Politis
A Citizen’s Guide to Greece 2015


ALL ARTICLES

December 12, 2012

Strategic agility in Greek human resource management

More articles by »
Written by: DW

By Konstantinos Bouas and Petros Katsimardos

Introduction

Human Resource Management policy is probably the most important challenge for Greek public administration, given the severe on-going crisis and the need to sharply reduce public expenditure. The high remuneration cost of Greek public servants (13,6% of GDP in 2009, against only 11% of OECD member countries [1]), was one of the first targets of austerity measures, thus creating a suffocating framework for HRM policy.

Reduction of wage bill and number of employees paid from the state budget [2] was the main priority over the last three years. During this period, salaries suffered a horizontal cut of 35% on average [3], while the number of payroll from the state budget has been reduced by 9.9% (76,408 people) compared to 2010 [4]. Besides the measures undertaken so far, Greece has to decrease public workforce by 150,000 employees by the end of 2015 [5].

Undoubtedly, fiscal consolidation is a sine qua non condition to exit the crisis and restore stability of the social and economic system. In this context, the exercise of restrictive policies concerning human capital seems inevitable, not to mention that the vast majority of countries obliged to perform under crisis are also planning or implementing respective policies. (Table 1).

Table 1: Workforce reduction measures in some OECD countries

Country Measures* Additional measures**
Austria 2012-2014 Hiring freezes 2015-2016 Replacing 50% of retiring staff
Czech Republic 10% reduction of staff in 2010
Denmark Reduction of administrative staff
Estonia 15% decrease in personnel costs
France Replacing 50% of retiring staff
Ireland 12% reduction of staff by 2010
Italy Replacing 20% of retiring staff Italy aims to reduce  public workforce by 1/3 until December 2013
Netherlands Reduction of 120,000 to 150,000 jobs
Poland 10% reduction of staff
Portugal 1% reduction in staff per year, 2012 to 2014
Slovakia Hiring freeze
Spain Replacing 10% of retiring staff
Iceland Reducing wages of high level civil servants. Cuts on over-time
United Kingdom Wage freezes 2011-2013. Reduction of 1/3 of administrative cost of government. Operational budget of all ministries will be reduced by 33% – 42% until 2014 Reduction of 55.000 jobs in 2012 and 550.000 jobs until 2015
USA Wage freezes 2011-2012
Japan 20% cut in central government staff in Japan
Germany up to 10 000 staffing positions to be permanently abolished by 2014

Source: *OECD, (2012b), The Government Workforce of the Future: Innovation in strategic workforce planning in OECD countries

** The data concerning additional measures come from the presentations of countries’ delegates on OECD Public Employment Network meeting held in Paris on 22-23 of October 2012

Risks & challenges

Despite the fact that horizontal cuts in public sector salaries and personnel is a common practice in periods of crisis, this is not a choice without cost, especially regarding long-term impacts in administrative capacity. In other words, gains in terms of fiscal adjustment in the short term are counterbalanced by losses in administrative capacity in the long-term. Downsizing policies endanger the ability of public administration to perform well and address emerging needs, especially if no other actions related to modernization of HRM techniques and methods are undertaken (Diagram 1). In addition, the rapidly ageing human capital along with drastic hiring restrictions which hampers workforce renewal, constantly deprive public administration of skills, experience, and know-how. The overall capability of public administration to plan and implement public policies is seriously undermined.

Diagram 1: Age and experience trends in Greek ministries

Source: OECD (2011), Greece: Review of the Central Administration: OECD Public Governance Reviews

At the same time, reducing salaries makes public sector unattractive, thus unable both to maintain qualified executives (who tend to seek for higher salaries in the private sector), as well as to attract new skillful and high qualified personnel. Moreover, wider depreciation of public employment, inevitably conducts to demoralisation, loss of productivity and rise of corruption.

The Human Resource Management policy in Greece: Reform or bed of Procrustes?

Having in mind these trends, risks and challenges a closer look at Greek developments concerning HRM is needed. From recent developments it becomes apparent, that Greece is trying to implement reforms, which either remain incomplete, delayed or even aborted due to fiscal constraints and cost-cutting priorities.

The new remuneration system introduced by L.4024/2011 corrected previous imbalances in inter-ministerial level, achieving a more equitable distribution of resources among the staff. On the other hand -and contrary to the initial purpose the new law led to horizontal cuts in order to reduce total wage bill and thus restore fiscal imbalances deriving from tax revenue under-performance. This way, a reform that was initially considered as a first step to a new HRM policy, in terms of fairness and justice, was finally overshadowed by the sharp loss of income for the whole personnel of public sector. In the same context, article 19 of L.4024/2011 which introduces performance related-pay and article 7 which provides for a new ranking system based on evaluation of competencies remained inapplicable, due to an attempt to moderate relevant public expenditure. Obviously, lack of motivation and performance reward hinders productivity and lowers morale at a time when they are more needed, that is when fiscal constraints imposes governments “to do more with less”. Taking into account all these distortions it could hardly be argued that the new remuneration system (L. 4024/2011) was finally used as a fiscal adjustment tool, rather than an HRM modernization intervention.

