Government Pay System for the 21st Century, Part I

The author says that the General Schedule pay system has some positive attributes that have helped it last for as long as it has, but he makes recommendations for a new government pay system to attract and retain federal employees.

Editor’s note: This article is the first of a two part series. The second article on this topic will go into additional detail about the author’s new pay system proposal.

Times have changed since World War II and the government pay system has been slow to follow. Although the General Schedule (GS) pay system has been around for decades, it still has many redeeming qualities that have helped it last so long. However, numerous studies and commissions over the past decade have concluded “the civil service compensation system is urgently in need of reform.”2 In response, government intelligence organizations converted to a pay for performance system called the Defense Civilian Intelligence Personnel System (DCIPS). The implementation of DCIPS was poor and the system did not account for the unintended consequences of pay for performance systems. This article proposes a new government pay system for intelligence organizations to attract, retain, and motivate government employees.

The new government pay systems will retain the transparency and well-known pay table of the GS system, but include pay for performance elements to motivate employees. The pay for performance aspect will build on the successful appraisal system of DCIPS based on goal-setting theory. The automatic salary increases based on tenure from the GS system will be eliminated. Promotions, salary increases, and bonuses will be linked to the employee performance appraisal system. Furthermore, the worst performers will be denied an automatic cost of living increase, which is a percentage increase for all employees to keep up with inflation. The extra funds will be used to make bonuses more significant for high performers. The proposed pay system should be able to overcome the seniority-based culture by retaining familiar aspects of the old system but adding new pay for performance incentives to motivate exceptional employees.

The GS system is based on the concept of a promotion incentive system, which assumes employees are motivated to perform in order to receive a promotion to the next grade. Under certain conditions, promotion incentive systems can provide powerful job performance motivation. If the GS system is applied appropriately then it should provide long term motivation for government employees. In theory, the GS system should promote higher performers faster and they will have a higher average salary over the course of their career compared to mediocre or poor performers.

However, the system lacks a significant tool to motivate employee performance in the short term. The government does offer bonuses for above average performers, although nearly 67% of government workers received a bonus in 2002. The bonuses are quite small and insignificant (typically 1-2% of salary) since they are spread so thin amongst a majority of the employees. Herein lies the problem of short term incentives in the GS system; a mediocre employee and an outstanding employee both receive a bonus within approximately 1% of each other, which is probably not enough to motivate an employee to significantly improve performance. One theoretical way to motivate employees in the short term and retain talented employees is through pay for performance systems.

Pay for performance systems can be great motivators and allow employees to receive large salary increases without a promotion. Montoya states pay for performance can have major impacts “helping agencies clarify their missions and goals, attract and retain quality employees, reward performance, and respond rapidly to changes in agency mission and priorities.”3 Therefore a pay for performance system can fulfill two missing components of the GS system, motivating employees in the short term with rewards and retaining talented workers.

DCIPS is a pay for performance system based on sound principles backed by organizational behavior studies, although the system did not address a number of pay for performance pitfalls due to its rushed implementation and poor training. However, the benefits of DCIPS should be studied and incorporated in future government pay systems. The main organizational behavior principle that supports DCIPS is goal-setting theory. Goal-setting theory states that employees will be motivated by defining realistic goals and engaging commitment on those goals. Goal-setting theory relies on supervisor and employee communication throughout the process. A critical step for the supervisor is to obtain employee buy-in for the goals. In order to be motivated by the goals, the employee must accept the goals and believe they are attainable.

Colin Smith received his undergraduate degree in Mechanical Engineering from Vanderbilt University in 2006 and subsequently started his federal career at the National Air and Space Intelligence Center, Wright-Patterson AFB, OH. Colin is currently pursuing his Master’s degree from the University of Dayton in Engineering Management.


  1. Robbins, Stephen and Judge, Timothy. Organizational Behavior. Upper Saddle River: Prentice Hall, 2011.
  2. Klitgaard, Robert and Light, Paul. High-Performance Government: Structure, Leadership, Incentives. Santa Monica: RAND Corporation, 2005.
  3. Montoya, Silvia and Graham, John. Modernizing the Federal Government. Santa Monica: RAND Corporation, 2007.