Several years in the making, Delaware's creation of a Cabinet-level Department of Technology and Information (DTI) was finished in May. The agency's makeover goes beyond a new name, a new leader and a new set of mandates from Gov. Ruth Ann Minner.
DTI employees now work outside the protections of the state's civil service system. The word now is "performance," and DTI employees were told during the transition that pay is now tied to performance. The DTI shares its exemption from the merit system with the state's Economic Development Office.
One might think the new arrangement would have ominous overtones in a culture often criticized for not valuing performance the way the private sector does. But 80 percent of the former Office of Information Services' employees agreed to give up their merit status to join the new DTI, said Tom Jarrett, DTI secretary and vice president of NASCIO. Switching to a performance-based pay scale didn't result in massive layoffs -- the remaining 20 percent of employees retired, took positions in other state agencies or moved away.
Delaware's decision to make the DTI's work force exempt from civil service protections may be the latest example of a government making such a move, but the state isn't alone. Other states, including Florida and Georgia, have made drastic changes to civil service protections.
Proponents say these moves boost efficiency. But opponents contend there's no evidence to back those assertions, and efficiency decreases because employees no longer feel secure in their jobs.
Civil Service Evolution
The civil service was created in the late 1800s to classify government jobs and remove them from the influence of patronage -- a real problem in the fledgling government structure. Also, a Civil Service Commission receives the task of administering a system based on merit rather than political connections. Potential employees were required to pass various tests to work for the government. The goal was to lay groundwork for a competent and permanent government bureaucracy.
Now, however, critics of the system say civil service rules combined with collective bargaining agreements tie agency managers' hands. The argument is that the civil service system has become a de facto seniority system, where the person with the most seniority gets promoted, regardless of skill or competence.
"The civil service structure -- having spent my whole career in business -- is amazing to me," said Jarrett. "I'm happy I never really had to deal with it because we started right out with our move to a new structure."
Jarrett came to state government from Verizon, where he was director of government, education and philanthropy affairs.
The transformation of an agency embedded in state government into a Cabinet-level department staffed by noncivil-service employees has raised a few eyebrows, Jarrett said, mostly because of the political strings attached to such a move.
"It's very different," he said. "We're kind of this island -- right now at least for Delaware -- surrounded by the government bureaucracy that's still out there. The only other organization that is completely exempt, in some things, is the Georgia Technology Authority, which is structured differently from us."
"What we've done is pretty amazing," he said. "I've talked to more of my counterparts, and I think they would kill to do what we've done. I know some that have brought the subject up, and have probably been swiftly shot down. This is a Legislature that passed [the enabling] legislation almost unanimously, and fortunately, we've had tremendous support from them and the governor as we've worked through this process."
As of July 1, every employee created a "performance agreement" with his or her immediate supervisor, Jarrett said, and employees know that to keep their jobs, they must meet their objectives.
"We wrote our own compensation structure that's market based and performance based," Jarrett said. "It's been quite a process to go through this transition. The employees are being paid better, differently. We went from 26 pay scales in the old civil service system to six in the new department."
Dollars and Sense
Jarrett said the benefits of making the DTI's work force exempt from the state's merit system boil down to more flexibility in hiring and paying employees, more savings to the state, and running the DTI more like a business.
The cumbersome nature of myriad pay scales and salary bands makes it hard to reward staff -- whether managers or employees -- for doing a good job, he said. Without drafting their own job descriptions, a director can't necessarily build the type of department he or she envisions, and the DTI's ability to change its structure has already paid dividends, he said.
"We're getting ready to make a change based on feedback from our customers," he said. "That's a big deal, because under the old merit structure, you had little or no ability to do that. Even though customers may have been telling you things were really bad, you really couldn't go and fix them much. We have that ability. We can restructure to meet what our customers tell us."
Last October, the state created an external operations team to reach out to other agencies, understand their business problems and serve as other agencies' interface into the DTI, he said. After hearing what agencies want from this sort of team -- and what skills they expect team members to have -- Jarrett said the DTI changed the team's approach and mindset to better reflect what other agencies expected.
Even in the lean budget times facing the state, Jarrett said he can pay people more and bring people into the DTI at higher salaries without asking his boss for a penny.
The DTI has driven some costs out, he said. Converting contractors to full-time employees saved DTI $2.5 million, he said. "The same contractor was here for six, seven years," he said. "That's a full-time employee where I come from."
Those savings have been invested back into the DTI to help offset costs of hiring staff at higher levels of pay, he said.
"In the old organization, we had roughly 30-plus managers," he said. "We have eight today. I pay people better, but I expect more. They have larger spans of control, but they're paid well for that. In the end, we've reduced our total cost just in salaries alone for those two areas almost 25 percent.
"People have kind of hammered me, saying, 'Well, geez, look at what you're paying these people,'" he added. "I said, 'Yes, but I'm paying fewer of them that amount of money, and I'm still paying them 25 percent less than what the old team used to get.'"
Changing Civil Service
Little changed in the U.S. civil service system from its inception in 1883 through the 20th century, but over the last several years, government has caught flak for its infatuation with bureaucracy. Observers and government reformers assert that government ought to act more like the private sector. It needs to do business faster and in a more streamlined manner, be more efficient, less wasteful, and take a more modern approach to its work force.
Impeding these changes is the civil service system, critics say, because it engenders a culture of complacency.
