Feds Are Overpaid – Or Not

The Cato Institute, formerly known as the Charles Koch Foundation, has issued yet another report claiming federal employees are grossly overpaid. Their numbers claim Feds make 78% more than private sector workers and 43% more than state and local workers. If true, those numbers would be alarming and cause for immediate steps to rein in federal pay and benefits.

Relax. The numbers are generally accurate, but they are not true. How can that be? How can real numbers, based in part on the government’s own data (from the Bureau of Economic Analysis) be accurate but not true? Easy. Anyone who starts out with a predetermined conclusion can select parts of the data that tell the story they want to tell. And they can ignore the data that conflicts with their narrative. In this case, they are comparing numbers for the workforce as a whole with the federal workforce. The fact that there are millions of low wage jobs in the private sector that do not exist in the federal government is left out of the conclusions. The fact that federal jobs are concentrated in occupations that pay more is mentioned, but explained away by saying the higher-skill jobs have always been there. The fact that the lower-skill jobs used to be in government, but have been automated out of existence or outsourced to the private sector, resulting in a much higher concentration of higher-skill jobs in government, is left out. The fact that striving for a workforce that works for the lowest possible pay is not a good idea is left out.  So what we have is a report that tells the story the authors want to tell.

The sad fact is that we do not know how accurate federal pay really is. The most recent annual report by the Federal Salary Council reports that federal workers are underpaid by an average of 35%. Although it would be great for federal employees to think they should get a 35% pay raise, the fact is those numbers are also questionable. When we look at narrowly focused studies of individual occupations we generally find that federal pay and benefits, taken as a package, are not seriously out of line with the private sector. Some federal benefits, such of the Federal Employees Retirement System and the old Civil Service Retirement System, are far more generous than what we see in the private sector, but Feds do not get stock, big bonuses, or the signing bonuses some in the private sector receive. Feds have more job security and that has value, but it is difficult, if not impossible, to place a realistic dollar value on it. In fact, some people would argue that staying in government too long actually causes people to make less than they would have made if they changed jobs more often and moved between government and the private sector.

We also know that job classifications in government are increasingly based on the grade levels managers want them to be rather than the actual job duties and classification standards. That means comparing the salary of a GS-13 to the salary of someone in the private sector whose job matches their job description doesn’t necessarily tell us anything useful. If the job description is bogus (and many are), so is the comparison.

So – the truth is that we do not have any idea how federal pay really compares to the private sector. We can’t even get a credible fake number. It is almost certain that the Cato Institute numbers are useless. It is also almost certain that the Federal Salary Council numbers are also useless. Neither is based on the kind of in-the-weeds research that is actually necessary to come up with realistic numbers. Given the politics on both sides, I am not optimistic that anyone wants to take on the issue and produce credible numbers.

Much like Goldilocks and her break-in at the home of the three bears, it is safe to say there are a lot of federal workers who are overpaid, there are a lot who are underpaid, and some are just right. Given that this subject is almost always addressed using fairy tale numbers, maybe the Goldilocks analogy is appropriate.

Let’s Put the “Chief” in Chief Human Capital Officer

chco councilThe Chief Human Capital Officers Act of 2002, enacted as part of the Homeland Security Act of 2002, established the role of the Chief Human Capital Officer (CHCO) in the federal government. After 13 years, it is time to take a look at the CHCO Act and see what it did and did not do.

The CHCO Act requires 24 agencies to establish CHCO positions to (1) advise and assist the head of the agency and other agency officials in carrying out the agency’s responsibilities for selecting, developing, training, and managing a high-quality, productive workforce in accordance with merit system principles; (2) implement the rules and regulations of the President and the Office of Personnel Management and the laws governing the civil service within the agency; and (3) carry out such functions as the primary duty of the Chief Human Capital Officer. It also identifies 6 required functions of CHCOs:

  1. setting the workforce development strategy of the agency;
  2. assessing workforce characteristics and future needs based on the agency’s mission and strategic plan;
  3. aligning the agency’s human resources policies and programs with organization mission, strategic goals, and performance outcomes;
  4. developing and advocating a culture of continuous learning to attract and retain employees with superior abilities;
  5. identifying best practices and benchmarking studies, and
  6. applying methods for measuring intellectual capital and identifying links of that capital to organizational performance and growth.

