How 20th Century Reform Became 21st Century Headaches

This is the second of a series of posts on the history and future of the civil service. The first, addressing the Pendleton Act and Theodore Roosevelt’s role in civil service reform is here.

Although it is 130 years old, the Pendleton Act is still a relevant foundation for the civil service.  The difficulty the system experiences in meeting today’s requirements is not because of the age of the system or lack of reform.  In fact, many of the problems the Civil Service currently faces are an outgrowth of one of the largest reform efforts of the mid-20th century – the Classification Act of 1949. The Classification Act consolidated multiple classification systems into one “General Schedule.” President Harry Truman issued a lengthy signing statement outlining the benefits of the new system. The Classification Act made sense and was real reform in 1949, but changes in the workforce and the nature of work make it increasingly unsuited for a 21st century workforce. Let’s take a look at it through the lens of President Truman’s signing statement.

“This act completely revises and brings up to date the salary structure for nearly half the civilian jobs of the Government–that is, nearly all of the jobs in the executive branch except those in the postal service and those paid on an hourly basis which are covered by other legislation.”  The General Schedule is no longer current. When it was established, more than half of Federal employees were GS-5 and below. Because so many lower graded jobs have been automated or outsourced, employees today are grouped at the higher end of the scale. This legislation makes a number of significant improvements in the pay structure of the Government. It greatly simplifies the salary system by reducing the number of pay grades from 41 to 28, and at the same time, corrects inequities among the different grades which were created by piecemeal legislation over a period of years. It authorizes longevity step-increases above the maximum scheduled grade rate for employees with long, faithful, and efficient service. The 21st century job market is far less stable than that of 1949. Employees change jobs more frequently and are more geographically mobile. A system where many of the pay increases are based on longevity rather than accomplishments presents problems that were not anticipated in post-war America. Back then, the idea of a life-long job was the norm.

The act also adds three new grades at the top of the pay schedule, which will permit a limited number of the top career positions to be paid up to a maximum of $14,000. As a result of this action, it will be possible to increase the salaries of some top career positions whose incumbents have been paid the same salary as many of their subordinates. The three new grades are now known as the Senior Executive Service. SES members often make less than their subordinates, and SES pay increases based on performance are so small that they are virtually meaningless. It will also make it possible for the Government to compete more effectively with higher-paying private employment for the services of outstanding people, and to offer a greater incentive to able young men and women considering whether to enter public service as a career. Federal entry-level salaries are adequate or generous for some occupations, but many lines of work are so competitive that the government struggles to recruit and retain talent. It is getting harder to attract high performers to the SES because the risks often outweigh the job satisfaction and benefits.

The new Classification Act also improves Federal personnel administration by decentralizing to the departments and agencies the responsibility for fixing the pay rate for each position, except those in the top three grades. This will eliminate one source of delay in appointing qualified personnel. The Classification Act may have helped at the time, but today’s hiring process is too complicated, too slow, and too unresponsive to changing labor market conditions. At the same time, it will increase the responsibility of the departments and agencies for meeting their own position classification problems. These responsibilities must be carefully exercised. Job classification in the 1950s and 1960s was a rigid and inflexible process. Some HR offices treated classification standards as though they were holy documents and would not let employees or managers read them. As a result, grade creep was contained (although at the expense of flexibility). Today, a classifier is a rare breed. Classification standards are available to anyone with an Internet connection. The authority to classify positions has been delegated to managers in many agencies, and grade levels are often not consistent with the classification standards. Grade creep is pervasive and has aggravated the grade compression at the top grades. The Civil Service Commission, in carrying out its responsibilities for maintaining the consistency of salaries on a Government-wide basis, must also exercise its authority for prescribing standards and reviewing and inspecting the operations and decisions under the act to assure that its provisions are judiciously administered by all alike. The Office of Personnel Management (successor to the Civili Service Commission) still writes classification standards. The process takes several years and requires coordination with many stakeholders. As a result, some classification standards are out of date, and others that should be developed in response to the realities of the labor market, simply do not exist. Cuts to OPM’s budget have limited its ability to address new requirements and effectively provide oversight of the classification process.

