A Study of Management Manpower Requirements

. . . . . COMMis~ONON ECONOMt~ .• CALIFORNIASTATEGOVERNMENT ORGANIZATION AND . . ..... . '.. . . . Chairman HAROlD FURST Berkeley Vice Chairman MILTON. MARKS Assemblyman, San francisco JOHN T. KNOX Assemblyman, Richmond DON B. LEI fFER Son Diego GEORGE MILLER, JR. Senator, Martinez MANNING J. POST Beverly Hills RICHARD" E. SHERWOOD . Los Angeles ROY SORENSON Son Francisco VERNON L STURGEON Seri.ator, Paso Robles DAIR. TANDY Oroville" .• FRANK D. TELlWRIGHT .Carmel" A Study of Management Manpower Requirements California State Governr11eilt COMMISSION ON CALIFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY February 1965 STATE OF CAlIFORNIA EDMUND G. BROWN, Governor COMMISSION ON CALIFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY 1209 EIGHTH ST., SACRAMENTO Chairman HAROLD FURST Berkeley Febmary 23, 1965 Vice Chairman MILTON MARKS Assemblyman, San Fro ... :isco Hon. Edmund G. Brown JOHN T. KNOX Governor, State of Califonlla Assemblyman, Richmond DON B. LEI FfER Hon. Hugh 1\1. Burns San Diego GEORGE MILLER, JR. President Pro Tempore, and to Members of the Senate Senator, Martinez M Be A v N er N ly I N H G ill s J . POST Hon. Jesse 1\f. Vnruh RICHARD E. SHERWOOD Speaker, and to '\fembers of the Assembly Los Angeles ROY SORENSON San francisco Gentlemen: VERNON L. STURGEON Senator, Paso Robles This Commission has completed its study of the managerial manpower needs DAIR TANDY Oroville of the California State government. The study grew out of the Commission's fRANK D. TELLWRIGHT concern that California's. State government might be facing a critical shortage Carmel L. H. HALCOMB, JR. of management manpower of the quality required to discharge its steadily increas Executive Secretary ing and more complex responsibilities in an effective manner. \Ve questioned whether the State's processes for attracting, developing, and holding a fair share of top managerial talent were equal to the task. The Commission's concern also was based on the three premises that (1) Cali fornia's rapidly expanding population will increase the need for more and better management talent in State government; (2) the State will undertake new pro grams, requiring still more such manpower; and (3) technological changes, including broader use of electronic data processing equipment and the results of research in the behavionil sciences, wiII lead to new concepts of organizational and managerial responsibilities. To equip this State's government to meet the challenges ahead, we proposed, and you appro..-ed, a comprehensive study of (1) the present and future need for management manpower; (2) the extent to which that need is being met now; and (3) personnel and organizational modifications necessary to ensure that the State 'will be an effective competitor in attracting, developing, utilizing, and retaining managerial talent. The accompanying report presents our findings, conclusions, and recommendations. The study was conducted under the general supervision of a Commission' sub committee, consisting of Messrs. Frank D. Tellwright and Richard E. Sherwood. The Commission's Executive Secretary, L. H. Halcomb, Jr., provided overall coordination of the project. Staff assistance was provided by Messrs. John J. Corson, William H. Dennick, Keith L. Beekman, and others from McKinsey & Company, Inc., management consultants retained by the Commission. In addi tion, the following individuals contributed to the study by reviewing staff pro posals at various points in time: Edward McCrensky, Director of Civilian Per sonnel and Services, Office of :Kaval Research; Frederick C. Mosher, Professor of Political Science, University of California at Berkeley; Wesley McClure, City Manager, San Leandro, California; Franklin K. DeWald, State Personnel Director of Michigan; and Henry Aronson, Chief, Division of State Merit Systems, Depart ment of Health, Education and \Velfare. This Commission believes that the proposals included in the attached report are soundly based, and, if adopted, will assist California State government mate rially in coping with the management problems of the future. Therefore, we wholeheartedly recommend their adoption through both legislative and admin istrative action. Respectfully submitted, Harold Furst, Chairman Assemblyman Milton Marks, Vice Chairman Assemblyman John T. Knox Don B. Leiffer State Senator George Miller, Jr. Manning J. Post Richard E. Sherwood Roy Sorenson State Senator Vernon L. Sturgeon DairTandy Frank D. Tellwright A SYUDY Of MANAGEMENT MANPOWER REQUIREMENTS CALIFORNIA STATE GOV~RNMENT TABLE OF CONTENTS Page Page INTRODUCTION AND SUMMARY _______ 7 The Exempt Appointees_____ 14 Questions to Be Answered by This Study____ 7 Table 2-Source of Appointees to Summary of Chapter I-Appraising Managerial Exempt Positions _ 14 Manpower Needs Now and in the Future 7 Table 3-Length of State Service of Findings and Conclusions_______________ 7 Exempt Appointees ___ 14 Recommendation ________________________ 7 Table 4--Comparison of Executives by Summary of Chapter II-Staffing to Meet Level of Education_ 15 Future Needs ______________________________ 8 The Civil Servants ______ 15 Findings and Conclusions_______________ 8 ~______ Recommendations _____ _ 8 Median Age Compares with Other Jurisdictions ________ 15 Summary of Chapter III-Developing Future Management Talent ____________ __ 8 Table 5-Comparison of Executive Ages __ 15 Findings and Conclusions______________________ 8 Chart l-Current Ages of Executives in Recommendations ___________________________ _ 8 Management Directory Positions 16 Summary of Chapter IV-Motivating California Executives Are Well Educated __ 15 Managers to ExceL___________________________ 9 Table 6-Comparison of Executive Compensation _____________________________________________ 9 Educational Levels ___________ 15 Findings and Conclusions-____________________ 9 Breadth of Experience Varies_ _ 17 Recommendations ________________________________ 9 Fringe Benefits ___________________________________________ 9 Chart 2-Proportion of Individuals \Vho Have Findings and Conclusions_ ______________ 9 Worked in One or More Departments < _ Recommendations ___________________________ __ 9 During Their Government Careers ___ 18 Promotion ___________________________________________ 9 Promotional Patterns Have Been Rapid 17 Findings and Conclusions______________ _ 9 Compensation Has Not Kept Pace ,vith Recommendations ________________________ 10 Promotion ___________ 17 Motivating Employees Through Salary Table 7-l\·linimum Percentage Salary Increases Administration _________________________ 10 Received by Fastest Rising Quartile of Findings and Conclusions-____________ 10 Executives-1954-1964 _____ 19 Recommendations ____________________________ __ 10 A Composite of the "Average" Civil Motivating the Young and the Old___________ 10 Service Executive ____________________ 19 Findings and Conclusions______________________ 10 Recommendations _____________________________ 10 Outlook for Future GrowtL_ ___________ 19 Motivation Through Employee RecognitioIL __ 10 Full-Time Civil Service________ _ 19 Findings and Conclusions______________ 10 Impact on the Top Management Group ____ 21 Recommendations ___________________________ 10 Chart 3-Actual and Projected Growth- Summary of Chapter V-Management Freedom 1950-1985-Full-Time Civil Service Em and Leadership __________________ 11 ployment and California Civilian Popu- Findings and Conclusions__________________ 11 lation _______________________ 20 Exempt Positions ____________ 11 Control Agencies _____________________ 11 Table 8-State of California-Top Manage- Personnel Leadership ________________ 11 ment Manpower Requirements 21 Recommendations __________________________ 11 Chart 4--The Top Management Gap ____ 22 Future Demand by Occupation_ 21 CHAPTER I-Appraising Managerial Manpower Table 9-Estimated Growth in Professional Needs Now and in the Future__ 13 Categories _____________ 21 The Current Management Group__________ 13 Table .I-California State Executives A Recommended Program for Manpower Returning Questionnaires ____________ 13 Planning ____________ 21 [5] Page Page CHAPTER II-Staffing to Meet Future Needs_ ___ 23 The EDA Concept-An effective Initial Replacements for the Management Group 23 Selection Device ___________________________________________ 39 Recommenda tions ___________________________________________ 24 Recommendations ____________________________________________ 40 Appraisal of Future Management Talent_ _____________ 24 Motivating ~~plorees Through Salary Gateways to State Managerial Jobs ___________________ 24 AdmlmstratlOn ______________________________________________ 40 Table lO-Seven Key Entry Level Positions ____ 25 Selectivity Is N eeded __________________________________________ 40 Quantitative Measures of Quality_ ____________________ 25 Deterrents to Selective Salary Administration 41 Table II-Academic Standing of Recent En- A Recorr:n:ende? Program for Salary try Level Recruits During Their College Admmlstra tlOn _____________________________________________ 42 Careers __________ _______________________________________________ 25 Opportunity to Reach Top Positions ___________________ 42 Junior Right-of--Way Agent_ _____________________________ 25 .Motivating the Young and the Old ________________________ 43 Employment Security Trainee ____________________________ 25 .\lotivation Through Employee Recognition ________ 44 Subjective Opinions by Present Managers ________ 26 CHAPTER V-Management Freedom and Reactions from Colleges and Universities _________ 26 L eadership ____________________________________________________ 45 Opportunities for Improvement _____________________________ 27 Central Control Agencies ________________________________________ 45 A Recommended Program for Entry Level "Controllers" Limited to Staff Experiencc_ _____ 45 Recrui ting _________________________________________________ 28 Financial Controls ________________________________________________ 46 CHAPTER III-Developing Future Personnel Controls ________________________________________________ 46 Management Talent ____________________________________ 30 Recommendations ________________________________________________ 46 Three Key Stages of Training_ _______________________________ 30 Impact of Legislators ________________________________________________ 46 The Changing Mix of Executive Abilities ____________ 30 The Role of Exempt Positions ______________________________ 47 Training Is Not a Panacea ________________________________________ 30 Exempt Positions in California ___________________________ 47 The Need for Training in Public Service ____________ 31 Table 15-Number of Exempt and Civil Evaluating the State's Training Effort_ _________________ 31 Service Employees-1940-1962 __________________ 47 Training Received by Incumbent Filling Exempt Positions ______________________________________ 48 State Executives ___________________________________________ 31 Limitations on Filling Exempt Positions ____________ 48 Training at Lower Levels in State Service________ 31 Recommendations ________________________________________________ 49 Recommendations to Foster Management .\1anagement Flexibility Through the Development _____________________________________________ 32 CEA Program _______________________________________________ 49 CHAPTER IV-Motivating Managers to ExceL_ 34 Recommendations _______________________________________________ 49 Compensation Levels __________________________________________ 34 Personnel Leadership ________________________________________________ 49 Executive Compensation in California ______________ 34 Top-Level Coordination N eeded ________________________ 49 Chart 5-Comparison of Proportional Com Recommendations _______________________________________________ 49 pensation Relationships-California State Management Responsibilities ___________________________ 50 Government vs. All Industry Average, Recomm end a tion _________________________________________________ 50 The Public Utility Industry and the Rail A..PPENDIXES road Industry- 1963______________________________________ 35 A-Scope of Research Effort in Connection with Table 12-Average Compensation Differen the Study of Management Manpower Re- tials Between Executive Positions- quirements (June 1964-January 1965) __________ 51 Twenty Largest Dcpartments ______________________ 36 B-Median Age of Civil Service Managers Increasing Salaries Has l\Iodest Impact_ _____________ 36 Twenty Largest Departments__________________________ 5:2 Recommendations ________________________________________________ 36 C-Salary Progress of Civil Service Managers Fringe Benefits ________________________________________________________ 37 Twenty Largest Departments-(1954-1964) 53 Table 13-Comparison of Employee D-Departmental F orecasts-Full-Time Civil Benefit Costs ________________________________________________ 37 Service Employment- ( 1963-1985) ________________ 54 Medical Benefits Han Fallen Behind ________________ 37 E-Departmental Forecasts-Management Level Life Insurance Coverage Also Lags____________________ 37 Positions-( 1964-1985) ____________________________________ 55 Recommended Impro\-ements in F-Salaries Paid to Fifty-Two Selected Fringe Benefits ___________________________________________ 37 Executives in Local Governments ___________________ 56 Promotion ______________________________________________________________ 38 G-Analysis of Compensation Differentials Be Not All Qualified C:mdidates Can Compete ____ 38 t\veen Selected Executive Positions-Twenty Certification Process Excludes Equally Largest Departments ________________________________________ 57 Qualified _______________________________________________ 38 H-Comparison of Retirement Benefits--State of Veterans' Preference Has Significant Impact California vs. Other Governmental and In- On Promotional Lists___________________________________ 39 dustrial Plans __________________________________________________ 58 Table 14--Effect of Veterans' Preference I-Constitution of the State of California- On Promotional Lists ___________________________________ 39 Article XXIV ___________________________________________________ 59 [6 ] A STUDY OF MANAGEMENT MANPOWER R~QUIREMENTS CALIFORNIA STAi E GOVERNMENT INTRODUCTION AND SUMMARY 5. The degree of freedom accorded to those who serve in top-level posts to manage the resources The California State government, like most large for which they are responsible. organizations, is managed by a relatively small "hand ful" of individuals (about 1,500 persons). These in This chapter summarizes the Commission's appraisal dividuals occupy the topmost positions in an organiza and presents its recommendations as to the actions tion of approximately 100,000 employees .... This study needed. is focused on that "handful" of individuals and the positions they occupy. Summary of Chapter I * The State government of California is, in the eyes APPRAISING MANAGERIAL MANPOWER of most observers of public administration, an efficient NEEDS NOW AND IN THE FUTURE and well-run organization. Federal executives who monitor the administration of various programs by FINDINGS AND CONCLUSIONS state gOYernments throughout the nation consider this To appraise the State government's personnel ad small group of individuals in the California State sen- ministration practices the study team first de,-eloped ice to be among the most competent state officials in a profile of the body of individuals who now serve the nation. The findings of this study confirm these in the top levels of the State service. (This profile is news. described in detail in Chapter I.) Second, it de,-eloped forecasts of the volume and kinds of managerial man Our task, therefore, has been to determine and shape power needed in the future. refinements for the practices of an already well-run organization; we found no need for radical change These analyses indicate that by 1975 more than half to correct manifest abuses or inefficiencies. There are, of the State's present management group will ha,-e left however, significant and important improvements to the State's employ because of retirement or death. By be made. 1985, only 14 percent of incumbent executi,-es will remain in State service. And, when the prospective QUESTIONS TO BE grmnh of the State service is forecast, it is found that ANSWERGD BY THIS STUDY a minimum of 1,000 new positions will ha,-e to be filled "\Vhat variety of managerial talents will be required by 1985. In summary, the effectiveness of California's by the California State government over the next two State government in the two decades ahead will de decades? And having identified these needs, are the pend upon the degree of success the State achieves State goyernment's processes of personnel administra now in recruiting, developing, and moti,-ating 3,700 tion adequate to attract, to utilize, and to motivate the additional persons to fill the top management ranks. number and kinds of people that will be required? Answering these questions, when taken together, RECOMMENDATION required considerable research. (Appendix A lists the This problem-that of finding, recruiting, develop principal tasks undertaken by the study team.) This ing, and motivating the men who will run this State's research study was designed to provide an appraisal of: gm-etnment-should not be left to happenstance. 1. The State's managerial manpower needs, now and Hence, the Commission recommends that the State deyelop its processes for planning "what managerial in the future manpo,ver will be required. Forecasts 5 years into the 2. Staffing practices, i.e., the ways in which the future should be compiled every 2 years (by each State finds and hires the individuals who serre in these top-level posts department and at all echelons of management) to sen-e as a basis for anticipating future requirements. 3. The ways in which the State develops its men This planning is an essential requisite to impro,-ing and women "who reach top-level posts the recruiting, training, compensation, promotional, 4. Ho"w and to what extent the State motivates its and other practices by which the State obtains and managers to apply their full talents and zeal to maximizes the usefulness of its managers. (Page 19) the programs for which they are responsible :If 'Ibis and succeeding summaries of chapters in this on-eduction are • Employees of the University of California, California State Colleges, intentionally brief, and therefore should not be ccnstr..!e:i 2.S full and the legislative and judiciary branches of State goye:rIliIle::::.t discussions of the subjects. See the page refere:::J.ces fa:: a more were DOt included in this study. complete discussion and supporting data. 8 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS Summary of Chapter II 1. The examining process for entry level college graduates be broadened and simplified. (Page 28) STAFFING TO MEET FUTURE NEEDS 2. Greater emphasis be given to recruiting college FINDINGS AND CONCLUSIONS graduates with superior intellectual capacities and/or In the face of the obvious need to be met, the State graduate training. (Page 29) government's processes for recruiting the individuals 3. Efforts be intensified and better organized to in to serve in the 1,500 key management positions are form college graduates of opportunities in State serv not "good enough". The evidence is this: The "first ice. (Page 29) wave" of replacements now available for promotion 4. The timing with respect to college recruiting to management positions as vacancies occur are, as a group, less educated, have less relevant experience in. (i.e., the seeking out and hiring of graduates) be im proved through better planning and coordination employment outside State service, and have had less among the various State departments. (Page 29) developing experience within the State service than their predecessors who now occupy positions in the topmost echelons of State service. Summary of Chapter III Longer term prospects appear brighter. Most State DEVELOPING FUTURE MANAGEMENT TALENT executives share the opinion that the men and women FINDINGS AND CONCLUSIONS recruited for entry jobs today are better qualified and Training is important in any organization. For the better prepared than were their predecessors 5 and 10 State of California, where over 90 percent of the man years ago. This opinion was supplemented and affirmed agement group are "homegrown", training is criti by a qualitative analysis of the men and women re cally important if the government is to fill adequately cruited in 1962-64 through seven "key" entry level the top management gap that will occur over the next examinations. However, that analysis also shows that 20 years. the State recruits a discouragingly large proportion of \Vhile there are at least three key periods in an college graduates who ranked academically in the lower quartiIes of their graduating classes. executive's career when training is most required, there is a real need for on-going training if executives are to Our conclusion is that the State must find ways to keep pace with the ever-accelerating developments in upgrade further its recruiting efforts. It must find the technological, scientific, and managerial fields. This ways to attract even more capable people who will be is particularly true in public service where a system of better able to cope with the increasing complexities of promotion from within, coupled with limited job rota managerial positions in an expanded State government. tion, imposes serious limitations on a person's oppor RECOMMENDA liONS tunity to broaden his scope of understanding through There is need to take steps that will strengthen the work experience. State's managerial manpower immediately. Thus, the Although distinctly below the Federal level, Cali Commission recommends that: fornia surpasses most, if not all, other states in the scope, variety, and number of courses made available I. The State Personnel Board be authorized to hold to its employees to develop the talents and understand open, nonpromotional examinations for positions for ing they require for their present and future jobs. which talent is as available outside State service as Nevertheless, almost one fifth of the individuals now within the State's employ. (Page 24) in these management jobs had received no formal or 2. Departmental Directors be authorized to make substantive training during the past 3 years. temporary appointments from the most qualifieg in dividuals available-whether they be outside or within RECOMMENDATIONS State service-to positions in management levels, pend The Commission regards it essential that the State ing the examinations. (Page 24) give greater emphasis to and develop more considered 3. In those instances where unique experience and processes for the development of its future managers. special skills are required and known to be in short To this end, the Commission recommends that: supply, Department Directors be authorized to make 1. The State Personnel Board make greater efforts permanent appointments from outside State service, to stimulate lower level employees to take advan subject to confirmation by the State Personnel Board. tage of outside training, particularly as such (Page 24) training relates to the needs of the employees' In addition, the effectiveness of the State's manage departments. (Page 32) rial manpower a decade or two in the future depends 2. Up to I percent of all top management personnel upon the effectiveness with which it recruits beginners be granted leave with pay each year so they can in 1965, and in each subsequent year. Hence, to im enroll, fuU time at State expense, in institutions prove the State's recruiting efforts, the Commission of higher learning to pursue a program of study recommends that: which, in the opinion of their department head, STUDY OF MANAGEME1'-.'r MANPOWER REQUIREMENTS 9 will broaden their knowledge and increase their payroll, yet carries the major share of responsi professional skills. It may be desirable to establish bilities for the efficient operation of the govern an arrangement with such individuals that "will ment. ensure their return to State service. (Page 32) 2. Compensation fails as an incentive for middle 3. The interchange of experience between agency, management to aspire to higher positions. department, and division heads of the State gov 3. The breadth of compensation for the senior man ernment with their counterparts in other states agement group is compacted, causing promotional and the Federal government through participation or merit salary increase to be virtually meaning in professional associations, attendance at selected less in size. seminars, or through out-of-state visits be encour aged. (Page 32) Recommendations 4. Departments be encouraged to develop year-long To correct these inequities the Commission recom internal training programs for the benefit of in mends that: dividuals in middle management. (Page 32) 1. The State Personnel Board extend upward its 5. An inter-agency management training institute be periodic survey of salaries paid to the incumbents established, perhaps on a college or university of jobs similar to those found in private industry, campus, for the benefit of certain members of top the Federal government, and other employers; the management and promising members of middle technique of such surveys is well established. We management. (Page 33) propose that it be applied to management level jobs. (Page 36) 6. The Governor's Personnel and Training Commit tee dev ~lop a 2- or 3-year program encompassing 2. The State Personnel Board, on the basis of the foundation and other support which focuses on surveys proposed above, recommend adjustments broadening the vision of department and division to managerial salary levels to provide comparable heads so as to maximize the effectiveness of the pay for comparable work; that is, pay equal to State government in the coming decade. (Page that paid in private industry to indiyiduals per 33) forming analogous tasks. (Page 37) Summary of Chapter IV 3. At least every 4 years, a citizen committee, ap pointed by the Governor with the approval of MOTIVATING MANAGERS TO EXCEl the legislature, review the adequacy of all salaries The State or any other employer requires in its paid to elected officials and the State's senior executives not only capability, but enthusiasm and management group. (Page 37) zeal. It is not enough to hire able indivduals; employ ers must mantain an environment which motivates in FRINGE BENEFITS dividuals to put forth their full capabilities. In the Findings and Conclusions California State government there are many able career The State government's fringe benefit program is men who pursue their tasks with obvious dedication. equitable and sound, and offers some appeal to entry But there remain opportunities to improve those de level appointees. However, in two significant respects vices which exist to stimulate the individual. medical insurance and death benefits-the State's com pensation, in the form of fringe benefits, is not com COMPENSATION petitive with that offered by other employers. Findings and Conclusions In the State government, as in most organizations, Recommendations compensation levels continue to be the focal point of The Commission recommends that: all incentive devices. The Commission's findings indi 1. The State provide a major medical insurance plan cate, however, that the highest salaries offered by the to supplement the protection offered by its State of California to managerial echelons are signifi present basic health insurance plan, and that it cantly low in relation to those offered by private in aSsume one third to one half of the cost of em dustry for analogous positions. They also compare un ployee coverage. (Page 38) favorably with salaries paid by the State of New York, 2. The State double the maximum death benefit now the Federal government, and even some municipal gov paid to the widow or orphans of employees who ernments. Conversely, 85 to 90 percent of all State die. (Page 38) • employees in lower and middle ranks are paid salaries that are comparable with those of employees perform PROMOTION ing equivalent tasks for other employers. Findings and Conclusions The effects of these comparisons are threefold: Men in State service, as men who senTe other em 1. The State's incumbent top management group ployers, are induced to put forth their best efforts by receives a significantly smaller proportion of total the opportunity to advance to higher and better com- 10 STUDY OF MANAGEMENT ~L.