Presidential Transition Notebook: Take Dismantling OPM Off the Table

A recent report from the Senior Executives Association (SEA) and the consulting firm The Center for Organizational Excellence (COE) is one of the many such reports we will see before the presidential election. The National Academy of Public Administration, the Partnership for Public Service, the Heritage Foundation, and many more organizations will weigh in on the actions the next administration should take. Like others in the federal human capital management space, I will participate in the development of some of those and offer my own ideas for reforms.

All of these organizations have a point of view. I will agree with some of their recommendations and disagree with others. Most of ideas we will see derive from a genuine interest in improving government operations. It is just that people have different views of what constitutes improvement. The SEA/COE report has some excellent ideas that I strongly support, along with a few that I would not agree with. I encourage readers to take a look at all of the recommendations various groups are making for the next Administration (whether it is Trump or Biden). In the SEA report, I am going to focus on their recommendations for the Office of Personnel Management (OPM), because OPM is an essential component to any civil service reform effort.

The report recommends “Reform the US Office of Personnel Management (OPM) into an efficient, effective, strategic, and credible governor of government-wide human capital that supports both mission-delivery and meeting the future needs of government.” I agree with that broad recommendation. When we get into details, some of my views differ. Here are three recommendations from the report that I believe are very sound, and some that I believe would not have good outcomes:

Streamline and Simplify the Personnel Regulations. Federal HR regulations are more complicated than they need to be. Job classification is a burdensome process, pay is even more complex. Hiring processes are so fragmented that agencies often do not use the authorities they already have. A thorough top to bottom scrub of HR regulations is essential as a starting point for real reform. In fact, much of what needs to be done to improve federal HR practices can be done without statutory reform. Accomplishing that will require OPM to reset its approach, with an eye toward giving agencies all of the flexibility the law allows. Too often OPM has been timid in its approach to reform, and too restrictive in its regulations and approvals.

Enhance the Capacity of the Chief Human Capital Officers Council. The CHCO Council has had its ups and downs since it was established by the Chief Human Capital Officers (CHCO) Act of 2002. At times, OPM and the CHCO Council have worked closely together, shared resources, and gotten things done. At other times, they have been like ships passing in the night. It is essential that the CHCOs and OPM work closely together. I would expand on this recommendation and designate the CHCO Council as a quasi-Board of Directors for OPM, with authority to set priorities for OPM policy development activities.

Establish the Office of Strategic Programs within OPM. OPM has lacked a strategic focus for many years. Individual leaders within the agency have attempted to provide that focus, but it is difficult to lead from the middle of the organization. The lack of strategic focus results in ad hoc policy development, disjointed programs, and a whole that is less than the sum of its parts. A Strategic Programs Office, working closely with a revitalized CHCO Council, could be far more effective in making use of the authorities already present in the law, and identifying areas where statutory changes are required. They could make better use of HR data, provide a business case for major initiatives, and identify the risks that endanger the success of human capital programs.

Reorganize OPM into four primary functional areas, make the director a term position for 5 – 8 years, and move the Merit System Accountability function under HR Programs. I understand the motivation behind wanting to tinker with the boxes in OPM, but OPM’s problems are caused by its culture and lack of funding and external support rather than its organization structure. In particular, I believe the recommendation to put policy and accountability in the same office within OPM creates an organizational conflict of interest that cannot be overcome. In order to maintain the integrity of OPM’s oversight functions, they cannot be paired with the policy functions in the same division. The idea of extending the 4-year term of the OPM Director is sound. I understand the motivation for having a term that could cross presidential administrations, but the truth is that the President can fire the OPM Director at any time, and a longer term will not change that. A more useful reform would be to convert the OPM Deputy Director position from a Senate-conformed political appointee to a career-reserved Senior Executive Service position and designating that job, by law, as the “first assistant” for purposes of the Vacancies Act. That would mean that when a vacancy occurs in the OPM Director position, the career deputy would act as Director.

