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Municipal Research News - Who Will Manage?
Who Will Manage?
Where, oh where, is the next generation of local government managers and administrators?
Demographics, compensation levels, anti-government public
sentiment, and generational differences make this a burning question in many of
our communities. Let's take a look at these challenges and then propose some ideas for addressing them.
Demographics
On New Year's Day 2006, the first wave of 78 million
"Baby Boomers," born between 1946 and 1964, will turn 60. Not surprisingly, demographers expect a boom in retirements over the next five to ten years. Departing boomers will be
followed by a much smaller generation of workers, the 46 million
"Generation Xers" born between 1965 and 1981.1
The generation following the
"Gen-Xers," born between 1982 and 2000 and called the
"Millenials," number 76 million strong but are just beginning to
enter the work force. So, the pool of
workers available for grooming for top management positions is much smaller
than it has been in decades.
This smaller generation of managerial candidates will
face the challenge of providing services to a growing population. The U.S.
population is expected to increase from about 282 million in 2000 to 314
million in 2012, just when the first wave of boomers become eligible for full Social
Security at age 66.2 Increased demand
for public services will create a demand for more managers, particularly more
skilled managers. Otherwise, the quality of public services could decrease.
Local governments face significant challenges in recruiting
and retaining a workforce capable of delivering efficient, quality services to
citizens. It is reasonable to expect significant increases in turnover and
intense competition for qualified employees at all levels of government during
this transition from "Boomer" managers to "Gen-X"
managers. According to the Washington
State Department of Personnel, more than 50% of state employees are 45 years or
older. By comparison, only 35% of the state's general workforce is over 45.
More than 50% of executive level and 30% of mid-level managers in state
government are eligible to retire in 2005.3 While there are no readily available figures for local government employees, there is every reason to expect a similar pattern at the local
level. Just look around the room at your
next conference!
Compensation
Compensation in the public sector is not keeping pace
with the private sector, making it more difficult to recruit and retain
workers. According to the October 2005
edition of Governing Magazine (see page 76), the median salary increase for
state workers nationwide was 1.19% in 2004-2005, less than the 3.15% rate of
inflation. Compensation lagged inflation in the previous year as well. This
mirrors a general trend in the U.S economy. Wage and salary growth is lagging
inflation, especially when energy costs are included.
Many local government employees are covered by one of two
Public Employees' Retirement System (PERS) plans. PERS Plan 1 covers all
persons who first became members of the system prior to October 1, 1977, and
PERS Plan 2 covers those after this date. There are a number of significant differences between Plan 1 and Plan 2,
including the normal retirement age, the required member contributions, a cap
on service credit, and cost-of-living adjustments.4 These differences affect
the age at which employees are likely to retire. The generous PERS 1 plan
exacerbates the workforce problem by encouraging early retirement.
(In 2000, 17.4% of the PERS workforce were in
PERS 1; by 2009 only 2.3% of the PERS workforce will be in PERS 1.) The normal
retirement age for PERS Plan 1 is 60. However, members can retire at age 55 if
they have 25 years of service, and they can retire at any age if they have 30
years of service. The normal retirement age for PERS Plan 2 is 65, regardless
of how much service the person has. PERS
Plan 2 members can qualify for a reduced early retirement if they are age 55
and have 20 years of service, but few members choose to exercise this option
because of the reduction in benefits. According to data from the Department of
Retirement Systems, most employees in PERS 1 retire within three years after
becoming eligible.5 Local governments in
the state of Washington are already seeing these PERS 1 departures.
Anti-government Public Sentiment
Beyond the brutal raw numbers, there are other reasons to
be concerned about replacing retirees. Government service is not a draw for
talented young professionals to the extent it was several decades ago. Many
business leaders and media outlets delight in tearing down government.
These days a common headline is, "We are
finding more government waste. Tune in at 11." It is harder to attract
Generation X into public management due to their general cynicism towards large
institutions. In the last 30 years, they have watched as every American
institution - the presidency, government at all levels, the church, large
corporations, the military - have been called into question. In Washington
State, voting taxpayers are starving government through the initiative process,
causing it to shrink. This has diminished opportunities for bright newcomers
who might be attracted to local government. Gen-Xers, who tend to be highly independent and entrepreneurial, ask
tough questions, such as, "Can I really accomplish anything in
government?" Furthermore, while
government service has never provided a path to wealth, there is a growing gap
between compensation levels in the public and private sectors, as discussed
above.
The Generational Challenge
To appeal to the next generation of managers, it's
helpful to better understand their traits as well as those of the managers
currently in service. Much has been
written about the differences in generational values. (See shaded box for
summary.) While one must always be
careful about generalities, there are a few points that appear repeatedly in
the literature about generational differences:
- Gen-Xers have a healthy dose of skepticism
about institutions. Some younger professionals express doubt that local governments
are committed to creating career paths for younger workers.
