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DOI: 10.1177/0734371X9301300405 1993; 13; 59 Review of Public Personnel Administration

James L. Perry Strategic Human Resource Management

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59

TRANSFORMINGFEDERAL CIVIL SERVICE

Strategic HumanResource Management

JAMES L. PERRY

Thegrowing importance of humanresources for organizationalsuccess has led to increasinginterest in making personnelmanagement a more integral,

strategy-driven activity in

organizations. This trend is

particularlyrelevant forthefederal government where

personnel activities are oftenperceived as constrained, complex,and separate from the manage-

ment process. This article

proposes changing the relation-

ship between the Office ofPersonnel Management (OPM)and federal agencies, redefining

their respective roles, and alteringthe roles of personnel specialists

and line managers.

uman capital, the knowledge, skills and experience

H possessed by individuals, has become pivotal for the

~~&dquo;&dquo;a successful performance of the federal government’s~ ~ missions (McGregor, 1988). Because human resource’&horbar;&horbar;&horbar;&horbar;&horbar;&horbar;&horbar; management focuses largely on the acquisition andutilization of human capital, it too has attained new significance forfederal organizations. In fact, many management scholars argue thathuman resource management is now an important, perhaps the mostimportant, determinant of organizational effectiveness (Devanna,Fombrun, and Tichy, 1984; Schuler, 1990).

As human resource managementhas acquired greater importance, theresearch and professional literature hasincreasingly distinguished betweenconventional human resource manage-ment practice and strategic humanresource management (see Lengnick-Hall and Lengnick-Hall, 1988 for acomprehensive review of this literature;McGregor, 1988, 1991). The distinctionis intended to differentiate between

conceptions of human resource manage-ment as functionally or administra-tively-oriented activities as opposed tointegrated or strategy-driven activities.One idea associated with strategichuman resource management is that thestyle of human resource management isconsistent with the strategy of theorganization and that human resource



60

practices are adjusted, accepted and used by line managers andemployees as part of their everyday work (Schuler, 1992). Dyer andHolder (1987) suggest that a strategic perspective requires focusingfirst on organizational goals in defining the role of human resourcemanagement. &dquo;To manage strategically means that traditional HRobjectives such as turnover or performance are superseded by organi-zation-wide goals designed to complement a specific business strat-egy&dquo; (Dyer and Holder, 1987: 1).

The changing role of human resource management is part of alarger set of organizational changes involving strategy, structure andcontrol systems. Organizations are increasingly giving subunitsautonomy and holding them accountable for specific results (Barzelay,1992; Osbome and Gaebler, 1992). They also rely increasingly onadhocracies, groups of experts temporarily brought together for specificprojects (Reich, 1987; Peters, 1987; Peters and Waterman, 1982).Coordination often occurs through mutual adjustment across groupswhose members overlap (Mintzberg, 1983). Jobs are vertically andhorizontally broader in scope and less likely to require direct supervi-sion. The expansion of job scope creates greater autonomy andentrepreneurship. This approach to empowering organizationalmembers is readily extended to customers (Osborne and Gaebler,1992). Organizations are also becoming more attentive to the costs ofinternal rules, striving to ensure that rules add value to goods orservices.

How does human resource management in the federal govern-ment measure up to the visions of strategic human resource manage-ment articulated in the literature? Can federal human resource

management become more strategic, i.e., integral to strategy making,adaptive, and useful to line managers and employees in their dailyactivities? This article addresses these questions. It argues that federalhuman resource management can become more strategic, but for thisto occur, new organizational designs must be used. The presentationproceeds in two stages. It begins by summarizing criticisms of thefederal civil service, and then presents alternatives for improvinghuman resource management.

Criticisms of f ederal humanresource managementCriticisms of federal human resource management typically involve atleast three arguments. The most common is that federal personnelactivities are over-regulated and too constraining (Colvard, 1988;Cooley, 1987; Homer, 1988; MSPB, 1993). Federal human resourcemanagement is perceived to be heavily constrained by statutory



61

requirements and regulations directed toward preventing failures.Managers and their agencies thus feel limited in their ability to tailorpersonnel policy to their own goals and missions. One Office ofPersonnel Management (OPM) Director (Homer, 1988: 35) explainedher view of the consequences:

Each of the rules, regulations, and requirements of the U.S. CivilService is well intentioned and designed to preclude unfairnessor error. Together they have led to an administratively moribundsystem that disallows the exercise of human judgment anddiscretion.