The intent of the CHCO Act was sound. Agencies need the right talent to accomplish their missions. Some people (including me) would argue that talent management is among the top tasks of any manager. We also know that it helps to have people who are accountable for the things we say are important. Having someone who is responsible for human capital management in an agency makes a lot of sense. The problem with the CHCO Act is that it was and is inadequate to meet the talent management challenges the government faces today.

Setting strategy, assessing workforce needs, and aligning policies with the mission are tasks a CHCO can accomplish with the right resources, as is identifying best practices. The problems is that none of those functions is actually doing anything. In the 14 departments with multiple bureaus, agencies components and administrations, much of the work of actually running human capital programs is in those sub-units. The CHCO can nudge, persuade, cajole and prod them, but s/he cannot actually make them do much of anything. In some departments the CHCO has a lot of influence, but in others the role is virtually powerless.

We learned from our experience with the Clinger-Cohen Act (that required agencies to create Chief Information Officer positions) that having the title is not enough. A Chief is not a Chief if s/he does not have some clout to go with it. Congress recognized and addressed that problem with CIO positions when it passed the Federal Information Technology Acquisition Reform Act (FITARA). FITARA gives the CIO budget authority and much greater oversight of the execution of agency information technology projects, even when the work is being carried out in a bureau or other subordinate agency.

The CHCO Act is much more like Clinger-Cohen than FITARA. It established some high-minded goals and got the ball rolling, but it does not give the CHCOs the authority they need to really be Chiefs. If we want to see real improvements in human capital management across government, it is time to reform the CHCO Act with FITARA-like legislation that, at a minimum:

  • Requires that CHCOs have substantive human capital management experience and day-to-day responsibility for leading the human capital organization. Some agencies have assigned the CHCO title to officials who have neither HR experience nor day-tay responsibility for running the HR organization. If the CHCO is to carry out its statutory responsibilities, both are required.
  • Grants the CHCO Authority to determine all HR IT requirements in Departments and Agencies. The number of HR IT systems is mind-boggling. When I was CHCO at DHS, we found the Department had more than 400 HR IT systems. Former DHS CIO Richard Spires and I got the Deputy Secretary to sign a directive requiring new HR IT projects in the components to be approved by both the CHCO and the CIO, so we could begin to get the proliferation of HR IT under control. Other departments and agencies have similar problems with duplicative and wasteful systems.
  • Grants the CHCO Authority to determine how the department/agency will deliver HR services. Most CHCOs do not have the authority to determine the service delivery model their organization will use. The money and the authority rest with the bureaus, agencies, administrations and other subunits. That means shared services are not the norm, costs are higher than they should be, and services are not always delivered effectively.
  • Provides that CHCOs have approval authority for selections of bureau/component HR Directors. Some departments already grant this authority to their CHCO. It helps ensure selection of individuals who will carry out the department’s human capital strategy.
  • Requires each agency to either have (a) a department/agency-wide Human Capital Strategic Plan signed by the agency head, or (b) incorporate human capital planning as a significant element of the department/agency strategic plan. 
  • Requires agencies/departments to establish and execute workforce planning for mission critical occupations (MCOs). Too often, there is no planning for MCOs or the plans are “shelfware” that are created and then ignored.
  • Establishes the CHCO Council as a “Board of Directors” for the Office of Personnel Management. The CHCO Council has come a long way since it was established. It has accomplished significant interagency improvements and has served as a way of communicating department/agency needs to OPM. The next step is allowing the CHCO Council to set the policy priorities for OPM.

