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"Surround yourself with the best people you can find, delegate authority and don't interfere."

-Ronald Reagan

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ACCORDING TO THE STATE PERSONNEL BOARD, 34 PERCENT, OR MORE THAN 70,000 STATE WORKERS, WILL BE ELIGIBLE TO RETIRE IN THE NEXT FIVE YEARS. SOME INDEPENDENT STUDIES HAVE ESTIMATED THAT THIS NUMBER COULD BE MUCH HIGHER, RANGING AS HIGH AS 49 PERCENT, OR AS MANY AS 100,000 WORKERS.

• California state government faces a human capital crisis. In the next five years, the state will lose 34 percent of its current workforce.

• The personnel system is fragmented and divided. Personnel issues are split between the State Personnel Board and the Department of Personnel Administration.

• Recruitment efforts for new workers are a shambles. The state has no systematic program to recruit the best and the brightest.

• Training for existing workers is sporadic. The state does not strategically invest in improving the knowledge, skills and abilities of its workers.

• Employee evaluations are ineffective. The state does not routinely evaluate the performance of all employees and in those evaluations does not set concrete performance goals.

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Numerous reports have been written about the impending "human capital crisis" that will affect the nation's workforce in the next several years. The crisis stems from the wave of retirements expected as the "baby boom" generation reaches retirement age. By one estimate, there are more than 70 million baby boomers in the workforce versus about 40 million in the generation following them.

The phenomenon affects the public and private sectors, but government will be hardest hit because on the whole, government workers, including California's, are older than those in the private sector. Moreover, in California, various labor agreements have lowered the eligibility age for government workers to retire.

According to the State Personnel Board, 34 percent, or more than 70,000 state workers, will be eligible to retire in the next five years. Some independent studies have estimated that this number could be much higher, ranging as high as 49 percent, or as many as 100,000 workers. The "age bubble" in the workforce is clearly shown in Exhibit 5, which shows a distribution of state employment by age bracket.

The "age bubble" is traveling quickly through the state's workforce. The baby boom age bubble is reaching retirement age, and California should be prepared. If we wait to act, we will find state government "hollowed out"-its best and most experienced workers gone with no plan to deal with their absence or build a well-qualified workforce for the future. The result could well be a poorly structured hiring binge or the further deterioration of state services in those areas where we simply don't have the people to make the engine of government work.

California's human resource management system is split primarily between two control organizations, the State Personnel Board (SPB) and the Department of Personnel Administration (DPA). This division has led to jurisdictional disputes, as well as delays in services to client state departments.

Created in 1934, SPB was charged with overseeing the state's civil service system and ensuring that it is free from political patronage. In this role, SPB enforces the merit system, and its five-member board hears merit-related appeals (for example, examination and disciplinary appeals).

Over a period of several decades, labor unions representing state employees sought a formal and exclusive process for negotiating the terms and conditions of employment. The enactment of the Dills Act in 1977 and the creation of DPA in 1979 established the modern context for negotiations between the unions and the Governor over wages, hours and working conditions for state employees. Today, DPA oversees collective bargaining and hears non-merit statutory appeals and contract grievances.

This dual management system has caused confusion about SPB's and DPA's roles. They often have different responsibilities for the same personnel processes, and their roles are unclear to client state departments. The departments do not agree on which areas of personnel are defined by merit law and which can be negotiated at the bargaining table. For example, SPB is responsible for creating classification plans, but DPA sometimes revises classifications during collective bargaining, without SPB's input. The two departments also disagree on transfer rules.

SPB estimates it spends approximately 50 hours a month on litigation with the DPA. Over a five year period, DPA estimated it spent nearly 1,100 hours on litigation against SPB. This senseless conflict should be eliminated. The goal is not to reduce anyone's rights but to make human resource management more efficient and effective.

By revamping our organizational structure and employing modern technology, we can work our way through the natural attrition in the labor force and give California a government that is leaner and makes the best use of its employees.

