U.S. Office of Personnel Management

Speech by Janice Lachance, Director,
Office of Personnel Management

"Designing a Civil Service for the 21^st Century"
Public Service in the 21^st Century Retreat
Wye River Conference Center, MD

June 28, 1999

I also want to thank the PricewaterhouseCoopers Endowment for the Business of Government for its support of this Conference, and the other activities being funded. The commitment of groups like yours is so necessary to engage the creativity and energy of leaders from all sectors to support the business of public service.

And may I say how lucky I think the Endowment is to have you, Mark [Abramson] as Executive Director. You have been identified with excellence in public service for so long, this was a natural selection!

It is an honor for me to have this opportunity to discuss the future of the Federal Civil Service with such a distinguished audience. And, since this is such an influential and knowledgeable group, and because I know that you are going to grapple with the tough issues that surround change in public service, I am going to be very frank in my comments today. So be prepared.

Certainly, there's no question that the Federal workforce of the 21st century will face challenges that were unheard of only 20 years ago.

Vice President Gore made this point very clearly at the International Re-inventing Government conference held last January when he said:

"We need governments that are as flexible, as dynamic, as focused on serving their customers as the best private companies around the world. We need to adopt the very best management techniques from the private sector to create governments that are fully prepared for the Information Age..."

This Conference is a step in that direction. The ideas put forth last night and this morning, and the honest talks you will have later today about these ideas, can help us frame our actions for years ahead.

We all know that the world of work is changing. The Federal Government's work world is changing as well. Some of the trends are already quite clear, and were probably described by some of the previous speakers. [I wish I could have been here earlier to hear them.] But I want to reinforce what I believe are the most important changes occurring.

Work processes are increasingly driven by what employees know - that is to say, how the work is done is increasingly dependent upon the level of knowledge the employee brings to the job.

The more knowledgeable an employee is, the better job she, or he, can do.

The result of this trend is that the distinction between working and learning is becoming blurred - today, part of the employee's job is to keep learning about the ever-changing work that needs to be performed. This is the essence of lifelong learning.

The way work is organized is also being affected by the speed of technological changes.

Traditional bureaucracies will have to shift from the hierarchical, Industrial Era structures that we are familiar with to "inter-networked" structures that improve and integrate service delivery and streamline the design of government.

In addition, you can expect to see more virtual organizations emerge, along with other forms of organization based on networked computing.

Where and when work is accomplished will increasingly be driven by customer demands and employee needs. The growth in telecommuting and working from home will only continue. The customer really doesn't care where the employee he is talking to is located, as long as good service is provided. And an employee who is given workplace flexibilities that help meet special family needs will give better service to the customer.

In the future, organizations will increasingly have a "just-in-time" workforce. Needed work will be done by a blended workforce of core employees in cross-functional teams and by temporary employees, consultants, contractors.

The fact of the matter is that full-time, lifelong jobs and job descriptions are disappearing.

Core government employees will have to be able to perform one role today and another tomorrow.

Workforce skill requirements are changing quickly and dramatically. Our lifelong learning initiatives will help us accommodate and be responsive to these changes, but we will still have to cope with skill obsolescence that leads to job displacement and organizational restructuring.

Middle management will continue to experience shrinking ranks and changing roles. The manager's role becomes more that of a coach and a teacher rather than simply an assignment-giver and performance evaluator.

And, executives must be true leaders - more than technical experts - capable of driving change, rather than managing change. They must be mobile, and able to adapt to changing missions.

Obviously, these changes have significant implications for how skills are valued, how salaries are set, how performance is evaluated, and how learning needs are assessed and met.

These are some of the changes we know are occurring. Each change has provided new challenges to our civil service systems. OPM has been working very hard over the last few years to provide new tools and strategies to meet the challenges.

Many of these changes were made governmentwide - changes like the delegation of examining to agencies, the automated data base of all government jobs that is open for business 24 hours a day, 7 days a week, and a flexible framework for performance management that supports both individuals and teams.

