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1.1
List of Tables, Figures, and Boxes
5.1
6.1
6.2
6.3
6.7
7.4
3.1
13.1
The desire to write Public Human Resource Management: Strategies and Practices in the 21st Century was a result of continued requests from students to review material that was relevant to the personnel challenges they were experiencing in their day-to-day work activities. The students frequently questioned why textbooks rarely addressed the practical impact of personnel reforms on practices such as recruitment, pay, and performance appraisal. Students were also eager to learn more about emerging issues such as nonprofit human resources, motivation, privatization, and human resource information systems. When I asked colleagues if they knew of any texts that addressed contemporary public sector personnel issues, they invariably replied no. Tired of having to incorporate a potpourri of material into the classroom to address student concerns for practical guidance, I decided to take on the endeavor of writing a text that brought attention to the changing landscape of public human resource management. My goal was simple: to put together a text that covered the traditional personnel material; include subjects that were rarely or never addressed in public personnel; and most importantly, apply a personnel reform framework for examining each chapter.
The reform framework for the book—decentralization, performance-based pay, declassification, deregulation, and privatization—is meant to prepare the next generation of human resource managers for careers in the public and nonprofit sectors. The framework addresses one of the most important issues raised by students and managers over the last few decades—how do we operate in an environment that is increasingly hostile to traditional personnel practices? As is often the case in MPA programs, my students came to class from their day jobs in government and nonprofit organizations. Keen to put in place best practices, my students want more from the traditional texts in personnel administration. They wanted material that addressed implementing contemporary reform practices such as performance-based pay, employment at-will, diversity plans, motivational tools, contracting out, human resource information systems, and strategic plans. Moreover, many of my students were increasingly exploring employment options in the nonprofit sector. Students who secured employment in nonprofit organizations quickly realized the difference in personnel practices in their sector in contrast to the public and private sector. The text also explores these differences in each chapter, taking up trending issues in nonprofit human resource management. The result is a labor of love that I believe finally
takes up the current challenges public and nonprofit managers are increasingly facing in their everyday work environments.
Organization of the Book
I have organized the book into three sections: Foundations, Functions, and The Future. The Foundations chapters bring the reader through the history of public human resource management in the United States. Most importantly, Chapter 1 establishes the reform framework that will be used throughout the text: decentralization, performance-based pay, declassification, deregulation, and privatization. While civil service systems have afforded employees job protections, merit-based employment, political neutrality, open and competitive examination processes, and equal pay, these ideals have rapidly changed (and in some cases radically so) over the turn of the last century as a result of public human resource management reforms. The reform framework provides an updated assessment of what reforms mean for successfully operating in the contemporary workplace. With the promise of efficiency, personnel reforms also bring about the potential for significant costs in terms of legal and fiscal uncertainties. Providing practical human resource solutions for coping with an increasingly complex environment is a key aim of the text.
The second section—Functions—puts the framework to work in earnest, taking up the impact reforms have had on routine human resource activities. These chapters highlight the difficulties of recruiting and maintaining qualified personnel in an increasingly reform-oriented environment; adequately compensating employees based on their organizational performance; employing appropriate performance appraisals; tapping the potential of public service motivation; and understanding the challenges contemporary reforms pose for labor management relations in the public sector.
Finally, I focus on The Future of public human resource management by reviewing topics that are trending and seldom covered in traditional textbooks. Among these trends is the increased reliance in the public sector on both private and nonprofit firms to provide HR functions in a bid for greater efficiency. Regardless of the merits of privatization, the public sector has embraced it as a viable alternative necessitating greater awareness among HR managers as the best way to manage the process. Technology has also tasked HR managers with a greater appreciation for HRIS software that can be applied to both routine and complex tasks in a bid to become more strategic in managing the future workforce. Accordingly, strategic human resource management (SHRM) considers the merits of strategic planning, improving internal processes and employee capacity, workforce planning, and accountability— features now considered essential to the future of PHRM. Given the changes taking place, scholars and instructors need to take stock of traditional subject areas and
competencies and refocus our attention on topics such as data analysis, managerial economics, labor market analysis, communication, and international public human resource management. I conclude the text with an assessment of the potential challenges and opportunities public HR managers will face in the 21st century, tying together the analysis of PHRM reforms in each chapter into an overall analysis.
