Fear and Hope

Federal managers are deeply divided over the merits of pending civil service reforms.

But Smith and Priolo don't agree about the groundbreaking changes afoot at their employer, the Defense Department. To Smith, Defense's plan to throw out the old civil service structure in favor of a new National Security Personnel System couldn't be more necessary. It could create "a true management tool" that will help managers recruit and retain top employees, he says. But to Priolo, the plan threatens a return of the "bad old days" of cronyism and union-management infighting, while generating untold headaches for burdened federal managers.

Their disagreement illustrates in microcosm the debate that's sweeping government's management ranks. After enduring years of frustration trying to hire, supervise and promote top workers, as well as fire bad ones, many managers feel as Smith does, that now is the time to endorse radical change and find an equilibrium between government efficiency and merit system protections. But Priolo has probably just as many supporters who argue that they've seen enough reforms go awry to be wary about what such radical changes could do to what everyone agrees is the world's most revered civil service system.

Whether reform is a good idea or not, it is a virtual certainty. Last year, Congress passed legislation that will allow the Defense Department to rewrite rules governing how civilian employees are hired, paid, promoted and disciplined. Employee and union rights are likely to be circumscribed and management rights expanded, though Defense has put forth few details about its plans to date. More than 600,000 workers will be affected.

At the same time, the Homeland Security Department won similar authority when it was created in 2002. Earlier this year, the agency proposed regulations to implement sweeping changes affecting 110,000 employees. The plan would implement a pay-for-performance system to replace the General Schedule, give managers broad discretion over promotions and make it easier to fire workers.

Bush administration officials have pushed the reforms, arguing federal managers need more authority to do their jobs well. They say the current civil service system was built for an era when government workers were mostly clerks. Today's federal workforce, by contrast, consists of highly skilled technicians much sought after in the private sector.

The Office of Personnel Management, the guarantor of the merit system, has heartily endorsed the reforms at Homeland Security and Defense. "I believe the changes happening in those departments are good and they are changes that will benefit the American workforce," says OPM director Kay Coles James. "Having those kinds of flexibilities so that you can reward people for the work that they do, having the flexibility to hire people that you need to complete your strategic mission, having the ability to speed up the appeals process so that people get due process in a timely way, those are excellent changes. They are changes that of course we would like to see governmentwide."

Hands Tied

It's a rare human resources officer who understands the tasks of a pneudraulic system mechanic, or the intricacies of the F404 Super Hornet engine. The job of hiring mechanics should fall to front-line managers who understand the projects and the technical skills necessary, Smith says. But that's not always the way it works under the current civil service system.

On one occasion, because of a sudden surge in workload, Smith needed highly qualified mechanics who could step in and help out on the F404. He had three workers in mind who could do the job. But when the human resources office forwarded him a list of potential hires, none of his candidates was on the list. He ended up with three less-experienced mechanics who had been placed on a fast track for new government positions after losing their federal jobs. It took Smith eight months to get the new staffers up to speed.

Smith believes a pay banding system, which would allow managers to offer new workers a range of salaries, would enable him to compete against private companies. And he endorses pay-for-performance to replace the current system of annual across-the-board raises as another means of enticing go-getters to the government, keeping his best workers in the fold and weeding out poor performers. "This is an opportunity for me to give performance awards or better grades for the star employees," he says. "If you don't work, then I don't need you."

Denying raises to poor performers may alleviate the need to access the government's disciplinary system, managers hope. They say it is too hard to discipline employees who refuse to, or are incapable of, doing their jobs because of burdensome documentation requirements.

"We spent hundreds of hours-sometimes 1,000 or more-doing the necessary documentation and going to court to eliminate an employee," says John Pochodowicz, a former manager at the Space and Naval Systems Command in San Diego.

"I used to have a case where the documentation was a foot-and-a-half high, just for one performance case," adds Carl Votteler, a 30-year veteran of the General Services Administration and an FMA member. "You have to counsel the person, you have to have a clear performance plan, the standards have to be in their job description. You have to put them on notice, and then you have to give them another chance. And then still a lot of it is subjective."

To top it off, managers often find themselves the subject of retaliatory grievances and discrimination complaints. To avoid such grievances, senior managers often veto disciplinary decisions recommended by first-line supervisors .

