New Pay-For-Performance Twist Coming to Your Agency

Pay for performance has been a controversial subject on which millions of dollars has been spent by lawyers, managers, HR specialists and unions. Here’s a new twist to the idea: Eliminating the time requirement for competitive promotions and leaving the agency with discretion as to how soon to push an employee through the system.

Some topics or phrases are sure to ignite passionate expression from a number of federal readers. At least that is one conclusion that can be drawn from reading the thousands of comments posted on the site.

Sometimes the topics would surprise anyone not familiar with the federal work environment. For example, "tattoos and dress codes" can inspire federal workers from around the world. One of the most popular articles on the site last year was "Dress Codes, Tattoos, and Federal Employees: A Brave New World." And who would think that a simple term such as "sick leave abuse" could generate enthusiasm and passion? But it can and does. For example, Bob Gilson’s article last year on "Steps an Agency Can Take to Reduce Sick Leave Problems" was widely read by government employees. The controversy exists because accumulated sick leave for employees under the FERS retirement system is treated differently than sick leave for employees under the CSRS system as a result of various benefit trade-offs made by Congress when the retirement system was changed in the 1980’s.

Here’s another favorite from some readers: "Good Old Boy Network." That phrase is often cited by some who comment on topics. It is usually defined as "Someone else got a benefit that I did not get because of the ‘Good old boy network.’" (See, for example, "Are You One of the Good Old Boys?")

"Pay for Performance" is another term that always generates heated controversy. Most Americans don’t think much about the term because it is an accepted concept. But, within the federal government, the controversy has been simmering for some time as a result of attempts to convert at least some federal employees from the long-standing pay system of paying everyone roughly the same instead of basing salary increases on performance. For example, see the article entitled "Your 2008 Pay Raise: Would You Prefer 3.5% or 7.6%?" and the many pages of comments that follow the article.

The Office of Personnel Management may now be stirring the boiling pot of controversy again.

In a Federal Register announcement that has not yet received much notice, OPM is proposing to change the rules regarding competitive promotions. Here is a brief summary of the announcement:

Currently, employees in competitive service General Schedule positions at grades 5 and above must serve 52 weeks in grade before becoming eligible for promotion to the next grade level. Abolishing the restriction would eliminate the 52-week service requirement.

My first reaction: "I didn’t know they could do that!" Apparently, they can do that.

The time-in-grade restrictions were first put into place back in the 1950’s by Mississippi Congressman Jamie Whitten. Congress was concerned that during the Korean War then going on that the bureaucracy would suddenly find many of its employees getting large pay increases as they quickly advanced through federal pay levels. In fact, that had happened during World War II.

But the Whitten Amendment expired in 1978. Before it expired, Congress asked the Civil Service Commission (now called OPM) what would happen if the amendment expired. According to the Federal Register notice: "The Commission reported that the time-in-grade restriction for competitive service GS positions had been placed in regulation and would continue even if the Whitten Amendment expired. The law expired September 14, 1978, and time in grade continues in regulation for competitive service GS positions."

But that was then and this is now and OPM has concluded that the time-in-grade restrictions are no longer necessary because the underlying problem has been resolved. There are several reasons for this conclusion.

One of the leading arguments advanced by the agency is that there is now in place a newer, more reliable, bureaucratic system to ensure that federal employees will not be able to zoom through the federal grading system, unless they are qualified to do so. The system in which the agency has so much faith is the government wide qualification standards.

In effect, getting rid of the time limits for a promotion is one part of a pay-for-performance plan under which the best qualified employees get more money. As written by the agency: "Eliminating the time-in-grade requirement will not eliminate the agency’s determination on whether a candidate is qualified to perform the essential higher level duties. Rather, elimination of the 52-week time in grade waiting period reinforces the principle that promotions are based on an individual’s ability to perform the requirements of the position (i.e., merit) not longevity." And, in a statement that should reassure anyone who may be concerned, the agency adds that "we are not aware of any widespread abuses concerning those positions that do not have a time-in-grade requirement."

OPM also notes that it made a similar proposal in January 1996. But, if you have been waiting to see what happened, the agency has decided to again seek to give anyone a chance to comment "Because almost 12 years have passed since publication of the first proposal…."

It goes without saying that a change such as this will be controversial. Several results are likely to occur if and when the change is implemented.

First, there will be considerable litigation. Waiving the time-in-grade requirement gives supervisors much more discretion on the salary levels of employees. Charges of favortism, discrimination and "I didn’t get promoted because I am not one of the ‘good old boys’ " will flourish.

Second, many people will quickly move through the federal system make considerably more money. In fact, I would guess that a large number of federal employees will quickly advance with the result of an overall pay increase for the federal workforce. Employees will also continue to receive the annual federal pay increase but the raise will be based on higher salary levels.

Whether the proposal is a good idea or not will remain to be seen. It sounds good and it is a significant move toward a workplace that rewards employees who are more productive and work harder. The big question is whether OPM’s confidence that the federal personnel system can fairly reward the best employees is really justified. There is a strong possibility that removing the time-in-grade restriction is a way to raise overall salary levels without any change from Congress but without actually rewarding the best performers within government.

We asked readers to comment on the proposal and they did. Here are the results of the survey.

If you want to send your comments to OPM, you must do so by April 7th. You can send in comments by e-mail to Include “RIN 3206-AL18, Time in Grade” in the subject line of the message.

Here is the Federal Register notice that outlines the proposed change.


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