To cope with change FDIC becomes lab for alternative pay systems

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10/18/05

To cope with change, FDIC becomes lab for alternative pay systems

By John L. Guerra
Special to Government Leader

The Federal Deposit Insurance Corporation, faced with a wildly fluctuating workforce and changing banking industry rules, has worked through four iterations of its alternative personnel and pay systems to meet the challenge of those changes.

As the agency’s employee population ballooned from 4,000 to 23,000, then shrank to 5,000 in the late 1980s and early 1990s, FDIC tried various ways to change its performance management systems and combine full-time hires, contract employees and returning retirees.

To meet its mission, the FDIC:

Streamlined hiring practices to reduce the time it takes to inform candidates of decisions
Created crossover training programs so staff members handling bank failures, for instance, could then become bank examiner trainees without significant reduction in pay
Hired outside consultants and other experts (often FDIC retirees who charge less than private-sector consulting groups) on a temporary basis
Organized new pay-for-performance bands: EM for executive management, CM for corporate management and CG for corporate grade nonmanagerial positions. FDIC also created a contribution-based compensation band, with five levels of merit raises and lump-sum payments for non-bargaining unit employees.

Arleas Upton Kea, director of the FDIC’s Division of Administration, told the Senate Homeland Security Subcommittee on Oversight of Government Management last month that feedback from employees was vital to pinpointing pitfalls and morale-busters. Employees gave FDIC’s program “mixed reviews,” Kea said. “It’s a very large shift in culture.”

Among the lessons learned:

Managers must have the will and the means to make meaningful distinctions with each employee’s performance and reflect them properly in pay raises and bonuses.
Put executives and managers through changes first, so they’ll apply lessons learned and empathize with lower echelon employees about to experience change.
Make sure there’s enough money to pay proper raises and bonuses, and create checks and balances that ensure fairness.
Recruit workers who can perform across organizational lines.

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