Action: The Governor should seek legislation to consolidate the Department of Personnel Administration and the nonconstitutionally mandated functions and staff of the State Personnel Board into a single entity.

The changes in organization and management CPR is proposing offer an opportunity to use our existing workforce strategically. By revamping our organizational structure and employing modern technology, we can work our way through the natural attrition in the labor force and give California a government that is leaner and makes the best use of its employees. We can change crisis into opportunity—making the government better, our workforce more effective with better skills, while we cut costs.

Right now, the state has insufficient information to estimate the depth of its workforce needs. Agencies make their own recommendations, which are reconciled in the budget process. There is, however, no overall planning for staffing needs. The state makes workforce projections for the various regions of the state, but it doesn’t fully grasp what it needs to meet its own workforce demands.

In this case, the state should aggregate and routinely analyze workforce needs by employment category. The periodic shortage of information technology workers has been well publicized nationally, but the data suggest that other job categories, including law enforcement, lawyers and health care workers are also likely to be hit by high retirement and separation rates in the years ahead (Exhibit 6).

The state must decide how to cope with these potential needs—and which are most critical to the state providing services to its citizens. But without reliable information about workforce trends and needs, decisions affecting the state’s workforce will not be made in any consistent, coherent way.

	Percent over 50, 2002	Percent over 50, 2004
Agriculture and Conservation	22	28
Office and Allied	32	35
Custodian and Domestic	39	42
Education and Library	62	67
Engineering	30	34
Fiscal, Management, Staff Services	33	36
Legal	47	50
Mechanical and Construction	39	42
Medicine	39	42
Emergency	52	59
Public Safety	24	25
Social Security and Rehabilitation	25	26
Career Executive Appointment	44	67
TOTAL	31	34

Source: State Personnel Board.

Action: The Governor should establish a centralized unit within the Department of Personnel Administration to plan for the state’s future workforce needs.

Once we have a projection of the overall needs of the state workforce, we should manage the size and shape of the workforce on an enterprise basis. That is, we can control the growth of the government as part of the state’s overall fiscal planning, and using the information about workforce demands, we can direct any hiring that does occur to those places across state government where hiring is most critically needed.

Action: The state should plan for and manage its workforce on an enterprise-wide basis.

Recruitment is the foundation of any personnel selection program. You can’t hire the best employees unless you attract the best candidates for the job.

According to Carl DeMaio of the Performance Institute, “Successful recruitment in government boils down to a complex formula: get the right people...in the right position...at the right time...with the right skills...to perform the right role...to achieve the agency’s mission.” Recruitment is the foundation of any personnel selection program. You can’t hire the best employees unless you attract the best candidates for the job. Despite its very real and growing importance, this is a step that often receives little attention by government managers.

In 1999, the Little Hoover Commission noted that, “the state does virtually no recruiting in good times or in bad to draw young, energetic graduates from its own university system into its work force.” The state has failed to make even a small investment in recruiting new workers. As a result of fiscal problems in recent years, most state departments have either abandoned or curtailed their recruitment efforts. Those efforts that do exist are sporadic and uncoordinated. Today, the state only considers those candidates who actually seek employment.

At a time when the labor force is dwindling and fewer young people are willing to consider government jobs, this poses a serious problem.

Senate Bill 1045, passed by the Legislature in 2003, requires all state departments to engage in broad and inclusive recruitment for entry classifications. Departments, however, need guidance to carry out this mandate. Instead of developing brief explanatory rules, the State Personnel Board approved a new section of the Merit Selection Manual entitled, “Recruitment for Civil Service Examinations” in September 2003. Despite departments’ desire to receive this new section, it hasn’t yet been released due to the need for approval from the Office of Administrative Law.

According to Dr. John Sullivan, Professor of Human Resources Management at San Francisco State University, “all recruiting is marketing, and a marketing-based strategy is the foundation of everything we do” in recruiting. The private sector has long recognized this maxim and typically fuses recruiting efforts with advertising and public relations efforts. The state faces stiff recruiting competition from the private sector and federal and local governments. The state must do a better job of highlighting state employment’s “selling points.” It must use demographic research and other data to find the best-qualified candidates.

