The Evolution of Strategic Workforce Planning Within Government Agencies

Alex G. Manganaris

CRISIS OR DRAMATIC CHANGE seems to bring out the best in us. Yet good planning helps mitigate the potential of a crisis occurring and makes it easier to respond to rapid change. In my career, stretching from the Army Research Institute for the Behavioral and Social Sciences to the Office of the Director of National Intelligence, with a variety of stops in between, workforce analysis and planning has been my central career focus. The “in-betweens” have involved budgeting often associated with labor or workforce utilization.

In this chapter, I would like to share some of my experiences and get a few points across:

The differences and interrelationships between workforce analysis and workforce planning

How “small analyses” can be big contributors to organizational decision making

How major changes driven by legislation often create the best opportunities to contribute

That people pay attention when the budget is involved

WORKFORCE ANALYSIS AND WORKFORCE PLANNING

Workforce analysis develops analytical relationships found in the workforce supply (faces) and methods to estimate future demand (spaces).

Workforce supply. A good example related to the supply, or faces, is an attrition rate or turnover rate. These are two different and related measures. There is much discussion that can result from debating the difference between these two measures (let’s substitute loss rate from one time period to the next). Suffice it to say there is a host of quantitative work in this area. For example, we can develop an estimate of what percent of a retirement-eligible cohort will retire over the next year, two years, or five years. Dominant methodologies are logit regression analysis and observable statistics.

Workforce demand. What do we need in the future? This can be expressed in positions or full-time equivalents (FTEs), and there are distinct differences between the two. Workforce demand is the bigger challenge and is often constrained by budgetary limits, political constraints, and uncertainty. How many air traffic controllers do we need in five years? How many Middle East analysts do we need? Is there new technology that may change any relationships between workload and positions needed to satisfy that demand? This is often the area that receives the least attention and yet is the most challenging.

Workforce planning brings together the supply and demand pieces. The goal is to have supply meet demand at a future point in time. Current gaps between supply and demand are good to know about but difficult to react to. My second example below provides an object example of the complete process of workforce planning while I was at the Internal Revenue Service (IRS).

EXAMPLES OF WORKFORCE PLANNING AND ANALYSIS

Example 1. Short-Term/Quick Analysis: U.S. Air Force

In the early 1990s during a period of cutbacks, two major commands of the U.S. Air Force faced funding shortfalls in regard to civilian pay dollars. These funding shortfalls would cause major reductions in force (involuntary separations) in the civil service workforce that were not based on any workload reductions (reduced demand). These two commands were characterized by having a large civilian workforce proportionally compared to military personnel. Military personnel were managed centrally and governed by congressionally authorized end-strength levels, so this was not part of the challenge. Civilian personnel are funded from a variety of appropriations, but operations and maintenance (O&M) accounts make up the dominant funding source. Unlike the military pay appropriations, O&M funding (and civilian funding in general) is fungible, so that it can be spent on labor or nonlabor. The two heavily civilian commands were hit disproportionately hard since funding levels were heavily constrained at the time.

The personnel directorate (faces) was asked to see what could be done working with the “requirements shop,” or manpower (spaces). A simple spreadsheet analysis demonstrated that the two commands were right to worry about funding. Based on a month-to-month analysis, controlling for functional transfers and expected attrition, these two commands would run out of funding even with a draconian hiring freeze in place. Simply put, they could not shed people fast enough. (This does not address workload concerns, only the affordability of the workforce, or supply.) Other commands had slack based on their current onboard levels and expected utilization of the civilian pay dollars. Often, commands set funding levels below what was needed for all the approved positions. The two large civilian commands planned to use 100 percent of their labor dollars on paying civilian personnel. The other commands funded about 85 to 95 percent of their civilian “authorizations.” For the most part, civilian pay was mostly funded out of appropriated O&M dollars, and these funds are fungible to meet other needs. Incremental budget reductions associated with the “peace dividend” were often allocated to the O&M account. For the other commands, dollars allocated for civil service pay were used for other purposes (e.g., fixing runways or infrastructure improvements) or could absorb reductions.

The spreadsheet I developed projected the expected workforce level at the end of the fiscal year. Using the average strength and average FTE costs, it showed that the two civilian commands would be forced to lay off hundreds of workers, while other commands had “excess” civilian pay funding. This would be a tough story to explain to Congress and a tougher sell to the career civil service and labor unions. The results of my analysis were briefed to the Air Force Council, which was chaired by the vice chief of staff of the Air Force. The decisions were made to reallocate manpower spaces and associated funding from a number of commands to the two large commands facing shortages.

