Dealing With the Coming Morale Crisis in the Federal Service

Dealing with the Coming Morale Crisis

in the Federal Service


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Dealing with the Coming Morale Crisis

in the Federal Service

A Research Paper for PSC 5950, Research Problems
Masters' Thesis for Oklahoma University
by Daniel R. Fruit, 1995




This article covers the coming morale "crisis" in the Federal government. It begins by explaining the concept of morale and some of the difficulties involved in measuring it. Next, some evidence is recounted showing reason to be concerned about Federal morale currently and that downsizing will in government, as in business, strain morale further. Two major contributing factors to long-term declining employee commitment are explored: falling compensation and the loosening of psychological bonds. A comparison between the philosophies of the two main would-be downsizers, Gingrich and Gore, reveal that the unwritten psychological contract between the Federal government as employer and its employees will like involve less being given on the part of the government, making the situation potentially worse. Particular constraints, including public mood and the political temper, allow little fluctuation in terms of compensation or development of psychological bonds on the government except with a relatively narrow range of policy options. Different method are explored as to how the Federal morale might be restored and maintained within these constraints. Suggested strategies include de-politicizing the bureaucracy, real employee empowerment through a changed evaluation system, a new job placement function for OPM, and a greater investment in training.


Issue Definition

A. Introduction to the Subject of Federal Morale

In the late 1980s and early 1990s a number of scholars and personnel experts proposed that the Federal government faced a personnel crises (Lewis 1991) in which the government was no longer able to attract and hold the "best and the brightest." While not being able to attract qualified personnel is more noticeable, the continuing ability to motivate those already in government service to perform their best is a complimentary and equally serious problem. After a rush of interest in the late eighties and early nineties, not much attention has been paid to the Federal work force and to conditions that effect Federal employment. This suggests that if no action is taken on the issue outlined in this paper, a more serious crisis is yet to come.

To discuss this issue, several definitions must be offered. First, the Federal worker, for the purposes of this discussion, is defined as the government service (GS), government management (GM), and senior executive service (SES) salaried, white-collar employee. This includes most individuals traditionally termed "bureaucrats" or "technocrats" and does not include the military service member or the wage systems (WS) worker. Though these Federal workers are important, their interests and problems differ from that of the career civil servant and merit separate consideration. Altogether, this definition of Federal worker, then, includes about 2 million (MSPB 1994) individuals. In order to understand the concept of morale, it's helpful to begin with an illustration.

In the movie, Gettysburg (1994), one of the truly remarkable scenes occurs directly after Pickett's charge. Lee's veterans have returned from that fated attack and are having a conversation with their general. The general is accepting blame for having issued what he considers, in retrospect, to have been a pretty poor set of orders. The troops, however, blame themselves. Despite the fact that their uniforms are largely in tatters and about a third of their number dead or wounded, the troops want to try the same charge again. Lee manages to talk them out of this. As he confides, later, to Longstreet: "The spirit of the army is still very good, very good indeed."

Instead of "spirit," Lee might have said, more correctly, "morale," for morale is a military term. It might defined roughly as how enthusiastic the troops feel, and is generally ascertained at the moment of most interest: right before a battle. As Lee's example proves, good morale does not necessarily win a battle. Poor morale doesn't necessarily lose a battle, as Hannibal's mercenaries showed. Generals believe, however, that other things being relatively equal, higher morale carries the day and devote at least some time to maintaining and building morale.

In terms of the civilian world, morale is defined in much the same way. Webster's (1984 ) defines morale as "a confident, resolute, willing, often self-sacrificing and courageous attitude of an individual to the function or demands demanded or expected of him by a group of which he is part; esprit de corps." Morale has been defined by business management (Manning and Petrick 1990, p. 83) as "an individual's or a group's level of positive mental attitude regarding the function or task at hand." Robert Levering, author of the best-selling A Great Place to Work (1989), characterizes a high morale work place as a function of four factors: the job itself; the work group; management practices; and economic rewards. Morale varies over time and, in large organizations such as the Federal government, from setting to setting. General statements, then, may not apply to a given specific situation, and this study focuses on drawing a general picture.

One difficulty with the concept of morale is morale is a psychological, not physical, measure. Accordingly, while the easiest means of measuring the morale of the Federal work force is to ask, this may not always provide an accurate answer. In this context, a number of surveys by the Merit System Protection Board (MSPB) (MSPB: 1990d, 1994) are particularly helpful. The MSPB asked a number of questions on the surveys that help give some indications as to the level of Federal morale. As the MSPB has done more than one survey, also, the surveys help illustrate general directions in morale variation.

Another valuable source of information supplied by the MSPB is studies conducted on those exiting the Federal government (MSPB 1990b, MSPB 1990c). The employee with the lowest morale is most likely to leave. The exiting employee is not necessarily typical, but problems noted by this employee may be illustrative of problems facing the whole group. A final source of MSPB information is that supplied by its study on attracting quality applicants (MSPB 1990a). The Governmental Accounting Office (GAO) also has done studies as has the Office of Personnel Management (OPM). In addition, a number of external studies, including, most importantly, the work of the National Commission on Public Service (1989) have attempted to measure the morale of the Federal work force.

B. The Low Level of Morale Now

A fair amount of the evidence indicates that Federal morale is not high and will soon fall. In its 1990 survey (MSPB 1990d), the MSPB found that while job satisfaction steadily rose from 1983 (59%) through 1986 (68%) to 1989 (70%), only 50% of those surveyed were willing to recommend Federal employment. In the area of retention, of those departing the government respondents considered a higher percentage to be above average 56% than of those remaining. The survey of those leaving the government highlighted some areas of concern (MSPB 1990b). Several key factors for leaving included compensation (28%), organization and management (17%), and work-related issues (15%).This means that over 50% of those leaving the government did so for money or better work conditions.

