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.