Remaking government with a new salary system

Pay and performance top agenda for change

Bush administration officials say their plan to change the way federal workers are paid and promoted is a central part of efforts to remake the internal workings of government. But skeptics wonder whether the administration's civil service reform proposals will transform government or undermine the federal workforce.

Administration officials plan to send Congress a proposal that would overhaul the way federal workers are paid and promoted, a change they want to go into effect by 2010, according to a draft letter from the Office of Personnel Management.

Granting agencies greater workforce flexibilities "makes it possible for agencies to be better focused on results," said Clay Johnson, the Office of Management and Budget's deputy director for management. "Civil service reform helps us create a performance culture."

In contrast, Jack Hanley, president of the National Federation of Federal Employees' Council of GSA Locals, predicted that reforms would cause "many

more conflicts, a lot more grievances and a lot more workload for the unions and the labor relations people."

But the Bush administration is not alone in its belief about the need to institute pay-for-performance systems. "Human capital reform is an essential

element in order to transform government," said David Walker, U.S. comptroller general.

A group of 18 Republican lawmakers, led by Rep. Jeff Flake (R-Ariz.), say they want to vote in favor of a proposal to replace the 50-year-old General

Schedule system of payment and promotion. "The time has come to promote a personnel system that mirrors the market," they wrote in a letter to Bush earlier this year.

In new systems being developed at the Homeland Security and Defense departments, in addition to existing systems at the Federal Aviation Administration and a slew of other agencies, more than half of federal workers will have their salary tied to some measure of performance. But managers at DOD and DHS, which employ 42 percent of the federal civilian workforce, have limited experience with pay for performance. That means the administration should wait until officials can evaluate the effectiveness of those programs before expanding the reforms, many skeptics

say. They also cite a survey of FAA employees released in January in which only 38 percent of respondents covered by that agency's pay-for-performance system give it a favorable review.

DOD's new pay regime, set to launch incrementally beginning July 1, has been delayed by a flood of negative comments from employees and contentious meetings with unions.

The final reform proposal will be released this summer, Johnson said, adding that draft language was released to agencies for feedback. "We've got an awful lot of comments back from agencies, so we need to sort through those comments and pay a lot of attention to them," he said.

Permanent or temp?

Employee resistance to pay-for-performance systems may continue well into the foreseeable future, said one academic who has different recommendations for personnel reform. The track record of pay-for-performance systems gives little reason to be optimistic, said James Thompson, an associate professor at the University of Illinois at Chicago and co-author of a recent report for the IBM Center for the Business of Government called "The Blended Workforce: Maximizing Agility Through Nonstandard Work Arrangements."

Performance evaluations "tend to be highly subjective, unless you're an assembly-line employee," Thompson said. Even in the private sector, managers don't receive adequate training on how to conduct evaluations. And in government, training funds are often the first to disappear when budgets are tight.

Thompson recommends that the government adopt a core-ring model for structuring the workforce. A core group of employees performing year-round tasks could be supplemented with on-demand contract workers, he said. Under the Bush administration's plans, two basic categories of workers would be established, career and time-limited employees, and the Office of Personnel Management would have rapid-response hiring authority. But although it might appear similar to the core-ring model, the administration's plan breaks down because temporary workers "always are going to be second-class employees," Thompson said. "Obviously, everybody would prefer to be permanent and have the choice of when to leave be theirs."

When contract workers are hired to tackle government jobs, "you get good people, because they're basically virtually permanent jobs, they only just happen to be working for a contractor," he said.

— David Perera

About the Author

David Perera is a special contributor to Defense Systems.

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