The AGA Weblog

Talent Management: How to Compete and Win the War for Talent

By: William Kilmartin, CGFM, and Breck Marshall

William Kilmartin, CGFM, a member of AGA’s Boston Chapter, is the retired state comptroller, Commonwealth of Massachusetts, and currently the director of Accenture's state government finance and administration practice. Breck Marshall is the managing partner for Accenture's North America public sector talent management practice.

Recently the Electronic Commerce Coordinating Council conducted a symposium on this topic, and the results are highlighted in this blog.

Whether you know it or not, your organization is in a war for talent. Over the next few years as the demographic landscape continues to shift at an ever-faster pace, the challenges with staffing our government work force are going to become significantly more difficult. Also, in this environment of constrained resources, we need to maximize and leverage every resource at our disposal. Work force represents a significant portion of every budget. How can we get more productivity out of our work force? One way is to embrace an effective program of Talent Management. Organizations that have report productivity increases of 15, 25 or even 40 percent. Do the math. This is big.

Talent management is the array of interconnected processes by which an organization identifies, attracts, develops and retains its personnel to perform and achieve the organization’s mission. Often this work is thought to be the work of HR or supervisors, but in fact, getting the best out of each employee is the responsibility of everyone on the team. From a rewards perspective, this also means not just rewarding the talents of the high-performing few but developing and executing strategies that raise the ability and output of the greater work force.

Why is this important?

Over the next five years up to a third of the U.S. federal government and similar percentages of state and local work forces are going to be eligible to retire, begging the question, who will fill their shoes? At the same time, a new generation, one that has grown up digitally from day one, is coming in to the work force. This combination bookend challenge of Silver Tsunami meets High Tech sophistication has started and will continue to significantly alter the battleground for attracting and retaining talent.

First let’s take a look at generations in the work force today so that we know what talent we are talking about. The baby boomer generation was born between 1943-1960 and came in with a roar. Due to its size, it was able to dictate the terms by which it would live and work. The Net Generation consisting of Generation Y and Millennials was born between 1977–1998. This population in the United States is size-wise on par with the boomers. However, globally in China, India, Vietnam and other Asian countries, this population dwarfs the existing boomers by large margins and early indications are that they will similarly shape the future work world to meet their interests and desires.

In addition to generation change over, what is particularly interesting is the future talent pool of the United States. The U.S. Department of Labor is projecting a 10 million-person work force shortage by 2010 and India will have an excess of 47 million workers by about that same time. A recent study by Accenture of graduating 2008 seniors from all over the world indicated that the United States is still considered to be the most desirable place to work and create a career. Quick reviews of testimonies on Capital Hill by Microsoft and the like indicate a shortage of talent in the U.S. and the need for better visa and Immigration policies to enable the free flow of talent. Essentially, in the near future, talent is going to be on the move and the war to attract and retain that talent may come from competitors half way across the world as well as in your own community.

An organization’s ability to be successful in attracting and retaining talent will depend on getting the following things right:

Organization Strategy—Before going out and spending precious resources to acquire talent the organization must be able to articulate what is it trying to do, what vision is it trying to achieve, how is it planning to operate in the future to accomplish the mission.

Talent Strategy—Once the organization strategy is known, the key is to define at a high level the talent strategy that will support execution of the organization strategy. Leading from this strategy is a continuous cycle of what we call the four D’s: Define, Discover, Develop, and Deploy.

Define—Interconnected with the strategy is the idea of defining who do you need doing what to be successful. How do you plan on organizing all of this talent? What are the skills and abilities of the work force that are required to achieve the mission? How will the future work force work together from a culture and toolset standpoint?

Discover—This step defines the sources of talent. Through analytics, past employee experience, and other means, what are the talent and recruiting pools the organization needs to go after to get the right talent to do the work?

Develop—What are the training programs, on boarding processes, mentors, etc., that need to be in place to bring in the new talent as well as further develop what already exists in the organization? While this step is not new, the way in which the Net Generation learns is different than previous as well as the technology to better support adult learners. Advances in snippet learning as well as other support aids are significantly changing what goes on in this phase.