We have also responded to specific needs, like streamlined hiring for computer professionals to deal with the Y2K crisis, and we provided tools like buyouts and early retirement authorities to help agencies deal effectively with downsizing and restructuring.

These changes have made a real difference in the way we work. But we must do even more.

That's why I was so delighted when the Vice President announced his personal support for key civil service improvement initiatives at the recent Global Forum on Reinventing Government.

There are two essential components to these initiatives.

First, giving agencies the ability to align pay and performance systems to support the accomplishment of their core mission; and second, giving agencies the staffing and development tools that will allow them to acquire and train a high-quality, diverse workforce and to adapt to changing organizational needs.

The Vice President's proposals are designed to move forward the ideas that we at OPM have been working on with stakeholders, including people in this room, for more than a year now.

We want to broaden agencies' access to available tools that agencies, managers, and the workers in the front lines, can use to craft responsive solutions to their particular Human Resources Management needs.

The proposed flexibilities provide agencies with the option to use new tools and strategies. Many of these have been tested and found to be very effective in demonstration projects and in the private sector, and we firmly believe that it is time that they were made available to all Federal managers.

Before describing more specifics about these proposals, let me be very clear -- and very frank -- about the context of change, and the process we are going through to get there.

With good reason, the Vice President proposed these changes in the context of a culture of high performance and labor/management collaboration. This collaboration is very important - it is one of the key reasons we have been able to reinvent ourselves as a government over the past six years, and it will continue to be critical to our efforts in the years ahead.

This lesson has also been learned in the private sector. To make fundamental change, effectively, employees, and their representatives, must be involved. With partnership, comes more creativity and productivity. This is an opportunity for growth that must not be missed.

Let me also clearly state, each new tool or strategy is offered in the context of fair and equitable treatment, with oversight or agency accountability set up to ensure that the fundamental principles of the merit system are protected, and that the very best workers are hired, rewarded, and retained. In this way, the bedrock values of the public service are preserved, even as flexibilities are introduced.

And finally, let me note that the demographics of our nation have changed. It is becoming more diverse. We have to ensure that our Federal workforce reflects these changes as well. To that end, President Clinton and Vice President Gore have been working hard to promote their vision of building a government that looks like America.

If I could talk about this point for a moment, diversity in our government is not something we do only for the benefit of our underrepresented communities; it is something we do for the good of our entire nation.

We, in this room, and our colleagues across the nation, fight for diversity and equality because of the difficult lessons of world history. When we look to the past (and sadly sometimes to our present world), we are confronted with the horrors that occur when some majority thought it could exclude some minority from the mainstream of their society..

And, no matter where you are around the world, the results of this are always the same: the destabilization of the governments that have closed their eyes to the reasonable expectations of all their citizens, and families destroyed by prejudice and senseless violence.

We seek diversity because our private sector, our government, and our nation are all learning the same lesson, that diversity means strength and vitality, but exclusion means division and weakness - and, at the end of the day, the loss of real freedom for all.

Our Federal workforce must embrace these changes if it is going to remain both competitive and representative.

Now, I'd like to share some of the specifics for civil service improvement legislation we are considering. Of course, you are aware that we believe consensus among our stakeholders is essential to the success of this effort.

This consensus building is still underway, so the process is taking longer than I would have hoped. But we will carry on this process as long as it takes. Our mission is too important, our opportunities too great to accept anything less than constructive engagement and cooperation.

And when we are done, I am confident that we will present a package of changes which will make a positive difference in the way staffing and performance management is conducted at Federal agencies and will be supported by all those groups who have a keen interest in change. So, while the details may be altered over time, there will remain some basic guidelines.

First, the government's employee performance management system should shift its focus away from the existing emphasis on individual process inputs to achieving results, to improvement, and to group performance. Each of the changes we have proposed to stakeholders moves us closer to this system.

