134
CHAPTER
11
Personnel
Management and
Labor Relations
I. LEARNING OBJECTIVES
After reading Chapter 11 in the textbook, the student should be able to:
1. Explain the rise of civil service reform in the United States and
its significance for the development of public administration,
pp. 418–424;
pp. 425–431
2. Describe the collective bargaining process as it applies in the
public sector and labor management relations, and how new
pp. 443–453
3. Assess the staffing and compensation alternatives available to
pp. 431–432;
4. Analyze the impact of new human resources management
issues—like pay comparability and pensions and benefits
funding issues—on public sector employment.
pp. 415–417;
454–457.
II. SUGGESTED LECTURE
A. Personnel Management
This requires an understanding of law as well as the major developments in the
social and behavioral sciences. Personnel administration has evolved from being
largely a clerical function into a professional practice.
The Personnel Function deals with the technical functions of employment, such
as recruitment, selection, retention, training, and evaluation.
1. Personnel Merit Selection: This process began with the Pendleton Act in
1883, when abuses in the civil service were rampant in the nation and civil
135
II. Suggested Lecture
based on the character of the work.
2. Position Classifications: Traditional position classifications organize all
jobs in a civil service merit system into classes on the basis of duties for the
purposes of establishing chains of command, salary scales, and delineating
authority.
3. Performance Appraisal is about the documentation of work performance of
4. Training: Training has always been considered an option, or a luxury, in
organizations. In the 1950s it was the premise that since employees were
5. Management Development: This is undertaken in organizations as an invest-
ment in human capital to develop leadership for the organization. Assess-
6. Performance Management—This is done to motivate individuals to perform
at a higher level by providing some form of variable compensation (bonus
pay) on top annual salary. It is often difficult to accomplish because the
majority of professionals in government all receive superior performance
appraisal ratings. It also conflicts with union standards which want compen-
sation to be based primarily on seniority.
B. Civil Service Reform
Any government employee who is not in the military is in civil service. There are
two groups of employees in the civil service: those who come up through the
so-called merit system and those individuals who were appointed for reasons other
than fitness for duty as patronage appointments.
1. From Spoils to Merit Systems: While civil service reform dates from the
post-Civil War era, its political roots go back to the beginning of our repub-
136 Personnel Management and Labor Relations
CHAPTER 11
for dismissal, although he did make partisan appointments on occasion.
Other presidents permitted the spoils system to a greater or lesser degree.
2. The Pendleton Act—Federal Reform: Clamors for a merit-based civil service
system, increasing after the assassination of President Garfield by a disap-
3. State and Local Reform: Influenced by the Pendleton Act, state and local
4. The Civil Service Commission: The commission, a bipartisan group of
appointees, was mandated to keep the bureaucracy as free as possible from
political influence. As time went on, however, nonpartisan career managers
found themselves burdened by the restrictions set up to thwart the spoils
system and called for personnel functions to be integrated with the adminis-
trative functions of the executive to whom they reported.
5. The Civil Service Reform Act (CSRA) of 1978: This was enacted under
President Carter in response to complaints of red tape and ongoing abuses
of employee rights. The name of the Civil Service Commission by then was
6. Reinventing Public Personnel Administration: Recently, public personnel
management has been heavily impacted by the “reinventing government”
movement. The 1993 Gore Report emphasized public personnel reform, sug-
gested decentralization of personnel management, and promoted a “customer
service” focus.
7. Privatizing Public Personnel: This trend entails sending both a function and
the employees who perform that function to a private company. The US
Office of Personnel Management had led the way in this regard in contract-
C. Patronage Appointments
Patronage stems from the word “patron”: in order to get certain plum jobs, you
need a patron in high places.
1. The Plum Book: This is the informal name for the publication US Govern-
ment: Policy and Supporting Positions , which comes out right after a presi-
137
II. Suggested Lecture
2. The Constitutionality of Patronage: In Rutan v. Republican Party , the US
Supreme Court ruled that traditional patronage is unconstitutional. In the
3. Veterans’ Merit Preference: The special merit earned by honorable military
4. Patronage Firings: When Patronage “Goes Bad”: Issues surrounding patronage
extend beyond hiring to firings as well, as in the controversial firing of eight
US attorneys by Bush administration Attorney General Alberto Gonzalez.
