Pay for Performance – The Best Possible Solution?

There has been much conversation recently about the General Schedule being outdated and inadequate for responding to the human capital management needs of the Federal Government.  A recent one is the hearing held by the House Subcommittee on the Federal Workforce, U.S. Postal Service and the Census on 15 July 2014.

There also have been opinion-pieces in various publications, including this one, which reinforce the idea that the Federal Government’s primary pay structure, the General Schedule, is outdated and should be replaced.  See, for example, the pieces written by Howard Risher and published in FedSmith over the last few months.

As a former position classification specialist I know from firsthand experience the challenges associated with establishing the proper title, series and grade for a position under the General Schedule.  I have had long and earnest discussions with managers and employees about the kind of work and the level of responsibility assigned to an employee, and whether it should be graded as a GS-X or GS-Y.  As a former compensation specialist, I have experienced firsthand the challenges created by having an engineer, a technician, a human resources specialist, and an IT specialist at one grade level being paid from the same pay range.  And, finally, as a member of a multi-disciplinary team working to create a new pay for performance system for the Department of Homeland Security (DHS) before that effort was cancelled, I have read about various kinds of pay systems, and the benefits and challenges associated with each one.

What have these experiences taught me?  Well let me share with you what goes through my mind when I hear recommendations for a pay for performance system to replace the General Schedule.  The first thought that crosses my mind is the recent problems faced at some locations at the Department of Veterans Affairs.  At these locations DVA employees are alleged to have “fudged” numbers related to how quickly a veteran was scheduled for a visit to a physician or other care giver.  Employees allegedly manipulated these numbers to ensure that they received bonuses or other special rewards for meeting scheduling goals.  The use of such bonuses or awards is a form of pay for performance. And it was this form of pay for performance, apparently without appropriate oversight, that contributed to a scandal which resulted in ending the career of a distinguished former military officer as the head of the DVA.

The next thought that crosses my mind is the pay for performance experiment tried by and eventually terminated at the Department of Defense (DOD).  Some of the allegations that helped to convince Congress that this pay for performance system should be terminated revolved around favoritism and a lack of fairness and transparency in providing rewards.  And this occurred in a system at one of the most disciplined and well ordered departmental structures in the Federal Government, where some of the best and brightest both in the Federal Government and from outside contributed to the creation and implementation of a pay for performance system.  This experience at DOD reminds us that creating and implementing a pay for performance system in a government environment where, unlike the U.S. Mint which actually produces a product, most Federal employees are involved in implementing regulations and/or programs is a difficult undertaking fraught with many challenges.

And the final thought that crosses my mind is an example that came to me when I was working on the DHS task force.  One of the occupational groups contained within DHS is criminal investigators.  These employees pursue investigations into alleged or suspected violations of criminal laws.  Investigations can take anywhere from several months to several years, and may involve a few investigators or large groups of agents from one or more federal agencies as well as employees from other organizations such as state and local governments.  If one thinks about how a pay for performance system would be formulated for this kind of work, then I think it becomes clear that creating a reliable, generally agreed upon, fair and objective pay for performance system that applies across the Federal Government is going to be difficult.  What are the measurable and objective performance goals that would be established as the basis for pay increases based on the performance for criminal investigators.  What about for research scientists?

In conclusion, I think it is important that policy makers and legislators not wear blinders and see only one possible solution to the challenge of fairly and competitively paying Federal employees.  Pay for performance may not be the one and only “right” solution to replace the General Schedule.  There are other systems for compensating employees.

My recommendation would be that a panel of public and private employee compensation experts be created to review the systems used by other national governments, such as Canada, Great Britain, and Australia as well as state and local governments here in the United States to compensate their employees.  And based on their findings plus the experience of the DOD and of the demonstration projects carried out under Chapter 47 of Title 5 of the U.S. Code select one or more appropriate compensation systems for Federal employees.  While the General Schedule may no longer be the best compensation system for Federal employees as it approaches its 65th birthday on 28 October 2014, focusing only on a pay for performance system for all Federal jobs when looking for a replacement may not result in the best outcome or return on investment for the employees, for those who have to manage it or for those who have to pay for it.

Wayne Coleman is a federal pay expert available to help your agency avoid premium pay claims through on-site training. Contact him for more information.

© 2016 Wayne Coleman. All rights reserved. This article may not be reproduced without express written consent from Wayne Coleman.

About the Author

Wayne Coleman is a senior consultant who has written about and provided training on overtime and premium pay, on the principles of FLSA coverage and exemption, and on related federal compensation issues at many different Federal agencies for almost 40 years. He can be reached at wayneslyhouse@comcast.net.

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