One final note about the organization of the text. In response to my students’ many in-class questions, I incorporate nonprofit human resource management issues into the text. You will notice that each chapter offers a “Nonprofits in Focus” box. The recurring boxes provide insight into how the issues raised in each chapter affect nonprofits. While nonprofits are frequently included in the public affairs curriculum, they are also governed by a distinct set of legal guidelines. This is indeed the case for human resources in the nonprofit sector, where personnel rules and guidelines do not always mirror those of federal, state, and local PHRM.
Acknowledgments
I’m thankful for the support of colleagues and friends in the academy. If not for their encouragement Public Human Resource Management: Strategies and Practices in the 21st Century would have simply been an idea. Their insight and feedback proved instrumental in the delivery of the final product.
Thanks also go to my students in several semesters of PA 6345 Human Resource Management over the course of writing my text. They often served as a sounding board for many of my ideas for case studies and exercises. Ultimately, the text is meant to serve their needs as future stewards in the public and nonprofit sectors.
Working with the editorial team at CQ Press is without a doubt a professional highlight of my career. Publisher Charisse Kiino and development editor Nancy Loh were instrumental in supporting my contribution to academic literature and offered invaluable suggestions. The final version of the text also benefited from the exemplary copy editing expertise of Paula Fleming.
Finally, I am eternally grateful to my family for their patience and support over the duration of this project. Thanks to my wife Leah for her advice and editing suggestions. Thanks go to my son Luca for his patience while Daddy worked on his book instead of having playtime. My daughter Lola was born during the writing process, so once again I am thankful to my wife for answering late-night wake-up calls when Daddy needed to get up early to work on his book.
Foundations
Introduction
Public Human Resource Management in the 21st Century
Human resource management is an essential part of any organization, encompassing a wide range of activities and functions, including staffing and recruiting, administration of benefits and payroll, workforce planning, training and development, performance appraisal, discipline, labor-management relations, and overall employee well-being. In fact, most employer-employee relations in any organization involve some aspect of human resources. This is true regardless of whether the organization is in the public sector (government), the private sector (for-profit companies), or the nonprofit sector. However, public human resource management (PHRM)—human resource activities at the federal, state, and local levels of government—can be particularly challenging, as it often entails complex legal guidelines that apply exclusively to public sector employees and public organizations; guidelines that human resource managers must understand, abide by, and enforce. It is the policies, regulations, and practices of PHRM that are the focus of this book.
Furthermore, this text takes a contemporary approach in its coverage of PHRM, recognizing that over the last few decades, traditional PHRM has given way to quite a different landscape, one that looks increasingly like the private sector. Beginning in the late 1970s, a series of reforms has aimed at improving the efficiency of public services. The impetus for these reforms has been a critical view of traditional public management practices, especially of human resource practices. These have often been depicted as archaic and rule bound and as epitomizing the convoluted practices typical of bureaucracy. Traditional PHRM espoused democratic ideals and values, emphasized fair and equitable treatment of all public employees, and protected public employees’ rights. However, traditional PHRM also conformed rigidly to rules and regulations and was based on a hierarchical structure, wherein a central personnel office set policy and made decisions that then filtered down to divisions or subordinate offices. Thus, making hiring and termination decisions in the public sector was
widely viewed as unnecessarily time-consuming. A classic example of the byzantine human resource process was the rules and procedures governing federal government hiring outlined in the ten-thousand-plus page Federal Personnel Manual (Mesch, Perry, and Wise 1995).
