It was a classic example of government bureaucracy mired in red tape: Employees at the Howe Developmental Center in Tinley Park were confounded by the paperwork and time it took to order prescription eyewear for residents. In an age when people can get new eyeglasses in about an hour, orders at Howe were delayed up to six weeks. "Our people couldn't believe it," said Henry Bayer, executive director of the American Federation of State, County and Municipal Employees (AFSCME) Council 31.

What happened next was unparalleled in a state agency infamous for union-management strife. As part of a pilot program, union employees and administrators sat down together to devise a solution that subsequently cut the waiting period to less than a week.

The change at Howe was relatively small, but it highlights the potential of the new employer-employee relationship envisioned in the new labor contract effective July 1 between the state of Illinois and AFSCME, the state's largest public employee union. In addition to 3 percent annual pay raises and new health benefits (see box), the three-year agreement calls for greater employee involvement in state agency decisions through "quality service committees," similar to the one formed at Howe. Though the panels are in the embryonic stage, Bayer thinks they should seek improvements such as shortening the time it takes citizens to get an unemployment claim settled or to collect tax information. "If we can get state workers to approach their jobs differently, that should translate into better services for taxpayers," he said.

The contract also includes a small-scale program to reward employees based on their performance, a provision pushed by Gov. Jim Edgar's administration but vehemently opposed by AFSCME. "It's a win-win situation," said Steve Schnorf, director of the Department of Central Management Services (CMS), the state's personnel agency. "We both realize we can't walk away from the negotiating table without getting some or all of what we want. The union gets more of a voice in day-to-day affairs, and we get an important motivational tool."

While it sounds like an amicable compromise, Schnorf and Bayer acknowledge the details of both initiatives still need to be worked out. Conveniently, negotiations on the fine print aren't scheduled to begin until after the November elections, preserving (at least for now) the labor peace reached in the new contract. In other words, today's upbeat rhetoric — along with the maternal pride of shepherding a contract for 43, 000 state employees to approval — could ultimately lapse into infighting and inaction if workers and supervisors don't agree to change their ways.

"It's in both parties' self interest to look at this as a wonderful document," said Peter Feuille, a professor of labor and industrial relations at the University of Illinois in Urbana. Feuille said the new incentives "could signal a significant change in the relationship between the state and its work force. Or they could end up as dusty, non-used references in the contract if the parties decide not to follow up. A lot depends on how important it is to top officials in the union and management to make it happen on a daily basis," he said.

Jess McDonald, whom Edgar picked in June as the new director of the troubled Department of Children and Family Services (DCFS), agreed. "Employee involvement, or empowerment, is not as easy as people would like," said McDonald, who previously headed the Department of Mental Health and Developmental Disabilities. "The Howe experiment was positive, but there can be lots of resistance from managers. It takes a lot of work to train everyone to accept the new system."

The theory behind the so-called "employee empowerment" movement, which slowly gained acceptance in private industry during the past decade, is that giving workers greater responsibilities and flexibility will boost morale and lead to more efficient work. The Edgar administration wants to add another wrinkle by basing pay raises on worker performance.

In turn, proponents say, changes in the labor-management relationship could lead to improved services to clients and taxpayers. It also could improve the battered image of state government. "It remains to be seen if this will work," said Schnorf. "But the experts say it's the way to go."

The proposed changes in Illinois' state government personnel system stem from a series of non-partisan study commissions formed during the past four years. The panels, made up of government officials, lawmakers and business leaders, suggested radical revisions in the personnel code, which hasn't undergone significant improvements since it was first enacted in 1955. The catalyst for provisions in the new AFSCME contract, such as quality service committees and the pay-for-per-

July 1994 / Illinois Issues / 17

Steve Schnorf
We both realize we can't walk away from the negotiating table without getting some or all of what we want

formance plan, came from the Governor's Advisory Council on Human Services named by Edgar soon after he took office in 1991.

In its final report, issued in September 1993, the council noted that state government has changed dramatically in the past 39 years. Not only were manual typewriters and black and white televisions the norm back then, the state had far fewer responsibilities. For example, there wasn't a complex $5 billion Medicaid budget (and the related bureaucracy) or an extensive child-welfare system. Most state employees were clerks or laborers.

But while the state's burdens are greater today, the method by which state employees are hired, trained and governed still mirrors the cumbersome, paper-driven system enacted in 1955. "The state's shifting priorities and responsibilities, the new expectations and new technologies have outgrown the current system, making it unsuited for the current and future needs," the council wrote in its report.

