A Wide Assault on Pay-for-Performance

By Joe Davidson
Tuesday, April 7, 2009

Pay-for-performance, the personnel system President George W. Bush advanced in an effort to replace the traditional General Schedule wage scale, has come under tough scrutiny by federal employee unions and their allies on Capitol Hill.

The assaults often have been agency-specific -- the Pentagon's National Security Personnel System, for example, was the subject of a congressional hearing last week.

But now, eight chairmen and subcommittee chairmen in the House have upped the ante and urged the Obama administration to suspend any further implementation -- government-wide -- of pay-for-performance.

The chairmen, all Democrats, questioned the justification for such programs in a Friday letter to Peter Orszag, director of the Office of Management and Budget.

"Proponents of pay-for-performance have argued that such systems are necessary to compete with the private sector for talent," they wrote. But they added that federal law already provides agencies with the personnel tools needed to compete with industry, "while retaining the fairness and transparency of the merit-based civil service system. A well-designed performance management system can recognize and reward high performance without a linkage to compensation."

Pay-for-performance has been repeatedly attacked by most federal employee unions, and they have pushed President Obama to kill it. Many workers do not trust its evaluation process, even though those under the Pentagon's NSPS have received higher-percentage pay increases than other workers.

Last month, the Pentagon announced that it would halt conversion of additional workers into NSPS pending a top-to-bottom review of the program. A few days later, Reps. Silvestre Reyes (D-Tex.) and Ike Skelton (D-Mo.), the chairmen of the Permanent Select Committee on Intelligence and the Armed Services Committee, respectively, asked the secretary of defense and the director of national intelligence to suspend implementation of the similar Defense Civilian Intelligence Personnel System and include it in the NSPS review.

Rather than being an introduction to a death notice, a review might prove the worth of pay-for-performance programs, some of which are "workable and working in a number of places," said Jonathan D. Breul, executive director of the IBM Center for the Business of Government. A review could show there are "cases where it has actually been done rather successfully."

He noted that although pay-for-performance was pushed at big departments such as Defense and Homeland Security during the Bush administration, the first demonstration project began in 1980.

The chairmen's letter urged Orszag "to put on hold further advancement of any pay-for-performance measures in the federal government and conduct a government-wide review to determine the best way forward to improve performance management while preserving merit principles."

Ronald Sanders, the intelligence community's chief human capital officer, said that Dennis C. Blair, the director of national intelligence, and Defense Secretary Robert M. Gates are considering a similar review for the National Intelligence Civilian Compensation Program. It provides a common framework for pay-for-performance systems in the nation's spy agencies, while allowing each to create agency-specific personnel practices.

"The decision to pause and study is pending," Sanders said.

The letter cited a Government Accountability Office study that reported on employee distrust with pay-for-performance, based on the fear that it will depress wages over the long term.

"Employees have complained about discriminatory pay practices in federal organizations that have moved to these types of systems," the letter says. "The discretion given to managers to set performance metrics and to pay employees accordingly means these systems lack transparency and accountability and could pose a disparate impact on minorities."

Reyes and Skelton signed the letter, along with Reps. Edolphus Towns (N.Y.), Oversight and Government Reform Committee chairman; Bennie Thompson (Miss.), Homeland Security Committee chairman; Stephen F. Lynch (Mass.), federal workforce, postal service and District of Columbia subcommittee chairman; Solomon P. Ortiz (Tex.), readiness subcommittee chairman; Chris Carney (Pa.), management, investigations and oversight subcommittee chairman; and Anna G. Eshoo (Calif.), intelligence community management subcommittee chairman.

The letter can be viewed here: http://www.washingtonpost.com/wp-srv/politics/documents/suspension_govt_pay_performance_systems.pdf .

Contact Joe Davidson at federaldiary@washpost.com

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