The Partnership for Public Service and Grant Thornton interviewed 55 chief human capital officers and other human resources leaders about the state of managing the federal workforce in light of the tough economy and shrinking budgets.  

Their findings were released this month in the report, Bracing for Change: Chief Human Capital Officers Rethink Business as Usual. The report claims that the rate of change within the federal government is increasing—not only connected to operational challenges and tightening budgets, but also in the people expected to deal with those challenges. To make matters worse, the report finds that “as challenges increase and issues evolve, CHCOs and their agencies continually work to respond to new rules, regulations, and high-level directives.” 

So what are the challenges facing CHCOs? 

From the CHCOs’ viewpoint, the top workforce management challenges for the federal government are: 

1. Declining budgets. When resources are constrained, there are fewer employees to do the work, limited options for contracting out or investing in technology, and training budgets are under fire.

2. Higher employee turnover. Government-wide, retirements are up approximately 25 percent from a year ago, indicating that the long-anticipated retirement wave has hit. Turnover may remain high for a while due to the combined impact of an aging workforce, a two-year pay freeze with threats of an extension, rising anti-government sentiment and increasing workloads. For example, in fiscal 2011 more than 122,000 employees in permanent federal jobs left government. More than half of them 63,134, left via retirement.

3. Inadequate succession planning. The inability to replace quickly, or at all, the knowledge and expertise of departing employees exacerbates the impact of those departures. Several CHCOs thought their succession-planning programs were paying off, but most admitted they weren’t keeping pace with the organization’s needs and that the talent pipeline wasn’t sufficient.

4. Lack of key HR competencies. Gaps in the competencies needed by many HR staffs are a continuing concern. Forty-two percent of CHCOs said they and their staff were viewed as a trusted business advisor to a “great” or “very great extent,” down from two years ago (46 percent). Although, progress is being made in closing those gaps.

5. Gaps in agency leadership skills. Many senior leaders may leave within the next two years due to retirement or the election fallout. CHCOs thought that too few mid-level managers and supervisors have the leadership capabilities to fill their shoes. 

To be sure, the government and the federal workforce are in for tough times. “Bracing for Change” offers the following recommendations to help CHCOs and agency leaders navigate their way through more effectively. 

Reform the civil service system. Take advantage of the current climate to develop, promote, and implement changes in recruiting, retaining, and rewarding the most capable and productive employees. This includes reform of pay and compensation, hiring practices, and merit system protections.  

Stay the course on initiatives that are achieving results. Resist the temptation to save resources by backing away from initiatives and improvement efforts that are achieving results, such as the investment in hiring-process improvements and leadership development.

Improve succession planning. Most federal agencies need to update and improve their succession plans and arrange for knowledge transfer and continuity of operations. OPM could assist by identifying agencies with good succession- planning efforts underway and creating opportunities for agencies to share approaches with others.

Plan now for political transition, no matter who is in office on January 20, 2013. Increase standardization of HR IT and use of shared services. The government can no longer afford to have individual agencies develop and maintain all their own unique systems. Several CHCOs noted they would welcome increased leadership from both OPM and OMB on this issue.  

Bottom line: Within each federal department and agency, the CHCO and other key HR staff are charged with helping agency leadership deal with their myriad workforce issues and challenges. The interviews reinforced the fact that the federal government is not a monolith. The report concludes, “Organizational differences aside, the agencies had many HR and management issues in common. CHCOs were willing to confront and find ways to deal with many of the challenges they face. They were realistic about the fact that they cannot simply continue to do business as usual and expect to be successful, given the current operating environment.”   

For more information, download Bracing for Change: Chief Human Capital Officers Rethink Business as Usual on the Partnership for Public Service website.