Flexible Work Force

Finding 14: The PUC's reputation for hiring and promoting the best and the brightest is being undermined by the rigidity of civil service rules.

The civil service system rigidly prescribes how managers will make decisions concerning job assignment, rewards and punishments. Those are all factors that will heavily influence how well the Public Utilities Commission is able to remake itself for the post-monopoly future.

How successfully the PUC manages to transform itself may well depend on the ability of Commissioners and senior management to enlist the full support and tap the deep creativity of its staff. The PUC staff is known throughout the civil service for its commitment and its expertise.

But the same independence that the staff brings to the job it applies to its workplace relationships. Keeping that energy focused on serving the public interest will require great skill, all of the tools available to modern managers, and a commitment to create a partnership between management, supervisors and rank and file employees.

Fortunately there are some opportunities to experiment in ways that can give managers more flexibility and restore the Commission as a good place for bright minds to work, without sacrificing the protections against favoritism or worker rights.

The Civil Service

The civil service system was designed to prevent patronage in government employment and to foster a permanent core of public employees. The amalgam of rules and procedures crafted to achieve those ends values stability: A stable work force comprised of employees who work their way up through the ranks to more senior positions. Stable job assignments and functions that allow organizations to perform routinely as personnel changes. Stable resources that allow individuals and organizations to go about their work uninterrupted. Several elements characterize the system:

• Examination and selection. To ensure that employees are hired based on merit rather than politics, all qualified applicants must take examinations and selection is limited to those who score highest on the exams. However, the process often leads to high costs and time consuming procedures and often does not result in finding the best person for the job. Many of the best prospective applicants are discouraged by the process, or find suitable employment before the state process is complete. And the process does not give enough flexibility to managers to find the right person for a critical position.



• Classifications and job assignment. To prevent management abuses, workers are hired into fixed classifications that have precise qualifications and job assignments. In order to avoid the burdens of the selection process, organizations often create unique classifications that then limit how those workers can be reassigned. Promotions, reassignments and changes to classifications have to be approved by at least one, and often two, central personnel agencies.



• Compensation. Compensation is restricted by the classification. While public employees are often motivated by a desire to serve the public, the restrictions on compensation make it virtually impossible for managers to reward workers who have taken on additional or temporary challenges -- putting out extra effort and putting in extra time. Similarly, the rules make it difficult for managers to link raises provided for within classifications to employee performance.



• Lay-Off provisions. Restrictions on lay offs make it difficult to reduce the work force when necessary, and even more difficult to surgically reduce the work force to keep the best workers in the right jobs. The lay-off provisions also complicate the hiring process by requiring state agencies to review as part of the selection process all employees who are facing layoff in other agencies.

How Civil Service Rules Hamper the PUC

The PUC has had difficulties with its personnel management even before it started to address the organizational changes demanded by an evolving mission and the pressures to reduce its workload.

After months of negotiations, the Commission in 1995 settled a complaint brought by the federal Equal Employment Opportunity Commission that the PUC had discriminated against older workers in promotions to senior positions. The Commission is now operating under a consent decree that requires it to take certain steps in the examination and promotion process to eliminate any bias based on age.

The PUC also has had running disagreements with the Department of Personnel Administration over high-paying classifications that have been created to attract employees to difficult, but temporary tasks. The personnel authority is concerned that the classifications lock the Commission into permanently paying high salaries to employees after the task is completed. The PUC maintains the specialized classifications are needed to retain highly competent workers to fill highly stressful positions when they are being courted away by the companies the PUC regulates.

As the Commission has come under scrutiny for its continuing role over deregulated industries, the PUC's staff has shrunk and key management positions have gone unfilled for months at a time. More recently, the Commission has requested an increase in the number of authorized positions -- at time when the expectation is for the Commission to get by with fewer resources.

These issues existed before the Commission began to formally recognize that its size, mission and procedures will have to be reformed to reflect trends within the industries it regulates. Those changes will create even more challenges for personnel managers and labor representatives to create an environment that satisfies fairness concerns, protects the established rights of workers, meets the needs for managers, wisely uses public resources and sustains the Commission's nationwide reputation as an outstanding venue for public-minded professionals to serve the public. Already, the limitations on work schedules, reward systems and job assignments are making it difficult for the Commission to retain its best workers.

Ironically, among those concerned that the Commission is not hiring, promoting, managing and rewarding its staff are the regulated industries -- particularly telecommunications companies -- that are luring away some of the Commission's best and brightest. While those companies want the expertise of former PUC employees to help them gain an advantage in the regulatory venue, they also want the PUC to be staffed with people who can competently and creatively resolve issues.

One of the hardest hit divisions within the Commission is Ratepayer Advocates. With 205 authorized positions, the division in the summer of 1996 was down to 150 employees. The division's telecommunications branch devolved in two years from a staff of 55 to a staff of 34. Most of the employees went to work for the businesses they once scrutinized.

The Commission's Vision 2000 process also demonstrated that many of the cultural attributes that guide the PUC's regulatory procedures also shape the internal machinations. Employees were amazingly frank with their superiors during the very public process to identify organizational failures, and felt free to criticize proposals once they were formulated by Commissioners. In response to a plan to break up the Division of Ratepayer Advocates and place those workers throughout the organization, a 10-page memoradum was crafted and signed by more than 90 members of the division, including key staff involved in the Vision 2000 process.

Creating Flexibility

The Commission, in its Vision 2000 process, identified as a problem the large number of specialized classifications that will make it difficult to reassign workers as the Commission's functions change. The report's recommendations included creating incentives to reward hard work and creativity, implementing a newly crafted appraisal system, broadening classifications, and seeking relief from civil service restrictions.

The Little Hoover Commission's 1995 civil service reform report, Too Many Agencies, Too Many Rules, identified an under-used mechanism for state agencies to cooperate with labor unions and receive relief from the statutory obligations that discourage innovation in personnel management. Government Code section 19600 allows for departments to apply to the State Personnel Board for permission to establish demonstration projects for civil service reform.

Demonstration projects have been used by federal agencies and departments in other states to create partnerships between rank and file workers and managers that helped to get past old problems and address new challenges. The demonstration projects have proved particularly fruitful in agencies that needed to reorganize how they would fulfill their mission with fewer resources.

As a demonstration project, the PUC could gain flexibility in how it established qualification requirements, recruited and appointed employees; how it classified and compensated employees; how it reassigned and promoted employees; how it provided incentives and disciplined employees; how it involved labor organizations in personnel decisions and made reductions in staff.

Recommendations

Recommendation 14: The Commission should apply to the State Personnel Board for permission to initiate a demonstration project. The project should allow for the creation of broader classifications and pay for performance. The Commission should initiate a labor-management council for anticipating, assessing and resolving labor-related problems that will result from the near-constant change facing the Commission.

As the PUC's role radically shrinks, it is in a unique position to benefit from the flexibility that the Legislature already has granted to state agencies facing considerable changes and looking for ways to forge a partnership between management and labor that transcends the rigidity of the civil service rules.