The MSPB's follow-up (MSPB 1994) survey seemed to suggest some improvements. Overall satisfaction (MSPB 1994) rose, once again, to 72%. An improved 62% stated that they would recommend the Federal government as a place to work. The study, however, also showed areas of concern. Employees were asked if their views were shared by their organization; only 50% agreed. While 41% agreed that their organization inspired them to do well, 34% did not. A study of Federal executives, that same year, found that 61% of these executives thought that morale was poor (Napoli 1994).


C. The Morale-Killing Effects of Downsizing

A substantial body of literature suggests that even if morale is considered "sufficient" at this point, it will soon be worsening due to downsizing. In this respect, the Federal government will be consciously following the lead of businesses in the late eighties and early nineties. It's instructive, then, to observe the effects that downsizing had on major American. companies.

A review of the literature from firms involved in major personnel cutbacks shows a toll in lower morale and performance. The general consensus among articles written in business periodicals on the potential ills of downsizing is striking as their readers would, in theory anyway, be most concerned about the bottom-line and the value of stocks, not employee morale. Of the Fortune 500 companies who collectively shed 3.4 million jobs in down-sizing (Fisher 1991) 58% thought morale had fallen. Wyatt Company, an international business consulting firm found that of the 531 downsizing US. companies it surveyed (Franklin 1994), less than half reported greater profits. The number of articles that consider downsizing as morale-harming outnumber those heralding downsizing about ten to one and include Nussbaum (1986), Imberman (1989), Boroughs (1992) and Charles (1995).

The effects of private sector downsizing were particularly felt in the middle management ranks most effected. Fortune (Fisher, A. 1991) found, in 1991, that middle management was experiencing a "morale crisis" with measures falling 5% to 15% in: confidence in top management; the company as a place to work; feelings of being treated with respect; and top management's responsiveness to complaints. Middle management, significantly, is the group targeted by the Gore's National Performance Review.

Moreover, management (Franklin 1994; Brewer 1992) experts suggest that there are better and worse ways, in terms of morale, to implement a downsizing, and the Federal government is implementing the worse alternatives. One thing that is not recommended is across the board cuts as this punishes already lean operations. Employee buyouts have the negative effect of encouraging top performers, who can get jobs elsewhere, to leave the firm. Finally, hiring freezes have the ill effect of preventing an infusion of new blood. Public Law 103-226, the Federal Workforce Restructuring Act, passed by Congress and signed by the president, mandates personnel reductions. The administration has already used hiring freezes, buyouts, and across the board cuts. Both the fact that downsizing will occur, then, as well as manner in which it is occurring, are certain, if the experiences of private industry provide any clues, to lower the morale of Federal workers.

There are signs that the coming morale crisis has already effected certain governmental departments and agencies (Bramson 1991) hardest hit by downsizing, including the defense departments. In the Federal government (MSPB 1994), it's important to note that while generally employee satisfaction rose, that of the Army and Navy fell. The Small Business Administration (SBA) is reported to have suffered a morale decline ("Small Business Administration" 1993). The new director of the National Parks Service ("New Directions for NPS" 1993) cited restoring morale as his top priority. There are similar reports from the DEA and FBI (Kincaid 1995).

If morale, then, is low now, downsizing, pursued, thus far, through the least-effective methods, will make it worse. This could cause some potentially negative effects, which will be explored.



D. Why Policy-Makers Should Care About the Morale in the Federal Government

There are a number of reasons why policy-makers might care about the morale of those working in the Federal sector, but, there are some reasons why policy-makers might not want to worry about their morale. The reasons not to worry about the morale of the Federal worker will be considered first.

Federal workers have many reasons to consider themselves lucky. There are millions of Americans, after all, who'd be willing and grateful to take Federal employment rather than be unemployed. Federal employees moreover, spend much of their life working with paper, the often-decried "red tape," rather than dealing with real issues. Moreover, if laying off just 12% of the Federal work force would save the administration some $40,000 ("Twelve Months Wiser" 1994) per job, per year, discarding the entire work force would net a cool $320 billion, per year. While laying off even 2 million Federal workers would seem sad, if it produced a better-working government, this would help the 300 million people living in the country, including those same workers.

These arguments are compelling, but not convincing. First, 50% of the Fortune 500 companies who collectively shed 3.4 million jobs in down-sizing reported realizing no savings (Fisher 1991) as well as the lower morale. In contrast, companies who downsized later, making gestures to retain higher morale, experienced a 72% rise in worker productivity (Franklin 1994). A large body of evidence, again drawn from business periodicals, links morale to performance in the private sector. Not all share this view that morale relates to productivity (Straka 1993), but in general morale is considered such an important consideration, currently, that there is even talk (Petrick and Manning 1990; Greenwald 1992) of "Morale Management." This suggests that any governmental restructuring that has no regard for the morale of Federal employees will lead to worse performing government as well as potentially saving nothing.

Next, there is the question of cost. There is a general consensus that government must be cheaper, but the amount paid Federal personnel is not as considerable as it seems and, as a percentage of GDP, actually decreasing (Meier 1993). To discuss savings of even as much as $320 billion is to ignore the much larger costs of social programs, especially social security.

Then, there is the question of human sympathy. All except the most crass would wish Federal employees to enjoy their employment, if possible, so long as their higher morale doesn't come at the expense of others.

Another concern is to what extent Federal workers may be defined as "part of the problem," or if, indeed, there is a problem. The term "red tape" has become synonymous with the piles of regulations, rules, and guidelines with which the Federal government runs itself and aspects of the country. Meier (1993) and others have labeled the bureaucracy the "Fourth Branch of Government." Assuming that this statement has some truth, then the question becomes not only whether power should be granted to this branch of government but also to what degree this delegation of power is helpful or harmful. While the bureaucracy may be derided as "unrepresentative" because they are not elected, they are in other senses very representative (Goodsell 1994). If bureaucracy forms a check on government, and particularly on the executive, it can be argued that a strong bureaucracy may be needed simply to form an obstruction on a too-zealous administration (Wilson 1995). Moreover, the "red tape" of today was created by the legislation of yesterday and attempts to get rid of it imply that the current administration's wisdom surpasses that of the accumulated residue of the past, a point worth debating.