\NPOWER REQUIREMENTS pensated jobs. The State's present promotional prac Recommendations tices tend to limit the opportunities for advancement For these reasons, the Commission recommends that: that exist for its ablest employees. 1. There be appropriated annually a sum not to ex Promotional examinations-designed to broaden the ceed one half of 1 percent of the salaries of in opportunity to advance-in practice offer opportunities dividuals (who are eligible for an increase) in to a limited few. For example, two thirds of the pro each department. Using this appropriation, De motional examinations for managerial positions over partment Directors should be authorized to grant the past 5 years were limited to employees within the additional salary increases to individuals whose departments or subdivisions where the vacancies performances have been clearly superior. (Page existed. 42) Second, the examination process, as practiced, ex 2. Section 18854 of the Government Code be cludes many qualified candidates. The rating process amended so that the withholding of salary in cannot reliably differentiate between contestants creases wiII not be appealable to authorities out whose final co~posite scores fall within four whole side the department in which the individual is points of each other; yet selection is limited to the employed. This action is proposed in order to three top scorers (computed to two decimal point make clear the obligation of each Department accuracy). Director not to grant "merit" salary increases an Third, granting veterans' preference distorts the se nually to the least efficient employees, and to lection process and denies promotion to many qualified make known to each why increases were not candidates. granted. (Page 42) 3. The ranges of salaries established for each grade Recommendations in the classification system be broadened to make To provide management with flexibility to select possible further advance by capable employees the potentially ablest candidates for promotion and to who remain in the same grade. (Page 42) ensure that all qualified candidates can participate in the competitive process, we recommend that: MOTIVATING THE 1. The opportunity to participate in promotional YOUNG AND THE OLD examinations be broadened so all potentially qual Findings and Conclusions ified individuals may compete, whether within or A major deterrent to motivating the more capable outside State service. (Page 40) younger employees in State service is the lack of va cancies in the managerial echelons to which they may 2. The appointing authority be empowered to se be promoted. This lack is caused by the continuation lect, for a management level position, any in of superannuated individuals in managerial positions. dividual who, in the competitive examination, obtains a score within four whole numbers of the Recommendations lowest score of the three individuals ranked high To increase the number of promotional opportuni est on the promotion list. (Page 40) ties to management positions for younger and abler " 3. The preference now granted to veterans be avail persons and simultaneously to motivate further tho~e able only during a national emergency and in the able individuals who wish to continue working after succeeding 5 years; that such preference be age 65, we propose that: granted only once-upon initial entry into State 1. Mandatory retirement age be reduced to 65 years. service; and that it not be applied to managerial (Page 43) and policy setting positions. (Page 40) 2. Individuals who wish to extend their working careers beyond age 65 be allowed to do so on a MOTIVATING EMPLOYEES THROUGH year-to-year basis, when the appointing authority SALARY ADMINISTRATION certifies that their performance in the preceding Findings and Conclusions year has been outstanding. (Page 43) Increased earnings is the motivational device most widely used throughout industry and government. But MOTIVATION THROUGH because the California State pay plan treats outstand EMPLOYEE RECOGNITION ing, average, and inefficient employees alike (i.e., grants Findings and Conclusions salary increases to each, every year, without regard Financial incentives alone, or the hope for them, are to the caliber of their performance), it not only de not sufficient. They should be supplemented with other forms of recognition of achievement. preciates the incentive for able and industrious effort, but is a wasteful expenditure of payroll dollars. In Recommendations short, the present pay plan provides no incentive for To supplement existing means of employee recogni good or superior performance. tion, we propose"an expansion in the number of awards STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 11 and dollars granted under the Superior Accomplish Control Agencies ment Awards program. In addition, we recommend Two major State agencies-The Department of the establishment of: Finance and the State Personnel Board-exercise sub stantial controls over the freedom each departmental 1. A "Governor's Award" to be given annually to executive has to manage the affairs of the department a specified number of individuals who have served for which he is responsible. The staffs of these im the State in an outstanding manner. (Page 44) portant departments, by and large, have had little or 2. A "Directors' Award" program for departments, no experience in discharging line responsibilities. \Ve not restricted to number of recipients, for in assume that, partly as a result of this limited experi dividuals meeting high criteria of performance or ence, these two departments have tended, in certain achievement. (Page 44) ways, to place unnecessary constraints on the freedom with which. operating managers may direct the affairs Summary of Chapter V of their departments. MANAGEMENT FREEDOM AND LEADERSHIP Personnel Leadership FiNDINGS AND CONCLUSIONS Finally, there is need for improvement in the per In no enterprise-public or private, large or small sonnel leadership provided throughout the State serv do managers have unrestrained freedom to direct the ice. The State Personnel Board has earned a reputation activities of the organization. In a public enterprise, for intelligent and efficient protection of the principle the monitoring of management by the legislature, by of employee merit in the selection and advancement control agencies, and by the public .tends to limit the of State employees. But its operations have been highly freedom of managers to an even greater degree than centralized, and there is less evidence that it has built exists in private industry. Such constraints tend to up effectively the processes of personnel administration handicap managers in State service in achieving ob to aid the management in each State department. jectives set for them by discouraging innovation and limiting zeal. RECOMMENDATIONS The Commission believes it is necessary to expand Exempt Positions the managers' freedom if each is to be held fully re In any democratic government, those in leadership sponsible by the Governor and the legislature. Spe positions, i.e., those who make and oversee the execu cifically, the Commission recommends that: tion of public policy, should be elected by the people, 1. An effort be made to rotate potential top execu or be immediately responsible to and responsi,-e to tives in the control agencies among positions in those who are elected. This principle of responsiveness different line departments with the objective of is provided for in the California State government (in building into these agencies a fuller understanding Article XXIV of the State Constitution) through the of the problems faced by the managers of the designation of positions in each agency and depart departments. (Page 46) ment as "exempt" from the provisions of civil sen'ice. 2. The practice be modified which requires prior Our analyses of the use of such freedom to appoint approval by the Department of Finance before over the past 25 years, and our appraisal of the current operating departments may (a) make expendi number of exempt positions, lead this Commission to tures for items included in budgets already ap proved, (b) execute contracts or other documents conclude that past and current practices in California for such items, and (c) revise organizational or have been wholly consistent with the highest standards procedural matters. As department executives of public personnel administration. Current proposals establish their competence as administrators, as for revising the State Constitution and further limiting well as executors of the Governor's policies. the both the Governor and the legislature in the degree to extent of perusal throughout the year should be which additional exempt positions can be created do relaxed. (Page 46) not appear warranted or desirable. We would be in 3. The State Personnel Board give departments, to disagreement with any action to advance such pro a greater degree than is currently the situation, posals. authority to recruit, classify, promote, and dis In California a large proportion of such exempt cipline its employees subject to standards set by positions in the State government-almost half of all the Board, and to its postaudit of their actions. exempt positions at the managerial levels-have been (Page 46) filled by individuals promoted from the career civil 4. The recruiting effort for individuals to be ap service ranks. This Commission questions the advis pointed to exempt positions be intensified. Sources ability of continuing this practice in the future, to the outside State civil service should be the primary degree it has been followed in the past. "hunting ground" for talent. (Page 49) 12 STUDY OF MANAGEME}"l i\L~",'PO'\TR REQUIREMENTS 5. Arbitrary limitations on the appointment to or The primlr)' responsibility o,f this position would removal from exempt positions be eliminated. be (\) ~l'lTe as the Governor s adVIsor on all per Such limitations include specific experience or sonnd llutters (and as a stimulator of improved licensing requirements established by the lei& pr:1.:-til'~S). P:1rticularly, this in~v~dual. sh?uId be lature, or specified terms of office. (Page 49) e:'1)i..'\.'(I.'d to aid the Gov~rnor In I~entifYl11g and 6. The Career Executive Assignment program be r('.:-miring the IlIost qualIfied candidates for ap expanded to include all positions immediate Iv pointnWllt to exempt positions. (Page 50) subordinate to managerial positions that are c;~­ 8. Posiri,1!ls equivalent to "Assistants for Personnel" empt from the provisions of civil service. Further be 1..'St'.lhlished in the larger dep3rtII1ents, report individuals outside California State civil servic~ . . in(T the Department Director. (Page 50) tt) should be eligible to compete for appointment to ::> '" such positions. (Page 49) These SUIllt1l:1rized findings, conclusions, and recom 7. A position of Secretary for Executive Personnel mendatiol'..$ :lre described more fully in the succeeding be established within the Office of the Governor. five chapc.:IS. CHAPTER I APPRAISING MANAGERIAL MANPOWER NE~DS NOW AND IN THE FUTURE The senior management group in the executive positions? What is their background in terms of edu branch of California State government is among. the cation and experience? When must they be replaced? most competent of any group of state officials in the The purpose of this chapter is to picture this man United States. This overall judgment was expressed agerial group and, for purposes of perspective, to con by Federal executives who monitor or audit, on behalf tr'aSt it with comparable groups. In addition, this chap of Federal departments, the activities of 15 depart ter forecasts the likely growth in the number of ments in State governments throughout the nation. managers the State wiII require 10 and 20 years in the Each interviewee was asked to consider a list of 20 future, as well as the inevitable attrition that wiII occur large states and to identify and rank the 5 leading 2illong incumbents. Subsequent chapters will consider states (in relation to the departments with which they the problems of staffing for this growth and attrition, had direct responsibility) according to the following as well as other problems facing future managers. three criteria: THE CURRENT 1. Overall professional competence of total depaTt MANAGEMENT GROUP mental staff-consideration of educational level, There are 1,530 management positions in more than breadth of experience, professional contributions, 50 departments of the executive branch of State serv quality and quantity of achievement ice. This number includes all positions with managerial 2. Prestige of tbe Director and his hmnediate staff responsibilities in the top echelons of the State's serv expression of respect among peers for adminis ice (referred to as the Management Directory *). Two trative and management skills, creativity in categories of employees-those filling statutory or achieving goals, leadership in profession exempt positions (hereafter referred to as exempt ap 3. The ability of these executives to obtain support pointees), and those within the civil service-are found those skills enabling the Director to obtain sup in these positions. Exempt appointees are responsible port from the Governor, the legislature, and the for policy formulation (i.e., as the Governor's aides, public. they are responsible for carrying out the will of the people). Civil servants are the careerists responsible Every Federal official interviewed listed California for assisting exempt appointees in policy formulation among the five leading states. In more than three and for executing the policy decisions of top exempt quarters of the interviews, California's management appointees, as approved by the Governor. personnel were ranked number one-several times on all three criteria. ~..vl 1,530 incumbents were surveyed by question naire regarding their background and experience, and Subjective opinions by this Commission's staff indi 94 percent replied. The analysis which follows in this cated that many of the State's managerial personnel chapter is based on reported data of 1,434 State execu compare favorably with executives in industry. tives as shown in Table 1. Who are these individuals who are held in such high regard? What positions do they hold? From where ,. _.. .. Management Directory, developed by the Training Division of the State Personnel Board for purposes of establishing eligibility criteria did they come? How did they achieve their present for certain types of managerial training and development, enumerates those positions. Table 1 CALIFORNIA STATE EXECUTIVES R...~RNING QUESTIONNAIRES Number of Executives Median Management Civil Exempt Salary Ecbelons Servants Appointees Typical Positions (8/1/64) 1 3 48 Agency Administrator-Department Director __ $20,484 2 44 60 Deputy Director 19,320 3 307 59 Division Head 17,028 4 873 40 Bureau Chief 15,432 1,227 207 14 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS Of the 1,434 executives returning questionnaires, 138 service. However, only one fifth of the individuals (almost 10 percent) entered State service during the appointed from outside State service also have ex past 5 years-74 are civil servants and 64 are exempt ceeded 10 years' service (see Table 3). appointees. Table 3 Analyses of this management group should be made LENGTH OF STATE SERVICE OF EXEMPT APPOINTEES with full recognition of the mix of characteristics re Appointed from Outside Appoillted from quired of individuals holding the topmost positions Years of State Service Civil SeT".'ice in a large governmental organization. There are three Service Number Percent Number Percent essential qualities ,vhich must be present: 0- 4 ___________________ 46 40% 3 3 % 1. A thorough knowledge of the functional field to 5- 9 _______________ 45 39 8 9 be managed, 10-14 _________________ 9 8 10 11 2. A capability for administration, including the 15-19 ______________________ 9 8 25 27 management of large bodies of people, and 20-24 _________________ 5 4 21 -7,' 25 and up _____________ _ 1 25 27 3. A capacity for dealing with the legislature and the constituency. IH 100% 92 100% Ideally, exempt appointees ,viII possess all three quali In total, 105 exempt employees (combining those ties. More often, however, the qualities will be present appointed from within and outside State sen-lce), or in the management group as a result of supplementing 51 percent of the top group, ha,-e served under two the exempt appointees' capacity for dealing with the administrations and two Governors of different politi legislature and the constituency, with the functional cal parties. The fact that over half of this group has knowledge of civil servants. Typically, both will carry stretched across at least two administrations raises the administrative capabilities to their positions. If any of question of whether the mix of qualities required in these three skills are missing (or even significantly the top management group is present. Perhaps the downgraded), the mana.gement group, as a whole, is answer lies in the uniqueness of the California political not complete. scene in which the parties in pm,-er have not pursued radically opposing philosophies. THE EXEN\PT APPOINTEES In addition to source of exempt appointees and In the topmost echelons of the California State length of service, age and education are also signifi service, 207 individuals serve in "exempt positions", cant. Following is a brief summary of these t\,-o-per i.e., in positions to ,vhich appointments may be made sonal characteristics, compared with Federal political without regard for the requirements of the State's civil appointees. service laws and rules. These are the individuals re 1. Age: The average age of exempt appointees is sponsible for assisting the Governor and the legislature 50 years. This compares with 49 years for Federal in formulating and executing policies that carry out political appointees. '* the will of the people. 2. Education: Exempt appointees in California are Two major characteristics stand out in analyzing well educated, although less so than their Federal this group. First, almost half of the current exempt counterparts, as shown in Table 4. This comparison group has been appointed out of career civil service probably is distorted, however, by the emphasis on positions, as shown in Table 2. scientific and research programs in the Federal gov Second, exempt appointees have been employed in ernment. California State service for a considerable number of In both age and education, exempt appointees do years. Those individuals appointed from civil service not differ significantly from civil service executiyes, as positions (where they have spent most of their work shown in the next section. ing careers) would be expected to have long service i~ the State's employ-88 percent have 10 or more years ~ W. Lloyd Warner, Van Riper et al., The American Federal Executive (New Haven, Connecticut: Yale University Press, 1963), p. 13. Table 2 SOURCE OF APPOINTEES TO EXEMPT POSITIONS Number of Exempt Appointees % Exempt Management From Outside From Appointees From Echelons State Service Civil Service Total Ch'il Service 1 30 18 48 38% 2 30 30 60 50 3 34 25 59 42 4 21 19 40 48 115 92 207 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 15 Table .4 COMPARISON Or EXECUTIVES BY LEVEL OF EDUCATION State of California Exempt Appointees From Outside From Federal Political State SeT'i. ....c e Civil Service Total Appointees 1 Attended College ____. ___________ 89% 88% 88% 97% College Graduate _______________ 72 69 71 90 Advanced Degree -------- ---------- 41 29 36 75 1 W. Lloyd 'VarneI et a1., "Profiles of Government Executives," Business Topics (Autumn 1961), pp. 16--17. THE CIVIL SERVANTS nia State service is 51 years, the top level of the man The 1,227 civil servants, as indicated earlier, are re agement group averages only 53 years of age, and the sponsible for aiding elected officials and exempt ap fourth echelon averages 50 years of age. Hence, it ap pointees in policy formulation. In addition, they are pears that executives at all echelons will leave State responsible for carrying out these policies. This section service within a relatively limited period of time. presents a factual profile of this group. The most meaningful analysis of age distributions and potential replacement problems, however, must be Median Age Compares accomplished on a department-by-department basis, With Other Jurisdictions where specific replacement gaps can be identified. In The median age of California State executives is certain departments, the replacement problem may be ,-irtually identical with that of civil servants in exec even more serious than for the onrall group. For utin positions in the Federal serice and in large munic example, the median age in the Department of Justice ip-alities as shown below. is 56 ye:lfs. In the Departments of Agriculture and Analysis of the age distributions shown on Chart 1 on the following page points out the eventual replace Education, the median age is 55 years. (A list of me ment problem that faces California State service. As dian ages in the 20 larges departments is contained in suming a continuation of past separation experience Appendi.-,,; B.) (i.e., primarily retirement, but including resignation California Executives and death), more than half of the present civil serv Are Well Educated ants in executin positions will have to be replaced by The proportion of California State executives .at 1975. By 1985, only 14 percent of the present group tending and graduating from colleges or universltles will remain in State service. substantially exceeds that of comparable executives in The principal reason for this rather dramatic rate of separ;.tion onr the next 10 and 20 years is the rela municip:l! governments and private industry, and lags tively close grouping of ages throughout the manage only slightly below the educational levels of Federal ment level positions. \Vhile the median age in Califor- executi\-es. Tobie 5 COMPARISON OF EXECUTIVE AGES (In Years) State of Federal Municipal Executives .. California • Service • Large Cities Small Cities 51 51.6 51 48 • Staff stL.'"\-eys. (Tne sUITey of Federal civil servants consists of a 10 ** l\lunicipal l\13npower Commission, Governmental Manpower for To· percent sample of executives, GS-15 and above, in 20 large depart mOTTC'w's Cities (New York: McGraw-Hill Book Company, Inc., ments with £UDCtiO:J'0.S similar to state activities, i.e., Employment, 1962), pp. 143-144. Public "'arks, and forth. The Defense Department and scientifi caily oriented departments were excluded.) Tobie 6 COMPARISON OF EXECUTIVE EDUCATIONAL LEVELS Attended College Graduate College Graduates Degrees California State Civil Service 1 ___ ._._ ______________ 93% 75% 33% Municipal Government ! _________ 80 59 25 Private Industry 3 _____________________________ 76 57 NA4 Federal Civil Service ___________________________ 96" 86' 47' 1 Staff SUI'. . eys. "Not <l't"anable. •~ ' ~VIu. nicipal l\ianpower Commission, op. cit. • David T. Stanley, The Higher Civil Sen'ice-Art E"a!uatiort of Fed Lloyd 'Varner and James C. Abegglen, Occupational Mobility in era! Personnel Practices (Washington, D.C.: The Brookings Institu American Bllsiness fr Industry, 1928-1952 (Minneapolis: University tion, 1964), p. 3U. of lItinnesota, 1955), p. 96. 16 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS Chart 1 CURRENT AGES OF EXECUTIVES IN MANAGEMENT DIRECTORY POSITIONS (Shown Cumulatively for Each Age) Number of Executives 65 III Levels I ar.d II 60 ltd Number of Executives Level III Averaged over Each ~ Level IV 55 5-Yea-r Per\iod -- 50 45 40 35 30 25 --- 20 15 10 S o 30 3S 40 45 50 SS 60 6S 70 Age in Years STUDY OF ?\L-\.NAGEMENT MANPOWER REQUIRE\fENTS 17 ·While data for the various gm-ernmental jurisdic to stay within their specialized field throughout their tions (Federal, State, and municipal) are current, career. Nevertheless, these data raise the question of information pertaining to industrial executives was whether greater exposure to a wider variety of expe developed in 1952. During the intervening period riences through interdepartmental transfers or promo nati;::mal educational levels have risen significantly. The tions would desirably broaden the perspectives of those 1964 Manpower Report of the President, for example, who reach the top ranks. pointed out that the proportion of college gr2.duates • Californians have some field experience. Forty among "professional, technical, and kindred workers" percent of California's State executives have worked in the civilian population had increased approximately both in field locations and headquarters. In contrast, 20 percent between 1950 and 1960. In all likelihood, nearly three fourths of the Federal executives have the 1952 data for industrial executiyes have increased never moyed from the field to headquarters, and close by a similar magnitude. to 90 percent have never transferred from headquarters Nevertheless, this evidence sugges-tS that California to a field location.t In both services, two thirds of the State executives are better educated than their counter employees are currently located in headquarters offices. parts in local government or private industry, although Because a proportion of the Federal executives trans lagging the Federal service. This lag should be taken ferring to the field probably returned to headquarters into account ,,,hen considering possible changes to the (and therefore were included in both figures reported recruiting and promotional processes for managerial for Federal executi,-es), it would appear that a larger positions in California State government. percentage of California's State executives acquired field experience than is true in the Federal service. Breadth of Experience Varies The breadth of experience of the State's executives Promotional Patterns was measured in terms of: Have Been Rapid One of the most pO\\"erful incentives for a career 1. The working experience, releyant to their cur executive lies in his ad,-ancement opportunities. In the rent occupation, acquired before entering State past, California civil sen-ice executives have advanced service rapidly. On the average, it took the top three echelons 2. The number of different departments in which of California executives * between 14 and 15 years of they have worked while in State service service to reach their present positions in the manage 3. Whether the individual has had experience both ment levels of State sen-ice. (Individuals in the top in a field location and at the headquarters of two echelons averaged 18 years' service to reach their the department where now employed. present positions.) By contrast, it took the Federal * * * executives studied about 20 years to reach the positions • Working experience outside of State service. they now occupy at grade GS-15 and above. Seventy-eight percent of California's executives indi There are two possible explanations for this signifi cated that they had acquired, on the average, almost cant disparity in rate of promotion, both of which are 8 years of related work experience outside State serv probably applicable. First, the median age of execu ice. More than half reported experience in private tives entering California State service is somewhat industry. In contrast only 31 percent of the Federal higher-30 years old compared with 27 years of age § executives surveyed '* indicated they have worked in for executi"es entering Federal service. Second, Cali private industry before entering Federal service. Cali fornia State service has grown rapidly during the past fornia executives, it should be noted, did not specify 15 to 20 years, thereby creating many more promo whether all their working experience was acquired tional opportunities. In the post-World War II era, before entering State service. California State government has more than tripled in • Califomia executives have t1'ansferred less often. size while the Federal sen-ice has remained relatively Chart 2 on the following page shows that over two stable. thirds of California's executives ha\-e spent their entire State career working in one department, compared Compensation Has Not with the Federal service where slightly over half stayed Kept Pace with Promotion in one department. t Despite the fact that California executives have Even though nearly a third of all promotional exam achieved their present management positions in fewer inations are offered on a service-wide basis, relatively years than their Federal counterparts, State salary few appointments to managerial positions in California progress has not been as rapid. During the lO-year State service are made across departmental lines. Ad mittedly, many departments are highly specialized and ¥-In order to make this analysis 2S comparable as possible with available Federal d~ta. C<lLfornia execurin:-s in this case were limited to the certain professionally trained indi\-iduals would tend individuals in the top thr~ ]e"e!s of the ;\lan2gement Directory W~lO h:ld ?