It's notable that Schnorf and Steve Culen, Bayer's predecessor at AFSCME, served on the panel. Two of the council's top recommendations reflected their individual priorities: utilizing employer-employee suggestion committees and implementing a pay-for-performance plan. Others included giving agencies more flexibility to hire and train new employees, providing opportunities for career development and relying on computers and other technology to slash the amount of paper required during the hiring process.

Training, for instance, is especially important in human services agencies like DCFS, where several caseworkers have been fired for failing to take adequate steps to prevent child-abuse deaths. The agency is hiring hundreds of new caseworkers to comply with a federal consent decree that requires caseloads to drop to 25 children or 20 multi-children families per worker. "I think we need to require higher skill levels for our supervisors," said McDonald, the agency's new director. "A person with a master's degree in social work likely will ask better questions and pick up subtleties others wouldn't. But we don't have any programs to encourage people to get into master's programs."

McDonald is talking with the University of Illinois and other institutions about developing such a program, which he initiated during an earlier stint at DCFS. His successors gutted the program due to budget cutbacks.

Several departments already have undergone pilot projects intended to test whether other proposed changes work (see "Daunting task of reinventing state personnel code," Illinois Issues, March 1993). The results were mixed. The Department of Employment Security began scanning job applications into a computer to cut back on the amount of time and paper required to hire new employees. At the Department of Alcoholism and Substance Abuse, supervisors experimented with expanded flex-time benefits, giving employees an opportunity to schedule their workdays with extended breaks as long as the time is made up later. Concerns from AFSCME, though, scuttled a Department of Revenue initiative to make it easier for the agency to hire college interns. The union felt they would be used to bypass workers represented by AFSCME.

Most of the pilot programs involved changes intended to please state workers, not necessarily to improve services to clients or taxpayers. "But government cannot be 'reinvented' without reinvigorating, motivating, challenging and providing incentives for state employees," the governor's advisory council wrote in its report.

18 / July 1994 / Illinois Issues

From the union's perspective, the most positive recommendation that made it into the new contract is the creation of so-called quality service committees in every agency of more than 1, 000 employees. "If the parties follow through, I think we are in for some major changes in the way services are delivered and in the way people view state government," said Bayer, AFSCME's executive director. "Years ago, the mentality was that management knows best and won't listen to people out on the front lines with daily contact with the public. The way to do things today is to tap their energy and knowledge by involving them."

Whether it works out that way remains to be seen. As part of a pilot program, employee-management committees at the Howe Developmental Center asked housekeepers to recommend new training requirements and work schedules. Another panel coordinated the moving of 92 residents to temporary quarters during building renovations.

Both sides envision committees where employees and supervisors can bring problems and suggest solutions in a more cooperative environment

"We haven't always had a good relationship with the union," said Kathleen Muniz, the center's director. "So when we first formed these committees they just got together to complain about all the perceived problems." That changed over time, she said, as supervisors and unionized employees realized she was serious about making the panels work. "They may not have done everything the way I would have, based on 22 years of experience, but their objectives and recommendations are sound."

As the idea spreads to other agencies, both sides envision committees where employees and supervisors can bring problems and suggest solutions in a more cooperative environment. Following advice from companies such as IBM, Xerox and Motorola, Edgar plans to name a cabinet-level quality committee this summer to get agency directors and top staff on board. "These companies found the quality service concept doesn't work unless it has support and involvement from the highest level of your organization," said Schnorf, the CMS director. "Xerox, for example, trained the top level of management and had each level train the level below it."

Bayer sees the panels fostering the type of employee attitude developed at Ford Motor Co., which is on the rebound from sagging sales and foreign competition. The company's television advertisements reflect the quality service mantra by highlighting employees and their innovations. "The message is 'We've trained our work force and our workers are committed to creating a quality product,'" Bayer said. "Public agencies need to do the same to present themselves in a more positive light."

Improving the image of state government also could help make it easier to recruit new employees. Budget cuts forced the state to lay off more than 1, 000 employees early in Edgar's term, but hiring is back on the upswing due to consent decrees in lawsuits against DCFS and Mental Health and the opening of new state prisons. However, state officials worry they aren't able to attract top college graduates, a fear supported by surveys conducted by the governor's advisory council. "Clearly the option of state government work as a career is not a high priority for most college students," said Schnorf. "One of the ways for people to think of this as a better workplace is to provide a better quality service."