The management improvement provisions of the act further assure economy and efficiency by requiring the department and agency heads to review their operations on a systematic and continuing basis. This provision recognizes the importance of improving the management of Government operations which was emphasized so strongly by the Hoover Commission and which is the purpose of the program provided for by a recent Executive order establishing the Advisory Committee on Management Improvement. Interest in improving management of government operations has waxed and waned, but it would be difficult to argue that many people today truly have an interest in getting into the nuts-and-bolts of government. A few excellent organizations, such as the National Academy of Public Administration, the Partnership for Public Service, and the Volcker Alliance, are actively engaged in “good government” activities, but the national interest the Hoover Commission generated is just not there today. Furthermore, it provides for the reward of those persons or groups of persons who have done an exceptional job in promoting economy and efficiency in the Government’s work. Bonuses for SES members and employees have been reduced or eliminated, Presidential Rank Awards suspended, and legislation is moving in the House of Representatives to limit bonuses for employees at the Department of Veterans Affairs. In many agencies, if employee bonuses are awarded they are a few hundred dollars each. It would be hard to argue there is a lot of political support for substantial rewards for people who promote economy and efficiency in government.

The Classification Act is 64 years old. The rigidly structured pay and job classification processes it created were well-suited to the challenges of the post-war world. They provided stability, consistency, and a means of making it easier for citizens to build careers in public service. Unfortunately, the civil service system has not kept up with the labor market in which it competes. It is unresponsive to the market, challenging to administer, and pretends that it provides a high degree of precision in classification and pay setting. It does not really do that, and the job classification process is a mess. Because job classification drives hiring and pay, those are a mess too. Experiments in pay-for-performance have had mixed results at best, although the Department of Defense National Security Personnel System and the Homeland Security MaxHR programs were destroyed more by their attempts to eviscerate collective bargaining than their classification, performance and pay provisions.

The civil service regulations, policies and practices that have evolved over the years to implement the merit system have produced application processes that seem designed to test how desperately an applicant wants government employment, a job classification system that, when it isn’t being ignored, is hated by managers, employees and HR officials alike, and a promotion system that federal managers, employees, unions and HR officials loathe and distrust.  The result is a Civil Service system that struggles to meet the challenges it faces today.  As the Federal government became increasingly complex, little provision has been made for the highly educated and trained workforce necessary to do much of the work.   The one-size-fits-all model might have worked for the government of the 1950s, but it does not work for the government of today.

There are many options for updating civil service to make it more responsive and effective. Future posts in this series will address aspects of the civil service system that must be changed in order to be competitive in today’s labor market and in the future, including more flexible position classification, pay reform, effective performance management, and simplification of the hiring process.

 

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2 thoughts on “How 20th Century Reform Became 21st Century Headaches

  1. Alex W. says:

    I don’t think that the federal workforce has changed that much to demand such profound change, especially since in none of your posts you discuss the quality of the management that would do the rating. No job performance evaluation system in human history has had total acceptance; the General System has come the closest to being acceptable.

    So, sir, what is the bottom line? Apply a forced-rank distribution performance model to the federal workforce that would have at its root a work environment based on instability, backstabbing, sabotage, and distrust?? (http://www.washingtonpost.com/blogs/on-leadership/wp/2013/08/27/with-steve-ballmers-departure-a-look-at-microsofts-flawed-system-of-performance-reviews) I am not sure why this terrible system from GE’s Jack Welsh and Dick Grote is still in fashion. See this article–“Rank and Yank Retains Vocal Fans,” http://online.wsj.com/news/articles/SB10001424052970203363504577186970064375222. Recall that Enron, the failed corporation, wickedly used forced-rank distribution.

    Because the federal government provides human services, there is not reasonable way forced-rank distributions can be fairly applied. [But if this system were to be advocated, employee ranking of their supervisors must be included to serve as a check on the process.]

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    • Jeff Neal says:

      I don’t support forced rankings at all. They are a terrible way to manage. I will be writing a post soon that will outline some ideas for rating processes that do not have the demotivating characteristics of the current processes.

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