Human Resource Management Modernisation in OECD Countries: Achievements and Challenges

1. Human Resource Management Modernisation in OECD Countries: Achievements and Challenges Public Governance and Territorial Development Directorate, OECD Oscar Huerta Melchor OECD, Administrator Tunis, Tunisia, 14- 15 February, 2008

2. Main focus: 1. HRM in the context of Public Sector Modernisation. 2. Delegation of Responsibility in HRM. 3. The Individualisation of HRM. 4. Managing Senior Civil Servants. 5. Future challenges in HRM.

3. 1. HRM in the context of Public Sector Modernisation • Government has a larger role than 20 years ago but of a different nature. • Continuous pressure on public expenditure. • Hard and sometimes unpopular political choices are needed. Lessons learnt after two decades of reform: • Policy formulation and managing change are interdependent. • A managing change strategy is central to any reform in the public service. • Modernisation depends on the context of each nation. • Reform is continuous and producing change requires time and political commitment.

4. 2. Delegation of Responsibility in HRM • People’s values have changed. • Delegation of authority to managers is an alternative to handle societal changes. • Delegation of HRM means to empower and enable public managers to adapt their HRM systems to the business needs of the organisation. • Some functions have been delegated in OECD countries: • Delegation of manpower planning. • Delegation of recruitment functions. • Delegation of staff training and development. • The liberty to motivate employees. • Delegation of working arrangements.

5. Delegation in HRM varies across OECD countries. No single model or standard. For example ‘recruitment’: • Belgium All recruitment for permanent employment is handled by a federal selection organisation. A central recruitment body can authorize departments and agencies to handle their own recruitments under certain guidelines. • Ireland Recruitments are the responsibility of individual departments and agencies but observing the recruitment procedures set out by an independent body. • United Kingdom

6. Delegation of HRM has impacted central HRM bodies, but they still play a significant role in policy formulation. • In most OECD countries central HRM bodies still: • Retain legal responsibility in reforming HRM policies. • Introduce new HRM policies and processing HRM-related laws. • Determine the pay level of civil servants. • Conduct negotiation with trade unions. • Play a key role in managing and developing the senior civil service system. Two remarks: • Delegation of HRM authority is never total. • Delegating authority may need to be accompanied by a strengthening of certain central functions to maintain policy coherence.

7. 3. The Individualisation of HRM Refers to: • The management of employees as individuals and not only as part of a collective entity. • A different treatment of staff according to the changing needs of organisations and depending on their performance. Two points of reference: Organisational and individual performance management. Performance-related pay schemes.

8. A. Organisational and individual performance management • Performance-oriented management has produced a cultural revolution in the public service. • The introduction of a performance-oriented culture must be preceded by a caveat on: Transparency Clear promotions mechanisms Trust in management • Performance in the public sector involves what it is done and how it is done. • Strong link among: Managerial development Performance management Delegation of HRM

9. Lessons on performance management: • Performance management should be based on strategic goals and the business plans of the organisation • A systematic assessment of employees’ performance is crucial. • Dialogue should prevail. • Good performance should be rewarded and poor performance addressed. • Team performance is generally more relevant to meet the public sector’s goals than the individual itself. • Public sector managers should be trained in performance management and assessments.

10. Performance-related pay schemes No single model of PRP across OECD member countries. Common trends in the OECD countries: PRP policies cover the management level and increasingly many other different categories of staff. Increase in the use of collective or group performance schemes, at the team/unit or organisational level. Long-running standardised PRP schemes have evolved into more decentralised systems facilitating delegation of managerial functions. Only Denmark, Finland, Korea, New Zealand, Switzerland, and the United Kingdom have formalised PRP policy schemes.

11. 4. Managing Senior Civil Servants Senior civil service aims at giving a clear sense of direction to policy formulation and improve performance and effective delivery of services. Four main trends of reform: Strong emphasis on developing leaders. Management of top officials as a distinct group. Position-based countries put emphasis on early identification of leaders and the creation of ‘pools’ for future leaders. Career-oriented countries use reforms as a priority for cultural change towards more flexibility and individual accountability for performance.

12. Senior managers are responsible for: • the proper and appropriate implementation of legal instruments and political strategies • the coherence, efficiency and appropriateness of government activities. The main challenge is the balance: Senior Managers As politically neutral stewards of the government As the responsive servants of the elected government

13. 5. Future Challenges in HRM in OECD Countries • Modern government demands more knowledge and skills but faces difficulties in attracting and keeping high-quality staff. • Key public problems are interconnected but there is a growing fragmentation and individualisation of public service responsibilities, incentives and capacities. • How to attract and motivate senior executives who meet the high performance demands of a modern ministry, while keeping them in a wider cross-government culture bound by the public interest. • The management of cultural change in the public sector. • The development and maintenance of a sufficient managerial capacity and competence.

14. Let’s not forget that: Reforms are context – dependent. There are no recipes to reform. One of the most difficult challenges is to create a results-based culture within organisations and government. To achieve change is necessary: Obtain and maintain the support of managers and employees. Obtain and maintain the support of politicians. Realistic expectations are needed. What can be achieved by this reform? How long will it take?

15. Oscar Huerta Melchor Public Governance and Territorial Development Directorate Budgeting and Public Expenditures Division oscar.huertamelchor@oecd.org