Municipal Human Resource Management

Abstract

Municipal governments experienced many challenges brought on by the great recession of the late 2000s. Drawing on data from human resource directors in Colorado and North Carolina municipalities, this article examines the real-world implications of the economic recession on human resource management (HRM) practices, including the workforce-related challenges municipal governments face in a difficult economic climate and what HRM innovations were developed to respond. For challenges, funding was consistently the top response as well as recruiting and maintaining a motivated workforce. The bulk of the innovations were internally focused and reactionary in terms of responding to an immediate or current condition. Implications for practice are provided.

Keywords

HRM innovation recession

Local governments in the United States experienced many challenges brought on by the great recession that impacted the country over the past decade (Perlman 2011; Martin, Levey, and Cawley 2012). Many municipalities struggled with maintaining their tax bases and experienced declining overall revenues (Hoene and Pagano 2010; Perlman 2011; Perlman and Benton 2012). Studies of the economic outlooks of governments have found that while economic conditions are starting to rebound to 2008 levels, the public sector at the local level is looking at an increasing financial gap and many municipalities are struggling to meet their financial obligations (Nelson 2012; U.S. Government Accountability Office 2013). These challenges, coupled with increasing personnel and health care costs, have led many municipalities to make tough choices about their workforces, including hiring freezes, layoffs, and other decisions that challenge the employment relationship (C. H. Levine 1984; H. Levine and Scorsone 2011; Ammons, Smith, and Stenberg 2012; Dadayan and Boyd 2015).

While fiscal conditions may be tough, municipalities still need to serve the public; their services are those most essential to the average citizen and therefore highly visible to the public. The human resource management (HRM) function is critical to government success, as it can assist with decisions about how best to deploy employees to continue to serve citizens. However, this is also a set of services and management function most likely to be cut or reduced (C. H. Levine 1984; Selden 2016; Getha-Taylor 2016). Drawing on data from a 2012 survey of human resource (HR) directors and municipal clerks in Colorado and North Carolina municipalities, this article examines the real-world implications of the economic recession on HRM practices. This article asks two questions:

What do HR professionals view as the largest challenges facing municipal governments when managing their workforces in a difficult economic climate?

As pressure and stress often lead to new ideas and innovations, what HRM innovations are being implemented to improve the ways in which municipalities manage people during times of fiscal constraint?

Managing in Municipal Governments during Fiscal Crises

How has the recession affected the management practice of municipalities? Bringing together a number of different research studies, Nelson (2012, 50S) specifies categories of municipal responses to a recession as “general expenditure cuts, personnel expenditure cuts, service expenditure cuts, new governance expenditure cuts (i.e., intergovernmental/ interorganizational partnerships), and revenue increases.” While many of these strategies are perceived as negative, during tough economic times, managers can also engage in innovative behaviors to try to stave off negative consequences and create new ways of leveraging scarce resources (Nelson 2012). In considering municipal responses to the economic recession, one should consider not only where and how municipalities have made cuts but also where new ideas or innovations have been enacted and what those ideas include.

In studying the recession through the 2000s, scholars examined the behavior of municipalities in terms of organizational and managerial responses (Getha-Taylor 2016; Scorsone and Plerhoples 2010). Overall, while particular municipalities may have specific or individualized challenges, many were faced with increasing costs associated with employee benefits, changing service requirements, and declining tax bases and revenue sources. This has created operating environments where resources are tight and the possibility of new resources is slim; municipalities have been forced to make changes to adjust to the new realities (Martin, Levey, and Cawley 2012).

Data and Methods

The data in this article are drawn from a 2012 survey of municipalities in Colorado and North Carolina. The survey was sent to HR directors and municipal clerks in the 271 municipalities in Colorado and 522 municipalities in North Carolina. The response rate for the survey overall for Colorado was 29 percent (n = 79), for North Carolina it was 33 percent (n = 174). For this article, the primary data being analyzed, through inductive thematic coding, are the municipal responses to two open-ended questions:

What do you see as the biggest challenges facing municipal governments in terms of managing their workforces?