Reforms are underway concerning HRM data management as well. Greece tries to cover a serious deficit in knowledge management as it “doesn’t have the habit to collect and evaluate data and evidence based decision making is insufficient” [8]. A quarterly recruitment planning is now in place, while entries, exits and transfers of employees among public entities are monitored on a monthly basis. Relative data are published in the web. Moreover, from October 2012 public employees’ census data base is interconnected with the Single Payment Authority (the agency which is in charge for employees’ compensation). This is regarded as a first step towards an attempt to align HRM policy with budget processes and financial management. Although the above mentioned initiatives are encouraging, further interventions are needed. Workforce planning can’t be limited simply in recording quantitative data in order to address conventional obligations stemming from MoU. Workforce planning mechanism must be enhanced with the capacity to collect qualitative data and elaborate meta-data concerning competency needs, thus helping managers to recruit and allocate human resources in the most efficient way.

Towards a new strategy for HRM

Downsizing public sector policies and measures is not a sustainable option in the long-term. A more comprehensive strategy is needed to effectively address the demand for a public administration that is capable “to do more with less”. In a highly diversified and rapidly changing environment, the effectiveness of public sector depends on governments’ ability to timely understand needs, adjust policies, prioritize goals and re-allocate resources. Hence, strategic agility becomes the core notion for all policies concerning public administration (i.e. budgeting, performance, service delivery etc) and particularly HRM policy.

Focusing on agility, HRM strategy should be structured in a way that supports and promotes a management that is dynamic, adaptable, extrovert and oriented towards quality of work and service. The transition to a new model of human resources’ organization and management presupposes the exploitation of modern techniques and methods, adapted to the special characteristics of Greek administration and administrative culture. The whole set of human resources’ management tools, such as the system of hiring, remuneration, promotion, valuation, mobility and training should be restructured so as to correspond to the flexibility and adaptability needs, without ignoring the budgetary constraints.

In order to enhance agility, HRM strategy should aim at uplifting barriers and constraints that currently limit personnel mobility among public entities or between public and private sector. It is also important to drastically improve knowledge management and evidence based decision-making related to human resources in order to better address current and future needs. An accurate needs’ assessment in terms of competencies supply and demand is necessary to rationalize decisions regarding number of employees, desired skills and allocation among shifting fields of priority. Strategic workforce planning should ensure the goal of staffing of public organizations with the right number of people, the right competencies, in the right place, at the right time [9].

Accordingly, the remuneration system should be fair in order to guarantee pay equity and equality. On the other hand it should offer motivation and performance appraisal both at individual and group level. Admittedly, the formation of a targeted system of incentives which will be based on measuring and evaluating performance of staff and structures (performance management) requires a change of culture, broader consensus and likely timeframe for assimilation. These hard-to-reach prerequisites stress the systemic nature of problems that HRM strategy seeks to solve. Benefits from the introduction of a performance management system will be limited unless an alignment of policies concerning HRM, budgeting, performance and ICT utilization with strategic goals is attained.

Conclusion

The current Greek HRM policy fails to counterbalance the negative impacts of cost-cutting measures on administrative capacity. Structural reforms are actually undermined, postponed or delayed, as fiscal adjustment gains full priority and absorb all attention, efforts and resources. The decisions that define the HRM policy seem to be ruled by an “urgent need”, short-term and fragmentary policy perception. Thus, it is not a surprise that the productivity and efficiency of Greek public organizations remains low, while fiscal measures go on reducing administration resources, competencies and morale. Crisis offers a window of opportunity to push forward to reforms but at the same time it seems to hamper implementation of structural reforms that can’t be directly connected to a fiscal target or result. In this ambiguous environment it’s up to public administration and its staff to be emancipated in order to introduce and support a whole-of- strategy for human resources.

References:

1. OECD (2011), Greece: Review of the Central Administration: OECD Public Governance Reviews, OECD Publishing.

2. OECD, (2012a) Public Sector Compensation in times of austerity, OECD Publishing, Paris.

3. OECD, (2012b), The Government Workforce of the Future: Innovation in strategic workforce planning in OECD countries, OECD Publishing, Paris.

4. OECD, (2012c), Developing Human Resource Management Strategies to Support Strategic Agility in the Public Sector, OECD Publishing, Paris.


[1] OECD 2012a, Public Sector Compensation in times of austerity.

[2] Τhis number does not include staff of legal persons under private law that are not paid from the state budget. A census will be conducted by the end of December 2012 regarding the number and staff of these agencies.

[3] This estimation includes a) the reduction of allowances by 20% in 2010 and abolishment of 13th and 14th month salary (or replacement by an allowance of 1000 € for employees who received less than 3000 € per month) (OECD, 2012) and b) further reduction of wage by 25 % on average due to the implementation of the new remuneration system (http://news.in.gr/economy/article/?aid=1231143478).

[4] Total number of employees paid from the state budget at 9/10/2012 was 691.601, according to the census data (http://apografi.yap.gov.gr/apografi/default.asp.)

[5] Greek Memorandum of Understanding, 2/2012.

[6] For the period 2011-2015, Greece will replace only 20% of retiring staff from the public sector and 10% retiring staff from public companies, (see MoU, 2 / 2012).

[7] For monthly data on exits/ entries in public sector see: http://www.ydmed.gov.gr/?p=3125, and for quarterly recruitment planning see: http://www.ydmed.gov.gr/?p=2802

[8] see: http://apografi.gov.gr/2012/10/1920

[9] OECD, 2012c, Developing Human Resource Management Strategies to Support Strategic Agility in the Public Sector.






0 Comments


Be the first to comment!


You must be logged in to post a comment.


The Latest