As part of its limited marketing efforts, the State Personnel Board has developed general pamphlets and publications such as “The Road to Employment with the State of California, State Civil Service Employment Information.” A separate publication, “Recruitment Sources Directory,” provides resource information to all state departments, but it should be expanded and updated regularly.

The current level of resources dedicated to recruiting a qualified workforce is insufficient to meet current or future needs. Occupation- and geographic-specific recruitment materials should be developed to use in conjunction with other recruitment strategies such as advertisements in professional journals, attendance at career fairs and community events. Additionally, the state should develop partnerships with groups whose members have the skills needed in state government, such as health care, information technology and engineers.

Automation should also be used to its fullest advantage, especially for high volume hiring. Increased use of the Internet will enable the state to reach more potential applicants and provide comprehensive information faster and at less cost.

Finally, departments are not using any tools to measure the effectiveness of their recruitment efforts. Today, most of the information on recruitment and retention is anecdotal at best. The state should develop statistical measures on state job recruitment. Only by evaluating what works will state departments realize a good return for their investment of taxpayer dollars to improve recruitment practices.

While the needs of individual departments change from year to year, the state’s overall recruitment effort should be consistent and consolidated. An improvement in centralized coordination of these basic human resource functions makes more sense and will help individual agencies. Agencies know best their needs for jobs in department-specific categories. However, recruitment for jobs that are essentially service and support positions, as well as marketing of the state as an employer, is best conducted centrally, thus freeing up departmental staff to recruit for department-specific classes. This is an effective strategy that can produce long-term cost savings.

TODAY, MOST OF THE INFORMATION ON RECRUITMENT AND RETENTION IS ANECDOTAL AT BEST. THE STATE SHOULD DEVELOP STATISTICAL MEASURES ON STATE JOB RECRUITMENT.

Action: The state should establish and staff a centralized state recruitment program to provide leadership and coordination for departmental recruitment efforts.

CPR also recommends that the state do a better job of recruiting and retaining the best and brightest students coming out of our higher education system. Right now, we are largely failing to actively recruit and employ large numbers of talented college graduates. These individuals typically excel in analytical and problem-solving skills, know and understand modern business technology and can respond to changes in work methods quickly.

As part of this recruitment effort, the state should establish a formal, paid college intern program, and departments should use this tool as a source of talented, well-educated employees. The Department of Personnel Administration should also work with departments to expand the use of the Student Assistant and Graduate Student Assistant classifications and to develop mechanisms to facilitate students’ entry into permanent state employment upon graduation.

Placing more emphasis on college recruiting and providing better ways to integrate students into the full-time workforce can help to turn this situation around. With only a modest investment of resources, the Department of Personnel Administration can help state departments hire more productive workers, which even in lean times can benefit the state through greater productivity for many years to come.

Action: The state should reestablish a centrally coordinated statewide college recruitment program and provide adequate resources to ensure its effectiveness.

Even the best workers can’t do their jobs without training and professional development.

Even the best workers can’t do their jobs without training and professional development. If we are going to recruit the best workers to replace those we are losing and expect them to be more productive, it is necessary to give the employees the training and clear performance expectations they need to succeed in their jobs.

In a 1999 report, the Little Hoover Commission underscored the necessity of a well-trained workforce when it said, “State policy makers and program managers need to use training programs to improve the effectiveness of their organizations, to support re-engineering efforts and prepare workers for new assignments.” To address this need more effectively, the state must improve and coordinate its training programs.

Currently, several departments offer training to state employees across all departments. This training is on essential topics, systems and processes used by all agencies such as procurement and contracting, supervision and management, information technology, personnel and budgets.

