Trump Administration Prepares 'Holistic' Review to Overhaul Federal Employee Compensation

The Trump administration is planning a contract to reevaluate the entire federal employee compensation system, hoping it will demonstrate to Congress the need to take a new approach.

The administration has structured an award it hopes to issue in the near future requesting private sector assistance to determine a new path forward for rewards and recognition. The review will take a “holistic” approach, acting Office of Personnel Management Director Margaret Weichert told reporters on Wednesday, with compensation making up just one part of the discussion.

The “investigation,” as Weichert called it, will include issues such as work-life balance, access to the “right type” of jobs and opportunities such as reskilling. She said that for the compensation aspect, the contractor will attempt to make a true “apples-to-apples” pay comparison, including factors such as locality pay.

“Merit systems principles are not entitlement programs for all once you get in,” Weichert said. “It’s really about rewards and recognition that are linked to merit, and that is the connection that we are trying to draw out using leading practice in the realm of broader HR.”

In President Trump’s fiscal 2019 budget, he proposed creating a $1 billion performance fund to provide agencies with a new funding stream to reward their top employees. In the fiscal 2020 document Trump again suggested an across-the-board pay freeze in favor of merit-based rewards for top performers, but he scrapped the performance fund, which Congress rejected last year, without suggesting a new funding source for such awards.

Weichert said on Wednesday the administration is currently analyzing proposals for rethinking rewards, retention and recognition, but declined to spell out whether new money would be part of those efforts.

“I think we will have more to come in the upcoming months about exactly what the proposals are going to look like on that front,” Weichert said.

She hoped the forthcoming, contracted review will better articulate to lawmakers the need for a “performance-driven” compensation system.

That is “part of why we’re putting to field this investigation,” Weichert said, “to help Congress understand how to think about pay as part of a broader, holistic strategy, and educate them.”

Part of the reforms Weichert plans to implement will involve giving agency heads more flexibility in allocating funding for employee pay as they see fit. Current personnel systems are “utterly inflexible” and “overly, exceedingly bureaucratic,” she said, noting that even small changes often require congressional approval.

“Civil service reform is something we’re looking at freeing up and decentralizing and giving agencies and people more ability to influence,” Weichert said. The administration wants to provide “regulatory flexibility to the agencies themselves to make tradeoffs and say, ‘OK, this person at this time doing this mission is doing the work that is the priority and I want to push more performance-based compensation in that direction.”

While Weichert emphasized the importance of rewarding mission-critical and top-performing workers, she insisted that federal employees are not primarily driven by money.

Pay is “actually a very narrow component of what motivates human beings once they’ve met the basic need for food, clothing and shelter,” she said. She added that government data show employees are not “getting the rewards they really want, which is making a difference for the American people.”

Weichert acknowledged the road to reform will be challenging, calling compensation reform a “thorny problem.”

“Frankly, if people have good ideas,” she said, before trailing off. “The way we’ve got it today with kind of this entitlement—you don’t have to do anything and pretty much everyone gets a very modest bump regardless of whether they’re a star or basically phoning it in—that isn’t the way to move forward.”

Weichert’s comments came during and after a panel hosted by the National Academy of Public Administration to honor the one-year anniversary of the release of the president’s management agenda. Weichert, along with Emily Murphy, head of the General Services Administration, and Suzette Kent, the federal chief information officer, highlighted the progress the administration has made in realizing the goals set forth in that document. In particular, they pointed to reforms in rooting out inefficiency in the federal procurement process, updates to legacy IT infrastructure, improved customer service and product delivery, and increased use of shared services.

The Obama administration’s management agenda was largely theoretical, Weichert said, while the Trump administration is “operationalizing the theory.” She noted the progress tracked on Performance.gov, a site launched under a law signed by President Obama and also used by the Trump administration to monitor key governmentwide and agency-specific metrics.

In addition to more flexibility for compensation, the Trump administration going forward will seek greater latitude to leverage expertise of the private sector. Weichert said the Government Efficiency Advance Research (GEAR) Center will run a $3 million competition this spring to solicit ideas from academia and the private sector on “the challenges of government.” In his recent budget, Trump proposed creating an “industry exchange” that would enable more nonprofit employees and academics to serve on federal projects in a temporary capacity.