In 2001, the Government Accountability Office (GAO) placed human capital management on its “high risk” list. Following the CHCO Act and the establishment of the CHCO Council, the government made substantial progress in human capital management. In 2011, GAO narrowed the focus of its high risk assessment to closing current and emerging critical skills gaps. Reforming the CHCO Act to put the “Chief” in Chief Human Capital Officer would help move the government toward removing human capital from the high risk list entirely, reducing the waste in HR IT systems, and ensuring agencies have the kind of human capital management leadership necessary to compete for talent in today’s labor market.

Shutdown Redux: (Borrowed) Money to Burn

MoneyBurningEvery time I think of the potential for a shutdown, some famous words from President Ronald Reagan come to mind. “There you go again….”

A lot has been written about the 2013 shutdown. How it disrupted government services. How it wasted $24,000,000,000 dollars and taxpayers got nothing in return. How Federal employees were sent home to do nothing, not knowing if they would be paid. How in the end they got paid for doing nothing. How much stress employees, customers, and taxpayers endured. How contractors had to lay off staff during the shutdown (most of whom got no back pay).

I almost expect to see Rod Serling step into the picture and start explaining how nothing is what it seems in the Twilight Zone of Washington, DC. Sadly, there is no narrator and this is not a TV show. Shutdown planning has already started in every agency. Leaders are reviewing plans, updating the lists of exempt positions, and working with other agencies who may be affected if they shut down.

All of this planning costs money. There is a dollar cost and an opportunity cost. Time that is wasted on planning for another shutdown is never going to be recovered, yet no responsible agency can fail to plan for the consequences. They have the choice of being wasteful or irresponsible.

Pain for Everyone

Just like last time, government employees are not the only ones who can and will suffer in another shutdown. In fact, because government workers will most likely be paid for any time they do not work, they may be among the least harmed by a shutdown. Employees in the private sector are subject to far more losses. Here are a couple of examples:

Federal Contractors. Businesses have to earn revenue to pay employees. If they are told to stop work, the company’s revenue for that contract stops. Larger firms can absorb the impact for a few days, but not much longer. Small firms may not be able to absorb anything. If they lose the revenue, they have to immediately lay off employees. The government does not make the contractor whole after the shutdown and the employer does not make the employee whole. Everyone suffers and no one wins.

Businesses Other than Contractors. Walk into a restaurant near Federal offices or military installations and take look at the number of Federal employees who are there. Go to the dry cleaners, the convenience stores, and the coffee shops. They depend heavily on customers who work for the Federal government, either as employees or contractors. When they are not at work, those businesses send employees home. They get no revenue and their employees get no pay. No one makes any of them whole.

The economic impact of a shutdown is immense. It is even more than the dollars wasted on paying employees ($2.5 billion in the 2013 shutdown) who are not allowed to come to work, the revenue businesses lose, and the wages their employees will not get paid. Here are just a few more examples from the 2013 shutdown:

  • It halted permitting and environmental and other reviews, delaying job-creating transportation and energy projects. For example, the Bureau of Land Management (BLM) was unable to process about 200 Applications for Permit to Drill, delaying energy development on Federal lands in North Dako- ta, Wyoming, Utah, and other states.
  • It hindered trade by putting import and export licenses and applications on hold. For example, because the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau was unable to issue export certificates for beer, wine, and distilled spirits, more than two million liters of U.S. products were left sitting at ports unable to ship.
  • It disrupted private-sector lending to individuals and small businesses. During the shutdown, banks and other lenders could not access government income and Social Security Number verification services. Two weeks into the shutdown, the Internal Revenue Service (IRS) had an inventory of 1.2 million verification requests that could not be processed, potentially delaying approv- al of mortgages and other loans.
  • It halted Federal loans to small businesses, homeowners, and housing and healthcare facility developers. The Small Business Administration (SBA) was unable to process about 700 applications for $140 million in small business loans, and the Federal Housing Administration (FHA) was unable to process over 500 applications for loans to develop, rehabilitate, or refinance around 80,000 multifamily rental units.
  • It delayed the Alaskan crab fishing season, costing fisherman thousands of dollars in lost revenue. Because the National Oceanic and Atmospheric Administration (NOAA) was unable to apportion harvest levels, the start of the season was delayed for three to four days. The fishing industry estimates these delays cost fisherman thousands of dollars of lost revenue per day, since days lost at the beginning of the season cannot be made up later.
  • It disrupted tourism and travel by closing national parks and the Smithsonian. The National Park Service (NPS) estimates that the shutdown led to over $500 million in lost visitor spending nationwide, a significant economic hit to communities surrounding national parks and monuments.
  • It significantly impacted small businesses that contract with the Federal government. Compared with the same period last year, small business contracts with the Department of Defense (DOD) dropped by almost one-third during the shutdown, and spending dropped 40 percent.
  • It delayed aircraft purchases and deliveries by closing the Federal Aviation Administration (FAA)’s Aircraft Registry. The General Aviation Manufacturers Association estimates that this delayed 156 aircraft deliveries valued at $1.9 billion.
  • It temporarily closed six Head Start grantees, serving nearly 6,300 children. Head start grantees operating in Alabama, Connecticut, Florida, Georgia, Mississippi, and South Carolina closed for up to nine days before reopening with funds provided by philanthropists through the National Head Start Association or their state.

So – in addition to burning the government’s borrowed money, a shutdown will harm businesses large and small, take money out of the pockets of working men and women, reduce tax revenues, disrupt communities, and generally make a mess.


Do You Have to Lie to Get a Federal Job?

LiarsAt last week’s Government Workforce Conference, a Department of Commerce official made some news by saying “If you apply for USAJobs and you’d like an interview, every young person in this country who is interested in a federal job knows you have to lie….” Her point was not that people should lie on their job applications. It was that the willingness of many applicants to stretch the truth, i.e., lie, means that government hiring processes may be screening out the people who are honest on their job applications in favor of those who are willing to lie about their experience.

Is it really true that a lot more applicants are lying? Absolutely. When we started using questionnaires instead of crediting plans in the early 1990s, we saw very few applications where it was apparent that the applicant lied in response to questions. If anything, there was a problem with applicants not giving themselves enough credit for their experience. Since that time, more and more hiring managers are complaining that their referral certificates are filled with candidates who have little or no qualifying experience. They got on the certificate by overstating their experience in their responses to the questionnaires.

How does that happen? Some people blame the problems on the technology agencies use to receive and rate applications. Because those systems are just tools agencies use to implement their hiring practices, they are not the problem.

The biggest issues are 1) lack of hiring manager involvement in the hiring process, and 2) inadequate numbers of experienced staffing specialists to run the processes.

Hiring manager involvement from the beginning is critical. The hiring manager knows what s/he needs for the job. Hiring managers know the work, know the organization’s needs, and are the ones who are accountable for results. Sadly, many of them do not get involved in the process until they get a certificate in their hands. By then it is too late to influence the process to make certain the candidates on the list are truly highly qualified. Some hiring managers claim to not have enough time to get involved, others delegate it to administrative staff in their own office, and others say their HR offices do not offer them the opportunity to get involved.

The “I don’t have time!” excuse is nonsense. Delegating the work to administrative staff member is another version of not having time. Hiring the right talent is one of the most critical jobs of a manager. A manager who does not have time to do it needs to find another job. The excuse that HR doesn’t let them get involved is true in some cases. Where it occurs, it should be challenged, because it usually means they are getting bad advice from HR.