~ Ie3q J 0 ye<ir5' c::reer !ien'ice with the State. t Ibid., p. 34. The Federal data are reported on a basis dHft>rent from ~ Stanley, op. cit., p. 30. C'"1liforn;~ c~ta. and :h~refc:e do not :::tHo\\' direct comp<lriso!l. t Stanley, op. cit., p. 33. § W. Lloyd ,,'arner et 01. The .-l.merican Federal Exewtive, p. 13. 2-64701 18 STUDY OF MANAGEMENT MANPO\VER REQUIREMENTS Chart 2 PROPORTION OF INDIVIDUALS WHO HAVE WORKED IN ONE OR MORE DEPARTMENTS .(JURING THEIR GOVERNMENT CAREERS 3 or More Depts. 3 or More Depts. 69% 56% 2 Depts. 1 Dept. 1 Dep~. California Federal Civil Servants Civil Servants~l< GS -15 and Above'!o!< * - .jtaff surveys. ** - Stanley, . Ope cit., p. 33. STUDY OF MANAGEMENT MANPO'VER REQUIREMEl\TTS 19 period 1954 to 1964, salaries of successful aspirants to ice executive who currently manages the affairs of the management positions (i.e., those who currently serve State's gm-ernment: in management positions) have, on the average, in • He is about 51 years of age. creased 93 percent. During the same tL.TJ1e period, those e He has spent about 17 years in the State's service who currently serve in management positions in the the last 4 or 5 of -which -were in his present position. Federal service experienced 117 percent increase in e He received a college degree before entering salary. A comparable figure for a large financial insti tution in California is 114 percent. '* State sen-ice. He has acquired approximately 8 years' working These percentage figures were calculated by com G experience in private industry and/or in another public paring the current salaries of indinduals in manage jurisdiction. ment positions with the salaries these same individuals were receiving 10 years ago in State service. The in e He has spent his entire State career in one depart creases over this lO-year period comprise three parts: ment and has been located in Sacramento. (a) general salary increases granted to most employees III He nearly doubled his salary oyer the past 10 (ranging between 35 and 45 percent for the three years and today is earning approximately $16,000 per groups surveyed), (b) merit salary increases, and (c) year. promotional increases. General salary increases in Cali e Chances are he will retire from the State service fornia State service kept pace "ith the general in .( or die) \\-ithin the next 10 years; almost assuredly his creases of the other two groups. Therefore, the expla successor must be found by 1985.· nation for the lag in salaries of California's executives must lie in smaller or less frequent merit or promo OUrLOOK FOR FI.J'n.,mS GROWTH tional increases. What growth is likely to occur in State government Aside from ovr:rall average salary increases, a more over the next 10 and 20 years? \Vhat will the State significant comparison is the speed by 'which the ablest government require in the nature of managerial man performers can increase their compensation. In other power in the future? Hoy! man)- of the present m:ma words, "Are outstanding individu" 1s identified and gers must be replaced within the next 2 decades? moved ahead in State service as fast as elsewhere?" Full-lime Civil Service The answer is no! The following t2.ble compares the Since 1950, the ci,'ilian population of the State of percentage increases in salaries for the 25 percent of California b.s gro'.'.-n at the ra:e -of 4 percent per year. individuals (within the three groups surveyed) who During this same period, the number of full-time civil received the largest salary increases o.er the lO-year servants i'1 State gm-ernment has grown 5 percent an period. nually-exceeding the population grov;th rate by an Table 7 average of 1 percent per year. OYer the -'next 20 years, it is estimated * that population growth rate in Cali MINIMUM PERCENTAGE SALARY INCREASES RECEIV~D BY FASTEST RISING QUARTILE OF EXECUTIVES 1 fornia will decelerate to about 2.8 percent per year in 19$1-1964 the period up to 1975, and 2.4 percent in the suc State of California _________________________________ 115% or More ceeding decade. Federal service ________________________________________ 150% or l\,lore rn light of this prospective growth in the number One large financial institution______________ 1-1-8% or More of people to be sen'ed, each of the larger departments 1 Staff sun'eys. in State sen-ice (now employing oyer 95 percent of On the other hand, a substantial proportion of Cali all fulI-ti!1~e State employees) was asked independently fornia executives, compared with Federal executi\'es, to estim~te its probable growth in employees to 1975 received relatively small increases m-er the same dec and 1985. Their estimates indicated that these depart ade. Forty-three percent of the S:ate's managerial ments expect an annual. growth in State employees of personnel received less than a 75 percent increase in salary since 1954. By contrast, only -+ percent of the 3.2 percent ber-ween now and 1975, and an additional Federal executives surveyed were held to this modest annual growth of 1.7 percent in the following 10 level of salary increases. (For variations in depart years.t In other ,,'ords, the departments' executives mental salary increases, see Appendix C.) expect that the growth rate of employment in State service will continue to exceed population growth in A Composite of the "Average" the near term (10 years), but \riII drop below it in Civil Service Executive t the period 1975-1985. Chart 3 on the following page By accumulating the foregoing mrormation, it is depicts actual and projected growth rates for both possible to develop a profile of the "r:-pical" civil serv- population and State employment for the period 1950- ~ During this same lO-year period, the Consumer Price Index (cost of 1985. living) increased approximately 15 percent. t The "averages" depicted in this paragraph do not necessarily descrihe anyone individual withjn State service. They ri.mply are a combi~ed • By the Department of Finance. listing of the 3'\'erages of se,veral different p.:uSe characteristics. t For projections of indiridual departments, see Appendix D. 20 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS Chart 3 ACTUAL AND PROJECTED GROWTH 1950 - 1985 FULL-TIME CIVIL SERVICE EMPLOYMENT AND CALIFORNIA CIVILIAN POPULATION Civil Service Civilian Employment PopUlation (000) (000,000) 36 180r-------------------------------------------------------·------------------------------------------------~ ,/ 150 30 ~". ~ ,,-'" ",- .,.".:~ /// 120 24 ~~/ /7~~ ,/ 90 18 PopUlation I 75 15 Civil Service Employment 60 12 __________ 45 ~4----------------------------------------------------- ~ 9 30 ~------~-------+-------~r_---------~---------~-------------+_---------J 6 1950 1955 1960 1965 1970 1975 ·1980 1985 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 21 Considering that the rate of growth for employment own profession if he is to direct a nriety of specialists in State government has exceeded the population on his staff, many of whom may be younger and may growth rate over the past 13 years (by an average of have had more recent exposure to the latest develop 1 percent per year), although projections indicate that ments in their fields.) In recognition of this require the two rates will be approximately equal over the next ment, the growth projections to 1975 for the manage 20 years, we believe these forecasts can be accepted ment group were also compiled according to nine pro only as minimum indications of gwwth. Nevertheless, fessional categories as shown in Table 9. full-time civil service employees (extrapolated to in clude all departments) are expected to reach 150,000 Table 9 by 1985-a sizable group to be managed. ESTIMATED GROWTH IN PROFESSIONAL CATEGORIES CUl7e71t Annual Impact on the Top Management Group No. in Estimated Per- Each department estimated the graw"th of manage A{anagement No. centage Directory· in 1975 • Increase inent positions, using full-time civil service as a base. In total,. the departments estimated a 2.4 percent Engineering & Architecmre (In- cluding Ciril, Petroleum & growth rate for the management level-slightly under Other Engineers, & Architects) 2i3 323 1.5% the 2.6 percent growth rate projected for the civil Social Sciences (Including Social service. Adjusting to include all departments, this Workers and Psychologists) _ 39 64 - 4.6 amounts to an increase of nearly 1,000 positions by Education ___________________________ 41 62 3.8 Law __________________ 5i 86 3.8 1985.** This figure, because it is based on the fore casts of the civil service population, also must be con Mathematics & Physical Science (Including Geologists, Chem sidered conservative. ists, l\-1athematicians, Statisti- Growth in employment is only one of the factors cians, Soil Scientists, Etc.L____ 16 23 3.4 to be considered in planning to meet the State's future Medical Science (Including Phy- management manpower needs. The inevitable attrition sicians, Psychiatrists, Nurses, Veterinarians, Etc.) _____________ 200 280 3.1 of the current management group (primarily because Natural Science (Including For- of retirement) creates the l)eed-for an even larger num esters, Agriculturalists, Biol- ber of managers in the future (see Chart 4). ogists, Etc.) ____________________________ 49 62 2.2 Yet even Chart 4 understates the problem of staffing General AdminL.-uative (All Other) ___. _____________ 647 902 3.1 the top management group in the future. Those in dividuals replacing the current managers are also sus ~ Note: These columns do not add to the totili for the managerial group shown ea=lier because they pertain o::uy to the depc.rtments which ceptible to the various causes of attrition (e.g., retire forecasted their requirements. ment, death, disability, and to some degree, resigna Table 9 reflects only the gro\\w factor and does tion). Table 8 shows the total manpower needs to fill not take into account the need for replacements. As the "management gap" in 1975 and 1985. indicated earlier, the replacement factor, rather than growth, is actually more important for manpower Table 8 planning in State government. Detailed examination of STATE OF CALIfORNIA replacement needs should be accomplished for individ TOP MANAGEMENT MANPOWER REQUIREMENTS (Numbers of Individuals-Rounded) ual departments. By 1975 By 1985 Additional Positions Resulting from Growt~ 560 1,000 A RECOMMENDED PROGRAM Replacements for Current Executives_____ 800 1,300 FOR MANPOWER PLANNING Replacements for Future Executives_______ 410 1,400 Effective planning and action to ensure that the State will have the managerial personnel required Total Additional Executives Needed _____ 1,770 3,700 when it is needed make desirable a continuing effort Even if the forecasts for managerial growth are low, to forecast needs. The time, effort, and cost required the impact of this conservatism on total requirements is to forecast the number of indi\-iduals needed by each not as large as might be expected. For example, were occupational specialty and in each echelon in the or forecasts low by 10 percent, total requirements would ganization \\'ill not be great; the value of such pre . be understated by less than 3 percent. vision will be substantial. Therefore, we propose that the State broaden and intensify the planning process Future Demand by Occupation through which manpower needs are identified and on As individuals rise within the State's service or in which appropriate recruiting and training programs any large organization, they must broaden their ca can be developed. Specifically, we recommend that: pacities if they are to deal with the variety of problems that confront them as managers. (Further, a senior 1. Every 2 years each department be asked to pre executive also must broaden his understanding of his pare a 5-year forecast of likely increases or de creases in personnel at all echelons in the organi- ~ ~ See Appendix E for forecasts by department. 22 STUDY OF iVIANAGEMENT MANPO\VER REQUIREMENTS zation. The Governor's office should serve as the 3. Deparunental manpower projections (in the stimulus to the departments in .this effort. The years in which they are prepared), as well as Governor's office well may ask the State Person plans for filling vacancies, should be incorporated nel Board to serve as the coordinator and com in the fiscal budgeting process (as a part of fore piler of data. casting program development and expenditures 2. In the light of these forecasts, departmental per gro\vth) and presented to the Governor and the sonnel officers should (a) develop inventory data legislature. regarding the potential replacement strength at 4. To facilitate their own planning processes, the each level of the organization (by occupational recruiting and training divisions of the State Per group) for the next higher echelon, and (b) plan sonnel Board should be involved in the forecast recruitment efforts for needed replacements. ing process and apprised of the results. Chart 4 THE TOP MANAGEMENT GAP Number of Managers 3000 . Total Number 2500 2000 555 ---New Positions 995 --- ------ -- 1500 .. .... ... ... ...... .. -----;. ......... . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . .. ... . . . . . . ... . . . ... . . . . . . ... . . . ... . . . . . . ... . . ... . . . . . . ... . . ... . . . . . ... . . . ... . . . . ... . .. ... . . . . ... . .. ... . . . ... . .. ,... .. . ... . .. ... .. . ... . .. .. .. . ... . .. .. .. . ... . .. .. .. . ... . .. . .. . ... . .. . .. . ... . .. .. . ... . .. .. . ... . .. . . ... . .. . . ... . .. . . ... . .. . ... . .. . ... . .. . .. . .. . .. . .. . . . .. . . . .. . . . .. . . .. .. .. . .. ... ...... .. 807---- Vaca f n ro c m ie A s t trition ............ 1319 1000 . .. 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The effectiveness with which young ments" ** attained at lea...<;t a baccalaureate degree, men and women are being recruited into entry level while three fourths of the current management positions today will determine in large measure the group reached that educationallC\-el. Contrarily, 13 caliber of the State's top management in 1975 and percent of the replacements did not attend college 1985. Since 1959 only 1 percent per year of all man at all, compared with only 5 percent of current agement positions in the civil service ha,e been filled managers. from outside civil service ranks. And of these individ Inasmuch as (a) there has been a postwar trend to uals, half were medical doctors entering the fields of ward attaining advanced educational degrees, (b) mental hygiene and public health. the replacements have a younger median age (45 This chapter evaluates the success of past recruiting years versus 51), and (c) m-er 70 percent are war efforts in California State service by analyzing the pool veterans and therefore were eligible for G.!. educa of individuals from which the first repla~ements to the tional benefits, the lower a,erage level of education management group are most likely to be chosen. In among the younger group is significant. addition, it considers the State's present entry level recruiting program by identifying a representative B1·eadth of experience: Sixty-three percent of the sample of classifications in which future managers are qualified replacements had some degree of full-time likely to begin their careers with the State, and assess working experience (related to their current occu ing the relative caliber of candidates currently enter pation) outside State sen-ice, compared with 78 ing these classes. Finally, this chapter appraises the percent for the current managers. Of those who had recruiting efforts that have produced these candidates, some outside exposure in their working careers, the and considers what changes should be made. qualified replacements anraged about 5 Yz years (NITIAL REPLACEMENTS compared with almost 8 years for the management FOR THE MANAGEMENT GROUP group. Observers of public administration throughout the The qualified replacement group also has had less nation generally have held that government was able breadth of experience while employed in State serv to attract the ablest of this country's young people ice. Over three fourths ha,e spent their entire State during the 193 Os and during the years of 'Vo rId 'Var careers in one department, compared with approxi II. However, government has not been able to attract mately two thirds for the management group. Sim an equally large proportion of the ablest men and ilarly, two thirds of the qualified replacements have women entering the labor market in more recent years. spent their entire careers without one transfer be This hypothesis appears to be borne out in California tween a field location and department headquarters. State government. The same is true for 60 percent of the management The group most likely to constitute the first wave group. of replacements to management positions does not possess as broad an array of discernible qualifications In summary, the findings indicate that the group from which initial selections to management positions as their predecessors (who now are in the top manage are likely to be made (a) is less educated, (b) possesses ment group). This conclusion is based on an analysis less working experience outside State service, and (c) of the qualifications of 327 individuals now on ran domly selected promotion lists for 60 different posi has had somewhat less exposure to Yarieties of situa tions;; in the lowest level of the top management tions while employed in the State's service (i.e., dif ferent departments or different locations) than the group (i.e., level IV of the fvianagement Directory). individuals now filling management positions. In this analysis, educational levels attained and breadth of experience~both in the employ of the State and In reaching these conclusions, 2yerages for the over working for other employers-were used as the bases all group have been considei"ed. Obyiously, there will for comparison. The pertinent findings are summarized be individuals within the group \,-ho exceed the aver- below. ¥J#o For purposes of clarity, and because :;II 327 individuals have been certified as possessing necessary m:"-::rnuw c;,u;:;.li£.cations, as well as * These 60 lists constitute approximately one third of all current pro ha,·ing achieyed at least the rnin.i::!l.!.In. p::ssing score on 2pplicable motional lists to management level positions. llltritten and/or oral examinatio:::lS, -.be Semple group shall be desig. nnted "quali.fied replacements". 24 STUDY OF ~L-\NAGEMENT MANPOVVER REQUIREMENTS ages (as well as others who fall shon). To determine however, should be limited to those instances whether the most qualified of the replacement group when the State Personnel Board can certify that differed sharply from the group as a ",;hole, similar the appointee possesses such unique and special analyses were made of all individuals who are im ized credentials that no other candidate would mediately promotable if a vacancy occurs (i.e., those likely to be found with equal qualifications, no ranking among the top three on each promotion list- matter how extensive the search might be. This 111 candidates in all). However, the various measures proposal is not intended to open the way for of qualifications are substantially the s:1me-differing appointment of individuals highly specialized in only by minor degrees. Therefore, the conclusion that limited fields, but who may be marginal candi the "qualified replacements" are not as broadly quali dates in other respects. On the contrary, it is fied as the curr~nt management group appears valid, designed to aIlow timely appointment of indi even when considering the topmost echelon of the re viduals who obviously possess all qualifications, placement group. thereby avoiding administrative delay caused by the selection process. RECOMMi:;NDATlONS In the most populous state in the union, with an APPRAISAL OF FUTURE annual budget in the 54 billion range, and (excluding MANAGEMENT TALENT Federal employees) one of the largest concentrations Appraisal of individuals, insofar as it is possible at of governmental employees in the United States (about all, is inevitably a judgmental effort. In order to pro 100,000 civil servants with an annual payroll approxi vide a basis for answering the question, "Is the State mating $750 million), the task of managing State attracting talent that will be competent to manage its affairs is immense and complex. And along with affairs in future years?", three approaches were growth in size and complexity, the requirement for adopted: (1) Quantitative measures (e.g., college class managerial talent, both in quantity and quality, also is standing and entrance examination rank) were growing. Yet the qualifications of the group most likely to become the next wave of managers fall short gathered for seven key entry level classes; (2) opinions of, rather than exceed, those of the current groups. of operating managers in each of the largest 20 de To improve the State's opportunity to obtain the most partments were solicited through more than 100 indi qualified personnel available for management level vidual interviews; and (3) College Placement Officers positions, both now and in the future, \ve recommend: in 25 colleges and universities were surveyed by 1. For all positions in State service, for which sub questionnaire; the topics in the questionnaires were stantial administrative experience is as available pursued further by subsequent interviews with leading in private industry or in other public jurisdictions Placement Officers and with faculty members 1il ap as within the employ of California State govern propriate departments of three major schools. ment, that: Gateways to State Managerial Jobs a. The State Personnel Board conduct open, non The many and varied activities of the 50 or more promotional examinations for all such posi departments within the executive branch of State gov tions. Such examinations should be conducted ernment offer a wide array of entry level positions as soon as possible after an appointment is for individuals beginning their working careers in the made (or better yet, before any appointment) State's service. To determine how most recruits enter in order to limit the natural advantage in the State service, we ascertained how a sample of 171 examination process that accrues to the tem current or future managers'" started their careers. porary appointee by virtue of accumulating This analysis disclosed that a large proportion entered experience on the job, and (and still do) into seven key classifications. Table 10 b. Department Directors be authorized, pending indicates the relative numbers entering the State the subsequent examination, to make tempo service through each of these "gateways". rary appointments of individuals from outside Table 1 0 also indicates that these same seven classes (as well as from within) State service in those are frequently used today. Although the 1,350 indi instances where individuals outside State serv viduals recruited into seven entry level positions do ice possess successful and qualifying ex not represent a complete list of all "feeder" classifica perIence. tions to management levels, they are a sufficiently 2. In addition, that Department Directors be au representative sample on which to base an appraisal of thorized to make permanent appointments of in future management talent. dividuals with unique and specialized experience .. This analysis was limited to individuals with 15 years' service or less from outside State service. Such appointments, thereby eliminating persons who started their careers in occupation;! classifications that no longer exist. ------------------------------------------------------------ STUDY OF MA.,._ -\GEMENT MANPOWER REQUIRE\1E:\,TS 25 TobIe 10 Number of Appointments SEVEN KEY ENTRY LEVEL POSITIONS University of California, Berkeley _____ 17 Number of Stanford University 9 Individuals Starting University of California, Los Angeles ___ 7 State Career University of San Francisco 5 In Specific Individuals Harvard University 4 In and Appointed University of Southern California 4 Classification Specific Related InFY Title Class Class" 1962-1963 46 Junior Civil Engineer _________ 15 28 508 Data regarding academic standing were not available Junior Right-of-\Vay Agent 11 13 59 for the remaining two key entry classes; however, em Physician and Surgeon ____ 10 19 140 Administrative Trainee ____ 5 7 38 ployment data provide some indication of the selective Auditor I __________________ 2 5 181 ness of the appointing process. Junior Counsel ____. _ ____ 4 7 89 Employment Security Junior Right-oF-Way Agent Trainee ____________________ 7 7 335 During the period May 1962 through May 1963, there were 82 persons appointed to this trainee position 54 86 1,350 in the Department of Public \Vorks. They were ~ Examples of related classes are: Junior Civil Engineer and Assistant Civil Engineer; Junior Right-of-Way Agent and Junior Property selected from an initial group of applicants (all with A tiv p e p ra T is r e a r i ; n e P e h y a s n i d ci a J n u n a i n o d r S S u t r a g f e f o A n n a a n ly d s t S ; ta J f u f n P i s o yc r h _: G .:: o .