Improving Performance Can Be a Win-Win
With slowing national economic growth, drops in consumer confidence, and anticipated cuts in federal funds, the Urban Institute reported state and local budgets are experiencing “fiscal challenges.” Several states are forecasting budget shortfalls for FY 2026. Reports show that over half the states have initiated a version of DOGE to cut “fraud, waste and abuse.”
But a recent article in the business journal, Forbes, questions the DOGE approach, “ . . . are these drastic workforce reductions truly making government . . . more effective? Or are they . . . stripping it of key talent and institutional knowledge vital for long-term operational efficiency and innovation?” (1)
Cost cutting is fully warranted but Elon Musk’s ‘chainsaw’ approach misses a key point – government operations are based on laws and budgeted funds. Politicians may disagree on what agencies should be doing or even if they should exist, but simply firing or laying off workers does not eliminate the ‘work.’ At some point those jobs will have to be refilled or the work done by contractors.
When jobs are cut but agency operations continue, it redefines the work environment for continuing workers. Reports say it creates chaos; many are overworked and stressed. Distrust makes them reluctant to voice ideas when problems surface. As described in a GovExec column, DOGE “has only been successful in one of its objectives: decimating and traumatizing the federal workforce.”
Experience with “lean management” shows improving efficiency requires “the active participation of the people who understand the processes behind the services being delivered.” They want to help. That’s been proven by Washington state’s ‘Results Washington.’ The state’s experience is not unique. The strategy was proven three decades ago.
The Lesson of ‘Reinventing Government’
That reality was ignored by Elon Musk’s effort to cut costs. President Clinton’s National Performance Review or “reinventing government” led by Vice President Gore relied on volunteer ‘civil servants’ and realized a far larger reduction in the federal workforce — the total was 426,000. It also reduced spending by enough to produce budget surpluses for two years and balanced budgets for four consecutive years. Budget surpluses today are unfathomable.
The NPR principles were: Putting customers (the American taxpayers) first, Cutting red tape, Empowering employees to get results, and Cutting government back to basics. Elon Musk has tried to associate his DOGE cost cutting with NPR but in every other respect the two are very different.
The key was best stated in a Gore comment, “I don’t want any recommendations to study this more. I want recommendations to do something.” Another was, “Don’t move boxes. Fix what’s inside them.”
In a 2013 presentation Elaine Kamarck, who managed the initiative, summarized the reforms:
- Total savings of $136 billion (keep in mind this was 30 years ago).
- Reduced agency headquarters staff, eliminated 78,000 middle managers, closed nearly 2000 outdated field offices, and shut down 250 programs and agencies.
- Cuts equivalent to 640,000 pages of obsolete red tape and agency rules.
There were also the Hammer Awards for individuals and teams that developed solutions to local problems. It was highly valued ceremonial recognition. By the end of 1999, there were 1,200 awards to federal, state and local government employees. None of that would have been possible if employees did not feel empowered to solve operational problems.
There was resistance, according to John Kamensky, Gore’s deputy for NPR, from the people who lost their jobs, but since the impact unfolded over several years and included normal attrition, there were only a small number of layoffs. It also had bipartisan congressional support.
All of this changed when George Bush was inaugurated in 2001. Two weeks earlier, the conservative Heritage Foundation issued a paper on “taking charge of federal personnel” that argued for reasserting “managerial control of government.” With the 9/11 crisis, the ‘reinvention’ ended.
The lesson, however, is still valid. Employees in every work environment are aware of inefficiencies, waste and ineffective policies. They want their organization to be viewed as successful and respected in their community. When their ideas are not welcomed or they are not trusted, they are likely to remain silent. Where they are respected and their ideas valued, they are more satisfied and more productive. That’s been reinforced by multiple studies emphasizing the importance of worker engagement.
Two decades later, the COVID-19 crisis forced millions of employees to work remotely, and that redefined manager-employee working relationships. It highlighted the need for managers to develop new supervisory practices. Now employers, public and private, are requiring employees to return to their workplace, but if leaders resort to top-down control, it’s unlikely they will again be fully productive. The NPR lessons are directly relevant today.
Empowering Employees Leads to Significant Performance Gains
Control-focused supervision was the norm from the time civil service laws were passed early in the 20th century. Jobs were defined with multi-page, detailed job descriptions. Government classification systems treated jobs as if they are isolated and unrelated to agency operations. It’s the definition of bureaucratic. Today, policies that support improved performance are still uncommon.
