Fear Not: The Case for Shared Services in Government

The Federal government, much like any other organization, either provides for itself or buys a wide range of overhead services to support its operations. Overhead is not a derogatory term – it is just the term that is applied to services that are necessary to support the mission of an agency. Missions do not get accomplished without overhead services. While overhead services such as Human Resources, Financial Management, or Contracting support follow laws and regulations that are remarkably consistent across agencies, most agencies have dedicated internal service providers. The result is a level of redundancy and cost that diverts scarce resources to overhead functions rather than agency missions. Faced with decreasing budgets and shocks such as sequestration, agencies can no longer afford to carry out business-as-usual with respect to common support services. Secretary of Defense Chuck Hagel challenged his Department and its stakeholders to “…challenge all past assumptions…” and “put everything on the table.”

“We need to challenge all past assumptions, and we need to put everything on the table.  For example, it is already clear to me that any serious effort to reform and reshape our defense enterprise must confront the principal drivers of growth in the department’s base budget – namely acquisitions, personnel costs, and overhead.”

Secretary of Defense Chuck Hagel – April 3, 2013

One good example of overhead services that whould be “on the table” is Human Resources/EEO. Looking only at the number of Federal employees in those occupations, we see 2% of the Federal workforce in the HR/EEO (41,929 employees) job series. Because both HR and EEO offices also employ people in other job series, such as IT, budget, and administration, my experience is that as many as a quarter of the people in HR offices are not in HR series. That means another half percent of the Federal workforce are HR in non-HR job series. The number may be higher. Assuming that conservative number, 2.5% of the Federal workforce exists to provide HR services to the government.

Federal Employees in HR/EEO Job Series

Job Series

# of Employees

Average Salary

Total Cost

201

27,698

$84,957

$2,353,138,986

203

11,480

$43,199

$495,924,520

260

2,751

$93,971

$258,514,221

$3,107,577,727

+ 30% Fringe

932,273,318

Total Cost

$4,039,851,045

 

If we look only at the costs of the Human Resources/EEO workforce (in salary and fringe benefits cost of employees in the 201 (HR Specialist), 203 (HR Clerk and Assistant) and 260 (Equal Employment Opportunity) job series is more than $4 billion. HR/EEO organizations also employee people in other job series, such as budget, clerical and information technology, and the common “catch-all” 301 job series. Use of the 301 series for HR has increased in recent years as a way of reducing the apparent number of HR professionals, and to support grades that are often not as easily obtained in the more prescriptive 201, 203 and 260 job series. In addition to the non-HR/EEO job series, HR/EEO service organizations also purchase contract support. The number of dollars devoted to such services is difficult to identify, government-wide it is certainly in the hundreds of millions and perhaps more. Because the costs of common services are buried in agency budgets, the number is rarely examined as a single cost. The time has come to begin that examination and find ways to reduce the cost to a more manageable level.

There are many side effects of failure to consolidate overhead services. Chief among them is the lack of money for training staff and modernizing systems and processes. An agency with redundant overhead organizations will cut costs by taking away everything but salary dollars and leaving the overhead functions with few resources to do anything other than pay their employees. It is rare to find an HR office that is adequately resourced, even when the agency is spending more on such services than would seem necessary. The agency wonders why it is not getting great support, the employees in the support organizations wonder why they cannot get training or adequate tools to do their work, and everyone wonders why it does not get better. An agency, its employees and its HR staff are far better off with one or two well-staffed, trained and resourced HR offices than they are with ten marginally staffed and resourced organizations that struggle to provide good service.

I have heard people saying for years that services cannot be consolidated because their agency is unique. While it may make us feel better to say we are unique, the truth is most agencies are not. The plethora of different rules, processes and systems is the result of choice rather than absolute necessity. Although agencies tend to create their own operating policies and directives for HR services, those rules are usually created because they can be, not because of a compelling business argument. Not only that, attempts to consolidate HR/EEO services are typically met with fierce resistance. When the Department of Defense proposed consolidating HR services in the 1980s, one of the services responded with the objection that their civilian HR services were at the heart of their warfighting capabilities. When faced with that type of opposition, the proposal was dropped. Eventually, the DoD elected to “regionalize” its HR services in a way that protected most of the parochial interests that objected to the previous consolidation proposal. The result was a model that few DoD leaders and virtually no one in HR would consider to be effective or efficient.