Finally, and this may the most important of all, there is the question of government, including the Federal government, as an institution and the role of its personnel in representing that institution. Most societies have one or more major institutions that bind them together. In Burma, for example, it is the Buddhist Church and the family (Eliot 1993). In the former Eastern bloc countries, this institution was the Communist Party. In Japan, often the point of comparison today, the major social institution is the trading company. In the United States, the far more limited government of the 19th century functioned in an environment of strong nuclear and extended families and influential churches. Only occasionally did companies, such as Pullman or various mining firms, act as social institutions. Times have changed, and the pace of change has accelerated recently. The most important trend in American society during the eighties was the disintegration of the nuclear family. As a result, by default, the only strong institution remaining is government, which has often, for better or worse, come to act as American society's church, family, and company.

This gives the position of government worker, by default, a moral obligation as "servant of the public interest." Unlike a private firm, the government worker is expected to, often forced by regulation, exemplify a very American set of beliefs in fairness, honesty, and devotion to the common cause. Thus the OPM and the Federal agencies felt obligated to (MSPB 1989) produce a work force that mirrored American society; to do otherwise would not be "fair." While American government workers are sometimes criticized as being wasteful, their reputation is far higher in terms of honesty and integrity surpasses that of almost any our major competitors (Goodsell 1994).

There is evidence, also, that Federal workers take this role model role seriously. This is perhaps best illustrated by the surveys on the Whistle-blowers conducted by the government. In the most recent survey (MSPB 1993), the most common reasons for reporting fraud, waste, and abuse were: it might endanger someone (96%); something might done (69%); immunity from reprisal (69%); and the activity was serious in cost (69%). Except for the concern about reprisals, this is almost a working definition of the term "public interest." The lowest of all reasons listed for reporting was cash reward (28%). Individuals reported in spite of the fact that almost half (47%) of those reporting experienced retaliation. A more general demonstration of this sense of high moral standard of government workers in general is shown by the results of a survey of government officials in the American Society for Public Administrators (Bowman 1990) which found that a whopping 90% considered governmental morality at least equal to if not higher than that of business. As one anonymous respondent wrote:

"Government and business ethics are not the same; since the public service must be seen as absolutely above reproach, it is just not good enough to follow the examples seen every day in the private sector."

This suggests that a decline in morale, leading to a decline in quality of Federal workers, could lead to serious consequences. Not only should government in general, and the Federal government in this instance, attract capable persons, it must also attract persons capable of continuing to exemplify the ideals of public serving. Retaining and inspiring "good people," then, is as important as retaining "good performers."



E. Why Should This Be on the Public Agenda-- Again

The coming Federal morale crisis needs to be put on the public agenda. As other sections have shown, morale is low. A downsizing, particularly a downsizing done in an inappropriate manner, will lead to lower morale, which in turn will lead to lower government performance in terms of goods and services. Moreover, the preceding section suggests that Federal workers perform a number of roles that are in addition to, or at least different from, than that of business workers. Accordingly, poor morale across the Federal government can have more far-reaching consequences than that in General Motors or IBM.

The concern about problems in the Federal personnel sector is not new. In fact, this is a second "crisis" in Federal personnel. In order to better understand the emerging crisis, it's necessary to review some historical development of the factors of Federal employment and the conditions that led to and through the first crisis.


II. Background

A. The First "Quiet Crisis" in Public Service

While the issue of government performance has been the subject of multiple studies, an interest in motivating, or even what motivates, Federal employees is of relatively recent origin. The Commission on Public Service, headed by Paul Volcker, first called attention to what was termed a "Quiet Crisis" in public service. The Volcker Commission's concern, and it was generally called the Volcker Commission, was that the Federal government could demonstrably no longer attract and hold high quality personnel. Accordingly, the Commission focused its attention on the related issues of Federal retention and recruitment.

Unlike some other governmental committee leaders of the past , Volcker believed in public service. Furthermore, his highly touted tenure as chairman of the Federal Reserve, during which inflation was tamed, seemed to prove the value of the public sector he defended. Volcker recruited bipartisan-partisan supporters to his commission, including Jerry Ford and Walter Mondale. The Commission operated independently of the government and yet could claim the public endorsement of then-president George Bush, himself an ex-bureaucrat, who shared the Commission's philosophy though he didn't always agree with its recommendations.

While Volcker's work called public attention to the problem, the situation had been slowly building towards a crisis since the late sixties through the gradual decay of what. Barbara Romzek (1990) and other personnel scholars describe as the "contract" that binds employers to employee, the employee in this case being the Federal worker. There are two aspects to this contract: one is compensatory, what is paid directly or indirectly; and the other psychological, an employee's feeling of attachment and commitment. So long as these ties are sufficient strong, the worker remains "with" the employer both in terms of physically coming to work and mentally in dedication to performance. Like any contract, both sides have obligations, but often the most important terms of the contract are unwritten, such as IBM's legendary unwillingness to lay off workers. Morale may be perceived as a rough, pinpoint, measure of employee feelings of commitment to the employer. Given this orientation, it's necessary to explore the evolution of the Federal "contract" with its workers from about 1970 to the first crisis.

In terms of compensation, the most important incentives that Federal employees had to stay, in the past, were pay and, especially, the pension program. Pay fluctuated in value over time, but generally fell in comparison with that offered in the private sector (Lewis 1991). By 1990, the MSPB (1990d) estimated Federal pay to be about 75% that awarded to those in similar positions in the private sector. The Federal pension plan was, historically, an equally important portion of the compensatory contract. Leaving the older Civil Service pension program imposed a penalty on the employee estimated to be quadruple that in private industry (1990d). The new FERS program provided less of an incentive. An MSPB (1990d ) study found that while 72% under the old Civil Service program saw this as a reason to stay with the Federal government, only 52% viewed the newer FERS system as a reason for staying.