A closely related criticism is that the system is, in the words ofan OPM Associate Director, &dquo;complex and undecipherable to theunannointed&dquo; (Cooley,1987: 1 ). Complexity is, in part, a product ofthe sheer volume of regulations. For example, even a Director of OPM(Homer, 1988: 35) found the 74 pages of rules on how much to pay a

secretary excessive. The technical character of federal personneladministration also makes for complexity. The tendency of thepersonnel system to focus on technical issues such as number of ratinglevels and detailed classification standards has led to a situation where

&dquo;rather than an integral part of the management process, the personnelsystem has become a separate and somewhat alien process&dquo; (Cooley,1987: 1).

A third criticism is that the federal personnel system does notmeet the needs of line managers. This problem is partly a result of thegulf between cultures-that is, between line managers and personnelprofessionals-that produces adversarial relationships. Line managersperceive personnel professionals as obstructionists. For their part,personnel professionals perceive line managers as uncooperative andeither disinterested or, worse, antagonistic to merit principles. The twocultures are indeed separate and alien, limiting the prospects formaking personnel an integral part of the management process.

The latter criticism is also a reflection of the inability of agenciesand managers to tailor the system to meet their goals and missions.According to Associate OPM Director Claudia Cooley: &dquo;When

managers look to the personnel system to meet their human resourceneeds, too often they get ’correct’ answers which don’t solve theirproblems&dquo; (1987: 1). King and Bishop (1991) attributed a high failurerate of new personnel programs to the disparity between personnelprofessionals’ and line managers’ perceptions of the criteria for humanresource effectiveness. They concluded:

Eighty (80) percent of proposed personnel project/programimprovements are dropped or modified, formally or informally,



62

within three years following implementation. The latter findingsindicate that most failures result from difficulties in matchingfunctional criteria to line managers’ needs rather than frommanagers’ reluctance to pursue corporate human resource goals.Clearly, HR professionals have good ideas which may be accept-ed, but these good ideas are not aligned to major businesspriorities.

Toward strategic human resourcemanagementThe criticisms indicate clear impediments to strategic human resourcemanagement in the federal government. A structure for effectivemanagement of human resources must:

1. Give agencies latitude to design human resource policyto match organizational strategies and missions.

2. Accord managers a high degree of responsibility forhuman resources.

3. Create clear accountability.4. Establish appropriate support activities.

What changes would increase human resource management’s integra-tion with organizational strategy, its flexibility, and its utility toorganizational members? The proposals below provide the design formore strategic human resource management.

The OPM-Department relationshipHow might the relationship between OPM and cabinet departmentsand agencies be structured to allow agencies to design human resourcepolicy that fits their organizational strategies? One way would be forOPM to develop broad performance contracts with departments for afixed time span, for example, five years. These contracts would permitthe department to articulate the goals for human resource manage-ment, identify objectives, and measure progress using appropriateindicators such as productivity levels, employee satisfaction, and skilldevelopment. During the course of the performance contract, depart-ments would report progress against their goals. OPM would monitorprogress and evaluate performance at the conclusion of the periodprior to authorization of a new contract.

The performance contracting approach has several advantages.First, it allocates a high degree of autonomy to departments andagencies, which gives them the flexibility to tailor their human resourcemanagement systems to their own mission and goals. For example, an



63

agency such as EPA might be given the latitude to eliminate individualappraisals and rewards for its professional staff and instead use groupappraisal and incentives exclusively to meet the needs of a highlytechnical, research-oriented work force.’ The flexibility of the perfor-mance contracting approach would eliminate the &dquo;one size fits all&dquo;nature of the present system and maintain meaningful oversight.

