Seven years ago, the Federal Aviation Administration began an overhaul of its personnel and pay systems. The first reviews are in -- and hard to sort out.

Perhaps that should not be a surprise, but it underscores the difficult task ahead for the Department of Homeland Security, which officially welcomed about 180,000 employees from 22 agencies this weekend. Much as it did for the FAA, Congress has given Secretary Tom Ridge the power to create new personnel and pay rules for department employees.

If the FAA experience is any guide, pay and personnel reform at the Homeland Security Department will center on issues of fairness. Is it fair to pay people differently, even though they do similar work? Is it fair to take away automatic raises tied to years of service and convert them to raises linked to job performance?

The FAA, which has about 50,000 employees, carried out its reforms with a good deal of outside scrutiny and internal anxiety. The agency replaced the traditional grade-and-step pay system with a market-based, pay-for-performance system -- changes that are likely at the Homeland Security Department. Some FAA changes have been resisted or questioned by unions -- a likely scenario for the newest Cabinet department.

When the General Accounting Office undertook an assessment of the FAA reform effort, nearly two-thirds of 176 FAA employees interviewed by the GAO said the new pay system was not fair.

That general sense of unfairness over pay has led to increased unionization, the GAO suggested in a recently issued report. The number of employees in unions, as a percentage of the FAA workforce, increased from 63 percent to almost 80 percent by 2001, the GAO said.

The Transportation Department's inspector general thinks the increase in union contracts has helped drive up FAA operating costs.

The average base salary of a fully certified air traffic controller jumped 47 percent from 1998 to 2003, the inspector general said. Other FAA employees saw their pay rise 32 percent, about 2 percentage points more than the average for other federal workers in the Washington area.

"The reality of personnel reform that we see has been soaring workforce costs and significantly higher salaries," Kenneth M. Mead, the Transportation inspector general, recently told a Senate committee.

The FAA reform effort can be traced back to 1993, when then-Vice President Al Gore's "reinventing government" task force determined that FAA could move more quickly on air traffic control improvements if allowed to shed federal personnel and procurement rules.

Congress went along in 1995. A year later, in what turned out to be a pivotal decision, Congress directed the FAA to negotiate any changes to its personnel rules with agency unions. As a result, the unions were allowed to bargain over pay.

In subsequent contract talks, the FAA agreed to provide employees represented by the National Air Traffic Controllers Union with bigger raises than other agency employees were receiving.

Shortly afterward, about 8,000 agency employees moved into unions, partly because unions could protect automatic raises known as "within-grade" increases.

At the seven-year mark, the FAA has moved about 60 percent of its employees into so-called pay bands, or salary ranges. The system allows managers to set the pay of new hires based on labor-market rates and what their budget can afford.

The FAA also created a new way of evaluating job performance. Managers meet with employees annually to discuss their work and what they should do if they need to improve their performance in the coming year. Those discussions help determine the pay raises provided employees.

The controllers union doesn't object to its members being paid differently based on the volume and complexity of air traffic they handle. But the union thinks the FAA should measure team performance at an air control tower or center, not individual performance. Team measurement helps avoid disputes over fairness, a union spokesman said.

Marion C. Blakey, the FAA administrator, said she is trying to figure out a way to create contracts that employees can accept while "at the same time having a genuinely performance-based system" that provides "clear expectations on what individuals are expected to deliver."

Personnel reform, she noted, "is something of a brave new world. . . . I want to be as positive as I can."

Stephen Barr's e-mail address is