- Gen-Xers are resourceful, self reliant,
independent, and entrepreneurial. Some research shows that Gen-Xers have higher
intentions to move from one organization to another, perhaps making them harder
to retain.
- Some older managers have labeled younger
professionals as greedy, impatient, and disloyal because they want to keep
their careers in motion. Some are of the opinion that the younger generation
need to "pay their dues like we did." Some may even fear that the
"young upstarts" want their jobs!
- Younger professionals ask, "Can I
accomplish anything in government?" "Can I be true to my values?" Reportedly, the Millenial Generation has as their number one career
consideration "the ability to make a difference."
- With regard to a top managerial or
administrative position, many younger professionals don't think the job is
worth having, given the extraordinarily long hours and the loss of time with
family and friends. They want more balance between career demands and other
life priorities.
Meeting the Challenge
The public sector has work to do in order to create a
positive environment for this transition. In studying this challenge, numerous
ideas have recently emerged. Human
resource professionals need to examine their recruiting and hiring process,
their retention strategies, and their compensation and benefit policies.
For starters, make mission a key part of the
recruitment process. All levels of
government need to change perceptions about slow-moving, low-tech bureaucracy
that is not able to get anything done. Younger professionals want to know if
they can make a difference. Think back to President John F. Kennedy's "ask
not" challenge that attracted many boomers to government.
Next, the typical hiring process is an obstacle. The
majority of those born after 1982 go to the Web to find jobs. Yet many local
Web sites, if they exist at all, are colorless and out-of-date. They fail to
communicate the vision, values, and challenges that might draw an individual to
public service. We all need to do a
better job telling local government success stories. Also, the relative
stability of government jobs should be a useful recruitment and hiring tool.
Local governments face challenges in retaining young
professionals too. Once hired, they have experienced limited or no mobility.
Young professionals want to be paid well, and they want to be challenged. They
are not afraid of being held accountable for performance. One strategy to
reduce turnover of Gen-X employees is to provide opportunities for professional
skills development. Another tactic may
be to offer flexible work schedules and policies and procedures, so Gen-X employees
can obtain the desired balance between work and personal life. Gen-Xers seek a
combination of challenge, autonomy, and encouragement.
The financial upheavals of the dot com bust and the
post-9/11 world have taken their toll. Look at ways to enhance retirement benefits. Most Gen-Xers do not
believe that Social Security will be there when they are ready to retire.
Cafeteria-type plans that allow younger professionals to opt for greater
retirement contributions have proven to be a tremendous incentive for entering
into and staying in public service.
Given the demographic imbalance between generations, it's
important to consider ideas that appeal to boomers as well. Many of the
previously mentioned tools can also keep older folk around longer. Those 55 and
over are the fastest-growing part of the workforce, and their retirement will
coincide with a dearth of young replacements. Offer flexible schedules, such as longer days but shorter weeks,
telecommuting, or hours adjusted to minimize commute time. Phase in
retirements, letting older workers cut back on hours. And provide more
assistance for employees struggling to balance home and work, particularly
those with elderly parents.
Our citizens are demanding better service but are willing
to pay less. The quality of life in our
communities requires that we attract and retain dedicated professionals
committed to the ideals of public service. At stake is the future of our local communities.
By Richard Yukubousky, Executive Director, Municipal
Research and Services Center and Bernard Seeger, Management Analyst, City of
Shoreline
Footnotes
1The definition of generational age boundaries is not
consistent in the literature. Thus, any use of numbers is meant to be
illustrative of trends, not precision.
2Interpolated from tables in U.S. Census Bureau, 2004,
"U.S. Interim Projections by Age, Sex, Race and Hispanic Origin."
3Impact of Aging Trends on the State Government
Workforce," Washington State Department of Personnel, June 2000.
4"PERS Plan I Member Handbook and PERS Plan 2 Member
Handbook," Washington State Department of Retirement Systems, July 2005.
5"Impact of Aging Trends on the State Government
Workforce," page 15.
Veterans, Matures, Traditionalists, the Silent Generation, or Gray Eagles, born before 1945. Of the four generations they are the smallest in number (55 million), the wealthiest, and the most likely to vote. They are loyal to their employers and expect the same in return.
Boomer Generation, born after the end of World War II between 1946 and 1964. Today, boomers run local, state, and national governments, and they dominate the workplace. There are 77 million boomers. They will probably redefine the concept of retirement as they leave the workforce en masse over the next decade.
Generation X, born between 1965 and 1978. This generation is sometimes referred to as the baby boom bust generation. To Xers, institutions (government, church, military, major corporations) are deserving of skepticism. The eldest Xers are achieving management positions and the youngest have been in the workforce three years or more. This generation values flexibility and control over their time.
Generation Y, also called Millennials, born after 1979. This is known as the baby boom echo generation. Members of this generation are the children and grandchildren of the baby boomers and will surpass the boomer generation in size. They are entering the workforce looking for opportunities to learn and move about.
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