Study makes case for performance pay
Implementing true merit-based pay would be difficult, but it's "virtually universal" in private sector, report states.
The federal government must embrace the pay-for-performance concept and move closer to the private sector model of management and compensation, according to a study released this month by IBM's Center for The Business of Government.
"In the private sector, pay for performance is a virtually universal policy for white-collar workers at all levels," according to "Pay for Performance: A Guide for Federal Managers." "For federal agencies, this represents a fundamental change in compensation philosophy. The General Schedule, with its virtually automatic step increases, has long been criticized as responsible for contributing to an 'entitlement' culture."
The study was written by Howard Risher, a longtime consultant and author on performance pay issues who has also worked with the National Academy of Public Administration.
The Defense and Homeland Security departments are overhauling their civilian personnel structure, scrapping the GS system and initiating performance pay systems. Observers expect the reform movement to eventually spread across the federal government. Union leaders and some lawmakers, however, complain that worker's rights are being eroded and the performance pay proposal is ill-suited for those in public service.
Risher's report echoes the finding of several previous private reports that promoted pay for performance in the federal government. In August, the Coalition for Effective Change released a paper supporting pay for performance, but acknowledged that its implementation would be "neither easy nor quick."
The report also acknowledged that "It will take several years to develop and implement the new systems and gain acceptance for the new philosophy." Risher insists the move is necessary.
"The transition to pay for performance will not be easy, but it will better serve the needs of the federal government than the current General Schedule," Risher wrote.
The paper did not address the common complaint that performance pay-along with other private sector management tools-is suitable when the driving motivation is profit, but inappropriate when the goal is public service.