The reforms that have been implemented over the last few decades have been referred to as “managerialist” in their focus or as “new public management.” The influence of private sector practices aimed at improving productivity is a persistent theme throughout these public sector reform efforts. These reforms were meant to increase efficiency and productivity, and—in contrast to to traditional PHRM, which was more concerned with rules and proper bureaucratic process—they were results driven. Reformers advocated adopting greater flexibility in approaching tasks so as to be more efficient, using more managerial discretion, and embracing a “whatever gets the job done” philosophy. Such reformers have become increasingly commonplace in the public sector.
Given the extent of reform efforts over the last few decades, managing human resources in the public sector has become increasingly difficult to navigate. Changes to civil service laws at the local, state, and federal levels of government have also created confusion among those trying to implement human resource changes in their jurisdictions. Practitioners and scholars are in need of some clarification regarding the current state of PHRM to identify just what are best practices in public human resource management today.
The aim of this text is to provide readers with a foundational knowledge of how PHRM operates and functions, while also highlighting the changes that have been proposed and implemented in PHRM, the scholarly debate surrounding those changes, and the impact they’ve had on practice. The hope is that by considering the difficulties of navigating the new landscape of PHRM at federal, state, and local levels, scholars and practitioners will have a better road map to guide their work and a toolkit for implementing it.
The chapters that follow will develop a concise analysis of the impact reforms have had on routine practices, addressing changes to pay, benefits, employee rights and labor relations, diversity planning and affirmative action, and performance appraisal. To achieve this goal, the text has distilled these changes down to five specific types of reform that have been implemented in some form or another throughout the public sector: (1) decentralization, (2) deregulation, (3) performance-based pay, (4) declassification, and (5) privatization. We will use these five common reform types, which will each be explained and discussed in turn in the following section of this chapter, as a framework for appreciating the day-to-day impact these changes have had on PHRM operations. Each following chapter will then utilize the framework in light of the topic being reviewed; the final section of each chapter will
offer insight into how these reforms have modified practices in the specific human resource area under discussion.
Each chapter will also provide information applicable to nonprofit human resource practices through a “Nonprofits in Focus” box. While not a specific focus of the text, nonprofit organizations are often considered in the broader PHRM discussion, and many readers will appreciate the challenges that managers in these organizations face—challenges that have intensified since the economic collapse of 2008. Finally, the book will address the future of PHRM education in graduate and undergraduate programs in light of recent reforms. Llorens and Battaglio’s (2010) assessment of PHRM education in master’s of public affairs/administration programs highlighted the shortcomings of graduate programs, which do not always teach the skills necessary to manage in a reform environment. A continued focus on more traditional human resource practices portends a future workforce ill-equipped for taking on future public service challenges. This text takes on these challenges head on.
public HrM reform: an Overview
The civil service system—the regulations, processes, and institutions that govern public employment—is the foundation of public service. Chapter 2 provides a more detailed account of the evolution of the American civil service system, but here we briefly discuss two landmark pieces of legislation that have been fundamental in shaping our civil service system—the Pendleton Act of 1883 and the Civil Service Reform Act of 1978. Both of the acts marked key points in history when civil service was redefined.
Historically, civil service systems based on professional merit were considered an essential element for government performance (Kellough and Nigro 2006b; Selden 2006). This practice was formally put into law with the Pendleton Act of 1883, which established a civil service system that separated routine work from policy and administrative process and that was based on merit, with open recruitment and competitive examinations (as opposed to the patronage and nepotism that was pervasive at the time) and political neutrality. These principles, which emulated the British tradition that had emerged in the mid-19th century, were deemed essential for effective governance.