When the Defense Logistics Agency proposed a real consolidation of HR services, Pentagon officials supported it as a means of seeing if consolidation could actually work. Studies of the DLA HR transformation have shown it was completely successful, reduced costs, and dramatically improved the quality of services. The proposed transformation was not universally accepted in DLA. In fact, many affected managers, field Commanders and Senior Executives were vehemently opposed. One SES referred to it as “the most brutal proposal I’ve ever seen.” Another said he would rather have bad service he controlled than good service someone else controlled. One General said it was doomed to failure and would generate no savings, even if it could be implemented, which he doubted. They were wrong. Not only did the consolidation work, it saved money and provided more resources for the consolidated offices to get their work done. Many of the savings came from elimination of redundant management structures. Rather than having seven HR offices, each with an HR Director, staff directors, and support teams for each, there were two HR offices. Rather than having seven sets of HR tools, we had one. Rather than having seven sets of operating procedures, we had one. DLA is not the only example of effective HR consolidation. Agencies as diverse as the Department of the Treasury, NASA, the Department of Commerce and the Department of the Interior have had similar successes. That kind of consolidation and cost reduction is not radical. It is not risky, and it is not new and different. It is a tried and proven approach to delivering services.

What was driving those objections, and what bold leaders in government will face today, is fear. Fear of loss of control. Fear of loss of influence. Fear of failure. Fear of services that are worse than before. Overcoming those fears is critical if government is going to transform itself today. If those fears drive debates about overhead services, imagine how people will respond when asked to do the same thing for mission services. How will any real consolidation of services, elimination of redundant missions and consolidation of agencies take place? We have proven in multiple agencies that support services can be effectively and efficiently consolidated, yet that knowledge has not been translated into government wide measures to dramatically transform support services. It is time to take that step.

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Leader Development is Not a Luxury

Federal News Radio’s Jason Miller had a story on April 2 with the headline “Better trained supervisors key to improving morale.” Jason reported on WFED’s CHCO survey and an interview Francis Rose conducted with NASA CHCO Jeri Buchholz. The CHCO survey and Jeri stressed the need for leader development as a means of improving employee morale. I believe Jeri and my former CHCO colleagues are spot on. Absent significant investment in developing the leadership abilities of supervisors, the Federal government is going to have morale and performance issues for years to come.

I have heard comments from folks who say the emphasis on leader development and the role of leaders in driving Federal Employee Viewpoint Survey (FEVS) results is an indictment of supervisors. Nothing could be further from the truth. If it is an indictment of anything, it is the culture that says investing in supervisor training is a waste of time and money. That culture has resulted in budget cuts for training programs, a lack of emphasis on developing the so-called “soft skills” of leadership, and a belief that mission-related training is always more valuable than leader development.  Such beliefs harm agencies terribly. Here is why.

Supervisors drive culture and morale. Other than demographic questions, the FEVS has 84 questions. Of those, 65 are under the control of supervisors and managers. Here is are the 2013 FEVS Questions with the 65 highlighted. So why not blame the supervisors? Easy – it is generally not their fault. For the most part, people are selected for supervisory jobs based upon their technical skills. If we are filling a basket weaver supervisor, we generally look at the basket weavers and pick the one the selecting official believes is the best basket weaver. In many cases there is little real consideration, and certainly no structured assessment, of that person’s leadership abilities. Once they are selected, we put them into a job that requires a completely different skill set from basket weaving and give them little, if any, real training to develop that new skill set. Many agencies send supervisors to a class that is called supervisory training, but it is really just training supervisors on the basics of writing job descriptions, using the rating system, and other basic HR-related skills. The “soft skills” are notably absent in many of these programs. So – we select people who are very good at what they do, but not at what we are selecting them for, do little to develop them, and then blame them for our problems. It seems that is grossly unfair to the supervisors and the people they supervise.