In business, workforce management changes started with the 1990 recession. Corporations eliminated levels of management, flattening their organizations, to cut costs and boost quicker decisions. It empowered workers and improved performance. The decade also saw the rapid adoption of personal computers and cell phones. Knowledge workers, primary tech specialists, got attention for the first time. It was at the end of the decade when Gallup started promoting the potential of engaged workers to perform at higher levels.
In all other sectors, the best performing employees are recognized and rewarded. The best performers command better job offers and higher salaries. The best performing companies are celebrated in the media. That’s also true for the best hospitals and best universities. The best places to work are recognized in virtually every industry and by the media in a number of cities.
In contrast, it’s rare to see the media or government leaders recognize agency or employee accomplishments. That’s not a strategy for building public support.
The focus in government too often continues to be on few employees who perform poorly. A recent GovExec.com column, “Holding poor performers accountable can lead to better government,” argued “neither federal employees nor the public have confidence that poor performers in government are dealt with properly . . .” That would never be a headline in business media.
Empowering employees to tackle work-related problems both improves performance and increases their job satisfaction. However, it can threaten managers. Unfortunately, too many executives and managers are not open to new practices. One certainty – as with Gore and NPR, leader support would be essential.
A version of the NPR Hammer Awards would be a great way to start the transition to improved results at any level of government. The costs were nominal, awards consisted of a $6 hammer, a ribbon, and a note from Vice President Gore. The recognition associated with initial awards would make it easier for other employees to propose solutions to local operating problems.
There is no reason to think a similar strategy would not generate ideas for improved results. A proven variation a decade or so ago was the Peak Academy program in Denver where training was provided to help city and county employees identify ways to improve government. Originally the Denver program involved cash “gain sharing” awards to enable employees to share in savings.
A notable difference between the public and private sectors is that in business it’s rare to hear the word “accountable.”
Managing for Improved Performance
The Clinton administration was also responsible for the Government Performance and Results Act in 1993, which required federal agencies to define performance goals, measure results, and report progress. It’s not clear if that was the first law focused on performance management, but it’s gotten the most attention. Now goal setting and performance metrics are used at all levels of government.
It’s also relevant that goal setting – or management-by-objectives – was introduced 40 years earlier when Peter Drucker published his book The Practice of Management in1954.
The textbook planning practice is the use of SMART – Specific, Measurable, Achievable, Relevant, and Time-Bound – goals to link managers and employees with organizational goals. It enables employees to follow how they are contributing to agency results. That’s likely to be a more effective motivator than the added salary dollars linked to high ratings. Tennessee’s reform led by Governor Bill Haslam confirmed goal-based management can be effective in government. (2)
The use of SMART goals received far more attention in the COVID crisis with millions working remotely. It’s a proven answer for workers empowered to work independently. Combined with a performance data system, it’s well suited to reviewing progress in reaching goals.
Following Tennessee’s rollout strategy, reform initiatives should plan the first year or two as a learning period to build comfort managing with team and individual goals. The first two years were focused on training both managers and employees. An added feature to consider is inviting employees to comment, possibly anonymously, on their manager’s supervisory skills.
In business, the typical pay package for executives and managers includes cash incentives, stated as a percentage of salary at each grade level (e.g., 20%). (3) At year end, awards are based on a combination of organization and individual performance. The portion based on organization results reinforces the importance of ‘team’ performance; each executive’s payout is based by formula on shared metrics. (3) The practice is common in hospitals and hospital systems as well.
In government, senior executive salaries are too often capped by the pay of elected officials. Federal senior executives are eligible for awards up to 20% for exceptional performance but contrary to business practice, awards are individual and subjectively decided. There is nothing, except politics, that prevents public agencies from adopting executive incentives. When the goal is improving performance, it’s an idea that warrants high level discussion.
When goal-based management is new, the transition should be understood and managed as culture change. That requires active leadership, a credible reason, clear goals, open communication, and an understanding of how manager-employee relationships are expected to change, with training for newly important skills. A successful transition rides on building the skills.
In today’s uncertain environment, agency and individual goals should be reviewed and possibly revised as circumstances change over the year. The goals provide focus, linking employees to progress throughout the year. It reinforces each employee’s sense of accomplishment. It also enables managers to follow the performance of their people. GPRA and follow up federal laws have been silent on workforce issues, but Tennessee demonstrates performance management is central to improving government performance. (4)
Linking Pay to Performance
Tennessee successfully transitioned to pay for performance. It’s certainly not the first public employer to switch to rewarding good performance. Charlotte NC was seen as a role model 30 years ago.
