IBM Business Consulting Services
Human Capital Management
in Government
An industry insight from the Global
Human Capital Study 2005
HCM in Government
Introduction
New technologies, competitive pressures
New technologies require skills lacking
and rising customer expectations are driving
among government employees.
change in all organisations. But for managers
of human resources in government agencies,
the journey is particularly tough.
The changing workforce is also having
a significant impact. Baby boomers in
public service are retiring without enough
They face similar issues to other HR
practitioners: recruitment, retention, training,
work design, cost management, workforce
planning and, of course, cultural change.
But years of insufficient funding, outdated
regulations and simple inertia have made
it more difficult for government employees
and their organisations to reinvent
themselves to meet today’s challenges.
Resistance to change in government
agencies is common – private sector
employees are more accustomed to the
shifts involved in a changing free economy.
experienced personnel to replace them.
These and a host of other factors – including
hiring freezes and other no-growth policies,
private sector competition for skilled workers
and lack of interest in public service careers
– all combine to make the CHRO’s task of
equipping the agency to respond to the
citizen that much harder.
It is in these areas that public sector Chief
Human Resources Officers (CHROs) must
turn their attention. A full understanding of
each area and the human resource impact
on their agencies will set the task ahead to
Technology is causing ripples as well.
transformation and gear their departments
For government agencies, grappling
up to deliver next generation HR solutions.
with rising customer demands and
expectations is a new challenge,
heightened by the increased accessibility
that new technology brings.
“The ability of the (agency) to respond
to rising citizen demands for service are
put at risk by the current skill set of the
(agency’s) workforce.”
U.S. Government agency
Key trends in government agencies
Putting the public first
Government agencies similarly recognise
Worldwide, governments are being asked
that they need to respond to an
to change the way they legislate, deliver
increasingly demanding public, listing
critical services to the public, manage
increased customer responsiveness and
internal operations and interact with
improved quality rate as two of their top
constituents. Political leaders mandate
three business priorities – 83 per cent
accountability for performance and use
and 78 per cent respectively [Source:
of public funds. Citizens and businesses
IBM GHCS 2005]
demand more convenient services, Web-
There’s one big difference. Public sector
based transactions and direct links to public
customers usually have nowhere else to
policymakers. The Web is increasingly seen
go. Failings tend to raise high emotions
as a means to attract new talent, and to
and can tie up a lot of management time.
offer staff educational opportunities.
Minimising the amount of wasted time and
Expectations about where, when and
resources means mobilising the workforce
how citizens, government employees and
around customer service – not just front-
private-sector businesses should interact
office staff, but also those involved in back-
are being reshaped by new technologies
office processes.
such as mobile computing. The increased
accessibility that these new technologies
Fundamentally, every person in the
bring has added to the pressure on
organisation should understand that
organisations to meet customer demands
they have customers, be aware of their
quickly and efficiently. IBM research
customers’ needs and demands, and be
shows that commercial organisations
equipped to deal with these demands.
have an average 1.8 opportunities to
resolve a customer’s issues satisfactorily
before they take their business elsewhere.
“(Our) employees are being challenged
to address the rising workload… and the
significant increase in citizen demand
on… services.”
U.S. Chief Human Resources Officer (CHRO)
Joined-up government
As a result of this study, the UK
Before government organisations can
Government is now looking to deliver
communicate effectively with their
a 2.5 per cent efficiency gain across
external customers, they first need to
the public sector by 2008, through the
be able to communicate effectively
reduction of both administrative costs and
among themselves, to create joined-up
roughly 100,000 existing jobs. But savings
government. That means integrating
are to be redirected towards recruiting
applications, processes, management
250,000 front line staff, which will help in
and delivery channels, as well as linking
improving customer service.
internal agencies to outside stakeholders.
The pressures to move towards joined-
Integration requires the marrying of
up government are both service and
technological and people-based solutions.
cost-related, and are forcing governments
As one US CHRO found, his office was
to invest in the systems and processes
“required to interact with more and more
required for more effective delivery of
outside organisations... skills were needed
services. To complete the transformation
in coalition building.”
to the flexible and unified organisation
Improved integration must also be
that citizens and legislatures expect,
balanced with reducing costs across
governments need to deliver products
the government, a need typified by the
and services when customers need them.
