Smooth Operator

IRS' human capital officer is on a diplomatic mission to break in the agency's new pay system.

As the Defense and Homeland Security departments ramp up new personnel systems-a source of sometimes bitter debate between department leaders and employees-pay for performance is already on the job at the Internal Revenue Service.

Beverly Ortega Babers, the IRS chief human capital officer, has the unenviable job of making sure it works smoothly. "This is a big push for us this year," she says.

Congress granted the IRS authority to revamp its pay structure in 1998. Already, 2,000 top executives are under the new system; later this year, it will cover all the agency's managers: 10,000 people.

Babers hasn't escaped the scrutiny of the National Treasury Employees Union, which represents IRS workers. Although the new system has yet to include rank-and-file workers, the 1998 IRS Restructuring and Reform Act gives the agency that authority. "We are concerned, of course, that IRS may want to expand this program beyond the management ranks," says NTEU President Colleen M. Kelley.

The union filed a Freedom of Information Act request with the agency and unearthed a 2002 survey of managers done by the Hay Group, a Philadelphia-based consulting firm. A sizable minority of responders-35 percent-said they were very dissatisfied or dissatisfied, while only 12 percent thought the new system had improved the agency's performance. "When and if they decide to use this as a model for bargaining unit employees, we will be focused on what we've learned" from the surveys, Kelley says.

But Babers is confident that the IRS will be able to convince wary union leaders. "We're always looking for win-wins with the unions," she says.

The pay-for-performance system, designed by Ronald P. Sanders, now associate director for strategic human resources policy at the Office of Personnel Management, is one of the toughest in government. Performance ratings are tied to points, and graders are limited in the number of points they can award. The idea is to prevent managers from ranking all employees high on the scale and spreading raises evenly among them.

Babers, whose career in government started at the Justice Department in 1991, is a tax lawyer by trade.

At Justice, she represented the government in tax disputes and bankruptcy cases and served as chief of staff to then-Assistant Attorney General Loretta C. Argrett, her first foray into human resources work. Babers left in 1999, joined the Senior Executive Service, and became director of technical services at the IRS. There, she oversaw government policy on tax shelter cases.

Her management skills caught the eye of IRS Commissioner Mark W. Everson, who asked her to take over the newly created chief human capital officer position. Everson said he appreciated Babers' breadth of experience.

Babers has spent much of her time building relationships on the services side of IRS, such as human resources, information technology and financial management-the bureaus that provide assistance to the agency's business units. All those bureaus now report to one deputy commissioner, the hope being that close ties among them will boost the quality of services to the business units, which collect and review tax returns.

Babers has held regular "brainstorming sessions" with IRS executives who head the business units. She tells them, "We want to make sure our strategic plan meets your needs." They, in turn, "are willing to invest in what we bring to the table," she says. That's helped IRS management coordinate as the agency has planned the expansion of its pay-for-performance and competitive sourcing initiatives. Babers isn't in charge of IRS efforts to require job competitions between government employees and contractors, but she does have to manage the reductions in force that typically result from them.

That's not an easy job, but Babers has done it with a firm hand. Before she arrived, IRS "had a lot of different people engaging the union and making agreements with the union on the same things throughout the country, and we were inconsistent in what we were agreeing to," she says. "We've been able to address that and bring some consistency." She'll need that management unanimity if performance pay is to spread.