It isn’t that there is no interest by supervisors in real training. At the Defense Logistics Agency, we implemented a comprehensive program for newly selected supervisors. It was so successful, we started getting complaints from people who had been in supervisory jobs prior to the program’s start asking why they could not have the same training. It was clear these folks wanted to do a good job. They wanted the training. Our response was to create a “retrofit” program to give them similar training.

If there is clearly a demand and a need, why does real leader development not happen? For many agencies, it is because leader development is not treated as a budget priority. With shrinking budgets and everyone competing for a diminishing pot of dollars, tradeoffs have to be made. Training has not traditionally been viewed as one of the priorities, and leader development has drawn the short straw when the limited training dollars are allocated. There is often a mistaken belief that it would appear selfish for agency leadership to devote dollars to training supervisors when their employees are not getting the training they need. I believe that view, while it is based on the best of intentions, actually harms the very employees it is trying to protect. If employee views are so dramatically shaped by the quality of supervisors as shown by the FEVS, investing in leaders is investing in employees. In addition to the benefits for employees, there is also a benefit to customers of the agency. At DLA, we conducted both employee and customer surveys. We found a very strong correlation between our employees’ views and how our customers rated the quality of support they got from DLA. On some questions, such as “I have the information I need to do my job,” the correlation coefficient was +.90 or better. It was clear that how we treated our employees was directly related to how our customers perceived the service they got from DLA.

With supervisory skills being so directly related to the FEVS results, and employee perceptions being so directly related to customer outcomes, it is clear that developing leaders is not a luxury. It is not a selfish use of precious resources for supervisors and managers’ own benefit. It can and will drive agency results and make the government a better employer. That makes it a necessity.

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Replacing the General Schedule: Meeting the Needs of the 21st Century Federal Workforce

I have written three posts on replacing the General Schedule. The first outlined some fallacies about GS, the second addressed facts, and the third outlined my reasons for opposing efforts to implement pay for performance as the primary means of setting Federal employee pay. What we know about the GS now is that it was designed for a workforce that we no longer have. When the GS was created by the Classification Act of 1949, it was viewed as a leap forward. It consolidated numerous pay systems, created the GS-16, 17 and 18 “supergrades” that were the predecessors of the Senior Executive Service, and decentralized much of the routine pay-setting authority of the Civil Service Commission (now OPM). The Classification Act grew out of the recommendations of the Commission on Organization of the Executive Branch of the Government – commonly known as the Hoover Commission. The commission was remarkably prescient, making recommendations that are still relevant today. Its recommendations included category rating, simplified and more effective performance ratings, and selection processes for supervisory jobs that focused more on ability to be a supervisor than on technical experience. The Hoover Commission also recommended pay include locality or industry differentials. The Classification Act did not include all of the Hoover Commission’s recommendations, but it made much progress.

Since the the Classification Act was passed, the state of the federal workforce has changed dramatically. It has shifted from a balance where more than half of employees were in the bottom 5 grades to one where more than half are in the top 4 grades. The complexity of Federal jobs has increased, lower-graded jobs were automated or outsourced out of existence, and the labor market has moved from one with more trade and craft jobs to one where knowledge work is the norm. The GS has not kept pace, agencies raised grade levels in an attempt to remain competitive in the talent market, and it has now gotten to the point where tweaking the General Schedule is not enough - it needs to be replaced.

Characteristics of an Effective Classification and Pay System

Any measure of effectiveness of the civil service system is dependent on how we define the goals of that system. Outlining those goals is more complex than it might seem. Most people (but not all) would agree Federal employees deserve fair pay for their work. Some people argue that Federal pay should not let government compete with the private sector, while others would argue the Federal government should be a model employer. Some argue the Federal government, even at its worst, is a remarkably stable employer and that stability of employment should be a factor in compensation decisions (i.e., pay should be lower). Almost everyone would agree that selections should be based on merit, but merit, like beauty, is in the eye of the beholder. Some would argue we should pay all Federal employees in a given grade at the same rate. Others argue it should be based on pay in the labor market where the employees are hired. Some argue Federal pay should rise when labor markets demand it, but they should not decrease when the opposite is true. Some would argue that pay should be subject to collective bargaining, others argue there is no point in that because the size of the pie doesn’t change – bargaining would just rearrange the slices. As always, the devil is in the details. In order to lay out a set of reasonable recommendations, I have to start with what I believe are the classification and pay characteristics we should be striving for.