Within the Federal government, the psychological commitment was not one of, as in the case of private industry, pride in product but pride in public service. This sense of Federal "mission" was probably most pronounced during the administrations of Roosevelt, Kennedy, and Johnson. The psychological value of remaining with the Federal government, however, deteriorated also. One reason for this decline was a loss of sense of clear mission. As successive administrations deepened the level of political appointees (Commission on Public Service 1989), and their tenures shortened, agency goals and objectives became more political and less consistent. As one career civil servant remarked (Philip Lark quoted in Hayman, 1994, p. 56): "I've been in government for 22 years, and most of the time people come in and say that whatever happened before they came in was bad and needs to be changed."

The eroding image of the Federal government further damaged this sense of psychological commitment. Jimmy Carter and Ronald Reagan ran administrations and campaigns that were explicitly anti-government, often implicitly anti-government worker. The MSPB (1990d, ii) found "public image of Federal employees" cited by only 8% as a reason for remaining with the government, a decrease from 1986 (14%), and one of the stronger reason for leaving (20%).

By 1990, MSPB (1990d) concluded that factors traditionally viewed as reasons to stay with Federal employment all declined during the period from 1986-1989, including: intrinsic value of work; salary; health benefits; and opportunity to have an impact on public affairs. This led John H. Trattner (1988) to conclude that the office of OPM director would be one of the 100 toughest management and policy-making jobs to fill in Washington: "A major problem facing the next Director of OPM is re-establishing some credibility with the Federal work force."

The Federal employee's "unwritten contract," of the sixties then, called for certain things from the government. The worker expected a salary and pension that, considered together, equaled that of a private sector and a secure job. On a psychological level, the worker expected the reward of working for the public and doing things generally considered to be good. Clearly, by 1990, the value of the Federal government's commitment to the employee had deteriorated. Salaries and retirement no longer equaled that of private sector; public perception and doubt made government work seem increasingly less worthwhile. About the only thing Federal government offered was relative job security (MSPB 1990c). Thus, unsurprisingly, the Federal service found itself having serious recruiting difficulties and losing valuable people. As a member of the Volcker Commission, Harry Freeman (in Lewis 1991) concluded:

"Not so long ago, talented people form the private sector.....could be recruited rather easily into the public sector. As a general rule, government service no longer attracts the same caliber of talent that it did in years gone by."

Thus, the situation had reached the level that it was labeled (MSPB 1990d) a crisis, a term jointly offered by both the Democratic-leaning Brookings Institution and the more Republican American Enterprise Institute.

B. The Problem Seemed to Be Solved

Remedies were tried, and success seemed to follow. Volcker's highly-public statements influenced the government into commissioning its own studies, including OPM's Civil Service 2000, a vision for a future Federal work force, and MSPB's Who is Leaving the Federal Government (1989), Why are Employees Leaving the Federal Government (1990d), and Attracting and Selecting Quality Applicants for Federal Employment (1990a).

The Volcker Commission offered a number of recommendations for improving the Federal Service (Crum 1990). These are worth listing:

1) rebuilding student interest
2) recruiting the best graduate students
3) Opening new channels of communication [between management and workers, workers and the public]
4) simplifying the recruiting process
5) increasing the representation of minorities

Government studies by the MSPB and OPM agreed with the general conclusion of the Volcker Commission. Agencies and the OPM launched a number of initiatives intended to meet these needs. Programs included granting more direct-hire authority to agencies, simplified hiring procedures, and more targeted recruiting of minorities (MSPB 1990a).

It seemed, by 1990, that the government had achieved considerable success. OPM could claim that the government work force mirrored that of the larger society (1990d) in gender and ethnic diversity. Moreover, employee satisfaction was up (MSPB 1994a) and up in most departments. The number of employees who'd recommend the government as an employer improved to 67% from only 50% four years earlier. The number of departing employees perceived as above average fell from 56% to 51% while the percentage of new hires perceived as excellent rose from 36% to 39%. Supervisors at all levels perceived a higher quality of recruits joining the government. The "crisis" seemed to be over.

A number of factors explain the relative success of the campaign. First, a general economic down-turn and downsizing in industry made government employment seem relatively, though not absolutely, more attractive in terms of its compensation. Second, the Volcker Commission and its statements raised the prestige of the Federal service and put the issue on the policy agenda. Third, Federal employment remained relatively stable. Moreover, then president Bush's public statements showed a great appreciation of the merits of Federal personnel. Bush (quoted in Shuger, p. 39) waxed:

"The civil service is a unique and talented mix of people with diverse skills and abilities that can't be found anywhere else in the world, and their hard work is seen not only seen in Washington, but in communities across the country."

Unfortunately, the climate for government has changed. While industry employment levels remain relatively stable, especially for the college-educated, the Federal government is experiencing the downsizing. Moreover, Volcker has returned to active public service, and President Bush was retired. The Clinton administration did not renew the funding of the Volcker-started National Advisory Council on the Public Service. The Clinton administration, while often making pronouncements about public service, lacks credibility with Federal employees, a situation Vice-President Gore has referred to as a "trust deficit." In other words, compensation is again relatively less attractive and government service is seemingly less valued. Finally, if security was considered the strongest remaining attraction for remaining in the Federal service, downsizing threatens to remove it as well.

Having explored, then, the origins of the Federal morale crisis and some of its implications for the future, it's next necessary to consider the policy environment in which it might be addressed.


III. Key Conflicts and Concerns

A. The Governmental Employee in the Theory of Bureaucratic Downsizing

American claims to want less government are legendary, but theory has seldom met practice. Government was and is perceived as intrusive, annoying, and unnecessary. American Federal workers, then, as Goodsell (1994) notes are often hated in the abstract while perceived more favorably one-on-one. Americans see no contradiction in decrying a large government while enjoying its services. Presidents share this ambivalence. Reagan, for example, promised to get government "off our backs" while actually expanding the scope and size of that same government (Levine 1986).