~. = .s e t; l A a d n m d in L is e t g ra a l B.A. degrees) as follows: Assistant. Percent of Initial Number of Examination Quantitative fAeasures of Quality I71didduals Competitors To provide a basis for judgment regarding the Initial Applicants _______ 864 100% quality of entry level recruits, data show-ing academic Passed \Vritten Exam __ 418 48 success or entrance examination standing "ere gathered Passed Oral Exam ______ 152 18 for all but one" of the "feeder" entry level classes (Placed on Employment List) listed above. Data also were gathered for the entry Appointed ________ 82 9 class of Compensation Insurance Assistant, the primary . While data on academic standings were not available entry class into the State Compensation Insurance for the 864 initial applicants, the 82 appointees were Fund. Academic success, measured by class standing, distributed as follows on the employment list: is shown in Table 11 for five of the cla~Jications. For Quartile Distribution of Appointees - purposes of comparison, data regarding Junior Civil Based on Employment List Rank Engineers also were obtained for recent graduates of Top 26% the University of California at Berkeley. Second _______________ 27 Third ____ While most of the classifications shown in Table 11 23 Lowest 24 are filled from a wide variety of schools, two thirds of the Junior Counsels graduated from six major law Employment Security Trainee schools, all but one of which contributed at least one During the 6-year period February 1955 to April 1961, there were 1,717 appointments made to this graduate from the top quartile of his class. general trainee classification for the Department of .. It was determined that appropriate data were not a~:;:"-="!-..le for entering Employment. These appointees constituted about 10 Medical Doctors or Psychiatrists_ Table 11 ACADEMIC STANDING OF R.ECENT ENTRY LEVEL RECRUITS DURING THEIR COLLEGE CAREERS Quartile Distribution of Appointees Based on Grade No. of Point Averages At College Graduation Classification Title Appointees Top Second Tbird Lowest Junior Civil Engineer _______ 2281 14% 34% 38% 14% Junior Civil Engineer from University of California, Berkeley 41" 10 24 39 27 Junior Counsel 60' 26 47 22 5 Administrative Trainee 67 • 35 38 16 11 Auditor I 98 • 27 38 32 3 Compensation Insurance Assistant 69 e 11 59 26 4 1 Appointed in 1963 from 84 accredited and 4 non-=edited colleges • Appointed from july 1963 to :'\o'l"ember 1964 into State Board oE outside the State of California. Equalization, Franchise Ta~ Board. aDd Department of Employment. ~ Currently in Tunior Civil Engineer classification. Represent 37 schools, prima~Jy State and City colleges. B Graduates of'16 different law schools employed as Jt=br Counsel in 12 6 Appointed in 9-month period starring January 1964 into State Campen· departments during summer of 1964. sation Insurance Fund. Represent 39 schools, primarily State and • Appointed into 12 departments he tween July 1963 :r...d October 1964_ City colleges. Represent 24 schools, primarily State and City colleges. STUDY OF MA"XAGEMENT MAJ'.,tpO\VER REQUIREMENTS 26 percent of the aggregate number of individuals who 1. Some departments have become more selective applied for employment via this examination. in terms of educational and/or minimum experi ence requirements. Percent of Initial Number of Examination 2. Higher starting salaries now 'attract better quali Individuals Competitors fied applicants. Initial Applicants _________ 16,448 100% 3. Competitive examination procedures which place Passed VVritten Exam _____ 5,901 36 more reliance on face-to-face oral interviews and Passed Oral Exam ________ 3,589 22 on the appraisal of the candidates' overall quali (Placed on Employment List) Appointed ______________ 1,717 10 fications than on written entrance examinations exclusively. In a more recent period, from July 1961 to June 1962, 503 appointments (57 percent of whom were O? the latter point, the consensus was that reducing college graduates) were made from the employment the unportance of, or in some cases eliminating, the list as follows: written examination made it less difficult to attract applicants to State service. The r::Iatively recent re Quartile Distribution of Appointees cruiting efforts by departments themselves, as well as Based on Employment List Rank in conjunction with the State Personnel Board, also Top _____________________________ 22% Second _________________________ 34 were cited as a significant contributive factor. Third _________________________ ._ 23 A few individuals expressed concern over the quality Lowest __________. . _. ___ ._____ 21 of people recruited by the State in specific functional fields, particularly accounting. In that field a national The quantitative measures of quality for the seven shortage of trained personnel makes recruitment espe classes described above yield the followinO' summarized cially difficult. It is reported, for example, that the conclusions: "" nation's colleges and universities graduated in 1964 6) The State has had considerable success in attract about 11,000 bachelor level accountants compared with ing the better students from major law schools. a national demand of approximately 20,000 annually. • Individuals employed via other entry examina-' In the face of this demand and supply situation, the tions seem to range from average to somewhat better Department of Finance, Board of Equalization, and than average quality when viewed against the aggre Franchise Tax Board have had understandable diffi gate of contemporary college graduates. culty in recruiting the number and quality of account ants desired_ e The selection ratio (i.e., appointments as a per In general, the management group in State service cent of qualified applicants) in two classes (Employ expressed satisfaction with the caliber of the candidates ment Security Trainee and Junior Right-of-way currently being hired. However, the present manage Agent) indicates that the State attracts substantial ment group had no data on which to base an opinion numbers of applicants to fill those positions. However, about -whether or not the State was attractinO' the bet the State hires a discouragingly large proportion of the ter college graduates available for emploiment. In appointees ranked in the lowest quartile of all individ most cases, they were unwilling to express an opinion uals who qualify for appointment. regarding the State's success in competing with other Subjective Opinions employers for future management talent. By Present Managers Readions from The prevailing opinion among members of the cur Colleges and Universities rent management group is that today's recruits into the Phcement Officers at 25 colleges and universities in State service are better qualified and better prepared to California were queried by questionnaires reaardinO' perform in the jobs to which they are assigned than their appraisal of the relative caliber of their ""alumci were entry level recruits 5 and 10 years ago. Principal en~ering the State service. The replies to the question among the reasons to support this opinion was that the naIres \vere supplemented by interviews with 30 fac educational attainments of current recruits are appar ulty members and Placement Officers at three of the ently greater than \vas the case in the past. This opin larger educational institutions.* The results of these ion was particularly strong when the members of the s:-rpplementary inquiries yielded two primary conclu management group were queried as to the caliber of SIOns: individuals recruited for entry positions in the scien tifically oriented fields (e.g., medicine and engineer 1. On the basis of academic achievement records the graduates who enter State service come ~ ing). The same opinion was held in evaluating the be major part from the inner or middle quartile of ginning social worker and the liberal arts recruit. their graduating classes; this may be interpreted The managers cited these further bases for their --- opinions as to relatively high quality of recruits: ,. U ni.ers:ity of California at Berkeley, San Jose State College, and Uni.ersity of Southern California. STUDY OF MAX_-\GEMENT MANPOWER REQUIRE.\1ENTS 27 to mean that these individuals are generally of tional institutions during a school year ranges average ability, and few are from among the from 20 at the smaller schools to approximately "superior" students graduating from these insti 600 at the large schools. Of those schools reply tutions. ing to the questionnaire, about 25 percent rated 2. On the basis of the same criterion, the State at the State's efforts "above average':, 50 percent tracts, in the opinion of these university officials, regarded the State's recruiting efforts as "aver about the same caliber student as do the Federal age", and 25 percent rated the State's recruiting and local governments. efforts as "below average". The quality of printed material (e.g., brochures In additon, these university officials pointed out that and pamphlets) distributed by the State is gener the State had been experiencing increasing difficulty ally regarded as "good". This printed material is in attracting superior students from the university regarded as the State's best recruiting tool. This graduating classes. The principal reasons cited in sup judgment was affirmed recently by the College port of this conclusion were: Placement Council; it ranked the State among the 1. The competition from graduate schools for the top 15 employers in the nation on the basis of abler students. the quality of the recruiting literature it l'ses. 2. Greater competition from both private and public Others in the top 15 included Aluminum Com employers for the ablest students. pany of America, Bethelehem Steel Company, 3. The aggressive recruiting efforts of municipal General Electric Company, Humble Oil and Re governments in California and the challenging fining Company, and the U.S. Internal Revenue opportunities offered by these employers. Service. 3. Improvements needed in tbe State's recmiting OPPORTUNi¥!ES effort. These Placement Officers suggested, on the FOR IMPROVEMENT basis of their experience with the State's recruit The inquiries made of faculty members and admin ing efforts, that the State should, if it seeks more istrators of the California colleges and uninrsities pro and better qualified recruits: duced additional and pertinent insights. a. Improve the quality and quantity of informa The Placement Officers stressed three key points: tion to students regarding career opportunities 1. Student attitudes toward e711ploY771e7lt i71 tbe State in State service. Specifically, it was suggested service are becoming more favorable. In the opin that: ion of these Placement Officers, students on their - Much closer liaison be maintained with the campuses tend to rank employment in the Cali faculties of the se,"eral colleges and univer fornia State service: sities so that they may do a better job of Above Federal service counseling students in their respective areas - Below private industry of competence. - About the same as local government. -Greater use of operating representatives of This image of the attractiveness of State sen-ice varies the employing departments be made when considerably (a) among the academic disciplines from when recruitment is undertaken on the cam which the students graduate, and (b) \vith regard to puses. It was frequent]!' suggested that the the different departments in State service in which State adopt the generalized "Career Day" career opportunities are offered. In the opinions of these concept of the Federal goyernment for Placement Officers, the Departments of Public Works counseling prospective employees. and Employment generally were rated as "relatively b. Increase the emphasis ginn to the use of sum attractive"; in contrast the Department of -'fotor Ve mer internships and to the part-time employ hicles and the State Compensation Insunmce Fund ment of students, and ensure that students are were rated unattractive as potential employers. These selected for such emplo!'ment solely on the judgments mayor may not be valid. The most im basis of their relati,-e competence. portant point here is that half of the respondents c. Modify current written examination proced thought that their students did not know enough about ures. Here the suggestions range from elim career opportunities in State service to ha,-e more than inating written examinations for college grad a general, overall opinion. Nevertheless, the attitude of uates to dn'eloping a single, generalized students toward employment in State sen-ice has been examination that could be used as the selection improving over the past few years. device for all entrY level classes. A third al 2. The State's recruiting eff01'ts are only of "aver ternatiye suggestio~ was to prm-ide greater age" effectiveness. The number of recruiters flexibility in the schedule of current examina representing both public and private employers tions so that if a candidate missed a scheduled who appear on the campuses of California educa- test date for a particular classification, he 28 STUDY OF MANAGEMENT ]\,L-L"-PO'NER REQUIREMENTS ,vould not h;1\-e to wait 3 to 9 months for the compensation, and job openings when applicants are next scheduled examination_ a,aliable, no recruiter can be expected to attract the Interviews \':ith faculty tended to confirm the dis best talent. California's State service offers each of cussions with Piacement Officers mentioned above, 6ese essential attractions (although several could be and also emphasized the trend toward graduate train improved). The following recommendations are di ing_ The national trend toward graduate study is si rected toward improving the State's recruiting effort. phoning the better students who have baccalaureate 1. Broaden further and simplify the examining proc degrees a"way from the employment market. "It is now ess for recruiting college graduates. The basic normal for college graduates of high academic stand objective of the examination process for entry ing to proceed for one or more years of graduate level recruits is to measure the relative compe work. A study of 34,000 graduating seniors in 1961 tence among large numbers of college graduates showed that more than 90 percent of the men and who offer generalized capabilities that are appli more than three quarters of the women ranking in cable to a wide array of possible careers in the the top fifth of their classes expected to go to graduate State service-as well as with competitive private school."· employers. Hence, every effort should be made This trend toward extending the educational years to use the simplest and most readily available is claiming younger people in several fields of interest tools that will appraise these generalized capa to the State. For example, of all B.S. and M.S. civil bilities. engineering graduates in the United States over the The examination process can be simplified for period 1955 to 1963, the proportion of the total re the college graduate-who in many instances is ceiving the M.S. degree increased from 15 percent of "weighing alternative opportunities. The task of the total to 22 percent. In relative growth, the num examining thousands of employees can be simpli ber achieving master's degrees has doubled over the ned and made less burdensome and costly. In same period, \,-hile the number of B.S. graduates has short, the number of examinations administered increased only 15 percent. by the State and the cost to the State can be re The significance of these data is twofold: (1) duced while the recruiting process can be made Greater numbers of the better students will continue less onerous to the applicants. To accomplish on to graduate \>'ork, and (2) State service has not those ends, we propose that: been a very attracti,-e employer for indivduals with a. Existing written examinations for generalized advanced degrees. Unless this practice changes, the trainee pOSItIOns (e.g., for Administrative State will be drawing its engineering talent from the Trainee, Junior Right-of-Way Agent, Com less educated and lower half of the talent pool. pensation Insurance Assistant, Employment Se In summary, the information obtained from the col curity Trainee, and so forth) be further con lege and university campuses indicates that the State solidated into a single State entry examination. is an "average" recruiter; it enjoys no better than "av b. In lieu of taking any State examination, ap erage" success in attracting "average" students. Fur plicants be privileged to submit scores achieved ther, the abler students pursuing academic disciplines on the commonly accepted and nationally con of interest to the State will tend to continue their edu ducted graduate level entry examinations (i.e., cation toward an advanced degree and then pursue the Graduate Record Examination, the Law the opportunities that are most attractive to the better School Aptitude, Graduate Business School educated. The importance of these findings is that the Aptitude, and so forth), or Federally con "beginners" now being recruited from an increasingly ducted examinations for similar positions. competitive emironment are entering positions from c. The use of summer internships be increased. which the State's practices dictate it must produce The expansion of such summer employment tomorrow's managers. provides the employer with a means for meas The State can-and should-improve its recruiting uring the individual's competence in a working efforts; the ways in which this can be done have been situation. Simultaneously, it can serve as a suggested above. means for attracting and enlisting especially A RECOMMENDED PROGRAM promising people to careers in State service. FOR ENTRY LEVEL RECRUITING In filling these positions, though temporary A recruiting program, no matter how skillfully ex in nature, selection should be based on some ecuted, can be no more successful in attracting high objective measure of competence (i.e., school caliber applicants than the caliber of the product it records or aptitude examinations).· Recruit it has to sell. \Vithout challenging jobs, reasonable op ment should be limited to those young people portunity for indivduals to progress, competitive .. In so-me governmental jurisdictions, the Use of summer employment has .. The Connnittee on Forejgn Affairs Personnel, PeTSonnel for the New been marked by personal and political favoritism. The result has been Diplomacy (Washington, D.C.: Carnegie Endowment for Interna CO!) failure to achieve the gains suggested here, and (b) lowering tional Peace, December 1962), p. 67. cf. the prestige of public employment. STUDY OF MANAGEMENT MANPOWEH. REQUIREMENTS 29 pursuing academic studies which are likely to at each major college campus in California qualify them for future State service. where prospects for recruiting are most favor 2. Place greater emphasis on recruiting college grad able. This concept should be implemented by uates with special competence or training. Specifi using representatives from line departments cally, we propose that: who are able to describe specific career oppor a. Substantial salary differentials (e.g., 10 or 15 tunities. (Such an activity, while augmenting the recruiting process, would have considerable percent) be established for applicants whose academic records or entry test scores indicate public relations value.) greater capabilities than 80 or 90 percent of c. A program be developed whereby especially all applicants. Further, these ablest applicants successful younger employees of the State re should be moved ahead via assignment of turn to their alma maters to describe the op duties and promotion as fast as their capabilities portunities in and advantages of employment allow. \vith the State. (This proposal could become b. Greater effort be made and larger inducements an integral part of the "California Day" con (e.g., salary or salary grades) be established to cept.) attract graduates holding master's degrees in 4. Imprm'e the timing with respect to recruiting those fields in which advanced training is par college graduates. To ensure the procurement and ticularly needed, or where the better students utilization of superior college graduates, there are going on-for graduate work (e.g., the en- is need for: gineering sciences). . a. Taking whatever steps are required to assure 3. Intensify and better organize the State's efforts to inform college graduates of opportunities in that ncancies in the departments are available the State service. Specifically, we propose that: and job commitments can be made when the a. An organized program of faculty relations be students are available and seeking employment. developed to supplement existing contacts (This may require some special budgetary al with Placement Officers. A special effort lowance in order to avoid the pressures for should should be made to inform those faculty salary savings at the beginning of a fiscal year, members who have student placement respon or budget shortages at the end of a year.) sibilities in their departments. b. Coordination of internal departmental training b. An organized career day for counseling stu programs with student graduations and avail dents (such as a "California Day") be initiated ability. CHAPTER III DEVELOPING fUTURE MANAGEMENT TALENT The availability within an organization-public or renewal process of the individual. Through ex private-of people capable of managing an enterprise posure to new ideas and new concepts, the suc and supervising the work of others is not a matter of cessful executive can study suggestions or recom chance. It is the end product of an effective selection mendations for improvement from a fresh, re process, planned efforts to develop requisite capabil vitalized point of view. ities, and an em-ironment which permits them to Obviously, there are substantial lapses of time manage. among these three periods in a p~rson's career. Enlightened management in private industry long During these interims, there is a need for on ago recognized the fundamental need for developing going training so that individuals can continue and encouraging those employees who demonstrate to grow and develop. In part, this can be accom the greatest growth potential for assuming managerial plished by on-the-job counseling and coaching responsibilities. To this end, vast sums of money are of the individual by his superiors-a highly im expended annually in grooming promising individuals portant aspect of any training program. And, in for top executive posts. Furthermore, major expendi total, this continuous training provides the spark tures are made to sharpen continually the managerial which keeps alive the desire for knowledae amI skills of incumbent executives. self-improvement. '" The needs of the State government of California are no less important. THE CHANGING MIX OF EXECUTIVE ABILITIES THREE KEY STAGES Viewing these stages of training in another dimen OF TRAINING sion and relating them to public service, the concept * Experience has demonstrated that there are three h:1S been advanced that the mix of abilities necessan' key periods in the life of a successful executive when to fulfill successfully the responsibilities of differe~t training exerts its greatest impact: positions changes markedly as the public servant moves up the hierarchical ladder of an organization. Not 1. Early career, \yhen an individual begins to apply only must the public servant increase his breadth of his substanti\-e knowledge to a given job. This is knowledge in the professional field in which he works, a time when specialized knowledge is refined and but he also must broaden his grasp of: adapted to the job and the environment. As he gains experience and becomes more con • The ways and means of directing the work of fident in his abilities, the person, if he carries the others seeds of management potential, begins to examine • The functions of other units within the organi objectively pjs job, his surroundings, and oppor zation and of related governmental entities tunities that might be available to him in the fu • The society, economy, and the citizens he serves ture. Usualh-, such people advance to a position • The ways and means of projecting the policies at the supen-isory level somewhere between 3 and programs throughout an enterprise, and seeing to and 7 years after employment. it that they are carried out. 2. Middle management, perhaps 10 to 15 years after employment, when it is highly desirable to review In other words, a career public servant, starting as an and update the breadth of knowledge in his sub 2pprentice with a beginner's grasp of a substantive stantive field. At the speed with which the field, must enlarge his professional skills, his adminis boundaries of kno\dedge are receding in the rrative capabilities, and his understanding of the society technological, scientific, and managerial fields, a he would serve, if he is to be a successful executive in a governmental establishment. person must keep abreast of advances in these areas as they occur. But at about the midpoint TRAINING IS NOT in his career, the successful executive takes time A PANACEA to refocus on his substantive field and bring new developments into perspective within the total 1Vhile much has been said about training as an essen tial ingredient in the development of capable execu spectrum of his knowledge. tives, training per se is not a panacea. And those who 3. Top management, when advanced training and sharpening of managerial skills stimulate the self- .. Henri Fayo], Geneml and Industrial Management (London: Sir Isaac Pitman & Sons. Ltd. • 1949). pp. 7-13_ STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 31 are entrusted with administering training budgets dividual agencies within state governments generally should husband their funds carefully so that training were not known.) During the fiscal year 1963, the is not wasted on those of limited growth potential. Federal government spent about $17 per employee in F or example, it is fruitless and time-consuming to at support of training at institutions or in associations tempt to develop specialists in a given field when outside the Federal government. \Vhile fully reliable trainees do not possess the substantive background or data for private industry are not available, training intellectual capacity. This would be particularly true and development costs are estimated to exceed $50 per when qualified, trained specialists are available in the employee per year. general labor market. During the fiscal year 1964-1965, the State of Cali The State of California had recent experience in this fornia budgeted $212,804 for specialized (m:ll1agerial regard. As cited in the report * prepared by the Task and technical) training, or an average of about $2.30 Force on Personnel and Training, "In the past, the per full-time employee. This latter figure is below that principal source of new programmers and computer of some other states and differs significantly from that operators has been from the tabulating machine opera of the Federal government. All are below estimates for tor group. This method of progression will no longer private industry. Of the $212,804 allocated for training be satisfactory in view of the advent of more sophisti purposes, $9,393 was earmarked for management train cated computer applications ..." . In the Commission's ing. Even after making allowance for the diEerence in opinion, this underscores the need for spending train size, California's allocation is minimal when compared ing dollars wisely. with the $7 million per year budget established by the Federal government for management training. THE NEED FOR TRAINING Dollar expenditures, however, are only one measure IN PUBliC SERVICE of comparison. Although distinctly below the Federal For promising individuals in the public jurisdiction level, California surpasses most, if not all, other states (with all the nuances that government service im in terms of the scope, variety, and number of courses plies), training assumes even greater significance than offered for training purposes. For example. during in private industry. A system of promotion from fiscal year 1963-1964, 591 managers particip::ted in a ,,"ithin, combined with limited job rotation and the broad range of conferences and seminars through the constraints which this imposes on broadening the scope State's Interagency Management Denlopment Pro of employee experience, makes a well-planned pro ru gram. A good example of a specific effort to broaden Q"ram of management training and development the range of knowledge on management techniques nully mandatory. This is especially applicable in the among State executives is the seminar on operations State of California if the government is to fill its man research being planned for the spring of 1965 by the agerial manpower requirements successfully over the Department of Motor Vehicles. next two decades. Training Received by EVALUATING THE: Incumbent State Executives STATE'S TRAINING EFFORT To establish more clearly the extent of training at Until very recently, management training and de the management level in California State service, the .