Pay, Performance, Money and Bureaucracy

Proposals for making change to the government’s pay system.

The federal government is moving toward a pay for performance system (again).

Those who have been in or around government for the past twenty-five years will have a sense of deja vu in the current drive to increase productivity and reward employees based on performance instead of how long a person has been quietly sitting at a desk.

Pay for performance (or “merit pay”) was one of the central features of the Civil Service Reform Act of 1978. It hung around for awhile. The concept generated huge publicity, occupied a significant amount of time for President Jimmy Carter, and provided fodder for articles, lawsuits and various appeals as individuals and organizations worked long and hard to get rid of or seriously weaken the new pay structure. The MSPB got involved. The FLRA got involved. EEOC got involved. The federal courts got involved. Arbitrators had their say. Not surprisingly, all these efforts to tear the system apart paid off.

It wasn’t too long before merit pay was thrown out and agencies went back to giving pay raises based largely on seniority instead of trying to implement a pay structure that led to appeals, delays and often cost more money while still not rewarding the best performers.

Pay for performance is a laudable goal. Many private companies would be astounded with the current federal pay system that rewards seniority as much as the federal pay system. On the other hand, most private sector companies do not get involved in the complex, convoluted, and expensive spaghetti-like structure of the various appeals applicable to the federal workforce.

A manager who has been through the process of trying to reward the best performers with promotions and awards, and who blithely ignores the strong preference for seniority inherent within the system, often comes to regret the attempt and just gives up. It is simpler, easier and less controversial to reward seniority. While the most senior people may not be the most productive or even the people a manager would prefer to keep on the job, everyone understands a system that requires waiting “your turn” to get an award, promotion or a standardized pay raise in which everyone shares equally.

With new personnel systems currently being designed for the Department of Homeland Security and the Department of Defense, there is a sense of major change coming to a the traditional civil service system. Pay for performance is often cited as a key component of these new systems. And, with changes coming to these major agencies, there is likely to be a move to put into place changes for other agencies as well in the near future.

The Coalition for Effective Change (CEC) describes itself as “an alliance of associations representing current and retired federal managers, executives, and professionals. CEC provides a channel for these public employees to contribute to the success of reinventing government.”

It has jumped into the fray with proposals for implementing a pay for performance system in government. The CEC cites several requirements necessary for a successful system in the federal government.

1. Gaining Consensus on the Basis for Rewards and Corrective Actions 2. Allowing for the Exercise of Reasonable Judgment 3. Flexibility (The amount and distribution of awards would ideally be controlled through budget allocations and not quotas or forced distribution. In addition, the system should allow team awards rather than individuals awards where that makes the most sense.) 4. Decisions should be reviewable with a rational, reasonable process for appealing actions having a material effect upon the employee. 5. Periodic evaluation and adjustment of the system 6. Adequately funding. The performance award system, both in testing and full implementation, must be adequately funded with a specific allocation of funds for both implementation and ongoing operation.
Whether a credible pay for performance system can be put into place in an organization as unwieldy as the federal government remains to be seen. Giving up and deciding that rewarding the best performers can’t be done should not be a good option although that philosophy often prevails for decades at a time.

The criteria set out by the Coalition for Effective Change reflects an understanding of political realities in the federal bureaucracy while also trying to work toward a more productive government that recognizes talent and hard work and attracts and keeps the best people.

No doubt the drive for change will run into strong opposition. The CEC proposals reflect an optimism about government service and are a good place to start trying to put a more realistic system into place.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47