The story of how Tennessee reformed the management of its state workforce has been widely reported. It's an important story for public administrators everywhere: Before Gov. Bill Haslam took office in 2011, the state was seen as a public administration laggard, but today it's clearly a leader. The highlight was shifting from employment practices governed by seniority to a focus on performance.
An unusual -- and, in hindsight, crucial -- element of the state's reform strategy was the requirement in its 2012 civil service reform law that agencies transition to a system of goal-based management that is widely used in business and known by the acronym SMART, which stands for specific, measurable, attainable, realistic and time-sensitive. A related change, although not addressed in the law, was the state's switch to pay for performance.
Rebecca Hunter, who was the state's human resources commissioner in both of Haslam's terms, says those changes have had a profound impact on the culture of state agencies, and there's plenty of evidence to support her assertion. I've consulted on pay and performance with employers in every sector and managed two large companies' pay and performance programs, and the contrast between the most effective current practices and what was common in private and public organizations a generation ago is as stark as night and day.
There was a time when employees were expected only to stay out of trouble and do what they were told. That was central to the era of scientific management. Lengthy job descriptions and performance standards were drafted to maintain control. As long as employees at least met the standard - "Do your job" -- all was well. High performance was not much more than a checkbox on year-end appraisal forms. General pay increases and step-increase policies are consistent with that management philosophy.
Goal-based management is a very different approach. We all have personal goals; defining what we hope to achieve is universal throughout our lives. In the business world, consistently beating goals is important to career success. Goal-based management is effective, however, only when employees are empowered to tackle job-related problems. Close, over-the-shoulder supervision is incompatible with goals.
Some of the best jobs are those where employees rarely see their boss. Employees know what they are expected to accomplish and have the autonomy to make the necessary decisions. In the past decade or two, self-managed teams have become common. One of my clients started a new factory where the goal was to eliminate all supervisors. It's a different world of work, and one that is far more satisfying than jobs where managers make every decision.
All of this feeds into two very different understandings of accountability. The word suggests an abstract ownership or willingness to admit mistakes. In government, it's used frequently by political opponents as a punitive comment. It's rarely used in discussions of achievements. I am struck by how often critics demand accountability but then there are no consequences for failure.
The word is not used as frequently in private-sector discussions. It's commonly assumed and front-loaded in defining goals. Everyone is accountable for achieving assigned goals. That's reinforced by reward practices. Employees know that if their performance meets or exceeds expectations, they will be rewarded. Failure to meet expectations means their compensation will be lower. Moreover, employees know their achievements will be recognized and valued. The expectation of rewards gives accountability a positive connotation. That undoubtedly is now true for Tennessee's public employees as well.
There is a second subtle change that emerges when employers switch to goal-based management. Since goals are generally set relative to the previous year's results, its natural to commit to improved performance. That introduces and reinforces a continuous-improvement mindset to management. In contrast, when an employer relies on performance standards where the employee has no input, the focus is on compliance, not developing plans for improvement. Tennessee now is committed to continuous improvement.
Finally, goal-based management contributes to a culture in which performance is a shared priority and where employees think daily about steps to improve results across the organization. Performance-review discussions naturally focus on how well teams and individuals are performing relative to their goals. Discussions of goals and progress are common in informal discussions at work.
Over the years, public employees have told me they would be unable to define goals for their job. That's true for a few job families - law enforcement, nursing, science, to list a few - but every employee still should be able to state what he or she plans to accomplish. They also know when they exceed expectations and when they fail. Others argue that the criteria have to be objective. However, verifiable, non-quantitative criteria can work. The important issue: Managers and their people need to agree on the criteria. Tennessee proves it can work.
After the 2012 Tennessee law was passed, the state invested three years in training and coaching, and in securing feedback from managers and employees to fine-tune the SMART approach before ratings were linked to pay. Today performance ratings are the basis for pay increases and bonuses.
As the state's reforms progressed, Hunter's office made a point of reviewing the performance evaluations. "We've been reading through these and seeing how they've evolved," she told Governing in 2015. "Each year they're getting better. We're trying to drive a culture of excellence." Making that a management priority changes everything.