DHS Experiment Gets Mired in Court Setbacks, Staff Changes

In late April, the attempt to transform people management in the federal government was a highlight of the Human Resource Planning Society conference in Tucson, Arizona.

    Marta Brito Perez, associate director of the U.S. Office of Personnel Management, and K. Greg Prillaman, chief human capital officer of the Department of Homeland Security, made a presentation on the introduction of strategic human capital practices at the DHS. Prillaman called them “revolutionary.”

    But two months after that session in the Arizona desert, the effort to overhaul federal workforce management, with Homeland Security in the forefront, was looking less like a revolution than trench warfare marked by some advances and several setbacks.

    The stage for change was initially set with the advent of the Department of Homeland Security. Its creation in 2002 in response to the September 11 terrorist attacks offered the Bush administration a chance to implement an HR system from the ground up, a rare opportunity in the federal realm.

    To create Homeland Security, Congress merged 22 existing federal agencies that employed 170,000 workers, who were represented by 17 unions and 77 collective bargaining units and supported by 80 personnel and seven payroll systems.

    Capitol Hill also gave the agency a free hand to establish its people management framework, so it instituted “MaxHR.” The initiative is designed to align performance goals with the department’s priorities, provide greater operational flexibility, agility, speed and consistency, build a unified culture and attract and retain a high-performing workforce, according to the April presentation by Office of Personnel Management officials.

    The program also emphasizes pay for performance. And that’s been the stumbling block.

    Things started falling apart for Homeland Security HR shortly after April’s HRPS conference. Prillaman quit in early June. The White House announced in August that Perez would replace him.

    Then, in late June, the U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court ruling and shot down the agency’s pay-for-performance system, arguing that it failed to ensure collective bargaining rights.

    The court said the department went too far with the latitude it was given to invent an HR system.

    “Translated into English,” the appeals court wrote, the bill that established Homeland Security “would give management full discretion over all aspects of the department except those that might be seen as personal employee grievances. The court put the brakes on the agency.

    On Sept. 25, the Solicitor General decided not to appeal the case to the U.S. Supreme Court. DHS spokesman Larry Orluskie says the move is not a setback but rather allows the department to avoid spending additional time in litigation.

    “We’re going to sit down without components–OPM and the unions–and determine our best way forward,” Orluskie says

    Before the court setback, the House Appropriations Committee cut $15 million from a White House fiscal 2007 funding request for Homeland Security’s personnel system. A House-Senate conference committee on homeland security appropropriations this week is likely to agree to millions of dollars less in MaxHR funding than the administration requested in its February budget.

    Despite resistance on Capitol Hill and in the courts, the Bush administration is pushing ahead to introduce strategic human capital management throughout the federal government. The government’s 26 agencies employ 1.8 million workers (not counting the U.S. Postal Service). Each agency has been given the task of “building a strategic value proposition for human resources management,” according to the Office of Personnel Management.

    Part of the process has included appointing a chief human capital officer in each agency—a new position. In addition, the administration has tried to institute pay-for-performance for thousands of personnel in the Department of Defense. That effort is mired in the courts as well.

    But the administration asserts that most agencies are making progress toward strategic HR management. Homeland Security, for instance, is not slowing down on the reform front.

    “We’re still actively moving forward with our performance management measures,” says Orluskie, a department spokesman. “We were given the flexibility to create this type of workforce. That’s why we’re moving full steam ahead where we can.” So far, 11,000 DHS managers and supervisors have been trained in MaxHR. The program will be rolled out to another 6700 in October.

    The obstacles are similar to private-sector corporations trying to change their culture and improve employee loyalty and engagement, according to one expert.

    “It will take a major rebranding effort,” says Glenn Davidson, president of Equaterra Public Sector, an HR consulting firm based in Houston.

    The department also is a touchstone for the challenges that face other government agencies as they try to institute strategic HR practices. Prillaman’s exit might be a discouraging sign.

    “To me, that suggests a level of frustration that could have been (caused by) insufficient empowerment, the inability to overcome silos, the difficulties with unions, the lack of funding,” Davidson says. “Maybe they had an impact on his ability to be effective.”

    But Prillaman had a prickly personality, so his departure wasn’t necessarily a blow to everyone in the agency, according to one Homeland Security employee who asked not to be identified because she is not authorized to speak to the media. Prillaman did not respond to interview requests.