These principles held for roughly the next century. In recent decades, however, the traditional association of civil service systems with effective governance has been challenged as being too focused on rules and not focused enough on finding the right person for the job. The Civil Service Reform Act of 1978 marked the beginning of the current reform era of PHRM, effecting a reorganization of the civil service system and increased managerial flexibility. Civil service reformers insist that reforming PHRM is crucial for enhancing government efficiency (Elling and Thompson
2007; Kettl et al. 1996). Functions such as planning, hiring, development, and discipline—typically centralized processes common to most levels of government— have been challenged by the current wave of reforms; they are now seen as civil service practices emblematic of bureaucratic inflexibility, inefficiency, and ineffectiveness. Greater managerial latitude has been afforded politicians and managers alike over personnel decisions and functions. As mentioned above, five distinct reform themes have emerged over the last three decades: decentralization, performance-based pay, declassification, deregulation, and privatization, and all have all challenged the traditional core of PHRM. Table 1.1 provides a summary of the five reform themes. In the
Decentralization
Performance-Based Pay
Staffing and compensation decisions are increasingly being made by agency and division level managers.
Termination, transfer, and demotion decisions have also devolved to lower levels.
Employment-at-will environments are removing hierarchy-based rules and regulations for staffing and compensation decisions.
Compensation is increasingly tied to performance.
There is greater appreciation for effective performance appraisal and job analysis.
Pay based on annual merit increases is being used as a recruitment, retention, and motivational tool.
Declassification
Salary and benefits are increasingly offered in nontraditional manners, such as broadbanding or paybanding.
Classic step-in-grade classification and compensation is eschewed in favor of less finite job descriptions and pay.
Greater skill is required to negotiate employment packages.
Deregulation The expectation of continued employment is increasingly eroded or eliminated. A greater knowledge of the legal environment of PHRM is needed.
PHRM systems may exhibit a mixture of step-in-grade classified and unclassified personnel, or even an employment-at-will environment.
Privatization
Many HR-related functions are being outsourced to private and nonprofit organizations.
Negotiation and cost-benefit analysis skills are essential for awarding of contracts.
HR personnel are often tasked with managing and monitoring contracts and contract employees.
HR personnel increasingly need knowledge of contract law.
Table 1.1
Public Human Resource Management Reform Types
following sections, we review the contemporary reform environment and its potential impact on the traditional core functions of PHRM.
Decentralization
Traditionally, all staffing decisions for a jurisdiction were typically made by a central personnel office. This process could be time-consuming, as all decisions needed to be sent up and down the organizational hierarchy for approval. Decentralization entails HR functions being demoted to the lower agency (i.e., division or department). Turning over personnel decisions to agency-level HR directors and political appointees is seen as making government more responsive and effective. Decentralization strategies provide managers at the agency level greater latitude over management issues; they can make decisions more quickly and independently and do not need to wait for approval. This downward transfer of responsibility increases managerial flexibility where it is needed most—at the front line. Decentralization strategies, with their focus on improving innovation and accountability for personnel decisions at lower agency levels, have been a hallmark of public management reform in recent decades (Brudney, Hebert, and Wright 1999; Coggburn 2001; Kettl 2000; Thompson 2001).
At the federal level, decentralization has involved the transition of many programs to lower levels of government, replacing centralized, rule-bound systems with more agency-specific, manager-centered systems. Decentralization of PHRM functions has been advocated by reform proponents since the Civil Service Reform Act of 1978. This act abolished the Central Personnel Office, which had previously overseen the civil service, in favor of a streamlined, management-centered agency—the Office of Personnel Management (OPM)—under the president’s purview. Since the creation of OPM, the federal decentralization trend has continued, with greater authority over staffing decisions moving to individual federal agencies while broader, higher-level planning issues remain with OPM.
In the 1990s, reform was spearheaded by the Clinton administration’s efforts under the National Performance Review (NPR). Spearheaded by then vice president Al Gore, the NPR was a task force of intellectuals and practitioners of public management whose purpose was to offer recommendations for improving government performance. Initially, the agenda was ambitious, recommending the delegation of recruitment, examinations, position classification, salary adjustments, performance management, due process procedure modifications, and changes to the dismissal process to federal agencies (Gore 1993; Thompson 2001). However, political opposition—led by members of Congress sympathetic to civil service and labor—prevented any widespread change and resulted in more modest changes, coming primarily from reductions in the OPM and the elimination of the Federal Personnel Manual (Naff and Newman 2004).