A second advantage is that performance contracting shiftsattention from compliance with rules to showing results. The centralquestion confronting OPM and the departments becomes: Whatresults do we want to achieve and how do we achieve them? The

propensity of performance contracting to increase the focus on resultscomplements the recommendations of GAO (1992) and MSPB (1992) inrecent reviews of OPM’s personnel management evaluation system. Incalling for better indicators of personnel management effectiveness,MSPB (1992a: vi) recommended: &dquo;Such indicators should seek toestablish and reinforce the link between mission accomplishmentcapability and various personnel management practices, policies, andprocedures.&dquo;

Performance contracts can be written to protect the merit system.Verification of prohibited personnel practices would be the basis forwithdrawing agency autonomy and tightening OPM regulation. Thesystem would continue to be anchored in merit principles, but it wouldnot involve nearly as much red tape.

The shift to performance contracts as an oversight instrumentdoes not necessarily mean immediate or radical change. Agencieswould be free to develop new tools at their own pace. What this moreflexible arrangement would mean is a shift in responsibility for humanresources and new criteria by which agency activities would beassessed.

An idea similar to agency-level performance contracts is alreadybeing tested in Great Britain (Corby, 1991). In 1988, The Next Stepsreport found that the civil service was too big and diverse to bemanaged centrally under common rules. By 1991, responsibility hadbeen transferred to 34 agencies, and actions involving another 28agencies were pending. Initial indications are quite positive for thisexperiment.

Despite granting increased autonomy to departments andindependent agencies, coordination among federal organizations canbe maintained with a minimum of rules. What are some of the charac-teristics of the new architecture for coordination? One is the use of adhoc arrangements (Mintzberg, 1983). OPM has been moving slowlytoward adhocracies in testing, classification, and training. Severalfeatures will be hallmarks of the adhocracies. One feature is that a

variety of people from throughout government, both line and staff, willcontribute their expertise, leadership, and vision. OPM will often play



64

a supporting role. Another feature is that the adhocracies will permitchoices about sources for internal services. A third feature is that theywill be funded by revolving funds or similar mechanisms, much likemany training services are presently supported (Agresta, 1993; OPM,1992b). Interagency task forces could also provide important forumsfor exchange of information. Some of these mechanisms are alreadybeing used by the Clinton Administration to tackle major publicproblems such as health care and welfare reform (Pearlstein, 1993).

Another mechanism for linking loosely coupled units is informa-tion systems that support flexibility, communication, and oversight(Gerstein, 1992). The design and operation of most personnel informa-tion systems is presently driven by the regulatory needs of personneloffices. These systems are less management information systems thanthey are personnel record keeping systems. Newell (1992: 42) providesan example of the present gap between data availability and useablemanagement information:

In short, OPM collects 57 types of demographic, occupationaland salary information from more than three million civilianworkers, generating more than 400 reports a year. But attempt-ing to use the data to help managers manage better would be liketrying to explain what makes the space shuttle fly by looking at alist of its parts.

Flexible, comprehensive information systems that permit dataaggregation in a variety of ways can encourage interactions betweenline managers and personnel support units and move the personnelfunction toward a consultative orientation. Such information systemsmust be available on distributed networks while, at the same time,providing appropriate privacy protections.

The roles of OPM and the departmentsChanging the relationship between OPM and the departments affectstheir respective roles. As the relationship becomes less adversarial andmore collaborative, OPM will need to increase its capacity to produceuseful information and the departments will need to become moreproactive in developing personnel policy.

*OPM’s role.2 When it was created in 1978, the OPM wasconceived to be &dquo;the right arm of the president as leader of the federalpublic service&dquo; (Zuck, 1989: 21). The Civil Service Reform Act of 1978(CSRA) intended that OPM provide broad policy guidance to agencies,conduct research and development, and oversee implementation ofmerit system principles (Lane, 1992). From the perspective of severaloversight bodies (National Academy of Public Administration, 1983;GAO 1989; MSPB, 1989; National Commission on the Public Service,



65

1989), OPM’s performance has fallen short of expectations. OPMacknowledged the need for change in its 1990 strategic plan (OPM,1990): &dquo;OPM’s emerging leadership style, while retaining guidance,assistance and oversight, relies increasingly on communication,research, flexibility and involvement.&dquo;

The changes in the OPM-department relationship will requireOPM to revise its mission3 to allow for a larger role for research anddevelopment activities. In today’s highly complex and rapidly chang-ing world, OPM can wield far more positive influence over the meritsystem via the knowledge it develops and disseminates than the rulesit writes. However OPM has almost no research and developmentcapacity. The agency now spends only .01 percent of the civilianpayroll on research and development (Newell, 1992).