Though governments, like any organization, will be burdened with a certain amount of dead wood, it's a stretch to target all government employees. Some suggest only targeting certain aspects of civil service for reform -- such as the fact that, in California for example, qualification tests for applicants are mostly closed to nonstate-government employees. California is forced to promote from within -- not necessarily a bad thing, but a limiting factor.
One problem is civil service tends to place too much emphasis on process -- not results, said Charles Gerhards, former Pennsylvania CIO and president of Gerhards Consulting Group.
"When your total dependence is on a written test, then the test is deciding who the best candidates are. I don't think a written test can properly sort out the best candidates," Gerhards said. "The whole process was intended to be completely blind to any bias, and whenever you have something like that, you go to the extreme and eliminate judgment."
Despite protections it gives government employees, the civil service system often works against employees, he said, citing rules prohibiting a promotion more than once a year and unless an employee has held required positions.
"Sometimes where you have very structured systems, and civil service is an example, those systems may not give employees an opportunity to really shine and benefit from what they've accomplished," he said.
In a setting where employees' jobs are virtually guaranteed and there are no rewards for exerting maximum effort, civil service protections arguably create the "good enough for government work" label so often used against public-sector employees.
"In an environment where there's no performance pay and no additional recognition, it's a matter of, 'Why should I go the extra mile if I don't have to worry about my job, and if I can't get any type of additional recognition or compensation?'" Gerhards said. "The more you layer it on, saying, 'You've got a job for life,' I think the more you build up the mentality that it's just a job. It's not a passion."
Gerhards said eliminating protections for particular types of government employees, rather than across the board, is perhaps the answer. "For some classifications -- IT staff, engineers and some others -- this should be seriously considered," he said. "I see eliminating civil service protections spreading out to certain classifications, versus just spreading to every agency and job classification."
Making the Move
Whether government employees want to forego civil service protections is up for debate, but Gerhards said he believes observers may be surprised.
"I think there's a good number of employees in government, and probably greater than one would expect, that if they felt they had reasonable protections, would be interested in stepping out of civil service, particularly if you could marry that with some kind of performance or incentive program," he said. "I don't think government workers want to be perceived as uncaring, uncommitted drains on organizations."
Some governments have experimented with their merit system's pay scale to better reward employee performance.
In Riverside County, Calif., CIO Steve Reneker instituted a competency-based pay program three years ago to replace the county's merit pay system. This occurred after getting approval from the County Board and buy-in from employee unions, but only after a failed attempt to create a performance-based pay program.
"That got shot down by the unions because they couldn't figure out how to tie pay to performance," Reneker said. "They didn't want to go there."
Under the competency-based pay system, half an employee's pay is based on the market for that position, he said. Employees can take advantage of 20 to 25 "hot skill components" to round out the rest of their pay.
Instead of 120 IT job classifications, the county classifies employees in 10 "IT concepts" (see Top 10 IT Projects,). Each concept has a specific set of 'hot skill components,' including historical knowledge, business process specialty, project management and project leadership.
This doesn't mean employees of Riverside County's Information Technology Department are at-will employees, Reneker said, because they are represented by two unions.
Reneker said he believes unions shy away from performance-based pay for good reasons. "People who primarily go to the unions aren't doing that well, and [unions] don't want to have all the complaining people constantly knocking on their doors," he said.
"The unions are saying, 'Poor performance isn't a union issue. It's an organizational issue, and you guys need to deal with it,'" he said. "And they're right, in my book."
It's not that problem employees don't exist, but blame for underwhelming employee performance is often improperly assigned.
"You're dealing with maybe 20 percent, maybe less, of your organization that probably fits that mode," he said. "When you drill down to find out why that's occurring in the organization -- whether it's state, local or federal -- you find out it's typically a lack of strong management and supervision."
Still, the civil service system is culpable to a certain point, he said, because it rewards poor performance and good performance equally.
"The merit process does not incent employees to do any better job than mediocre," he said. "The bottom line is what incentive do you, as an employee, have to work additional hours or to work any harder than somebody next to you who's coming in and leaving during a normal shift? And maybe only doing an adequate job? If you're a manager or supervisor who expects a little more than that, you can't expect that if you can't compensate employees any differently or provide them with any other incentives."
In 2001, Florida Gov. Jeb Bush introduced his Service First initiative, which among other actions, reclassified more than 16,000 state employees from "career service" to "selected exempt service." The reclassification applied only to managerial, supervisory or "confidential" employees.
Though all these employees are now essentially at-will employees and lost certain entitlements, such as eligibility for compensatory leave time, the reclassification did offer some financial perks. Bonuses are available for top performers; selected exempt service employees do not pay for life and health insurance; and they receive 176 vacation hours per year, compared to between 104 and 156 hours per year in career service, depending on length of service.
Though some levels of government are changing civil service systems, doing so is not necessarily a trend, said Steve Kreisberg, associate director for collective bargaining at the American Federation of State, County and Municipal Employees (AFSCME).
"There's certainly some dissatisfaction with elements of the civil service system," Kreisberg said. "From my perspective, it's really a lot to do with the hiring process, which can be slow and cumbersome, especially in the states that are still trying to do early 20th-century hiring practices by giving civil service tests."
AFSCME does not advocate continuation of written exams for hiring, he said, and is in favor of giving managers more hiring flexibility with "disassembled testing" -- developing qualifications and other factors desired for particular positions and using documents provided by the applicant, such as a resum