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Making Human Resource Management Agile & Effective
By Petros Katsimardos & Konstantinos Bouas
Reforming Human Resource Management (HRM) policy is probably the most important challenge for Greek public administration. The severe ongoing crisis and the need to sharply reduce public expenditure created a suffocating framework for HRM policy. High remuneration cost of Greek public servants (13,6 percent of GDP in 2009, against only 11 percent of OECD member countries), initiated measures for reduction of wage bill and number of employees.
Over the last 4 years, salaries have suffered a horizontal cut of 35 percent on average, while the number of payroll from the state budget has been reduced by 19.5 percent (149.300 people) compared to 2010. Besides the measures undertaken so far, Greece has to decrease its public workforce by at least 150,000 employees by the end of 2015. Undoubtedly, fiscal consolidation is a sine qua non condition to overcome the crisis and restore stability. In this context, the exercise of restrictive policies concerning public sectors’ human capital seems inevitable.
Risks & challenges
Despite the fact that horizontal cuts in public sector salaries and personnel are a common practice when fiscal adjustment policies are imposed, this is not a choice without cost, especially regarding long-term impacts in administrative capacity. Gains in terms of fiscal adjustment in the short term are counterbalanced by losses in administrative capacity in the long-term. Downsizing policies endanger the ability of public administration to perform well and address emerging needs, especially if no other actions related to modernization of HRM techniques and methods are undertaken.
At the same time, reducing salaries makes the public sector unattractive, thus unable both to maintain qualified executives, as well as attract new skillful and highly qualified personnel. Moreover, wider depreciation of public employment, inevitably conducts to demoralisation, loss of productivity and rise of corruption. The overall capability of public administration to plan and implement public policies is seriously undermined.
The HRM policy in Greece: Reform or the Procrustes bed?
Having in mind these trends, risks and challenges, it becomes apparent, that Greece is trying to implement reforms, which either remain incomplete, delayed or even aborted due to fiscal constraints and cost-cutting priorities.
A new remuneration system (L.4024/2011) introduced to correct previous imbalances and achieve a more equitable distribution of resources among the staff, finally led to horizontal cuts in order to reduce the total wage bill and thus restore fiscal imbalances. Performance-related-pay and a new ranking system based on evaluation of competencies were also introduced but remained inapplicable.
Undoubtedly, lack of motivation and performance reward hinders productivity and lowers morale at a time when fiscal constraints impose governments “to do more with less.” Taking into account all these distortions it becomes obvious, that the new remuneration system was used more as a fiscal adjustment tool than HRM modernization intervention.
Reforms are underway concerning HRM data management as well. A quarterly recruitment planning is now in place, while entries, exits and transfers of employees among public entities are monitored on a monthly basis. Public employees’ census data base is now interconnected with the agency which is in charge for employees’ compensation. This is regarded as a first step towards an attempt to align HRM policy with budget processes and financial management but further interventions are needed. Workforce planning can’t be limited simply in recording quantitative data but must be enhanced with the capacity to collect qualitative data concerning competency needs, thus helping managers to recruit and allocate human resources in the most efficient way.
Towards a new strategy for HRM
Downsizing public sector policies and measures is not a sustainable option in the long-term. A more comprehensive strategy is needed to effectively address the demand for a public administration that is capable “to do more with less.”
In a highly diversified and rapidly changing environment, the effectiveness of the public sector depends on government’s ability to timely understand needs, adjust policies, prioritize goals and re-allocate resources. Hence, strategic agility becomes the core notion for all policies concerning public administration (i.e. budgeting, performance, service delivery etc) and particularly HRM policy.
Focusing on agility, HRM strategy should be structured in a way that supports and promotes a management that is dynamic, adaptable, extrovert and oriented towards quality of work and service. The transition to a new model of human resources’ organization and management presupposes the exploitation of modern techniques and methods, adapted to the special characteristics of Greek administration and administrative culture. The whole set of human resources’ management tools, such as the system of hiring, remuneration, promotion, valuation, mobility and training should be restructured so as to correspond to the flexibility and adaptability needs, without ignoring the budgetary constraints.
In order to enhance agility, HRM strategy should aim at uplifting barriers and constraints that currently limit personnel mobility. It is also important to drastically improve knowledge management and evidence based decision-making related to human resources in order to better address current and future needs. An accurate needs’ assessment in terms of competencies supply and demand is necessary to rationalize decisions regarding number of employees, desired skills and allocation among shifting fields of priority.
Accordingly, the remuneration system should be fair in order to guarantee pay equity and equality. On the other hand it should offer motivation and performance appraisal both at individual and group level. Admittedly, the formation of a targeted system of incentives which will be based on measuring and evaluating performance of staff and structures (performance management) requires a change of culture, broader consensus and likely timeframe for assimilation. These hard-to-reach prerequisites stress the systemic nature of problems that HRM strategy seeks to solve. Benefits from the introduction of a performance management system will be limited unless an alignment of policies concerning HRM, budgeting, performance and ICT utilization with strategic goals is attained.
The current Greek HRM policy fails to counterbalance the negative impacts of cost-cutting measures on administrative capacity. Structural reforms are actually undermined, postponed or delayed, as fiscal adjustment gains full priority and absorb all attention, efforts and resources. Thus, it is not a surprise that the productivity and efficiency of Greek public organizations remains low, while fiscal measures go on reducing administration resources, competencies and morale.
Crisis offers a window of opportunity to push forward reforms but at the same time it seems to hamper implementation of structural reforms that can’t be directly connected to a fiscal target or result. In this ambiguous environment it’s up to public administration and its staff to be emancipated in order to introduce and support a whole-of- strategy for human resources.
The authors work for the Greek Government in the Special Agency for Strategic Planning of Ministry of Administrative Reform and E-gov.