Public Employee Compensation Packages

I am with Megan McArdle in confirming that the non-pay portions of the typical public employee compensation package is at least as important, and as potentially expensive, as the money itself.  In particular, two aspects of many public employee compensation packages would be intolerable in my service business:

  • Inability to fire anyone in any reasonable amount of time
  • Work rules and job classifications

From time to time I hire seemingly qualified people who are awful with customers.  They yell at customers, or are surly and impatient with them, or ruin their camping stay with nit-picky nagging on minor campground rules issues.  In my company, these people quickly become non-employees.  In the public sector they become... 30 year DMV veterans.  Only in a world of government monopoly services can bad performance or low productivity be tolerated, mainly because the customer has no other option.  In my world, the customer has near-infinite other options.  And don't even get me started on liability -- when liability laws have been restructured so that I am nearly infinitely liable for the actions of my least responsible employee, I have to be ruthless about culling bad performance.

The same is true of work rules.  Forget productivity for a moment.  Just in terms of customer service, every one of my employees has to be able to solve customer problems.  I can't automatically assume customers will approach the firewood-seller employee for firewood.  All my employees need to be able to sell firewood, or empty a trash can when it needs emptying, or clean a bathroom if the regular cleaner is sick, or whatever.

For those who really believe state workers in Wisconsin are underpaid, I would ask this question:  Which of you business people out there would hire the average Wisconsin state worker for their current salary, benefits package, lifetime employment, work rules, grievance process, etc?  If they are so underpaid, I would assume they would get snapped up, right?  Sure.

Bonus advice to young people:  Think long and hard before you take that government job right out of college.  It may offer lifetime employment, but the flip side is that you may need it.  Here is what I mean:

When people leave college, they generally don't have a very good idea how to work in an organization, how to work under authority, how to manage people, how to achieve goals in the context of an organization's goals, etc.   You may think you understand these things from group projects at school or internships, but you don't.  I certainly didn't.

The public and private sector have organizations that work very differently, with different kinds of goals and performance expectations.  Decision-making processes are also very different, as are criteria for individual success within the organization.  Attitudes about risk, an in particular the adherence to process vs. getting results, are entirely different.

I am trying hard to be as non-judgmental in these comparisons as I can for this particular post.  I know good people in government service, and have hired a few good people out of government.  But the culture and incentives they work within are foreign to those of us who work in the private world, and many of the things we might ascribe to bad people in government are really due to those bad incentives.

It is a fact you should understand that many private employers consider a prospective employee to have been "ruined" by years of government work, particularly in their formative years.  This is simply a fact you will need to deal with (it could well be the reverse is true of government hiring, but I have no experience with it).  That is why, for the question I asked above about hiring Wisconsin government workers, the answer for many employers would be "no" irregardless of pay.

  • http://www.pbase.com/lmwalker Mike Walker

    This reminds me of my cousin who retired recently from the US Navy after 20 years with the rank of captain, and at the ripe old age of 41. During his time in the navy he had obtained an MBA and upon retirement took a mid-level executive position with Target. After about 6 months he resigned from Target and took a civilian position with the navy at his former base. So I asked him why the Target job didn't work out and his response was, and I paraphrase, "Its a lot more stressful working for private industry.". This was not the answer I was expecting from someone who had spent a good part of the last 20 years as a naval pilot flying aircraft off of ships at sea.

  • http://space4commerce.blogspot.com Brian Dunbar

    It is a fact you should understand that many private employers consider a prospective employee to have been “ruined” by years of government work, particularly in their formative years.

    I'd be remiss if I didn't point out this is not always true for veterans. While, yes, a lot of guys who put in 20 turn into bureaucrats of the finest kind, a good NCO is a guy who gets things done in the most expeditious way possible consistent with the mission requirements.

  • Bill

    I think that your post is mostly correct. I live in D.C. and have many close friends who work for the federal government, and I run in those circles.

