Letters

Paybanding Pros and Cons

Karen Rutzick's article "Paybanding Pitfalls" (January) is well done. I must, however, correct one thing. Randy Riley and Eva Bien were the architects of the China Lake paybanding experiment conducted under the 1978 Civil Service Reform Act experimental provisions. Riley worked for me as personnel generalist when I was division head at China Lake. He and I spent many hours discussing how to redesign the personnel system to give the line manager more authority. By the time China Lake designed its experiment, I was a department head at the Naval Surface Weapons Center, Dahlgren division, in Virginia.

I continued to support the concept after they proposed their experiment and Constance Horner, director of the Office of Personnel Management, and I as her deputy prompted the Reagan administration to have Congress introduce the Civil Service Simplification Act, which was fundamentally the paybanding system. The bill never passed due to union intervention with former Congresswoman Patricia Schroeder, D-Colo. The bill provided for voluntary adoption of the system by agencies. Had it passed, the government would be further ahead today in instituting the system.

Paybanding, based on the evaluation of independent evaluators, has proved to be a more effective personnel system at both China Lake, Calif., and San Diego, where it was first implemented by the Navy. It quickly identifies the managers who can effectively manage their workforce and those who can't. What it requires is significant investment in helping first-line managers develop skills, particularly in performance evaluation.

For too long, federal managers have used the personnel system as their excuse for poor management. Paybanding allows them to use their management skills, but also removes their crutch. Holding managers accountable in using the added discretion that paybanding provides will be a challenge, but not an impossible one. The improved effectiveness and efficiency in federal management will be worth it.

I was one of the authors of three National Academy of Public Administration studies on paybanding. I've also helped a number of public and private employers move to a banded salary system.

Karen Rutzick is correct; some organizations have run into problems. That is especially true for organizations that adopted the idea several years ago. But in each case, a little digging into the design and implementation strategy suggests where mistakes were made. At the Office of Federal Housing Enterprise Oversight, for example, the simple idea of allowing an employee to earn a promotional increase within a salary band would have alleviated the resistance.

As with many new ideas, banding has evolved over time and is still being refined. It would be possible to find any number of variations across the private sector.

In the private sector, banding is an accepted alternative and is widely used. The first success story was actually the China Lake experiment, which is now in its third decade. The National Institute of Standards and Technology has had a banded system for years. Charlotte, N.C., considered one of the best-managed major cities, has had a banded pay system since the early 1990s. More recently, the Government Accountability Office moved to a banded salary model that is widely understood to be a success. With adequate planning and sound management, the idea can work well in any organization.

The General Schedule system is broken. No one is defending it. The problems have been recognized for decades. I was the managing consultant for the study that led to pay reform in 1990, so I am intimately familiar with the problems. From a practical perspective, the GS system is a sham because employees move from grade to grade with virtually no regard for their performance or demonstrated competence.

Salary bands are a simple concept. They are a framework for managing salaries. The bands logically should be aligned with planned career ladders and with market pay levels. It is true that salary increases will no longer be guaranteed-but then that is rarely true in any other sector. Yes, federal managers will have to develop the skills to manage the performance as well as the salaries of their people. That will require time and an investment in developing the needed skills. But that would be true in any pay-for-performance system. That is unrelated to the idea of salary bands.

As a Navy civilian employee and a Navy Reserve captain at the Pentagon, I have concerns regarding paybanding. Many civilians are working for military personnel barely familiar with the old system and certainly unfamiliar with paybanding. When it takes effect, some of the similarity in military pay and civilian pay will be lost. Military pay has a rank and time-in-rank aspect similar to the current grade and step aspect for civilians. With paybanding, grades and steps for civilians go away, and with them the guidance many military personnel managers used in compensating their people; think quality step increases. My military managers have all been smart people, but the proposed payband training offered to our military leaders is woefully short.

James Colvard's statement that paying slightly higher salaries for higher-performing workers evens out in the end is seriously flawed. Years ago, corporations discovered that higher pay does not equal better work, job satisfaction does. If the goal of paybanding is competitiveness in the open market to attract better-qualified people to government service, then all they needed to do was hire at a higher pay grade/step, not change the entire pay system.

Correction

"Getting Serious," (December 2005) incorrectly stated that Charlie Allen warned of Saddam Hussein's invasion of Kuwait in 1991. Iraq invaded Kuwait in 1990.