  • Less Complexity. The GS has become more complex in the past 65 years, partly as a result of the growing complexity of many Federal jobs, partly as a result of previous attempts at reform, and partly because of the natural tendency of any bureaucracy to grow processes, rules and checkpoints. For example, the GS Handbook of Occupational Groups and Families today has 407 job series in 22 Occupational Groups. Add to that the classification guidance for supervisory positions, the various parenthetical designations in many position (11 in the Information Technology series alone), and you have the potential for more than a thousand ways to classify a white collar job. Add individual grade levels (8 for the typical 2-grade interval series), and the number possible job classifications becomes many thousands. That fact presents an illusion of precision that simply does not exist. The reality is that one characteristic of seasoned position classifiers is their ability to finesse the classification process to get the type of classification the organization needs or wants. One experienced classifier used to tell me she could “classify a Dixie Cup as a GS-15.” False precision comes at a cost. More than 150 series have individual position classification standards. Many others have classification standards that cover multiple series, while others have “flysheets” that provide basic classification guidance. The complexity of the multitude of job classifications places a tremendous burden on the Office of Personnel Management, whose small group of standards writers have the herculean task of keeping them current, and agencies that have to administer the system. It places a burden on job applicants who are bewildered by the multitude of job classifications in the government. And it puts a tremendous burden on agencies to manage the entire process. Faced with a highly complex system and pressure to reduce overhead jobs, many agencies have turned to automated classification systems and reduced the number of highly experienced classifiers. The scale and breadth of Federal responsibilities means it will never be a simple system, but it can certainly be far less complex than it is now.
  • Fairness. This is a tough one, because everyone seems to have their own definition of fairness. Here is mine – pay should be based upon the work we do. Age, gender, race, ethnicity, sexual orientation, religion and other non-merit factors should have no place in classification and pay decisions, nor should discrimination or unintended systemic adverse effects on people for those reasons be allowed to exist.
  • Public service as a public trust. Federal employees work for the people of the United States – that makes the government unlike any other employer. As Thomas Jefferson stated in the Declaration of Independence, governments derive “their just powers from the consent of the governed.” That means Federal employment is a public trust. Public servants do not go to work to make their fortunes. Government is not and never will be a place to get rich. Trust, however, is a two-way street. When we the people ask Federal employees to do the people’s work, we must treat them as public servants rather than as undesirable bureaucrats.
  • Based upon sound management principles. One factor that makes civil service reform hard to do is our highly political environment. From the beginning of the republic, decisions regarding government and its workers have been based as much on politics as on merit and sound management. Many of the recommendations of the Hoover Commission died in the political process. Whatever we do now in the name of reform, we should as much as possible base it on effective management rather than politics.
  • Reward that which we want to encourage. Recent efforts at pay for performance have attempted to address one thing we want to encourage – performance. They have often failed to encourage retention as well. Rather than treating longevity-based pay increases as evil, we should recognize it is in the interest of good government to have a stable workforce that does not suffer from unnecessary turnover. The costs associated with turnover are significant. Pay for performance efforts also generally fail to recognize and reward teamwork. If we want to encourage the kind of teamwork that is necessary to deliver consistently excellent results, we have to encourage, recognize and incentivize it.
  • Where discretion on pay matters exists, it should be executed by people who are trained and equipped to do it. One problem with pay for performance systems is that they often place pay decisions in the hands of managers who lack the expertise to make informed pay decisions. We often hear that managers struggle because they were selected for their technical skill rather than their leadership abilities. We also hear that agencies do not invest enough time and money in training supervisors and helping them make the transition from doers to leaders. Why do we assume these same managers now have the ability to successfully execute a pay system when they have no training in compensation, do not have access to data on pay comparability, and often do not have access to data that shows how the rest of their agencies pay similarly situated employees. Placing that burden on managers is not fair to them or to the people they lead.