During the George W. Bush presidency, initiatives at the federal level continued the push for decentralization. Legislative exemption from Title V of the US Code— the federal legislation governing civil service protections for federal employees— provided many agencies with the ability to develop more flexible systems, which in some instances resemble private sector practices (Woodard 2005, 113). For instance, the Homeland Security Act of 2002 significantly increased personnel flexibility within the Departments of Homeland Security (DHS) and Defense (DOD), giving the secretaries of both agencies greater latitude in managing labor relations and staffing (Brook and King 2008).
A number of state governments have also decentralized HRM decision making, with variations in which functions (e.g., classification, recruitment, selection, training, labor-management relations) have been targeted and to what extent (Selden, Ingraham, and Jacobson 2001). Voter sentiment for improved accountability in government has been a key component in the demand for greater decentralization, although this force has been tempered by the political environment and the degree of unionization in the respective states (Hou et al. 2000).
Decentralization is not without its drawbacks. Hou et al. (2000) asserted that decentralization at the state level has increased the support, planning, and supervision responsibilities of state personnel offices, overburdening them. Recently, Hays and Sowa (2006) surveyed all fifty states to determine to what extent the HR function was decentralizing. The authors found that a majority of states reported some degree of decentralization, often coupled with additional reform efforts. Given the extent of decentralization reform, it seems prudent to take stock of its ramifications for practice. Each chapter of this book will review the merits of decentralization in light of the topic under discussion.
Performance-Based Pay
Traditionally, PHRM pay structures were based on longevity or time-in-service, focusing on career management and advancement instead of employee performance. High-performing civil servants were not rewarded, and underperforming employees were not given incentives to improve. Since the 1980s, the push for greater accountability has resulted in a greater focus on performance management by rewarding superior performers with pay increases. Performance-based pay structures have proven to be an attractive alternative to traditional PHRM practices. Appealing to the logic of market-like mechanisms, proponents of compensation reform suggest that performance-based pay systems have the potential to increase employee performance and therefore organizational productivity. A number of performance-based pay schemes have been implemented by linking individual, team, and/or organizational performance measurement to financial incentives. Financial incentives can be
distributed as increases to base pay (i.e., merit pay), one-time bonuses, or a combination of the two (Kellough and Nigro 2002, 146). According to Kellough (2006),
Presumably, such a policy would prevent resentment or alienation of the best employees that could result when their superior contributions are not recognized, and they receive the same pay as their less-productive colleagues. At the same time, poorer performers are offered an incentive to improve their levels of productivity. (184)
The federal government tested performance-based pay systems from 1981 to 1993 (Kellough and Nigro 2002). However, government-wide attempts during this period, which relegated performance-based pay to individual agency-level decisions, proved unsuccessful. An inability to distinguish poor performance from other levels of performance, inadequate financial support, and insufficient evidence to confirm improved performance led to the demise of federal performance-based pay systems (Perry, Engbers, and Jun 2009; Perry, Patrakis, and Miller 1989). More recently, the Homeland Security Act of 2002 granted authority to DHS and DOD to implement performance-based pay systems. According to Brook and King (2008), approximately 90,000 of the total 2.7 million federal civilian employees were covered by performance-based pay systems by 2005 (10).
Despite its problematic history at the federal level, numerous jurisdictions at the state level have continued to pursue performance-based pay systems (Hays 2004). Hays and Sowa (2006) noted that more than half of the states they surveyed indicated either implementing or planning some form of pay reform. GeorgiaGain, the performancebased pay reform in the state of Georgia, has garnered significant attention from both practitioners and academics as a result of implementation problems (Kellough and Nigro 2002, 2006b). Like pay reform initiatives elsewhere, the Georgia reforms were politically popular, but they failed to achieve demonstrable evidence of success among state employees. Even though implementing GeorgiaGain has proven problematic, the state has continued to rely on performance-based pay for improving employee and agency productivity. In Georgia, as with in many states, this is often the result of the government’s desire to demonstrate legitimacy to the public—that is, while the evidence for success is sparse, the continued pursuit of accountability policies in itself is attractive to a public that feels cynical about traditional government efficiency (Perry, Engbers, and Jun 2009). Thus, politicians are encouraged to continue advocating performancebased policies as long as citizens are convinced that government is broken.
