc.   This is highlighted by OPMs HR LoB initiative, and indications are that is going to get a kick up in implementation and authority going from a recommended federal architecture for the HR function to a mandated one.

Additionally the new administration sees waste in the duplicative efforts of multiple HR organizations.  Not sure yet if this will mean allowing OPM to become the chief HR provider for all federal agencies with only employee relation support in the individual agencies or if it will take the form of centralizing HR at the master agency level (i.e. DoD OSD level, DHS HQ level, etc.) and reducing the HR footprint in the sub agencies (i.e. Department of the Navy, Department of The Army,  and sub commands, DLA, etc.) but they are looking at both possibilities.   This would be a major shift to a more centralized HR model, and is not a small thing to get authority for, so lot of doubt if they will succeed in this area.   To date a new head of OPM has not yet been named.

The Obama administration is very concerned with the demographics of the federal workforce and the need to both ramp up hiring and retention programs as well as knowledge management programs to accomplish the work with a smaller workforce.   Overall they are talking about shrinking the size of the federal workforce, through attrition, to the tune of 10-15%, and see the most waste in what are loosely the GS 12-15 ranks.   The demographic trends say this will likely happen with or without a master plan as baby boomers begin to retire, and with only a very small Generation X contingent in the workforce, but this increased focus presents major shifts in the process and governance used in the executive branch over the next 4 years as well as major labor relations challenges.

Agenda Items of Interest to HR Professionals:

1.    Lilly Ledbetter Fair Pay Act (H.R. 11, S.181) passed the House on Jan 9 currently under debate in the Senate vote expected last week of January.   This is a response to an anti-discrimination law suit in which the courts held that issuing paychecks can not be challenged as a discriminatory act.   In other words it goes after unfair wage practice law, and issues revolving around facts such as women being paid less than men, etc.   Legally it states that every time a pay check is issued that would be considered an act of discrimination and opens the door for class action law suits.  In practical terms it mandates that compensation systems be modified so that the only differentiators for pay on a given job be seniority, merit, and production and that other factors such as sex, geography (that is a huge one), etc. are not valid.   The geography clause could result in the elimination of pay differentials based on geography and cost of living.  Of more import the act is retroactive, so it will force both employers and the federal government to go back and revue past pay policies and may force them to make restitution payments.

2.    Employee Non-Discrimination Act, not yet under debate, but would prohibit employment discrimination on the basis of sexual orientation

3.    Employee Free Choice Act (S. 2).  This is a major change to labor relations law in the US, and would mandate the certification of unions if a union could produce signed union cards totaling 50%+1 of a workforce regardless of how or when those cards were gathered.   It would eliminate secret balloting for unionizing a workforce and mandate set time frames under which union balloting must take place.   It would also mandate that once certified immediate collective bargaining must occur, and if unsuccessful in 90 days that the National Labor Relations Board would mandate an agreement through binding arbitration.

4.    RESPECT ACT. Narrows the legal definition of a “supervisor” under the provisions of the National Labor Relations Act.  Impacts include not only who could be part of a union bargaining unit, but also how companies formulate their organizational structures.

5.    Workplace Flexibility / Leave Act.   This is being pushed by Ted Kennedy as one of his legacy issues, and is also one of Michelle Obama’s stated focus areas.  It would have impacts on the changes to the FMLA regulations that take effect on February 1, 2009.   They would require any employer with more than 15 employees to provide paid sick leave (7 days minimum), prevent employers from altering existing leave policies that are more generous than that.  It would also, and perhaps far greater impact,  redefine full time workers (both exempt and non-exempt) as anyone working 30 or more hours in a week (1,020 hours in a year) ; which has impacts on benefits policies, job classifications, use of temporary workers, and use of season staff among other things.

6.    Family Leave Insurance Act.   Would provide for 8 weeks of PAID leave for any worker taking leave under the Family and Medical Leave Act (FMLA).  Funding for this program still to be formulated.

7.    Employment Verification:  The E-Verify program through DHS expires March 6, 2009, however, DHS has issued regulations saying that since it was funded in their appropriations bill they will continue providing the service, on a voluntary basis, beyond that date.  Comprehensive reform of this legislation is a key issue according to polls (# 3 with the electorate), and it is likely to see debate that would mandate among other things a stricter enforcement mechanism against companies employing illegal aliens.

8.    Health Care reform is going to be a major focus of the 1st year, just as it was a part of today’s inaugural address, and issues include expansion of the State Children’s Health Insurance Plan (SCHIP) which insures anyone under the age of 18 whose parents employers do not provide insurance.   This passed the house yesterday (Wednesday).   Also looking at mandating that health insurance be provided to employees of any prime contractor to the federal government with 300 or more employees and any sub contractor to the government that does more than $10,000 in business with the federal government in a given year.    This is not limited to “traditional” government contractors such as Lockheed Martin and Boeing, but anyone with whom the government does business.  That includes newspapers and television stations they buy advertising from for one example, consumer good companies that provide goods in the militaries commissaries for another, colleges and universities as a third example, and any number of business in between.

The one thing for certain, change is coming, and change is probably overdue.  So I encourage everyone to keep your eyes open and watch for what the next 6 months may do to the HR profession.

Workforce Stimulus Plan

As our new President is inaugurated today, we’re all keen to see the audacity of hope converted into the realization of productive change that can restore our economy and put our growing numbers of unemployed Americans back to work. One of the most burning issues for many Americans is what the new administration will do to stimulate the economy through government spending. Our board member, Jared Bernstein, has recently joined Vice President Joe Biden’s staff as an economic policy advisor. You can read some of his thoughts about what an economic stimulus package needs to achieve in his testimony before the House Committee on Education and Labor on October 24th of last year.

