MGMT 591

Course Project
Leadership and Organizational Development
Derek Carillo derekjcarillo@yahoo.com 2/22/2013 Professor Christopher Declerk

Course Project 2013

Introduction The State Accounting Office (SAO) of Georgia is responsible for providing fiscal responsibility to the State of Georgia. In addition they are also the license holders for the Oracle software PeopleSoft and provide tech support to all state agencies and authorities that use it. The third and final responsibility for the SAO is the states Comprehensive Annual Financial Report (CAFR). There are a total of 112 employees in the State Accounting Office and 7 executive officers. PeopleSoft is a product offered by Oracle that has several applications. The state of Georgia uses specifically PeopleSoft Financials and Human Capital Management. The financials software is used to track accounting transactions processed in the state to include but not limited to payroll, accounts payable, accounts receivable, general ledger, and project costing. Human Capital Management is a Human Resources Information System used to track Human Resources transactions such recruiting, on boarding, terminations, in-processing, and more. There are approximately 43 fulltime employees, consultants, and contractors that work on the two PeopleSoft systems. The CAFR is an extensive financial report that the SAOs accounting team comprises to provide the legislation information to help determine authority and agency budgets for the new fiscal year. The CAFR is also a public record that is available online to the states taxpayers to ensure transparency and build trust with the public. The CAFR team has about 39 employees, consultants, and contractors.

Course Project 2013

The SAO employs 23 support staff. The support staffs responsibility is to help the SAO run day to day operations; they include an office manager, executive assistants, web designers, travel employees, and other miscellaneous office staff. I am the Director of Human Resources (HR) for the State Accounting Office. I am one of seven executive officers at the SAO and am responsible for the Human Resources department and all HR activities. I have three support staff that report to me that have various responsibilities.

Problem Statement In the last 7 months the SAO has had approximately a 30 percent turnover rate. A 30% turnover rate in an agency the size of the SAO is unusual. Perception is the process through which people receive and process information from their environment. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) The employees have the perception that managers do not appreciate the skills, experience, and expertise their current employees have to offer. They show very little enthusiasm when employees provide creative solutions to problems that only comes from education and experience. This attitude portrayed by the managers makes the employees feel unappreciated and therefore they are seeking employment elsewhere. This leads to high turnover in the agency and therefore it creates gaps in manpower, a deadline missed, and has budget impacts for recruiting. High turnover can create several issues for any company regardless of size. When employees leave, especially long term employees, they take with them years of knowledge and

Course Project 2013

experience. Knowledge and experience is not a commodity issued on the first day of employment. It takes several years and working through mistakes to acquire it. The turnover is the result of several issues most of which are cultures created the leadership team. Employees feel a lack of loyalty and under appreciated by the agency. Many of them are tenured veterans that have 10+ years of government service with multiple agencies. The SAO is a hub agency that must create, build, and nurture relationships with other agencies. Several of the SAO employees held positions in the agencies that the SAO has relationships with. The advantages of that experience are obvious. Many times problems can be fixed with phones calls to previous acquaintances or coworkers. Trust is established through action. (Covey, 2006) The employees of the SAO do not trust the leadership team because it would seem that more often than not transitioning employees are replaced with employees of SunTrust Bank Inc. The current Chief Information Officer, Jill Cleaveland, was once an employee of SunTrust, therefore when a position opens up she tends to discount state employee experience and hires a previous SunTrust employee. I asked Jill one day why she was so keen on hiring previous SunTrust employees, and her answer astounded me, its because they are all being laid off over at SunTrust. (Cleaveland, 2012) You can imagine my reaction as the Director of Human Resources. There are several reasons to hire candidates, but because they are losing a previous employment opportunity is certainly not one of them! Jills unorthodox reason for hiring has caused major concerns within the agency. To compound the problem of hiring her previous coworkers the state hasnt had raises in 4+ years. Normally this wouldnt be a problem; however the employees that Jill is hiring are less qualified

