The Quiet Crisis – Gov’s Woefully Inadequate Pay System

“Money, money, money” – that’s often the refrain you hear from federal civil servants, who feel they don’t get paid enough. Not nearly enough. Chris Dorobek calls the pay system, “woefully inadequate for the challenges of the 21st century.”

A new report from the Partnership for Public Service and Booz Allen Hamilton agrees. The report even goes as far as to say that pay issues are one of the single biggest impediments to creating the best government possible that we face today. 

The report, “Building the Enterprise; the New Civil Service Framework,” calls for overhauling the entire civil service system, including pay, performance management, hiring, job classification, accountability, and workforce justice.

Ron Sanders, Vice President and Fellow with Booz Allen Hamilton, is one of the report’s authors. Sanders also previously served as the intelligence community’s Associate Director of National Intelligence and the first Chief Human Capital Officer.  

Sanders told Chris Dorobek on the DorobekINSIDER program that the nature of government work and the skills needed for it has changed – but the civil service system has not kept up.

“If you think about how much the world has changed in 10 years, much less 50 or 60, the last time some parts of the federal civil service system were last revisited was 1949,” said Sanders.  “I wasn’t born then. We didn’t even have color TV.  Cars cost $1,500.

“If you go into a government building today, you can see old black and white pictures of rooms; literally huge rooms full of clerks at desks typing away. That work doesn’t exist anymore for the vast majority of federal government agencies.  It’s all on computer. It’s all about technology, and the world has gotten so much more complex.  Yet, we’re still labeling with definitions of work literally, established by statue in 1949, that bear no resemblance to what federal employees find themselves doing on the frontlines today.”

Can you keep politics out of civil service reform?

“The core principles that ground the American federal civil service system, I believe are sacrosanct.  I think they are the envy of the world, and I’ve been all over the world talking about civil service issues,” said Sanders. “In this report, we are not suggesting that those core principles merit veteran’s preference, nondiscrimination, political neutrality, collective bargaining, due process; we are not suggesting that those should be changed at all.  They are enduring.  But, the way they’re operationalized needs to be. You can take merit for example.  Merit, when the federal workforce consisted of tens of thousands of clerks, is one thing.  Merit when the federal government is competing against technology companies like Google and Microsoft for the best cybersecurity talent, and you do that competition on the web where you get 60,000 applications, that’s a different sort of merit.  Merit is still the goal, but they have to operationalize it differently.”

Recommendation Number One: Build a market-sensitive labor system by occupation

Hire graded, white collar knowledge workers.  That’s where the system is most out of touch with the rest of the world.  We do pretty good with blue collar. We do pretty good with clerical and technical employees. But this is where we are at risk of hemorrhaging talent,” said Sanders. 

Recommendation Number Two: Change the pay structure

Look, I don’t think we’re naïve or Pollyannaish here.  We actually believe that by going to a system that is more occupationally sensitive, the pay debate would get easier.  Because when you say the federal workforce should get a 1% raise, you are talking about everything from GS2’s to senior executives, and a hundred different occupations, all of which in the private labor market get paid different things,” said Sanders. “I see hypercompetitive workers, and salaries are increasing, but government salaries are lagging behind.”  

  • Key Insight: “There are job categories where frankly the government may be the labor market leader,” said Sanders. “There are almost two million federal employees, tens of thousands of jobs, across the entire country. If you try to classify them into one number, one size fits all, you can see why the pay debates occur.  Yet, we think it’s much more sensible to sa,y let’s look at IT workers, see what they’re being paid in the private market, compare that to what we’re paying in the federal.  If we don’t match up, let’s make a rational decision as to where we want to compete against private sector salaries.  Do the same thing for accounts, HR specialists, acquisition people; those benchmark occupations that are most commonly found in the private industry, or state and local government, we don’t want to exclude them, and do it occupation by occupation.  Then this becomes a much more data driven debate, as opposed to all of the emotion.”

“Just think about trying to describe the entire federal workforce, if the way it’s going to be paid next year with a single number,” said Sanders. “There are lots of think tanks that say federal employees get paid too much, and the irony is, they’re right and wrong, depending on the occupation.”

Recommendation Number Three: Stop beating up the public servant

“It’s a quiet crisis.  That’s the term that two colleagues termed this situation, the quiet crisis,” said Sanders.  “It’s not something that’s dramatic that’s going to make the headlines. We lose a trickle of talent, but that trickle adds up.  And, at some point, you risk mission failure.”

