SD15 - Review of the Department of Personnel and Training

  • Published: 1994
  • Author: Joint Legislative Audit and Review Commission
  • Enabling Authority: Senate Joint Resolution 279 (Regular Session, 1993)

Executive Summary:
Virginia's Department of Personnel and Training (DPT) is relatively decentralized, appropriately organized, and sufficiently staffed to perform its statutory responsibilities. Most agencies are satisfied both with the overall operation of the State personnel function and the services provided by DPT.

The department, however, has not exercised needed initiative in many areas. The department also suffers from low morale, frequent leadership turnover, and inconsistent direction. Frustrated large agencies are not satisfied with their ability to operate within the confines of the personnel system and want greater autonomy. Opportunities exist both for improvements within DPT and with the overall structure of the State personnel system.

The Virginia Personnel Act establishes the framework of the personnel function and identifies both the key entities responsible for operating the personnel system and the criteria which they must meet. Although seven other State entities provide various personnel-related services, DPT is given primary responsibility to administer the personnel function. In fiscal year 1993, the department was appropriated $5.4 million and 88 staff to oversee Virginia's personnel function in the more than 90 State agencies employing over 110,000 State workers.

The mission of the department is to ensure a personnel administration system based on merit principles and objective methods of appointment, promotion, transfer, layoff, removal, discipline and other incidents of state employment" consistent with the requirements of the VPA. Consequently, to meet each of the functional requirements of the Act, the department is organized into six divisions: Classification and Compensation; Health Benefits; Personnel Development Services; Policy and Personnel Programs; Equal Employment Opportunity; and Information Systems.

Senate Joint Resolution 279, of the1993 Session, asks JLARC to conduct a study of the organization, staffing, management, and resource needs of the Commonwealth's personnel function in conjunction with the Joint Commission on the Management of the Commonwealth's Workforce (Workforce Commission). The study directed JLARG to include, but not be limited to, the Department of Personnel and Training, the focus of this report. To the extent that other issues related to the personnel function have been uncovered through the process of reviewing DPT, they are brought to the attention of the Workforce Commission. Additional review of the State's personnel function, resulting from issues raised in this report as well as the ongoing activities of the Workforce Commission, could be performed by JLARC staff in the future.

This summary highlights study findings and recommendations. Detailed discussions and supporting explanations are contained in the text of the report.

Most Agencies Are Satisfied with the State Personnel Function

With some exceptions, State agencies appear satisfied with the operation of the State personnel function. However, large State agencies are the least satisfied. As shown in the figure on page ii, 53 percent of agencies with a MEL over 1,000 were not satisfied with the personnel function, as compared to only 21 percent of agencies with a MEL under 100. This may be true because large agencies have more complicated personnel needs, the ability to act independently, and are more resistant to the controls of the State's personnel function.

State agencies also appear satisfied with the organization and structure of the personnel system, including the division of authority between DPT and line agencies. There appears to be little duplication or conflict among the central State entities responsible for the operation of the State personnel function.

The design and structure of DPT appears to allow it to successfully meet the service and control expectations of most State agencies. State agencies seem to be satisfied with the performance of DPT staff. In addition, agencies report that there is little duplication or overlap of functions within DPT.

Large-Scale Efforts to Further Decentralize the Personnel Function Are Not Recommended

Virginia's personnel function is highly decentralized, relative to other states. Unlike many states, where personnel functions such as hiring are often performed by a central personnel agency, Virginia permits a large number of personnel responsibilities to be performed by the State agencies. For example, compared to 12 southeastern states, Virginia has decentralized significantly more personnel-related activities to the line agencies. Because Virginia's present system is so highly decentralized, the opportunities for further decentralization, short of giving agencies almost total autonomy, are somewhat limited. State agencies are generally satisfied with the amount of the decentralization authority they already have been granted, although larger agencies want more autonomy.

There are however, two areas in which satisfaction with the decentralization of authority is markedly low. Agencies appear to be least satisfied with their level of decentralization authority in the area of classification and compensation. In addition, larger agencies and universities appear to want increased flexibility in the way that they may operate their personnel function. For example, although 74 percent of State agencies reported that they are satisfied with their present division of authority in general, more than one-third of State agencies cite they are not satisfied with their authority in the classification and compensation areas.
In particular, the larger agencies and universities would like increased authority in the area of classification and compensation.