    There are a lot of dedicated hard working government employees, and there are some others who they work side-by-side with, who come in at 10:00, immediately log into face book, and if they have no work to do, keep quiet and do nothing or do busy work at a leisurely pace. Their raises are often times based on metrics and projects that may be hard to complete, but may not be useful. So, in order to get a raise, you have to complete some project demonstrating your capabilities and writing a report nobody will read, except for the promotion committee, who reads it to see if you should get promoted based on the fact that you wrote a special kind of report. Once a 40 year old maxes out on the pay scale, there is no monetary incentive to work harder. They are already making as much money as they can. The only monteary incentive they have is to get transferred to a position with less responsibility to make the same amount of money but have to do less. I know of one manager who managed poorly for years, everyone on her team left to go somewhere else within the department, upper management finally demoted her, and she still makes the same she did when she was a manager.

    I work for a small employer, six people total at our company. All of us know and can see if what we're doing adds to the bottom line or not. The boss knows it too.

  • http://thelibertypapers.org/ Brad Warbiany

    "Attitudes about risk, an in particular the adherence to process vs. getting results, are entirely different."

    Completely. My current job (the company that hired me before we were acquired) would ask prospective employees to take an online personality test. As a libertarian and an employee with a brain, I answered the question about whether "rules should always be followed" with a No. Rules are there to cover 95% of cases. You need to know when the rules aren't applicable or are downright counterproductive to the goal [having happy paying customers], and when they can properly be bent. This actually came up in my final interview, and when I explained my answer, it was certainly no impediment to me getting the job.

    Rules are black and white, and the reality of business tends to be shades of gray. If you can't get your mind around how to operate, you need to be in a rote job where you're not asked to make complicated decisions [i.e. bureaucracy].

  • JoshK

    Agreed 100%, but remove the "ir" from "irregardless".

  • me

    Of course, state and federal organizations deal with the non-culling of underperformers by declaring themselves no liable. I fondly remember the last federal error that cost me more than 1k... I could have filed a complaint, but the cost of the complaint filing fee was significantly higher than simply reapplying. Thanks, guys.

  • Mary Mastenbrook

    A lot of generalizations here. I took a job with the government pretty much straight out of college in the late 70's . After working for the government for 7 years, I decided to move into the private sector because I saw the government as a dead end with little opportunity to move up (primarily due to Reagan and his downsizing of government).

    When I went out searching for a job, I was recruited by several companies I had previously worked to regulate. I have to admit that I also on my own took management classes at night to learn about organizations. I encountered many people from the private sector taking those same classes for the same reasons.

    Once in the private sector, I saw the same cross-section of motivated and unmotivated employees. Some of those unmotivated employees were highly compensated because they knew how to play the game, not because they were better at their job.

  • Dr. T

    "I was recruited by several companies I had previously worked to regulate."

    That may be because they were looking to beat the government cronyism system. I doubt that they believe that government workers typically are more skilled and productive than private sector workers.

    "Once in the private sector, I saw the same cross-section of motivated and unmotivated employees."

    The fact that some private companies can function with numerous bureaucrats and slackers doesn't make it the norm.

    I've been an employee of Nebraska, Virginia, Tennessee, and the federal government. In each of those government jobs I saw higher numbers of bureaucrats and slackers than in any of my equivalent private sector jobs. My sister (an accountant) has worked for a county and a town and saw the same thing: many incompetent, bureaucratic managers and two or three slackers for every good worker. She also has seen bad managers in private companies, but relatively few slacker employees. Unless a company has cronyism-based guaranteed profits, having more than a few bad managers and slacker employees results in failure (bankruptcy or a cheap buyout).

  • John Moore

    Work rules and the inability to fire employees is not a government monopoly - it is what unions do to private industry too. During WW-II, my father was an Electrical Engineer at RCA, working on radar. When their lab blew a fuse (not uncommon in those days of high voltage, high current tubes), they had to get the appropriate union guy to change it. The EE's were not allowed to - work rules, you see.

    It's not surprising that unions are losing in the private sector while they have been gaining in the public sector. They drive private sector businesses into the ground or to a right-to-work state, but the politicians just pay them off in trade for campaign contributions and workers.

    The whole idea of government unions is wrong - they should be illegal.

