White House Proposals For Civil Service Reform: What They Got Right

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By on February 15, 2018 in Human Resources, Pay & Benefits with 0 Comments

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The White House proposed a number of changes that would dramatically reshape the federal workforce and how federal workers are compensated.

My last post provided the list of proposed changes. This post will address what they got right, while the next one will cover what they got wrong and what is missing from the proposed reforms.

Civil Service Reform

While pursuing a series of proposals to overhaul Federal compensation and benefits, the Administration also intends to partner with Congress to cull statutory and regulatory rules that have over time created an increasingly incomprehensible and unmanageable civil service system.

It is hard to argue with this one. Rather than a comprehensive set of reforms, the civil service has been subject to piecemeal changes since the passage of the last big reform package – the Civil Service Reform Act of 1978. Even good ideas can result in a mess if they are implemented as one-offs in a single agency or type of job.

NAPA Report

“No Time to Wait,” a clarion call to civil service reform, was issued last year by the National Academy of Public Administration. That report questioned whether a “one- size fits all” Federal personnel system is necessary or even effective. 

The NAPA report is well worth reading (full disclosure: I serve as Vice Chair of NAPA’s Board).

The part about one-size-fits-all not being the way to proceed makes more sense when it is read in context.

Here is what NAPA said:

Moreover, we believe that public servants should not be viewed as symbols of big government or as problems that need to be eliminated whenever possible. The nation needs to follow the central lesson taught by its leading private corporations: the best-managed companies see their employees as their biggest assets, and government should too. Government employees are fundamentally important assets in pursuing government’s goals. Although we certainly need greater accountability in public service, what we most need is a system that holds administrators accountable for results. How well government employees accomplish government’s mission and what principles are pursued in doing so are the key issues. Viewing “accountability” through the narrow lens of “firing employees” does the debate and the country no good service.

Instead, the focus should be on the creation of a federal human capital system that (1) focuses on how best to achieve the government’s mission, (2) fits the core principles of merit to meet the government’s new challenges, and (3) redefines accountability through strategies and tactics that meet citizens’ needs. What the country does not need is a system preoccupied by—and mired in—process.

Nor does it need a “one-size-fits-all” strategy that jams all federal agencies into uniform boxes. The federal government’s work and missions are just too varied for this to succeed. Efforts to force one-size solutions only undermine the ability of government’s many departments and agencies—each created for a different reason—to serve their diverse constituents in ways that meet their individual (and individualized) needs.

Federal vs. Private Sector Pay Differential

A Congressional Budget Office (CBO) report issued in April 2017 found that, based on observable characteristics, Federal employees on average received a combined 17 percent higher wage and benefits package than the private sector average over the 2011-2015 period. The disparity is overwhelmingly on the benefits side: CBO found that Federal employees receive on average 47 percent higher benefits and 3 percent higher wages than counterparts in the private sector. These gaps result from disproportionately high Federal compensation paid to individuals with a bachelor’s degree or less; Federal employees with professional degrees are actually undercompensated relative to private sector peers, in CBO’s analysis. The generous benefits package offered by the Federal Government includes a defined benefit annuity plan and retiree health care benefits – both are increasingly rare in the private sector. The Federal defined benefit plan, according to CBO, is the single greatest factor contributing to the disparity in total compensation between the and private sector workforce. To better align with the private sector, the budget reduces Federal personnel compensation costs, primarily the annuity portion.

The White House proposals focus on areas where federal and private sector compensation differ, without restating the flawed arguments that federal workers are overpaid by 50% or underpaid by 30%. Virtually no one agrees with those extremes.

After working in federal HR for 33 years, I have to agree with the general idea that federal benefits are generous and that pay is out of balance with the private sector at lower grades (where it is high) and at high grades and in shortage category jobs (where it is often too low). It is obvious that federal benefits, particularly for retirement, are more generous than in the private sector.

The real question is whether the government should simply follow the lead of businesses, or if they should set an example of what we would hope to see every employer offer. For the private sector, the idea of a defined benefit pension plan is dying and it is unlikely to ever return. That does not mean it is the best approach.

Sick and Annual Leave Benefits

Federal employee sick and annual leave benefits are also disproportionate to the private sector. All Federal employees receive 10 paid holidays and up to 13 sick days annually, as well as 13 to 26 vacation days, depending on tenure. This Budget proposes to transition the existing civilian leave system to a model that has worked well in the private sector, which is to grant employees maximum flexibility by combining all leave into one paid time off category. This would reduce total leave days, while adding a short term disability insurance policy to protect employees who experience a serious medical situation.

This one is another area where we should decide whether the government should lead or follow.