Deploy—A key to success for all employers is the need to deploy the right talent with the right skills to tackle the right challenge at the right time. Creating this type of timing for both new and existing employees can be a key component to maintaining an engaged work force.

In planning for the future in the public sector, some organizations have already begun to experiment by creating programs to attract experienced workers retiring out of the private sector in to second careers in government. At the same time, the Net Geners are starting to seep in to the work force and are already having an immediate impact as organizations are having to change their recruiting strategies and messages to target as much the “hover parents” as the graduating students. Given their interconnectedness to technology, the Net Geners are also looking carefully as to what collaboration space and mobile tools they will be provided to get their work done. Not to long ago, the debate in most offices centered on should we provide our employees with access to the Internet in the workplace and why. Now the question is how much access and interconnection are you going to allow with the outside world in order to get talent to come and work for the organization.

Governments need to do a better job managing and nurturing one of their most precious assets: their work force. This is an executive policy issue, but it also permeates through all levels of the organization.

Given the need to rethink the talent needs of the organization and the complication of talent on the move, the future employee career experience is going to be different than today. The war for talent is definitely squarely on the horizon. “Game On.”

TOMORROW: Mike Hettinger, Director of Practice Planning and Marketing at Grant Thornton Global Public Sector on "Oversight Matters: Effective Oversight vs. a 'Gotcha' Mentality"

Accounting for Human Capital

By: Steven Berkowitz

Steven Berkowitz, a member of AGA’s Montgomery/Prince George’s Chapter, is an independent consultant in federal accounting, budget and risk management.

It’s 6 p.m. Do you know where your assets are? That is how I began my Fall 2001 article “Measuring and Reporting Human Capital” in the Journal of Government Financial Management. Although it is now a cliché, our most valuable assets walk out the door at the end of the workday. Government agencies could not achieve their mission without human brainpower, and yet, we still do not have a generally accepted standard for measuring and reporting our most important asset on our financial statements.

Accounting systems and standards mirror the existing economic and business structure of an organization and help provide stakeholders with valuable information to help them gauge the value of an organization. In my view, we have continued to stay rooted in an industrial age accounting structure that ignores the modern age where people are idea generators who convert knowledge into intangible and tangible value. We continue to spend millions of dollars to measure and audit hard assets, such as property, plant, equipment, supplies and inventory. The real value of a successful organization, however, lies in its capacity for acquiring, generating, distributing and applying knowledge strategically and operationally. Thus, the assets that really count are the ones that we do not count. One of the major limitations of the current financial accounting and reporting model is that we do not measure and report human capital on financial statements or footnotes.

Rather than treating personnel as an expense, I believe we need to capitalize as an asset the net present value of the future year cost for the cohort of employees that exist on the balance sheet date with an offset to an unfunded human capital liability. I provided a simplified example of a balance sheet using this approach in the Fall 2001 article. I suggested that we use the annual salary increase included in the most current President’s Budget as the discount rate. For the period to use for the net present value calculation, we could use the average length of service of employees. We could even stratify this by various classes of employees to derive a most precise calculation.

In addition, I believe there is value is reporting human capital metrics as part of supplemental stewardship information. Some examples of these metrics include training dollars spent per employee, hours of training per employee, stakeholder and employee satisfaction indicators, years of employee experience, turnover ratios, percent of employees with less than two years experience (the rookie ratio), quality performance ratios, and so forth.

Human capital is the most valuable asset held by government agencies. I believe it is important that we try to measure and report this value or proxies for this asset’s value. I encourage us to begin a dialogue of and experiment with reporting models that measure and report our investment in human capital.

As such I posse several questions:

Should we measure and report the value of human capital on our financial statements? What approach would you consider appropriate for measuring the value of human capital? How would you report it? What supplemental stewardship information would you include as part of the financial statements?

TOMORROW: Peter Franchot, Comptroller, State of Maryland

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You’re Not in Public Service—You Get Paid!

By: Tom Sadowski, CGFM, CPA

Tom Sadowski, CGFM, CPA, a member of AGA’s Mid-Missouri Chapter, is the Missouri state controller. He’s an AGA Past National President and a two-time Past National Treasurer.