The current budget crisis, rising taxes, and general knowledge that government has, for years, been spending more than it earns, has forced an accounting of sorts. The public wants to know where all that money is going and has gone. To politicians, providing the correct answer, that all that money is being spent in programs that are politically untouchable, provides no political capital; to shirk all responsibility seems irresponsible. The more politically convenient answer, for the politician, then is to blame as much as seems plausible on the incompetence and waste of the Federal employee. Both parties, then, in coming up with proposals to "trim the government" have several, often competing, purposes in mind: genuine savings; better performance; less cost; "punishing" workers perceived as incompetent; distracting the public from more politically dangerous items on the budget; wasting time until the next election. Given this, actually improving the conditions of Federal employment, or even evoking much public interest, would be, at best, politically risky.

This lack of political support comes as no surprise to Federal employees. Successive administrations have been promising to gut the bureaucracy for years. The difference is that, this time, budgetary urgency linked to public anger mean that things will happen. Putting this into business terms, the election of 1992 represented a kind of hostile takeover, and the bi-election brought in an equally hostile board of directors.

In order to help predict the current policy climate for Federal personnel requires consideration of the two main bureaucracy-cutters, Gore and Gingrich. To compare and contrast them, this discussion will follow upon a comment by a University of Oklahoma public policy professor (Cox 1995) who claims that in every American politician you can find either a Hamiltonian or a Jeffersonian.

Jeffersonians believe that government should be as limited as possible. Accordingly, they tend to perceive public servants as probably superfluous and possibly dangerous. Since Jeffersonians believe government can and/or should perform little, allocating it the best personnel is inherently incorrect. The best Jeffersonian approach would be to get the cheapest people who can reasonably perform the job and to invest just enough so they perform the job. Speaker Newt Gingrich is the Jeffersonian in this instance. His list of things the government shouldn't do is generally social. Government agencies he would discard include NASA ("Gingrich Criticizes NASA" 1995), the National Endowment for the Arts, the National Endowment for the Humanities, the Corporation for Public Broadcasting, the Small Business Association, and the entire Education, Energy, and Commerce Departments (Barnes 1995).

The Hamiltonians, in contrast, believe that government can and should intervene in important affairs of the state, especially the economy. Since government can be effective, it follows that it needs to attract and hold its share of the best and the brightest. Vice-President Gore, head of the National Performance Review, follows an essentially Hamiltonian viewpoint-with a business administration twist. The NPR's inspirational tome, Reinventing Government, by David Osborne and Ted Gaebler, relies heavily on anecdotes drawn from business. By implying that the private sector is outperforming the public sector (Masden 1995) it criticizes the Federal worker. As Charles Goodsell (1994, p. 179) remarks:

"The reinvention movement has, however, accomplished one thing. It has turned the Washington establishment and much of the public management fraternity back in the direction of the mind-set of the Reagan era. Once again we are assuming that public servants do not serve and that bureaucracy does not work."

If government is perceived as a business, then the key consideration is how well it delivers goods and services, i.e. efficiency. Accordingly, the NPR evaluates departments and agencies on their ability to "deliver the goods." Anything that prevents efficient delivery, such as poorly performing public servants, should be swept away. Poorly performing agencies, just like poorly performing company subsidiaries, should be spun off, consolidated, or liquidated.

As far as the Federal worker is concerned, then, either philosophy promises potential danger. The only difference is in whether their jobs disappears through performance review or through agency extinction. For the Federal employee, then, either version of the new Federal contract promises low pay, poor public image, and a reasonable, but unlikely, retirement. From either party, one can predict action that would lead to worsening Federal morale. As one survey respondent remarked (MSPB 1994):

"Employees who are in constant jeopardy of losing their jobs are not going to be as productive. They feel the Government has no loyalty to them, so they respond the same way. An employee is going to be as good as his or her employer."

Neither party, at this point, promises to make the Federal government into a very good employer.


C. Downsizing in Action: What Has Happened So Far and What It Portends

This is one of those rare occasions in United States history in which there's a relatively bipartisan consensus on a course of action, in this case governmental downsizing. With both sides united in their aims, the only real disputes concern specifics. A main distinction is that, while the Republicans are working through the Senate, and, especially the House, in order to legislate a smaller government, Clinton and especially Gore's Reinventing Government ("ReGo") committees are working directly through the departments and agencies. While both have a common goal of reducing the Federal government, they have no interest in sharing the credit for what they think will be certain political rewards.

The Clinton administration, having a two-year head start, took action first with buyouts, personnel ceilings, and a hiring freeze. The Federal Workforce Restructuring Act, mandated a reduction of 272,000 jobs during fiscal years 1994-1999. This would reduce the ratio of the Federal workforce per 1000 to 10.7 from 14.9 in 1970, according the Office of Management and Budget (OBM 1995), the agency that Clinton chose to accept most responsibility for the downsizing. The Clinton administration also expressed its will to "rule by decree," using executive orders, if necessary, to achieve its goals.

Perhaps the most instructive way of observing what is happening is to examine the changes at the OPM. Technically in charge of Federal personnel policy, OPM should've been selected to run the downsizing. Though it has been argued the OPM is understaffed to handle its current personnel responsibilities (MSPB 1989a and 1989b), James B. King, Clinton's political appointee, made it clear that he wanted to make OPM a model leaner and meaner agency. Steps to do this included reducing the 10,000 page personnel manual to a fraction of its former size, cutting 31% of his managers, and discarding 240 jobs. While King acknowledged that a little kindness, in terms of buy-outs as opposed to RIFs, was not only cheaper but friendlier, King's emphasis ("Reinventing Government 1994," p. 9) clearly centered on economics and efficiency: "I am defining success as smaller...We can work smarter. We can have more product with fewer people, and we had better understand that."

By reducing the number of career civil service managers and not their political bosses, for whom there was no "hiring freeze," Gore's team effectively strengthens the power of the president over the executive branch, continuing a trend that can be traced back to the Nixon presidency (Commission on Public Service 1989) and criticized by the Volcker Commission.

