HRM for innovation: Managing the new normal Vietnam 2015

Changes in CPA Employment Levels (2008-2013) The first slides are to set the context of recent HR Reforms in OECD countries. These are based on the survey conducted in 2014 regarding austerity reforms after 2008. Focus is on central public administrations. Our data confirms that, from 2008-2013, important downsizing trends took place in most OECD countries’ central public administrations (CPA). As such, this reform trend in the field of public employment is the most important reform trend in most countries’ CPAs. Almost all EU countries are in a process of reducing public employment in their CPAs. Source: 2014 Survey on Managing Budgeting Constraints: Implications for HRM and Employment in Central Public Administration

Average number of reforms by bundle per country (2008-2013) Other significant reforms include training system reforms, working time reforms, and especially important are remuneration reforms which has a large impact. Changes in Public Employment includes various downsizing instruments such as recruitment freezes, dismissals, encouraging voluntary departures, privatization, or decentralisation of employment. Training system reforms includes reductions of training time and budgets, as well as various efficiency mechanisms such as reducing travel costs and providing training through electronic means when possible. Working time reforms includes changes to the number of paid holidays, various kinds of leave, or increase in working hours. Salary reforms include salary reductions (for top-level or all staff) abolishment of allowances, reduction of performance-related pay, and pay freezes. The bundle, “Cost Saving Measures in the field of HRM”, includes the use of furloughs, promotion freezes and reductions of hierarchical levels. Job security reforms asked whether it had become easier to dismiss civil servants and public employees. Status reforms include changes in the use of civil servants and other public employees, including fixed-term employees. This presentation will focus on the three with the biggest implications: Employment Reforms, Remuneration system reforms and Training system reforms. Source: 2014 Survey on Managing Budgeting Constraints: Implications for HRM and Employment in Central Public Administration

Towards a new normal for Public Employment? Traditional Public Employment The New Normal? Big public administration Leaner Reduction of public employment Exercise of public powers by nationals More Diverse Towards more diversity, exercise of public powers also by migrants Young workforce Ageing/multi-gen workforce (older) Men in top-position Increase of women in top-functions, also young leads old Recruitment at entry level, focus on qualification, seniority Higher Qualified Flexible recruitment, LLL, Competency Management, Skill focus Central workforce planning More Agile Sectoral variation (education, security, research, IT) Dominance public law status More flexible legal status Low internal mobility All sorts of mobility, restructuring, outsourcing, shared services Specific Working conditions for CS Alignment of Working Conditions Our survey supports trends in OECD central public administrations towards leaner, more diverse, higher qualified and more agile civil services.

Changing core competencies of the public sector Political mandate Sharper priorities of tasks and service levels Policy making process boundaries Changing boundaries of the core public sector Suppliers Rethinking of sourcing strategy & core competencies Users Increased involvement of users to optimise service value and exploit gains from co-production & auto-management At the same time as the civil service composition and structure is changing, the job civil servants are doing is also changing. All of this change means that the way the civil service is managed also needs to change to keep up with the times. Partnerships Innovative use of joint incentives in public & private communities Service delivery process boundaries

Towards an HRM for Public Sector Innovation This is a model of the trends and structures that we see in OECD civil services. It starts on a foundation of merit: (see question above) Then is the question of strategic agility: (question above) But innovation requires more than merit and strategy: (next question) Let’s look at each one.

Building on a foundation of Merit Fundamentally, man is the key to all problems, not money. Funds are valuable only when used by trained, experienced and devoted men and women. Such people, on the other hand, can work miracles even with small resources, and draw wealth out of barren land. Dag Hammarskjold (U.N. SG 1953-1961) Guiding Questions: Is the workforce professionalized and educated? Are they managed through fair, rule-based and transparent practices? HRM for innovaiton starts builds on a foundation of Merit.

Merit indicators Merit is hard to measure, but this indicator helps to show how politicised a civil service is. Only a small number of OECD countries systematically change their civil servants below the second level of management.

Merit-based Recruitment In 21 OECD countries a central HRM unit is responsible for standardizing recruitment and designing skills profiles 23 countries use standardized competitive examinations In 20 countries, candidates apply directly to a specific post. Merit–based recruitment can happen in various ways. In countries which have career-based systems, it is often ensured through standardized testing at the beginning of the career. In position-based systems, merit is usually ensured through clear requirements for positions, transparent and open application and selection systems including board interviews.

Merit based job advancement   Top management Middle management Professional Secretarial staff Technical support Years of experience 15 19 17 16 13 Performance appraisals 24 22 21 Qualifications (relevance of education) 26 28 27 23 Other 12 8 5 4 Performance assessment is mandatory for almost all employees in almost all OECD countries. The chart at the bottom of the slide shows that performance appraisals are very important for career progression in most OECD countries, more than years of experience. The index on performance assessment is composed of the following variables: existence of a formalized performance assessment; use of performance assessment tools (meetings with supervisors, frequency of meetings, written feedback, etc.); performance assessment criteria used; and the importance of good performance assessments for career advancement, remuneration, contract renewal on the same job/ remaining in the same job and employment contract renewal in the public service. The index ranges between 0 (no use) and 1 (high use). Missing data for countries were estimated by mean replacement. This index provides information on the formal use of performance assessments in central government, but do not provide any information on their implementation or on the quality of work performed by public servants.