Declassification
Civil service systems have typically employed hierarchical step-in-grade classification structures as a means for career management. Upon hire, public employees are
typically ranked at a particular grade (and pay) level based on their qualifications, education, and experience. Through time-in-service, employees are promoted to higher steps within each grade, and eventually higher grade levels, receiving better pay as long as they perform satisfactorily. Grades are classified according to strict job descriptions in a career class category, and each step, grade, and corresponding pay level is listed in a matrix often called a “general schedule.”
However, the view of many reformers is that traditional classification structures restrict hiring authorities’ ability to attract applicants from outside the agency or the broader public sector. Declassification refers to the easing of the rules that define pay grades in terms of very specific job descriptions. Advocates argue that more open-ended job searches can exploit a larger, more talented pool of qualified applicants whose résumés do not necessarily match up exactly with the job description.
Broadbanding (or paybanding) classification structures—the collapsing or combining of a number of traditional grades into a single band—is often employed as a means for declassification. Managers then hire for jobs with broader descriptions and pay structures and have greater flexibility over pay rates both at hire and during the employee’s tenure (Hays 2004; Whalen and Guy 2008). Broadbanding emerged as a result of Title VI of the Civil Service Reform Act of 1978, which authorized agencies to waive civil service rules in order to develop innovative new approaches to traditional PHRM functions (Shafritz et al. 2001). It has its roots in the demonstration projects—that is, limited rollouts of new initiatives on a small scale before implementing them on a wider basis—commissioned under Title VI, and it has since been used more widely in government. By compensating employees according to their unique skills, broadbanding was intended to promote egalitarianism by removing the distinctions accompanying traditional pay grades and by deemphasizing the centralized personnel system’s insistence on titles and hierarchy.
Classification reform during the Clinton administration was part of NPR’s mission to reinvent OPM and the human resources function (Shafritz et al. 2001). While the Clinton administration included language in civil service reform legislation that authorized agencies to pursue broadbanding, labor unions resisted these proposals, viewing declassification efforts as encroaching on union authority. As a result, the federal government continued to rely on authorization for such measures through Title VI (201). However, civil service reform legislation by the Bush administration post–September 11 included provisions for replacing the general schedule with paybanding systems for DHS and DOD (Thompson 2007). As suggested earlier, these efforts focus on enhancing manager discretion over compensation and employee performance, thereby moving away from central personnel authorization.
At the state level, there is a general trend toward fewer job classifications (Hays and Sowa 2006; Whalen and Guy 2008). In 2008, Whalen and Guy surveyed all fifty states in an effort to assess the extent of broadbanding. The authors found that civil
service systems implemented broadbanding to reduce job classifications as well as promote pay for performance. While demonstrable evidence of the effectiveness of broadbanding is lacking, Whalen and Guy’s work suggests that it is still part of the broader PHRM reform movement in the states. Among those states utilizing broadbanding, twelve implemented government-wide broadbanding, and four employed such measures on a limited scale (Whalen and Guy 2008, 1). Additionally, the authors found that eighteen states considered broadbanding but opted against it.