D. Public Sector Labor Relations
1. The AFL-CIO: The American Federation of Labor-Congress of Industrial
Organizations is a voluntary federation of over 100 national and interna-
2. Administrative Agencies: In the context of labor relations, an adminis-
trative agency is a private or government organization that facilitates the
labor process. The agencies oversee collective bargaining, make rulings
on unfair labor practices, judge legitimacy and scope of bargaining, inter–
3. Collective Bargaining: This is a comprehensive term that encompasses the
negotiating process to the goal. This final goal is the making of the final
contract between labor and management on wages, hours, and other condi-
tions of employment. The process involves four basic stages: establishment
of bargaining units, formulation of demands, negotiations, and the admin-
istration of the contract. In terms of collective bargaining, the public sector
model comes from the private sector, but employing collective bargaining in
the public sector is problematic because no union is equal to the power of the
government or to the people as a whole.
4. Strikes: A strike is a mutual agreement by workers to a work stoppage. In the
past, unions used the strike as a powerful tool to attain their goals. Pub-
lic opinion began to turn against unions in the later years of the twentieth
III. ASSESSMENTS
Multiple-Choice Questions
1. You have just joined a public employee union. Your colleague who is not
a union member tells you that Collective bargaining refers to negotiations
by labor unions on behalf of individuals in organizations, groups in orga-
nizations, vendors, suppliers and outside contractors. Is she correct in her
assumption?
a. Yes
b. No
c. It refers to individuals and groups in organizations but not vendors and
contractors.
d. It refers to individuals only.
pp. 446–447, b
2. Civil service reform traces its beginnings to the:
a. Civil Rights Act of 1964.
3. The Civil Service Reform Act of 1978 split the US Civil Service Commission
into which two agencies?
a. The Office of Personnel Management and the Merit Systems Protection Board
b. The Office of Personnel Management and the AFL-CIO
c. The AFL-CIO and the Merit Systems Protection Board
d. The Merit Systems Protection Board and the Federal Communications
Commission
p. 423, a
4. The National Labor Relations Board:
a. was set up in 1935.
139
III. Assessments
5. The Professional Air Traffic Controllers Organization (PATCO) strike:
a. was an illegal strike.
6. Public sector competitive outsourcing:
a. involves hiring non-government workers to perform government functions.
b. was heavily used by the Bush administration in the Iraq War.
c. necessitates always being economically efficient and effective.
d. a. and b.
pp. 437, d
7. The Equal Employment Opportunity Act of 1972:
a. extended Title VII of the Civil Rights Act of 1964 to public employees.
8. Giving special preference to honorably discharged military personnel is
known as:
a. partisan patronage system.
b. the spoils system.
c. veterans’ preference.
d. none of the above.
p. 441, c
9. Public Sector Unions have switched tactics in the past decade—which best
summarizes their change in emphasis?
10. The first statute that set forth the basic private sector model of labor
relations was the
a. Civil Service Reform Act of 1978.
b. Wagner Act of 1935.
c. Pendleton Act of 1883.
d. Taft-Hartley Act of 1947.
p. 453, b
140 Personnel Management and Labor Relations
CHAPTER 11
Chapter 11 Student Self Assessment Questions
Q1 There is an often contentious debate about how well paid public sector
workers are compared to the private sector. Which of the following is a
reasonable conclusion to draw from the pay comparability debabte?
Q2 Which of the following functions is not part of the personnel office’s
common responsibilities in a public sector organization?
Q6 The establishment of a civil service commission was considered to be a
hallmark of personnel reform and the advent of the merit system. Much
has changed—when did the federal government change its Commission to
the Office of Personnel Management?
Q7 Training is considered the youngest function with personnel management.
Which explanation best explains this statement?
Q8 Which of the following is the best description of President Andrew
Jackson’s idea of rotation in office?
Q9 How extensive is patronage politics in the federal government today?
Q10 Which of the following is not a part of the Civil Service Reform Act of 1978?
Q11 What effect have civil service reforms had on political parties?
Q12 What has been the experience of professional city managers and county
administrators with merit system reforms?
Q17 What is the process for letting workers decide whether they want to be
represented by a union?
Q18 Which of the following is not a stage of the collective bargaining
process?
Q19 When a public sector union does not have the right to strike, what
options does it have to force the agency to listen to its demands?
Q20 When a public sector union does not have a right to strike, but does so
141
IV. Activities
Q23 What is the difference between a defined benefit pension and a defined
contribution plan?
IV. ACTIVITIES
Group Exercise: Critical Thinking—“President Obama
By-Passes Senate Approval Process”
On January 4, 2012, President Obama named Richard Cordray as Director of the
Consumer Financial Protection Bureau (CPBF). Criticism of this appointment imme-
diately arose because it was an appointment made without Congressional approval
Class Discussion Scenarios with Instructor’s Notes
Personnel Management Exercises On The Civil
Rights Act Of 1964, Title VII
Scenario A : Mary Louise Davies interviews applicants for professional and man-
agement positions at MAXCom, Inc., a computer company in the Silicon Valley.
