A WORKFORCE WELL-SHOOK:  A Sequel to "Shaking Up the State Workforce, an HR Shared Services Model"

Ruth N. Bramson, Chief Human Resources Officer, Commonwealth of Massachusetts

Eighteen months ago, the Commonwealth of Massachusetts implemented a shared services model for the delivery of its human resources policies, procedures and practices.  The results to date have prompted this sequel article, which should prove useful to practitioners who are beginning this process within their organizations. 

It has been an eventful time with challenges, legislative and culture hurdles, some successes and some setbacks.  But, all in all, the Shared Services model has been received enthusiastically.  Most importantly, the model has lived up to the expectations for cost savings, less duplication of effort and as a tool to break down the fiefdoms among agencies and divisions that were interfering with the effective management of the workforce.

The initial introduction of the concept took place in 2003 when the Romney-Healey administration took the reins of government in Massachusetts with a commitment to professionalize the workforce.  With 45,000 employees in the Executive Branch and total employee population of 70,000, this was no small undertaking.   In addition to the size, this workforce is 90% unionize, with these relationships tenuous at best. 

One of the keys to our success with the HR model was our early groundwork in gaining the buy-in from the Governor and the Cabinet. A key factor of organizational life in government is the increasingly political environment in which change has to happen.  To some extent this can be understood in the context of the more fluid informal political alliances that often become the means of getting the job done.  Cross-boundary lines heighten the possibility of political behavior since loyalties can be tested when these reporting lines become less clear. Our first step was to do research and benchmark the approaches other organizations were taking with this kind of a structure.  While our structure is reasonably unique, there were sufficiently similar models to give us some base line information. We then tested the waters with our ‘customers’ to assess the level of interest and/or resistance we might encounter.  Before any outreach was done with the agencies’ HR directors, but after we surveyed many of the people who would be affected, we had lengthy conversations with the Governor and the Cabinet regarding the feasibility of this plan and their willingness to relinquish independent control of the human resources activities within their Secretariats.  These conversations and a final presentation to the Cabinet led to the approval of the HR Shared Services model and the reporting relationship change.

With the Shared Services model calling for the Secretariat Human Resources directors to report to the Chief Human Resources Officer, we have an entirely new way of initiating projects, changing policies, developing training and dealing with the myriad of responsibilities that fall under this huge umbrella.  With over 200 human resources professionals across the Commonwealth, we had training and change management issues. Everything from the way hiring requisitions are initiated to performance appraisals for the HR directors to compensation decisions and organizational design now have become part of a joint decision-making format.  At the same time, several people-intensive processes have been transformed into easier, on-line functions that are managed with less staff and greater speed but less direct control by the agencies.  These are permanent, sustainable changes.  An example of our success is the reduction of time to fill hiring requisitions from 16 weeks to 5 weeks.  Our customers have enthusiastically received this improvement.
 

Another area of focus for senior human resources central staff is leadership development.   Arguably the importance of leaders during periods of culture change and reform helps achieve several strategic objectives simultaneously.   Because we can now initiate promotions and transfers more easily with fiefdoms broken down, we are better able to identify our high potential leaders.  They are then placed in new positions that allow them to close the skill gaps needed for their next role. Using the newly developed on- line performance appraisal system, we assess the levels of core competencies, create development plans with clear career paths and orchestrate an integrated succession plan. 

If the ultimate objective of the Shared Services process is to improve the effectiveness of HR while reducing costs, then the processes that have the greatest potential for improvement and cost savings need to be identified and revamped first.   This allows for incremental improvement and builds and maintains the capabilities needed to execute business strategies better.  We have had great success in reducing human resources headcount by 25%, with a savings of over $3million in the last 18 months.  This was done with no reduction in service but a leveraging of technology to ease the burden of staff work.  By redesigning work and better sharing of resources, we have also reduced overtime costs.  An unexpected byproduct of this reorganization has been improved retention as individuals have more varied and broader responsibilities that make work more interesting for them.

yearly increases through a system of uniform steps along a continuum of salaries. Each individual received the same step increase as his co-worker unless his performance was sub-standard.  This made for an entitlement mentality.  Individuals see no tangible benefit to exerting discretionary effort to perform to their maximum potential.  However, with fewer staff and the increased speed at which government is moving, there is a need for each person to take on additional responsibility.  These conditions set the stage to move the compensation system into the 21^st century and look to ‘pay for performance’.  Managers have to make meaningful distinctions among individuals’ performance, measuring contributions and rewarding those whose contribution is most significant to the success of the organization.  With the Shared Services model in place and its operating body, the HR Advisory Council as the facilitators, we had the perfect scenario to try to do just that.  The primary value in changing the pay methodology is to identify and retain the best and brightest and encourage churn among those employees whose performance is sub-standard.  

Our first hurdle was overcoming the constraints on change because of the Massachusetts General Laws.  These set certain parameters restricting how much reform could be put in place without legislative changes.  With a strong Democratic legislature reluctant to provide easy reform to a Republican Governor, it was clear that any changes could not require legal reform.  So we set about identifying how far we could go within the limits of the current legal structure.   We discovered that there is opportunity to make significant procedural changes toward a merit system under the current laws.  A taskforce was formed made up of representatives from the various agencies. This taskforce model has been an effective subset of the Shared Services model, allowing us to draw those managers interested in working on a specific issue together to move the change forward. We had great success with taskforces to create our new performance appraisal system and one for the identification of HR metrics.  The efforts of both these cross-functional groups resulted in ACES, our on-line performance appraisal process, as well as the metrics we are using to assess the effectiveness of the shared services model in the agencies. 

A salary survey provided the data for expansion of the salary bands and the merit budget pool.  With this information in hand, salary ranges and quartiles have been set for each grade level and guidelines have been established to connect performance ratings to the merit increase grid.  Working with Executive branch managers, we are doing significant training on the salary administration changes, the compensation theory driving the process, and the challenges around cultural adaptation.  Technology changes also are being made before the system can be fully implemented.  Because of the shared ownership of the reform by all agencies under the Shared Services model, we are able to harness enthusiasm and commitment that is reducing resistance to these changes.  With over 70% of managers having the potential for greater pay increases than last year and salaries more competitive with the private sector, we anticipate a successful implementation.

And so the HR Shared Services model continues to provide the foundation for change in the way services are delivered and the workforce is managed at the Commonwealth.  Success in performing transactional activities builds the level of trust and confidence needed for agencies to engage the shared services model in higher-risk, strategic HR priorities.  As the shared services organization moves from demonstrating transactional competence to HR consultative expertise, the degree of effectiveness in this framework is the standard against which the expansion of this partnership is measured.  There continues to be sufficient economy of scale, skill and scope to make further expansion of the concept reasonable.  When the shared services is operating optimally, HR is better organized to add value and improve overall service delivery and cost management.