-elopment in public service have received only limited Commission's study team, when developing its man attention. In the Federal government, " ... most Fed agement profile described in Chapter I, asked these eral development programs still do not compare well senior managers to indicate the amount and type of \\"ith the best in the country. Too little time, effort, formalized and substantive training (of 3 or more days and money are spent in developing managerial talent." t in duration) they had received during the past 3 years. At the State level, training has received even less attention. In a recent nationwide survey, ** only 29 ~early one fifth reported no training whatsoeyer. Of the remainder, more than three fourths indiclted in states reported state-sponsored training programs, 8 service * training averaging 4 days per year. and one reported no knowledge of any state-sponsored training third reported State-sponsored out-sen-ice ** training program, and the remaining states failed to reply. In a,-eraging 4 days per year. Some executi,·es, of course, terms of expenses for conducting training programs, participated in both types of training. 9 selected states reported central personnel office train ing budgets ranging from $0.54 to $3.44 per employee Training at Lower annually. (Expenses incurred for this purpose by in- Levels in State Service At levels below the senior management posltlons, .. "Report of Task Force on Personnel and Training" (concerned rith utilization and application of automatic data processing), (De;'):rrt training on managerial and administrati,·e topics gen- ment of Employment, State of California, September 1964), p. 10. C~Iimeogranhed.) t Improt1ing Executive fo,.{anagement in the Federal Government. a :f In-service training, in the context of this report, refers to th.2t training statement prepared by the Research and Policy Committee (Xew which is provided by government trainers on the pre.nili;es of State York: Committee for Economic Development, July· 1964), pp. 35-36. goyernment offices . •• Earl Planty and George Kanawaty, Training Activities in the S!ate .... Out-service .training is that which is pIorided at locatio:ls ether than Governments (Personnel Report No. 622, Chicago: Public Perso=el government offices, i.e., training provided by associatio:lS, p~fessional Association, 1962), p" 3. or technical organizations, colleges, or universities .. STUDY OF MANAGEMENT MAl'-.'POWER REQUIREMENTS 32 erally is limited to in-service, usually 'vithin the de of such executives into State service upon com partment to which the employee has been assigned. pletion of their studies, it may be desirable to The need for development of managerial talent is no make this obligation explicit either through con less in the middle management ranks than in the upper tract or a bonding arrangement. echelons. Indeed, it might be argued that the need for 3. The interchange of experience between agency, training during the formative years of a future execu department, and division heads of the California tive is ey'en greater. In light of the State's future needs State government and their counterparts with like for qualified management rephcements, it is the Com responsibilities in other states and the Federal mission's opinion that training at these lo,ver levels government should be encouraged to a greater should be broadened considerably and made available degree than at present. This recommendation can to full-time employees who demonstrate top manage be accomplished, at nominal cost, through meet ment potential. ings of professional associations, through yisits, or through participation in selected seminars spon Rl:COMMENDATIONS TO FOSTER sored by Federal agencies, other state agencies, MANAGf:MENT DEVELOPMENT or universities. The limitation on funds for such Recognizing the managerial needs of the State gov purposes, particularly as it relates to out-of-state ernment o\'er the next two decades, and the role which travel, should be eased when constructive inter training can play in helping to meet these needs, the change is demonstrable. Commission makes the following recommendations \Vith respect to in-service training, the Commission with respect to out-service training: makes the following recommendations: 1. The State Personnel Board should take such steps 1. Special effort should be made to increase the as appropriate to stimulate the utilization of out management and supervisory training oppor service training by each department, and such tunities provided for individuals holding middle training should be related particularly to the de management level positions in each department partment ne.eds-including both professional and or division (approximately 6,000 persons). Spe managerial development. This will involve: cifically, we recommend that: a. Modifying the Board's present pre-audit re a. Each department should be directed to develop quirement of each department's plans for out a year-round training program that will pro service training vide middle management personnel with addi b. J\Jaking funds available for training those em tional training either in the techniques and ployees who have not yet attained senior man arts of management or in the substantive con agement positions tent of the agency's program. Each department c. Developing a program that would authorize head should plan such training as an integral individual depart!TIents to reimburse employ part of the department management process, ees who, on personal time, successfully com i.e., as a means by which the agency head eval plete courses which contribute to the individ uates the performance and talent of his em ual's competence in the position to which he is ployees, perfects communication throughout (or will be) assigned. the agency, welds the subdivisions of the 2. The breadth of experience and professional skill agency together, and strengthens esprit de of individuals in senior management positions corps. It may be desirable to involve institu should be increased through enrollment in college tions of higher learning in California in pre or university programs, as appropriate.;Io paring appropriate training materials. Specifically, the Commission proposes that up b. To supplement this intra-agency training for to 1 percent per year of all top-level management middle management personnel, we recommend personnel be granted leave with pay so that they that current inter-agency programs for man may enroll for an academic year iIi schools of agement training be expanded, with the goal higher learning for full-time supplementary train that each individual in this level participate in ing, at State expense. An appropriate study pro at least 5 days' training during each year. gram should be developed by the individual and These inter-agency programs should be of spe approved in advance, by t.he department in which cial value to those smaller and less equipped de the individual is employed. To assure the return - partments and agencies for which formalized training programs would be impractical: • This recommendation is made with full recognition of two scholarship award prograIIlS recently made available to State executives, j.e.~ c. Finally, in such in-service training efforts the the Career Award Program of the National Institute of Public I A n ff a t i h r e s a fo n r d m e t r h , e o G ne o v S er ta n t o e r a o d f m C in a i l s if tr o a r t n o i r a 's a lr E e x a e d c y u t h iv a e s A be w e a n r d a w P a ro rd g e r d a m a . effectiveness of coaching by superiors :l.S a year of graduate study at Harvard University's School of Public training device should be given greater em Administration. The latter program provides two outstanding State executives with tuition and expenses for resident management courses phasis. of short duration at any college or university in California. STUDY OF MANAGEML'IT MANPOWER REQUIREMENTS 33 2. Further, we propose that the State Personnel Because this effort will be experimental at the Board establish a residential inter-agency manage outset, it might be desirable to consider seeking ment training institute, perhaps on a college or out foundation support (e.g., Ford Foundation, university campus accessible from Sacramento. Rockefeller Foundation, and so forth) for the This staff college should be designed to prOTIde planning and conduct of such a program. The advanced training in management techniques as value of this program would be found in broad well as public affairs (in sessions of 6 to 8 'weeks' ening the vision of these individuals \vith respect duration) for approximately 300 individuals each to the role of the State as a political institution year holding positions in senior management ech in the American society, and how the California elons and for promising personnel in middle man State government can maximize its effectiveness agement levels. Individuals from other le\-els of in the environment that will prenil in the decade government-local and Federal-could also be in 1965-1975. The program might utilize the resi cluded, thereby advancing the knowledge of dential institute proposed abm-e, and effectively managing the public trust at all echelons in the be the capstone of an original effort to give vigo State of California. At this institute, managers rous and fresh perspectires to the present and should he exposed to outstanding administrators future leaders of the State's career service. from both government and business, and to uni versity professors capable of discussing and inter * preting advances in the management sciences. Considered in toto, these recommendations form 3. Finally, we recommend that the Governor's Per the nucleus of an executive de\-elopment program for sonnel and Training Committee develop plans for State service. If they are combined 'with an appropri a 2- or 3-year program that focuses on planned ate rotational program of executi,-es among depart interchange of experience and training both ments, the State service should benefit by having a within and outside State service for selected indi broad-gauged, highly informed, thoroughly knowl viduals at the department and division head leveL edgeable top management group. CHAPTER IV MOTIVATING MANAGERS 'CO EXC12L Recruiting, retammg, developing, and effectively However, there is no reason that justifies differences utilizing an able and highly motivated group of execu of the magnitude frequently found to exist. Conten tives in any enterprise requires a broad and diverse tions that social or professional prestige of public of variety of incentives to stimulate individuals to extend ficials are substitutes for adequate compensation are to their full capabilities. Does the California State gov gradually giving way to the realization that top public ernment offer incentives adequate (a) to attract able salaries, as well as lower level pay should bear ap young people each year; (b) LO stimulate them to propriate relationships to salary levels in pri\-ate in grow and advance in State service; and (c) to moti dustry. With their recent adjustment of top executive vate them to carry out their responsibilities with full salaries, both the Federal government and the State of ,~nerg~- and zeal \~hen they have reached management New York have accepted the principle that executive level positions? This chapter appraises the major in salaries should be set at levels comparable with private centi\-es that exist in the California State service and industry, and even at the very top should be in reason identifies those areas which should be improved. able relationship to them. Executive Compensation COMPENSATION l.iEViELS In California For the State, as with most employers, compensation The highest salaries paid by the State of California is its central incenti,-e. The compensation must be ade are low when compared with those offered not only quate to attract qualified indi,-iduals at the entry levels. by private industry, but also by the State of New In addition, there are at least three pragmatic reasons York, the Federal government, and by some municipal why an adequate level of compensation must be main governments-including local governments in Cali tained for those who serve at managerial levels: first, fornia. The incongruous fact is that 85 to 90 percent to ensure retention of the talent already recruited into of all California State employees in the lo"'\\-er and the organization; second, to permit recruitment of ca middle ranks are paid salaries comparable to those of pable individuals into managerial posts; and third employees doing equivalent work in private industry. (while perhaps more subtle, but just as real), to serve However, those men and women who sen-e in posi as an inducement to the more thoughtful entry level tions at the upper management levels are, by and large, candidate who inquires into his longer term oppor paid salaries significantly below the compensation of individuals doing comparable work elsewhere. tunities for compensation advancement. In other words, relative to this third point, competitive starting Chart 5 on the fonowing page compares the pro portion of the total payroll paid to the highest execu salaries alone will not attract the young individual who tives in California State government with the propor has the capacity or takes the time to think ahead. tion paid equivalent echelons in industry generally, the But these pragmatic arguments are quite apart from, railroad industry, and the public utility industry (i.e., and in addition to, the principle of compensating man the highest paid 1 percent of employees in each group; agerial personnel equitably for their efforts. in California State service this is the highest paid 907 The principle of "equal pay for equal work" has full-time employees, ranging from the Gm-ernor's long been generally accepted in this country. It is a salary downward to the $17,000 level). The chart principle entirely compatible with our economic and clearly demonstrates two points: political philosophy. Internal equity combined with external comparability is the principle on which the - The top group in California State service receives wage and salary setting policies of almost all large a significantly smaller proportion of the total pay organizations are based. roll than is true in industry generally, and a some Traditionally, the principle of comparability h?s what smaller proportion than is typical of the rail found only partial acceptance for compensatiQn levels road and public utility industries (neither of in public administration. "\Vhile lower level public which is noted as being high paying). J employees receive salaries that, over a period of time, - The higher the positions in the California State are essentially competitive with pervailing rates in pri government, the smaller is the proportion of the vate industry, it is at the top executive level where total payroll paid to the executives, relative to compensation in public bodies generally has lagged. their industrial counterparts. STUDY OF MANAGEML"T MANPOWER REQUIREMENTS 35 Chart 5 COMPARISON OF PROPORTIONAL COMPENSATION RELATIONSHIPS r CALIFORNIA STATE GOVERNMENT Vs. ALL INDUSTRY AVERAGE':', !' THE PUBLIC UTILITY INDUSTRY AND THE RAILROAD INDUSTRY - 1963 Percentage of Total Payroll 10.00 I I 9.00 I I 8.00 7.00 6.00 5.00 4.00 l-o' ... ~ 3.('0 ,..-- AI I 6¢ ~ I All Industry Av\e rage ~ .... ~ C4' /' ~ I.; 2.00 I /~ ~ 4' '" ~ ~ .. ' ~ ..4 .I /"'I/V i ./ I ..,,/ ./ 1.00 .90 I i ; ~"" A ~ .4 !' L ~.::: .80 I ~'I' Ali' ,,~ .70 /i ~ " .60 ... ~ ~ i ~ F' / .50 Public Utility ",,' V /~ .40 r- indu,'ry \ ~ A t I V ..,.~' ~ , 1,-" .30 ./ Ii' /~ Railroad I.~ ~' "'7-:.... California State ~/ ~ Industry",· Government 20 V ." .~ i i ! ./ ! ! .~~. ! ,I, .10 " I .09 .08 .' I"," I, , .07 ~/ I .06 ·/ I I .0 5 V t .0 4 I I .0 3 .01 .02 .03 .00.OS ,07 .10 .20 '3~ .40 .50 .70 1.00 Percentage of Total Number of Employees :~ - Based on a sample of 84 large companies in 19 industries. 36 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS It may be argued that the existence of a legislative Teble 12 body dilutes the decision making and risk taking as AVERAGE COMPENSATION DjHER.NTI:'~S BETWEN pects of the executive in a democratic organization EXECUTIVE POSITIONS TWENTY and to a degree this is true. However, the responsi LARGEST DEPARTMENTS ~ Percen:.:ge Differences bilities of the tasks are no less complex, and in fact, B='::::een Salaries may be more complex when considering the additional % H igh:>-t % 2nd difficulties of worJ{ing within the political environ Abo-o;e 2nd Abo~Je 3rd ment. The principal factor to be considered here, Average Before Senate Bill 53__________ -T.O 6.4 however, is the relative flatness of the compensation Average After Senate Bill 53_.____________ 11.7 9.i pyramid in State government. Should the most popu Typical Industry Differentials lous state in the union expect to attract less able mana Individual Companies _______ ._ ___________ -t3 23 gers than those attracted by other employers? Or Divisions Within Companies_. ______ 5S 12 should it strive to attract first-rate individuals but offer )/. See Appendi.l( G for individual departmental perce:::lt.J.bcs. them second-rate rev.rards? The answer to either ques Not only are State salary differentials modest by tion is, of course, obvious. comparison, but they can, and do, h;n-e the effect of The State of New York, in recent years, has taken inhibiting promotions. Interviews \\-ith State execu positive action in this regard by comparing its top tives indicated that, on a number of occasions, management positions with similar positions in private individuals were unwilling to accept broader respon industry. The study showed that in 1961 State Com sibilities (and increased pressures) concomitant with missioners (equivalent to Department Directors in promotion, and only receive a nominal s:llary increase. California) held responsibilities that were analogous to This problem was particularly acute when geographic positions paying $35,000 annually in private industry. transfer was involved. The total expenses of mO'.;ing Although New York has not yet achieved this goal, from one domicile to another often are not reimbursed Commissioners presently are earning $29,875 annually. fully by the State. Further, the possibility of increased In contrast, the Directors of the 20 largest departments living costs in the new area tends to make such a trans in California's State government have a median salary fer "or promotion" unattractive. Hence, in a financial of $23,500-more than 20 percent below the New York sense, it may cost the employee money (in the short level. And this level was only achieved in California term) to accept the promotion. last August when Senate Bill 53 became effective. Increasing Salaries At the Federal level, the Randall Commission made Has Modest Impact a thorough study of executive compensation and con The effect of raising top salaries, compared to the cluded that top salaries for appointive positions in the total cost of wages and salaries paid by the State, is executive branch should range between $30,000 and relatively insignificant. For example, if all salaries at $50,000 annually-providing for increases up to 100 the top two management levels were iIlcreased by 27 percent in some cases. The Committee on Economic percent, thereby bringing these into a more appropri Development supported this recommendation en ate relationship with competitive pay levels, this would thusiastically, stating that these" ... proposals should raise the State's total payroll cost by less than one sev be adopted as minimum levels . . .". enth of 1 percent. Further, if the highest paid 1,000 exempt and civil service salaries were raised 10 per At the municipal level, the need for upper level cent, the increase in payroll would be less than one executive salaries also has been recognized. Appendix half of 1 percent. If the same group were raised 20 F lists 52 local positions with annual salaries in excess percent, the increase still would be less than 1 percent of $30,000. of payroll. One reason for the interest in providing adequate Recommendations compensation for the top management positions is the In order to establish appropriate salary levels ini effect that these salaries have on the next lower eche tially and to provide a system for maintaining reason lon-and it in tum on the third echelon, and so forth. able relationships with salary levels outside State serv Relatively low salaries for the top executives (even ice, we recommend that: though these individuals might be willing, or finan 1. The State Personnel Board make a biennial sur cially able, to accept them) have a depressing effect vey of the salaries prevailing in private enterprise on the salaries of positions below them on the organi in California for a large number of "benchmark" zational pyramid. The result is compaction, with positions in upper management levels (both minuscule salary differentials between successive levels exempt and civil service positions) of State serv of responsibility. The following table shows the aver ice. The results of such a survey would be re age salary differentials for the largest 20 departments ported to the legislature and to the public along in California State government. with recommendations for the adjustment of sal- STUDY OF MANAGEMENT .\L.\.NFOWER REQUIREMENTS 37 aries to establish effectively and maintain them Medical Benefits at salary levels comparable to those paid analo Have Fallen Behind gous positions in private and municipal employ Currently the State contributes $6 monthly per em ment in the State of California. ployee toward the cost of medical insurance. The cov Upon establishment of appropriate salary levels erage provided is limited to specified amounts for in for Agency Administrators and Department Di dividual illnesses or treatments. It is characterized as a rectors, the State Personnel Board should submit first dollar or basic plan designed for only limited re recommendations regarding existing classified sal imbursement of medical expenses. As such, the benefits ary levels, continuing the principle of equivalence are adequate. However, there is no provision for major with private industry. medical insurance* for State employes. 2. Not le')s than once every 4 years, a citizen com Life Insurance mittee be appointed by the Governor, with con Coverage Also Lags sent of the legislature, to review the results of the As part of the State Employees' Retirement System, most recent biennial survey of prevailing manage the State offers a death benefit (at no cost to em ment level salaries (and such other data and ma ployees) consisting of 1 month's salary for each year terial as may be necessary) and express judgments of service up to a maximum of 6 years (i.e., one-half as to the adequacy of the salaries in effect for: year's salary). The benefit levels provided in industry a. The Governor and other elected officials typically range between 100 percent and 200 percent b. The legislature of annual salary. In Federal service, the benefit is 1 c. Agency Administrators and other statutory year's salary plus $1,000. In contrast, the State's provi positions at senior management levels. sion is not as attractive to the prospective employee. FRINGE BENEFITS Recommended Improvements For many individuals the assurance of security In Fringe Benefits through retirement or when adversity strikes is a sig In summary, the fringe benefit "package" provided nificant moti,·ational force. Through job tenure, liberal its employees by the State is low in cost and offers rel- sick leave benefits and a generous retirement program·, the California State government provides very ade :4-Major medical insurance is a device under which the insured is pro tected from the high costs of treatment for serious and pro1onged quate security measures for its employees. Time paid, illnesses. It serves as an umbrella over basic medical coyeroge. Typically, major medical p~ans ~o not become effective until ~ but not worked, also exceeds industry averages. How individual has used all of hIS baSIC benefits and exceeded the ma:G mum by $50 or $100. At that point the majer medical insurance ever, State-sponsored benefits to offset catastrophic ex shares all additional medical e>:penses with the insured-usually paying 75 percent or 80 percent of the total cost-to a maximum penses, resulting from death or illness, as the following of $10,000 or $15,000. There has been a marked trend toward adoption of major medical table shmvs, are less generous than those provided by insurance by industry. A Bureau of Labor Statistics ~urvey sho'ws that, other employers. during the period 1960 to 1963, the proportion of U. S. office workers covered by major medical plans grew by nearly 50 percent (from 42 percent to 61 percent). A 1962 surrey by the State Per ... See Appendix H for a comparison of nine other governmental retire sonnel Board of 292 nonmanufacturing companies showed that 92 ment plans and representative industrial plans. percent of employees were covered by company-sponsored plans... Table 13 COMPARISON OF EMPLOYEE BENEFIT COSTS % of Total Payroll Major Benefit Plans N onnzanufacturing California·· General Benefits Industry· FY 1963-1964 Legally required plans"· ------------------------ 5.0% 1.7% Pension Plans ----------------------- 5.7 6.5 Health and Welfare and Life Insurance - 2.3 1.1 13.0% 9.3% Time Paid But Not Worked Sick Leave ____. _ _____. _ ________ 1.4% 2.9% Vacation and Holidays 6.9 8.8 Oilier _________________________ 2.7 3.0 11.0 14.7 Miscellaneous Bonuses, Profit Sharing, and Other _____ 3.8 Total 27.C% 24.0% • Chamber of Co=erce of the United States, Fringe Benefits 1963, Resea:::::h study prepared by Economic Research Department (Washington, D.C.: Chamber of Co=erce of the United States of America, 1964), p. 9. H Estimated by State Personnel Board. Jf.K-Jf. Includes OASDI, Unemployment Compensation, and Workmen's Compe=.sdon. 38 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS atively little attraction to employees offered alternative the candidate must have completed a minimum num job opportunities. Therefore, we recommend: ber of years in the next lower classifications. This pre requisite establishes, for the very ablest indiyjduals in 1. The State sponsor a major medical program to State service, a discriminating bar to the promotional .supplement the basic health plan currently in existence. Further, we propose that the State pay progress of which they are capable" \Vhile experi~nce is useful and desirable, the mere passage of time has one third to one half the cost of the employee long been recognized as an ineffecti\"e measure of coverage. This would range between $500,000 capability. and $1 million, depending on the extent of cover