After the Republican Congressional victory, the Clinton administration intensified its effort. For example, the original civil service "reform" bill (Rivenbark 1995) planned to give the Unions expanded bargaining rights; this was scrapped though clauses about negotiating performance issues remained. The new bill contained a number of changes designed to give managers more power over workers, including enhancing their power to fire poor performers; extending the length of employment probation (in which 25% of all employees are terminated) from one to three year; and extending the length of time for temporary employment to a possible five years. In other words, Clinton would give managers, and public appointees, the power to terminate at least as easily as any business.

Moreover, the Gore team went after not only excess workers, but functions as well. Gore went to the extent of actually calling three Federal departments and two agencies in to "justify" their existence (Shoop 1995), including the Office of Personnel Management (OPM).

The Republican forces had to wait until they controlled the House to launch their program. Gingrich and others made a number of public statements as to which departments and agencies they considered superfluous. Unlike Clinton, moreover, at first it appeared they would have to move through legislation, risking a presidential veto. Gingrich, however, expressed his willingness to have the House simply not fund a disliked program (Barnes 1993), the so-called "zero option." This has the advantage of needing neither the approval of the President nor even the Senate.

As for the Federal workers, it would seem that they have no advocates. The most relevant act covering their employment, the Civil Service Reform Act, Pub. L. No. 95-454, 92 Stat. 111 (1978), only provides for general guidelines of fairness and prohibits such practices as discrimination, unequal pay, termination for political action, or reprisal for "blowing the whistle." So long as all employees were terminated in an arguably fair manner, the merit principle could be defended. The Clinton administration held out the olive branch of extending bargaining rights to more workers, but as Federal workers cannot strike and have considerably curtailed bargaining rights, the unions would not be an effective force for defending Federal worker rights.

On the other hand, there was another, less predictable, force involved in the struggle, the often self-contradictory chimera of public opinion. It has been noted in several studies (Goodsell 1994) that governmental organizations have twice the survival rate of business organizations. Mahtesian (1992) finds the sun "rare sets on state bureaucracy." There are some reasons for this. A recent survey (Galen 1995) found that while only 6% thought that the Federal government performed well, 44% advocated some dramatic restructuring, and 49% an advocated an approach more akin to fine tuning, giving neither Gore nor Gingrich a clear public mandate. Moreover, out of eight different departments and bureaus listed, the public didn't favor eliminating a single one. This suggests that while a sudden disappearance of a department might be an omnipresent fear for Federal workers, it's more likely that workers will disappear across the board. Budget-cutters, at least on the Democratic side, may use the threat of program termination to force unwieldy managers into reaching personnel reduction targets by other means.

The government of the future will then look very different from the present. Some functions, those few on which something like public agreement can be found, will disappear or be returned to the states. Surviving departments and agencies, stripped of their middle managers and with much more focused missions, will be "leaner and meaner" in many senses of the word. As the number of managers decreases, departments and agencies, under political heads, will perform better, increasing the power of the president. A side-effect will be that with each new presidency, a higher percentage of each agency will be bled than previously, leaving agencies the task of re-re-inventing themselves. In short, the future Federal employee will face instability, insecurity, and continuing doubts about the value of public service.


D. The Policy Constraints of Fact, Fiction, and Fantasy: Softening the Blows of a Hostile Take-over

Given the political climate, then, solutions to the problem of improving Federal morale have to meet a number of constraints. First, they have to be cost-neutral. For either party, or a governmental body, to recommend anything that costs more money than is currently being spent would simply not sell to policy-makers or, just as importantly, the public.

Second, any policy option must, in some way, improve the Federal contract. Current conditions of low pay, a denigrated job, a hostile employer, and no security will not attract talented, dedicated people to the Federal service.

Third, any policy chosen must be politically correct, given the new politics of the bureaucracy-trimmers. Within the Gore paradigm, the easiest means of justifying change is by improved service even if figures proving improved service are somewhat fanciful. Within the Gingrich paradigm, ideally, a program would either commit suicide or fade away if not essential. More realistically, some programs, and their workers, might end up transferred to state and local governments.

IV Reviewing Policy Alternatives

A. Policy Choices: Toward A New Federal Worker Contract

Choose Your Ideology

There are a number of different ways that policy-makers can react to the morale crisis, even within the constraints listed above. Perhaps the best way of sorting these reactions would be to group them by their ideological orientation. This is to not to imply, however, that a combination of these programs might not work best or that differing agencies might not choose differing solutions.


B. True Jeffersonian Thought

With this ideology, you don't worry much about Federal workers as they're relatively irrelevant. Since economic opportunity is most important, so long as they've received some education, any obligation ends on the day of dismissal. If government performance is not very important, a decrease in performance will hardly be noticed, and a decrease in influence is welcome. On the other hand, Gingrich himself has, following Clinton's lead, lately asked prominent businessmen for advice as to what works in a downsizing ("Washington Wire: Gingrich Asks" 1995), so there may be some shifting of position leaving no true Jeffersonian advocate. Then again, after his election as president, it's questionable whether Jefferson remained a Jeffersonian.



C. Hamiltonian With a BA Twist Choices

Under this ideology, you assume that government can perform well only if it has the best-performing people. As a result, then, the Federal government must build a culture of high performance in the midst of cutbacks. As this ideology assumes a bottom line, the ideas to be most highly regarded can be most easily cost justified. As compensation is generally regarded as a necessary, but not sufficient, condition for retaining employee commitment in the private sector, the point of departure, some form of compensation needs to be offered to the Federal employee in return for the decreased security of working for the far riskier employer that government will become.