    Still, it’s not difficult to imagine that Prillaman on many occasions found himself coping with substantial foes. Federal unions have stridently fought pay for performance, not only at Homeland Security but across the government. At a Sept. 26 Senate hearing, the Senior Executives Association will outline a survey that shows pay-for-performance has undermined morale and motivation among the 850 career federal employees it polled who are now working under such a system. In the civil service system, a worker’s salary increases as he or she progresses through more than a dozen pay grades.

    Colleen Kelley, president of the National Treasury Employees Union, says that instead of trying to scrap the system, the Bush administration should focus on the flexibility it provides to reward top performers.

    “That’s not a system problem, that’s an implementation problem,” Kelley says. “There’s a lot of work that could be done and should be done on the evaluation system.”

    She argues that the Bush administration’s effort to change workforce rules reflects a dismissive attitude toward government employees.

    “The morale of the federal workforce is at an all-time low,” Kelley says. “It’s appalling how they are treated. It’s with disrespect and very often disdain. There are not a lot of federal employees that I talk to today who would want their son, daughter, niece or nephew to work for the federal government.”

    This frustration manifests itself in court. The Treasury Employees Union has been the plaintiff in the cases in which the district and appeals courts have ruled against Homeland Security. Kelley recently called on Homeland Security Secretary Michael Chertoff to toss the department’s human capital framework and start over.

    Such union resistance doesn’t alarm a consultant who helped develop MaxHR.

“There is a proliferation of litigation in part because it is so important to people,” says Bill Trahant, national leader of Watson Wyatt Government Consulting Services. “If there were no litigation, I would assume that people were asleep at the wheel and didn’t view the changes as having any impact.”

    It’s not surprising that the Bush administration has roiled the federal workforce waters. It is trying to implement a system in which HR is central to improving constituent service for each agency while increasing efficiency and lowering costs—roles that the function has not previously been expected to perform.

    The chief human capital officer for each agency also has to bolster recruiting and retention policies to help the government deal with what could be a surge in vacancies. The Office of Personnel Management estimates 40 percent of the federal workforce will retire within the next 10 years.

    A focus on results and rewards, identifying and attracting talent and branding the government as a compelling place to work requires a new mind-set not only for federal HR officers but also for potential recruits in the corporate world.

    Cross-fertilization is one way to start. There should be more rotation between the private and public sectors, according to Paul Sparta, CEO and chairman of Arlington, Virginia-based Plateau Systems, a firm that uses its Web-based software to support companies in their efforts to develop and manage organizational talent. Homeland Security is one of its several agency clients.

    People who constantly meet the demands of surviving in the midst of cutthroat global economic competition know how to deal with change on a daily basis. It’s a trait that might come in handy in a place that addresses an amorphous terrorist threat.

    “Those kind of people would be highly effective in the middle and upper management of Homeland Security,” Sparta says.

    But they’re often turned off by government work because of the perception that it involves sclerotic bureaucracies. That image is earned, to a certain extent, because it is difficult to get rid of a low-performing federal employee. On the other hand, it’s also hard for the best and brightest to excel.

    “You can neither hit a home run nor can you strike out,” Sparta says.

    But many federal employees don’t just see their positions as jobs. Those who work to find cures for diseases, ensure highway safety or protect U.S. citizens from terrorist attacks often view their work as a calling. So introducing change requires communicating it well.

    “You can’t just ram it down the throats of career employees,” says Frank Ostroff, managing partner of Ostroff & Associates, a consulting firm. “They really do care about (their) mission. If you can tap into people’s better side in terms of making a difference in the world and having dignity, you can release a tremendous amount of energy.”

    As Deborah Giannoni-Jackson discovered in the private sector, you have to constantly communicate the benefits of change. Giannoni-Jackson, the former HR vice president for international supermarket operator Royal Ahold, is now vice president of employee resource management at the U.S. Postal Service and is helping to implement fundamental HR changes at that quasi-governmental agency, which employs nearly 700,000 people.

    “You can’t spend enough time communicating and helping people understand why we’re doing what we’re doing and how it will change their job,” she says. “The communication factor of what we’re trying to do here is a Herculean effort.” The Postal Service overhaul is not formally part of the Bush administration’s human capital management reform, but the enormity of the task is similar.

    Perez, who will take the job of chief human capital officer for Homeland Security in late September, put some numbers to the problem at that conference in April, back when the revolution looked like it was going to be easier to achieve.

    “We have 22,000 HR professionals who are still operating the way they were 20 years ago,” she said. “The core people we keep in HR management we want to be strategic.”