If possible, please share an HRM innovation that has improved how your municipality manages its people.

For additional information on data and methods, see Text 1 Supplement.

Findings and Discussion

Understanding the Problems—Challenges

The survey asked managers to identify the biggest challenges facing their workforce and HRM. The results are grouped into three broad categories:

limited resources and staff to meet needs,

maintaining and recruiting a motivated workforce, and

other issues.

The results are presented in Table 1.

Table 1.

Identified Challenges.^a

Limited resources and staff
Funding	67 (45.0%)
Time and staff to address issues	39 (26.2%)
Maintaining and recruiting
Finding talent	22 (14.8%)
Developing talent	29 (19.5%)
Demographic issues	12 (8.1%)
Retention	14 (9.4%)
Morale	39 (26.2%)
Additional challenges
Manager skill level	5 (3.4%)
Legal mandates	6 (4.0%)
Elected official/political interference	4 (2.7%)
Public perception	5 (3.4%)
Other	19 (12.8%)

Note: N =149.

^aPercentages do not equal 100 as participants could answer more than one challenge. Numbers were rounded. Out of the sample of 253 overall survey respondents, 149 answered the question about the biggest challenges they are confronting.

Limited resources and staff to meet needs

Lack of funding and resource limitations was the top response, driven by a range of issues including having inadequate resources to offer competitive compensation packages to recruit candidates, retaining staff, paying for training, and having funds for bonuses.

Of those responding that funding was a challenge (sixty-seven respondents raised this as an issue often with multiple funding concerns noted), twenty-seven commented on having to do more with less, thirty-two referenced lack of funds for salary adjustments, and eight highlighted the lack of funds for training. Overall, the reduced budget of these municipal governments significantly strained the management of their workforce leading to more work with fewer employees, inability to recognize this additional work with compensation, and challenges with keeping the workforce trained up to the needed requirements.

Before the fiscal downturn, many local governments were already operating with limited capacity in staffing levels or resources (U.S. Census Bureau 2006, 2011). Over a quarter of the sample (26.2 percent) mentioned issues with having the necessary staff or time to respond to needs. In many municipalities, staff members often served in multiple positions, creating larger workload and management challenges. One North Carolina director noted that “for a town of our size it is difficult to have a dedicated HR staff to deal with the issues posed… so it falls to the Town Manager and Clerk where we have other duties that keep us from spending time on HR development.” At a time where HRM is needed the most, many of these municipalities lack the capacity or resources for HRM.

Maintaining and recruiting a motivated workforce

Another important theme relates to the “human capital crisis” which involves retirement, retention, and becoming an employer of choice. This “crisis” places long-term pressures on these municipalities; it involves demographic issues, finding talent, and developing talent over time (Llorens 2009). These issues are not new to governments and exist independent of the economic landscape but become more challenging with reduced resources. Short-term strategies such as hiring freezes and limited travel budgets for training provide quick savings but can affect long-term workforce preparedness. Responses about finding, developing, and retaining talent as well as maintaining high morale all relate to the strategic issue of having the right mix of people and skills ready when needed; in other words, responding to workforce planning needs.

Responding to these needs has become more difficult; with the recession shrinking the resources available for HRM as noted above, respondents indicated a major concern was to be a competitive employer both in the general market and in competition with other local governments. Finding talent and offering competitive pay were central concerns and connected to the resource scarcity issue but were described more broadly as an issue of being a competitive employer. The challenge of recruiting top performers is not new to local government, but it is much harder as a result of the economic downturn. One respondent characterized this challenge as “recruiting and retaining qualified employees who are willing to put up with being scrutinized by the public and lower salary levels.”