To better meet unique agency needs, requests for further decentralization should be considered by DPT, but on a case-by-case basis only. It is recommended that:

• The Department of Personnel and Training should assess agency requests for further decentralization authority on a case-by-case basis. The department could modify existing decentralization memoranda through pilot testing the impact of more flexible policies. The department should work with the larger agencies to streamline the processing of personnel actions.

DPT Needs to Address Some Internal Management Concerns

Although staffing and resource levels of the department appear appropriate, there are a number of concerns relating to internal management, raised mostly by DPT employees. Many DPT staff appear to have low morale. Sixty-four percent of DPT staff disagreed with the survey statement "employee morale is good." Also, 53 percent of DPT staff indicate that communication within the agency is poor. This not only affects employee morale, but also impacts upon the cooperation and coordination between central agencies and the line agencies.

Additionally, leadership goals and priorities appear unclear to 44 percent of DPT staff. This may have some relationship to the fact that turnover in DPT leadership has been frequent -- DPT has had seven directors since 1978. Both are concerns among DPT staff, impacting on agency morale as well as agency effectiveness.

An additional concern that DPT should address is the fact that the department has not formally carried out a responsibility of the VPA. This requirement obligates DPT to evaluate the performance of State agencies in carrying out their personnel responsibilities. DPT should reinstate such a program, or provide justification to the General Assembly as to why this legislative requirement is no longer appropriate.

• To be in compliance with statutory requirements, the Department of Personnel and Training should reinstitute a program to evaluate agency effectiveness in implementing State personnel policies. If the department believes the statutory requirement is no longer appropriate, or that it cannot comply with the VPA, it should develop a position statement citing its rationale, for presentation to the 1994 General Assembly.

DPT Needs to Become More Proactive

In virtually every area of its operations, the department would benefit from a more proactive approach to management and administration. It appears that the agency could avoid a "crisis management" mode if it took more initiative to organize and plan service improvements on an ongoing basis. For example, the department did not enact the managed care hearth policy, or revise its Personnel Policies and Procedures Manual -- both key components of the personnel system -- until the General Assembly directed it to do so. Other examples include:

• As DPTs training resources have lessened, its roles as training facilitator and coordinator have become more important. By comprehensively surveying agencies on their needs and coordinating services with other agencies and the VCCS, DPT could maximize its limited resources in this area. Training opportunities that cut across agencies -- such as total quality management (TQM) and the orientation of new State employees have not been pursued.

• DPT staff have access to a large amount of information in their daily operations. Yet they do not use it effectively. Better utilization of agency information could allow DPT to streamline and improve agency operations. For example, in 1992, DPT received over 8,600 phone calls for policy assistance. However, DPT did not maintain records showing which policies were causing the most confusion, or which agencies were calling the most frequently. If DPT were to track such information, it could target those policies needing improvement, or those agencies in need of additional training.

• DPT's solicitation of policy input from line agencies has been sporadic. Where input has been sought, it appears to have yielded some positive results. Increased and improved utilization of line agency input could improve the policy development process, enhance communication generally, and potentially minimize repetitive agency inquiries.

Management should take greater initiative in developing long-term solutions to the demands placed on the department, rather than focusing the bulk of its energy and resources on reacting to specific problems. It is recommended that:

• The Department of Personnel and Training should assign a higher overall priority to proactively address long-term problems that face the agency.

Modifications Needed in Providing Compensation and Classification Services

DPT, through the Office of Compensation Management (OCM), is responsible for maintaining and administering both the State compensation plan and the State classification plan. While the performance of these activities was generally satisfactory, there were concerns with OCM's processing of agency compensation requests and its conducting of special compensation studies.

Agencies also reported that the Classification Review/Specification Update Project (CR/SU), designed to ensure that job positions were allocated correctly and that class specifications were rewritten to accurately reflect the work being done by employees, was beneficial but not timely. Agency comments and a review of the project suggested that DPT should make it a higher priority.

