Report calls for broad overhaul of federal personnel, pay systems

Tuesday - 4/1/2014, 6:07pm EDT

The personnel system under which millions of federal employees are hired, managed and paid is a "relic of a bygone era" and in desperate need of an update, according to a new report calling for a large-scale overhaul of the federal civil- service system.

The new report from the Partnership for Public Service and Booz Allen Hamilton calls for essentially throwing out the 65-year-old General Schedule system, comprised of 15 separate grade levels, and replacing it with five broad work levels "that more closely align with the knowledge work that most federal employees currently perform."

When Congress devised the GS system in 1949, more than 75 percent of federal workforce held clerical positions in mostly entry-level positions — grades GS-7 and below.

Now just under a quarter of federal employees fall into those lower grade levels, while the vast majority of federal workers are employed in professional and administrative occupations.

The GS system "reflects the needs and characteristics of the last century's workforce — not those required for today's complex, interagency challenges," a foreword to the report stated. "The work of government has changed. The way we work and the skills needed have changed. And the world has changed. Our civil service system has not kept pace."

Report: GS system 'archaic'

The GS system for classifying jobs is "archaic," the report argued, making it virtually impossible to benchmark federal salaries to either a particular occupation or the broader labor market.

The report recommends compressing the GS-5 through GS-15 levels into into five broad classification levels: entry/developmental, two intermediate levels for middle-career employees (called Full Performance I and II), expert/manager and senior executive/senior professional.

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The system would decouple technical expertise from the art of management but would maintain both their positions in the overall hierarchy.

"This simplified five-level system would be far more fluid than today's etched-in- statute General Schedule, a fluidity that is consistent with today's workplace," the report stated.

The proposed framework would also "shift the focus of job classification away from semantic debates over grade level to meaningful distinctions regarding the labor market and performance," the report stated.

Pay for performance makes a comeback?

The new personnel framework envisioned by the report would also revamp the way federal pay is calculated.

The report calls for the White House and Congress to set a total annual compensation budget each year, assigning salary ranges for specific occupations based on the labor market and geographic location. This proposed reform would do away with the 1990 Federal Employees Pay Comparability Act, which has never been fully implemented, and instead compare and set pay ranges for federal employees on an occupation-by-occupation basis.

The report also delves into the politically treacherous waters of pay for performance.

Federal managers have grown increasingly reluctant to make performance distinctions between employees, according to the 2013 Employee Viewpoint Survey. About 70 percent of respondents to that survey said they didn't believe promotions in their work unit are based on merit, while just 26 percent of respondents said steps were taken in their work unit to deal with poor performers.

Do managers just 'check the box' when it comes to performance ratings?

Supervisors fear litigation or management headaches when they try to hold poor performers accountable and lack the tools and flexibility to reward high performers, the report contended.

"The net result is a ratings distribution where large numbers of employees are rated above average because it's the most expedient way to check the box," the authors of the report wrote.

The proposed reforms include eliminating tenure-based pay increases for managers and employees, entirely, in favor of a range of pay raises within a particular band based on performance. Maximum raises would be capped at the market rate for employees whose performance meets expectations and above the market rate if their performance exceeds expectations. Employees and managers whose performance is found unsatisfactory would not receive pay increases.

To maintain accountability and transparency in the system, the report calls for the creation of performance-review boards — similar to those already in existence for members of the Senior Executive Service — to analyze patterns in ratings by occupation and grade level to make sure ratings aren't running afoul of merit principles or nondiscrimination mandates.

The performance-rating process would be "completely firewalled" from the process for setting performance pay, according to the report.

Among the other recommendations proposed are expanding the use of hiring flexibilities that are currently only granted to a handful of "excepted agencies," revamping the structure of the Senior Executive Service and streamlining the process by which employees can allege workplace discrimination or unfair labor practices.