I hear from Chief Human Capital Officers and others that agencies do not have enough qualified Staffing Specialists who fully understand the hiring process, know how to do job analysis, understand the variety of assessment tools that are available, and remain engaged in the process from beginning to end. Staffing Specialists who know what they are doing check the results coming from the automated staffing tools and overrule applicant answers to questions when the resume has no evidence that the answer is realistic. Just this week a frustrated hiring manager told me of her experience dealing with applicants for a critical job who had clearly lied. She did the right thing and helped develop the applicant questionnaire, but her HR office offered no help and was unwilling to overrule the applicants’ lies.

When hiring managers step out of the process or amateur staffing specialists trust anything that spits out of a computer, the result is an open invitation to unethical applicants to lie about their experience. Nothing emboldens liars more than knowing they will not get caught. And make no mistake – falsifying an application is lying. It is dishonest, unethical, and grounds for firing.

The problem of lying applicants is real. It does affect the quality of talent agencies are able to hire, and it needs to be addressed. If not, we are disadvantaging the honest applicants and rewarding the liars and cheats. There is no way that is good for government or the taxpayers the government serves.

Managing With Blinders On

We can all agree the government keeps a lot of records. In fact, just the HR records are enough to fill a lot of warehouses – both literal and electronic. The basic HR record is the Official Personnel Folder. It includes a record of every personnel action for an employee, along designations of beneficiaries, appointment affidavits, job applications, college transcripts, training records, awards, and more. That is just the start of the government’s HR record keeping. The Office of Personnel Management and agencies that run their own hiring process keep millions of job applications. Add to that the job descriptions, injury compensation records, disciplinary actions, performance plans and ratings, grievances, training records in learning management systems, and countless other HR records, and there is a wealth of information that could be used to make HR programs far more effective.

So – what do we do with all of the information in those systems of records? For the most part, nothing. We spend hundreds of millions of dollars on the processes that produce the records, but little to nothing on analyzing and using the data for constructive purposes. Let’s look at a couple of examples.

The government uses a hiring process that collects more information on applicants than the typical private sector employer. Every HR office uses one of a handful of systems to manage those applications, evaluate them, issue referral certificates to hiring managers, and record selections. The applicant data could be a rich source of information that could be used to improve the hiring process, but it typically goes to waste. Agencies receive the applications, rate them, do interviews, make selections, on-board the new employee, then let the data sit in the system, unused, until it is time for it to be purged.

Agencies also maintain performance information on all of their employees. Performance management processes are supposed to identify who is doing well and who needs improvement (how well they do that is another matter). Given that we have a hiring process that is supposed to identify the best candidates for a position and a performance process that rates how well they perform, why are agencies not using the information to see if the hiring processes are actually working? It would not be that difficult to develop analytics that look at key data from the hiring process and compare that to performance once the employee is on the job. When an agency uses a given assessment, does the predicted performance actually occur? Are there questions that are more likely to predict performance? Do applicants from one hiring authority (e.g., merit promotion) compare to those from another (e.g., VEOA)?

Every agency has records that tell them who is leaving, but few agencies analyze the data to predict turnover, let alone comparing that data with information from the hiring process. Do new hires from particular sources turn over faster than normal? Or at a lower rate? Is it a problem? If so, what is the underlying cause and what can be done to fix it? At the Defense Logistics Agency, we found a much higher turnover rate among hispanic new hires in our corporate intern program. A recent report from OPM says the same thing about Veteran hires in some agencies. Analysis of the hiring data, employee surveys such as the Federal Employee Viewpoint Survey, and performance data can help explain what causes the problem and how it might be fixed. That analysis is not happening in many agencies.

The information locked in systems that are viewed primarily as “records” rather than data could answer a lot of questions and help agencies manage better. It could improve the hiring process, identify contributors to morale issues, improve retention, and and generally help agencies manage based on data rather than seat-of-the pants feelings. Our failure to use information that is available to us means we are often managing with blinders on. The information is there, the world around us is visible, but we choose not to look at it. If we truly want to improve all of these processes, we have to start making use of the data that we already have and stop treating the data just as records.


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