Abstract
This issue of the State and Local Government Review’s Governance Matters section features an article by Jacobson and Sowa that examines how municipal human resource management (HRM) directors in Colorado and North Carolina responded to the 2008 economic downturn. The authors examine the HRM effects of this Great Recession by asking about two themes: challenges for managing the municipal workforce and their innovations in reaction to these challenges.
The main challenge for local governments after the Great Recession was the fiscal decrease itself: they were asked to do more with less. This affected everything from pay to the replacement of capital items to the provision of services. Cutback strategies such as furloughs, workforce reduction, and pay reductions often resulted in increased workloads and flat wages engendering the specific challenges of low morale and motivation. The article offers some lessons about these concerns.
Successful workforce management in tough economic times requires doing HRM better in new ways, not just doing new things. It involves the interplay of various elements including the support of elected officials—or at least the absence of their active opposition—in attending to workforce needs, balancing the need of the public for transparency with the need of employees to not feel unfairly scrutinized, and overcoming the pressure to act tactically and address the crisis of the moment in order think strategically about HRM. Balancing these tensions under the constraints of resource reduction was the main challenge for HRM in the Great Recession.
In U.S. local government, top-level department managers have practical day-to-day HRM responsibility. To see how well the challenges, innovations, and lessons presented in the article fit actual experience in managing a local government workforce, three practicing HRM directors were consulted for this issue: Lisa Ward, HR director, Athens–Clarke County, Georgia Amy Rollston, HR director, Kent County, Michigan Donna Peter, HR director, City of Santa, Monica, California
They were asked to read the article and offer views on it in a teleconference. They raised issues supportive of the article and counterpoints to it. Following is an analysis and summary of their remarks on HRM.
The Challenges of Resource Constraints for Local HRM
The commentators agreed that the challenges seemed applicable to their situations, although situations differed. All three mentioned the effect of available resources on their HRM duties, but their experiences diverged. For two of the commentators, constrained resources were a big factor in operations. As Lisa Ward stated, We have experienced some challenges … and limited resources, is one of them. As a local government, we have a limited budget for salaries and benefits. So, recruiting a diverse work force as well as employee retention continues to be a challenge. We weren’t able to … offer pay increases from 2008 to 2011. Our story is somewhat similar … in Kent County [but] … we … might be unique … We start with state legislation that, in periods of upswing in the economy, limits us … in the ability to share in those good times. There’s legislation that limits our revenues and caps them at the rate of inflation, which next year, is going to be a half of a one percent increase in our property tax revenue … that represents about fifty-percent of our overall general fund revenue. [T]hat does present … a challenge for us and it’s more acute in periods of economic prosperity when … labor costs grow and establish the rate for revenues. Regardless of recession or … the economy, we face that kind of a percentage challenge. [I]n terms of limited resources, the City of Santa Monica probably survived the recession better than almost any other California city. We have … a diverse base of revenue because we’re a tourist destination. [Our] resources were somewhat more limited, but not as limited [as others].
Recruitment, Retention, and Competition with the Private Sector
A shared challenge for all three HRM directors was recruitment. For at least two, the difficulties in recruiting were worse during the upturn in the economy. This is due to a more robust recovery in urban areas and in the private sector, enhancing wage competition for public sector employers in less-urban areas. Retention of employees was less of an overall problem but varied across the commentators’ jurisdictions.
At the Athens–Clarke County Unified Government, Lisa Ward reported felt wage competition from other governments: In Athens, as the labor market has started to open up in the last year or so, we’re seeing more employees leaving and going to the Metro-Atlanta area for similar-type jobs in governments that … are offering a little bit higher salary for the same type of job. [O]ur turnover is between ten and twelve percent. We also have challenges with recruitment … in areas where we compete directly with the private sector, public health nurses, IT, HR, accounting, professionals, skill-trades, and less acutely in areas where we really compete directly with other public sector employers. Kent County has a very low[voluntary] turnover rate … The average county employee has over 13 years of service, so … other than in pockets … [retention] hasn’t been much of a problem. We have very low turnover as well and a lot of retirements. We pay really well, our benefits are great, and so we don’t get a lot of turnover. We’re really experiencing some issues or challenges in recruiting for certain positions … similar to what Amy said. When we start competing with the private sector, we have … more of a challenge for getting those positions filled.