This was not a very sophisticated analysis. No complex methodology was applied. The simplicity of it was the selling point, with the analysis using available data and attrition estimates and providing a format that people could easily understand. It was easy to brief and demonstrate and also involved allocation of resources and potential layoffs. It helped avert an emerging crisis.

Example 2. Major Restructuring: Internal Revenue Service

In 1998, Congress passed the Restructuring and Reform Act, commonly known as RRA 98. A critical part of the restructuring was changing the Internal Revenue Service (IRS) from a geographically based organization (e.g., Northeast Region, Midstates Region) to a business line-based organization (e.g., Wage and Investment, Large and Mid-Size Business, Tax Exempt and Government Entities). With changes in technology, it did not make sense to have a number of regional IRS entities when you could have a national focus on specific business lines, such as individual filers, small business organizations, or tax-exempt organizations.

When I arrived in March 1999, design teams of IRS employees and contractors were at work building the new requirements structure, or, as they liked to call it, an organizational “footprint.” While the design of the footprint was not done in a vacuum, independent of the current workforce distribution, it was still necessary to examine or test what the implications were to the current workforce. What was needed was a way to estimate how we could take the current workforce deployed throughout the country and align the workers to the new organization.

I was fortunate to have a talented in-house analyst named Ed Harris and contract support. We received the requirements footprint from the design teams. The footprint provided information on the number of positions that would be required by occupation, pay grade, business unit, and location. This was then compared to the current personnel supply. We had the personnel data file and knew the inventory of people (current employees), and we could structure the inventory in the same format as the footprint.

With this in mind, we needed an algorithm to initially match the faces to the spaces, and the easiest way to do this was a cost minimization network linear program. I believe we set the cost of a direct match to one (so if you had a grade 12 revenue agent in New York and a grade 12 revenue agent space in New York, it was a direct match). We played with some of the matching rules. For example, if an occupational title (e.g., revenue agent, criminal investigator) was in the correct location but one grade off, we set a higher cost but made the near match a reasonable possibility.

Non-matches received a high cost. From here, we were able to analyze the areas where the footprint was not aligned with the workforce supply. There were two uses for this information. First, we could inform the commissioner of the “misalignments” of spaces and faces. Second, when we identified that there were key occupations—say, revenue agents or revenue officers—that did not align, this caused us to question the new design. These were mission-critical occupations, and we needed all of them that we had. Some of these results became new information that the design team used to adjust the footprint.

Once the footprint became reasonable, we had a secondary routine that examined the unplaced supply (those people not being matched) and estimated the impact of applying congressionally authorized voluntary early retirement authority and variable separation incentive payments. Together, these are commonly referred to as VERA/VSIP. The secondary analysis used estimates derived from work I had done previously during the Department of Defense drawdown with Dr. Pat Mackin from SAG Corporation.¹

In the end, this process tested the new organizational design and provided estimates of possible impact to operations and people. For example, we were able to forecast the possible cost to VERA/VSIP and areas where there would be potential personnel shortfalls. After we stood up the new organizations, our estimates, especially at the aggregate, proved to be very accurate.

Example 3. Policy Guidance and Expectations

The Intelligence Reform and Terrorism Prevention Act (IRTPA) of 2004 led to many changes in the intelligence community (IC), most notably the creation of the Office of the Director of National Intelligence (ODNI). The overall goal was to improve collaboration and integration across the IC agencies and make major changes in existing agency roles. Resident within the new structure was a strong focus on human capital and workforce planning.

I decided that when working to aid the integration of a community, the focus is on providing policies and a framework that conforms to the Office of Management and Budget, the Office of Personnel Management, congressional direction, and best business practices. In my role at the ODNI, I set out to examine the needs of the community and see what initial steps had been taken. What I learned was that IC workforce planning before my arrival was centered around an IC-specific computer model that required uniform data inputs for all IC agencies. This was difficult, since the community is drawn from six different cabinet-level departments and seventeen different agencies, including the DNI organization itself. In addition, it would be onerous to determine how to ensure a level of compliance that provides uniform measures without strict uniformity. We needed an alternative approach.

Running in parallel at the same time was the President’s Management Agenda (PMA) of George W. Bush, of which workforce planning was a key element. I was able to use this as a unifying policy. The Assistant Director for National Intelligence (ADNI) for Human Capital, had pushed the idea of Civilian Employment Plans, which would later be named Human Capital Employment Plans (HCEPs). By carefully defining the parameters and structure of these plans, coordinated with agency representatives of the IC, we were able to identify a “sweet spot” of HCEP requirements that could be met by most IC organizations. Also, these plans provided prima facie evidence of workforce planning capability. For some organizations, this was easy; for others, it was a stretch.