She has been asked by the director of human resources to attend a one-day con-
142 Personnel Management and Labor Relations
CHAPTER 11
Scenario B : Pete Chavez graduated with high honors from the Columbia Uni-
versity School of Journalism in the area of sports journalism. He then applied
for the position of assistant sports writer with a local paper to cover basketball
and football. Pete’s credentials were verified and he was made an immediate offer
1. Does he have a case?
2. On what basis?
Instructor’s Note: Pete Chavez has a prima facie case for a “disparate impact”
claim if the facts are correct. He can claim that his height and weight are not rel-
evant to the requirements of the job and the job is not a bona fide occupational
qualification constituting a good faith exception to EEO provisions.
Scenario C: Tim Fujie, a Japanese-American, and David Dougherty, an
Irish-American (white), are both applicants for promotion for the same job as
Additional Class Discussion Issues with Instructor’s Notes
1. Explain how the Griggs decision relates to the merit system in the private
sector. In what form was the intent of the Griggs decision extended to the
public sector?
Instructor’s Note: The US Supreme Court decision Griggs v. Duke
Power Company (1971) upheld the mandate of the Pendleton Act of
1883 that “examinations shall be practical in their character.” Over the
143
IV. Activities
2. Analyze the following scenarios:
a. Officer Steven Connerly has been accused by several Taylor County Jail
inmates of using excessive force in restraint of prisoners while escorting
them to and from the courthouse. The warden of the jail sent Officer
Connerly to a class to learn about the use of new security devices and
restraint techniques. Six months later complaints were still coming in.
Instructor’s Note: Officer Steven Connerly has received short-term
and peers.
b. Following the announcement of Dr. William Baker, CEO of the Mercer
county zoo, of his intention to resign in a year, the zoo hired Dr. Mary
Marshall. Dr. Marshall’s program is as follows: she will work for 3 months
as Deputy to the Human Resources Manager. Following that period, she is
to serve a 6-month period as deputy to the finance and accounting man-
ager. For the rest of the year, Mary Marshall is to work under the supervi-
sion of Dr. Baker. What could be Dr. Baker’s goal for
Dr. Marshall?
Instructor’s Note: The intent of the program envisioned for Dr. Mary
3. Analyze the following scenario: Alma Davis, Manager of Computing, and
Fred Smith, Manager of Finance and Accounting, have among their reportees
three individuals who are shared between the departments. There is constant
friction over time, workload, and other factors concerning these time-shared
employees. Relationships between Ms. Davis and Mr. Smith have become
so strained that the HR Director has been called in to facilitate a resolution
between them. What type of impasse resolution is this?
Instructor’s Note: This form of impasse resolution is known as medi-
Writing Exercises
Using one of the following key words or phrases of your choice, write a short
analysis linking the word or phrase from the scholarly text to an incident in your
workplace, your daily life, or a media report that you have heard.
144 Personnel Management and Labor Relations
CHAPTER 11
In the summer of 2016, maintenance workers with the state of California
rejected an initial proposal for a salary increase because it also contained
major increases in health insurance costs
California state maintenance workers
reject deal, authorize strike
JULY 7, 2016 4:33 PM
RACHEL COHRS
rcohrs@sacbee.com The Sacramento Bee
Rank-and-file members of the California state maintenance workers’ union
The International Union of Operating Engineers Unit 12 represents
approximately 12,000 state maintenance workers, from electricians and
window cleaners to aqueduct construction workers and truck drivers.
Union officials would not say how many members voted, but reported that
67 percent of those voting rejected the deal.
The rejection sends both sides back to the bargaining table. If those
talks break down and the bargaining reaches an impasse, the union would
civil service reform merit system collective bargaining
veterans preference impasse resolution competitive outsourcing
scope of bargaining defined benefit pens pay comparability
CASE STUDY
145
IV. Activities
In your opinion, is it reasonable in today’s workforce to expect employees to have
a high-school diploma or equivalent?
Web–Based Discussion and Writing Assignment: Labor
Costs in the Public Sector—Market Constraints or Not?
Labor costs in the private sector are modified by consumer demand and com-
petition. Salary and benefits increases must be accommodated by raising prices,
improving productivity, and increased marketing. If labor costs rise and prod-
organizations.
Many public agencies are monopolies and there are no such market controls
on them. Because public organizations generally provide vital services, like police,
fire, sewer, etc., the public cannot go elsewhere for comparison shopping for these
services. Thus, labor unions can make inflated demands on the public employer
the contributions. At the beginning of the year, the state was obligated to pay
$74 billion in unfunded benefits, and that number will only grow as more
state employees retire.
