Panel urges new administration to go slow on pay reform

The next president should tread carefully when it comes to revamping the federal government's pay scale, said a panel of senior managers, union officials and industry representatives last week during an event sponsored by the Partnership for Public Service.

"I think the General Schedule system is an anachronism," said Scott Cameron, former chief human capital officer at the Interior Department and current director of enterprise management solutions in the global public sector practice at the international accounting and tax firm Grant Thornton. But Cameron recommended a gradual migration away from the GS system to avoid "knock-down drag out" battles with Capitol Hill and the unions: "I would not advise the new administration to launch a frontal assault on it, because I don't think it's worth the expenditure of political capital."

Cameron joined 17 workforce management professionals to discuss ideas and develop recommendations for the next commander-in-chief and Congress on issues including the General Schedule pay scale, contracting, performance-based pay and training for federal managers.

Reforming the government's pay system dominated most of the March 12 discussion. Critics argued that the General Schedule rewards longevity rather than merit, and hinders the recruitment of highly skilled employees, while supporters said it promotes pay equality. Chris Mihm, managing director of strategic issues at the Government Accountability Office and event moderator, asked panelists if the GS system was dead. "I don't even think it's sick," said Jacque Simon, public policy director of the American Federation of Government Employees. "It has done a marvelous job at eliminating pay discrimination based on race, gender and age."

Other pay-for-performance critics cited benefits such as recruitment and retention bonuses and student loan repayment as flexibilities allowed under the federal pay scale that provide important incentives to retain high-caliber employees.

"Part of the concern in my view about moving to another system, is about trust" between unions and government managers applying pay-for-performance metrics, said Matt Crouch, president of the Presidential Management Alumni Group, an organization that champions private sector-style merit pay. While acknowledging that unfair pay decisions do occur in the private sector, Crouch added that industry has "an overall metric of profitability." In other words, he said, "If I don't like you, but I need you to make my profit, I'm going to think twice before I short your pay. We don't have that measure in the government." Some agencies, including the Defense Department, have opted out of the GS system in favor of a pay-for-performance scale.

Lynn Jennings, vice president for strategic initiatives at the Council for Excellence in Government, said great leadership is the key to a strong workforce rather than any particular pay structure. "You can have the General Schedule system, pay-for-performance, a system in between, but unless you have good leaders implementing [it] and your employees think it's fair, you'll be in the same position," she said.

In addition to pay reform, panelists also discussed the costs and benefits of government contracting. "The value of contractors, of course, is that you can expand very rapidly and then when you're done with them you can contract very rapidly," said Ron Sanders, chief human capital officer at the National Intelligence Directorate. "Use them as a buffer between you and the rest of the outside world to protect that core [workforce]."

Crouch complained about the current costs associated with government contractors. Recent union victories in Congress, such as preventing health benefits from being counted against federal employees in competitions, and the right of employees to recompete contracts before they are opened to public competition, have leveled the playing field. "We've driven up the transaction cost so incredibly high," he said. "That what is required for a company to successfully compete for a government contract, deliver the results that the government wants, oh, and not charge billions of dollars to do it, has become harder and harder."

Cameron agreed. "It's wonderful to have competition. But competition can end up being more expensive," he said.