Leave benefits in the private sector are often less generous than in government, but not always. Many private employers offer paid parental leave, something that the government does not. Many offer disability policies to cover both long and short term illnesses. The White House proposal includes short term disability and maternity coverage.

The real question on this one may be how it is implemented. The proposal is short on details. Would it cover existing employees? Only new hires? How many days would be appropriate?

Pay System

Across the board pay increases have long-term fixed costs, yet fail to address existing pay disparities, or target mission critical recruitment and retention goals.

That idea that the current pay system is inflexible is true. Yes, agencies can offer quality step increases for outstanding performance or deny step increases for poor performance, but the system is designed to move employees from the bottom step to top step over time. In general schedule jobs the range is about 30%.

One approach to performance based pay would be to reduce the number of step increases that can be given based on longevity. The devil is in the details, and we do not have the details on how it might work.

Federal Hiring Process

Federal jobs can take more than a year to fill. The job announcements remain a confusing cipher to applicants. The hiring process – which includes at least 14 steps – is cumbersome and frustrating for Federal hiring managers. As the nature of work changes, the Federal Government requires more term employees. Many individuals are interested in public service but not seeking a career in the civil service. Existing Federal hiring rules make term hiring as difficult as hiring a permanent employee.

Amen. Federal hiring processes are too cumbersome, lack flexibility, and scare off potential applicants.

Security Clearances

Another major hindrance to timely hiring is a massive security investigation inventory. Beyond the immediate problem, fundamental reform of the background investigation process is necessary, to both increase efficiency and reduce costs.

The security clearance process is a bit of a mess. The problem is more than just a backlog. We could use a fundamental rethinking of background investigations, including how, when and why they are done. Throwing more resources at the backlog is not going to fix the underlying problems.

Technology

Agencies will continue to examine their workforces to determine what jobs they need to accomplish their mission, taking into account the impact of technological investments that automate transactional processes, artificial intelligence that can streamline the byzantine compliance and regulatory processes, online and telephone chat-bots to improve customer service, and other such tools that may reduce agency personnel needs. Currently, many professionals are performing tasks that the private sector dispatches via technology tools such as “bots” and artificial intelligence.

This should be a basic component of management in any organization.

Government is making some progress, but the overall customer experience in many agencies leaves a lot to be desired.

It really is time for government to step into the 21st century. That means fully embracing digital solutions, treating the public as consumers and delivering the kind of customer experience consumers have come to expect from their service providers.

Difficulty in Removing Poor Performers

The Administration recognizes that the vast majority of employees uphold their Oath of Office and work diligently. A percentage, however, are simply unable or unwilling to perform at acceptable levels. Their peers in the Federal workforce recognize this issue. Every year, the vast majority of Federal workers surveyed disagree with the statement that, “in my work, steps are taken to deal with a poor performer who cannot or will not improve.” The requirements to successfully remove an employee for misconduct or poor performance are onerous (see Chart 7-6). Employees have a variety of avenues to appeal and challenge actions. Agencies may settle cases to avoid the expense of litigation, regardless of the strength and documentation of a manager’s case. Settling can avoid the prospect of an even more costly decision by an arbitrator unaccountable to taxpayers. Federal managers are reluctant to expend the energy necessary to go through the process of dismissing the worst performers and conduct violators.

I have been writing about this problem for years. It is a legitimate concern. Accountability is about far more than firing people. I will address that issue more in my next post.

Rewarding High Performers

The Federal workforce also contains untold numbers of selfless civil servants who perform their jobs in a manner that honors and uplifts their fellow citizens. They are part of the fabric that makes this Nation great. We need reforms that recognize and reward such individuals, and free them from unnecessary red tape so that they can more efficiently and effectively support the mission of Government.

I have worked in and with government for almost 40 years. In my experience, most federal workers do a great job. I would have preferred to see this statement at the beginning, rather the end, of the reform proposals.

This column was originally published on Jeff Neal's blog, ChiefHRO.com, and has been reposted here with permission from the author. Visit ChiefHRO.com to read more of Jeff's articles regarding federal human resources and other current events along with his insights on reforming the HR system.

© 2018 Jeff Neal. All rights reserved. This article may not be reproduced without express written consent from Jeff Neal.

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About the Author

Jeff Neal is a senior vice president for ICF and founder of the blog, ChiefHRO.com. He has 33 years in federal service, including serving as Chief Human Capital Officer for the Department of Homeland Security and Chief Human Resources Officer for the Defense Logistics Agency. Jeff is also a Fellow and Director at the National Academy of Public Administration and a Partnership for Public Service SAGE.

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