Gershon Report. In his recent review,
That means moving to an on demand
Sir Peter Gershon addressed the UK’s
environment supported by flexible
civil procurement in light of the
infrastructure, new technologies and
government’s objectives on efficiency,
reengineered processes.
modernisation and competitiveness.
The slow take-up of e-Government
The changing workforce
There is global consensus that
The challenges associated with an ageing
e-Government can change the way in
workforce are being felt at all levels within
which governments operate, improve the
government. In our survey sample, the
quality of life of its employees and citizens,
average age of a government employee is
and increase competitiveness in a global
42.1, compared to 38.3 for private sector
economy. There are already numerous
employees. Over-one quarter of public
examples of e-Government success stories
sector employees is aged 50 or over,
from central and local governments across
compared with 15 per cent in the private
Europe, and government entities such
sector [Source: IBM GHCS 2005].
as those in the province of Manitoba in
Governments are beginning to prepare
Canada, the US states of Michigan and
themselves for what amounts to mass
Florida, Dade County in Miami, the city of
retirement, and the need to replace
Naestved in Denmark, Singapore and a
the skills that are walking out the door.
handful of others.
Agencies such as the State Department,
However, market research indicates
the Department of Transportation
that few governments have actually
and the U.S. Agency for International
advanced past the preliminary stages
Development will all have 40 per cent
of placing existing services online. A
or more of their employees eligible
global economic downturn has led to a
for retirement by 2006. Public sector
reduction in public spending.
agencies in Europe are experiencing
similar challenges.
An e-Government approach could
change HR management dramatically,
In order to fill these critical skill gaps,
but economic barriers remain in place.
government agencies need to hire a new
generation of employees.
“The challenge is with the pyramid
of age – one generation is about to
retire… and there is a risk of losing
some critical skills.”
European Government agency
Percentage of workers per age category
Source: IBM Global Human Capital Study 2005
20%
15
10
5
0
Under 25
25-29
Government Agencies
30-34
35-39
40-44
45-49
50-54
55-59
60+
All other industries
However, a recent Gartner Research report
commissioned an “exhaustive” report
concluded, “their (government’s) optimistic
recommending transformation, but “the
hiring intentions will not fully materialise
report has not been used in any way for
unless the government significantly
lack of political will to change”. Another
changes its HR management
programs,
Blank
CHRO from Europe commented on
compensation, and job classifications”.
“political interference in the organisation
20
structure” acting as a change barrier.
15
Not far at all
Change needs to be led from the top, not
culture. As one Asian CHRO commented,
Asia Pacific
The line to the top is also more often
NAthan
“Being dependent on the government
Blank
Not far at all
35
30
25
10
just in workforce culture but government
0
40%
not indirect
–Grand
the CHRO
reports to
LA
Total
the head of the agency (equivalent to
Getting Started
Doing Alright
Getting There
Have Arrived
for every decision has a heavy toll on
the CEO) in just 43 per cent of agencies
the organisation.” His organisation had
[Source: IBM GHCS 2005].
5
0
Percentage of organisations using various compensation strategies
Source: IBM Global Human Capital Study 2005
80%
70
60
50
40
30
20
10
0
Salary scales with fixed increments
Government Agencies
Broad banding
All other industries
A survey by the online recruitment firm
Sixty-eight per cent of agencies surveyed
Totaljobs.com2 indicated that 90 per cent
used salary scales with fixed increments
of jobseekers would consider applying for a
while just 18 per cent used broad banding,
public sector post, but are deterred by the
compared to 43 per cent in other industries
belief that the
public sector is bureaucratic
Blank
[Source: IBM GHCS 2005]. Almost
40%
35
Not far at all
Totaljobs.com said that public sector15
as an ungenerous employer, offering
10
employers did not have a modern outlook.
limited prospects to new hires – a view
5
0
supported by one CHRO
in SouthNA
Asia Pacific
LAIf
America who struggled to “enhance
Getting There
Not far at all
Getting Started
25
two-thirds of jobseekers interviewed20by
The public sector is also regarded
Blank
30
0
government
Grand Totalagencies are to attract
Have Arrived
top-tier talent,
they need to improve the
Doing Alright
and motivate employees with no
value and benefits of an agency career.
additional benefits”.
