David M. Walker, Comptroller General of the US, says that the Department of Defense has some good ideas for changing its human resources system that need to be explored. But, he warns, there are some areas that need to be carefully thought out. (You can download the statement from the link on the left hand side of this page.)
Many observers think that the existing human resources structure of the federal government is broken. GAO has joined this chorus with its statement that “The federal personnel system is clearly broken in critical respects-designed for a time and workforce of any earlier era and not able to meet the needs and challenges of our current rapidly changing and knowledge-based environment.”
Moreover, says Walker, the government needs to expand broad banding and pay-for-performance systems in government. The report offers a cautionary note though. Moving too quickly can raise the risk of doing it wrong and creating problems.
GAO obviously wants to see it done correctly in the Department of Defense or, if not, it will be a setback to having similar systems elsewhere in the federal government.
The key to a successful pay for performance system is having a good performance management system. These systems need to support performance-based pay and related personnel decisions. Currently, most systems in the federal government are not up to this task.
What constitutes an acceptable performance management system? GAO lists several criteria it believes are necessary:
An agency’s performance management systems must (1) link to the agency’s strategic plan, related goals, and desired outcomes, and (2) result in meaningful distinctions in individual employee performance.
• Involve employees and other relevant parties in designing the system
• Assure that internal safeguards are in place to achieve the consistency, equity, nondiscrimination, and nonpoliticization of the performance management process (e.g., independent reasonableness reviews by Human Capital Offices and/or Offices of Opportunity and Inclusiveness or their equivalent in connection with the establishment and implementation of a performance appraisal system, as well as reviews of performance rating decisions, pay determinations, and promotion actions before they are finalized; internal grievance processes to address employee complaints; and pay panels up of career officials who would consider the results of the performance appraisal process and other information in connection with final pay decisions).
• Assure reasonable transparency and accountability.
With these caveats, Walker concludes that Congress should consider providing authority to agencies, including DoD, for instituting pay banding and pay for performance.