My Recommendations

When I started writing this series, I assumed I would get to this point and then lay out specific ideas for replacing the GS, with a lot of detail about each. As I researched and wrote this and the preceding 3 posts, I concluded the issue is far too complex to be solved with one person’s ideas, or even those of a small group. Some of the problems are long-standing (and were discussed 65 years ago by the Hoover Commission) with no resolution for many decades. Because of the complexity of the issues, the data needed to make sound recommendations, and the absolutely essential requirement that any substantial Civil Service reform follow an open and robust discussion of the public policy issues that are involved, I am going to limit my recommendations to the means by which I believe we can address replacing or reforming the General Schedule and the areas I believe should be included in that public policy discussion.

Civil Service Reform in Our Politicized Government. With the current state of our political system being what it is, using the regular legislative process to design a replacement for the General Schedule is unrealistic. The parties’ views of the civil service and how it should work are too far apart. We need some mechanism for allowing a policy discussion to occur outside the walls of the Capitol. There is a model that might work, and that is the one created by the Base Realignment and Closure (BRAC) process. The BRAC process was designed because the Department of Defense needed a means of shedding excess infrastructure, but it was apparent that no sane member of Congress wanted to go on record voting to close bases where their constituents work. There was also a recognition that DoD’s infrastructure was too big and too costly. In order to reduce the political problems, Congress passed the Base Closure and Realignment Act of 1990. The Act (amended and used again in 2005) created a Presidentially appointed BRAC Commission to review and make recommendations for closures and realignments. The process began with recommendations from the Department of Defense, followed by Commission reviews and recommendations. The Commission’s recommendations went to the President,  who could make recommendations back to the Commission. Following that, the President had to approve or disapprove the entire list. If the President approved and sent it to Congress, the recommendations were implemented unless Congress passed a joint resolution stopping them. There was no provision for Congress to modify the list.

Although there are debates about the quality of some decisions the BRAC Commissions made, there was widespread agreement that the process allowed a far less political, more thoughtful and deliberate approach to a highly sensitive issue. A similar approach could be used to make recommendations for Civil Service reform, including replacement of the General Schedule. A Commission on the Public Service, authorized by BRAC-like legislation, appointed by the President and confirmed by the Senate, should be created. It should include representatives from government, academia, the private sector, and organized labor, and have a professional staff that includes experts in human resources, labor economics, industrial/organizational psychology, and other necessary professional disciplines. The Hoover Commission provides an excellent example of the work such a Commission can do. Presidents Truman and Hoover did not have a history of being friends. In fact, President Truman often cited President Hoover during his campaign (while Hoover was chairing the Commission), saying of President Hoover “…the great engineer we elected backed the train all the way into the waiting room and brought us to panic, depression and despair….” Following the 1948 election, when President Truman’s reelection surprised everyone (including Mr. Hoover), the two Presidents found a way to work together. The result was a personal friendship and a remarkable set of recommendations that are still felt in government (including the creation of GSA and the Joint Chiefs of Staff). Such a Commission today could create a new model for the Civil Service, with little risk that either party could drive it to extremes. Absent such a model, there is little likelihood our current political climate can produce significant reform.

The Commission’s Tasking. Following are some of the areas a Commission should address, with some rationale for including them.

