Pay-For-Performance Faces Tough Road in Federal Environment

Pay for performance in the federal environment faces a tough road according to the MSPB

Unless you have isolated yourself from the rest of the federal workforce, you know that major changes are occurring in the federal civil service system. Pay- for-performance is again at the top of this change list.

Change in government never seems to happen rapidly and won’t be spread evenly through agencies. But the definite trend is for some kind of pay for performance system.

One of the biggest concerns among federal employees is that any pay for performance system will be used to reward someone else. Or, in other words, many active duty federal employees are concerned they will not get as much money as the person at the next desk or the guy down the hall.

The concern is usually couched in terms of “the good old boy system” or a “buddy system” under which a supervisor has discretion to give some people higher raises than others.

At the same time, there is widespread dissatisfaction with the current system.

So a number of people in government seem to come out with a position of not wanting to change the current system–even though they don’t like it–because they are afraid they will not fare well under a different system.

The Merit Systems Protection Board says in its latest newsletter than many supervisors find the current system of performance appraisal “challenging.” That is a polite way of saying that too many people are given high performance ratings regardless of their performance. Less than 1% of the federal workforce is rated less than “fully successful.” And the MSPB asks the obvious question, “are federal employees really this good?”

Probably not. New reports have indicated that the federal hiring process leaves a lot to be desired in attracting and retaining the best candidates. So with a hiring system that is less than ideal, the probability of thousands of supervisors throughout government continuously making outstanding hiring decisions sounds like a fantasy for a Ph.D dissertation.

It is more realistic to conclude that supervisors find the system of withholding within-grade increases or awarding a less than fully successful rating too daunting. It is much easier to give everyone a good rating. That way, there are no complaints filed, no grievances, no unfair labor practices and no harm done to a supervisor’s career. Everyone is happy enough or at least doesn’t have a basis for filing a complaint. Whether the job gets done well becomes a secondary consideration to avoiding complaints and grievances.

Not making distinctions between poor, average and outstanding performers undermines the primary goals of a pay for performance system. In fiscal year 2003, says the MSPB, only 9 out of every 10,000 employees were denied a within-grade increase. Moreover, the number of denials of within-grade increases is actually decreasing each year.

And, at the other end of the performance spectrum, over 40% of federal employees were rated outstanding. But only 5% received a quality step increase.

While some of these outstanding employees may have received a cash award, the MSPB notes that it is unlikely the monetary value of these awards provided much motivation for top performers as there isn’t that much money available and the money available is dispersed through a large number of people so no one person gets much money.

In other words, the government has a system that, by most accounts, doesn’t work very well. On the other hand, many employees and supervisors are hesitant to try a new system because they fear it won’t be any better and may actually be worse. Or, as the MSPB puts it, “the transition to performance-based pay systems won’t be easy or quick.”

You can download the latest MSPB newsletter by clicking here or from the link on the left hand side of the page.

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