Course Project 2013

than the SAOs current employees, and are being hired in at more money than the SAO employees. The turnover rate is a concern for the Human Resources team. Turnover, whether it be low or high, directly impacts the HR department in the form of processing a termination, recruiting, onboarding, assigning parking badges and ID cards, conducting orientation, assigning new computers, and cleaning out cubicles/offices (Carillo, 2012) On average, depending on the position of course, it costs a company $5-8,000.00 to replace an employee. Based on the median estimate $6,500.00 and with 33 replaced employees it costs the SAI an average of $214,500.00 in the last 8 months. For more premium, harder to fill positions that cost raises significantly. According to the 2012 CAFR the State of Georgia employs a total of about 143,000 employees. (Office, 2012) With the State Accounting Office having less than 120 employees the agency is a very small part of the states workforce. Although the agency is small in size they are still on the states payroll which is funded by taxpayer monies. The SAO has an obligation to the taxpayers to ensure that their budget is being spent effectively and responsibly. Improper hiring practices and the costs that go along with it is a poor example of money well spent. Every company has problems, some much more complex than this, some less. The SAO uses an independent survey conducted by Georgia Tech to determine employee satisfaction. The employees cited the lack of trust in the leadership team of the questionable hiring practices that are happening. This is a culture that was not created over night, and certainly will not be fixed overnight.

Course Project 2013

I would estimate 90% of the employees at the SAO are college, many with masters degrees, are educated. Through interviews and research I have identified hiring qualified candidates as a large concern for the current employees of the SAO. I have researched their issues to find more conclusive theories and solutions to correct the problems. I have located sources within the SAO, books, magazines, and on the internet of possibilities for changing the culture of trust within the SAO. The sources chosen are professional, scholarly, and reputable with proven tactical solutions to employee relations matters.

Literature Review There are very few people that have insight into issues inside various state agencies. The following resources were used to identify the issues; Jill Cleaveland serves as the State Accounting Offices Chief Information Officer and Director of Client Services. Jill holds a Bachelors of Science degree in Accounting and a Masters Degree in Accounting Systems, both from Auburn University. (Covington, 2013) Derek Carillo serves as the State Accounting Offices Director of Human Resources. He holds a Bachelors of Technical Management degree from DeVry University and is currently earning a Master of Business Administration from Keller Graduate School. (Carillo, 2012) There are several sources used to theorize and diagnose the issues in the SAO. Listed below are some of the sources used for that purpose.

Course Project 2013

Stephen M.R. Covey is the cofounder and CEO of CoveyLink. He holds a Masters in Business Administration from Harvard University and is a worldwide sought after keynote speaker. (Covey, 2006) The book Organizational Behavior was co-authored by John Shermerhorn, Richard N. Osborn, Mary Uhl-Bien, and James G. Hunt. Mr. Shermerhorn holds a Bachelors of Science degree from State University of New York. He also has a Masters degree in Business Administration from New York University, and a PhD from Northwestern University. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) Mr. Osborn holds a Bachelors of Science degree from Indiana University, a Masters or Business Administration from Washington State University and a Doctorate of Business Administration from Kent State University. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) Ms. Uhl-Bien holds a Bachelors of Business Administration, Masters of Business Administration, and a PhD. All of her higher education was pursued at University of Cincinnati College of Business. She is currently a faculty member at University of Nebraska (Lincoln). (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) Mr. Hunt has a Bachelors of Science degree from Michigan Technological University. Mr. Hunt earned his Masters and PhD. Degrees from the University of Illinois. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) The State Accounting Office is the state agency that is responsible for providing the state of Georgia with guidelines to maintain fiscal responsibility. (Office, 2012)