Morale and Motivation
Another challenge identified in the Jacobson and Sowa article is motivation and morale effects, as pay decreases and working conditions change. Foregone raises, furloughed days, increased workloads, or enhanced scrutiny can ripple throughout a municipal workforce and significantly depress mood and performance. All three practitioners had different experiences but similar comments. Amy Rollston shared the effects of cutting the workforce for the first time in her jurisdiction. Kent County had to eliminate a decent number of positions and it was actually the first time in anybody’s collective memory that we ever had to do that in response to a recession. A lot of people have been here for their entire career. I think it did shake their foundation a little bit in terms of their expectation for job security and what employment with the county really meant. [We] found that some of our employees are not as engaged as we would like … when you start not filling vacant positions … to keep an eye on your financials, some employees become burned out—you have to start doing more with less people. When finances got difficult in our community because of the recession, our employees came under much closer scrutiny … there was more demand for transparency and … people [asking] why were [government employees] making so much money, why were their retirement benefits staying in place, while the workforce in the private sector was having to make adjustments in those areas? [It] seemed to cause a … closer scrutiny of our salaries and benefits as public employees and it’s caused a certain amount of distrust of the public sector. We’re struggling … to address that … we have been more and more transparent in everything that we do. I didn’t really start to experience morale challenges and that kind of thing until probably the last couple of years. Now, that the economy is picking back up, employees are expecting to see increases that are a little bit higher than in the past. Like the last two years, we’ve been able to do a two percent pay adjustment. To talk a little bit about the transparency that Donna had mentioned, that is something that we struggle with here as well. [Citizens] will call and … make comments about employees standing around or doing something. So, we’ve really worked on the transparency here in Athens-Clarke County and just being open when they call. We actually have someone that will go out to the worksite … to check on things just to make sure that we’re following through with any kind of citizen complaints.
Leadership and Succession
Both Amy Rollston and Lisa Ward pointed out leadership and succession planning as key challenges. As officials and employees retire to take advantage of local government retirement plans, a vacuum is created at the top. As Amy mentioned, I think some of our big challenges include leadership development and succession planning, We’ve got a lot of retirement going on in leadership positions all the way from long-term, highly capable and well regarded elected officials, to department heads and first-line positions. We are seeing a massive leadership transition and looking to deal with that. [We’re] experiencing the same thing that [Amy] mentioned, about the leadership transition and succession planning being the real challenge. Because we have people leaving our organization and we haven’t done a great job over the past ten years or so, grooming people internally, to be able to take some of those roles.
Responding to the Challenges
Each of the commentators had somewhat different circumstances, yet responded to the challenges in three similar ways. The first is employment branding or developing a recognizable product to attract prospective employees. The second is employee development including training new and current employees and engaging them intellectually and emotionally. The third category is internal HRM improvements covering enhancements to current departmental practices including technology use.
Employment Branding
Lisa Ward reported how her jurisdiction attempted to articulate its brand identity with respect to similar local government employers. We just kicked off a branding initiative to look at [how] employees … look at us as an employer of choice. We’re trying to … differentiate how Athens-Clarke County Government is different from … other local cities. We do have a … Unified Government. We [provide] city and county services to our citizens; that makes [us] unique. [We’ve] been … tailoring our branding initiative to … how we stand out … compared to the other cities around us. About half of our hires come from the private sector. The branding approach that we’re taking is … come to the public sector and … work for Kent County … for more than a paycheck. [We are] trying to sell that you can not only make a good living and have a good job, but … you can make a difference in your local community. One of the things we created was … called the Santa Monica Institute … it’s a kind of branding ourselves internally. We came up with this slogan that, “we’re a city that learns.” [T]hat’s the branding of our Santa Monica Institute. [We focused] on using internal trainers and identifying people who are already in the organization who … have special skills in certain areas.