The most straight-forward way of improving compensation is to raise salaries. This is a solution that has been tried, in different ways, by industry. Labatts (Charles 1995) spent an average of $500 Canadian dollars, per employees, in counseling sessions to deal with the effects of downsizing. The Volcker Commission recommended increasing the pay of the Senior Executive Service (Ferris 1989). A study published in Congressional Quarterly agreed (Landers 1990) and went so far as to label Federal executive underpayment "dangerous." Also popular (Farrell 1989) is giving employees the opportunity to buy stock meaning, in this case, perhaps Savings Bonds. The obvious drawback of this strategy is that it costs something; politically, a solution that costs nothing would far easier to implement.

Another possibility is to simply redistribute the amount already paid, hopefully inspiring everyone while only paying the "winners." This has been tried in a number of businesses (Hanke 1994). The senior executive service, which has such a system (MSPB 1990d), registered the highest percentage (63%) in favor of this kind of system, suggesting a measure of success. A major problem with any incentive system, as it now stands, is that you have to decide whom to award, and few workers perceive (MSPB 1990a, MSPB 1994) the present employee evaluation system as either fair or accurate. As the head of Education department (Hayman 1994) summarizes: "It is bureaucratic, burdensome, totally fallacious, doesn't accomplish a goddamn thing. You can justify any decision you want." On the other hand, this solution would provide the justification and data to punish poor performers and reward good performers and is already being proposed by the Clinton administration (Rivenback 1995).

A different approach is to improve the non-monetary benefits of Federal employees. One way in which to do this is to address family issues. The Federal government is already experimenting, like many private firms (Laabs 1993) with child-care and flex-time (Alvareztorres 1989) to allow parents with children a better opportunity to enjoy continued employment (Martinez, Overman, and Thornburg 1990). A revenue neutral method of increasing loyalty of younger workers might be to increase the funds spent on family-issues by decreasing the amount invested in pensions. This would have the effect of building short term loyalty while sacrificing long term loyalty. The drawback of this approach is that, while firms that have attempted to increase family benefits report increases in productivity, the evidence can be challenged.


D. True Hamiltonian

The true Hamiltonian position emphasizes that positive government is important. As a result, government service calls for, not just competence, but dedication. Such a dedication is only built over time and requires a highly level of psychological commitment. As a result, the employer needs to invest in that commitment. This is the position endorsed by private sector firms who have ridden out a downsizing.

Some of the mostly highly recommended strategies, thankfully, cost nothing. One that is emphasized over and over again is that management, including top management, must open lines of communication to workers to let them know that they are heard and valued. Surviving employees want reassurance and the ability to overcome (Kiechel 1988, p. 149 ) survivor's guilt: "People don't fear extinction; they fear extinction without meaning." Some magazines advocate counseling for employees who survive cuts (Bredin 1988).

Equally recommended, both to cope with downsizing and as a general morale-raising strategy, is various forms of employee participation. This is an approach that follows, to some degree, the beliefs of Demings (Elmuti, Kathawala, and Wayland 1992), and is more often offered also as a solution to poor quality. Demings believes that "people want to work, but they want to take joy in their work." Accordingly, Demings and his followers believe that every opportunity should be made to involve employees. The simplest method is through work groups (Cook 1995; Blumenstyk 1993). Further down the communal line is "empowerment" where employees actually have some say in things such as product development and performance evaluation (Waterman 1994), self-directed work groups (Kleiner and Zuidema, 1994), and TQM (Caldwell 1994). McClellan Air Force Base's (MSPB 1992b) civilian work force found success with a Demings-style system and arguably cut costs. Some 80% of all Fortune's top 1000 firms instituted at least some form of token employee participation, and the dean of the University of Michigan business school dubbed empowerment "a buzz word for the 90s." This approach has been embraced, somewhat, by the formation of labor-management partnership units at 32 agencies and the 135 "reinvention labs" by the Gore commission (Miller 1994). Management experts, however, warn that to embrace high amounts of worker "empowerment" requires a major change in culture and attitudes, acquired through a training investment, and that even in many of the "empowered" firms, commitment is not deep enough for results. Further, savings are often hard to document and not beyond challenge.

Another method of building worker commitment is through training and out placement. High technology companies, whether downsizing or not (Waterman 1994; King 1995) invest heavily in retraining as means of maintaining morale and a competitive edge. Small firms (Szabo 1992; Gersh 1993) found improved worker morale as well as greater flexibility. An obvious problem with training is that it costs money, at least in the short term. Several advantages include that it would allow the government to provide something of the longevity of the past by allowing more workers to shift positions. Moreover, the Civil Service Reform Act explicitly provides for retraining as a right of Federal workers. Beyond this, the MSPB (1990d) found that only 42% of Federal employees thought that they were being trained in the new technology, implying that more training could increase productivity as well as morale.

Outplacement is the industry term for placing an employee with another firm. With the Federal government's size, there's no reason that the OPM couldn't act as an in-house outplacement firm, placing Federal employees both within other departments and out of the government. This would have the effect both of retaining top employers (they could even be re-inplaced) and of providing, again, some of that sense of security that used to be a part of the Federal contract. As importantly, outplacement demonstrates to survivors that Federal workers are cared about and not simply discarded.

Finally, the cheapest alternative for improving employee morale is to say "thank you," according to some management experts. Studies show that, within a certain range, employees are more motivated by simple appreciation than by compensation (Gill 1995). This re-enforces the theories of Maslow that, once primary needs are satisfied, humans strive toward self-fulfillment and development. Studies among nurses, for example, indicate that the most valued form of reward for performance was verbal recognition (Blegen, Cram, Goode, and Ibarra 1993).


E. Washingtonian Options

In a way, Washington was the nation's first civil servant as he was the first president. The example he set was of long, faithful, but not always efficient or effective, service. It can be argued that this quiet dedication, through Washington's own several morale crises, set the stage for the Civil Service.

In an age of mass communication, a relatively silent example may not be public enough, especially when those who wish to criticize Federal workers have nearly unlimited access to the mass media. The most effective means of improving the morale of Federal personnel, then, may be through more publicity. Certainly the Gulf War enhanced the image of the Armed Forces. A public campaign, a Congressional Medal of Bureaucratic Honor, or a television show ("Bureaucrat of the Week"), might be a relatively inexpensive way of changing public perceptions an improving morale in the Federal service.