The implications for Human Capital Management
The challenges raised by these workforce-
Public sector managers can address
related issues place significant pressure
human capital mandates in a number
on today’s government human capital
of ways. They can look at organisational
strategies.
redesign and re-evaluate their recruitment
A crucial first step is for leaders to
consider their workforces in a new light
– as a strategic asset rather than a cost
and retention policies. They can invest in
training programmes, new career ladders
and leadership development.
base. If they assess the skills required
An agency can use any number of
of their people, devise strategies for
techniques to improve its human capital
securing the right people with the right
— but without a sound strategic approach,
skills and use technology to support
such efforts are likely to go astray.
their objectives, they will contribute to
developing a dynamic workforce that
can operate to its full potential.
Making these plans a reality requires
committed leadership and thoughtful
change management.
Government leaders must “establish a baseline
of their human capital profile; build a business
case for future human requirements, and make
targeted investments as part of the agency
strategy to attract, develop, and retain the
talent necessary to meet its mission and goals.”
U.S. Government Accountability Office (GAO)
Such an approach needs human
Components of a sound human resources
resources managers who are prepared
management strategy for public sector
to transform both themselves and their
organisations include:
operations. Instead of just handling basic
• Reorganisation: the fundamental
personnel activities and transactions,
redesign of government processes to
the next generation of HR requires public
improve its capacity for coherent and
sector HR leaders to become strategic
efficient implementation of public policy.
partners with other agency leaders,
• Culture change: uniting and motivating
focused on adding value by leading the
staff behind a common commitment, a
people aspects of transformation.
commitment to the customer – a move
They must invest in the research required
away from the concept of product
to develop a sound strategy, identify
delivery to one of client service.
leading-edge approaches to human capital
• Workforce management and planning:
management and implement plans to fill top
moving public sector organisations
priority gaps in skills and experience.
away from traditional grade-based
approaches to reward systems
based on skills, competencies and
demonstrated performance.
Percentage of companies measuring recruiting effectiveness
Source: IBM Global Human Capital Study 2005
80%
70
60
50
40
30
20
10
0
Evaluated the quality of new hires
Government Agencies
Did not evaluate the recruiting process
Track hire to start time
All other industries
40%
Percentage of organisations using various work-life balance strategies
Source: IBM Global Human Capital Study 2005
100%
80
60
40
20
0
Flexible hours
Government Agencies
Telecommuting
Home services at work
Reductions in business travel
All other industries
• Employee recruitment, selection and
No single activity can ensure an effective
retention: few government agencies
future workforce. But if implemented
measure recruiting effectiveness
correctly, a comprehensive and highly
[Source: IBM GHCS 2005] – however,
effective human capital strategy has
government agencies
have a good
Blank
four qualities:
Not far at all
record when it comes to offering
mission, and so enables employees
hours and telecommuting. Acquiring
new people with new skills for a
0
Asia Pacific
new organisation, and creating
a
Blank
Not far at all
NA
Have Arrived
• It produces actions that reduce
• Work design and cost management:
the cost of human capital.
assuring that policy is designed so
• Most of all, it delivers the people
that it can be delivered efficiently
power that leaders need to
– which implies a top-level liaison
turn vision into reality.
between civil service and government.
10
0
Getting There
in requirements and environment.
the organisation are essential.
15
achieving
goals.
LA the organisation’s
Grand Total
to adjust quickly to rapid changes
that inspires employees to stay with
20
5
Doing Alright
challenging, rewarding environment
30
to focus on that mission and on
• It makes it possible for the workforce
Getting Started
35
25
• It is linked to an organisation’s
employees greater use of flexible
40%
The role of HR in government agencies
CHROs of government agencies face
Link to organisational mission and strategy
unique challenges. For example, one
• What services should my
organisation provide to fulfill our
of the major differences between such
mission now and in the future?
agencies and the private sector is that the
• Which processes and functions are
former rely far less on outsourcing for both
most important to these services?
HR administrative support and staffing.