Employee Development
The employment branding effort in the City Santa Monica was tied to employee development through training and engagement activities. Donna Peter explained this relationship. We started focusing on training … courses like public speaking, conflict resolution, and how to be a project manager. We put together in one place … the city budget process [and] how knowing about that will benefit you. [We]… tried to engage our employees so that they don’t get burned out. The younger generation wants to … connect with … “something larger,” but they also want to be able to tap into training. [We have] an employee [engagement group] … across departments … [to]… give [employees] an opportunity to meet each other even though they may not cross paths on a daily basis. Just recently, we were able to add our tuition reimbursement program. [Our] employees have been ecstatic about [it]. We have established an internship program [with] the University of Georgia … in Athens … [to] bring graduates into our organization. [We want to] say, “Consider Athens-Clarke County as a place to move your career forward … stay here in Athens and don’t move into Atlanta for a job.” [We] have an aggressive wellness program [with] two wellness coordinators … an onsite flu clinic … healthy weight contest, those types of things. [We] tried to focus on that [when] we were unable to add … to salaries.
Internal HRM Improvements
Donna Peter was able to use pressures from the Great Recession to make significant changes in internal HRM processes. This included finding out how to work better with other departments and an electronic application process. [I wanted to see] how my HR department was working … to be more efficient [and utilize] the tools that we have [We want] to be … a strategic partner with the departments. [So]we [got] input from the operating departments [on] whether we were helping them meet [their] challenges [like] recruiting faster or recruiting the right people, or [figuring] out … what positions [they needed] and … should be filled. We decided [to use] only online applications. We’re hearing from our applicants that they want to fill out a job app on their smart phone because they do everything on [it]. [We] processed 17,000 applications last year and you cannot do that if you’re still bound in paper. We downsized about twenty-five percent of our HR department staff. We [had] to revisit [and] streamline our policies. [We] eliminated some functions from HR … [like] compensation administration: we weren’t getting pay increases and we weren’t doing job audits. [In] the short term, there was no need for those resources. [I] resurrected … the county’s leadership development program; an immediate need considering the retirements … coming up in the ranks of leadership. [Just] a year ago [we were] able to streamline the application process and … have seen a significant improvement in … the number of applicants. [Everybody] wants to apply for jobs online and they’re using social media profiles to do that. We … just [implemented] an online applicant tracking program … that has helped to recruit additional employees. [Until] about a year ago, we were still taking paper applications.
Comments on the Lessons Learned
The Jacobson and Sowa article presents both HRM challenges of the Great Recession reported by respondents and the lessons learned from meeting these challenges. The three HRM commentators were asked for their reactions to the lessons. They agreed with the lessons learned, although each had comments on them. Amy Ward saw the Great Recession as a spur for strategic thinking, but thought these activities owed more to preexisting organizational culture. She offered these comments: I thought a great deal about how … challenges as an opportunity to foster strategic thinking applies to [Kent County]. [Here], many people would take a great deal of pride in identifying better ways to do things. I don’t … think it’s fair to say that people aren’t thinking strategically in periods when there is not a serious challenge pushing [them]. The recession pushed [Kent County] to make decisions that may be subject to opposition and not popular but … in the long term may result in structures that are in everybody’s best interest. [Innovations] don’t … need to be novel: a good example is that tracking systems are not new, but they were new to Kent Country. I look at innovations and improvements that started after the Great Recession and think some of that is a culture of people who are excited and proud to make things better. I see a lot of that thinking here at Kent County and I don’t know that the recession … prompted that kind of innovative thinking. I think it was already here. Actually, I think those are really good lessons. I agree with Amy that there’s never going to be enough resources … to do everything that is demanded of HRM. You have to … look at how you’re doing business in … your department. Even if you’re being efficient and strategic, you’re going to be challenged. [We’re] challenged … to fill police officer positions. We pay well and we’re still having difficulty … You have to focus on what works for your organization. You have to talk with your people … because you can come up with the next best thing, but if [they] don’t care, it doesn’t work. [It’s] hard in human resources to move from being reactive to proactive because … the work we do [is] time driven. [To] sit down and strategically look at things [is] a luxury, but … we … have to move from being reactive to being proactive to … build resilience for whatever that next crisis is. One of the things … that we’ve [tried] is to take a more strategic view … [looking at] the services that we provide … as a government for internal departments and for our citizens. [It is important] to look at services to determine [their] cost [whether they are] viable [without] enough resources. [We] have to make some tough decisions at the mayor and commission … and … department level about what … might have to be cut back during … challenging times. As far as [waiting] for the [next] crisis, [I] have tried to stress to the HR team [to plan] for the future [using] … continuous operational planning, rather than just reacting. [The] nature of our business in human resources, [seems] reactive because we’re dealing with all the departments and … the employees. [Looking at things] before they become a crisis is important.