Merit Based Pay Determination Job content is the most important factor in determining base salary in most OECD countries. Relevant experience is a key factor in top determining base salary for management positions, In subordinate positions, educational qualifications are also important. Trend toward greater use of performance-related pay and less emphasis on seniority-based pay. Pay should also be merit-based – people should be rewarded for the skills they bring and the difficulty of the job they do. In all hierarchical levels—from top management to the secretarial and technical support levels—the most important factor in determining base salary is job content. Relevant experience is a key factor in top determining base salary for management positions, while in subordinate positions, educational qualifications are also important. Seniority in the position ends to be only somewhat important across all hierarchical levels. The employee’s age and ministry generally do not influence income levels significantly. In 26 countries seniority-based pay is in place, although nine countries (Belgium, Brazil, Denmark, France, Korea, the Netherlands, the Slovak Republic, Switzerland, and Turkey) have reduced seniority-based pay increments in recent years. Ten countries do not use seniority-based payment.

Enabled by Strategic HRM HRM for innovation is enabled by strategic HRM capacity

Use of Strategic HRM tools While almost all OECD countries have fairly strong merit-based practices, there is greater differentiation amongst the use of strategic tools. The index is composed of the following variables: the existence of a general accountability framework; the existence of HRM targets built into performance assessments of top and middle managers; elements that top and middle management should take into account when planning and reporting within the general accountability framework; regular review and assessment of Ministries’/Departments’ HRM capacity; existence of forward planning to adjust for adequate workforces to deliver services; and elements considered in governments’ forward planning. The index ranges between 0 (low utilisation of strategic HRM practices) and 1 (high utilisation of strategic HRM practices).

Strategic integration Strategic HRM is about aligning HR policy and planning the strategic objectives of the government. This ensure vertical and horizontal integration for more effective and efficient policy design and service delivery.

Strategic Workforce Planning Strategic workforce planning is central to strategic HRM and ensure a future vision for workforce management. This is the process used by all agencies and ministries in the USA.

HRM for Innovation HRM for Innovation recognises the motivation and desires of the civil service workforce and supports them to make improvements to their workplaces and their countries.

Incentivizing staff and building a culture of innovation Ability I can do it Skills (hard and soft) Knowledge Motivation I want to do it Intrinsic Extrinsic Opportunity I am allowed to do it Work design Organisation

Cases received Learning in Networks Awards and Competitions Holistic and Individualised HRM Mobility Programmes Collected over 20 cases from member countries which we grouped into these categories. Holistic HRM – focus on supporting a variety of employees to maximize their contribution to work and innovation: Switzerland multiple career paths for lawyers, recognises that not all professionals want to work up the ladder to become management. So they created 4 different career paths which encourage a better match of skills and interests with their jobs. Belgium’s NWOW is about a more dynamic workplace that can be better suited to workers’ needs. Learning in Networks: giving employees the opportunity to work outside their “box”. Spain’s innovation ecosystem includes an innovation network that extends across all ministries, supported by a virtual social media site. The German Ministry of Labour and Social Affairs’ junior staff orientation programme and Israel’s Civil Service Cadet Program enable networking and learning for new civil servants. Mobility programmes: aim to attract outside talent, can be a source of engagement ideas or a challenge. Korea’s Open Position System, Job Posting System and Job Exchange programmes bring people from the outside into specific positions to lead innovation. Canada’s interchange programme gives civil servants opportunities to work outside the public sector to learn new skills. Awards and Competitions: positive encouragement and branding the public sector: Australia’s Awards of Excellence in Public Sector Management includes innovation as a key criteria; Poland’s contest for the best innovative practices in public management has the specific goal of changing the image of the public sector… But these are just the tip of the iceberg…

Managing Leadership and Management Tensions Bottom Up Top Down Horizontal Vertical People Development Organisational Development Autonomy Stress Holistic integration Individual tools Formal HRM Informal Culture Steady State Innovation and Change Efficiency Slack In all of the cases, leadership at the senior and middle manager levels is necessary. Because this kind of way of working challenges traditional command and control bureaucratic methods, leaders will need to manage a number of tensions and contradictions. The cases show the following.

HRM for Innovation: Refined framework based on PEM input HRM-related Levers Cases Collected Performance Learning in Networks Awards and Competitions Leadership Work / Organisational development Ability Opportunity Motivation Holistic HRM Mobility Programmes Strategic HRM Systems: Recruitment & Selection Performance Mgmt Training & HR Development Compensation and Rewards Put together, we’ve developed this framework to guide future research efforts. Enabling infrastructure e.g. modernized organizational enablers (HR, Finance, IT, procurement etc); effective strategic planning processes; enabling regulatory environment; risk acceptance and effective risk management practices, etc (see other chapters of the report)