Responses related to demographic issues included direct reference to the need to create workforce or succession plans as well to the demographically changing workforce in terms of retirees and management of new younger workers. As the workforce in the United States and the needs of citizens change, the municipal HRM department and the associated workforce also need to change. One respondent captures this challenge of both changing demographics and managers’ resistance to these changes, noting that governments need to be:

[A]dapting to the changing demographic in terms of age and ethnicity. Individuals in management positions … are unwilling to make changes necessary to recruit and retain new workers who have different expectations.

Respondents recognized that reduced availability of funding to develop and reward workforces contributed to employees feeling overworked and overloaded and, in turn, to decreased morale. However, morale was also recognized as a distinct issue with a set of challenges that extended beyond financial shortages and overloaded workers. Morale issues were raised by thirty-nine respondents, with seventeen highlighting the issue in general, twelve raising it in relation to the larger issue of employee engagement, another six referencing it as an issue of valuing employees, and four noting issues about employee motivation to perform. The issue of morale challenges was captured by one respondent who questioned how municipalities can continue “keeping the morale up while cutting away at their pay and benefits.” Another respondent wondered how municipalities can continue “motivating employees for the highest level of performance in an era when pay raises are difficult to come by.” Municipal leaders may see cost cutting and HR reductions as a necessary part of doing business during tough economic times; the HR managers highlighted how challenging it was to manage people and foster “employee engagement when management has a laissez-faire attitude.”

Other issues

External pressures on municipalities can make maintaining morale in the wake of fiscal constraints even more difficult. Although not the most frequent concerns, issues of politics and political interference were raised by respondents. This is consistent with Getha-Taylor (2016), who states “it is important to note that it will be difficult to sustain a strong municipal workforce in light of increased demands for services, accompanying cuts in resources, and public sentiment that does not support public employees” (p. 87). Results from this sample indicate that there is an issue of sentiment toward the workforce that extends beyond the general public to elected officials as well. According to one respondent,

[T]he biggest challenges facing municipal governments in terms of managing their workforces include elected officials in a Manager Council form of government who do not allow the Manager and Management Team to manage their people without interference and the sense of entitlement to jobs, benefits, salaries, etc. and resistance to change of municipal employees.

While tough decisions need to be made, long-term questions facing municipalities as they rebound from the recession will need to focus on whether nonstrategic or politically driven cuts to workforces will have significant long-term impact on municipal capacity and performance. This concern is captured by the sentiment “at least here locally: the increasingly devastating impact of precipitate political decisions [is] directly affecting employees and employee morale.”

Municipalities in this study experienced challenges associated with the economic recession. These challenges, however—while exacerbated by the recession and financial shortfalls—are the same challenges facing government workforces in general as they are pushed to do more with less. Given these larger challenges, what strategies are municipal governments employing to help them mitigate or overcome them?

Working on the Problem—Innovations

In the face of challenges, new ideas often emerge. An old English proverb states that necessity is the mother of invention and more recently, Paul Romer, American economist, coined the phrase, “A crisis is a terrible thing to waste” (Linden 2007). Hard times may lead to important solutions or provide the context for innovation and change—even change that would not have been considered or deemed feasible in a different context. Given the daunting list of challenges facing local governments, what actions are these municipalities taking to respond?

When asked to share an HRM innovation that improved the ways in which the municipality manages the workforce, 18 respondents indicated that they had not undertaken any innovations. While these respondents actively noted that they did not have any innovations to share, another 171 left the question blank altogether. For those that indicated an innovation that they were undertaking, there was substantial variation in responses. The innovative HRM practices adopted appear to be more tailored to the setting and specific circumstances their government faces as compared to the broader set of comparable challenges across local governments.

Practices were often targeted to context and adopted not because they were identified as best practices or industry trends but rather in response to the situation the local government faced. For example, a number of jurisdictions implemented some form of flexible scheduling or additional time off. Flexible schedules have been a trend in the field for some time, but in these cases they were being used for more targeted reasons, such as “giving employees more personal time off, to compensate for the lower wages.” As another respondent noted, “since we did not get [a] cost of living increase, the manager gave us [an] extra four hours at Thanksgiving and Christmas by closing at noon.”

