Pay for performance hammered at House hearing

Pay for performance — both ongoing initiatives and the concept itself — took a beating Feb. 12 from critics at a House Oversight and Government Reform federal workforce subcommittee hearing.

Titled “Robbing Mary to Pay Peter and Paul: The Administration’s Pay-for-Performance System,” the three-and-a-half-hour hearing saw a parade of witnesses launch a collective assault on the Bush administration’s efforts to implement performance-based pay.

In his opening remarks, Rep. Danny Davis (D-Ill.), the subcommittee’s chairman, said the title of the hearing helps show “how the administration’s pay-for-performance system really works.”

In the absence of a significant increase in money, “performance-based increases are often funded by denying or reducing other employees’ [cost-of-living adjustments] and bonuses,” he said.

Subcommittee member Del. Eleanor Holmes Norton (D-D.C.) added, “What is truly hard to understand is how the administration…could fail to provide money to reward people in its proposed pay system and push the money from COLAs or locality pay. How in the world does the administration think it has the statutory authority to do that?”

Charles Tiefer, a professor at the University of Baltimore School of Law, said the lack of new funding for pay for performance has diminished employee acceptance of the system. “If you don’t put new money into it, you don’t have any net winners,” he told the subcommittee.

Other witnesses expressed skepticism that pay for performance could work in a government setting. “I would agree that what’s good in the private sector is not necessarily appropriate for the public sector,” said Charles Fay, a professor at Rutgers University’s School of Management and Public Relations.

Federal labor union leaders also took a swing at pay for performance.

Colleen Kelley, president of the National Treasury Employees Union, cited “a slew of grievances, arbitrations, litigation, high attrition rates and rock-bottom employee morale” connected with alternative pay projects and defended the current General Schedule pay scale as “a performance-based system that works.”

John Gage, national president of the American Federation of Government Employees, said current systems weren’t salvageable.

Lack of funding isn’t the only hurdle for performance-based pay systems, witnesses told the subcommittee.

“Problems in unsuccessful systems can often be traced to lack of communication with employees, overly ambitious timelines, ambiguous goals, inadequate guidance and poor assessment,” said Max Stier, president and chief executive officer at the Partnership for Public Service.

Stier defended the idea of pay for performance, arguing that the government needs to move toward a more performance-sensitive compensation system to compete for talented employees. But, he added, “the challenge for the federal government, Congress and stakeholders is to learn from [current implementation efforts] — both the good and the bad — and apply those lessons going forward.”

The hearing focused on pay-for-performance systems at the Securities and Exchange Commission, the Office of the Director of National Intelligence and the Internal Revenue Service. Representatives of those agencies insisted that they are making progress in implementing their systems but acknowledged mistakes along the way.

“Our pay-for-performance system, while certainly not perfect, is helping the organization meet its overall objectives,” said Richard Spires, IRS’ deputy commissioner for operations support. “We did have some bumps in the road.”

He noted, for example, that “we didn’t communicate with and train the management staff as well as we needed to on the system.”


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