What Poor Workforce Strategies Are Costing Government
Engaging their employees could improve productivity and save governments a lot of money. But the public sector is largely ignoring the opportunity.
The linkage is indisputable: When employees are engaged and committed to their organizations and their work, they are more productive, and that contributes to lower operating costs. Employee engagement is also linked to the costs associated with absenteeism, turnover, accidents, mistakes and waste. It all adds up. And yet at all levels of government these potential savings are being left on the table.
Gallup's research on this subject is best known. In 2014, it reported that as a result of lagging employee engagement levels federal workers' productivity was 11 percent lower than in the typical client organization. Based on the average federal salary (ignoring benefit costs) and the number of federal employees, that productivity gap translates into $18.5 billion annually in added costs.
Similar studies apparently have not been completed in state and local government. But the issues are essentially the same, given that Gallup also reports that 71 percent of state and local employees are not engaged with their work. Productivity gains of just 5 or 10 percent can save millions. Conversely, when productivity declines, costs increase.
Employee engagement became a hot button in the private sector long ago because Gallup and others have confirmed the linkage with performance and productivity. Businesses have learned that switching to policies and practices that contribute to higher levels of engagement pays off. Those practices have also been shown to facilitate the recruiting of better-qualified applicants. The same kinds of changes would improve the brand of government as an employer by make agencies better places to work.
Productivity in government is difficult and for many operations impossible to measure, but that does not negate the importance of good performance and the practices that contribute to raising performance levels. Over the years, public employers have focused on strategic planning, goal setting, metrics and of course technology, but those initiatives largely ignored the workforce and clearly have not solved the performance problem.
It's also been true that public employers have focused more on improved efficiency than on improved results. The gains from efficiency studies are rarely significant. In contrast, studies show rethinking the organization and management of work and adopting practices to strengthen employee engagement can generate savings of 10 percent or more. Simply eliminating a layer of management is an obvious saving. There is also evidence that engaged employees will improve their service to the public.
A core aspect of the problem is that nothing in traditional civil-service systems supports efforts to raise performance levels. A century ago, civil-service reform protected employees from political abuse. Similarly, the early personnel offices protected workers from supervisor abuse. But work environments were inflexible and unresponsive: The principles of scientific management -- the origin of "time-and-motion studies" in the manufacturing environment -- dictated how workers did their jobs through the century.
In the private sector, that approach began to change after the 1990-91 recession. Since then, there has been an explosion of books, articles, online resources and conferences promoting the potential gains from new work management thinking. Every sector except for state and local government now has rankings of the best places to work. The thread that runs through all of these discussions, studies and surveys is the advantage of maintaining a positive, supportive work environment.
The books and articles consistently focus on improving engagement. Writers rarely discuss the management actions that can trigger a decline in engagement levels or cause a worker to become disengaged. When that happens, their performance and productivity decline and costs increase.
Public leaders, in particular, need to recognize that decisions that adversely affect workers -- freezing pay, reducing benefits, cutting the workforce -- may be politically advantageous but that those actions will undermine employee engagement and performance. Moreover, once the adverse action ends, it will take time to regain the employees' commitment.
In business, companies with poor management fail, but ineffective management in the public sector can continue for years, especially where leaders are not dependent on elections. In one federal organization, engagement scores are at rock bottom and members of Congress are receiving complaints from constituents expressing dissatisfaction. A root cause is the way the agency's workers are managed. It's been more than a year since the problem first surfaced but little has changed.
A final point is that writers commonly discuss engagement in terms that suggest it's a human-resources issue. But all of the factors that influence engagement are controlled by leaders or managers. HR has virtually no involvement in day-to-day workforce management. In too many jurisdictions HR has been seen as merely an administrative function. But leadership on workforce issues is needed. That can be a new role for HR.
Employee engagement has important ramifications for operating results, budget management and the public's satisfaction with government. The practices associated with high-performance workplace cultures are all available to government. When employees believe their efforts are valued and there is mutual respect and trust, they will commit to achieving credible goals. Workers want to make their organizations a success. A starting point might be to solicit their ideas to improve performance. They will have many.