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Government Leader home > March 2005 issue
March 2005; Vol. 1 No. 1
CHECKS AND BALANCES: Pay for performance rewards the right people and can improve agency efficiency
By Howard Risher
The debate is over. Pay for performance is the new basis for managing federal employee salaries. After years of contentious argument, the focus now is on the details of the new policy and how to avoid mistakes.
To this point, salary increases have been effectively
automatic, based on the scheduled steps. Under the General Schedule,
when employees complain about their pay, managers can blame
their human resources office, the Office of Personnel Management,
the Office of Management and Budget,
Congress and probably others. Salary management
has not been a job duty. Managers
really have had no accountability for managing
the performance or the pay of their people.
They complete appraisal forms, but that
is hardly performance management.
All of that has to change.
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| | Agency performance is not an HR responsibility, it is management’s responsibility. Agency leaders should be driving this train.” —Howard Risher | |
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Critics contend the change will not be popular
with many employees. But employee responses to a 2002 OPM
survey on human capital showed that, by significant margins, they
are already very dissatisfied with the way their work efforts are recognized
and rewarded. It’s not that they are dissatisfied with the
level of pay; they are dissatisfied with the practices that recognize the
value of their contribution.
The fact is that pay for performance has been accepted in a long list
of pay demonstration work units. Government is the only sector
where the philosophy is not deeply entrenched.
Wary of what’s new
Trust is low among employees, who at this stage really do not know
what to expect. Most only have experience with the GS system. Few
know much about the new salary systems at the Government
Accountability Office, Federal Deposit Insurance Corp. and the IRS,
or practices in other sectors. New concepts such as salary bands are
poorly understood until they are put into operation.
It’s not surprising that employees are anxious and apprehensive
about the proposed changes in the way their pay is managed. Salary
management affects employees’ careers, their lives and their relationships
with co-workers.
But the train has left the station. It’s clear that the GS system will
be replaced—changes announced at the Defense and Homeland Security
departments will have a big impact governmentwide—and
that agencies have to start planning for its replacement.
The people management practices typical at most agencies are not
ready to support the change in policy. Agencies will need a couple of
years to digest new practices and, more important, to prepare their
managers to handle this new role.
The necessary changes are not limited to those normally under the
purview of HR. If federal leaders were able to understand how their
agency’s culture compares with what is typical in a successful corporation,
they would understand the breadth of the necessary changes.
To be sure, the changes have started.
The management practices introduced in
response to the Government Performance
and Results Act of 1993 and the President’s
Management Agenda, along with the new
Senior Executive Service pay and performance
regulations, are important steps.
But few agencies would argue they now
have a culture with a shared sense of accountability
and a focus on results. This does not mean federal agencies
should necessarily emulate corporate cultures, but improved
performance must be accepted as a shared goal.
At the crux of the matter is the fact that moving to pay for performance
can and will improve agency performance. If that were not so,
it would hardly be worth the tension and risk of lowering of morale.
The research and the experience in the private sector confirm that
the change in policy should improve performance. A National
Academy of Sciences committee commissioned by OPM a decade
ago completed an in-depth review of the research evidence and
reached that conclusion. Corporations obviously concur.
Finally, agency performance is not an HR responsibility, it is management’s
responsibility. Agency leaders should be driving this train.
HR clearly needs to play a prominent role, but this is as new to federal
HR managers as it is to anyone.
Switching to pay for performance will be a difficult organizational
change, and managers at every level need to understand it’s a priority.
Senior management needs to walk the talk and commit the
organization to the changes needed for a successful transition. It’s far
more than a new performance appraisal form.
Howard Risher is a consultant on pay and performance. A member
of several National Academy of Public Administration study teams,
he authored Pay for Performance: A Guide for Federal Managers.
Published by the IBM Center for The Business of Government, it’s
online at www.businessofgovernment.org/ pdfs/RisherReport.pdf.
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