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                         May 10, 2002

Administration's pay study short on solutions

WASHINGTON (govexec.com) -- A Bush administration study detailing serious flaws in the General Schedule compensation system that covers 1.2 million federal employees sets the stage for what may be the most sweeping reform of pay policy in 50 years.

But much initial reaction to the study, issued April 29 by the Office of Personnel Management, has been critical and indicates a tough road ahead.

Labor leaders are outraged the report does not address what they see as a widening gap between salaries of federal employees and their private-sector counterparts. Public administration experts who spent more than two years discussing the pay system’s failings with OPM are disappointed the report recommends no solutions. Lawmakers who champion federal work-force issues are noticeably quiet, except to offer general statements about the need for further debate.

Despite the mixed response, OPM seems pleased that the report is attracting attention and that no one is arguing the system is fine just the way it is.

"We felt that it was really, really important to get agreement that we have a problem, there’s an opportunity to fix it and we can create a better system," said Doris Hauser, OPM’s assistant director for performance and compensation systems design. "If there isn’t an agreement that there are serious issues to be dealt with, it’s an uphill battle."

Some people who participated in workshops and discussions with OPM officials during the development of the report say the agency should have recommended ways to fix the system instead of detailing the system’s failures and calling for further debate on solutions.

"I’m not sure that the next step should be more rounds of meetings with people. We’ve done that," said Rosslyn Kleeman, a public administration professor at George Washington University in Washington, D.C., who chairs the Coalition for Effective Change, a group of 32 federal managerial and professional associations devoted to civil service issues.

"Many of us are eager for a good proposal for action rather than review."

OPM chose not to recommend any solutions because it wanted to focus debate on the merits of a new pay system in general as opposed to a particular proposal, Hauser said.

Hauser also concedes any proposals for changing the pay system would not have been received well at the Office of Management and Budget, which has not addressed the issue of federal pay reform.

"The administration’s policy has yet to be formulated and decided. OPM couldn’t get out ahead of the leadership of the executive branch," Hauser said.

OMB did not respond to a request by Federal Times to comment.

Robert O’Neill, who counseled OMB on management issues early in the Bush administration, said OPM’s tactic of laying out the problem and inviting interested players to suggest solutions is a smart move.

If OPM officials had recommended a solution to the pay problem, "they would have been attacked on all corners," said O’Neill, president of the National Academy of Public Administration in Washington, D.C.

Sen. George Voinovich, R-Ohio, who has held numerous hearings on the government’s inability to recruit and retain workers, issued a statement to Federal Times saying the report "lays an excellent foundation" for discussion, but he and other lawmakers did not respond to queries seeking further comment.

The report, released April 29, contains few revelations. Most of the problems with the pay system documented in the report are well known: its failure to reward performance, its inability to respond to changing market conditions, its overriding focus on equal pay for people in similar job classifications regardless of varying job duties.

The novelty of the report is that it represents OPM’s first acknowledgment of the pay system’s failures and declares unequivocally that a new method of paying and rewarding employees is necessary.

"Changing the white-collar pay system is no longer a luxury, but a necessity," said the report, "A Fresh Start for Federal Pay: The Case for Modernization." It is posted on OPM’s Web site, www.opm.gov.

OPM Director Kay Coles James said agencies will not be able to recruit talent to replace retiring workers without a modern pay system.

"To attract the best and the brightest in this next generation into public service, we need a pay system that reflects the realities of the modern workplace," James said in a letter accompanying the report.

James is committed to winning adoption of a new pay system during her tenure, Hauser said.

"It’s not a matter of leaving it for someone else to do," Hauser said. "She wants to do it, and she wants to do it with all prudent speed."

The report is candid about some of the hurdles to creating a workable, lasting solution, particularly the need to manage and contain the cost of compensating employees.

"Unless the federal government develops a system that is affordable during difficult budget times, there is no hope for success," the report said.

Lack of funding is the reason the last major effort to fix the pay system failed, said Colleen Kelley, president of the National Treasury Employees Union.

Congress passed legislation in 1990 that would have raised employees’ salaries gradually until they were on par with earnings of private-sector employees in their area doing comparable work. But the legislation -- the Federal Employees Pay Comparability Act -- has never been implemented because neither the Clinton nor Bush administrations were willing to fund it, Kelley said.

A similar lack of political drive to raising employees’ salaries could doom OPM’s new effort to reform the system, she said.

"Fashioning a new system without a commitment to fund it will be a huge waste of time and effort," Kelley said.