As a result, few federal workers are fired or even disciplined for poor performance. Managers prefer to wait for an egregious act, and then fire the employee under the more manager-friendly rules governing misconduct cases. In 2003, the Merit Systems Protection Board-the federal agency charged with hearing employee appeals of agency disciplinary decisions-decided only 126 cases involving poor performance. During the same year, it heard 3,136 cases dealing with allegations of misconduct.

Many managers, including Smith, are pleased with Homeland Security's proposal because managers would no longer have to undertake the lengthy process of documentation now required to discipline a poor performer, and would face a lower standard of proof in the event of an appeal to the MSPB. The board would continue to hear appeals, but would not have the authority to reduce agency penalties, as it does now.

Perils of Pay Banding

As a result, many managers deplore the condition of their ranks. And few potential leaders are waiting in the wings. The average manager is now about 50. In 2003, nearly 7,500 supervisors across government retired, 40 percent more than OPM had predicted. And the retirement rate is expected to rise over the next several years. A recent survey by the National Academy of Public Administration found that 45 percent of federal managers plan to retire early or immediately upon reaching eligibility. Another 44 percent said they would gladly give up their supervisory duties if they could continue to earn their current salary.

Priolo worries that Defense's proposed personnel changes, rather than encouraging managers to stay and enticing others to move up the ranks, would instead destroy the teamwork that he believes is essential to his shipyard's operations.

Pay banding, he says, is "going to rip up our teams unless we are very, very shrewd as to how we reward people. We depend on teams of mixed trade [employees] working under mixed trade supervisors. Our unions will support teams, but when you reward part of your team and not the rest, I think you are asking for it."

It's not that civil service reform might not be beneficial, he says, but that the Defense Department has taken the wrong approach to implementing it. "They're saying this is it, my way or the highway," Priolo says. He was pleased April 1 when he received a letter from Defense Undersecretary for Personnel and Readiness David Chu and Navy Secretary Gordon England indicating their intention to reach out to employees. "The proof is in the pudding," Priolo says. "But at least saying the right things is a major, significant improvement."

For reforms to work, Priolo contends, Defense will need to win the support of unions and ensure that employees continue to have the right to appeal grievances to an outside arbiter. As a manager, Priolo says he relies on the unions. They've worked together regularly on local issues. And like many managers, he says his job is much easier when unions and management are on the same page.

"Sometimes we agree to disagree," Priolo says of the unions. "But to put them out of existence . . . I think it's bad."

Substantial investments in training for managers are also critical to a successful transition, Priolo says. Based on past experience, he doubts the money will be there. "As a manager, I don't know how the heck I can rate people without the tools and training so that the ones who need to get rewarded are [rewarded] and the ones that don't, don't, without getting inundated with unfair labor practice complaints and grievances," he says.

Risks of Cronyism

Priolo worries that some managers will give bad marks or refuse to rank employees whom they personally dislike. But Priolo is willing to sacrifice management flexibility to ensure fairness. During his 20 years as a manager, he's had to fire four employees. "It was never fun," he says. "Every time was difficult, frustrating and took forever. . . . But I don't know if we want to go to the other extreme and just willy-nilly be allowed to dump people."

Guaranteeing employees the right to appeal disciplinary actions and firings to the Merit Systems Protection Board also protects managers from lawsuits and grievances, Priolo says, because it gives an employee a fair shot at reversing a disciplinary action without turning on the manager. Many managers share Priolo's skepticism about overhauling the civil service system, arguing that it's too much to expect that government will provide the training and the funding necessary to implement an entirely new civil service system.

Dan Wood, a longtime supervisor at the Federal Aviation Administration in Texas, remembers the dilemma he faced when top-level management limited the number of high grades he could give to employees. During one stretch, he had four employees, all of whom were "truly outstanding," he says. "They always showed up early, worked until the job was done despite the clock, needed no supervision and gave the government more than its money's worth." But when it came time to rate them, Wood was told he could only give top marks to two of the four to cut costs.

As federal managers readily point out, pay-for-performance is a tricky concept even in the private sector. Few organizations have mastered it. And most agree that a pay-for-performance system will be more expensive than the General Schedule, rather than less. "It's doable, but it's really hard," says Priolo. "And even if they have a good system, they may not provide the money to reward people. If that pie is the same size, I am in trouble."