Sunset Human Resources Solutions (HRS), fund OPM with appropriated dollars, move facilities management and procurement to GSA, reengineer Healthcare and Insurance if needed and determine if it should remain in OPM or be moved. Human Resources Solutions has been a controversial part of OPM following the National Performance Review during the Clinton Administration. OPM has to sell services to pay its bills. In some respects, that presents a conflict of interest. OPM write the rules, sells services, and provides oversight. There are, however, aspects of HRS that make sense for OPM to manage, and to charge fees for doing so. For example, OPM runs the outstanding Federal Executive Institute (FEI). FEI provides superb training for federal executives and charges a fee for their services. That makes sense and does not present any significant conflict of interest. OPM also offers services in organizational development that do not really present a conflict of interest and can be done on a fee basis. Other services OPM offers could present a conflict, and a thorough review should be conducted to identify those services and divest them. The facilities and procurement services make more sense to leave in OPM. It is an independent federal agency, so it should have the ability to manage its own support services and choose its own service providers. The last part of this set of recommendations concerns healthcare and insurance. OPM provides excellent services in these areas and the Federal Employees Health Benefits Program is a model for large scale health insurance programs. Their costs are reasonable. I have argued for many years that they represent some of the best programs in OPM. There is no reason to move them, consider moving them, or disrupt them in any way. Doing so runs the risk of breaking a part of OPM that is not broken. If we want OPM to evolve into a high performing organization, taking the best parts out and giving them away is not a good way to start.

The part of OPM that needed to go was the background investigations group. That move has happened. The need now is not divestiture, but rather a strong focus on rebuilding the culture of OPM, getting the agency on a sound financial footing, and restoring a focus on policy development and oversight.

I believe it is safe to say that virtually every good government group that looks at federal HR is going to say that OPM and overall human capital management need to be fixed. Where we will see divergence is in the fixes. Should the private sector do more? Should we simplify the merit system? Should we base federal pay on market forces? Should we use more contractors? Should we use fewer contractors? Should we rewrite the law? Or just the regulations? Or both? How do we make OPM more effective? Transition recommendations for the next Administration are all offering value. They start a discussion, put ideas on the mix, and, if we are lucky, might actually result in some real reforms.

 

How Racism in HR Practices Hides in Plain Sight

With all of the attention being paid to racism in our society, there is a lot of talk about systemic racism. I hear arguments that there is no such thing as systemic racism, that systemic racism is everywhere, and everything in between. Having spent decades involved in federal hiring programs, following are some thoughts on racism in hiring and other federal human resources practices.

Let’s begin with some definition of what this post is about. It is not about overt racism. We have all seen racists who own their racism and are happy to espouse every kind of negative view of people of races that are not their own. That kind of racism is obvious, deliberate, and has generally decreased in our society. This post is about racism that is far more subtle, and typically not deliberate. It is baked into the process, but the ingredient was not listed on the recipe as “1 cup of racism.” It was put there as something else, but the outcome disadvantages people based upon their race or other factors that are not really about merit.

Qualifications requirements are one of the biggest sources of racism in hiring and promotion. They are described as being the core of merit-based hiring, but are they really? If an agency decides it wants to hire only people with Bachelor’s degrees, but the job does not require a degree and the agency has no proof that a degree leads to higher performance, the agency is discriminating against people who lack a particular credential that is not needed for the job. When we look at this chart of census data on education and race, it becomes apparent that a degree requirement that is not valid is likely to make more white and Asian people eligible for the job, and fewer Black and Hispanic people eligible. Was the intent to be racist? Probably not, but the intent does not erase the racially biased outcome of the decision.

There are other education-related practices that can result in racial disparities. For example, I have worked with many senior executives who like to recruit at particular schools (often their alma mater). Depending on the racial makeup of the school, the result can be racial disparity. Again, those are generally not cases where the person making the recruiting decision intends to discriminate based on race, but that is still the outcome.

Racism also exists in performance ratings. A good example is the experience of the Department of Defense in implementing the now-defunct National Security Personnel System (NSPS). The outcomes of rating and bonus payouts had a measurable bias against Black employees. When I was HR Director, the Defense Logistics Agency conducted its own study of ratings, bonuses and pay raises and had similar findings, even though the Agency was aware of the risks and had taken deliberate steps to reduce the likelihood of biased outcomes. In one of the pay pools I managed, managers discussed the ratings for two employees whose performance was poor — one Black and one white. Neither was someone we would rehire if they left. The recommendation was to give the white employee a satisfactory rating and the Black employee a marginal rating. When I challenged the recommendation, there was no good reason for the disparity. None of the participating managers intended to discriminate based on race, but that would have been the outcome if the ratings were allowed to stand. Ratings-based discrimination is often the result of the inherent biases that exist in performance rating processes. Studies have shown that people tend to be more impressed with people who remind them of themselves or have similar backgrounds to their own. When executives, managers and supervisors are disproportionately white, as they are in most agencies, the outcome is often that the employees who look like those leaders get the highest ratings and biggest bonuses. In the case of NSPS, DoD found that the biases were not caused by the NSPS law itself — they actually existed before in Quality Step Increases and performance bonuses. NSPS magnified the effects of the existing biases.

