According to the recently released 2010 Federal Employee Viewpoint Survey, only about one in four federal employees see a link between their performance and remuneration. No wonder President Barack Obama and his OPM Director John Berry have wanted to revamp a pay system based on rigid grades and automatic steps. With an all-time high interest in government employment, hiring managers long for the flexibility to compete for the best candidates. Even though salary is rarely the most important factor in choosing a government career, today’s Gen Y candidates want to advance as fast as their abilities let them.
Changing the federal pay system, however, will not be easy. Detractors point to the inequities that have led to failure in recent Pay for Performance experiments. For example, the Defense Department is rolling back its National Security Personnel System (NSPS), restoring some 220,000 employees to the General Schedule.
In spite of these snags, Director Berry has indicated that government must address the issue of performance. Hiring managers, HR leaders and job candidates tend to agree that current federal pay systems put government jobs at a competitive disadvantage. Civically minded Gen Y job seekers want to serve their country, but they also want to advance as rapidly as they prove themselves. And they want their worth reflected in their paycheck. This audience may then find themselves dismayed as they review the Viewpoint Survey and discover that three quarters of the federal workforce feel that their accomplishments on the job have no bearing on promotions.
In order for Pay for Performance to succeed, major changes are necessary in government HR. If agency departments are mindful of these changes, they will also be better prepared to recruit and nurture top performers in the meantime. This talent can have a greater sense of “fit,” i.e. the employee characteristics most likely bode for long-term commitment and engagement.
Finally, a compensation savvy HR will have the knowledge to counteract partial information, such as the August 2010 USA Today study that claims that federal workers are vastly overpaid in relation to the private sector. The across-the-board study admittedly neglected the "increasingly high level of skill and education required for most federal jobs and the government contracting-out lower-paid jobs to the private sector in recent years." One need only compare federal lawyers and doctors with their private sector counterparts to see that the U. S. government usually does not compete on money.
Can a Pay for Performance Program work in government?
Compensation consultant Sharon Koss gives a basic definition for a successful Pay for Performance Program in her Solving the Compensation Puzzle: Putting Together a Complete Pay for Performance System (Society for Human Resource Management: 2008). Correctly done, pay for performance “is the marriage of an organization’s pay system to its performance appraisal system in order to reward and motivate employees to provide superior performance.”
Koss adds, “To understand the whole concept, it is important to look at each separately, because without a solid, fair compensation plan and an accurate, believable performance appraisal system, pay for performance will not work.”
Looking at government, Koss warns that “pay for performance can be a very large stretch for an organization that has been functioning on the step system for a long time. A decision to change to a system with a totally different pay system can spell disaster.”
She notes that “with pay for performance, differential pay changes behavior— employees follow the money.” Cultural change must go hand in hand with implementing the new pay system.
Attaching money to performance appraisals, says Koss, also entails change. She recommends doing a “dry run,” using an employee performance appraisal as if there is money attached.”
What motivates federal employees?
TMP Government has found through many focus groups with government employees that economic benefits weigh far less heavily on employer choice than mission, meaningful work and opportunities for advancement. Compensation tends to be looked at as “table stakes,” i.e. a competitive salary merely buys you a place at the table. Your organization is in the “consideration set” or “long list” of possible employers. When a prized job candidate down-selects to a “decision set” or “short list,” psychological benefits become prime determinants. In other words, pay should be sufficient enough for employer and candidate to focus on interest in and suitability for the mission.
In fact, at this moment, government has to be wary of attracting candidates on the basis of material rewards. As the nation struggles through a slowly recovering economy, agencies can easily draw qualified people to available jobs that seem relatively secure. But many of those job seekers may be looking at government mostly as a “ stopgap” until something better opens up in the private sector. For instance, recent college graduates may receive far fewer job offers than expected and then turn to government. Such an economically inspired rise in demand does not necessarily augur for a new government workforce, luring the best and the brightest. Consequently, if the federal government wishes to be competitive as a “premier career choice” in better economic conditions, agencies must understand the psychological impact that their pay systems have on candidates.
Flexible, customizable pay allows managers to express the value of the organization, the assignment and the employee.
In Pay People Right: Breakthrough Reward Strategies to Create Great Companies (Jossey-Bass: 2000), compensation experts Patricia K. Zingheim and Jay R. Shuster comment, “Pay and other [tangible] rewards are a powerful way to help communicate business directions and values. People become stakeholders as the company anchors rewards in the business and create a win-win partnership.”