• Does my organisation have
At the same time, government agencies
the skills and tools needed to
have a greater focus on responsiveness
operate these services?
and quality, and less focus on profitability
• How do I maintain the right staffing
and revenue generation.
levels across the organisation to do
CHROs of government agencies who want
the core work and unique events?
to deliver next generation HR solutions and
transform their people from the brakes of
Recruiting and sourcing employees
the organisation to the accelerator need to
• Do I have the right people in the
review the following key issues, including
right jobs at the right times?
some pivotal questions:
• Are we bringing in and keeping
the people we need?
Percentage of government organisations that use alternative HR sourcing channels
Source: IBM Global Human Capital Study 2005
80%
70
60
50
40
30
20
10
0
Temporary agencies
Government Agencies
Global labour resourcing
Tiered labour systems
All other industries
10
40%
Retention and employee development
Headcount, budget, diversity, training,
• What are we doing to prepare our
sickness/absence
people and organisation for the future?
• How do I ensure that any process
• How do I attract and retain
or technology initiative meets
young high flyers, high potential
regulatory compliance standards?
managers and rare skills?
• How can I reduce my HR
budget and headcount?
Performance management, rewards
• How do I enhance the value
and recognition
of my HR organisation?
• How do I reward and motivate my
• How do I get the most out
people in an environment where
of our ERP systems?
I can’t give a bonus, promotion,
• How do I leverage wider technology
career progression or salary
transformation initiatives?
rise when I want?
• How do I fuse disconnects between
• How can I assure that performance
front office and back office technology?
assessments are adequately
equipped to evaluate functions
CHROs who are looking to deliver HR
and people performance?
services more efficiently and effectively
across the organisation must not only
Knowledge and learning
determine the answers to the previous
• How do I retain and share knowledge
questions, but solutions that can be
and experience of subject matter
implemented against those answers
experts who are retiring?
that do not satisfy.
• How do I rapidly get new employees
up-to-speed in their new roles?
11
Better HR for government
It will improve data consistency across
Among the many challenges facing
the organisation, enable management
government agencies is to achieve
decision making and ensure regulatory
efficiency targets and improve service
compliance.
delivery for HR. However, the benefits
This is only the starting line. There are a
of such an achievement are apparent.
number of areas that require focus and
Doing so will lower the cost of providing
each brings with it a host of potential
HR outcomes and release resources
benefits. Together, these benefits add up
back to the organisation. It will increase
to stronger HR strategies and, ultimately,
manager and employee satisfaction, and
an improved governmental function.
provide more accurate information about
the workforce.
International Security Government Agency
Dramatic developments in world poiltics signified radical change for a 19-member
cross-border security alliance. While its primary mandate, security, remained
unchanged, its approach shifted, with a change in strategic objectives and the
introduction of objective-based budgeting. To support this shift, the organisation
needed a comprehensive review of its people management practices, including
a shift to competency-based performance management, the introduction of
better training and development, the enhancement of internal mobility, and the
improvement of line management and HR function capability. In an innovative
engagement, IBM provided project management support, coaching to the
organisation’s project leads, expert input in the content of all sub-projects, and
implementation and delivery support.
12
Percentage of learning days by delivery channel
Source: IBM Global Human Capital Study 2005
50%
40
30
20
10
0
% delivered through external classroom
Government Agencies
% delivered through internal classroom
All other industries
Training & development
Doing so will achieve cost savings in
Successful talent management extends
training delivery as well as more value
to a systemic approach to the way an
from training expenditure overall. Handled
organisation develops its own talent.
properly, this will improve employee
Government agenciesBlank
have a greater
response to new mandates as well
reliance on external education suppliers
as faster time to performance. More
20
than other industries [Source: IBM GHCS
important than this in the long-term is
15
2005]. They must make best use of the
the retention of key skills and people,
10
training and development budget, get the
and maintaining relevant skills for longer.
Not far at all
0
Asia Pacific
best value from training resources
and
Blank
Not far at all
NA
Getting Started
Doing Alright
investment, and thereby improve staff
competence and performance.