V Summary and Recommendations

A. Summary

To summarize, then, the Federal government is facing a coming morale crisis. Over time, Federal employment has declined in terms of its compensatory and psychological benefits. The coming downsizing will, as in the case of industry, threaten morale further. The example of the private sector shows that, unless handled properly, downsizing leads not only to lower employee commitment, but also to lower performance. A number of reasons exist besides performance to be concerned about the possibility of a lowering of standards in Federal work force. The Federal work force handles a substantial portion of the national economy, is in some sense a fourth branch of government, and continues to display high moral standards in a country where most other social institutions are crumbling.

In the past, the issue of maintaining the quality of the Federal work force was addressed. The Bush administration showed interest in Federal personnel while the Volcker Commission provided a public presence. By the end of the Bush presidency, it appeared the problem had been solved. As the government begins another round of cut-backs, and both parties assume essentially anti-governmental worker postures, the situation is worse than before the Volcker Commission. While the Clinton administration, under Gore, talks about workers, it's goals are budgetary. Republican opponents in the Senate are primarily focused on a general reduction in governmental function. As yet, neither side has expressed much more than a desultory interest in maintaining personnel quality or a belief that this represents an important issue.


B. Policy Recommendations

Given the constraints under which present policy issue is being considered, especially budgetary constraints and the general anti-governmental mood of the public, I make the following recommendations.

First, bring the issue of Federal personnel morale back onto the public agenda. An obvious step would be to refund the successor to the Volcker Commission. Given budgetary constraints, a more realistic option would be a privately funded commission. The ideal person to head this commission would be former president Bush, but a next best choice would be a career civil servant of obvious and conspicuous talent, who is apolitical, such as Colin Powell [the issue could be expanded to include the military]. Within the government, the obvious agency to bring forth this issue is the Merit System Protection Board. While the MSPB produces a number of excellent studies, outside of governmental circles they make no impact. A suggestion might be that the MSPB release a synopsis of its more interesting findings to prominent and popular periodicals in as non-academic a style as is feasible.

Second, roll back, the politicization of Federal executive. The simplest, though not necessarily most effective, way of doing this is to link the percentage of schedule C, political, appointments to that of the size of Federal personnel force. This would have the obvious advantage of making politicians and political appointees more leery about discarding Federal workers. Unfortunately, there are a number of ways, such as including contractors in the total, to manipulate the apparent number of Federal workers. A better solution would be to pass a bill designating that if a political position is unfilled for a certain length of time, it becomes, until a change in administration, an SES position. Another option would be "three strikes and you're out" whereby if a position is turned down by three individuals, or three do not meet Congressional approval, the position, again, reverts. Either or both of these plans would have two important effects: they'd provide a career capstone position for the SES, and they'd insure that positions would be filled. This would avoid embarrassing situations such as that of the United States. not having an ambassador in India for nearly a year. A disadvantage of this would be that it would give Congress more power in terms of thwarting a president though not necessarily of asserting itself.

Third, "reinvent" the OPM as a true office of human resources. With the OMB, at least temporarily, in charge of cutting costs, and the OPM with less red tape to handle, this presents an opportunity for OPM to re-conceive its mission and to truly view the Federal worker as a resource to be used in an optimal fashion. One way to do this is by making OPM the central office for coordinating training and placement within the government. This would require a major investment in technology so that the entire Federal government could communicates its personnel needs and surpluses, on-line, real-time, to the OPM. This would allow increased flexibility and flow of personnel from one agency to another as the need arises. The system could be called "just in time personnel." More personnel could be retained, increasing loyalty, while allowing a tighter management of staffing budgets. A final expansion of this system would be to include the state and local governments, on-line, as well. Thus, an employee working for a Federal social program that devolves to the states, could devolve with that program. To put this in theoretical terms, this is viewing government, at least in terms of personnel, as part of an open, not a closed, system. The drawback to this strategy, obviously, is that it will cost something in terms of hardware, software, and training.

Fourth, within budget constraints, have every Federal agency offer training. Research shows employee interest in training, particularly in technical areas, and the CSRA requires these opportunities. Again, private firms view training as form of investment, not as a benefit. A very simple program would be to have each organization offer one course per term, either through local colleges, universities, or staff. While each organization would offer a class, any employee within a given area would be eligible to attend-free. Not only would this increase the skills of workers, but it would help facilitate the easy movement of personnel within agencies and assignments. This would particularly appeal to the needs of younger workers who have far less likelihood of remaining to get benefits such as enjoy retirement.

Fifth, allow at least some form of Federal employee empowerment. For government, it may not be appropriate, or even effective, to embrace an entire Demings philosophy or TQM, but some form of employee empowerment can be both cost-effective and beneficial to morale. This is true, in part, because one of the traditional duties of middle management was to provide communication between top management and workers, and this is the group that will be hardest hit by downsizing, leaving a communication gap. Except for a few experiments, the efforts by the Federal government thus far have been gestures. For starters, all employees should be involved in some form of supervisor appraisal, and all employees need a free, anonymous forum for suggestions. These proposal would cost little and yield the kind of information on performance being sought by the "reformers" among both parties.

Sixth, aggressively pursue the morale-building options that cost nothing. Again, building a pleasant office is perceived by many as an important means of morale-building, and it's almost free. Non-monetary recognition programs, moreover, arguably hold as much value with employees as monetary programs and invite a lot less cynicism than those involving the current performance appraisal system.

Seventh, allow employees, if possible, a more flexible benefits program. Doing anything to increase benefits for employees is likely to incite public and political reaction, so the cost neutrality must be presented even before the proposal. A possibility is to allow workers to reduce their pensions in order to receive more take home pay, child care, or even training.

Eighth, remember why Lee didn't let his men try charge Missionary Ridge a second time. He viewed his troops as a valuable and scare resource. He also cared.




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