Skill and Will: Talent Is Key to the Turnaround of Distressed Municipalities

August 24, 2017

Martha E.M. Kopacz
Phoenix Management Services LLC

 

Budget deficits abound and past promises have been broken, irrevocably. If governments honestly valued their assets and liabilities, most would be insolvent. In the not-too-distant future, delivery of essential services will require a new mix of “skill and will” from our elected leaders and public-sector employees. Changes in compensation structure, job tenure, internships and fellowships, and secondments may provide solutions.

 

As citizens, you and I face a conundrum. Do we work to solve the problems left by past generations, or do we focus on avoiding problems that we would otherwise leave to future generations? Historically, government has provided “essential” services to the citizenry that they could not, or chose not, to provide themselves at a cost that was largely invisible. State and local taxes paid by the residents covered the cost of the services (or so we thought), and diligent public servants made sure those services occurred uninterrupted. Populations grew, more taxes were generated, elected officials expanded the breadth and depth of government services, and loyal public-sector employees reached a comfortable retirement. Then — taxpayers woke up with a headache and collection letters in their mailboxes, so to speak.

As odd as it may seem, more money doesn’t solve this dilemma. More money largely allows decisions to be avoided. Although new financial capital, restructured loans and other assorted financial-engineering activities may be required as part of temporary transitions, to truly address distressed municipal situations, the human capital component must be transformed. Real solutions lie in the human capital dimension, not the financial capital dimension, and it comes in three segments: leadership, innovation and change management, and execution.

 

New Criteria for Elected Leaders

The core of our democracy — leadership by elected officials — has hit a speed bump. Just because someone wants to be a mayor, governor or local leader doesn’t mean he or she has the skills to meet those challenges. Many who have the skills can’t afford to be public servants. Leadership to address the conundrum involves identifying elected officials, a/k/a politicians, willing to stand tall and set aside stump speeches in favor of transparency and honesty. Leaders must ensure that the fact set upon which they establish their policies and programs is legitimate. Government needs leaders with analytical skills, prior experience delivering goods and services, abilities to resolve conflicts, or some combination thereof. This is a much taller order than what was asked of elected officials even 10 years ago.

 

Longevity and Change at Odds in Middle Management

Innovation and change comes from fresh ideas and forward-thinking individuals. Because most municipalities have been starved for capital investment in training and technology and are unable to hire the best and the brightest in a competitive marketplace, government workforce skills are “dated.” Mid-level managers and long-serving administrators rarely have training beyond what they’ve learned by osmosis in 20 years on the job. However, these are the most critical positions when it comes to solving the problems of distressed municipalities. An evolutionary approach will not bring inefficient processes to an acceptable state; a radical overhaul of systems is required. An injection of fresh thinking and cutting-edge experiences can go a long way in transforming career managers into champions of change.

 

Workforce at a Crossroads

In no industry does unionized labor play as large a role as it does in public sector. From teachers to firefighters to bus drivers, government entities undertake a highly routinized process of negotiating periodic contracts with dozens of employee groups. With few exceptions, paying — or overpaying — government employees is not the problem. Rather, output or value derived from the work is not sufficient to provide the necessary government services at a rate that is competitive with the alternatives. As private-sector pay rates, particularly for entry-level and skilled-labor positions, move closer to those same public-sector positions, a perception grows that government workers get more than they deserve. Another challenge is presented by the traditionally restrictive components of collective bargaining agreements that make the notion of change difficult. “Work rules” present a challenge for both the employee and the government agency delivering the service.

 

Possible Solutions at Every Level

Adjusting to the new paradigm in which government entities must justify and compete with private-sector alternatives requires human capital that heretofore has shunned the public-sector employer. How do we change that so that government can leapfrog from antiquated systems to processes and programs that are valuable and beneficial for taxpayers?

For middle-management and executive-level needs, changes to the compensation approach used by the public sector is needed. The historical tradeoff between current pay and future retirement benefits has become hollow. As such, moving to more commercially viable compensation systems in which employees are paid at or near market rates and have portability of their retirement benefits is essential. Interestingly, this sort of change will result in fewer government employees earning more and producing more value for the citizens.

Once a “government” job is no longer a financial step backward for talented professionals, the opportunity to hire top talent for less than lifelong positions becomes possible. Bringing experienced-but-progressive leadership to elected positions and senior leadership within the municipality can result in real turnarounds in a short time frame. Term limits, for both elected and executive positions, can be helpful in this regard.

The mindset of millennials to give back and to serve others should be an opportunity to employ bright young minds with the energy to undertake change. Year-long internships at the college and graduate school levels, by which the student/employee is paid and takes on meaningful research and planning activities with resulting academic credit, can provide much-needed content and data for the transformation activities of the municipality. Often, foundations and charities can be convinced to fund these fellowships in full or in part if the student’s assignment is harmonious with the philanthropy’s mission.

Expanding the notion of public/private partnerships to include talent transfer is beneficial for the governmental unit and the employer company. “Secondments” have long existed in European circles whereby private professional service organizations loan an employee to a different organization so that a win-win develops, with the secondee gaining valuable real-world experiences and the receiving organization getting human capital to solve a problem or undertake a project without a permanent commitment to hiring.

Lastly, connections between high schools, particularly vocational and trade schools, and local governments to purposefully train and develop talent to meet government job requirements is a low-cost win-win solution that should be available to all municipalities. In addition, adding tech-savvy talent at the entry level creates an opportunity to enhance the overall operations of the government workforce, as they tend to bring natural curiosity and alternate thinking to traditionally lower-skill and routinized positions.

 

Conclusion

Changing a government’s compensation and benefits approach and creating an environment in which the public sector and private sector work together to enrich one another’s talent development will bring each sector a better understanding of the other, as well as more efficient and beneficial use of taxpayer resources.

 

This article was originally published in the June 2017 edition of the Labor and Employment Committee Newsletter. Participation in ABI's committees is one of the many benefits of becoming a member.  Committees provide networking and leadership opportunities.  For additional information on how you could become involved in ABI and our Committees please visit membership.abi.org

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