That was the response I got from a co-worker when I said something about my being in public service. I thought that comment was a good starting point for talking about not just why I work for government but what it means to me.

I do like my job, and I have liked every job I have had in government. Sure there were times when it wasn’t fun, and there were some difficult times, but overall I have had a very satisfying and rewarding career in government financial management. Why is that? What makes it special? For me it boils down to three things:

• The people I get to work with, including in my agency, the other state agencies and the various people we work with. A lot of good people work for government, and they do a lot of good work. Government is much larger and more complex than it used to be and the knowledge and skill level necessary has risen considerably. Yes, I am a boss, and there is a hierarchy, but that doesn’t mean we can’t enjoy what we do and support each other. • The interesting, challenging opportunities I get to work on every day. Yes, sometimes it is the same but not really. It is like this story about Einstein. On a final exam a student said, “Professor, the questions are the same as last year.” Einstein smiled and said, “Yes, but the answers are different.” • Making a difference in government which is something we often don’t appreciate from the financial management side.

I can boil it down to three words—it is fun! For me fun means it is intellectually stimulating, and I get to interact with a lot of people to solve problems and make things better.

When I was AGA National President I talked about what it meant to me to be a government financial management professional (Yes, we are a profession). It was a few simple things:

• Act ethically (know what is the right thing to do and do it, while encouraging others to do the same). • Serve the public and the public good. • Treat others with respect. • Take care of and help develop other professionals. • Leave things better than you found them and enable the future to exceed the present.

So, how did I get into government and how did I know I’d like it?

I have always had an interest in government, but to be honest it was not something I sought out. I sort of fell into it, but that’s a story for another day. What I can tell you is it can be a great career but it will only be as good as you make it. Like I advise college students trying to figure out what they want to do, start with what interests you. Try different things and talk to different people to learn what is out there. Be inquisitive. Don’t be afraid to ask. Most people are happy to help, and if they’re not, they don’t have anything you need anyway. A career is like clothing. Something may fit for a while or be a style you really like but later you grow out of it or develop different tastes. Thankfully, my career sense has been a lot better than my fashion sense.

As many of you may know I don’t buy into this generational stuff, at least for me. I don’t try to figure out how to manage or motivate someone by how old they are. I talk to them and encourage them to talk to me. If you don’t work in the kind of environment where you feel valued, try to change it or go elsewhere. If you have talent, there are a lot of doors open to you.

Some people call this mentoring but that term doesn’t work for me. To me it is having relationships with people who can help you shape your career whether or not they work in government financial management and regardless of their age or position. It is your career—own it, develop it and love it!

I am interested in how you view yourself. Do you see what you do as a job or a career? What questions or suggestions do you have about managing a career?

Do you think and act like a professional?

I know you get paid, but are you in public service?

TOMORROW: Jon Desenberg, Consulting Director, The Performance Institute on “Moving Performance Forward in Government: Planning from the Top Down / Measuring from the Bottom Up”

Questions on posting comments or wish to subscribe to the feed that sends blogs right to your e-mail? Find instructions here. Want to be our guest on the Blog? Contact Marie Force, AGA communications director, at mforce@cox.net.

Can We Contract Out the Human Capital Issue?

By: Joseph L. Kull, CGFM

Joseph L. Kull, CGFM, a member of AGA’s Washington, D.C. Chapter, is a director in the Washington Federal Practice for PricewaterhouseCoopers LLC.

So can we contract out the human capital issue? Sounds crazy, doesn't it? But, hey, why not? If we can contract out a large part of our security force in the Mid-East, then contracting accounting should be a slam dunk.

Yes, we have a human capital crisis on our hands. Not a day goes by when the topic isn't in the news, especially in the federal sector. We are facing a tsunami of retirements and we’ve known that for years, and now we act surprised, like these people were NOT going to retire? They may be old but they’re not crazy.

We then changed the retirement package for feds with the idea of making them more portable so they can go back to the private sector—no more golden handcuffs that tied many of us up in the system for at least 30 years. So now they are portable and they are transporting themselves back to the private sector to work for contractors.