  • Mary Mastenbrook

    "I’ve been an employee of Nebraska, Virginia, Tennessee, and the federal government. In each of those government jobs I saw higher numbers of bureaucrats and slackers than in any of my equivalent private sector jobs. My sister (an accountant) has worked for a county and a town and saw the same thing: many incompetent, bureaucratic managers and two or three slackers for every good worker. She also has seen bad managers in private companies, but relatively few slacker employees. Unless a company has cronyism-based guaranteed profits, having more than a few bad managers and slacker employees results in failure (bankruptcy or a cheap buyout)."

    The answer here is that experiences vary widely. I've seen my share of slackers in private industries, especially ones that become so large that they become indistinguishable from governments.

    And no, the recruiters were not trying to beat the cronyism. I was targeted for my skill set. The government office I worked in had some of the hardest working and most professional people I have ever met (including private industry) and one slacker.

    Slackers exists where ever the are tolerated - be it government or private.

  • marco73

    You want to really get your frustration level higher, try government contracting. The incentives are completely screwed up. After a stint in the service, I was in private industry for several years. An old buddy recruited me into a government contract job, because I had the right skill set and could get a security clearance fairly quickly. Good Lord what a fiasco. There were several of us trying to "accomplish the mission", but all our time was spent filling out paperwork to make sure that we worked the correct number of hours, that we recruited folks in the correct protected class, that whatever we delivered had all the right forms collated and signed. The product we delivered wasn't really that important, but following the process sure was. After 2 years of that I left and went back into private industry and have never looked back.

  • Eric Hammer

    Mary brings up a good point, that at a point private businesses get large enough that they are indistinguishable from governments, at least in their laws and procedures. I work for a large company, and have spoken with many of our employees that came from buyouts of smaller firms, and to a one they all say the biggest change and source of frustration is the red tape and incredibly slow pace of the bigger company. Especially annoying is that everyone pretty quickly learns who gets things done and who doesn't, so the good employees get all the work and the slackers get left alone. Inexplicably the managers (plenty of whom are pretty worthless themselves) never seem to figure out who is who well enough to get rid of the bad ones.

    I suppose the question really worth looking into is at what point do things start breaking down, and why. At what point are one size fits none rules and procedures seen as the logical next step compared to the alternative? Does this change based on governmental rules? I think it would need to. At some point the benefits from economies of scale and better resource direction and information sharing have to be out weighed by the dead wood in the organization, but when?

  • Not Sure

    Personally, I don't see slackers in private industry to be an issue, since I'm free to take my business elsewhere if I don't like the service provided by the company. But with the government, if I don't like the service provided (by the DMV, for example) where do I go instead?

  • dearieme

    I have a friend who works for a large consulting firm. They've had success hiring good people from the (British) civil service. When they are doing consulting for a government department, they keep an eye out for the people who are obviously able but frustrated and, after seeing how they deal with the firm's activities, they may invite them for interview.

    Naturally, if they do join the firm they are most often used on public sector projects.

  • tribal elder

    It is about incentives--and risk aversion -even when the downside is imaginary. Federal managers should be bold and innovative--they can't be fired, so they should only have an 'upside' view.

    In 1973, the federal organization I was assigned to met all of its commitments, exceeding some by 40%. Did our national HQ study how my unit achieved that, when our 9 counterparts did not -- NO! My then boss's reward for recruiting and training staff and providing the guidance and motivation that was behind this bureaucratic success was to transfer 2 people out on 3 day's notice.

    In 1983, I worked on a project that would eliminate 80% of the reports for a federal agency reporting requirement, because, for 80% of our regulated community, we could get an SEC's mainframe computer to tell our computer-for about 1/3 of what it cost to drop the hardcopy reports, unread, into a file cabinet. 80% of the reports would just go away--maybe 1% of the computer filings would generate a situation a real analyst needed to examine.

    When the agency wasn't interested in savings money or doing its job more efficiently (or maybe both), I made other plans and left public service after a night school stint. Looking back, school at night is what saved me from brain death. The agency still has this requirement--and still does it by hand -- but there computers with as much or more capability as that 1983 SEC computer on every desk.

    If you wanted to design a system to maximize deadwood retention, it would look a lot like civil service.