Putting "strategic" in human capital management

Public Manager, The, Fall, 2005 by Philip Nathanson

Like their counterparts in the private sector, public-sector human resources (HR) professionals have spent the last couple of decades clamoring for "seats at the table" when senior decision makers gather. Today, federal HR managers are being invited to the strategy table as never before. The aging workforce, shrinking staff ceilings, sourcing competition and implementation, pay for performance, and rising customer service expectations of all stakeholders have created a pressing workforce agenda for agency top managers.

The President's Management Agenda

In addition, administration and congressional initiatives require at least some consideration of employees at federal agencies as human capital (HC). Viewed as HC, employees are not costs to be avoided or resources to be consumed, but assets to be valued and investments to be strategically managed to maximize their usefulness. Comptroller General David Walker introduced the term "human capital" into federal-speak in the late 1990s. Since then, the Bush administration and Congress have eagerly embraced the notion of the workforce as a manageable investment. The President's Management Agenda (PMA), developed early in President Bush's first term, includes a Strategic Management of Human Capital initiative, and each agency's progress in implementing it is tracked as part of the quarterly executive branch management scorecard of the Office of Management and Budget (OMB). The Chief Human Capital Officers Act of 2002 requires each executive agency to appoint a senior official whose major role is to think about the workforce strategically.

A look at the June 30, 2005, executive branch management scorecard suggests that over the past couple of years, HC professionals have indeed been spending some time in the executive conference room. On the Strategic Management of Human Capital initiative, eleven of twenty-six departments and agencies scored "green." That means, among other things, that they have provided OMB with documentation that they have implemented and are using a comprehensive HC plan and that they use outcome measures "to make human capital decisions, demonstrate results, make key program and budget decisions, and drive continuous improvement in the agency." Another fourteen organizations scored "yellow," having shown that they put the planning and management machinery in place to support HC strategic decision making.

U.S. Department of Energy

At the U.S. Department of Energy (DOE), which scored green, chief human capital officer Claudia Cross has taken advantage of the early, enthusiastic, and continuing support of HC initiatives at the Deputy Secretary and Assistant Secretary levels to set up a comprehensive HC planning and tracking process. DOE is determining what core competencies will be needed in the workforce five years from now by identifying gaps and planning initiatives to address them. In addition to top management involvement, Cross credits DOE's success to a holistic approach, which looks at all parts of DOE and the PMA as interlocking rather than independent and encourages input from all levels of the organization. The philosophy behind this approach is that each DOE manager--not the HR staff--"owns" HC initiatives and is responsible for the effective use of HC.

U.S. Department of State

At the U.S. Department of State, another "green" agency, the director general for human capital is at the table (and usually next to the Secretary or Deputy Secretary) for all significant agency management decisions, including budget allocations. State HC managers have developed twenty key performance indicators that have already assisted in shaping HC programs and activities. For example, two years ago the metrics showed that it was becoming increasingly difficult to fill positions in hardship posts. State responded by requiring a tour of duty in a hardship post for promotion to senior foreign service officer.

Human Capital Metrics

Although many federal HC managers are more involved in agency management decisions today, the permanence of this state of affairs can be reasonably questioned. The history of federal government management theory over the past fifty years is replete with examples of what The Public Manager calls "Fads of the Year." These ideas--from Theory Y to PPBS, MBO, ZBB, CQI, TQM, and the balanced scorecard--become prominent in federal management discourse for a while and then fade into the background. No longer the topics of mandatory management off-sites or the centerpieces of agency initiatives, some have been at least partially incorporated into established public management practices, but many have simply faded away over time. If HC initiatives suffer the same fate, will HC managers be asked to stay at the strategy table?

The answer depends on whether HC managers are able to offer information useful to the top decision makers in making core business decisions, practical insights that transcend traditional HR boundaries and the perhaps transient focus on "workforce issues." It is axiomatic that in any organization, line managers--those responsible for profit and loss or, in the public sector, those directly accountable for accomplishing the organization's mission--are the principal strategic decision makers. Staff managers are part of the process only to the extent they provide this leadership with "news it can use."