Compensation, hiring policies in need of overhaul

Wednesday - 8/8/2012, 9:53pm EDT

Robert Shea, Principal, Grant Thornton

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This story was updated at 8:30 a.m. Aug. 9 to include comments from Grant Thornton's Robert Shea.

By Amanda Iacone
Federal News Radio

A quickly retiring workforce and outdated hiring policies are among the biggest challenges facing federal agencies today, according to a new survey of federal chief human capital officers.

The Partnership for Public Service and Grant Thornton interviewed 55 chief human capital officers and other human resources leaders about the state of managing the federal workforce in light of the tough economy and shrinking budgets.

Based on the survey's findings, the report recommends that Congress enact a new wage scale and job classification system that allows managers to reward employees with a pay raise for good work. The report also said outdated hiring laws should be replaced so the government can compete with the private sector for talented employees in science and technology areas. It also encouraged the federal government to blend human resources information technology systems to better share and collect data among agencies and to save the government money.

Pay-for-performance

As in past surveys, human resource managers said that the General Schedule, a 15- level classification system dating from the 1940s, should be replaced with a smaller number of broader job categories with pay ranges for each, known as pay- bands.

"In a climate where budgets are being reduced, employees are being bashed and people are retiring, you really do want to pinpoint your highest performers and do what you can to retain them," said Robert Shea, principal at Grant Thornton, in an interview with The Federal Drive with Tom Temin and Emily Kopp.

Unfortunately, the GS system does not give CHCOs enough flexibility to reward workers based on performance, Shea said.

CHCOs also said the GS system is not based on market wages and doesn't match private sector practices. Specifically, agencies often can't offer competitive salaries in specialized positions in science, technology, engineering, math and medicine (STEMM), the survey found.

Hiring to fill positions in accounting, finance and procurement could similarly become a struggle because of competition from the private sector, according to the report.

Current pay caps included in the General Schedule also limit how much senior executives can earn. These top employees often earn close to or less than the people they supervise. Human capital officers said the pay caps discourage some workers from seeking management-level positions.

Topping the list of CHCO concerns is their limited options to remove under- performing workers. They said they felt employee appeals hinder their ability to fire under-performing workers. Others interviewed said that a compensation system that gives more weight to performance would offer a positive incentive for workers to improve. An employee could earn more for strong work than an under-performing co-worker in the same position.

Succession planning

Seventy-two percent of those surveyed said they expect workforce reductions in the coming months and years. But because of budget cuts, agencies are unlikely to out-source some of those jobs, an alternative used during downsizing in the 1990s.

At the same time, the federal government is losing workers as baby-boomers retire from public service. The human resources managers said it is more difficult to recruit new employees to join the federal government in part because of out-of- date compensation policies but also due to a lack of public support for federal employees.

"Retirements are up approximately 25 percent from a year ago, indicating that the long-anticipated retirement wave has hit. Turnover may remain high for a while due to the combined impact of an aging workforce, a two-year pay freeze with threats of an extension, rising anti-government sentiment and increasing workloads," the report said.

The survey found that most agencies do not have any plans in place to replace departing supervisors or top managers. To stem the loss of institutional knowledge and leadership, Congress passed a partial retirement bill that would allow workers to begin collecting retirement benefits but remain on the job part-time. Most agencies do not have mentoring or offer leadership training for prospective managers.

Most striking in this survey compared to the last was a spike in the CHCOs who said they were not confident in the competencies of managers. Agencies will have to start training future managers now to gain those competencies, Shea said.

Diversity

CHCOs also said that trying to give preference to hiring military veterans clashes with other policies and laws that aim for a diverse workforce. Most veterans are white men and only 10 percent of all veterans are women. And for some entry level jobs, veterans may force out all other qualified applicants, the survey found.