Further consideration should also be given to "banding" the number of position classifications used by the Commonwealth. Evidence suggests that while the State has moved in the direction of reducing the total number of position classifications, there is some resistance to continuing with this practice. In the past two years, the number of active position classifications used by the Commonwealth has been reduced from 1,888 to 1,725; a number fewer than the 50-state average of 1,969.

Most State agencies (79 percent) reported that for their own department the current number of position classifications was either about right (60 percent) or too few (19 percent). Advocates of maintaining the current number of "unique" position classifications contend that the system yields the flexibility necessary to operate effectively. On the other hand, proponents of position banding argue that a reduced number of classifications promotes clarity and simplicity. It is therefore suggested that both DPT and the Workforce Commission continue to research and explore potential solutions to the position classification issue. The following recommendations are made:

• DPT should evaluate and report to the Workforce Commission on two components of OCM's processing of agency compensation requests: the expeditiousness of processing, and the frequency of new hires being brought into the system at higher pay than existing employees.

• In order to further reduce the number of position classifications in the State classification plan, thereby simplifying its structure, DPT should give the Classification Review/Specification Update Project a high priority for completion. Upon completion, project results should be reported to the Workforce Commission.

Health Benefit Services Warrant Changes

In 1991 ,the General Assembly selected a managed care, point-of-service plan, titled Key Advantage, to provide health benefit services to State and local government employees. This decision required that DPT, through the Office of State and Local Health Benefit Programs (OHB), make many complex implementation decisions within a six-month time frame. Accordingly, a large scale, intensive effort was made in the design and implementation of Key Advantage. Given the fact that the implementation phase is virtually complete, OHB needs to continue to make improvements to its program benefit and design process, and to provide agencies with improved assistance.

A review of the program benefit and design process used by OHB indicated that early procedural difficulties generated considerable, and often unnecessary, concerns with the final insurance product. Fifty-six percent of State agencies reported that they thought the process needed to be changed. Specifically, 40 percent of these agencies cited insufficient use of line agency input. This problem was compounded by the inaccurate provision of information to agency benefits administrators, which created a lasting perception that the process did not work.

Similarly, the communication weaknesses evident in the program benefit and design process also negatively affected the ability of OHB staff to provide regulatory assistance to State agencies. Policy guidance on Key Advantage was provided piecemeal and the health benefits manual (last revised in 1989) was not updated to include the new information. Problems of this nature lessened both agency confidence in and reliance on DPT services.

State agency responses to a JLARC survey indicated that the complex area of health benefits was not always well understood by agency benefits administrators. Despite the importance of well-informed agency benefit administrators, DPT has no accurate record of whether or not these administrators attended training. Lack of health program knowledge has, in turn, negatively impacted the ability of agency benefits administrators to provide employees with accurate and timely information. Procedural changes are needed to improve agency confidence in and use of OHB-provided information. Recommendations in this area include:

• DPT should work to formally incorporate line agency input into its program development processes. The use of employee surveys, task forces, or focus groups should be more extensively utilized, particularly when a major program initiative such as Key Advantage is under development.

• Both DPT and OHB need to improve communication within the agency and the accuracy of information provided externally. Specifically, the department needs to improve the timeliness and quality of the Health Insurance Manual. The distribution of a revised Health Insurance Manual should be made a top priority.

• DPT should set a goal of mailing health benefit Source Books to agency benefits administrators two to four weeks prior to the start of the annual open enrollment period.

• DPT should maintain records on agency participation in major health benefits training programs. If it appears that an agency's level of participation is insufficient to accurately inform State employees, DPT should coordinate needed training with the agency.

Training Services of DPT Need Improvement

The Virginia Personnel Act requires that DPT "establish and administer a comprehensive and integrated program of employee training and management development." In previous years, DPT met this responsibility by directly providing training to State agencies. Reductions in training staff and resources have necessitated that the department change its training role from that of a provider to that of a facilitator. Accordingly, DPT, through the Office of Personnel Development Services (PDS), currently conducts about 10 percent of its total training activities and contracts out the remaining 90 percent.

Examination of DPT's training services suggested there were three areas in need of change. First, further consideration needs to be given to the training and career development of all State employees. A friction exists between agencies' desire to promote from within and the State's imperative to have an open employment process.