The results of the self-reported innovative practices are consistent with the idea that adopted innovations do not necessarily have to be completely new ideas—they need to be new to the adopting organization (Walker 2008; Damanpour and Schneider 2009). For some jurisdictions, the practices noted would not classify as innovations in broader HRM research or practice, but the responding municipalities viewed them as new when adopting them. Responses range from practices that assist the municipality in the maintenance of the workforce during hard fiscal conditions to practices that are more strategic and long term.

The innovations adopted by the respondents are grouped into two categories:

responding to immediate morale issues and

new/enhanced specific practices, programs, or policies.

The results are presented in Table 2.

Table 2.

Identified Innovations (Percentage).^a

None	18 (22.0%)
Responses to morale issues
Employee engagement efforts	13 (15.9%)
Initiated or enhanced wellness programs	6 (7.3%)
Motivation/appreciation actions	3 (3.7%)
Implementation of alternative work arrangements	3 (3.7%)
New/enhanced specific practices, programs, or policies
Performance appraisals enhancements	12 (14.7%)
Training and development	12 (14.7%)
New practices in hiring/on boarding	5 (6.1%)
Policy or handbook revisions or creation	8 (9.8%)
Enhanced use of technology	6 (7.3%)
Other	12 (14.7%)

Notes: N = 82.

^aEighty-two separate municipalities responded to this question but some listed more than one innovation.

Responding to immediate morale issues

The recession created an environment of increased uncertainty and stress for employees, and the most common innovation identified involved engaging the workforce to manage in this environment (thirteen respondents). Engagement happened in a number of ways. For three municipalities, it directly related to communication and keeping employees informed. For example, when there are discussions of layoffs, it is important for employees to believe they are hearing the correct and timely information; otherwise, rumors are likely to fill the gap. Others focused on not just informing the workforce but also gaining feedback from employees. The strategy that dominated for this group was the introduction of employee surveys, as captured by the following response:

We contracted out for an employee opinion survey and that really opened our (management’s) eyes about what employees feel are the concerns. We are doing more to get employee input on the issues that directly impact them. We are inviting interested employees to have a seat at the management table to develop solutions for specific issues.

Including employees in decision-making is the last way in which respondents highlighted engagement efforts, with one respondent stating “all employees are included in the developing strategies and giving input in HR design.” Engagement efforts can be seen as a positive move both in terms of providing additional information to inform decisions and in terms of helping to create a more committed workforce (Boxall and Macky 2009; Chuang and Liao 2010; Kehoe and Wright 2013).

The issues of engagement and overall employee well-being are not just about productivity and morale, however; they are also a financial concern, given the cost of health care. Wellness programming, a strategy mentioned by several respondents, has been shown in the research to help promote health and in turn keep down related health benefit costs (Benavides and David 2010; Bowden et al. 2010). Wellness programs can broadly be defined as any action by an organization that “promotes health or seeks to prevent a disease” (Chancey 2009, 49). Respondents highlighted both the morale and the financial motives behind wellness program efforts.

In addition to efforts focused on engagement and wellness, respondents noted other innovations with a focus on motivation and overall morale. There has been considerable interest and experimentation with alternative work schedules, including four-day work weeks, teleworking, and job sharing (Facer and Wadsworth 2008). These have been explored as mechanisms to save money, help with environmental concerns, or serve as a workplace motivation technique (Wadsworth, Facer, and Arbon 2010). Goals were not explicitly provided in the survey responses, but many respondents reported a range of alternative work arrangements often associated with morale- and motivation-related initiatives, including “flexible work schedules when needed,” “job sharing,” and “providing work/life balance programs such as telecommuting and flex hours.”