13
LA
Grand Total
Getting There
Have Arrived
40%
35
30
25
5
0
Engaging and motivating your people
Breaking the “silo” mentality
Keeping government employees (and
One of the major challenges for
management) motivated and involved
government agencies is to improve their
is vital, insofar as it will help you ensure
ability to work across organisational
that, at the very least, front line services
boundaries to achieve their mission.
stay the same or, hopefully, improve.
This can only be achieved through
In addition, this will contribute to cost
shared information and knowledge, and
reduction by minimising staff turnover
improved organisational cohesiveness
and duplication of change initiatives,
and co-ordination.
while avoiding industrial disputes,
All too often, a simple lack of information
legal action and negative press.
can cause irreparable damage to reputation
It will also maintain and improve service
and well as service levels. Striving for a
levels by helping keep the people you
more interactive and inter-related workforce
want, encouraging the behaviour you
model will help to prevent government
want from staff and a more adaptable
failures and incidents due to a lack of
workforce. Ultimately, it will also improve
effective collaboration. There will be a single
stakeholder relationships.
version of the truth across all departments,
which can only lead to greater effectiveness
and a wholeheartedly co-ordinated effort
within the agency.
“It was essential to design [our]
strategic plan with the participation
of the different areas [in the agency]
in order to achieve the commitment
and involvement of everybody.”
South American Government agency CHRO
14
This will also help retain critical knowledge
By implementing a more flexible HR
and make it easier to locate expertise. It will
strategy, agencies guarantee a fast
allow the agency to make use of knowledge
response from their workforce while
and highlight examples of good practice for
minimising cost as well as waste. It
the entire organisation. Finally, it will make it
improves the staff’s capacity to meet
easier for government agencies to comply
assigned goals and puts the right people
with freedom of information legislation.
in the right place, at the right time and at
the right cost.
Workforce on demand for government
In an atmosphere of unpredictable
demands being placed on employees
across all industries, the key for
government agencies in particular
is to respond flexibly.
U.K. Ministry of Defence (MoD)
The U.K. Ministry of Defence (MoD) is a large and complex
organisation that historically had operated in silos – between central
and geographically dispersed groups, between civilian and military,
and between services. A clear example of this was the 5.2 million
pages that existed on the MoD internal websites, including 475 new
sites. For staff, finding information was difficult; 58 per cent took more
than five minutes to find what they were looking for. In 2003, extensive
consultation from the Army, Navy and RAF led to the development of
a user-centric intranet design, focused on common tasks for the U.K.
MoD. This cross-MoD Defence intranet program is providing simpler,
clearer access to information and advice to all staff in the MoD. By
focusing on processes, tasks, activities and information management,
the team was able to create a new frame of reference that avoided the
“tribal” requirements of each of the specific defence organisations.
15
Conclusion: Towards a new kind of human resources
IBM Business Consulting Services’
Dynamic People Management
experience with government clients,
To meet these objectives, organisations
coupled with our Human Capital thought
are shifting the way they look at people
leadership, has enabled us to identify key
– seeing them as a strategic asset rather
themes driving governments worldwide.
than a cost. People are the competitive
We work with a range of public sector
difference – “the capability within”.
organisations to help them meet targets,
Companies need to take a systemic view
reach customers efficiently and effectively,
of their workforce and examine the variety
optimise their workforce, and pave the
of levers that can improve organisational
way for a powerful transformation of the
performance. They then need to manage
services they deliver, focused around
people dynamically to make the most of
dynamic people management.
their human capital. This involves:
Connecting with customers is not just
• understanding the key drivers
of workforce productivity
about technology. It also involves people,
• designing jobs and organisation
organisations and the way in which
society and government interact with one
structures that improve productivity
another. A clear and unremitting focus
and manage labour costs
• acquiring the talent the
on the customer cannot simply be bolted
organisation needs in a timely
on to existing systems, but depends
and cost-effective fashion
on a planned, integrated approach
– and a commitment to change at every
• ensuring that employees know
level, driven by the CHRO defining next
how to do their jobs, can use
generation HR and creating dynamic
available tools and knowledge,
and receive suitable training
people management.