Conclusion: Strategic Thinking and Tactical Action
The commentators agreed with the thrust of the Jacobson and Sowa article. Coping with the Great Recession in HRM at the local level did include facing the challenge of reduced funding and the effect this reduction had on operations such as recruiting and maintaining a motivated workforce. Many of their adjustments to that new reality were internally focused and in reaction to the economic downturn. They concurred with the tenor of the lessons learned offered by the authors: resources are usually insufficient which should promote strategic thinking; what makes an innovation appropriate is particular to context; constantly review operations instead of waiting for a crisis to make changes.
Nevertheless, their agreement is nuanced. Each of them pointed out that they took action to review their operations and worked at developing middle term strategies for client satisfaction. These included internal clients like their local government departments and external clients like citizens and prospective employees. Their knowledge of internal needs was admirable—they understood the best organizational structures and reforms for their business and ways to leverage scarce internal resources. Yet, they indicated also a deep sensitivity to their external organizational environments including knowledge of external labor markets and wages and benefits in their own and other sectors, demands by clients for communication technology, and institutions in their communities with which they could collaborate. In short, they were doing already much of what the Jacobson and Sowa article prescribed in terms of innovating, reviewing, and thinking strategically. Like our commentators, many local government managers think strategically and take strategic action, but this endeavor is often blunted in practice by two realities.
The first reality is the particularly unpredictable nature of the environments of public organizations. Forecasting and responding to economic conditions, public opinion, and needs at the same time is not easy, and public sector actors are not at liberty to agilely invest or reinvest efforts and resources as are private sector actors. Problems can be predicted, but competing demands for particular actions makes choosing the appropriate action a political as well as an administrative problem. So, acting “proactively” may reduce but will not eliminate the ultimate need to act “reactively” in local government. In brief, problem solving always will have a tactical element dictated by the political situation that may not fit with a preset strategy.
The second reality is the constant resource scarcity in local governments. This means that fully strategic thinking is a luxury that local governments can never afford. With limited resources, it is possible only to engage in limited strategic thinking. As a result, the number, scope, and degree of operational reviews as well as their ongoing nature will be tentative, at best. So, local government HRM will rely on installed routines and procedures that can be modified slightly to meet problems. In short, tactical action will always be as prevalent as strategic action, but what can vary is how much strategy informs tactics.
One conclusion that might be drawn from the experts’ responses is that the biggest challenge for local government managers in general, especially those in HRM, is getting strategy and tactics to mesh operationally. Fitting together strategy and tactics, proaction and reaction, and short-term and long-term thinking may be the central challenge for all local government management, including HRM. Carrying out these activities is of great importance as Jacobson and Sowa point out, but developing a logic and framework that unifies them in implementation may be the fundamental challenge for local government HRM.