New/enhanced specific practices, programs, or policies

Efforts to impact the delivery of services through changes to specific HR practices were another common theme among respondents. While these practices—including enhancements to performance appraisal systems and hiring practices—are not completely new to municipal workforce management, they were new practices for these governments. Performance appraisals are a critical part of successful HRM, including the development of staff and succession planning. However, all too often they are not effectively utilized or valued when compensation is not tied to them (Selden 2009). Ideally, performance evaluation systems allow for performance enhancements. Over 10 percent of the sample indicated they were exploring innovations within the area of performance evaluation. One focus was on creating greater quantifiable measures. Ensuring that individual employee evaluation is linked to broader organizational outcomes was a second focus. The efforts to tie performance to goals and better quantify performance can provide short-term as well as long-term benefits for the jurisdiction. While performance management is a cornerstone of effective HRM in theory and practice, it is often an area in which organizations struggle. Therefore, while perhaps not new per se, improvements or innovations designed to better conduct performance management could both reduce the challenges experienced during tough economic times and better harness the value of the workforce moving forward.

Given concerns about developing and recruiting talent, innovative efforts around training and development are also a natural response. Leadership and/or supervisory training efforts were highlighted by four respondents, with one noting “strong emphasis on training supervisors and developing supervisors for the future” and another noting having designed an “internal leadership development series of trainings for supervisors.” New ways of providing training to save resources characterized other responses on this topic, such as “coordinating supervisory training with other local governments—stressing a lot of finance and HR practices and laws as well as basic supervisory training.” Respondents also identified training strategies as a way to cope with lost internal capacity:

With a reduction of workforce in the past we have cross trained in areas and found ways to manage with fewer employees and also had input from the workforce on possible ways to save within the budget. With the savings found it has allowed a slight cost of living increase which the employee is always glad to receive.

The environment these municipalities face continues to involve significant changes, and training provides an opportunity to respond proactively.

While municipalities expressed high concern about talent recruitment, only a small number identified hiring process improvements and enhanced on-boarding efforts. Due to negative rhetoric and sentiment about public service, compensation concerns, and notoriously slow hiring practices, the public sector often faces considerable hurdles in recruiting and retaining talent. Online applications, job fairs, and service centers are innovations used at the state and federal level (Llorens 2009; Llorens and Kellough 2007; Selden 2009). The responses from the municipalities suggest they are also looking for ways to enhance this process. One respondent noted that “the one stop shop developed for recruitment and for retirement information [has] helped.”

Finally, HR in some municipalities may be moving toward a more strategic role, other jurisdictions are still just trying to ensure that basic HR policies and practices are in place and documented (Jacobson and Sowa 2015). Especially for smaller jurisdictions, the creation of a dedicated HR department is still new. As one small-town respondent noted,

[M]y municipality’s HR department was created two years ago upon my hire. We have created an employee handbook, job descriptions and [are] in the process of rolling out a performance management program to help manage staff and clearly communicate expectations.

Eight respondents recognized innovations around the creation, revision, or codification of HR policies and handbooks. While policies and procedures may not be initially seen as a radical innovation, good policies are an important workforce focus (DeHart-Davis 2010).

Respondents identified a mix of innovations. Many of these are reactive, including cost-saving strategies and enhanced communication in response to employee stress. Others are more adaptive and include developing new skills in the workforce, such as emotional intelligence training for all managers or a new focus on performance alignment. Several innovations follow trends in the field or the natural growth of the office and are more internally focused; for example, with the first full-time HR staff, the office creates its first handbook or changes files from paper to electronic. While all of these actions can impact the effectiveness of the HR department and the service the municipal workforce receives, they represent different responses, readiness, and results.

Conclusion and Lessons Learned

Even in tough times, municipal governments cannot ignore the importance of HRM, as “organizations need to focus on developing individuals to confront the internal and external management challenges of the future” (Getha-Taylor 2016, 87). The best means to respond and succeed is still a moving target, but governments are trying new ways to meet needs so that they can continue to provide the critical services on which their citizens rely. HR professionals must continue to have this forward-looking focus. While the fiscal condition of municipalities is improving, many challenges related to planning, finding and retaining talent, and ensuring high morale remain. These issues impact the entire government. HR is positioned to help government officials think and respond to these issues, but many will need to gain skills in building a sound business case for the changes and investment that will be required. A number of lessons developed based on this study were identified and are discussed below.