Why? Because at about the same time as the pension change occurred, there was also a big wave of contracting out of government services. It was called OMB Circular A-76 and it changed the landscape, didn’t it? More and more administrative functions got “A-76’d,” reinforced by streamlining initiatives like NPR and PMA.

No doubt more and more work will be contracted out. Is that the right way to go, the best for our citizens and our country? How are we going to find the right people? Can hired guns—literally and figuratively—do as good a job as bureaucrats? What about organizational knowledge, or how about the loyalty that comes from believing in the agency and its mission? Not to be old fashioned, but how about, very simply, the President Kennedy “ask not what your country can do for you…” kind of call to public service?

There is a price to pay for a government of bureaucrats. Seems there is also a price to pay, literally and figuratively, for a government that is dependent on the private sector for basic services.

In the long run, will we have a better, more efficient, effective government with more contractors and fewer feds? In the long run, do we have a choice? And, regardless, WHERE will the people come from? Are we on a slippery slope here, with perhaps even the continuity of government?

TOMORROW: Patricia E. Healy, CGFM, Executive Consultant, CGI Federal; recently retired as Deputy CFO of the U.S. Department of Agriculture, on "Too Many Chiefs? Do We Need to Change the Way We Govern Our Federal Government Support Operations?"

Questions on posting comments or wish to subscribe to the feed that sends blogs right to your e-mail? Find instructions here. Want to be our guest on the Blog? Contact Marie Force, AGA communications director, at mforce@cox.net.

Consequences of Inadequate Staffing

By: John D. Webster, CGFM, CPA

John D. Webster, CGFM, CPA, a member of AGA’s Washington, D.C. Chapter, is an independent consultant. He is vice-chairman of AGA’s Journal of Government Financial Management Editorial Board and a member of the Architect of the Capitol Audit Committee. Prior to his retirement from the federal government in 2005, he was chief financial officer at the Library of Congress.

Since retiring from the federal government at the beginning of 2005, I provide independent consulting services across the country, including training. In my travels to federal agencies, many people comment to me about inadequate staffing and the challenges they face in completing their work as a result. More than just reading and hearing about the predictions of increasing retirements, I continue to witness the loss of experienced staff nearly everywhere I go. People are looking for answers to inadequate staffing and help in plugging the leaks.

In a research study I authored for AGA entitled 21st Century Federal Financial Managers, A New Mix of Skills and Educational Levels?, I found that work force planning is being done as part of the budget process at most agencies. What is lacking—and is more important—is the identification of competency gaps and development of strategies to make sure the people with the right skills are available to ensure mission accomplishment. In this study, I stated that without adequate planning and strategies to handle the loss of experienced staff or changes in work force requirements, federal agencies will not be able to support adequately the future financial decisions of the most complicated entity in the world. The results will be government inefficiencies and ineffectiveness on a grand scale or a costly, and perhaps inappropriate, dependency on outsourcing with contractor staff providing the needed expertise.

One strategy that I recommended in the research study was to develop a Workforce Planning Guide that is specific to federal financial management, which provides examples of agency best practices in recruiting, training and retaining staff. For example, many agencies have formal training programs that address competency gaps by providing opportunities for classroom training, developmental assignments, mentoring, networking opportunities and exposure to agency culture. Sharing these and other effective work force planning strategies would help mitigate the loss of experienced staff.

Another strategy that I recommended was to consider adopting a minimum biannual number of continuing professional education (CPE) hours for federal financial management professional and administrative positions (such as 501, 505, 510, 560). Auditor (511) and acquisition (1102) positions already have such a requirement. The federal financial management work force will be less vulnerable to having inadequate or outdated skills with this mandate for CPEs.

The research study also confirmed information I found from a number of sources that people recently graduated from colleges and universities lack many competencies needed in the federal environment. The federal budget process, appropriations law, U.S. standard general ledger and federal GAAP (generally accepted accounting principles) to name a few skills are not covered in typical college courses. These skills must be learned on-the-job or through training after being hired. This process may take years. As a result, many agencies resort to hiring experienced staff from other agencies or hire consultants (many retired feds) to meet compliance requirements such as PAR and A-123.

If you have experienced inadequate staffing at your agency, what specific consequences do you see as a result? And, what strategies do you recommend to help?