“There are obviously some great people in government,” Max Stier, president of the Partnership for Public Service, says. “But the system is failing them.” (Sam Kittner/Kittner.com)

The federal government, stuck with an outdated civil service system, is failing to hire the best talent, treating employees as “costs” rather than assets and facing a leadership crisis, a leading expert on the federal workforce said this week.

The dysfunction has gotten so bad that the system needs a complete overhaul, according to Max Stier, president and chief executive of the nonprofit Partnership for Public Service.

“There are obviously some great people in government,” Stier said Wednesday during a meeting with The Washington Post editorial board. “But the system is failing them.”

In a new report by the Partnership for Public Service and Booz Allen Hamilton, the two million-strong civil service system is depicted as increasingly obsolete, with its approach to pay, recruitment, management, competition for talent and dealing with poor performers virtually unchanged since Congress passed the 1978 Civil Service Reform Act.

Despite recent changes designed to shorten the process, an arcane hiring system remains a “mystery” that prevents managers from recruiting good people who would do the job well, focusing too much on experience and too little on talent, the report says. The 60-year-old General Schedule job classification system prevents agencies from aligning compensation with what comparable occupations in the private sector pay, undermining government’s ability to attract top performers.

Accountability is lacking. “Employees and managers view performance management as a paperwork exercise, an annual necessary evil that has little effect on their working lives,” the report concludes. Poor performers are rarely fired or demoted. And many senior executives in government are technical experts who are promoted because they’ve been in their jobs a long time rather than because they have track records as seasoned managers, Stier said.

Many of these problems arise from changes in the nature the workforce. While clerical jobs once dominated the bureaucracy, professional occupations do today, and government needs to recruit and keep employees to fill those posts, the report says.

Stier proposed changes that would give provide for more flexibility in hiring and management and a pay system that helps employees advance based on expertise. He would replace drawn-out litigation involving firings with a streamlined process. Automatic, tenure-based pay raises would be eliminated, Stier said.

“The administration as a whole has not led on these issues and they need to lead,” he said. Previously reluctant to criticize the White House publicly, Stier faulted the Office of Management and Budget for being slow to focus on government management.

There are bright spots in government where managers have “gotten it right,” Stier said, nurturing productive, high-morale employees. One is the National Aeronautics and Space Administration, despite a drastic change in mission when the space shuttle program ended in 2011. Another is the United States Patent and Trademark Office. Stier attributes high morale at both agencies to innovative leaders who developed successful partnerships with unions.

Public employee unions have criticized Stier’s recommendations as attacks on federal employees, undercutting decades of progress. But Stier said unions have a lot to gain by embracing reform.

“It’s too easy to say we’ve got to keep the status quo,” he said, adding that the current “dysfunction” in government creates more impetus for agencies to turn to contractors.