  • Simplify the numbers and types of job classifications. We should not have thousands of ways to classify a Federal job (and that doesn’t even consider the Federal Wage System). Rather than classifying jobs based on occupation-specific characteristics, the Commission should explore alternative approaches, such as classifying them based on cross-occupational characteristics that make up the requirements for a job. Using the biological concept of a Phenotype (a composite of the observable characteristics of an organism), the government could create a model that identifies characteristics of positions such as education, types of skills, physical characteristics, work environments, interactions with others, competency requirements, and others. Rather than a thousand or more ways to classify jobs, we could drive the number down to as few as a hundred.
  • Reduce the number of grades to a smaller number of more inclusive grades. Broad banding systems that have been implemented in the past have had some success, but some have fallen victim to pay for performance issues and systemic bias. For a typical two-grade interval job series that currently has 8 grades (5/7/9/11/12/13/14/15), reducing to 3 or 4 grades would provide ample room for pay differences based on individual position requirements.
  • Incentivize retention through longevity-based pay increases. The current GS system has steps within grades. Employees get step increases based on time in grade, with steps 2, 3 and 4 taking one year, steps 5, 6 and 7 taking two and steps 8, 9 and 10 taking three years. Each step represents about 3% of the pay for step 4 (the representative rate), so the difference in step 1 to step 10 in the same grade is about 30%. Going from step 1 to step 10 takes 18 years. The logic behind extending waiting periods is that employees are more likely to change jobs in the first few years in a job and their abilities grow quickly early in their tenure in a job. As the years pass, added experience becomes less of a differentiator. Twenty years doing the same job is generally no more valuable than 15 years. The Commission could explore options for making the incentives simpler to administer in combination with broader grades/bands using an approach that incentivizes retention in the early years when an employee is more likely to change careers and while competencies are rapidly increasing.  Developing the specifics requires significant data and analysis, but it would help reduce turnover early in careers and make it clear that experience in government has value.
  • Pay employees based upon the realities of the labor market. The Federal government competes for talent in a labor market that values some occupations more than others. For example, a Physician makes more than an HR Specialist. We also know that the cost of talent varies from one location to another, and the value of a given occupation can fluctuate due to supply and demand. The GS system is unresponsive to market fluctuations and the current locality pay process does not work effectively and results in pay localities that are far too large. Studies that compare Federal pay to the private sector often find pay is too high for some lower-graded jobs and too low for some higher-graded jobs. My experience was that the GS system is also particularly ill-suited to recruiting entry-level staff in occupations with high demand and high entry salaries. Gathering enough data to make market-based pay decisions is not simple, but it is not so difficult that we should avoid trying to do it.
  • Include some accomplishment-based pay for truly extraordinary work. Although pay for performance has many flaws, most people recognize there are some employees whose accomplishments are far outside the norm. Pay increases based on such documentable accomplishments (not effort) can be done in a way that ensures they are not based on flawed performance rating processes.
  • Annual comparability increases for employees whose performance is is fully successful. The pay raises the Federal workforce receives annually (when there is no pay freeze) should not be denied to employees whose performance meets requirements. One of the weaknesses in DoD’s National Security Personnel System was the policy of granting only 50% of the increase to employees with a “Valued Performer” (fully successful) rating. That undermined the objective of convincing employees a level 3 rating was a good rating.

Any effort to reform or replace the General Schedule will uncover many more considerations that must be accounted for in order to create an effective classification and pay system. If we have a robust public policy debate, informed by data and facts rather than politics, a Commission such as I am recommending could position us to face the challenges of this century with a system designed for it rather than one designed for the last century. If we fail to act and grades continue to creep up to the top of the grade structure, I believe the stresses on the General Schedule will reach a point where it becomes a crisis. It is critical that we address the problems in a thoughtful and informed way, rather than waiting for a future where the government is unable to recruit the talent it needs.

 

Reforming the General Schedule Does Not Have to Mean Pay for Performance

I have written two posts on the issue of General Schedule reform. They addressed some common fallacies and some facts about the General Schedule and how it is working today. My plan was to wrap up the series with one more post on my recommendations for replacing today’s General Schedule with something that is better suited to the knowledge workforce we now have.

After hearing from several folks about their concerns about pay for performance and why it is a bad idea, I decided to include one more post than I had intended. The next post on this issue will address my recommendations. This one is focused entirely on pay for performance.