You may have heard about our recent report Poor Performers in Government - A Quest for the True Story. And the true story is that there are far fewer poor performers than some have believed. Never the less, we are proposing changes which enable us to handle that small percentage of poor performers more directly and more efficiently.

We have proposed changes which require that everyone's performance appraisals be based on real results obtained.

We have also proposed changes that put some pay or bonuses at risk for those executives, managers, and supervisors who have significant responsibility for outcomes in their organizations. The message is clear: you are responsible for the work assigned to you and the staff you supervise.

And, we are proposing a few statutory changes to reduce the complexity of the current pay administration, which will make it easier for us and for agencies to focus on more important issues; issues such as using pay to support better performance.

Let's not kid ourselves. We have all known for far too long that our pay system has had mixed results. Just last week, the PricewaterhouseCoopers Endowment released a survey of senior Federal executives that supported our concerns about this issue.

Essentially, the results say that inadequate executive salaries have created a significant barrier to recruiting and retaining top notch leaders in the Federal Government. More than half of the executives interviewed said they had considered leaving Federal employment because of pay concerns.

As Ian Littman, co-chairman of PricewaterhouseCoopers, said, "Unlike private-sector companies, which strive to apply 'best practices' to solve business problems, the government operates with a 'worst practices' compensation system....that provides few incentives for performance..."

We are working on solutions to the executive pay problem, but I'm sure you realize that this will be a very difficult task.

And, of course, we must also address pay and performance issues for those who are below the executive level. I have chartered a Total Compensation Policy Center, which is examining best practices, and will make broad-based recommendations for change by FY 2002. But there are interim steps we are proposing as part of our civil service improvement initiatives. Broadbanding, for example, is exactly the type of authority that supports linkage between better performance and pay and rewards. But broadbanding would also allow us to do far more.

It simplifies job evaluation by reducing the number of distinctions between levels of work; it supports flatter and leaner organizations; it broadens the skills of employees to provide a more versatile and flexible workforce; it gives managers additional flexibility to pay for top quality new hires; and, it provides flexibility for setting pay progression policies for movement through the bands.

Right now, broadbanding can only be done within the confines of formal demonstration projects. But the successes and lessons of those projects have been well-established.

In my view, it is time to follow through on the original intent of the demonstration project authority and make successful strategies available on a Government-wide basis.

And, speaking of demonstration projects, our civil service improvement package also includes proposals to make it easier for an agency that conducts a successful demonstration to put it into permanent use within the agency, and to broaden the scope of coverage for new demonstration proposals.

The second major component of the civil service improvement package is our proposals for new recruitment and hiring flexibilities.

Clearly, Federal agencies must attract top quality candidates. The labor market is tight, and it is important that we use effective recruitment methods. Agencies also need a selection process that provides more choices among equally qualified applicants, including veterans, to best fill individual positions.

So, we are proposing special hiring flexibilities to handle critical situations where agencies must hire quickly and where there are shortages of qualified candidates.

The fact of the matter is that competing private sector employers are able to make offers to high-quality candidates in shortage and critical need occupations before Federal agencies can.

So, under this proposal, we are simplifying the hiring process when it is clear that a shortage or critical need exists.

OPM will clearly predefine the criteria for shortages and critical needs, and we will work with agencies to address their unique needs.

There will be safeguards. Only agencies with certified examining programs will be able to exercise the authority. This will ensure that the shortage or critical need has been documented, that appropriate public notice has been provided, and that veterans' preference and merit principles are protected.

We are also proposing an alternative process to rank applicants into quality groupings. This would greatly simplify the selection process while maintaining veterans' preference. You may know this as "category ranking," and you may also know that it has been tested through a demonstration project at the Department of Agriculture. The results of rigorous evaluations show that the new system supports both merit and veterans' preference.

It is about time to spread this practice to other parts of the Federal Government.