"The Stateworker Stereotype" and Other Stories of the CPR To gather information and input on California state government, CPR offered a central e-mail box. We received many comments. CPR teams searching for ideas and insights looked at all of the e-mails and answered as many as time permitted. Many were anonymous. One particular group of correspondents was state employees. Below are some of their comments. “California needs employees who are willing to accept ownership of the problems presented to them and do their best to find a solution. I’m well aware that as an employee, there is no way that I can solve every problem that is presented to me. When I am unable to resolve a problem, I feel that I have a duty to assist my customer in finding either the correct person or department who can help them solve their problem. . . . There are a good number of people that do perform to the best of their ability and are eager to provide help when they can. If that were the case every time, would we have the ‘Stateworker Stereotype’?” * * * “The other day I was at a job site assisting a drilling crew out of Sacramento. I was picking up a closure but was told I was going to be delayed. I asked why and was told they had more equipment on site than people.” * * * “I will have worked for the State nearly 27 years [as a registered nurse]. We have a severe shortage of nursing personnel especially RNs. Our state hospital meets or exceeds its ‘Salary Savings’ goals by keeping the level of care positions vacant for gross periods of time. Unfortunately, this causes untold amounts of overtime that more than eliminates any supposed salary savings.” * * * “Junk the state civil service system, which is too cumbersome and unresponsive. You can’t hire the best and the brightest and retain the good people you have under this system. There are too many sections, branches, units that NEVER talk to each other. Even experienced State employees don’t know how to navigate the system.” * * * “Remember Lily Tomlin’s ‘Ernestine’ routine? ‘We’re the phone company. We don’t care. We don’t have to.’ Substitute ‘public employees’ for ‘the phone company’ and you’ll see why taxpayers are fed up. How about this: Every department that deals with the public should have postcards that the consumer fills out and mails to the CPR people regarding the general work ethic and relative efficiency of their encounter, with the names of the employees involved.” * * * “I am glad there is finally somebody up there in Sacramento working for us common people.”

As a first step, the training courses should be offered through one central training organization. The quickest and most efficient step in this direction would be to create a single state training portal administered by the State Training Center. This website could be developed into a comprehensive portal for training and career planning for all state employees. This website could provide access to a comprehensive catalog of state and university courses for professional development for state employees.

In addition to providing available training information, a state training portal could be used to register employees for any of the training offered through the portal and track agency use of training courses and employee training history. It could also be used to provide online training.

Here are two examples of how the training portal concept has already been implemented by a state agency and a private corporation. The Franchise Tax Board (FTB) designed the “Employee Opportunity Network” (EON) on its intranet. Although FTB has 6,600 employees, the usage of the site passed 50,000 hits within a few weeks of implementation. In the private sector, Cisco Systems developed a website to orient new employees to its large and geographically dispersed company. The company found that the site also was popular with employees who wanted to know more about the company.

In addition to providing available training information, a state training portal could be used to register employees for any of the training offered through the portal and track agency use of training courses and employee training history. It could also be used to provide online training. This is a growing area for providing training to employees, particularly as computer systems become faster and more flexible. This approach can save time for employees, because it isn’t necessary to travel to any of the state’s training centers. It can also save money for the state by making more training available to more employees at a lower cost.

Action: The state should create a central online training portal for state employees.

We should take the training issue a step further. One of California’s most important resources is its extraordinary higher education system. State government should work with the colleges and universities of the state to provide the best educational opportunities for the state’s workforce.

Action: The state should work with higher education institutions to develop appropriate learning strategies and programs for state employees.

The state should work with unions to develop performance standards for rank and file employees. The state should also develop management reward systems to recognize outstanding performance and contributions to achieving organizational goals.

Another section of the CPR report recommends moving to performance-based budgeting. Under this budget management system, the state would set out concrete strategic plans and would budget and allocate funds to meet specific goals and achieve specific outcomes. Budget decisions could thus be more closely tied to actual performance.

In conjunction with this concept, the state should develop evaluation processes for supervisors and managers that include accountability for results and a requirement to conduct performance appraisals of their subordinates.

The state should work with unions to develop performance standards for rank and file employees. The state should also develop management reward systems to recognize outstanding performance and contributions to achieving organizational goals.

Action: State agencies should incorporate performance goals and expected outcomes into employee evaluations.

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