Recommendation Number Four: Re-think pay for performance

I know that the unions have compared our pay incentive program to systems that haven’t worked in the past. But look, you don’t implement incentives without learning lots of lessons.  You are faced with a choice; do you learn those lessons and act upon them, or do you retrench and retreat.  We think we ought to learn and act upon them.  

In the report, we say:

  • Any employee who is fully successful, who is meeting performance expectations, should be paid at market rate.  
  • Set the salary ranges by occupation; find out where that market point is, and that salary range, it could be the midpoint or the median.  
  • Anybody who meets performance expectations rises to that level as quickly as they would rise under the general schedule. All that requires is a performance rating.  
  • There’s no supervisory discretion in it.  

“To me that was one of the failures of National Security Personnel System –  we entrusted those tools to managers who were not yet prepared to use them.  They had too much discretion,” said Sanders. “So we would make those pay raises formulaic.  You should be at market if you meet expectations.  Now, obviously if you don’t, you’re not going to be paid at market rate, you should not.  I don’t know who could argue with that,” continued Sanders. “You’ve got to deforest and detach the performance rating from pay decisions. Rate employees the way they should be rated, pay raises by formula; if you get this rating, you get this amount.”

Recommendation Number Five: Get the public on board

“We think one of the biggest issues about paying civil servants is that the number that’s bandied about every year has no credibility with the American public.  Again, it is hard to acquire that credibility that’s a single number.  So if the American public says here’s how the federal government’s going to pay IT workers, and it’s based on a sophisticated salary survey of what IT workers make generally, and they say alright, but the principle is, if you’re meeting expectations in the government, you’re going to be paid at that market rate.  But if you want to be paid above, you should exceed your performance expectations, and here’s he formula,” said Sanders.  We think that just leaches so much of the emotion out of the debate, it’s more data driven, both at the aggregate level and at the individual level, supervisor and employee level, that we can get there.  We can’t keep going down the path we’re going where you’re talking about 0%, 1%, etc., for the foreseeable future.”

Recommendation Number Six: Rework the Senior Executive Service

“As a practical matter, almost every agency that I know of has gone to a three-tiered approach to managing SES work and SES pay.” 

  • Frontline SESers
  • SESers who supervise other SESers
  • Then finally direct reports to agency heads.  

“You’ve got to have those 3 levels to make some pay distinctions and responsibility distinctions,” said Sanders.  So most agencies have gone to 3.  Set that aside.  The most important part of the report here focuses on that 4th tier, because there are 1500 jobs, exec—senior executive jobs in government that have C suite and/or enterprise wide, that is government wide, inner agency or inner governmental responsibilities that are beyond just an individual agency.  

  • Key Insight: “We would develop the 4th tier executives differently, much the way the military develops general officers, to make sure that they can think jointly.  The civilian equivalent of joint is enterprise.  Think of the government as an enterprise.  If you grow up in a single agency, it’s hard to acquire an enterprise perspective, much less lead in that capacity.  So, we would develop individuals who aspire to that 4th tier differently.  Make them require an interagency assignment.  For example, either coming up as a SESer, or once they’re in the, the Senior Executive Service.  But we would limit the executives, career executives who would be eligible for that 4th tier.  Again, C suite, CFO, CCO, CIO, the, you can identify the jobs, you know, it’s one of those where you’ll know it when you see it.  Those jobs that have enterprise-wide responsibilities, make sure that the executives that occupy them are prepared for that, and pay them accordingly.  We pay them up to Executive Level One, where today the cap is Executive Level Two.

The really big challenges that government faces, that our nation faces, are no longer the purview in a single agency, or even level of government,” said Sanders.  “You can take examples right out of the newspaper, like the Affordable Care Act.  That is a classic case of interagency coordination and collaboration.  And we need career executives who can lead those kinds of cost cutting efforts.  Look at the President’s and its new set of cross-agency priority goals. Those are the kinds of critical enterprise-wide efforts that require a special kind a leadership.  It’s not the kind of leadership you acquire, with all due respect, because look, I was one for 21 years, with all due respect to my colleagues in the SES, if you grow up in a single agency, and even in a single function, it is hard to then step across the line and lead something like one a those cross-agency priority goals.  So develop them differently, develop a cadre of executives, a subset of the larger SES to be able to do that, because that’s what we’re facing.  That’s where the really big challenges are.  We need career executives who can do that, and they ought to be compensated as a consequence.”

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