Another staffing issue we must address is the use of non-permanent employees, with appropriate benefits, to enable agencies to adapt to workload and mission shifts.

Permanent employees may not be the answer for every job in the Federal government. But, right now, non-permanent employees don't have the benefits they deserve and their families need. This is wrong.

So, we are proposing a new hiring authority for non-permanent employees which will support agencies in their legitimate need for such employees, while ensuring that these employees have fair access to benefits.

There is no question that agencies need the flexibility to structure their workforce to meet specific, changing needs. A significant portion of the workforce (about 10 percent) is already nonpermanent. Our changes are designed to simplify the current systems and to increase equity over existing temporary and term authorities.

Our objective is simple: we want fairness for workers, and we remain committed to the principle that access to benefits should be based on length of service and not the particular type of appointment used in a particular situation.

Also, keep in mind that by providing immediate access to health and life insurance benefits with the guarantee of a Government contribution after a year, we are putting the Government in a sound competitive position in the labor market.

And, use of merit-based competitive procedures for initial selection into these non-permanent positions will continue to support workforce quality and provide a simplified transition to the permanent workforce, in those limited instances where such a transition is justified.

In addition to the civil service improvement initiatives that would take legislation, OPM is moving forward, with a team of agency representatives, to create a new career intern program for recruiting and selecting top-quality applicants for GS 5-7-9 entry positions in professional and administrative jobs.

This program would be patterned after the successful PMI [Presidential Management Intern] program, but would be targeted to filling the jobs that are more technical in nature - rather than the future managers that are recruited through the PMI.

But many of the successful techniques from the PMI - like a broad-based recruitment strategy, using strong college and university relationships, and on-the-spot job offers, once a qualified group has been identified through a thorough assessment process -- would be used.

This program would create a new hiring authority, and new hires would have to successfully complete a defined internship before being converted to permanent status.

A key, critical piece of the civil service improvement package focuses on the Senior Executive Service.

Last year, we circulated a draft Framework for Improving the SES to get our stakeholders thinking seriously and talking about the future, and about whether the way we develop, select, and manage the SES cadre is producing executives who can meet the leadership challenges of the 21^st century. After a year of discussions, with a wide variety of stakeholders, there is general consensus on a number of areas needing improvement.

We should abolish recertification, but strengthen performance management and accountability.

We should address the SES pay compression issue - initially we are proposing to raise the aggregate pay limit to the Vice President's salary.

We are proposing to increase agency staffing flexibilities, especially for meeting short-term needs, and to streamline paperwork and procedures.

We are expanding the focus on continuing learning for current executives and candidates, and we are developing tools to help agencies with succession planning.

The Framework also included ideas for modifying the structure of the SES and other executive personnel systems, and although there was no consensus on how to proceed, there was general agreement that further study of the structural issue is warranted.

You can see that every one of the proposals we are considering is designed to take the Federal workforce to new heights. I recognize that some of these proposals may be challenging and difficult.

Executives and managers are particularly affected by the proposals. Along with the new flexibility for managers and executives to select and manage the high quality, diverse workforce they need, we are introducing more individual accountability. This translates into more performance measurement, but it ultimately translates into improved recognition and rewards. This is a good thing!

One of our challenges as leaders is to assist each stakeholder to confront any apprehensions and embrace the opportunities that these improvements offer. It is up to us to change the way we do business, and then reap the improvements in public service that will follow.

This Conference is a wonderful opportunity for us all to move beyond our personal short-term interests and take a long hard look at our collective workforce needs in the next century. You all have a lot of exciting work ahead of you and I am looking forward to seeing the results of your discussions.

Only by working together, will we be able to create a new workforce - built on the lessons of the past, the innovations of the present, and the needs of the future - to help our nation move successfully into the 21^st century.

As Robert Kennedy so succinctly said "unless we move with change, we will become its victims...." I'm here to tell you that the Federal Government is committed to moving with the tide of change.

Thank you.

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