What really surprised me is how many smart, well-informed and thoughtful people assume that the only alternative to the General Schedule is pay for performance.  I do not believe that is true. The General Schedule is a pay and job classification system. It includes modest measures to deal with pay differences in different parts of the country, a small performance-based component (bonuses and Quality Step Increases), and longevity-based within grade increases to incentivize retention. Retaining employees, pay that recognizes labor costs are not the same in every locale and performance incentives are all good.

Replacing the General Schedule does not have to mean going to a system that is pay for performance (P4P). Here are some of the reasons why I believe that to be true:

  • Performance management. I doubt anyone can find an agency where HR, managers, employees and unions will agree the performance appraisal process is working. My four posts on performance (on judging others, neuroscience and ratingswhy the government does ratings and what can be done within existing law and regulations) outline the many problems with current appraisal processes. IF, and that is a big if, we could get to the point where we actually believe we know how to evaluate performance effectively, I would  support an approach with a larger performance-based pay component. The only way to do that and make certain it works is to implement a substantially improved performance management process, test it for at least 2 or 3 years, assess it, fix problems that are uncovered, try it again, assess it again, and make certain it works. We can use it as the basis for pay if, and only if, it is proven to be effective. If that isn’t done, we are making decisions that affect employees for years to come based on unproven systems.
  • Retention. It is common to see P4P systems that include no pay increases for longevity. Many proponents of P4P argue that pay raises should be based entirely on performance and longevity-based increases such as the current within grade increases are bad. If hiring people had no cost, training new employees had no cost, and vacancies had no cost, I might agree with them. But – they all have a cost. The lost productivity of vacancies affects agency performance and morale. Hiring new employees can be very costly. Training new employees is also expensive, both in terms of dollars and productivity. Given all of the costs associated with turnover, incentivizing retention is a good thing. Incentives that vary from year to year based on performance negate much of the benefit. A GS replacement should include, but not be limited to, incentives to encourage employees to stay with the government.
  • Unintentional outcomes. My experience with P4P in government caused me to have concerns that P4P systems that are not fully tested prior to being used for pay decisions may have unintended adverse impact on some groups of employees. In 2008, a Federal Times article on DoD’s National Security Personnel System (NSPS) raised concerns about race, ethnicity and gender inequities in the system. Some other P4P systems have also had similar issues. Although those are the more commonly discussed issues, some unintended consequences are the result of types of jobs. For example, a pay system designed for an organization primarily comprising auditors, attorneys, or medical professionals may not recognize the contributions of other staff. Bias issues might actually be easier to deal with if they appeared to be the result of intentional discrimination. My experience in DoD was that the issues were not evident during the appraisal process or in pay pool deliberations, but surfaced when large amounts of data across multiple pay pools were collected and analyzed. Many pay pool managers I talked with were surprised and troubled by the results. They clearly had no intent to discriminate, but the numbers showed outcomes that no one intended. Some people (including the Government Accountability Office) recommended DoD implement a third-party review of NSPS ratings prior to them becoming final. DoD objected, citing grievance procedures and other protections. There is another reason that is even more fundamental. In a large-scale P4P system that includes third party review, how do you correct problems that are uncovered during a rating cycle? Redo everyone’s ratings? Overrule the managers ratings to correct disparities? Short of a complete do-over, correcting a flawed rating and pay process after the fact is incredibly hard to do. As I said above, the only realistic solution would be a tested and throughly validated rating process that works the first time. That isn’t impossible, but it is not easy and getting it right the first time is not the norm.

I believe performance should be a factor in pay decisions. So should retention and differences in the cost of labor throughout the country. I also believe a pure P4P system is too hard to implement quickly or fairly, and is not worth the numerous problems it would create. In my next post I will outline how we can reform the General Schedule in a way that meets all three needs, but does not rely on P4P for all pay decisions.