age. The third factor is the temporary appointment (TAU) of civil servants to positions when \:lcancies 2. State employees be provided a maximum death occur and no promotional lists exist. \Vhile this prac benefit that is at least equal to 1 year's salary. tice enhances management's flexibility in selecting re This can be accomplished by doubling the size placements for vacancies caused by emeraencie5. it also of the current benefit schedule (i.e., 2 months' tends to pre-select candidates. The vast'" majority (75 salary per year of membership in the State Em to 80 percent) of TAUs in State service are cO:lJirmed ployees Retirement System, up to a maximum of subsequently by the competitive process. Once a TAU 6 months). The annual cost of this proposal has been made, it is unrealistic to expect that :It"1other would approximate $1.3 million. candidate has much chance of obtaining the pemunent PROMOTION appointment-especially if the examination process is Merely establishing reasonable compensation levels delayed to any significant degree. Confirmation of an will not, per se, provide all the stimulus necessary to individual from outside State service is enn less likely. encourage the fullest effort of the 1,530 persons now Extensive use of TAUs indicates a failure of the per occupying management level positions. The opportu sonnel system to anticipate vacancies and prmide the nity for advancement is, for these individuals as for Department Director with assistance in selection. their counterparts in most organizations, a requisite CertiRcation Process incentive. Excludes Equally QlIaliRed If the most qualified individuals in management An important function of a personnel s\"stem is to levels of the California State service are to be pro enable management to consider all possible" candidates, moted into, and among, the top management group, and to assist m:magement in identifying and selecting hvO conditions should exist. First, all qualified persons the best candidates for promotion. This is accom should be permitted to part~cipate in the competitive plished in California State government throuq~ the examination process; second, and equally important, competitive examination process. Howe\"er, ex-anllna senior management should be able to select from the tion processes have not yet been de\"eloped that are best of the qualified candidates. sufficiently precise to permit perfect matching oi qual Not All Qualified ifications and job requirements for management posi Candidates Can Compete tions solely on the basis of test scores. Anah"sis b\- the Of the 289 examinations held for management level State Personnel Board indicates that the St~nd:.'Id Er positions over the past 5 years, about half were limited ror of iVleasurement on composite examination scores to persons in the department or subdivision where the is at least four whole percentage points. This means, ,'acancy existed. Only 26 percent were open to em in the simplest possible terms, that the exarnination ployees on a service-wide basis. This relatively small process cannot be expected to differentiate between proportion of examinations that are open to individuals contestants whose final scores fall within four 'whole throughout State service raises a question about percentage points. whether the best candidates 'were able to compete for Present practice in California State sen"ice is to rank and be appointed to the vacancies that existed. all contestants for promotion on the basis of their Three additional factors tend to preclude considera overall examination scores, carried to two decimal tion of all the potentially best qualified candidates places. Under the "rule-of-three" the appointing au First is the limitation that most examinations for man thority must select, for promotion, one of the indi\id agement level positions are restricted to civil service uals determined to have the highest three scores. Con- 5 employees. During the past years less than one fourth -sequently, candidates whose test scores faIl below the of all examinations held were open (i.e., persons not third highest score (but within the ine\-itable margin then in the State civil service were alIo'wed to com of error that is inherent in the examination process) pete). This practice of selecting the vast majority of cannot be certified for appointment. candidates from among State employees limits the Assume, for example, that the upper portion of an source of talent available to the State. The second factor is the requirement that, before array of overall examination scores on an employ"ment being permitted to participate in any examinations, list were as follows: STUDY OF MANAGEMENT MANPO\VER REQUIREMENTS 39 Candidates Scores niticant impact on improving the position of vet::rans A 91.45 on promotional lists. Conversely, nonveterans were B 89.75 equally, but negatively, affected. C 88.21 As part of the present study, 60 promotional lists D 88.20 E 88.19 for management positions were selected for analysis. F 88.00 Sixteen of these lists contained only yeterans; hence, G 87.95 veterans' preference points were of no consequence. H 87.50 On the remaining lists, however, the effect of veterans' Section 19057 of the Government Code requires that preference points were pronounced as shown in the the three persons standing highest on the employment following table. list be certified to the appointing power as eligible for In all cases, the individuals included among the top 6 promotion, implying that candidate C is better quali and the top 3, as well as their rank order, were affected fied than candidate D. State Personnel Board analysis, significantly. For example, the bottom line of the table on the other hand, suggests that the examination can indicates that (for lists with 7 or more candidates) the not distinguish between the eight candidates. Neither candidate -with the highest score was changed on al the Code nor the analysis tries to indicate which of the most one third (31 percent) of the lists. This means, candidates might best fit into the environment where of course, that when nonveterans received the highest the vacancy exists. TIllS is left to the appointing au score, they were downgraded on one third of the thority 'who can select from those certified as the lists. 'Vhen larger segments of the lists are considered, "most qualified". It might be that candidate H is best the proportion becomes higher. suited to the environment. There is little question that the impact of veterans' Veterans' Preference preference points on promotion lists significantly dis Has SigniAcant Impact torts the competitive examination process, and there On Promotional Lisls fore the merit principle. It is questionable, however, Section 18973 of the Government Code provides whether this effort is justified a decade after the last that veterans of national emergencies, or their widows, declared national emergency. have three "'hole points added to their promotional The fDA Concept-An examination scores, and 10 points added to their scores Effective Selection Device in open examinations (15 points in the latter case for disabled veterans). In Federal civil service, veterans' The Employee Development Appraisal (EDA) preference applies only to initial entry into the system. method of screening employees for appointment to Should veterans' preference in California continue in higher leyel positions was developed as an alternative definitely and for each promotion during a veteran's screening device for assessing competitors' qualifica career? Moreover, do yeterans' preference points sig tions. EDA consists of detailed repofts, prepared by nificantly affect the opportunity for other individuals two or three supervisors-past and present-concerning to be promoted on the basis of their qualifications? the competitors' accomplishments, demonstrated com The ans,,'er to the first question hinges on the pur petence, and potential for promotion. The report for pose of and need for granting preference to veterans. mat follows a standardized approach developed for This Commission belie\-es that veterans certainly are each class in which EDA is used. These reports are entitled to assistance in adjusting to civilian life. The revie\\"ed and scored by a departmental (or agency) extent of this assistance, and the length of time over review committee. Review committees can consult which it should be continued, however, are subject to with the reporting supervisors for additional informa question. 'Vhen considering the alternati\'es of lifetime tion, as necessary. assistance versus transitional assistance, we conclude ED A.. at times is the sale basis for making promo that the latter is preferable. tion decisions, dthough normally it is used in connec A 1958 report by the State Personnel Board clearly tion with a written test which determines technical established that ;-cterans' preference points had a sig- knowledge. Table 14 EFFECT OF VETERANS' PREFERENCE ON ?RCN'iOTlONAL LISTS Percentage of Lists Cbanged Lists of 7 or Lists of 6 or If Preference TVere Eliminated More Candidates Fe-wer Candidates Top 6 candidates changed ------------------------------------- 65% Not Applicable Rank order of top 6 changed -----------.----------------- 72 40% Top 3 candidates changed __________________________ 38 40 Rank order of top 3 changed________________________________ 45 40 Top candidate changed _______________________ ._._______________________ 31 13 40 STUDY OF MANAGEMENT MANPOWER REQUIREMENTS Intervie,'ls with those using EDA found that experi 4. To assure increasing emphasis upon the demon ence with this approach generally has been favorable. strated capabilities of individuals who He re However, of 142 promotions identified during these cruited (a) for eventual promotion to manage interviews, the EDA process was utilized in only 6 ment level positions, or (b) immediately into percent of the cases. This relatively small usage of such pcsitions, we recommend that: EDA results, in part, from the rather complex and a. The preference now granted to veterans be time-consuming preparations needed to develop spe available only during a national emergency and cific rating forms for each class, and the problems of the 5 years succeeding the official termination indoctrinating supervisors and raters. \Vith wider use of the emergency; of EDA, this is likely to become less of a problem. b. Such preference be granted only upon initial Analysis of the rating forms used for several ED As entry into State service; and in the past indicates that many of the qualifications c. It not be applied to management or policy for "which candidates are screened are also those which setting positions. are considered during annual performance appraisals. 5. The Employee Development Appraisal be simpli This similarity, or overlap, points out an an-:a of po fied in procedure and extended to the wid~st tential simplification in the future. possible number of classes. Its effectiveness has been proven, and the broadest possible applica Recommendations tion wiII reduce the amount of preparation for To broaden the range of capable persons from subsequent ratings. whom appointing authorities can select for promotion, In addition, we propose that, in the EDA and to encourage individuals in State service to strive full use be made of information already being more zealously for advancement, we propose that: accumulated on annual performance appraisal re 1. Competition to fill vacancies for which substantial ports. Knowledge that this will be done will serve administrative or professional experience is as as an additional inducement to supervisors to pre readily available outside as within State service be pare thorough annual reviews. "open and nonpromotional". When in-service examinations are necessary, they should be open MOTIVATiNG EMPl.OY£eS to all potentially qualified individuals in all THROUGH SAlARY ADM!NISTRATlON agencies and departments. To assure that the The use of merit salary increases, as an employee competitive process is well served, necessary ex motivational device, is widely practiced throughout aminations should be scheduled as soon as possible industry and government. A 1963 Bureau of Labor after a vacancy is anticipated or occurs. Statistics study of 239 large industrial establishments 2. The appointing authority be authorized to select with 1.3 million white collar workers shows that the for a management level position any individual salaries of all professional and administrative employees who, in the competitive examination, obtains a in formal salary plans are administered under the merit score within the unavoidable margin of error that concept. The Federal service and most states also have is inherent in the examination process. Inasmuch a merit plan. California is no exception. as the Standard Error of Measurement is at least Selectivity Is Needed four whole percentage points, we recommend If periodic increases in the individual's salary are to that all candidates for management level positions, be an effective incentive, salary adjustments must be whose scores fall within four whole numbers of granted selectively (i.e., on the basis of demonstrated the lowest score of the three individuals deter performance, not length of service). In State service, mined to rank highest, be certified as eligible as in most public jurisdictions, this is particularly im for appointment. portant because salary is the only form of cash com 3. The minimum qualifications established for civil pensation available to employees. Hence, the "reward service positions be modified. The present abso and penalty" concept of salary administration is ap lute minimum length of experience required be propriate. fore an individual is allowed to participate in For reward to achieve maximum effectiveness, there promotional examinations should be eliminated. also should be some form of penalty. Real motivation Minimum qualifications should be couched in can be achieved only when poor as well as outstanding terms of the qualities needed, and then recognized performance is recognized. Some people are highly only as guidelines. When, in the judgment of the motivated by the hope of reward; others react strongly appointing authority and with concurrence of to the knowledge that penalty follows weakness or the State Personnel Board, an" individual appears failure. to possess the qualifications needed for the higher It is recognized, of course, that penalty needs to be level position, the person should be permitted to used with caution. This is particularly true in admiIl participate in the examination process. istering salaries in a public jurisdiction. If penalty is STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 41 to achieve maximum usefulness, the reasons for failure steps during each year when he meets such stand must be sufficiently provable so that the affected in ards of efficiency as the Board by rule shall pre dividual knows what he must do to improve the per scribe." formance for which he was penalized. Comparatively This sentence has been interpreted to mean that if few managers in a sizable group (perhaps 5 percent to a salary increase is withheld the affected employee 10 percent) can be expected to make outstanding con may appeal this action to the State Personnel Board. tributions to operations in a given year. By the same The effect is that managers are required to defend token, an equally small group is likely to perform their action (i.e., exerting management's prerogative poorly. An incentive oriented salary program should of distinguishing between levels of performance provide a significant financial reward for above-aver among subordinates) in open hearing with the age performers and should penalize the below-average chance that they may be reversed. It is not surpris performers. The large "middle segment" doing accept ing that most managers are chary about withholding able work will tend to receive average salary increases salary increases. that approximate the normal or average rate of increase 2. Extraordinary increases not authorized. There is during the given year. no provision within California's State service by A penalty concept in salary administration does not which a manager may accelerate the salary prog necessarily imply reducing salary. It often means only ress of a subordinate, no matter how extraordi withholding salary increases. On the other hand, the nary the subordinate's performance may be. As reward philosophy of salary administration does not suggested earlier, it has long been the practice necessarily mean increasing the frequency of merit in industry to recognize outstanding perform increases, but may mean increasing the size of merit ance by larger than average, or more frequent increases when granted. than average, salary increases. More recently, this In State service there is little evidence of the penalty practice has been adopted by the Federal govern concept and no provision for reward. An analysis of a ment. recent 21-month period showed that only one half of In the U. S. Department of the Navy, for ex 1 percent of eligible employees (i.e., lout of every ample, during the period July 1963 to June 1964, 200 employees) were denied a merit salary adjustment 3.1 percent of all employees (ranging from GS-2 when they became eligible. This is in sharp contrast with practice in large private companies where annual to GS-17) were granted "Quality Increases". These Quality Increases, which were granted salary increases typically are withheld from 10 to 50 throughout the year, amounted to an additional percent of eligible employees. one step increase over and above that which the Two important consequences result from the prac individuals normally could have expected. While tice of virtually automatic salary increases in State this program is relatively new in Federal service, service. First, in 1964 O\'er half of all employees were initial reaction has been quite favorable. paid salaries at the maximum of their range. to which their classification is assigned. At the management level 3. Narrow salary ranges. Despite any program that the proportion is even higher-63 percent. Hence, for might be adopted in California State government well over half of all State employees, no further mone for accelerating salary progress for outstanding tary incenti\'e is available as long as they remain in individuals, the current salary structure would their present positions. Second, awarding merit salary be limiting. In the California pay plan, salary adjustments at annual intervals to outstanding, average, ranges to which classifications are assigned are and marginal employees alike eliminates the motiva only 21.5 percent wide (i.e., the maximum of the tional value of a compensation program. In other salary range is 21.5 'Percent above the minimum). words, from the standpoint of sound salary administra By any comparison, these ranges must be con tion practices, there is no "merit" in the merit plan. sidered quite narrow. In Federal service, all salary ranges are approximately 31 percent wide. In >1(0 Deterrents to Selective private industry salary ranges typically vary be Salary Adminisfralion tween 25 percent and 50 percent with the broader At least four principal factors deter performance salary ranges applying to management level em oriented salary administration in State service. ployees. 1. Management is 071 the defensive. Management's In view of the narrowness of California State freedom to identify the poor performers and to salary ranges, any acceleration of salary increases withhold salary increases from them is severely would only result in a larger proportion of in limited by the interpretation of Section 18854 of the Government Code: dividuals reaching the maximum of their range. "After completion of the first year in a position, Hence, the motivational valve of the compensa each employee shall receive a merit salary ad tion plan would be limited even further. justment equivalent to one of such intermediate • Excepting the three super grades: GS-16, GS-17, and GS-IB. 42 STUDY OF MAi\,"AGEMENT MANPOvVER REQUIREMENTS 4. Performance appraisal needed. At the core of holding of a merit salary adjustment should not any system that attempts to compensate em be appealable to authorities outside the depart ployees in accordance with quality of the indi ment in which the individual is employed. ,-idual's performance lies the need for proper 3. Broaden, insofar as possible, the ranges of salaries appraisal of performance. In State service a established for each grade in the classification nricty of performance appraisal forms, as well system (i.e., increase the percentage spread be as attendant explanatory material, has been de tween the salary minimum and salary maximum ,-eloped and distributed by the State Personnel for each classification). The addition of two salary Board. In addition, certain departments have steps (in 5 percent increments) would appear to modified this material to meet their particular be a reasonable extension of the current s2lary needs. However, interviews with State managerial ranges. personnel indicated that, with few exceptions, little effective use has been made of the material. These additional ~alary steps should be resernd for those individuals who have exhibited outstanding per To be sure, a substantial number of appraisal formance. It is intended that the proportion of indi forms are completed, but they apparently serve viduals advanced to these additional steps would not little purpose. If a performance oriented salary exceed 10 to 20 percent of the total number of in administration program is to be effective, much dividuals within a given department. greJ.ter attention must be paid to the appraisal Recognizing that a small percentage of employees of employee performance. eventually will be elevated to the additional salary A Recommended Program steps, and a larger number of individuals will con For Salary Administration tinue at the current maximum of their salary grades, To make salary increases an effective means of mo it may be necessary to modify the application of salary tivating employees, we propose that senior manage survey data in determining compensation levels for ment be allowed (and encouraged) to recognize the classifications. As a highly technical .point, it is pro different levels of performance within their organiza posed that greater emphasis be placed on relating the tion and to adjust salaries accordingly. Specifically, we median and the weighted average of survey data with recommend the following: the third step in the salary range; however, the inner quartile range of survey data also should be con 1. To reward those individuals occupying manage sidered in relation to the first and fifth steps of the ment level positions, and those individuals who existing ranges. gin promise of attaining such position, merit The fact that the majority of State employees are salary increases (over and above the "normal" in paid salaries in the upper portion of their salary range crease but within the established salary range) is more a failure in administering salaries than in salary should be provided when the individuals demon setting procedures. This upward drift of salaries could strate special competence and superior accom be slowed by extending the time period required in plishment. To this end, we propose that a sum which individuals become eligible for an increase to not to exceed one half of 1 percent of the total steps 4 and 5 (e.g., require 2-year intervals between salaries of individuals in each department (who increases). A sounder approach, however, is to appraise are eligible for an increase) be appropriated an performance realistically and extend the time between nually. The Department Director should be au increases for below-average performers. thorized to make such extra increases in instances of special merit, and at any time during the year, OPPORTUNITY TO subject to review by the' State Personnel Board. RE,I\CH TOP POSiTIONS 2. Existing practices as to granting merit salary ad Of importance in motivating the career civil servant justments to all employees annually should be to remain in and give his best effort to the service of modified. Adjustments should be denied to all the State is the hope of attaining the topmost rank. employees whose performance is less than or In a representative democracy-be it Federal or state barely satisfactory. A practice that, in effect, the topmost positions usually-and logically-are re grants a salary increase annually for all employees served for political appointees. This tends to deny provides no incentive for the individual possess career civil servants the opportunity to attain the most ing greater than average competence or zea1. prestigious (and most responsible) positions. The individuals who are denied such merit salary In California, the opportunity to achieve high rank adjustments should be given explanations as to is provided the career civil sen-ant by the prevailing (a) why such increases are not granted, and (b) practice of appointing civil service employees to ex how his (or her) performance may be improved. empt positions. As indicated earlier, almost half (44 The individual may request review of the denial percent) of the exempt appointees in management by his immediate supervisor's superior. The with- positions are former civil servants. STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 43 California is unique in this regard in that its prac The lack of promotional opportunity has not been tices differ from other states. A random sample of 13 a problem in the California State government.;; In the other state go\-ernments~' noted for progressive per period 1943-1953, employment in State gonrnment sonnel practices showed that in all states at least some increased at an average annual rate of 9.5 percent. For individuals are appointed from the career ranks to the next 10 years, the average yearly increase was 5.7 exempt positions. However, in most of these states, percent. the proportion of exempt executives coming from the During the next 10 to 20 years (i.e., to 1975 and civil service is minimal-ranging from less than 1 per 1985), the larg,~t departments' combined foreCast in I; cent to almost zero. dicates a markedly slower growth rate; only 2_5 per Only a few states offered exceptions to this prevail cent per year over the 20-year period. And senior ing practice. Oregon reported that approximately 65 management positions are projected to grow at an percent of its exempt administrative jobs are filled even slower rate (i.e., 2.4 percent annually) over the from the ranks of classified employees-usually in posi future 20 YC:1rs. tions where professional knowledge or skills are re If these forecasts prove reasonably accurate, pro quired. Connecticut estimated that, while the percent motional opportunities will be limited and the motiva age varies, 25 percent of its exempt appointees were tion of opportunity to reach upper level management career employees. New York estimated that between positions will be curtailed sharply. 