Still, some supervisors and union members are bound to resist the changes. Feuille, the U of I labor professor, warned it could take years to see whether the initiatives work. "It's easy for contract negotiators to agree to something that's far removed from day-to-day business," he said. "Successful quality service programs in the private sector involved a positive attitude change from both sides, but the path of least resistance is to maintain the status quo."

A new deal for state employees
Here are the highlights of the three-year contract effective July 1 between the state of Illinois the the 43, 000 state employees represented by the American Federation of State, County and Municipal Employees:
• Three percent across-the-board pay raises in each of the next three years.
• Creation of "quality service" committees intended to foster a cooperative problem-solving effort between workers and management.
• A pilot program to reward employees based on their performance, combined with new benefits intended to place a greater reliance on prevention and wellness. Coverage in the basic health insurance plan is expanded to include physicals, pap smears for women and child immunizations.
• Continued health insurance coverage for six months for laid-off employees.
• Two weeks paid leave for parents of newboms. Employees now must use sick time for such leave.
• Vision care program that will pay a portion of employee eye exams and glasses.
• Flat-cost prescription drug program for employees not enrolled in a managed care health plan.
• A $10 per month increase in employee health-care contributions, beginning July 1, 1995.

Yet, implementing the quality service committees may seem easy compared to the dispute that's bound to erupt over the pay-for-performance provision in the new AFSCME contract. The advisory council, along with the Edgar administration, says pay raises should be based on job performance, not seniority. In theory, the idea sounds reason-

July 1994 / Illinois Issues / 19

But a sign of how controversial the proposal really is surfaced in the advisory council's report. Next to the recommendation to enact a sweeping pay-for-performance plan is a series of objections from AFSCME, which claims it doesn't work. The union threatened to withhold support for the advisory council report unless its views were included. In the new labor contract, the union agreed to a $500, 000 pilot program in the second year of the agreement. But it blocked the more ambitious plan pushed by the Edgar administration that would have based all raises on job performance rather than seniority.

Under the pilot program, top employees will be awarded bonuses on top of their contractual pay raises. Decisions about who gets the rewards will be made jointly by management and the union. "Surely there are a certain number of employees about whom there is no doubt that their performance is superior and meritorious," said Schnorf. "If you ask their uncle, their supervisor, their subordinate, you would get universal praise for this kind of employee. We should be able to provide these people with some type of reward and encourage others to improve their performance."

AFSCME leaders say the issue isn't that simple. Given Illinois' predilection to inject politics into every facet of state government, the union fears raises under a pay-for-performance plan would be based on political and personal factors, rather than a worker's skills and efficacy.

"What we agreed to in the new contract is to pick an employee of the year or somebody like that for outstanding performance," said Bayer. "What they want will only create division and resentment in the work force by adding a lot of office politics."

If pay-for-performance was such a good idea, Bayer argued, non-union state workers already covered by a merit-compensation plan (another name for pay-for-performance) wouldn't be clamoring to join AFSCME. In the past two years, about 800 non-union workers have either joined the union or have taken steps to do so.

Moreover, union employees already work under a similar pay plan that both AFSCME and the administration agree hasn't worked. Workers are entitled to step raises during the first seven years they're employed by the state. Supervisors can deny step raises to bad employees and reward the good ones with double step raises. In practice, though, few state workers are denied the raises. And money earmarked for "superior performance" ratings usually is one of the first things cut by the General Assembly during tough budget years.

Edgar administration officials insist the pilot project will prove their plan works. Funding concerns could be alleviated, Schnorf argued, if a more sweeping pay-for-performance plan was included in a negotiated union contract.

He likens the project to a bonus program at Montgomery Ward, the department store chain. Supervisors there hand out cards worth $25 to $50 on the spot to employees doing a good job. "It's important in some way for people to begin tying their success to their performance," said Schnorf. "I understand the union's concerns that supervisors will reward employees for something other than performance. I don't believe that would never happen. But I also don't believe it would be pervasive throughout state government."

If the two sides sound somewhat conciliatory toward each other on normally divisive issues, it's likely because both the union and management are flush with the success of completing their new labor accord. They realize they have to live with one another after the negotiations are complete.

But their upbeat assessments belie the struggle that could ensue once they sit down to finalize the details on items like quality committees and pay-for-performance. The new contract calls for changes in the traditional employer- employee relationship. Everyone else will have to wait until after the November elections to see if it works out. 

Michael Hawthorne is the Statehouse bureau chief for the Champaign-Urbana News Gazette.