While most of us don’t have much say as to where those government dollars will land, we do have choices to make about how to keep our organizations healthy and our employees engaged.  Many organizations worldwide are cutting budgets, including headcount, in an effort to remain viable.  Following are suggestions from our board members and other Workforce Institute stakeholders about how organizations can keep their employees engaged and stimulate workforce productivity, even as they are forced to make tough workforce budget decisions.

Leadership is More Critical Than Ever:

  • Get extremely focused on setting and aligning employees around key business goals.   It is critical that everyone in the organization be spending time on those things that matter most for the company’s survival.  Set realistic goals.
  • Employees will be looking to their managers to share the pain of wage freezes, reductions of perks, and increased workloads driven by headcount reductions.
  • Paying attention to employee engagement as a key business driver is as important now as it is when employees may have more opportunities elsewhere in the market. Our newest board member, CEO Andy Brantley of the College and University Professional Association for Human Resources, writes about how cutbacks are impacting the academic workforce in his blog.

Involve Employees in Business Improvement Efforts

  • The employees closest to the work can have great impact on improving revenue and margin opportunities.  Mel Kleiman cites the example of one of his dining clients holding meetings with frontline workers to enlist their ideas to increase profit margins. This client has seen a reduction in food cost of almost 2%. In another case, following an employee resignation, a manager offered a 50 cent/hour raise to the remaining employees if they could come up with a plan to get the job done without a backfill.
  • Being assigned to a strategic project is often viewed as a reward/recognition for above-average performance and when these projects dry up, it can negatively impact top performers.  Creating strategic initiatives focused on operating improvements provides learning and recognition opportunities for top performers while driving needed organizational efficiencies.
  • Conduct company-wide contests for ideas on how to improve operational efficiency.  If you want to get really creative, turn such an initiative into an American Idol-type format, hopefully without the lunatics.  Winners can receive monetary rewards equal to a percentage of the savings/benefits generated.

Communicate, Communicate, Communicate

  • Complete transparency is difficult when individuals’ jobs are on the line, however keeping the lines of communication open about what’s happening in the market and what the organization is doing to respond is critical to keeping employees engaged and productive. In the absence of information, employees will assume the worst case scenario.
  • Russell Klosk notes that the debate about whether you let employees know when they are identified as high potential has resurfaced. The majority view on this is to let top performers know they are considered high potential so that they’ll be more invested in remaining with the organization.

Get Creative with Rewards

  • One company in the office cleaning business gives a cleaning crew member the vacuum cleaner they have been using to take home at the end of the year. They say the results have been amazing: less theft, better care of the equipment, reduced turnover and more motivated employees.
  • Tim Lett suggests team-building efforts focused on helping out in the local community. “We participated in a toy drive in Toronto just before Christmas and it’s amazing how good people feel when they contribute to things like that.  The cost is nil, you get to help a worthy cause and you get people together to work as a team and feel good about themselves.  Executive management participation is critical.”
  • Deb McGrath suggests increasing the contribution to stock option plans (so that employees can benefit from the recovery). She also suggests giving employees loans for cars and mortgages. There was an interesting article in Sunday’s New York Times on the latter.
  • Reward outstanding performance through public recognition – at meetings, in newsletters, in the CEO blog
  • Make available to managers small “gifts of gratitude” to be handed out on the spot to reward and reinforce great efforts – for example: movie tickets, free meal ticket, $5 or $10 iTunes gift card.
  • Throw an ice cream or pizza party on all three shifts and have the Executive Team serve to show their personal appreciation

Talent Management is Still Important

  • Help employees use the recession as a chance to take on new challenges and build their skills and experience.    It’s a challenge we have to get through, so we might as well use it as a chance to learn.
  • Many of the contributors to this post indicated that leading companies are using the current slowdown as a time to invest in employee training – both internally and through encouraging employees to seek outside development. This is an immediate skill building benefit for employees, that can also enable the organization to redeploy or advance employees as opportunities arise.
  • Tim Lett cites an airline client with a program where employees can take foreign language classes on their lunch breaks.  Employees seem excited about the opportunity to expand their skills and the company benefits by having a larger pool of employees with language skills to handle international customers or work in international locations.
  • Invest in internship programs to build your talent pipeline while providing college students with important resume building opportunities. If the opportunity to learn is good, students will consider unpaid internships.

Creative Labor Cost Management Strategies

  • While many organizations are downsizing to trim operating expenses, Russell Klosk cites a recent article in the New York Times by Matt Richtel about the extraordinary length some companies are going to in order to avoid layoffs and hold onto their workforce. Specifically “Cisco implemented a four day shutdown (no pay for anyone). Motorola asked staff to take salary cuts across the board”. Other employers are shifting to 4-day work weeks and trimming benefits. The interesting quote was “Companies taking nips and tucks to their workforce say this economy plunged so quickly in October that they do not want to prune too much should it just as suddenly roar back.”
  • Workforce management technologies such as scheduling and analytics can help ensure that employee resources are optimized for the job at hand.  Already stressed managers will benefit from better control over expenses such as overtime and absenteeism while automated scheduling solutions ensure that shifts are covered.  Even better is to implement employee self service options so that shift bidding is handled fairly while accommodating employee preferences.

What would you add to the list above?