Subsequently, in the administration of President Barack Obama, there was a push to do “multisector” workforce planning. This involves looking at the contingent workforce of support contractors. My office had already organized and made routine the “core contract personnel inventory” for the IC in response to congressional concerns of an overuse of contract personnel. This inventory focused on contract personnel augmenting the work of U.S. government personnel. These contingent employees usually were in level of effort (LOE) contracts. (We distinguished between those contract personnel delivering a definable product or commercial service with core personnel who responded to day-to-day tasks. Those “inherently governmental” decisions were reserved for U.S. government personnel in accordance with the law irrespective of contract personnel type.) So we had a jump-start on looking at the total labor contributions of the civilian, military, and contingent workforces. All sectors need to be considered in order to really address the key workforce planning questions: What do we have now? What do we need in the future? And how do we shape what we have now to meet future needs?

A key final point is based on my career and experience. Having spent most of my non-human capital time in budget and finance, I understood that there was often a disconnect between dollar resources and human resources. We pushed for workforce representation in the congressional budget justifications that accompanied the president’s budget. We had very open-minded leadership within the office of the IC CFO. A strong linkage is needed between dollar resources and human resources in order to have organizations provide sufficient focus on the importance of workforce planning. The workforce you need does not appear the day the funding appears for the positions. Senior analysts, mathematicians, and senior managers are developed over a number of years.

Summary of the Three Examples

The first example provided here shows that unexpected events present opportunities to contribute. To be prepared as an organizational asset, a continual and energized workforce analysis and planning function is necessary to allow a swift analytic response. The doorway to influence the decision-making process is open only briefly. You will notice in all three examples that there was (to borrow from John P. Kotter’s Leading Change) “a sense of urgency.” In the second and third examples, specific legislation was driving the importance and legitimacy of these efforts. Such opportunities come along in the workforce planner’s career occasionally and often provide the best opportunity to contribute. But the opportunity closes quickly, and you need to be invited to the table (or the meetings!) in order to fully contribute.

The greater challenge in workforce planning is in the more stable periods. At these times, workforce planners need to have a functioning capability to analyze trends and develop the necessary coefficients (attrition rates, buyout take-rates) or tools (models) to better deal with emerging issues. But most important, you need to be engaged in the discussion and ready to add value as the next crisis emerges.

Finally, the greatest challenge for workforce planners is estimating future requirements (spaces). It is difficult to have leadership focus on the “to be” workforce since we are often focused on the current exigency. For some organizations, this is easier than for others, especially if the organizations have obvious workload measures (e.g., phone calls per hour) and good projections of future demands (e.g., 30 percent increases in phone calls over the next three years). It is far more challenging when the workload is less defined (e.g., analytic reports). But in the end, it is the planning that is important. As General Dwight Eisenhower in his role as commander of D-Day in World War II noted: Plans are nothing, but planning is everything.

This article reflects the opinions of the author and not necessarily his employers.

Reference

1. Alex Manganaris and Patrick C. Mackin, “Separation Incentives and Early Retirement: DoD Civilians.” Paper presented at the 71st annual international conference of the Western Economics Association, San Francisco, June 1996.

Alex G. Manganaris is currently chief of Workforce Planning within the Office of the Assistant Director of National Intelligence for Human Capital. Prior to that, Alex worked as a senior manager in the IRS’s CFO, responsible for budget execution and systems and analysis that provided labor forecasting from 2003 to 2006. Alex also was director for Strategic Workforce Planning at the IRS (1999–2003). Alex has a variety of work experience primarily as an operation research analyst in workforce planning and analysis within Office of the Secretary of Defense (1992–1999), HQ U.S. Air Force (1989–1992), Grumman Corporation-Procurement Finance (1987–1989), Congressional Budget Office-Defense Analyst (1985–1987), and the U.S. Army Research Institute for the Behavioral and Social Sciences (1983–1985).

Alex is a graduate of the W. Averill Harriman College for Policy Analysis and Public Management at the SUNY Stony Brook (MS 1983) and has a degree in sociology from SUNY Stony Brook (BA 1979). He is married to Nina Manganaris and has three “almost” grown children (Sam, Emma, and Marina). His interests include baseball, motorcycles (not Harleys), and playing the guitar (not all that well).