Classification and compensation review

While municipal government is largely intended to be non-partisan, the political climate at both the state and federal levels can make governing locally more complex.  Decisions regarding the delivery of core services are best made without, but may be influenced by, party affiliation.  It’s unsurprising then that impartial administrators and managers watch with curiosity (and some trepidation) conditions in various statehouses, at Capitol Hill, and even on Pennsylvania Avenue.  Recent activity, ranging from legal cases to intergovernmental relationships, have the potential to fundamentally change “life as we know it” in the public sector. 

Initially, the Supreme Court rendered two decisions that will, without question, transform the public sector workforce.  In South Dakota v. Wayfair Inc., the majority reversed a precedent established in 1967 (and reaffirmed in 1992) where it determined e-commerce sites (or really, any remote retailer) can be forced to charge a sales tax.  While ambiguity still exists about timelines for implementation, systems for collection and remittance, and whether it will prompt much-needed congressional action, one thing is clear: there will be a financial gain, with estimates anywhere from $8-33 billion annually.  A few days later, a slightly different majority ruled in Janus v. AFSCME that mandatory “agency fees,” often charged by unions to cover the cost of collective bargaining, are unconstitutional (on First Amendment grounds).  This verdict has the potential to lessen membership, decrease union budgets, and weaken associations in their representation of employees.  AFSCME’s own research concluded approximately 15% of its members would no longer pay, with as many as half undecided on whether they would continue to provide monetary support.  The full consequences of these two cases are not immediately known, though it is safe to assume that, with increased operational funding and destabilized unions (which cover approximately 34% of public employees), the landscape of governmental personnel management will undoubtedly change. 

Other factors can also complicate public sector leadership.  Retirements are occurring in record numbers, and an interest in public service among younger workers remains scarce.  Transparency is, rightfully so, the default, though that degree of external visibility can be problematic when addressing the missteps that invariably occur.  Technology continues to disrupt (albeit positively) business processes and citizen engagement.  Consequently, public sector human capital management will remain a strategic challenge for the foreseeable future and will continue to evolve in ways not yet understood. 

Although it is important for public agencies to periodically assess their classification and compensation system, these circumstances make such a review even more urgent.  A properly-designed and administered program is comprised of several essential characteristics, the first of which are internal equity, or the quantifiable, consistent relationship among positions, and external competitiveness, or the ability to successfully recruit and retain within an identified market.  Presuming those factors are confirmed, employees should then progress through their pay range based on some combination of defined criteria that, when appropriately managed, produces individual equity for employees throughout an organization.