Greater research and development capacity would permitquicker and more effective responses to the types of problems thathave beset federal human resource management in recent years in theareas of pay, performance management (Milkovich and Wigdor, 1991),labor relations (U.S. GAO, 1991), and automation. Reported inadequa-cies in many human resource programs admittedly are caused byfactors beyond OPM’s control, but the problems are exacerbated by itsinability to generate ideas to deal with them quickly and effectively(GAO, 1989 and MSPB, 1992b).

.Departments’role. As OPM becomes a more research oriented,knowledge-based enterprise, departments and agencies would assumeresponsibility for policy making and programming to meet organiza-tional mission requirements. Allocating policy-making responsibilityto departments and agencies is the first step in locating accountabilityfor human resource management where it is used by program unitsand line managers. As a manager at an agency exempted from title 5U.S.C. observed at a 1990 National Academy of Public Administrationsymposium: &dquo;We know we can never be on automatic pilot. We’reresponsible for managing our people well; if something isn’t going wellwe can’t blame some ’regulations’ someone else issued. It’s up to us tofix it.&dquo; One means for creating line management’s commitment tohuman resource management is to integrate it more effectively withagency mission. The most direct way of doing so is to give greaterlatitude to departments and agencies for policy development.

Turning over policy development to departments and agencies isa step toward decentralization and internal deregulation, but it doesnot assure optimal human resource management. Departments oftenretain authority that is better delegated to subordinate levels (U.S.OPM, 1992a). In its oversight and leadership role, OPM could developmeans for facilitating decentralization within agencies. Furthermore,once a greater policy role is delegated to departments and a newcourse is set for relationships among organizations, bureaus and other



66

subordinate units may seek greater autonomy for human resourcemanagement.

Integration of functional activitiesThe changes in the roles of OPM and the departments will begin tobreak down traditional barriers between specialized personnel func-tions, but restructuring must be reinforced throughout government.The existing functional bias of human resource organization must bedealt with explicitly. Among the mechanisms for doing so are modifi-cation of career paths for managers and specialists, and carefullyrethinking the internal organization of personnel departments.

*Reorganizing human resource units. Baird and Meshoulam(1988) argue that efforts to produce integration and flexibility in thehuman resource function require that it be structured around corepoints of integration, not based on subfunctions such as classificationand pay. They suggest this requires organization around client groupsor integrative activities such as planning, research, and informationsystems. Miles and Snow (1984) suggest that organizations using adhoc, flexible, loosely coupled structures are likely to stress servicessuch as career and human resource planning, job rotation, organizationdevelopment and team building.

*Developing generalists. A variety of well-known job rotationstrategies (Hall, 1976), which have been little utilized in federal organi-zations, could contribute to integration. Rotating line managersthrough human resource functions and human resource specialiststhrough line positions as part of career development programs wouldhelp to reduce existing organizational barriers. There is some researchwhich indicates that there is a better linkage between strategy makingand human resources in firms requiring senior human resourcesexecutives to have substantial line experience (Baird and Meshoulam,1988; Buller, 1988). The higher integration can be explained in twoways: (1) broadly experienced human resource executives have a goodknowledge of the organization and its human resources and are thus ina good position to integrate the two; and (2) because of their lineexperience, functional managers are perceived as credible by topmanagers and thus are given a fuller role in the planning process.

Another step toward integration would be to redefine the job ofpersonnel specialists. When personnel specialists at each level offederal organization dominate policy making about particular issues,such as classification or pay, it is difficult to distribute ownership forhuman resource management. The role of the personnel specialistmust become broader. These jobs must be enlarged and enriched as ameans of integrating functional activities. For example, the Bureau ofLabor Statistics has experimented successfully with customer-focused



67

teams of personnel generalists as a way of broadening personnelpositions (Coffee, 1992).

A third means for increasing integration would be throughmanager training. For example, the research and professional litera-ture indicate the value of managers being trained in career counselingand job design skills (Hall, 1976). To the extent that line managershave such skills, they will be better able to manage human resourceseffectively. At the same time, devolving such responsibilities to theline manager facilitates development of a leaner and more consultativerole for the personnel department.