Similarly, changes may be warranted in the provision of management training programs, continuing education courses, and orientation information for new State employees. Finally, with respect to the facilitation of training, several improvements are also needed. DPT-initiated training for new agency heads should be institutionalized. Likewise, resources such as the Training Resource Directory and the facilitation of TQM training efforts should be encouraged. Suggested recommendations include:

• The Workforce Commission may wish to study career development options for State employees, including non-supervisors, that do not conflict with the objectives of equal opportunity and equal access.

• DPT should place a higher priority on management training programs so that they can be offered more frequently to State agencies, especially those of medium size which do not have substantial management training programs of their own.

• DPT and the Virginia Community College System should resume efforts to assess and meet the professional development needs of State employees.

• The Secretary of Administration should develop an inter-agency task force to develop common orientation materials for new State employees.

• A training program for all new State agency heads, coordinated by DPT, should be institutionalized.

• DPT should assess the extent of TQM initiatives in the Commonwealth and report to the Workforce Commission on options for making TQM-related resources available to State agencies.

Changes Needed in DPT's Policy Development, Information Management, and Equal Opportunity Services

In the policy development process, efforts need to be made to incorporate more agency input into decision-making, to improve the timeliness with which policies are issued, and to regularly review and update the Personnel Policies and Procedures Manual.

DPT could streamline its operations by tracking incoming requests for assistance, especially in areas such as personnel policy interpretation, where over 8,600 telephone calls for assistance were received in 1992. Similarly, in the area of information management, the department should work to revise the user's manual for the Personnel Management Information System (PMIS).

The department should continue to explore and develop options for adopting an Integrated Human Resource Information System (IHRIS).

Finally, in the area of equal employment opportunity services, the department should consider evaluating its compliance review and affirmative action assessment processes. In the past three years, DPT has experienced a 50 percent increase in EEO complaints. Specifically, JLARC staff found that there were two agencies that received almost 30 percent of the State total of complaints for this three-year period. DPT should use the compliance review process to ensure that discriminatory practices are not occurring within these agencies. The recommendations related to these areas are:

• Recognizing that there will be occasional exceptions due to extenuating circumstances, DPT should establish an internal guideline that policies be issued to agencies at least two weeks prior to the effective date.

• DPT should regularly review and evaluate the policies in the Personnel Policies and Procedures Manual.

• DPT should develop a system to analyze agency requests for policy assistance or interpretation. The department should use this analysis to improve existing policies, as well as better identify policy training needs in specific agencies.

• DPT should revise the users' manual for the PMIS system to include adequate introductory materials for new users.

• DPT staff should evaluate causes of the 50 percent rise in EEO complaints over the past three years. To meet this objective, the department should use the compliance review process to evaluate the equal employment opportunity/affirmative action programs in agencies which have a consistently high number of EEO complaints.

Issues for the Workforce Commission to Consider

There are a number of issues that the Workforce Commission may wish to consider to improve the operation of the State's personnel function. First, there appears to be no coordinated effort in the area of statewide human resource planning. Many State agencies are performing their own human resource planning, while other agencies have assumed that it is DPT's role to provide such planning. However, DPT maintains there is no legislative mandate for the agency to be involved in statewide, human resource planning. Therefore, DPT has not assumed a leadership role in this area.

Second, the Personnel Advisory Board (PAB) appears to have been fairly inactive and ineffective over the past 15 years. Although there have been some recent efforts to increase the PAB's activity, the Workforce Commission may wish to reevaluate the role of the PAB in the State's personnel function.

Third, the Workforce Commission may want to consider realigning some of the personnel functions and agencies. Some options to consider could include:

• the consolidation of DPT and DERC to coordinate policy and procedural elements of the grievance process;

• combining DPT's benefit functions with benefit functions now located in other agencies (such as VRS and workers compensation) to form a comprehensive human resources department;

• reconfiguring the PAB to more comprehensively advise the Governor and General Assembly on employee benefits.

Finally, the General Assembly may wish to consider changing the name of the Department of Personnel and Training to the Department for Human Resources Management. This name change would reflect more current practices in the area of personnel management.