From Entitlement to Engagement:

How Shared Services Changes the Culture of Government

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

While predicting the future is more art than science, with the arrival of 2006, it is seems a good time to give some thought to what might occupy HR leaders in the year ahead. Some of the 2005 issues - health care, the aging work force and skill gaps in the work force, to name just a few - have not seen any significant resolution. However, the economy is moving in the right direction, the employment picture is improving, organizations are focusing more on developing the people they have, and HR leaders are learning how to impact their companies more effectively.

In the year ahead, the HR executive will have to take the lead in building and sustaining a culture that retains people. Employee engagement is the newest agenda item and rightfully so. With many jobs going overseas and some being supplanted by technology, the employee has fewer choices and less upward mobility. . Furthermore, older employees are staying in the work force longer or returning to it.  Younger workers, faced with a greater population of older workers, view them as impeding their upward mobility. The result is the need to solidify a multigenerational culture and contend with the huge issue of leadership succession.  Feeling little control with seemingly constant change and on-going job uncertainty contributes to the erosion of employee engagement.  Organizations want employees who are resilient and change-ready but the right environment to nurture these qualities is increasingly difficult to create.

At the Commonwealth of Massachusetts, we initiated the Human Resources Division Shared Services programs and policies in mid-2003.  Not only was the state in the worst fiscal crisis in thirty years but also the workforce was demoralized and disengaged.  There were an ongoing set of early retirement incentives, reorganizations to streamline overhead and even mandatory furloughs to save money.  At the same time, the culture was one of entitlement and many employees felt that the Commonwealth owed them a living, a job and a yearly increase.   This was not a tenable situation for survival.  Although the Shared Services initiatives were met with tremendous skepticism as a ‘program du jour’, failure was not an option.  We had to turn around the cost structure, the efficiency and, perhaps most importantly, the engagement of the workforce.

Why, you may ask, with all these operational problems, did we care about engaging employees?  Weren’t they just lucky to have a job?  Our answer was that unless we could sustain higher levels of workforce productivity and raise the discretionary effort levels of everyone, we could not turn things around.  Engaged employees produce 60% more discretionary effort and 20% better performance than the disengaged.  Furthermore, engaged employees stay with their organizations five times more frequently.    (Corporate Leadership Council, December 2004)

Because Shared Services builds a clear connection between the organization’s goals and the employee’s work, personalizing the organization and providing meaningful opportunities for participation, it was the vehicle to turn around the mood from entitlement to engagement.   Our leadership was involved and providing tremendous support for this new way of doing business.  That support started at the top and permeated the management ranks.  Taskforces focusing on major organizational issues were formed with participants crossing departmental lines and working together.  They saw results from these cross-functional partnerships and soon fiefdoms became less important than shared progress on major programs.

Because managers play a crucial role in driving employee commitment, the Shared Services Advisory Council became the enabler by exhibiting the connection, contribution and credibility that is necessary to build a highly engaged culture.  The Council was the incubator for new ideas and new initiatives that drove Shared Services into the ranks of the organization.  We infiltrated all levels and across all boundaries.  People began to look beyond their daily routines, pooling resources, changing behaviors and generating innovative thinking.  We were particularly successful at reaching people who usually fall below the radar and getting them involved.  We targeted not only the mandatory effort people had to expend to keep their jobs, but also the discretionary effort that an employee puts forth when they are excited about their work and anxious to make a difference.

From a practical prospective, the programs under Shared Services encouraged engagement because they rewarded those behaviors.  The performance management process was not an effective tool for communication, evaluation or staff development.  The process needed to change so people were held accountable for doing effective reviews that captured the discretionary efforts of the workforce and eliminated seniority as the sole criteria for salary growth.   With a new online performance management system, we are achieving clear, timely and accurate visibility for employee performance and potential.   This motivates employees with the knowledge that their efforts will not go unnoticed.  Individuals are working on development plans to get them to their next role or improve their skills in their current job.  Abilities around leadership competencies are being measured and, where necessary, are targeted for future training.

The final lever was management compensation reform. The culture of entitlement that had been in place was fed by a system that gave all employees the same annual increase percentage regardless of their performance during that year.  Therefore, putting discretionary effort into a project or even into daily work did not garner any rewards.  However, as we looked at engaging the workforce and driving the Shared Services delivery of service, it became clear that change in how we compensated folks was essential.  It was time to move into the 21^st century and support a real organizational commitment to pay people based on their performance.   It would be fair to say that this was truly counter-culture reform and the naysayers were out in force to rail against such a radical and dangerous policy.  However, showing true grit, the Human Resources Division painstakingly won the buy-in from the Governor on down to the senior HR managers and the management compensation reform program was put in place.  I can tell you it was worth the effort.  We have seen a marked improvement in attitudes, performance and engagement.   While our budgetary constraints do not allow for huge differentials, we have been able to come close to a bell-curve normal distribution of increases and a modest bonus program to recognize special effort in projects or leadership.  The bonuses are also being used to provide rewards to people whose compensation is pushing the top of their ranges or upsetting internal equity.  Commonwealth managers are now more motivated to deliver that discretionary level of effort. This is changing the culture as a high priority is placed on recognizing and rewarding the best performers.

To achieve productivity gains, the talent, energy and creativity of all employees must be released today to achieve strategic goals tomorrow. Solving the problem of how to do that is one of the most critical issues of 2007.   Creating an adaptive, customer-focused organization that can move swiftly to meet changing needs is the goal. Collaboration among internal business partners requires confident and knowledgeable leadership. The fiefdoms need to break down and the ‘shared’ in Shared Services must be the operative word.  This kind of leadership needs to be built and, like most organizations, we are devoting resources to building the next generation of leaders.  An outgrowth of this will be clearly articulated measures and accountabilities. Everyone will know what is expected of him or her, how he or she is doing and how he or she can contribute even greater value. Those whose performance does not measure up can no longer expect to hang on to their positions. We are getting much more serious about attracting the best people and retaining them, and will move to make opportunities for these folks by selecting out the poor performers.  When employees are engaged in their work and accountable for results, productivity goes up.  The correlation between the two is undeniable.  Human Resources executives are taking the lead by creating an employee development environment, supporting succession planning, high potential development programs and appropriate compensation programs.