LeadershipAlthough many of the current problems of federal human resourcemanagement involve organizational design issues, the impetus to bringabout fundamental change requires political leadership. The Presidentand the director of OPM must commit to bringing about the organiza-tional changes that will facilitate substantive responses to the needs offederal organizations. Executive leadership must begin with a perspec-tive that recognizes the dynamic relationships among strategy, struc-ture, human resource management, and performance (Senge, 1990). Avision that is sensitive to the needs of all stakeholders is vital foreffective human resource management (National Academy of PublicAdministration, 1993).

Executive leadership must be manifest in more than the vision forfederal human resource management. As the short history of theOffice of Personnel Management reflects (Lane, 1992), a president’schoice for director of the Office of Personnel Management has consid-erable influence on the performance of the agency. The OPM directorestablishes a course for the agency, makes important decisions aboutstaff that affect agency capacity, and creates a climate for congressionaland interagency relations. Each of these activities is essential to thelong-term effectiveness of federal human resource management.

Given the size and scope of the federal government, transforma-tional leadership must diffuse well beyond the Executive Office of thePresident and OPM. Cabinet members, assistant secretaries, and

personnel directors must work to ensure that authority and responsi-bility for human resource management is delegated to the lowestpossible levels in their organizations. This process would be facilitatedby opportunities for cabinet members to develop close workingrelationships with the OPM director.

Another leadership issue is congressional-executive relations.The authorization and long-term implementation of the changesoutlined above will require development of constructive, trustingrelationships between Congress and the executive branch. Suchrelationships are the mutual responsibility of Congress and the execu-



68

tive branch. However, steps by the President and the director of theOffice of Personnel Management can go a long way toward encourag-ing a mutually satisfactory response from Congress.

ConclusionOne test of the effectiveness of our public administration institutions iswhether they can adjust to new circumstances and yet retain the corevalues that make them so important to our society. One public admin-istration institution, the federal civil service, has endured for over acentury because of its ability to adapt. In recent years, powerfulenvironmental forces--a soaring federal deficit, global economiccompetition, information technology--have created new challenges forthe federal civil service.

This article offered several ideas for responding to the newchallenges. It proposed restructuring federal civil service to align itmore closely with developing strategic, structural, and control systems.Among the proposed changes were using performance contracting as amechanism for setting direction and assessing results, shifting OPM’smission toward more research and development to improve itscapacity for guiding federal human resource management, and givinggreater autonomy to departments and agencies to tailor policies totheir missions. The proposed changes would decrease the regulatorycharacter of current systems and diffuse ownership for human re-source management more widely. More important, such changeswould renew the capacity for the federal civil service to pursuemeritocratic values.

Notes’Statutory changes would be needed to facilitate the flexibility envi-

sioned by this proposal. OPM has some discretion to authorize alternativesystems for title 5 agencies. For example, the Federal Employees Pay Compa-rability Act of 1990 (FEPCA) allows OPM to use title 38 for some health careoccupations currently covered under title 5 (U.S. MSPB, 1991). This type ofstatutory discretion would need to be broadened. One way might be topermit OPM to authorize the use of any existing legislation for agencies thatcan demonstrate its appropriateness. Another would be to allow the use ofdemonstration provisions that are proven useful in a five-year trial. Thisapproach would encourage more rapid diffusion of innovations and avoidthe need to show their government-wide applicability, which has been astumbling block to benefits from Title VI of CSRA (see Ban, 1992).

2In addition to its core mission of providing strategic direction forfederal human resource management, OPM has operational responsibility forinvestigations and federal employee retirement systems. This article ad-dresses only OPM’s core mission.

3For another proposal for radical redefinition of OPM’s mission to align



69

it with new organizational realities, see Abramson (1988). The presentanalysis ignores the issue of OPM’s location in the federal administrativestructure. For example, some have proposed that OPM and OMB be merged.Although changing OPM’s organizational location may have merit, theproposals do not deal directly with the systemic problems of overregulationand lack of line manager ownership. For a history and analysis of the OPM/OMB relationship see Radin (1992).

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