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Is pay for performance doomed to fail?

Why can't the federal government get pay-for-performance right? Large-scale efforts to implement such systems, most notably the Defense Department's National Security Personnel System, have faltered.

The question has surfaced because Rep. Dennis Ross (R-Fla.) is working toward developing another effort. As chairman of the House Oversight and Government Reform federal workforce subcommittee, he began holding hearings in March.

For most feds, the alternative to pay-for-performance is the General Schedule system, which has a total of 150 different pay levels -- 15 ranks and 10 "steps" within each rank. The salary for various job categories is set  for each level, with adjustments built in for employees who live in higher cost-of-living areas. The defined salaries give managers little freedom to play favorities -- or reward success.

Advancement on the GS system is more a matter of seniority than performance, or at least that is the perception. One FCW reader, commenting on an article about Ross's efforts, disputed that understanding.

"The 'GS' system is a 'pay for performance' system. Within-grade increases and promotions are contingent upon performance," the reader wrote. "The problem is that many managers cannot articulate the practical differences between pay grades and, thus, do poorly at defining performance elements and standards.”

Other readers said pay-for-performance doesn't work well in agencies because too many managers are apt to reward friends rather than the best performers, out of a limited funding pool available for pay raises.

"What is absolutely required for pay for performance to work is that the decision makers who get to decide who receives performance bonuses and/or raises have to be held personally accountable for those choices," wrote reader "Ted." "In private industry a manager can use cronyism and nepotism as her criteria when awarding performance pay, but that manager will be held accountable when her department fails to perform. Private industry doesn't tolerate for long those managers that cost the company money. The problem in the federal sector is that we've all seen instances of cronyism and nepotism, and if anybody tries to bring it to the attention of higher management that person gets labeled as a whiner and complainer."

A reader commenting on an earlier Workforce Wonk blog entry said that pay for performance does work in some individual government organizations.

"I have worked at a Navy lab with pay for performance since 1984," that reader wrote. "It's true that ratings are always somewhat subjective and there will be some favoritism. That's still far better than treating everyone the same regardless of performance."

So what do you think? Is pay for performance doomed to fail in the federal government -- at least on a large scale -- or is it possible to make it work? Share your opinion in the comments.

Posted on Apr 20, 2011 at 12:18 PM


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