Senior executives wary of Bush pay proposal

Members of the Senior Executives Association remain skeptical about a Bush administration proposal to replace the six-step executive salary scale with a performance pay salary band.

Earlier this month, members of Congress introduced the Senior Executive Service Reform Act (S. 768 and H.R. 1602), that would increase the cap on federal executive pay and end pay compression in the Senior Executive Service. Administration officials pitched the proposal as part of a plan to reform the civil service pay system in its fiscal 2004 budget proposal.

Executive salaries are currently set at predetermined rates on a six-step salary schedule. Under federal law, salaries for the SES are capped at the third-highest pay level on the Executive Schedule, which sets salaries for members of Congress and executive branch political appointees. This year, the third-highest level is $142,500, and according to Office of Personnel Management Director Kay Coles James, about 60 percent of the SES is paid at the current cap. The Senior Executives Association, the professional association for the 7,000 members of the SES, has lobbied Congress and the administration for several years to raise the cap.

"There are some civil service issues that sharply divide people," said Rep. Jo Ann Davis, R-Va., who introduced the House version of the SES bill. "Pay compression is certainly not one of them. It is remarkable to think that more than 60 percent of the senior executives earn the same salary, simply because Congress has not been willing to lift the pay cap." Davis is chairwoman of the House Government Reform Subcommittee on Civil Service and Agency Organization.

The pending legislation would abolish the six steps and change the pay range to a salary band that starts at $102,000 and is capped at $154,700. Political appointees could set executives' salaries at any amount within that range.

An informal poll of SEA members revealed that some senior executives were slow to embrace the proposal.

"I cannot understand the rationale for pegging the bottom of the SES scale to a little more than the beginning of the GS-15 pay range, except to provide an avenue to reduce SES members' [salaries] in order to force them to resign by paying them less than their GS-15 subordinates," one executive said. "Most SES members entered the service from at least the middle of the GS-15 pay range, and probably higher, so the new floor would constitute a substantial pay cut for any SES member reduced to that level."

Other executives questioned the increased control that political supervisors would have over SES pay under the proposal.

"Allowing such flexibility over the pay range allows political [appointees] a much greater leverage over SESers by allowing pay increases to be potentially more greatly influenced by political considerations," one executive said. Another executive said that "a politicization of the SES appraisal process, or its distortion, will do far more harm than the increased compensation will do good."

During an April 8 congressional hearing, SEA President Carol Bonosaro testified that efforts to relieve pay compression were welcome, but she and her membership questioned the administration's stance that the current compensation system does not adequately tie executive pay to executive performance.

"The current performance management system gives agencies the flexibility and discretion they need to ensure that they can use performance information to adjust pay and to reward-or penalize-executives, as appropriate," Bonosaro said. "An executive's pay rank can be increased to reward his or her performance, and that performance can also be recognized by payment of an annual bonus, as well as by awarding a Presidential Rank of Distinguished or Meritorious Executive."

According to Bonosaro, agencies have carte blanche to remove nonperforming executives from the SES.

"An executive who receives an unsatisfactory annual summary rating must be reassigned or transferred within the SES but also may be removed," she explained to lawmakers. "An agency must remove from the SES an executive who receives two unsatisfactory annual ratings in any five-year period."

In short, Bonosaro said, the SES is already a model for pay-for-performance.

"To the degree that these tools have not been used to fully realize the 'pay-for-performance' nature of the SES, then only one conclusion is possible-political appointees and other superiors who supervise senior executives do not have the disposition, or are unwilling to invest the time and energy, to use the tools at their disposal," Bonosaro concluded. "And no amount of process or structure changes will magically cause them to do so."

Though the majority of executive comments raised questions about the Bush administration proposal, some executives did agree with it.

"I believe this is the best shot we have at lifting the cap and the SEA should endorse the pay proposal," one executive said. "More significantly, the image and reputation of the federal workforce will not be improved until pay is more closely tied to performance and pay banding is an integral part of that."

A retirement eligible executive said that he supported the administration's proposal and hoped to see an end to pay compression: "Resolution of the pay compression problem and the recognition [that] we need significant extra financial help with locality pay in high-cost locations like the San Francisco area where I work, are the primary drivers in keeping me serving our government."

Raising the cap on SES pay would cost $20 million in 2004, according to Office of Management and Budget officials, who must work with OPM to certify the executive rating systems agencies will use to determine raises and bonuses. In her testimony, Bonosaro offered solutions to some of the concerns expressed by executives, including instituting safeguards against politicization of the SES and allowing executives to appeal poor performance appraisals.