Unions have expressed concern that higher benefit contributions are
swallowing up workers’ pay increases. Following years of budget cuts and
146 Personnel Management and Labor Relations
CHAPTER 11
come in to the public sector. Furthermore, unions are well aware that if employees
engage in work stoppages, they may risk being found redundant, and have their
jobs eliminated.
After reading the above passage, and using an online discussion tool, take a
V. ADDITIONAL WEB RESOURCES
US Office of Personnel Management
www.opm.gov
The federal government’s central personnel office with a wealth of information about all
Merit Systems Protection Board
https://mspbwatch.org/tag/office-of-policy-and-evaluation
While MSPB is thought of as the adjudicary agency for federal employee appeals and legal
Center for State and Local Government Excellence, Inc.
www.slge.org
For the best research and current studies on public sector pensions and benefits, featuring
Partnership for the Public Service
http://ourpublicservice.org/
Founded in 2001 in Washington DC with the original purpose to revitalize the federal civil
Review of Public Personnel Administration
http://rop.sagepub.com/
ROPPA is the leading referred scholarly journal designed to promote and encourage new
147
V. Additional Web Resources
World Federation of Personnel Management
Associations (WFPMA)
www.wfpma.com
The WFPMA represents more than 450,000 management professionals in over 70 national
International Public Management Association
for Human Resources
www.ipma-hr.org
A cross sector Public Sector HRM organization with a broad range of services, but especially
American Federation of Government
Employees (AFGE)
www.afge.org
AFGE is the largest federal employee union, representing 600,000 federal and Washington,
American Federation of State, County, and
Municipal Employees (AFSCME)
www.afscme.org
AFSCME is the nation’s largest public employee union, with more than 1.6 million active
American Society for Training and Development (ASTD)
www.astd.org
ASTD is dedicated to workplace learning and performance professionals. The site has
information about its conferences, education programs, publications, and public policies.
MOU FISCAL ANALYSIS: BARGAINING UNIT 12
(CRAFT AND MAINTENANCE)
This analysis of the proposed labor agreement between the state and Bargaining
Unit 12 (Craft and Maintenance) fulfills our statutory requirement underSection
19829.5of the Government Code. State Bargaining Unit 12’s current members are
148 Personnel Management and Labor Relations
CHAPTER 11
represented by theInternational Union of Operating Engineers (IUOE) Locals 3,
39, and 501. The administration has posted theagreement and asummaryof the
agreement on its website. The union also has posted asummaryof the agreement
on its website. (OurState Workforcewebpages include background information on
the collective bargaining process, a description of this and other bargaining units,
Major Provisions of Proposed Agreement
If ratified by the Legislature and the IUOE membership, this agreement would be
in effect through July 1, 2019. With an official term of four years, this agreement
would have the longest duration of any Unit 12 agreement we have reviewed. The
key provisions of the proposed agreement are summarized below.
Three General Salary Increases. The proposed agreement would increase pay
by a specified percentage for all Unit 12 members on three separate occasions—
Classification-Specific Salary Increases. In addition to the general salary
increases discussed above, the agreement would provide employees of specified
Q Two 5 Percent Salary Increases. The agreement would provide an additional
5 percent salary increase on two separate occasions—once in 2016–17 and
again in 2017–18—to about 720 rank-and-file employees employed by
(1) the Department of Transportation (Caltrans) in specified heavy equipment
149
V. Additional Web Resources
Q One 5 Percent Salary Increase. The agreement would provide an additional
5 percent salary increase in 2016–17 to about 650 rank-and-file employees
Increase State Costs for Health Benefits. The state contributes a flat dollar amount
to Unit 12 members’ health benefits that was last adjusted in January 2015. The
proposed agreement would adjust the amount of money the state pays towards
be increased thereafter unless agreed to in a future agreement.
Increase Allowable Annual Cash Out of Vacation and Annual Leave. Under
the current memorandum of understanding (MOU) between Unit 12 and the state,
departments may permit Unit 12 members to cash out up to 20 hours of vaca-
tion or annual leave each year. The proposed agreement would permit—to the
departmental resources.
One-Time “Transitional Supplement” Payment to Caltrans Employees. Thecur–
rent MOU—ratified by union members and the Legislature in 2013—and thesum-
mary provided by CalHRto the Legislature in 2013 specify that Unit 12 Caltrans
employees who are paid on a semi-monthly basis will transition to being paid on
a monthly basis by July 1, 2014. The current agreement provides no compensation
(1) this transition is necessary to improve departmental payroll operations and
(2) the one-time payment is necessary to help employees make the transition to
being paid once each month.