Deregulation
Over the last few decades, there has been a general trend in eliminating personnel rules and regulations—deregulation—in an effort to expedite PHRM decisions. Rules akin to the ten-thousand-page personnel manual regulating federal government staffing exist in jurisdictions throughout the country. Traditionally, civil service systems have afforded public employees the right to a hearing (the right to due process of law) as part of the grievance process. In the spirit of managerial flexibility, reformers have supported severe limitations to, or outright elimination of, employee procedural due process rights to promote greater efficiency and effectiveness in public management (Facer 1998). The elimination of the grievance process is seen as a critical component of streamlining and expediting the termination of poorperforming employees. The trend toward eliminating such rights altogether has led to what some have called “radical” civil service reform (Condrey and Battaglio 2007). These “radical” personnel systems operate under an employment-at-will (EAW) environment in which employees may be dismissed summarily, for any reason that does not violate employment law (Muhl 2001). Employees within EAW systems have no expectation of continued employment, as has traditionally been the case under the protections provided through civil service systems (Gertz 2007; Kellough and Nigro 2006b; Lindquist and Condrey 2006). Thus, many public employees now have no guarantee of procedural due process before discipline or removal (Kuykendall and Facer 2002).
EAW is seen as a means for increasing managerial efficiency because it removes what some view as the cumbersome grievance and appeals processes under traditional civil service systems. Instead of following guidelines that might lead to a lengthy dismissal process—a process that reform proponents suggest is a waste of taxpayer dollars—managers under EAW need provide little or no notice before terminating an employee they perceive as performing poorly.
During the last decade, efforts at the federal level have sought to curb traditional civil service system practices, especially through legislation promoted by the George W. Bush administration in the wake of September 11 (Kellough and Nigro 2005). Federal efforts have generally emanated from legislation permitting exemption from Title V, OPM demonstration projects, and legislative approval of
performance-based polices (Woodard 2005, 110). At the state level, efforts to curb employee rights have occurred in Georgia, Florida, and, more recently, Colorado and Arizona (Hays and Sowa 2006; see also Bowman and West 2007; Condrey and Maranto 2001; Kellough and Nigro 2006a). EAW reforms in Georgia and Florida have been the most visible (Battaglio and Condrey 2006; Bowman and West 2006; Condrey and Battaglio 2007). Georgia has led the “radical” reform trend toward EAW by phasing out its merit system for all “unclassified” positions (i.e., those not granted protection by the State Civil Service Board) beginning in 1996. Approximately 80 percent of Georgia’s state employees are now employed at will (Condrey 2002; Condrey and Battaglio 2007; Facer 1998). Florida followed in 2001 with Governor Jeb Bush’s Service First initiative, which placed senior state government managers in at-will status (approximately 13 percent of total employees; Condrey and Battaglio 2007, 427). As will be detailed in later chapters, some research suggests that the increased use of EAW policies has had a negative effect on employee motivation and performance.
Privatization
A key component of public management reform, privatization is intended to improve accountability and quality of service (Kettl 2000; Savas 2000). According to Savas (2000) privatization entails increased reliance on private sector and nongovernmental (i.e., nonprofit) institutions—rather than government—for the delivery and production of public sector needs. Indeed, governments at all levels have increasingly looked to the private sector for the delivery of many HRM functions, such as payroll and benefits administration (Battaglio and Condrey 2006; Fernandez, Rainey, and Lowman 2006; Shafritz, Russell, and Borick 2007). Proponents of privatization insist that the inefficiency of rule-bound PHRM systems presents no alternative but to encourage the increased use of contractors who can hire new personnel quickly and dismiss poor performers (Maranto 2001, 75).
The rationale for opting out of in-house provision of HRM services mirrors more general reasons proffered for privatization within public management. HR privatization may allow public agencies to take advantage of larger firms’ economies of scale or the quality advantage inherent in specializing in HRM (Fernandez, Rainey, and Lowman 2006, 220). Moreover, by unburdening current HR employees from more mundane tasks, privatization has the potential to provide greater flexibility to pursue core functions such as strategic planning (Fernandez, Rainey, and Lowman 2006, 220; Rainey 2005). The rationales for privatization may depend on the degree of difficulty associated with the tasks outsourced (Coggburn 2007, 317; Rainey 2005). PHRM services associated with more mundane tasks, such as payroll, are often outsourced as a way of saving money and freeing up personnel to focus on more strategic functions (Coggburn 2007, 317; Kellough and Nigro 2006a, 320; Rainey 2005, 706). Looking to
