With the President’s March 13, 2017, signed Executive Order (EO), each federal agency has an opportunity to rethink its operations to improve the efficiency, effectiveness, and accountability of the organization. The guidance issued by the Office of Management and Budget (OMB) on April 12 provides additional direction to agencies, specifically around six factors to address in their plans, to include workforce reductions and cost savings. Each agency is required to submit an initial plan to OMB by June 30 with a final plan due on September 30.
Achieving the full intent of the EO requires a holistic strategy for government driven by OMB, an appropriation budget, and legislative measures that exceed the authority of individual agencies. While these activities still need to be finalized and a government-wide ecosystem approach still needs to be defined, agencies should prepare in advance for top-down changes and take into account a full range of restructuring opportunities. Here are some key considerations.
Federal agencies have the opportunity, if not the mandate, to modernize old, inefficient operating models to consider interagency and private sector collaboration and partnerships to provide services, shared services to achieve synergies in meeting customer needs, and process automation to drive greater efficiencies.
Federal human capital leaders should be at the forefront of this effort to (1) support each agency in creating a defensible and sustainable restructuring plan and (2) drive cultural outcomes that business and HR leaders need to manage. It’s especially important to recognize that:
- Restructuring or other transformational initiatives can easily fail if there is a cultural resistance to change or “change fatigue.” For instance, a decision to consider transition of a function to a shared service or merging two departments cannot be successful without considering the perception of potential job loss or job change within the affected workforce.
- Recent history suggests caution is warranted. The context of this EO and larger Budget Blueprint direction suggest that the discretionary spending component of the federal budget, which constitutes the funding source for the workforce programs, is at the core of the restructuring effort. Federal workforce programs are many times viewed as an “easier means” to cut costs. Yet, experiences in recent years with funding cuts, hiring freezes, government shutdowns, and furloughs have led to a decline in employee morale and engagement, as well as insignificant (if any) cost savings, that ultimately compromise an agency’s ability to fulfill its mission.
Here are some insights for federal human capital leaders to assist agencies in designing effective restructuring plans:
- Approach the EO mandate as an “opportunity to adapt”: The current EO brings an opportunity to plan for an evolving future and consider modernizing old systems, processes, and services, rather than to merely respond to an executive mandate to cut costs. As highlighted in Deloitte’s 2017 Human Capital Trends, organizations are already embracing radical and cost-effective changes in response to new digital, cloud, and technology trends and generational shifts. Such changes include: more network-based agile environments, meaningful customer experiences, open talent solutions, digital HR, and innovative design thinking processes. Accepting these larger ecosystem shifts should be part of the agencies’ planning for the current restructuring effort.
- Validate strategic needs and areas of growth: While finding cost-cutting areas is important, so is identifying new opportunities for strategic growth and innovative mission delivery. Agencies need to look deeply at their value chain functions and organizational capabilities (e.g., processes, culture, partnerships, grant authorities, and appetite for innovation) and then review their portfolio of projects and initiatives supporting these capabilities.
- Rationalize functions before looking at eliminating individual positions: A hard look at what constitutes critical activities within an agency can lead to different approaches to reorganization that are focused on optimizing existing activities and the related workforce in core mission functions while containing operational and staffing costs in support areas.
- Build a data-driven business case for implementation: Deploying analytics and collecting data and benchmarks on the longer-term benefits of each program can help agencies prioritize the true investments that need to be preserved or enhanced in an environment of “doing more with less.” Regular adoption of business cases can also help defend critical investments even for “intangibles” like employee engagement, change management, and training programs.
- Align workforce to strategic priorities and budget processes: Investments in workforce analytics and competency assessment capabilities help agencies identify the “workforce needs of the future.” For instance, use of HR data and analytics can determine how a specific workforce group is aligned to strategic priorities, attrition rates, skill portfolios, and labor costs.
- Find opportunities to reshape current workforce in a “smart” way. Reshaping doesn’t mean cutting head count in an equal way. A separate blog post describes examples of workforce reshaping opportunities, ranging from organic growth in targeted areas to reassignment to voluntary early retirement (VERA) and voluntary separation incentives (VSIP). Also, while some agencies may need to reduce the size of their workforce in order to meet reduction goals, there could be also opportunities to realign their workforce by identifying transferable skills, (e.g., management analysts in the 0300 series) to other agencies. Additionally, investment in training and on-the-job rotation assignments can help repurpose existing workers to other core mission needs. Lastly, a more creative use of various hiring authorities, like fellows and temporary staff for critical hiring and demonstration projects, can boost access to critical skills and fresh thinking.
- Address performance incentives and programs: Performance management should focus less on standard forms and lengthy review processes, and include more requirements to align job to mission expectations, derive individual accountability for results rather than hours worked, and encourage innovation. Also, the inclusion of motivational incentives (recognition, access to flexible assignments) and ongoing coaching and development-based feedback are key performance management investments that can be used to help set employees up for success and can help them grow their federal career.
- Include change management solutions: Any transformation effort impacting the current federal workforce, especially the larger segment eligible for retirement and other tenured employees who were already exposed to decades of “change fatigue,” requires strong change catalysts, laser-focused communications, and customized training efforts to help make people aware of, understand, and ultimately support proposed changes.
Creating a successful restructuring plan focused on people is not an easy, check-the-box endeavor. However, a systematic and analytic multistep planning process can guide the formulation of defensible and sustainable programs and investments that meet the purpose of the EO while also proactively preparing agencies to deliver on their mission in an evolving larger ecosystem.