What does the rigidity of the General Schedule communicate about the government? Sylvia Mostoya and John D. Graham give a description of the GS in their Modernizing the Federal Government: Paying for Performance (Pardee RAND Graduate School: 2007): “Pay and performance under the GS system are not well linked. The WGIs [Within Grade Increases] reflect no link between pay and performance. All other things being equal, a mediocre employee will receive the WGI as fast as a better-performing colleague. As currently administered, the performance rating systems do not provide sufficient information to link pay with performance.”
TMP Government believes that this lack of a tailored compensation system works against the most important aspect of the employer value proposition: self expression. A self-expressive benefit empowers employees to take “ownership” for their work and align their personal career goals with that of the organization. Advancement entails not an automatic rise in status, but an honoring of personal initiative in taking advantage of educational and experiential opportunities.
“Pay” is not an end in itself, but a feedback mechanism that tells employees that they are a valued member of the team. Performance pay is a step towards recognizing the role of the individual in serving the mission. In the 19th and early 20th century, civil service reform replaced the spoils or patronage system in which government jobs were often awarded because of political loyalty. The GS was a logical improvement, instilling objectivity, but it belongs to the cog-in-the-machine era of talent management. It subordinates both the caring manager and the self-starting, enthusiastic well-motivated employee to a cumbersome bureaucratic system that empowers neither supervisor noremployee.
While opponents of a pay-for-performance system point out that it gives supervisors too much power, thus leading to favoritism, one might counter that any empowerment takes that risk. One hopes that any Pay for Performance system contain sufficient “checks and balances” to prevent abuse. The “failed experiment” with NSPS then does not mean an end to Pay for Performance. It simply offers us an opportunity to learn and create a better system that rewards merit and performance more than seniority and tenure.
The next step: linking performance, merit and pay
In late summer 2010, the road ahead for Pay for Performance is not clear.
In early August when the Defense Department announced abandoning the pay-for-performance elements of its Defense Civilian Intelligence Personnel System (DCIPS), a Federal Times reader commented, “Unbelievable… back to the old way where you get paid for doing only as much as needed to not be fired?”
In releasing the 2010 Federal Employee Viewpoint Survey, John Berry held a more positive view: "Performance management, including the management of poor performers, and the promotion process are areas of concern."
The most compelling voice for Pay for Performance continues to come from those who are aware of complex challenges that only government can handle. They know first hand that getting the best people into government is not a rhetorical stance. It is an absolute necessity.
An example is cybersecurity. An article in the August 1, 2010 edition of the Baltimore Sun reported, “As the federal government, contractors who support federal agencies and private companies ramp up spending to secure complex computer networks, they are all competing for a tight pool of high-tech specialists and workers with government security clearances.”
A former associate director of national intelligence at the Office of the Director of National Intelligence (ODNI) believes that pay-for-performance initiatives are key to strengthening the government’s cybersecurtity workforce. Speaking to Nextgov.com’s Wired Workplace, Patrick Gorman, now a principal at Booz Allen Hamilton, said that the government must institute some type of performance-based pay system in order to retain the expertise critical to combating cyber threats.
Gorman said that while the mentality among the younger Generation Y workforce is often focused more on mission than it is on money, it may take some type of variable or performance-based pay system in order to keep such workers engaged and interested in staying in their federal cybersecurity jobs.
"The mission and prestige of working for government is actually quite high ... but at the same token, you're going to have to have some type of variable pay or pay for performance like we had with [the National Security Personnel System] to try to entice people to stay around once they come in," Gorman said. "Government is going to have to have pay for performance and also accept the fact the people are moving in and out of government and industry. And that's actually a healthy thing, not something they should frown upon."
TMP Government believes that Gorman’s assertion applies to all mission critical arenas throughout government. Our employer value proposition model is closely akin to Dr. Abraham Maslow’s Hierarchy of Needs. Job seekers need to know that their lower-level economic needs are assured. With that support, they can fully devote themselves to the great challenges ahead.
For more information on how TMP Government can help your recruitment program, please contact John Bersentes at 703-269-0092 or john.bersentes@tmpgovernment.com and follow our blogs at www.tmpgovernment.com/blogs.aspx
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