In other sectors it’s effectively the universal practice for white collar workers. Even the critics in universities understand their career success depends on performance. Across society, the recognition of the best performers is broadly accepted. It’s true in sports – All Stars; in entertainment – Academy awards; and in education – Gold Stars and Honor Rolls. Parents commonly recognize and ‘reward’ their children to encourage exemplary performance.
The importance of rewarding employees is evident in the sales of the book first published 30 years ago, 1001 Ways to Reward Employees. It’s now in its 58th printing and has sold over 1.7 million copies.
Critics have denied pay for performance is effective in government, but the research focused on work practices that would not be adopted today. Moreover, their focus was typically on employee satisfaction, which is not consistently linked to better performance. Significantly, the studies did not suggest traditional step increase systems are a better policy nor did they highlight the reasons for the failures (e.g., inadequate funding, inadequate training).
Experience with implementing performance pay policies highlights a number of issues in the planning and implementation that should contribute to a successful transition.
- Leadership and prior experience of leaders in executive roles (Tennessee’s Governor Bill Haslam had executive experience in the private sector as well as two terms as Mayor of Knoxville.)
- A central office or at least someone in a high-level role should be responsible for leading the transition
- Announcing at the start the goals and reasons for initiating the change
- Training managers at all levels in effective performance management practices
- Defining a role for Employee Resource Groups to address issues that arise
- Differentiating employee SMART goals by job family, career stage and experience.
- Relevance of data on workforce trends (e.g., turnover, job vacancies) by occupation
- The history (and any resistance) of previous policy changes affecting the civil service system
The goal is a successful transition to new management practices. Both managers and employees have to accept new ways of interacting and that frequently triggers resistance. For the same reason, relying on outside “experts” may not be the best strategy. Plus, they need added time to learn how an agency operates. In both colleges and hospitals, it’s common to rely on employee teams in the planning and roll out of new pay systems. They take their role very seriously. Involving employees builds a sense of ownership and ongoing communication with co-workers.
A notable difference between the public and private sectors is that in business it’s rare to hear the word “accountable.” It seems that defining and agreeing on goals creates a sense of shared accountability. The linkage to pay increases (or cash incentives) confirms accountability and the consequences. Everyone knows what they are expected to accomplish, and how their performance affects their careers
Research by Gallup and others makes managers key for engaging employees. Too often in the past they got the job because of their technical expertise and were not provided adequate training. To support their staff’s work efforts, experts argue they should provide coaching and advice throughout the year. Year-end reviews will have fewer surprises. The growing support for pay transparency makes the justification of ratings essential.
Toward that end, a strategy to enhance the credibility of performance ratings is to have a committee of peer level managers review the highest and lowest ratings. It addresses the problem of inflated ratings. The added step forces managers to be able to justify ratings. Confirming ratings reinforces the recognition.
When combined with team incentives for developing solutions to workplace problems – similar to reinventing government – it creates a culture where employees are committed to good performance.
(Note: An alternative, primarily for ‘knowledge’ occupations where employee goals are not a credible option (e.g., technology, science, healthcare) is basing salary increases on assessments of individual knowledge and skills – it’s known as competency-based pay. That’s the proven basis for managing salaries in several federal ‘demonstration projects’. It’s embedded in societal norms that value expertise.)
Final Thoughts
In far too many government agencies work management practices have seen minimal change in decades. Where that’s true, managers and employees have established working relationships and are resistant to change. Their resistance could lock them into the past. They need to understand switching to pay for performance can be a win-win, for them and for the public.
Years ago, Charlotte’s HR manager, Bill Wilder, and I were speakers at two ASPA conferences on pay for performance. Each time we had overflow audiences with attendees standing along the walls. They came to hear how the city transitioned to pay for performance. Bill is retired now but an alternative is to have agency teams meet with states and cities that successfully switched to pay for performance. Learning first-hand what works and understanding what the new policy means to agency success is likely to be convincing.
(1) The ebook I co-authored with Dr Trish Holliday, formerly Tennessee’s CLO, “Preparing Managers for Tomorrow’s Government,” https://www.govexec.com/assets/preparing-managers-tomorrows-government-ge-q4-2020/portal/ provides a longer discussion.
(2) Government executive salaries are too often capped by the pay of elected officials. That’s far below the pay for comparable positions in the private sector.
(3) In business publications, incentives differ from bonuses, which are subjectively determined at year end.
(4) The book, It’s Time for High-Performance Government: Winning Strategies to Engage and Energize the Public Sector Workforce, co-authored with William Wilder, former HR director for Charlotte, NC provides a full discussion. Charlotte was recognized for its successful pay for performance policy.
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