Lesson 1: You will rarely ever have enough resources. Use challenges as an opportunity to foster strategic thinking.

These exploratory results indicate that HR professionals are acutely aware of the stresses impacting them and many are trying to create tailored and focused practices to help their jurisdictions respond. HR professionals and government leaders need to balance the impact of the environment on the workforce, which means engaging in thoughtful information sharing that keeps staff informed and engaged but does not unnecessarily panic or stress them. HR professionals can also use these opportunities to make the case for the impact of resource constraints on their organization and organizational outputs and to better demonstrate return on investment for needed HR practices/resources. Showing the importance of the HR function and outcomes impact in these regards can help to build confidence and acceptance of HR in a more strategic role. Engaging the HR department as strategic partners can assist governments in short- and long-term planning to respond to needs. A more strategic role for HR in the management of organizations can help ensure that the organization is asking strategic questions about its workforce and workforce needs (Selden 2009; Jacobson and Sowa 2015).

Lesson 2: Innovations need to have meaning for your context. Do not stress about “the next best thing.” Look for innovations that are new to you.

A number of important implications were found for innovations, including tailoring innovations to context, making the case for innovations, and continuing to ask short- and long-term questions about how innovations work. Governments should continue to think about “big” or “out of the box” innovations, but they should also look at changes that can help their workforces within their particular context. Results from the municipalities in this study demonstrated a focus on innovative practices and programs tailored to the needs of the jurisdiction and/or environment. More focused changes are important moves for helping to enhance the services of the HR function and in turn the government workforce. Innovations need to be new for the jurisdiction; they do not have to be the most popular new management strategy but rather what is needed for current demands. When considering what can have a positive impact on performance, local government leaders and HR professionals should consider not just best practices but rather better practices—those that work for them and improve their specific performance.

Lesson 3: Do not wait for a crisis. Question your practice to determine when to make small or large innovative changes.

Finally, it is important that local governments continue to work on their HRM capacity to fully harness the potential of their workforce. Governments may continue to experience uncertainty in terms of resources and the economic conditions facing their jurisdictions. Therefore, it is important to develop a strategic approach to create change when needed in spite of challenges facing the government.

HR professionals can help direct their organization to focus on strategic needs, actions, and opportunities. Raising key issues and questions around workforce and personnel decisions can enhance municipal performance no matter what the economic conditions. Below are examples of workforce questions municipalities can ask. This list is by no means intended to be exhaustive, but it could help HR professionals and decision makers think critically about the short- and long-term implications of the strategies they are considering.

How do we become an employer of choice?

What are our mission critical positions and how do we identify them? How do we demonstrate their importance to others? How do we think about changes we are going to face? What are we going to need in order to deal with those changes?

Do we have gaps or surpluses in our current workforce?

What are the implications of our short-term strategies on long-term success?

What are small things we can create to accomplish bigger change?

What new practices, policies, or programs should we consider? How would it work for our needs?

What practices are not working?

How do we communicate with staff?

Where are our areas of concern? What are employees’ top concerns? What are citizens’ top concerns? What can we do to respond?

How do we ensure that challenges are not the cultural stop to innovations?

Whom do we need on board to make an innovation work?

How do we demonstrate the value of HR practices and programs?

Many of the challenges discussed in this article do not have a quick fix even if the economy does improve. Issues such as morale are not likely to change just because funds are now available for a one-time bonus. Additionally, some of the strategies that have been used to respond to the fiscal downturn may have helped with short-term outcomes but may have negative long-term consequences. Local governments will need to continue to think about what they can do to respond to the remaining challenges in the short- and long term. Recovery is an ongoing process, but one in which the actions and efforts of the HR departments may continue to help all municipal departments and employees better perform their work.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Supplemental Material

The online [appendices/data supplements/etc.] are available at .

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