Finally, a New Emphasis on Training

Both the Washington Post’s Joe Davidson and Federal News Radio‘s Jason Miller reported on March 3 that the Obama Administration will include increased attention to employee training needs in the President’s proposed 2015 budget. The reports are based upon comments made by OPM Director Katherine Archuleta at the National Treasury Employees Union legislative conference last week. Federal News Radio reports Director Archuleta said “The President’s budget proposal will include measures to improve federal employee training and support an exchange of training ideas across government, part of the conversation that [NTEU President] Colleen [Kelley] and other labor representatives are going to be having in the Labor Management Council. We need to learn from one another about what works. We need to be able to talk about our successes.”

It’s about time. For far too long Federal agencies have looked to the training budget as one of the first places to cut (after travel) when budgets are tight.  Training cuts are among the most shortsighted of the budget cutting options. They trade small savings today for a lack of capability tomorrow. Although such cuts are typically justified by claims that they are to protect dollars devoted to the mission, the result is that employees do not have current training on crucial mission skills. The renewed emphasis on training in the 2015 budget is a good sign that the dark times for employee training may be coming to an end. I was also pleased to see Director Archuleta’s focus on sharing information regarding learning about what works.

“What works” is sometimes difficult to define other than through anecdotal evidence. One key shortcoming in many training programs is evaluation of their effectiveness. Real training evaluation goes far beyond simply asking class attendees if they liked the training or asking managers if they think their employees did better after training. Done properly, training evaluation can help agencies determine whether employee skills, customer experiences and mission outcomes are improved by specific training. If more training programs were accompanied by proper evaluations, we would learn far more about “what works” and what does not. That would lead to far better use of training dollars and better outcomes.

One area where we have a good idea of “what works” is leader development. Other than core mission skills, leader development is one of the best investments in training dollars. Money spent on leader development is leveraged by the effects leaders have on the people they lead. With many of the bad results evidenced by the Federal Employee Viewpoint Survey being directly or indirectly caused by the quality of supervision, the amount of goodness that can result from effective leader development programs is tremendous. Given that, and the fact that even with more dollars training budgets will be tight, how can agencies make certain they spend their dollars wisely?

Recently my ICF International colleague Ethan Sanders and I discussed the issue and the results of a study Ethan, our colleagues Lisa Gabel, Kate Harker and students from Penn State conducted for ICF and the American Society for Training and Development (ASTD) on the subject. The report of that research, “The Impact of Leader Development Programs,” looks at the most effective methods of linking leader development programs to organizational impact measures. The study focused on three specific research questions:

  1. What are the best examples of organizations that are able to measure the impact of leadership development programs?
  2. What are the specific techniques and the required context that these organizations need to link leadership development content to organizational metrics?
  3. Can these best practices be transplanted into other organizations, thereby allowing them to assess and improve the outcomes of their leadership development programs?

Following interviews with an expert panel (including Chief Learning Officers), conducting a literature review, doing “best case” interviews and administering two surveys, the research resulted in several key findings.

  • It is possible to effectively (and efficiently) link the outcomes of leadership development to organizational success measures. It is exceedingly rare to find organizations that do it well and it definitely takes some practice to do it well.
  • Best Case organizations who do evaluation well, report it taking far fewer resources (time, people, money) than those who speculate about the difficulty of implementing a robust evaluation systems.
  • Organizations that already have a culture around measurement (i.e., measuring the effectiveness of programs, service, success, etc..) have a much easier time standing-up a training evaluation system for leadership development.
  • There are a lot of techniques out there (some more qualitative in nature, some more quantitative) that can work for different organizations, but you have to select ones that fit your organization. The study identified 29 techniques.
  • Best Case organizations have baseline data, a formal evaluation plan in place, and use more advanced types of measurement approaches such as control groups and time-series approaches.
  • ROI measurement is still very low in the profession.
The good news from the report and literature review is that it is clear that training programs in general can benefit from evaluations of their effectiveness. Training evaluation is not only less resource intensive than many people believe, but there are also many effective techniques that can be used and tailored to fit the culture, mission and requirements of the organization. If agencies become more committed to training evaluation, the Federal government will gain far more knowledge about effectiveness of programs, ways to get better results with fewer dollars, and the real mission benefits of training. That knowledge can serve as the basis for the business case for increased investment in training and the improved results it can produce.
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