Making the best of sequestration

Over the past few weeks, I have periodically felt slightly weird in writing my blog posts. Here I was continuing to write my normal posts about how to improve organizational performance and management, as if the situation in agencies was just proceeding as normal, while many of my readers were focused on the possibility of furloughs and the other disruptions of an increasingly certain sequestration.

So the first thing I want to do in this post is to say to my readers in and around government that, as one taxpayer, I am grateful for what you do and saddened that you are about to be run over by a rogue bus. As I say to my executive education classes, there is no group for whom the gap between what people are actually achieving and accomplishing, and what folks out there think you are achieving and accomplishing, is so great as for most U.S. civil servants. I’m not sure what my sympathy will buy – especially for those employees who really can’t afford furlough-induced pay cuts. But I want to express it anyway.

At the same time, this wouldn’t be my blog, and Steve wouldn’t be Steve, if I didn’t also discuss this in a managerial challenge context. I think agencies need to be ready for the likelihood that sequestration itself will last for a while, and that, even more importantly, tight agency budgets will last for a very long time even after the sequester is "fixed."

In this situation, as far as personnel expenses (S&E in government budget lingo) are concerned, agencies simply must look for alternatives to furloughs for wide swaths of staff. Organizations, and managers, will need to start – and should be starting now, on the assumption this fiscal environment is not going away – thinking more strategically about how to bring down personnel costs.

For managers and the human resources system, this means becoming more serious about taking on poor performers. For organizations, this means making tough choices about units that need to downsize or even be eliminated.

Most federal managers will say that they could absorb a 10 percent personnel cost cutback without too much impact, if they could choose how to take it – that is, by getting rid of poor performers. Needless to say, in the real world of federal personnel law, this is incredibly easier to say than to do. In this environment, some federal managers will be willing to endure the hassle, but probably some system changes are needed to help managers who would like to act.

With hiring declining in this environment, shouldn’t there be some HR staff resources that can be freed up to help managers with the process of getting poor performers to shape up or ship out? Isn’t this a time for OPM to examine its regulations in this area to see how much the process can be streamlined and deregulated without statutory change?

The bottom line is that the alternative to dealing with poor performers is to have the brunt of the cutbacks fall on good performers. This is wrong morally, and it increases the organizational performance penalty from the cutbacks.

A second alternative to furloughing a lot of people is a smaller number of Reductions in Force. RIFs reflect the reality of a permanently tighter budget environment. The heads of units need to start looking for ways to re-engineer business processes to reduce unnecessary steps or in other ways take out staff requirements. Higher-level managers need to ask whether there are whole units that, in this environment, simply can’t be justified and should be eliminated. Again, keep in mind that the alternative is worse: an unfair, impossible world of furloughs.