Ron Sanders is a vice president and fellow at Booz Allen Hamilton.
When it comes to the people who do its work—members of our armed forces, civil servants, and contractors—the federal government faces a number of significant, long-standing challenges. To borrow a line from author Jim Collins, they’re “big and hairy” and if left to fester unresolved until 2016 and beyond, they threaten no less than our nation’s security. And paradoxically, these challenges are exacerbated even as our economy begins to boom, as those with the most mission-critical skills, those individuals who can really make a difference, have their choice of opportunities.
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So as we contemplate 2015, here are what I believe to be the six most critical of those challenges. Offered in no particular order, they all demand to be confronted—now, in a concerted and collaborative way—by OMB and OPM, influential legislators, and above all, agency leaders, both political and career. I’m not so starry-eyed as to think that they must (or can) all be solved this year, but even if we successfully take on just a couple, the country will be better for it. So here goes:
The Peace Dividend, Part 2. After several years of real cuts, the total defense budget may have bottomed out, but DoD still needs to find funds for modernization and readiness, and some of those funds will have to come from personnel savings. Some of that must come from reductions, and the question is whether we’ll learn from the mistakes of the past – mistakes like hiring freezes and indiscriminate, across-the-board cuts that left DoD with a ‘hollow’ military and civilian force. This time, the Department must take a ‘total force’ approach to retrenchment, and that means coming to grips with the cost and mix of its military, civil, and contractor personnel. Today, internal, mostly-unintended inducements encourage an over-reliance on military and contractor manpower that in some cases, is relatively more expensive but decidedly more flexible to perform core, non-warfighting functions that could be done more efficiently by civil servants…given the right performance incentives. Few know this better than Secretary-designate Ashton Carter and DEPSEC Bob Work, but their challenge will be to bring some rationality to what has become an irrational system.
Military Compensation Reform. Carter and Work also face the challenge of continuing to slow the growth in total military compensation (to include pay, retirement, health care, and other benefits), a trend that none other than the Joint Chiefs of Staff have said is unsustainable. Like entitlement programs more generally, military compensation costs are driving down and out such discretionary but no less vital parts of the DoD budget as readiness and modernization. DoD has made proposals to slow growth while sustaining recruiting and retention, and Congress has approved a few of them, but now everyone is waiting with bated breath for the Military Compensation and Retirement Modernization Commission to produce the answer’in its report due out next month. I for one am not holding mine (breath, that is). Chances are there will be no one answer; rather, we’ll likely see a series of inextricably intertwined options, and every one is sure to be controversial–especially when no one wants to break faith with our men and women in uniform. However, something’s got to give, and given that any reforms will be phased in over time (possibly decades!), we need to continue to work this issue.
VA Transformation. Relative peace also has implications for the second-largest government department, as that agency struggles to serve an increasing (and increasingly aged) veteran population. And at the end of the day, those struggles ultimately represent a human capital challenge of the highest order—whether it’s hiring quality healthcare professionals, improving depressingly low morale, sustaining a culture of veteran-centric customer service, or instilling an ethos of leadership accountability—all of these efforts will turn on VA’s human capital strategies, policies, processes, and procedures. Treated as just another set of transactions, those things can undermine Secretary Robert McDonald’s very best intentions, but shaped with true strategic intent, they can profoundly change things for the better. But with only two years left in the Obama Administration, the real challenge will be to choose those actions that can be implemented quickly but with more-or-less self-sustaining long term impact, especially post-transition.
Declining Morale. For better or worse, VA is like many (most?) other agencies, all seeing another year of declining employee job satisfaction and morale. With a few notable exceptions, Employee Viewpoint Survey scores continue to head south, with no reversal in sight. And as job opportunities outside government improve—especially for mission-critical skills like STEM and cyber, healthcare, accounting and finance, acquisition, etc.—agencies will find it harder and harder to recruit and/or retain the best and brightest of them. And this isn’t just about pay…although that matters too. Rather, those with a choice of employers will opt for those that offer the most challenge, personal growth, developmental opportunities, autonomy, and perhaps most importantly the most visionary, inspiring leaders. With the same few exceptions, these are not generally considered characteristic of the federal workplace. Those exceptions invest in and support their leaders and reward the best of them, while those at the other end of the spectrum do the opposite…and their scores show it.
Cyber Insecurity. Leadership and culture make a difference when it comes to recruiting and retention, but so do other, more tangible bread-and-butter human capital issues like pay and promotion opportunities. The federal government’s cyber workforce is perhaps the most at risk in this regard, with the fight for top cyber talent becoming hyper-competitive, even while most federal agencies remain handcuffed by the medieval General Schedule. Absent some concerted, bipartisan effort to reform that system (in my wildest dreams!), most of them will fall further behind, forced to rent cyber ninjas from contractors or lose them altogether to Google, Microsoft, and dozens of tech start-ups. Some agencies are already trying to cut their own separate deals with Congress, and while I’m all for more personnel flexibilities, an uneven federal playing field is problematic. The good news here is that the executive branch enjoys more than enough administrative discretion to fix this. We ought to just do it!
Daunting Demographics. Finally, cyber is a leading indicator of a much larger and more intractable human capital challenge for the federal government: its demographics. Like morale, those demographics are trending in the wrong direction, especially when it comes to diversity and government’s ability to attract Millennial talent to its ranks (the federal government’s share of that segment of the labor force is abysmal!). As government’s primary ‘port of entry’ for that talent. Pathways, however well-intentioned, has fallen way short of expectations and needs significant overhaul. And it couldn’t come too soon. At the other end of the employment spectrum, the average age and tenure of civil servants continues to increase, and while they’ll eventually retire, it will look more like a trickle than a Tsunami; however, I worry more about the shortage of diverse, experienced, motivated talent they’ll leave behind to succeed them. Another reason not to cut back on leader development.
I could go on and on (as fighter pilots like to say, this is a very target-rich environment), but the Federal Times likes pithy blogs, so I’ll stop. Besides, these half-dozen challenges are, in my humble opinion, the most pressing of the lot, and if left unaddressed, they’ll not only get worse over the next year or two, but they’ll also become that much harder to solve. Moreover, to make matters worse (if that’s possible!), their adverse consequences will not likely manifest themselves in a single, galvanizing event, the odds of a cyber Pearl Harbor notwithstanding, of the sort that can lead to real reforms. VA is an example of the latter, but it’s an exception. Rather, most of these human capital are challenges are part of the larger, no longer quite so ‘quiet crisis’ besetting the federal government, as so profoundly predicted by my colleagues Charles Levine and Roz Kleeman (may they both rest in peace) over two decades ago.
6 ‘big, hairy’ federal human capital challenges in 2015
