Pay, Performance and Change: Is the Sky Falling on the Federal Civil Service?

Pay for performance may be coming to the rest of government–not just DHS and DoD. The concept scares many readers. What are the options and what will the future hold for employees of the executive branch of government?

FedSmith has published various articles on pay for performance. Most of the articles have centered on the changes in the Departments of Defense and Homeland Security for the obvious reason that they are in the limelight for the major changes proposed for the human resources system.

While some readers may be quietly observing what is happening in DHS and DoD, they may not be worried because they don’t work in those agencies. It’s not their problem.

Actually, it may be your problem if you are a federal employee. Many of the changes in these two agencies may be applied to the rest of government. (See Changing the Civil Service–for Better or Worse)

If you haven’t kept up with it, you may think the courts have killed the initiatives to change the human resources system in these two large agencies. And it is true that portions of the initiative have been successfully challenged. But the sections that would have the most immediate impact on most employees are still alive and well. In particular, pay for performance is still on the agenda and still moving forward even if at a slower pace than originally envisioned.

Government Executive reports that the Office of Personnel Management is considering moving away from the labor relations changes the administration would like to see throughout the government and will, instead, focus on implementing pay for performance in other federal agencies.

The reaction of many readers to a federal pay for performance can be summarized as: "The sky is falling, the sky is falling!"

One personal observation: Writing articles on federal human resources issues is controversial. FedSmith readers are spread throughout government and occupy a wide variety of positions. Readers always have different perspectives on issues and many of them will not agree with a position taken by an author. One of the most popular segments of the site and perhaps one of the most challenging for some authors is that we post comments from this diverse group. Readers of the federal community are articulate and do not hesitate to voice their opinion.

In response to one recent article, a reader commented that I must have been a political appointee in government. From the context of the remarks, he (or she) appears to have intended the statement to be an accusation rather than a compliment.

For what it is worth, I have never been a political appointee under any administration. I entered government service as a GS-7 and resigned a few years later as a GM-14–a long way from any political appointment.

With that out of the way, here are several observations on pay for performance in the federal government.

When the Civil Service Reform Act of 1978 was passed, the internet did not exist. As an instructor for OPM at the time, I talked to hundreds of federal employees in classes and conferences on the new law. Many of the comments would sound familiar to the comments referenced above with regard to pay for performance. "A return to the good old boy system" (This is the all-time favorite and most often cited by readers. It was just as popular in 1978 from supervisors who were fearing the new pay for performance system.) It was followed closely by "This plan is designed to reduce the pay of federal supervisors" (it was only designed to apply to supervisors at that time); "Pay for performance will make us subject to the whim of terrible managers who only have their own interests in mind"; "This will destroy the teamwork concept of government supervisors"; "Pay for performance can’t be done in the federal government because we can’t measure the work of federal supervisors."

In short, read some of the comments from readers regarding pay for performance on this site and the same comments were being raised in the 1970’s.

When it first came into existence, I was not a supervisor. A short time later, I came under the pay for performance system.

Despite the protestations and fears of many, it was not a bad system. My pay went up faster than it would have had I been under the general schedule. Like most of us, I liked recognition for my work and would always like to have had the biggest raise possible. The bureaucracy smoothed out the rough edges for the system and, at least in the agency in which I worked, the system worked reasonably well. Some people got more money than others, most people got a regular raise in any event, and some of the more radical fears went away after a couple of years.

The problem was that there were always people who were not happy with it. In theory, no one knew what other people were getting. In practice, most people had a good idea of who was getting more money than others. In a large organization, those who are not happy can create problems, file grievances and appeals, and generate publicity about how the system was "unfair" for some and unfairly rewarded others.

The pay for performance system went away after a few years. No doubt, it did not work well in other agencies and the concerns and complaints from those who were not happy had a cumulative effect.

In short, in the large bureaucracy that makes up the federal government, it is usually easier to have a system that generates fewer complaints. Unhappy people can and do create problems. Those that benefit the most from a system don’t complain or file grievances. High performing achievers may quickly see other opportunities and leave. The ripple effect is small, there is no publicity and while the the best and brightest may quietly leave to the detriment of the organization, there is no way to measure the invisible loss.

The natural tendency will be be to eliminate problems. If that means higher performing people do not apply for federal jobs or don’t stay, the results can’t be measured or observed. One solution would be to leave the current system in place and contract out many more federal jobs to the private sector–a situation that has already been occurring for a variety of reasons for a number of years.

Instituting a pay for performance plan that works will be a big challenge. If it can be done successfully, it will be an accomplishment that will have to be admired as a bureaucratic miracle.

The Merit Systems Protection Board has issued a report that outlines what it considers necessary to have a successful pay for performance system. Here is the MSPB’s quick summary of what they think needs to be an integral part of such a system:

1. A culture that supports pay for performance;2. Effective and fair supervisors;3. A rigorous performance evaluation system;4. Adequate funding;5. A system of checks and balances to ensure fairness;6. Appropriate training for supervisors and employees; and7. Ongoing system evaluation.

If you have an interest on what a pay for performance plan will incorporate, download the report. Considerable research has gone into this thorough and objective analysis of such a system.

According to the comments from most readers, and the results of surveys from our readers on the subject, the federal government is a long way from having this capability.

People don’t like change. They will use any argument or rationale to resist it.

Federal employees have significant advantages in resisting change. There are plenty of avenues to appeal and challenge any proposal. In a political environment, Congress may intervene in some way. Federal employee unions can be counted on to hold rallies and issue press releases in support of the opposition to change. And, most imporantly, making meaningful change take hold requires lots of time.

Many civil servants take a view of "I was here before the administration and I will be here after this administration. I can wait them out." In other words, delay, complain and fight the change. It may go away after the next national election.

That may not create an effective government. It may lead to future presidents deciding the only way to get anything done is to contract out even more work to the private sector. It may lead to having even more political appointees occupy positions in the executive branch because the politicians don’t think the career work force can be trusted to carry out the agenda of those who were elected by the American people.

No doubt a political battle is brewing and those working for Uncle Sam will be participants and, depending on your point of view, a beneficiary or victim of future changes.

All Americans want a government that works well and does its job well. Let us hope that the right decisions can be made for the good of all of us and not just to benefit a few of us.

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