Increase Footwear Allowance. Under the current MOU, Unit 12 members
who work for Caltrans and the DWR annually receive $82 (paid either as $82
150 Personnel Management and Labor Relations
CHAPTER 11
and Medicare payroll taxes but does not affect employees’ pension benefits.
Increase Uniform Reimbursement. Under the current MOU, about 480 Unit
12 members who work for the Department of Forestry and Fire Protection and the
Department of Parks and Recreation receive reimbursement for up to $470 each
year to purchase a uniform required by the department. The proposed agreement
would increase this reimbursement by $200 to up to $670 each year.
Increase Overtime Meal Allowance. Under the current MOU, Unit 12 mem-
bers who work at Caltrans and CDCR who are required to work at least two hours
Retiree Health Benefits and Prefunding
Proposed Benefit Changes. Currently, after Unit 12 members retire, themaximum
state contribution to their health benefits covers 100 percent of an average of
CalPERS premium costs plus 90 percent of average CalPERS premium costs for
The proposed agreement changes future retiree health benefits for Unit
12 members first hired in 2017 and thereafter. The agreement requires future work-
ers to pay more towards their health benefits in retirement. The maximum state
contribution for these workers’ future retiree health benefits would be revised to
Proposed Funding Changes. Until recently, like most governments in the US,
California did not fund health and dental benefits for its retirees during their work-
ing careers in state government. This has resulted inlarge unfunded state liabili-
tiesfor the benefits. The state now pays for retiree health and dental benefits on an
151
V. Additional Web Resources
The current MOU requires Unit 12 employees to contribute 0.5 percent of
their salary towards prefunding retiree health benefits. This contribution level is
specified in the agreement and is not based on actuarial calculations. These contri-
butions are deposited to a retiree health funding trust account. Under no circum-
The proposed agreement would institute a new arrangement to address
unfunded retiree health benefits for Unit 12 members. The new arrangement is
consistent with prefunding arrangements included in other recent bargaining agree-
ments ratified by the Legislature—see our analyses of agreements with Units 6
(Corrections), 9 (Professional Engineers), and 10 (Scientists). While the admin-
Under the agreement, all Unit 12 members would contribute 1.9 percent of
pay to a retiree health funding account beginning in 2017–18, rising to 3.3 percent
of pay in 2018–19, and rising again to 4.6 percent of pay beginning in 2019–20.
The state would match these contributions to the trust account. In 2019–20, total
Fiscal Effects
Significant New State Budget Commitment. As Figure 1 shows, the administration
estimates that this agreement would increase annual state costs by about $158
million ($50 million General Fund) by 2019–20. Based on the administration’s
estimated costs of past Unit 12 agreements submitted to the Legislature for ratifica-
152 Personnel Management and Labor Relations
CHAPTER 11
Extension of Provisions to Management Further Increases Costs. When rank-
and-file pay increases faster than managerial pay, “salary compaction” can result.
Salary compaction can be a problem when the differential between management
and rank-and-file is too small to create an incentive for employees to accept the
additional responsibilities of being a manager. Consequently, the administration
often provides compensation increases to managerial employees that are similar
Leave Cash Outs Can Reduce Long-Term Costs. The average state employee
earns a significant number of days off each year. During the five years of fur–
loughs from 2008–09 and 2012–13, Unit 12 members received 70 furlough days in
addition to vacation or annual leave they earned throughout the year. As Figure 2
2016–17 2017–18 2018–19 2019–20
General
Fund
All
Funds
General
Fund
All
Funds
General
Fund
All
Funds
General
Fund
All
Funds
General salary increases $7.6 $23.9 $17.9 $56.6 $26.0 $82.2 $26.0 $82.2
Prefunding retiree health
benefits
— — 3.2 10.0 5.6 17.6 7.8 24.6
Health benefits 2.5 7.9 4.3 13.5 6.3 20.0 7.2 22.7
Leave cash outa5.3 16.8 5.5 17.4 5.7 18.0 5.7 18.0
rate—when the employee separates from state services. Employees typically earn
their highest salary during their last year of service with the state. We estimate
that the total value of Unit 12 members’ unused vacation and annual leave will be
Long–Term Fiscal Effects of Retiree Health
Proposals Uncertain
We long have recommended that the state move toward funding normal costs for
retiree health benefits. This agreement—according to the best information avail-
able now—would achieve that important goal. Over the long term, by generat-
ing investment gains in a dedicated retiree health funding account, this approach
Hours of Leave Per Employee
300
250
200
150