A peek at paybanding

The Bush administration is planning to introduce legislation that would allow federal agencies to develop new pay systems, tailored to their own needs. Under the legislation, thousands of federal workers would no longer be subject to the General Schedule, the government's 50-year-old standard pay and job classification system. The Sept. 6 Pay and Benefits Watch column ("The one-size-fits-all system") provided an overview of the General Schedule, which Office of Personnel Management Director Kay Coles James and other critics say is too heavily tied to longevity and too weakly tied to performance. "There's an awful lot of rigidity in a system that makes a manager give exactly the same sized pay increase to the employee who's doing a really terrific job and the employee who's just sort of coasting," James said in August. A Pay and Benefits Watch reader pointed out that the General Schedule does have pay-for-performance elements. Managers can award special raises called quality step increases to outstanding employees and can withhold longevity-based pay increases from weak employees. But over the past 20 years, a growing number of federal offices have left the General Schedule and created their own pay systems, typically labeled as paybanding projects. Under paybanding, the 15 grades of the General Schedule are usually merged into four or five salary ranges. Within those ranges, managers typically have more freedom to set salaries than they do under the General Schedule, which limits managers to 10 salary options in each grade. In other words, paybanding eliminates some of the rigidity and predictability of the General Schedule. Scientific and technical outfits have been the primary testing grounds for paybanding. Navy, Army and Air Force laboratories and the National Institute of Standards and Technology have paybanding systems for their scientists and engineers. More recently, paybanding experiments have been launched for Defense Department acquisition workers, a variety of Commerce Department employees, Internal Revenue Service managers and many Federal Aviation Administration employees. In the federal paybanding experiments, managers get flexibility to set salaries. They also get the responsibility to implement new performance appraisal systems aimed at tying pay more closely to performance. At the Air Force Research Laboratory, pay is tied to an employee's contribution to the organization. At the end of each year, employees write descriptions of how their accomplishments contributed to the organization's mission. Managers then give employees a contribution score, which determines whether they will get a raise--and how much the raise will be. Almost every employee gets a basic across-the-board increase, but not every employee gets a contribution-related raise. Lab managers say poorly performing employees either get the message and improve or leave the lab. The structure of paybanding and performance appraisal systems varies from agency to agency. The Internal Revenue Service, for example, still includes steps in its payband for managers. The Air Force Research Laboratory has four paybands. At the FAA, there are 12 paybands. More to Come In a recent article, Paul Light of the Brookings Institution said that "past OMBs and OPMs have not been really interested in studying the effects" of experiments in the paybanding projects. OPM officials disagree, saying that scores of studies by OPM and outside auditors have evaluated the various aspects of the government's paybanding projects. Many of those studies are available on the Web (see the "Related Links" section in the right-hand column of this page). What are your thoughts and questions about paybanding systems? Write to bfriel@govexec.com. We'll explore your comments and concerns in upcoming columns. Firefighter Entry Age The Forest Service will now hire permanent full-time firefighters up to the age of 37. Before, because of retirement rules, the Forest Service would only hire people who were 35 or younger. But on Aug. 20, President Bush signed the Federal Firefighters Retirement Age Fairness Act, which raised the mandatory retirement age for firefighters with 20 years of service from 55 to 57. Attention Managers of Reservists If your employees get called up to active duty in the reserves, be ready to support them. That's the word from OPM Director Kay Coles James, who issued a memorandum to agency leaders on Sept. 14 reminding them of their responsibility to support reservists under the 1994 Uniformed Services Employment and Reemployment Rights Act. To review reservists' rights, see James' memo.