Course Project 2013

Analysis So the question stands; why does the State Accounting office have such high turnover? The leadership team at the SAO specifically in the PeopleSoft Financials division displays the perception to the employees that they are not appreciated. Not only are the resigning SAO employees being replaced predominantly by SunTrust bank employees, but those employees are being paid on average 10-30% higher than current employees. The current employees at the SAO have not had salary increases in over 4 years, therefore they tend to feel a lot of resentment toward employees being hired for more money with what seems to be less experience. Unlike employees in the private sector, salaries of government employees are not confidential. The salaries of State Employees are displayed on a website in an effort for the state government to be completely transparent to the taxpayers. There is no conclusive evidence to support that the SunTrust employees are hired solely because of their relationship with Jill Cleaveland. There is an element of education and experience. Not all, but some of the new hires are as qualified as their state counterparts, however in the majority of the cases the SunTrust are under qualified and have less experience with the software than the state employees. The state employees feel though as if the new employees should be paid equivalent or less than they are. The concept that most closely relates to the SAOs issues from our reading is Herzbergs concept of Job Enrichment, specifically the Hygiene Factor. Herzberg identifies salary as an issue for hygiene with employees. Although the hygiene concept does fit the characteristics, Herzberg does not necessarily believe that if an employees salary is raised it will raise their motivation. He simply identifies salary as a motivator for employees. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012)

Course Project 2013

Another concept that relates to the issues at the SAO is Maslows hierarchy of needs. According to Maslow there are 5 levels of needs; (1) self-actualization (2) esteem (3) social (4) safety (5) psychological. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) It is obvious that the sub-concept most closely related is the esteem. I dont think the employees at the SAO are completely financially motivated. I believe their need for recognition, respect, and a personal sense of competence. I think the SAO leadership is unknowingly discounting these things for the employees because of their habit to consistently hire new employees with more pay than the current employees.

Solutions There are several solutions that can be applied to help correct the perception of the employees. If the employees perception is going to change it first needs to be done with a sincere intent by the leadership team. If the leadership team is only making changes to make the employees happy it will be superficial and the employees will recognize it. Employees need to feel valued and appreciated and it is the responsibility of the leadership team to do so. A great way to show appreciation to the SAOs current employees is with merit pay. Merit links and individuals salary or wage increase directly to the individuals performance. (Shermerhorn, Osborn, Hunt, Uhl-Bien, 2012) Merit pay is something that the leadership can do for employees relatively cheap and would show the leadership trusts and appreciate the current employees. Merit pay can be a salary increase based on a promotion, job change, and/or additional responsibilities. With the amount of turnover most of the employees are constantly being bogged

Course Project 2013

down with responsibilities of exiting employees, therefore the leadership could easily justify the merit pay with additional responsibilities. Another solution would be to hire new employees based on their qualifications. It seems many of the new employees are hired based on their previous employer. The Human Resources department will screen all resumes and only forward those that meet the minimum requirements for the job posting. Once those resumes are selected, the Human Resources department will blackout the candidates name and former employer in an event to help ensure candidates are selected based solely on their qualifications, not where they worked or who they know. The third and final recommendation is to hire new employees with salaries equivalent to or less than those of the current employees. When the offer letter is sent we can simply add the wording that the candidates performance will be reviewed for a salary increase after 6 months of employment.

Reflection All companies have their problems, some so extensive that the close down. That is not an option for the State Accounting Office, and the few problems with the SAO are not so extensive that they cant be fixed. In the larger scope of things, the problems of the SAO are minor and when they are addressed the employees will be much happier and more productive.

Course Project 2013

References

Carillo, D. (2012, 11 03). Director of Human Resources. (J. Cleaveland, Interviewer) Cleaveland, J. (2012, 11 03). (C. Shrum, Interviewer) Covey, S. M. (2006). The Speed of Trust. New York: Free Press. Covington, M. (2013, 01 02). State Accounting Office. Retrieved 02 18, 2013, from http://sao.georgia.gov/jill-cleaveland-chief-information-officer-and-director-client-service Office, S. A. (2012). CAFR. Atlanta: State of Georgia. Shermerhorn, Osborn, Hunt, Uhl-Bien. (2012). Organizational Behavior. Hoboken: John Wiley & Sons.

10