10 and 20 percent of exempt positions are filled by This prospective problem is accompanied by an individuals from merit system positions. However, a other problem-the need to stimulate older employees. large proportion of the 10 to 20 percent are career Few ways exist to moti\'ate those individuals \',-ho are stenographers appointed to exempt or noncompetitive within 5 or 10 years of retirement; having reached the secretarial positions. top of their salary grades, they ha,-e little prospect of A theoretical reason why this practice occurs in greater income; for most, there is no prospect of pro California (i.e., why civil servants are willing to ven motion. There is little their superiors can do to elicit ture into exempt positions) is that individuals lP outstanding performance from those who haye de pointed out of the career service may be reinstated to their former civil service positions. However, 11 of cided to "retire on the job", while awaiting the date of the 13 states sun-eyed also indicated that they had their formal retirement. The effect of this "early re some arrangement by which the appointee could re tirement" not only is detrimental to the organization, turn to his former career status. Hence, the reinstate but it can be demoralizing to younger subordinates. ment provision is not peculiar to California. More Only in isolated cases can these "veterans" be shifted likely, the political climate (including the attitude to to special positions-a practice common in industry ward civil sen-ice) that has existed under the last three to make room for younger men with an unquenchable Gm-ernors, as well as the caliber of the career em desire to get ahead. ployees themselns, has had a more pronounced impact To supplement normal attrition and its impact on on this practice. the rate at which promotional opportunities can be In general, this Commission is opposed to the ap pointment of career civil servants to policy setting and expected to occur, and to motivate further those in politically sensiti,-e exempt positions. In our opinion, dividuals who wish to continue work after age 70, the recruitment of individuals to top level exempt we propose that: positions from among those \vho have risen through 1. Mandatory retirement age be reduced to 65 years, the career sen-ice is only justified when it is clear that and the individual is sensitive to or responsive to the poli 2. Individuals who wish to extend their working cies of elected officials. \Ve recognize, however, that when this occurs the promotion of such individuals careers beyond age 65 t be allo\ved to do so on to exempt positions can provide an incentive of sig a year-to-year basis, and only with advance ap nificmce for all career civil servants. proval by their Department Director, based on proven high level performance in the preceding MOTIVATING THE year. In each succeeding year after age 65, the YOUNG AND THE OLD standards of performance required should be A major deterrent to the adnnce of personnel viewed critically-particularly after age 70. within an orQ"~nization is the lack of vacancics in the uppermost p~sitions to which one can aspire. This • See Chapter I, p. 29. t Currently 3.4 percent of incumbents ill ma:J2gement positions are 65 usuallv occurs \,-hen an organization is not growing YC8rs or age or older. By 1975", the proportio::t will grow to 5.5 per rapidl)" or e,-en is contracting, despite the fact that cent (assuming a continuation of past retirement and tu.rnover experience). The impact on ID(ltiY<ltion, l:m'.e'-er, would he even attrition continues at a normal rate. greater because an additional 3.5 percent of this senior man:::.gement group "ill be cit11er 63 or 64 years old by- 1975, and ro.piily ap proo.ching "mcmdatory" retirement. For those interested in and .. Colorado Co:c.ncctic.J:, H3.'..· .:aii, illinois, Kansas, IHaryland, 1\'iichjgan, capable of extending their careers, the requirement for s:.lperior nlinJ]~sot3J Kew Je:i'S~Y, Ne\v York, Oregon, 'Vashington, '\Nisconsin. performance is clear. 44 STUDY OF MANAGEMENT MANPOWER REQUIREi\1ENTS MOTIVA nON THROUGl'i be granted. Modest cash awards, up to $150, also are EMPLOYI:E RECOGNITION available. Thus far, the criteria for receiving this award Appropriate compensation levels, a flexible and ac have been held extremely high; only four gold and celeraL~d promotion system, and the opportunity 'to eight silver awards have been granted-sLx were strl\-e for top positions combine to provide manage granted in 1963. The benefits of a program applied so ment with a variety of significant incentives to use stringently are limited. in managing their personnel, as well as serving as stim To supplement existing means of employee recogni ulants to managers themselv,s. tion, we propose an expansion in the number of Financial incentives alone, or the hope for them, are awards and dollars granted under the State's current not sufficient. They should be supplemented with Superior Accomplishment Awards program. Further, other forms of recognition of achievement. we propose, in addition to the existing devices to rec The most effective form of recognition is a "pat on ognize outstanding performance by employees, these the back", i.e., words of encouragement from the be established: supervisor to the subordinate. To the degree this proc 1. A "Governor's Award" to be given annually to ess can be encouraged, we strongly support it. a specified number of individuals; for example, In addition, the State currently provides the follow- six distinguished State employees who have served ing employee recognition programs: the State in an outstanding manner. A medal, I. The Employee Suggestion Plan and fitting certificate might be presented at a din 2. Awards for Special Acts of Valor ner sponsored jointly by various employee and 3. Superior Accomplishment Awards. professional organizations. Department Directors would make nominations for these awards. (It The Employee Suggestion Plan and the Special may be desirable to combine this with an ex Valor Awards program have been well administered panded Superior Accomplishment Awards pro in the past, and the State has gained by their existence. gram.) Ho,,-evcr, little use of the Superior Accomplishment 2. A "Directors' A 'ward" program for departments, Awards program has been made. not restricted to number of recipients, for indi The Superior -Accomplishment Awards program viduals meeting high criteria of performance or was established in 1958 to afford recognition to those achievement. This Ieyel of awards would be ad employees who make exceptional contributions to the efficiency, economy, or improvement of the operations ministered entirely within each department. with of State government. Either gold or silver awards may appropriate ceremony and publicity. CHAPTER V lV1ANAGEMENT fREEDOM AND LEADERSHIP This chapter examines the relative freedom provided these two control agencies-the Department of Finance to managers in the California State government. Re and the State Personnel Board-often place major limi cruitment, deyelopment, and motivation of manage tations on departmental executi,-es' freedom to man ment-level personnel are but three (though extremely age.* important) facets in. the overall management of any The individuals managing these departments thus enterprise. The freedom with which executives can tend to become "controllers" of the operating depart make and implement decisions toward attainment of ments in their day-to-day acti,-i.ties. Hence, the indi goals is, perhaps, the most important aspect of manag viduals themselves become important when consider ing the enterprise. ing the restraints placed on operating management's "Freedom to manage", howe\'er, is a relative thing. freedom to manage. In no enterprise-public or private, large or small-do "Controllers" Limitec:l managers ha,'e unrestrained freedom to direct the ac To Staff Experience tivities of the organization. The larger the organiza The individuals holding management posltlons in tion, the less freedom the individual manager is allowed. the Department of Finance and the State Personnel He becomes more dependent on the interactions of Board have background profiles that are similar to others, greater use is made of policy and procedure to other management level employees. However, in one circumscribe his actions, and as a result, his freedom to important characteristic-breadth of experience accu take independent action becomes limited. mulated while in State service-they are quite limited. In a public body, the restraints on management are Almost two thirds of the current managerial group even greater. The intentional separation of authority in the Department of Finance have spent th:.:ir entire between branches of government, the need for pro careers with the State working in that one Depart tection of public funds and the public interest, the ment. Eighty-six percent have never been transferred pragmatic requirement of meeting the diverse inter outside Sacramento while in the State's employ. Fi ests of the political environment (and yet protecting nancial executives who have worked in at least one against disproportionate attention to these interests), other department of State go,ernment have subse all combine to place seemingly limitless restraints on quently spent, on the average, the past 16 years in management in public service. the Department of Finance. It can be assumed that the CENTRAL CONTROL AGENCIES experience accumulated in other departments was in Effective control by the Governor and other elected relatively low, nonmanagerial positions. officials for administering the functions for which The staff members of the State Personnel Board they are held accountable by the Constitution is man who currently hold management level positions have datory if the will of the people is to b~ carried ou~. had some'vvhat broader experience than the financial For a variety of reasons, however, effectIve control IS managers, but not significantly so. About 40 percent not a simple matter to achieve. Statutory terms of of of the management level employees have devoted their fice or qualification requirements, constitutional offi entire State service careers to "\vorking for the State cers, independent boards and commissions, and the role Personnel Board. Another 45 percent, however, have of powerful ci,-il servants all, in one way or another, worked in only one other department. Close to 80 tend to fragment the Governor's control over his ad percent of the management group have never worked ministration. Similarly, the legislature has difficulty in outside of Sacramento while in State service. Those assuring that appro"ed programs, for which funds who have worked in at least one other department have been appropriated, will be carried out as in have, on the average, spent the last 13 years working tended. for the State Personnel Board. _-\.gain, it is assumed One central tool for maintenance of this control in that the experience prior to joining the State Person California is the Department of Finance which, nel Board was accumulated at relatively modest levels. throuah control over funds, effectively holds the key These data indicate that experience in operating de to th: execution of the Governor's program. In a dif partments by the management of these two control ferent dimension, the administration of a high quality agencies has been virtually nonexistent-at least in civil service S\'stem necessitates controls to ensure maintenance ot" proper standards and to prevent abuses. ". The tr o D l ep ag a e rt n m cy e n i t n o f t h G e e n s e e r n a s l e Se th n a ri t c e i s t a p ls r o e s C c 2 r . i !l b e b s e p c u h r a c ra h c a t s e i r n i g z ed p r a o s c e a d u c r o e n s , forms and paper work control techni-;ues, facilities standards, and In California, this role is filled by the State Personnel the like. Such housekeeping and other functions performed by this Board. Howeyer, in carrying out their proper roles, Department are not of the same nature and tio not place the same magnitude of constraints on manageme.:::..t's action, as discussed above. 46 STUDY OF MANAGEMENT MANPOWER RE:!t:1REi\1ENTS the last decade or two. "While certain specialists (e.g., ing managers to make the best use of their personnel psychiatrists) would not be expected to have worked resources. in several State departments during their careers, the The proper discharge of the State Personnel Board's situation in the finance and personnel fields is differ responsibilities requires a certain degree of centralized ent. These functions, and substantial numbers of posi authority and contro!' It is the degree of centralization, tions in them, exist in virtually all of the larger depart particularly in the classification of positions, that ap ments. Promotional progress as \Yell as lateral transfer pears to be excessin. All State positions are currently is readily available in either function for the indi grouped into about 3.000 job classifications. The num vidual who seeks operating experience before wishing ber has grown steadily in the pJst and probably will to control it. continue to do so in the future. The effectiveness with which the State Personnel Board can monitor this large Financial Controls number of job classifications, "without unduly limiting No one questions the need for financial control. management flexibility, is dubious, at best. However, control devices and procedures can be de Recommendations "eloped which ,vill serve the needs of the Governor The following proposals are set forth to increase and the legislature without unduly limiting depart management's freedom to attain the goals established mental exccutives. To this end, the Department of Fi by the Governor and the .legishture. Specifically, we nance and several operating departments are endeavor recommend that: ing to introduce the concept of program or perform ance budgeting. vVe appbud this effort and encourage 1. Potential candidates for senior manageri:ll posi its early accomplishment. tions in the control agencies be identified and ro tated among positions in line departments (in Nevertheless, in the interim and perhaps for some cluding line operating jobs) with the objective time to come, the more traditional line item budget of providing tt:cse candidates with ,:xposure in will continue as the controlling budgetary device. The depth to the problems faced by line adminis shortcomings of this system, "with which legislators and trators. executives have been laboring for years, are beyond or 2. The practice requiring prior approval by the the scope of this study. Ho\\"e"cr, the use of this Department of Finance before operating depart budgetary tool for administrati,'e control, after the ments may (a) make expenditures for items in budget has been approved, affects the manager's free dom, and thus is of interest. cluded in budge~s already approved, (b) execute contracts or orbcr documents for such items, and Examples too numerous to mention, and of no con (c) revise orgaIllzational or procedural matters, sequence in themselves, ha\re been cited in which the all be eliminated ,,'nenever there is assurance of Department of Finance has not authorized the expen sound management practices in the operating de diture of funds already approved by the Governor and partments. appropriated by the legislature. This practice not only 3. The State Personnel Board establish as a goal, to is demeaning to departmental executives, but it im be achieved m'er the next 3 to 4 years, the delega pinges significantly on their ability to achieve estab tion of as man;.- personnel functions as possible lished goals. which are currently performed in the central It must be recognized, however, that budget execu agency. Primarv objecti\'es should include tion (i.e., controlling expenditures throughout the delegating the routine establishment of new year) is a necessary and proper tool which the Gover classifications, the allocation of positions to clas nor must have available for use. The only question is sifications, salar:- administration, the primary re the extent to which it is used, and how it is applied. sponsibility for recruiting, and the development This Commission concludes that freedom from close of procedures that would allow disciplinary ac financial surveillance must be earned through demon tions and resulting appeals to be confined within strated administrative competence and proven alle agencies or departments. giance to the Governor's philosophies. A shortcoming Achievement of this broad goal with its many in either of these requirements must and should lead to objectives will require (a) elevation of the stat greater control. ure of the departmental personnel function, both in level of position and caliber of incumbent, to Personnel Controls assure true personnel leadership by those held The California State Personnel Board is recognized responsible for this function, and (b) establish as one of the outstanding personnel organizations ment of standards and a system of post-audits to among state governments throughout the nation. It is assure departmental compliance. responsible not only for maintaining the integrity of the civil service system, but also for (a) establishing IMPACT OF LEGISLATORS personnel processes that will identify and develop the One of the distincti\-e characteristics of a represen best candidates for management positions, and (b) aid- tative democracy, as practiced in the United States, is STUDY OF MANAGEMENT MANPOWER REQUIREMENTS 47 the relationship between the executive and legislative In practice, if the leaders of each unit of a state gov branches of gO\-ernment. To be effective, this inten ernment are to be responsive to the Governor, they tional division of authority requires restraint on the should have the right to appoint and replace individu part of individuals in both branches of government. als in agencies and departments whose actions have a Nevertheless, because, in a narrmv sense, the constitu direct impact on the execution of public policy. The encies of each mav not be identical, conflicts will de translation of the ,viII of the electorate into policy velop. The constituencies of indiddual legislators are and action by the state government requires that the defined by geographical boundary. For a department Governor be aided by individuals who actively will head, his constituencies may be senral, including the support his leadership. Governor, a legislative committee, and certain special interest groups. Exempt Positions in California Intel'views \,-ith individual legislators suggested that The principle of responsiveness is provided for in frequently legislative intent, and therefore the wiII of California State government through the designation the people, is not carried out by departmental execu of positions in each agency and department as "ex tives (i.e., programs are adopted and funds appropri empt" from the provisions of law covering the selec ated, but "nothing happ:ns"). Conyersely, department tion and appointment of civil service officials. The heads indicated th3.t, at times, indiyiduallegislators, be legal provisions for exempt appointments are contained cause of their (or their contituency's) particular inter in Section 4 of Article XXIV of the Constitution of ests and throu£h th(;ir personal prestige, unduly restrict the State of California (primarily in paragraphs 1 the freedom ~':ith which managers can pursue their through 6), shown in Appendix 1. annual departmental goals. The budgetary process and In the light of principles and limitations stated in the inhibiting legislction were mentioned as the techniques foregoing p::ragraphs, ,ve have assessed the total list most common!:-- employed. of exempt appointees in California State government. The mandate of the legislator in representing his In summan', the relative numbers of individuals who constituency is clear. The role of the departmental are exempt-indicate that: executive i~ following the programs of the Governor, 1. Proportionately, the total number of all exempt as authorized b\- the entire legislature, is also clear. it" appointees to the State's total personnel is small The solution, there is one, lies in the ability of the and has declined. departmental executive in bridging any gaps in the two points of ,-iew. The successful manager will find 2. At the management levels, the number of exempt means to accomplish his annual program. The less positions is largely in the topmost jobs 'where talented executi\'e, who is not sufficiently alert to the the responsibility for making policy and over environment around him, will fail. This sensitivity and seeing its execution is located. Nearly three understanding of the political em'ironment is a very fourths of the positions in the top two manage important qualification required of those appointed to ment echelons are exempt, contrasted with less high office in go.-ernment. than 8 percent at the lower two management levels. In our opinion, this number and propor THE ROLE OF tion of exempt positions in management levels is EXEMPT POSITlON:S consistent with recognized principles of public In any democratic government, those in leadership personnel administration. positions, i.e., those who make and m-ersee the execu tion of public policy, should be elected by the people, In most public jurisdictions it is customary to estab or be immediately responsible to and responsh'e to lish additional exempt positions without regard to civil those who are elected. Only in this ,val' can the will of service requirements to allow senior exempt officials the people, as expressed at the polls, be translated into to appoint one or a very limited number of confi action by the gO\'ernment that StlTes them. dential aides. The logic of this practice is that, to be Table 15 NUMSE~ OF EXEMPT AND CIVIL SERVICE HI!PlO¥;:;:;S " (1940-1962) Exempt Civil SeT7.-'ice Exempt As % Year Appointees • ~ Employees Total Of Total 1940 2,459 25,160 27,619 8.9% 1945 1,378 28,485 29,863 4.6 1950 1,034 47,il9 48,753 2.1 1955 1,327 64,015 65,342 2.0 1960 1,680 85,900 87,580 1.9 1961 1,637 93,044 94,681 1.7 1962 1,539 96,277 97,816 1.6 • State of California, California Statistical Abstract, 1963 (4th ed., "')1-Includes fun-time and part-time exempt apI?ointees at all levels. Ex Sacramento: Economic Development Agency, 1963), p. 73. cludes University of California and California State College em ployees. 48 STUDY OF MANAGEMENT MANPOvVER REQUIRE~IENTS effective, the political appointee must have an aide of increasing requirement that the heads of State agencies, his own choosing. This practice is provided for in departments, and divisions be qualified in various spe Section 4 of Article XXIV of the Constitution cited cialized fields (e.g., correctional work, mental health, above and has been consistently followed in California. and so forth). However, the individuals "growing up" It accounts for a substantial proportion of the posi in the State's career ci\"il service may tend to have tions below management level that are classified as a monopoly on these forms of specialized knowledrse. exempt. The remaining exempt positions are those Yet it must be realized that for the leadership of a listed in paragraphs 7 through 16 of Section 4, Article state department (and this is particularly true in a )"'X[V, plus the personnel of the California Disaster large and rapidly gro\\"ing state), specialized knowl Office. edge alone is not sufficient. Secondly, the individual Currently there is interest in revising the State must possess the capacity to manage the affairs of a Constitution regarding its provisions for exempt em large unit. Finally, and perhaps most important, he ployees. On December 10, 1964, the Committee on must be aware of, and sensitive to, prevailing public Article XXIV approved its seventh working draft and and political opinion as to the function of government recommended its adoption by the Citizens Advisory he would carry out.* Committee on Constitutional Revision. Aside from In California, there has been a tendency to fill ex modifyino- obsolete language and making certain other empt positions, in major proportion, from among the amendme~ts, the draft suggests two principal changes. career civil servants.'" This practice of appointing First, the Governor would be precluded from creating "civil servants" to the highest ranking positions in the additional exempt positions over and above those spe State service undoubtedly provides an incentive for cifically listed in the Constitution. Second, the legis those who are civil servants. Simultaneously, this prac lature would be limited in the number of additional tice raises a question: "Are career men really qualified exempt managerial positions it could authorize. The for these policy-making, and hence politically import limitation is established by formula-one quarter of ant, positions?" 1 percent of the total number of full-time civil service The practices in other states u* vary. Two thirds employees. Currently this would amount to approx of exempt positions in Oregon are filled from the imately 225 exempt positions. career ranks-one fourth in Connecticut. However, In our opinion, the limitation on the Governor (as in most states the number from the career ranks is ,,:e interpret the proposed revision) is inconsistent minuscule. 'with the principles set forth above. Further, the pro Ultimately, the decision of whether or not to ap posed limitation on the legislature, while less onerous, point civil servants into exempt positions must be made is also inconsistent with the principles set forth above, in terms of the individual himself. First, does the in and unnecessary. As Table 15 (shown earlier in this dividual possess the professional competence to (a) chapter) indicates, the proportion of exempt appoint understand the technical consequences of the decisions ments in State service has been decreasing steadily he must make, and (b) attain the respect of his tech over the past 25 years. There is little evidence that nically oriented subordinates? Second, does he have further limitations in the Constitution are needed. the capacity to superv;se and administer a large organ To the contrary, the limitation imposed on the leg ization? Finally, can he, after years of serving in a islature might have an effect opposite to that which neutral role, become sufficiently sensitive to the polit is intended. Historically (since the inception of civil ical demands of the position? In the opinion of this service in California as we know it today) the Gov Commission, these three criteria should be weighed ernors and the legislatures have been conservative in carefully when considering the appointment of a civil exempting positions from civil service. Howev.e:, a servant to an exempt position. specific limitation on numbers of exempt posItIons might well be interpreted as a maximum to be filled Limitations on at all times. vVhile not opposed to a reasonable max Filling Exempt Positions imum being placed on the proportion of exempt po Filling some exempt positions is limited by the legis sitions, it is this Commission's view that the self-control lative requirement which specifies that the incumbent exerted in the past is more desirable than a fixed limit must have acquired a certain number of years' experi cemented in the Constitution. ence of a specified type, or that he possess a certain type of license. Filling other exempt positions is Filling Exempt Positions limited by fixed terms of office. Carrying out the principle of responsiveness, dis This Commission concludes that if the Governor is cussed above, is not always an easy task. Unattractive to be free to select and appoint individuals who will be compensation levels, combined with lack of tenure, most effective in carrying out the administration's pro- limit the ready recruitment of exempt employees from sources outside State service-especially during the lat ** • S O e f e t C h h e op 2 t 0 e 7 r I " , e p x . e m 19 p . t " positions at the managerial level, 44 percent ter years of a Governor's term. Further, there is an were occ1:lpied 2S of August I, 1964, by former career civil servants. 