• measuring staff performance and
aligning it with appropriate rewards
16
• optimising staffing levels for both
• benchmark current operations and
short-term work scheduling
offer insight into best practices
requirements and longer-term
in HR service delivery
workforce planning objectives
• redesign processes to leverage
• ensuring leaders at all levels
leading technologies and existing
have the skills, tools and values
systems infrastructure
to perform to their best
• create a measurements system
• creating a workplace culture
that ensures HR is focused on
that encourages excellence,
the right tasks and can describe
collaboration and staff retention.
its contribution to the business
• review alternative HR service
Next Generation Human Resources
delivery mechanisms.
In many organisations, the ability of the HR
function to tackle these important strategic
It is time for CHROs in government agencies
issues is hampered by an increasing lack
to develop a new human capital agenda
of resources owing to cost pressures and
that places people at the strategic heart
an excessive administrative burden. In
of the organisation. They must connect
addition, HR organisations often struggle
the investments made in employees with
to demonstrate the true contribution of the
performance outcomes, and identify and
programmes they initiate to the bottom line.
deploy the optimal strategies to promote
the retention of key people.
To be successful, HR leadership needs
to reduce the administrative burden and
In short, it is time for the HR function to
develop a results-oriented focus. It must
migrate from a basic services provider to
evolve into the Next Generation Human
a strategic advisor that leads the people
Resources of the future, ready to compete
aspects of business transformation
successfully in a global environment. It must:
initiatives in their organisation.
17
About IBM Human Capital Management
IBM Business Consulting Services’
Our analysis provides a methodical and
Human Capital Management (HCM)
measurable approach to determine the
focuses on helping clients improve the
right people strategy for your organisation.
value of their human capital assets to
The result is a unique combination that
the organisation. With more than 3,000
produces the behaviours that drive
practitioners, Human Capital Management
increased productivity and profits.
has a full suite of end-to-end capabilities
Better HR and HR Business
to address client’s challenges.
Transformation Outsourcing
Around the globe, IBM has partnered
Better HR is about transforming the way
with public sector organisations at all
that human resources works and delivers
levels to deliver end-to-end Human
value to the business by improving the
Capital Solutions that leverage available
quality and reducing the cost of HR
technologies. Our approach looks at four
processes and systems. We help clients
key factors:
to design, implement and adopt the most
appropriate combination of HR service
More from People
delivery portfolios, operating models,
More from People focuses on getting
technologies and processes for their
the highest possible value from your
organisation, either internally or through
workforce while controlling your human
an outsourced arrangement. This allows
capital costs. We can assist you in
the HR function to move successfully
assessing your strategy and examining
from being a simple service provider to
your operations, and then analysing how
a strategic advisor that is capable of
your workforce implements the initiatives
delivering Next Generation HR.
that drive your business.
18
Learning and Development
On Demand Workplace
This initiative inspires and equips people
IBM On Demand Workplace brings
in business to improve their performance,
together all the strands of information that
skills and knowledge. It focuses on
run through an enterprise in ways that can
improving the effectiveness and reducing
radically change the way you work. It helps
the cost of learning and development
clients achieve dramatic improvements in
within the organisation by assessing the
efficiency, effectiveness and innovation by
organisational approach, technology and
integrating and simplifying core employee
methods used to deliver it.
work processes.
Reference
1 The Global Human Capital Study 2005
was a quantitative and qualitative study of
global human capital practice. The study
referenced 320 surveys and 106 interviews
with CHROs. Within the study, we examined
23 government agencies whose findings
are reported in this document.
2. www.totaljobs.com
19
IBM contacts
Further information
USA
To learn more about IBM Business
Lisa Tondreau
Consulting Human Capital Management,
Human Capital Management, Americas
consult your IBM Sales Representative or
Geo Leader
visit ibm.com/bcs/humancapital
+1 703 653 7330
[email protected]
To find out more about The Capability
Within: The Global Human Capital Study
EMEA
2005, visit ibm.com/bcs/humancapital2005
Mary Sue Rogers
Human Capital Management, EMEA Geo
and Global Leader
+44-20-8832-5018
[email protected]
Asia Pacific
Bill Farrell
Human Capital Management, Asia Pacific
Geo Leader
+61-2-939-78717 x8717
[email protected]
20
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