Another good example of racism is in discipline and adverse actions. Although agencies generally have little readily available data on the details of disciplinary and adverse actions, data that is available often shows a higher likelihood of Black employees being suspended for more days than white employees who commit similar offenses. Black employees are also more likely to be suspended when a white employee may be reprimanded for a similar offense. When reviewing individual actions, it is easy to justify them. The problem is when we compare similarly situated employees, the outcomes are often different based on race. The lack of data for disciplinary actions (particularly the reasons why people are disciplined) makes it difficult to recognize this type of discriminatory practice and correct it. Many years ago I presented data to a Commanding Officer that proved there was bias in disciplinary actions. His response? “Destroy the report and never talk about it again.”

Agencies often rely on years of experience for hiring and promotion decisions. Length of experience can be important, but only to the degree that those years give an applicant or employee adequate time to encounter the various types of work issues that a job involves. For example, it may take a year or two or more to go through a budget cycle, a performance rating cycle, a strategic planning process, and other key tasks. One year of experience is most likely not as good as three years of experience. But what happens when we compare three years vs. 10 years? Ten versus twenty? Is there really a difference in performance? As much as those of us with decades of experience would like to think it is true, those extra years of experience most likely do not result in better performance on the job. When we favor candidates who have many years of experience, the outcome may be that people who benefited from biases in hiring years ago continue to benefit by getting preferential treatment in the hiring or promotion processes. People who were the target of those biases likewise continue to be disadvantaged. A hiring manager who focuses on years of experience may not think that is a discriminatory practice, but the outcome may be just that.

The hiring process itself is cloaked in the language of merit, yet it is remarkably subjective. Managers get to decide what constitutes well-qualified. They decide who gets interviewed and who gets selected. Even getting to the interview can be highly subjective. A 2016 study cited in a 2017 Harvard Business School article showed that minority candidates who “whitened” their resumes got significantly more callbacks than those who did not. It said “In one study, the researchers created resumes for Black and Asian applicants and sent them out for 1,600 entry-level jobs posted on job search websites in 16 metropolitan sections of the United States. Some of the resumes included information that clearly pointed out the applicants’ minority status, while others were whitened, or scrubbed of racial clues. The researchers then created email accounts and phone numbers for the applicants and observed how many were invited for interviews. Employer callbacks for resumes that were whitened fared much better in the application pile than those that included ethnic information, even though the qualifications listed were identical. Twenty-five percent of black candidates received callbacks from their whitened resumes, while only 10 percent got calls when they left ethnic details intact. Among Asians, 21 percent got calls if they used whitened resumes, whereas only 11.5 percent heard back if they sent resumes with racial references.” Is it likely that hiring managers made those decisions because they were consciously being racists? No. Does that change the outcome? No — the outcome is a racially biased process that provides an advantage to white applicants.

When I raise these issues with some people, their first response is “I’m not racist!” Then they stop listening to descriptions of ways in which racism manifests itself in management decision-making. I believe the reality is that people who grow up white do not like to admit that we may have benefited from being white in American society. We want to think that everything we accomplished was 100% our work. We point to “merit” based processes and say “See — we earned it!” An old boss of mine used to say the most important thing was his version of the Golden Rule — “He who has the gold, rules.” In our society, the gold (and the decision-making power) is still mostly in the hands of white people. We should be far more open to the idea that what we think of as merit can be influenced by who we are, where we grew up, the people we work with, and many other factors that may or may not be objectively merit-based.

I believe systemic racism exists, and can be found in federal hiring, promotion, training and other Human Resources and management practices. Rather than proclaiming “I’m not racist!” we might find we make more progress if we say “I try not to be racist” and are open to hearing about ways in which our behavior has racial impacts. No one expects the world to change instantly, but it does not change at all if we refuse to admit that there are problems.