'if** See Chapter IV, p. 99. STUDY OF l\lANAGEMENT MANPOWER REQUIREMENTS 49 grams, the limitations described above should be PERSONNEl LEADI!RSHIP eliminated. . California State government, as any other organiza tIOn, must have effective means for managing its most Recommendations important resource: people. To be effective, this re To assure that the topmost policy-making positions quires active participation by the chief executive to in California State government are filled by the most indicate that, at all levels: (a) managers believe that qualified and capable individuals available, we propose the strength of the organization lies in its personne~ that the recruiting effort for exempt appointments be and (b) they are interested in improving on that intensified, and that sources outside State service be strength. This last section discusses two proposals for the primary "hunting ground" for t2.Ient. Implemen improving the management of managerial personnel tation of this recommendation may require the assign in California State service. ment of recruiting and screening responsibilities to one individual in the Governor's office. Top-Level Coordination Needed To provide freedom in the selection of the most Recruiting and selecting individuals who occupy qualified candidates for exempt positions, we recom exempt positions are of prime consequence to the mend the elimination of (a) statutory provisions for effectiveness of the State's management. First and fore minimum qualifications of appointees, and (b) statu most, exempt appointees must be highly qualified in tory fixed terms of office, for all exempt positions. dividuals, possessing the required mix of skills, both in substantive and administrative fields, and in under MANAGEMENT FLEXIBILITY standing political life. Typically, such individuals are THROUGH THE CEA PROGRAM difficult to obtain-particularly through informal re The relatively new Career Executiye Assignment cruiting methods. Second, and of equal importance, (CEA) program increases management flexibility in are the sacrifices, financial and otherwise, an exempt the assignment and removal of civil sen-ice executives appointee from outside State service must make in to specially designated positions with major adminis order to serve in a government post. Finally, the at trative and policy influencing responsibilities. This is tractiveness of an exempt appointment wanes as elec accomplished through two principal provisions: (1) tion day approaches, i.e., there may be a change in the appointing authority can select from among at administration. Hence, if the Governor is to have a least 10 qualified competitors as compared to three for large pool from which to select, recruiting for the non-CEA civil service positions, and (2) employees highest appointive positions needs more organized and gain no tenure rights to CEA positions. Termination intensive attention than is currently the case. The al of an assignment is not a disciplinary matter and can ternative is to appoint the readily available, even if not be appealed on grounds other than racial, religious, less competent, individuals. or political reasons. Apart from providing top officials with flexibility in Establishing and maintaining an adequate compen assigning personnel in accordance with departmental sation program for exempt executives are responsi and agency needs, incumbents must continually dem bilities which should be discharged at the highest level onstrate their competence if they ,,-ish to retain their possible. Exempt pay must bear proper relationship to CEA positions. In this respect, the CEA program is salaries of lower level and equivalent civil service posi similar to the Schedule "C" positions initiated by the tions, and also be adequate to attract into and retain in U.S. Civil Service Commission in the Federal govern State service the individuals best qualified for such key ment. However, there is one important difference. positions. While Schedule "C" positions can be filled with in FinalIy, overall executive coordination must be di dividuals from outside civil service, CL\ positions are rected at recruiting, developing, and motivating all limited to executives with civil service status. top executives, including civil servants. Agencies and departments have to be stimulated to further the train Recommendations ing and development of their executives to assure that To further the flexibility provided to management future candidates for management positions receive the in assigning individuals to the topmost ranks of the breadth of experience required. The establishment of career service, and to broaden the motivational value Federal and local contacts for the purpose of advanc thereof, we propose that: ing mutually beneficial programs of executive person 1. The CEA program be extended to include all nel exchange also merits funher attention. management positions in the career civil service which are immediately subordinate to managerial Recommendations positions which are exempt from the provisions Not only must certain personnel functiom be co of civil service, and ordinated at sufficiently high executive levels, but 2. Individuals outside California State service be leadership in personnel administration from that same eligible to compete for appointment to positions source must be provided to line departments. For this designated as CEA. purpose, we propose: 50 STUDY OF MANAGEMENT MANPO\VER REQUIREMENTS • Establishing the position of Secretary for Execu 1. Future managerial manpower requirements for tive Personnel within the office of the Governor. The each department have to be determined and re principal purpose of this position would be to serve cruiting programs must be planned. as the Governor's advisor on all personnel matters in 2. The training and development of key executives State service. Specifically, this position would be re can be accomplished only through appropriate sponsible for: planning and the wholehearted support on the a. Identifying and recruiting, from within or out part of line management. side State service, the most qualified candidates 3. Performance-oriented salary administration and for appointmc;nt to exempt positions (including other employee recognition plans, to be effective, boards and commissions). This responsibility require the full participation of line executins. would include, but not be limited to, the func 4. Additional responsibilities to be delegated by the tions currently performed by the Appointments State Personnel Board to operating departments Secretary. will prm"ide greater managerial flexibility, but b. Serving as liaison between the Governor and all will carry with them additional burdens. officials of each personnel system of the govern In light of the above requirements for personnel ment concerned with executive personnel to administration at operating levels, the question must be foster collaborative efforts and approaches for considered whether the current personnel officers in utilizing, rotating, and exchanging executiv,;s. line departments have the background and stature re This would consist primarily of liaison with the quired and are in a position to aid line managers in State Personnel Board, but also would include implementing these programs. the University of California and California State Colleges. In addition, this position would maintain Analysis indicates that the characteristics of depart contacts with municipal governments and the mental personnel and training officers compare favor federal government with the objective of devel able with those of the senior management group. How oping mutually beneficial programs for exchange ever, the ability to be effective in implementing change of executive personnel. is measured in part by organizational echelon. On the average, personnel officers are at the third echelon of c. Formulating, in collaboration with the State their departments (i.e., two levels dO\\TI from the di Personnel Board, policies and regulations for con sideration by the Governor relating to the modi rector); training officers are at the fourth~ vVe con clude that, from this relatively low lenl, departmental fic.ltion or expansion of recruitment, develop personnel officers are not in positions to implement ment, and motivation of management personnel effectiv"ely the programs outlined abo,"e. in State service. d. Establishing and maintaining a compensation pro Recommendation gram for exempt personnel, assuring, through To strengthen the personnel function within the cooperation with the quadrennial committee ap operating departments of State service, and especially to assist top management in developing and motivating pointed by the Governor, that this program is the personnel within the departments, ,ve propose the compatible with the salary and fringe benefit establishment of: programs of the other personnel systems in State gm"ernment, and equitable with executive posi • Civil service positions equivalent to "Assistants for tions in other public jurisdictions and with in Personnel" in the larger departments, reporting to the Department Directors. Such positions would be re dustry. sponsible for all personnel functions in the department, e. Providing executive leadership, in conjunction including training, and would supervise the appropriate \\·ith the State Personnel Board, to stimulate staff. agencies in the training and development of their It is contemplated that incumbents in these "Assist employees, as well as planned rotation of the ant" positions would provide leadership in personnel ablest individuals, to assure that future candidates matters. They would propose and whole-heartedly for management positions receive the breadth of pursue change in traditional personnel practices when experience and exposure required. the advent of change held the promise of improving line management's ability to administer the affairs of Management Responsibilities the department. The qualifications of the incumbents In addition to the personnel functions discussed in would include competence as personnel technicians, the preceding paragraphs, the recommendations in this but more importantly, competence as solvers of man report have emphasized the need for other executive agement problems. For management problems revolve personnel programs which can best be implemented around people, and people are the interest of the per in operating deparnnents. sonnel manager. Appendix A SCOPE OF RESEARCH l:rFORi IN CONNECTION WITH THE STUDY OF MANAGEMENT MANPOWER REQUIREPJl=!Ni'!i'S (JUNE 1964-JANUARY i 965) Followmg are the principal tasks undertaken by the • Compiled and analyzed statistics of 3i..i candidates study team during the course of this study. currently on State promotion Lts • Prepared, distributed, compiled, and analyzed the • Contacted 20 college placement officers and 30 college deans and faculty members of institutions of results of 1,434 questionnaires completed by incumbent higher learning in the State of California State executives representing 94 percent of manage • Surveyed, by questionnaire, 85 recent resignees ment level positions from State service o Interviewed, in depth, about 250 State executives; • Surveyed, by questionnaire, 185 entry level re reinterviewed many of these executives on several oc cruits now in State service caSIOns o l\,fet with the Deputy Directors Council, the Per • A:;sisted heads of the largest departments, repre sonnel Officers Council, the Training Officers Council, senting 95 percent of present, full-time civil service and representatives of the California State Employees' ,mployees, in developing forecasts of their manage Association ment manpower needs in 19i5 and 1985 o Surveyed 13 other states on matters pertinent to • Interview 20 Federal executives whose depart this study m~nts perform work analogous to their counterparts • Analyzed the impact of veterans' preference in California State government points on 60 promotional lists III Surveyed, by questionnaire, executives of 21 de • Reviewed considerable published data prepared partments in the Federal government by the State government, as well as other sources. App;:;ndix B MEDIAN AGE OF CiVIL SERVICE MANAGER.S TWENTY LARGEST DEPARTMENTS Age Department (In Years) Justice _________ ------ --- 56 Agriculture ___________ - --- 55 ~_____________ Education ____________________ ----- 55 Equalization ____ -- 54 EmploYinent _________________ ------ 53 Social Welfare__________________ ------ 53 California Highway PatroL_____________ __ _ 51 Motor Vehicles ---- 51 Conservation _________________________________ ------- 50 Franchise Tax _____ 50 General Services __________ _ 50 Industrial Relations - 50 Public Health ____________________ --- 50 Public Works ____ ----- 50 Mental Hygiene _____________ ------- 49 Parks & RecreatioIL______________ ----------- 49 Corre;~tions 48 "Vater Resources___ --- 48 Fish and Game_ - 47 Youth Authority ___________________ --- 47 [5'2 ] Appendix C SALARY PROGRESS OF CIVIL SERVICE MANAG~RS TWENTY LARGEST DEPARTMENTS (1954.1964) % IncTease Department In Salaries Youth Authority _________________________________________ 114% Motor Vehicles 109 Corrections _____________________________ 106 Water Resources _.____________________ 106 California Highway Patrol 104 Parks & Recreation ____________________________ 104 Fish & Game _____________________. _ 101 Industrial Relations 99 Public Works ___________ ____ 97 Agriculture 95 Conservation ____________________________ 92 Equalization . 87 General Services _________ 87 Mental Hygiene 83 Employment 82 Franchise Tax 82 Public Health __________ 82 Justice 81 Social Welfare 73 Education 68 Appendix D DEPARTMENTAL FORECASTS CIVil SERVICPE EMPLOYMENT ~;ULL-TIME (1963-1985) 1985 Employment 1975 Employment Annual 1963 Total Annual Total % Increa,-e Department Employmcnt Number % Increase * Number Since 1975" Agri cuI ture__________________________________________________ 1,573 1,883 1.5% 2,185 1.5% California Highway PatroL____________________________ 3,490 5,500 3.9 7,000 2.4 Conserva tion__________________________________________ 2,590 3,672 3.0 4,627 2.3 Corrections____________________________________ 5,600 9,600 4.6 13,400 3.4 Ed u ca ti 0 n____ _______________________________________________ 1, 37 4 3,000 7.1 4,000 2.9 Employment___________________________________________ 6,110 10,450 4.6 11,950 1.4 Equ aliza ti 0 n_________________________________________________ 2,2 70 2,350 ~Iin. 2,425 Min. Fish & Game_____________________________________________ 988 1,250 2.0 1,500 1.8 Franchise Tax______________________________ I,ll 0 1,840 4.3 2,500 3.1 General Services._________________________________________ 3,932 5,549 2.9 7,077 2.5 Industrial ReIations____________________________ 2,567 3,763 3.3 5,011 2.9 Ju stice _________________________________________________ -___________ 1,076 1,500 2.9 1,900 2.4 Mental Hygiene____________________________ 20,580 27,300 2.4 28,650 0.5 Motor VehicIes________________________________________ 4,750 8,300 4.8 11,500 3.4 Parks & RecreatioIl...--_______________________ 1,062 3,200 9.6 4,000 2.3 Public Health_______________________________________________ 1,450 2,030 2.9 2,567 2.4 Public WorkL_________________________ 16,480 19,273 1.3 21,068 0.9 Social Welfare_____________________________________ 724 1,110 3.6 1,482 2.9 Veterans Affairs_____________________ 954 974 Min. 921 Min. vVater Resources__________________________________ 2,730 5,000 5.3 5,400 0.8 Youth Authority____________________________ 2,460 4,700 5.5 6,000 2.5 83,870 122,244 3.2% 145,163 1.7% Proportional Adjpstment for Remaining DepartmentL_ _______________________ _ 3,642 4,256 4,837 T otaL______________________________________________ 87,512 127,500 3.2% 151,000 1.7% • The annually compounded percentagoo are shown so that growth rates for the 12-year pecdcd 1963-1975 can be compared with the IO-year growth rates to 1985. NOTE: l\Iin. indicates Minimal Increase. Appendix E DEPARTMENTAL fORECAS'II'S MANAGEMENT lEVEl. POSITIONS (1960.-1985) 1981 Management 1971 Management Positions POSi:'iOl1S Annual -=--;--- ---,--- 1964 Management Total Annual Total % Increase Department Positions Number % Increase • Numb:r Since 1975· Agriculture______________ __ _________ _ 45 47 0.3% 52 1.0% California Highway Patro~ __________ _ 30 75 8.7 123 5.1 Conservation_______________ _ _________________ _ 49 72 3.6 99 3_2 Corrections_ ________ _ 119 163 2.9 221 3.1 Ed uca ti on_ _____________________________________ _ 49 88 5.4 107 2.0 EmploymenL_ __ ~ 55 67 1.8 70 0.5 Equalization _____________________________________ _ 48 54 1.1 59 0.8 Fish & Game_______ __ __________ _ 21 28 2.7 30 0.7 Franchise Tax_ ______________________________________ _ 26 57 7.3 70 2.0 General Services_ _______________________ 93 118 2.2 122 i\1in. Industrial Relations-_____________________________ _ 69 89 2.3 107 1.8 Justice_ ________________________________ _ 25 32 2.3 42 2.7 Mental Hygiene_ ____________________________ _ 188 285 3.8 352 2.1 Motor Vehicles_ _________________________ _ 26 33 2.2 40 1-9 Parks & Recreatioll-_____ __ _____________ _ 25 35 3.1 40 1.3 Public Health_________ __ ________ 53 65 1.9 '77 1.7 Public W orks __________________________ _ 227 248 0.8 271 0.9 Social Welfare,_ ______ 38 48 2.1 70 3.9 Veterans Affairs_ _______________________ 12 9 -2.6 8 -1.2 Water Resources_ __________________ 51 84 4.6 99 1.5 Youth Authority_ ______________________ _ 73 105 3.3 124 1.7 1,322 1,802 2.9% 2,183 2.0% Proportional Adjustment for Remaining Departments _______________ _ 208 283 342 TotaL_ ________________________ 1,530 2,085 2.9% 2,525 2_0% • The annually compounded percentages are shown so that growth rates for for the ll-year period 1964-1975 can be compared with the 100year growth rates to 1985. NOTE: Min. indicates Minimal Increase. Appendix F SALARI~S PAID TO FlfTY. . T\tVO SE~t:CTED EXECU'u'UVES LOCAL GOVERN.MENTS * I~J POSITIONS AT $35,000 AND ABOVE Executive Director, Port of New York Authoritv,____ __ _ $60,000 Director, Inter-American Trade Exposition, Flo~id'da ___________ 50,000 School Superintendent, Chicago ________________ _ 48,500 Deputy Executive Director, Port of New York Authority_ ____ 45,000 General Counsel, Port of New York Authority_" _____ 45,000 Chief Engineer, Port of New York Authorily_ ______ 45,000 General Manager, Triboro Bridge & Tunnel Authority 45,000 General Manager, Water & Power, Los Angelesi _______ 40,560 Controller, New York City_ ____________________ " "_ _______ 40,000 Director, Port of New Orleans _________ _ 40,000 Director of Finance, Port of New York Authoritv_ __ 40,000 Director, Marine Terminals, Port of New York Authority_ 40,000 Director, Port Development, Port of New York Authority_ ____ 40,COO Director, Aviation, Port of New York Authoritv_ _______ 40,000 Assistant General Manager, Triboro Bridge & T~el Authority_ ___ 37,500 School Superintendent, Los Angeles 37,500 School Superintendent, New York City_ 37,500 General Manager, Airports, Los Angeles __ _ 35,000 City Council President, New York City 35,000 Chairman, Housing Authority, New York City_ ________ 35,000 Chairman, Transit Authority, New York City_ _________ 35,000 Director, Administration, Port of New York Authority_ _____ 35,000 Director, Public Relations, Port of New York Authority_ ___ 35,000 POSITIONS AT $30,000 AND UP TO $35,000 Assistant General Manager & Civil Engineer, Water & Power, Los Angeles ____________ _ $33,768 General Manager, East Bay Municipal Utility DistrictL-___ 33,600 Director, Personnel, Port of New York Authority_ ______ 33,300 Director, Tunnels & Bridges, Port of New York Authority_ ____ 33,300 School Superintendent, Detroit_ __________ 33,000 School Superintendent, DallaL_ ____________________ 33,000 General Attorney, Port of New York Authority_ ___ 33,000 First Deputy Director, Aviation, Port of New York Authority_ __ 33,000 General Solicitor, Port of New York Authority_ _______ 33,000 Chief Administrative Officer, Los Angeles County_ ________ 32,808 City Manager, San Francisco to _________ 32,566 Business Manager, City Schools, Los Angeles 32,565 Executive Deputy Superintendent of Schools, New Yor~ _____ 32,500 Counsel, Triboro Bridge & Tunnel Authority_ _______ 32,000 Controller, Port of New York Authority 31,350 Chief Assistant City Attorney, Los Angeles ___" _ __________ 31,140 Chief Electrical Engineer & Assistant General Manager, Water & Power, Los Angeles ___________________ 31,140 Auditor-Controller, Water & Power, Los Angeles, _________ 31,140 Chief Engineer, Water \Yorks, and Assistant General Manager, Los Angeles 31,140 School Superintendent, San Francisco___ 31,000 Director, Terminals, Port of New York Authority 31,000 Controller, San Francisco__________________ 30,528 City Manager, San Diego to_ 30,421 General Manager, Harbor Department, Los Angeles___ 30,312 City Manager, San Jose to _____ 30,048 Director, World Trade, Port of New York Authority 30,000 City Manager, Long Beach to __ 30,000 School Superintendent, Cincinnati 30,000 City Administrator, New York. 30,000 • Advisory Panel on Federal Salary Systems, Clarence B. Randall, Chairman; Final Report to the President, 1963 ("The Randall Commission Report"). Excerpts from data co:npiled by the Randall Commission (Mar~h, 1963) and attached to the Report in sections C, D, E and G of Appendix IV. Appendix G L~NALYSiS Of COlv1PENSATION DifFERENTIALS BETWEEN SEL!!Cil:D EXECUTIVE POSITIONS TWENTY LARGEST DEPARTMeNTS % Highest % 2nd Department Above 2nd Above3.d Agriculture 13.6 21.5 California Highway PatroL__ 14.2 5.0 Conservation 14.2 5.0 Corrections 8.3 4.9 Education 9.6 21.5 Employment 19.5 4.0 Equalization 5.0 10.2 Fish & Game 14.2 21.5 Franchise Tax 14.2 15.7 General Services 8.2 10.2 Industrial Relations NA NA Justice 14.0 5.0 Mental Hygiene ______ 7.2 1.3 Motor Vehicles 8.2 21.5 Parks & Recreatio~ ___ 14;2 5.0 Public Health 11.1 2.6 Public Works 7.4 1.4 Social Welfare 24.3 10.2 Water Resources 7.4 1.4 Youth Authority 8.2 15.7 Average 11. 7 9.7 NOTE: NA indicates Not Applicable. ApF ,ndix I-Continued "(9) The teaching staff of all schools under the subject to the power of the Legislature to amend or direction or jurisdiction of the Superintendent of repeal suchl.aws and to enact new laws not in conflict Public Instruction, the Department of Education or herewith. the director thereof or the State Board of Education "(c ) The rules, regulations, classes and grades of who otherwise would be members of the state civil positions heretofore lawfully adopted by the state of service. ficer or 2gency heretofore administering said laws are "(10) Employees of the Federal Government, or continued in force and upon the effective date hereof persons whose selection is subject to rules or require the same shall become the rules, regulations, classes and ments of the Federal Government, engaged in work grades of positions of the board herein created subject done by cooperation between the State and Federal to change by said board in the exercise of its powers Government or engaged in work financed in whole herein conferred or as may be hereafter provided by or in part with federal funds. (See Article 4, Section law. 18593, Civil Service Act). "Cd) All persons other than temporary ~ppointees "(ll) Persons appointed or employed by or under heretofore serving in the state civil service shall con the State Board of Prison Directors or any warden of tinue so to serve without change of class or grade of a state prison. (See Article 4, Section 18591, Civil position heretofore acquired save as such class or grade Service Act.) , may be changed by said board in the exercise of its "( 12) The officers and employees of the Railroad powers herein conferred or as may be hereafter pro Commission (Public Utilities Commission). (See Ar vided by law. ticle 4, Section 18594, Civil Service Act.) "( e) All persons not hereinbefore provided for in "(13) Member help in the Veterans Home of Cali subdivision (d) hereof, holding positions subject hereto fornia and inmate help in all state charitable or cor for more than six months immediately preceding the rectional institutions. effective date hereof, shall continue to hold such "( 14) The members of the militia of the State while positions subject to the provisions hereof save that engaged in military service. the board in adopting rules relative to classes or grades "(15) Officers and employees of the district agri of the position held by such person shall give each cultural associations employed less than six months in such person such class or grade as it may deem just anyone calendar year. and such probationary term to commence on the effec "( 16) Stewards and veterinarians of the California tive date hereof of not less than two months nor more Horse Racing Board who are not employed on a full than eight months in the class or grade assigned as it time basis. may fix. "(b) The Legislature may provide that the provi "(f) All persons not hereinbefore provided for in sions of this article shall apply to, and the term 'state subdivisions (d) and (e) hereof holding positions sub civil service' shall include, any person or group of ject hereto less than six months immediately preceding persons hereinbefore excepted other than those men the effective date hereof shall be deemed to hold such tioned in paragraphs (1), (2), (7), or (14) of sub position under temporary appointment under the pro division (a) of this section. Hereafter, no exception visions hereof but such temporary appointment shall shall be revived with respect to any person or group be deemed to have commenced on the effective date of persons heretofore or hereafter included in the hereof. state civil service under this subdivision. The Legisla "SEC. 6. (a) No temporary appointment of a per ture may, however, provide that any officer included son to any position shall be made unless there is no in the state civil service pursuant to this paragraph employment list from which such position can be may be appointed by the Governor, and in such case filled. the provisions of paragraph (2) shall apply. (Adopted "(b) No person shall hold a given position under at General Election, November 7, 1950.) temporary appointment for a longer period than nine "(c) Whenever the appointment or employment of months in any consecutive 12 months, nor shall any new or additional officers or employees of this State person serve in the state civil service under tempo is hereafter authorized by law, such officers or em rary appointment for a longer total period than nine ployees shall be subject to the provisions hereof and months in any consecutive 12 months. (Adopted at included within the state civil service unless of a class General Election, November 7, 1950.) excepted herein. "SEC. 7. Nothing herein, contained shall prevent "SEC. 5. (a) The provisions of this article shall be or modify the giving of preferences in appointments self-executing but legislation not in conflict herewith and promotions in the state civil service to veterans may be enacted to facilitate its operation. and widows of veterans as is now or hereafter may "(b) All laws relating to the state civil service are be authorized by the Legislature. (Adopted by vote continued in force insofar as not in conflict herewith of the people November, 1934-1,216,141 to 382,609.)" o 64701--404 2·66 1M print~l I" CALIPOt:.NIA OFPICB OP ITAya PUNTINC STAT': or- CALIfORNIA EDMUND G. BROWN JR .• Govarnor COMMISSION ON CAliFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY 11th 8. L Building, Suita 550, (916) 445·2125 Sacramento 95814 Chairman NATHAN SHAPELL Be'lc.rly Hills Vice-Chairman DONALD G. LIVINGSTON Los Angeles ALFRED E. ALQUIST Senator, San Jose MAURICE RENE CHEZ Los Angeles JACK R. rENTON Assemblyman, Montebello RICHARD D. HAYDEN Assemblyman, Cupertino N. BROOKE KNAPP Los Angeles MILTON MARKS Senator, San Francisco JAMES F. MULVANEY San Diego MANNING J. POST Los Angeles PHILIP J. REILLY Mission Viejo JEAN KINDY WALKER Modesto L. H. HALCOMB Executive Dj rector THE STATUS OF HEALTH PLANNING IN CALIFORNIA SUPPLEMENTARY REPORT STATE OF CALIFORNIA February 1979