[Senate Hearing 107-470]
[From the U.S. Government Publishing Office]
S. Hrg. 107-470
THE FEDERAL WORKFORCE: LEGISLATIVE PROPOSALS FOR CHANGE
=======================================================================
HEARINGS
before the
INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL SERVICES SUBCOMMITTEE
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
MARCH 18 AND 19, 2002
__________
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
79-887 WASHINGTON : 2003
___________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan FRED THOMPSON, Tennessee
DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska
RICHARD J. DURBIN, Illinois SUSAN M. COLLINS, Maine
ROBERT G. TORRICELLI, New Jersey GEORGE V. VOINOVICH, Ohio
MAX CLELAND, Georgia PETE V. DOMENICI, New Mexico
THOMAS R. CARPER, Delaware THAD COCHRAN, Mississippi
JEAN CARNAHAN, Missouri ROBERT F. BENNETT, Utah
MARK DAYTON, Minnesota JIM BUNNING, Kentucky
Joyce A. Rechtschaffen, Staff Director and Counsel
Richard A. Hertling, Minority Staff Director
Darla D. Cassell, Chief Clerk
------
INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL SERVICES SUBCOMMITTEE
DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan THAD COCHRAN, Mississippi
ROBERT G. TORRICELLI, New Jersey TED STEVENS, Alaska
MAX CLELAND, Georgia SUSAN M. COLLINS, Maine
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
JEAN CARNAHAN, Missouri PETE V. DOMENICI, New Mexico
MARK DAYTON, Minnesota ROBERT F. BENNETT, Utah
Nanci E. Langley, Deputy Staff Director
Dennis Ward, Minority Staff Director
Brian D. Rubens, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Akaka................................................ 1, 45
Senator Voinovich............................................ 2, 46
WITNESSES
Monday, March 18, 2002
Hon. Kay Coles James, Director, Office of Personnel Management... 6
Hon. David M. Walker, Comptroller General, General Accounting
Office......................................................... 7
Colleen M. Kelley, National President, National Treasury
Employees Union (NTEU)......................................... 21
Bobby L. Harnage, Sr., National President, American Federation of
Government Employees, AFL-CIO.................................. 23
G. Jerry Shaw, General Counsel, Senior Executives Association.... 25
John C. Priolo, General Executive Board Member, Federal Managers
Association (FMA).............................................. 27
Tuesday, March 19, 2002
Paul C. Light, Senior Advisor, National Commission on the Public
Service, and Vice President and Director of Governmental
Studies, The Brookings Institution............................. 48
Carolyn Ban, Dean, Graduate School of Public and International
Affairs, University of Pittsburgh, and President, National
Association of Schools of Public Affairs and Administration.... 49
Max Stier, President, Partnership for Public Service............. 51
Steven J. Kelman, Professor of Public Management, John F. Kennedy
School of Government, Harvard University....................... 53
Alphabetical List of Witnesses
Ban, Carolyn:
Testimony.................................................... 49
Prepared statement........................................... 207
Harnage, Bobby L., Sr.:
Testimony.................................................... 23
Prepared statement........................................... 128
James, Hon. Kay Coles:
Testimony.................................................... 6
Prepared statement........................................... 77
Kelley, Colleen M.:
Testimony.................................................... 21
Prepared statement........................................... 111
Kelman, Steven J.:
Testimony.................................................... 53
Prepared statement........................................... 221
Light, Paul C.:
Testimony.................................................... 48
Prepared statement........................................... 191
Priolo, John C.:
Testimony.................................................... 27
Prepared statement........................................... 178
Shaw, G. Jerry:
Testimony.................................................... 25
Prepared statement of Carol A. Bonosaro with attachments,
submitted by Mr. Shaw...................................... 144
Stier, Max:
Testimony.................................................... 51
Prepared statement........................................... 215
Walker, Hon. David M.:
Testimony.................................................... 7
Prepared statement........................................... 95
Appendix
Majority Subcommittee Memorandum ``The Federal Workforce:
Legislative Proposals for Change,'' with attachments........... 232
``Changing Role of NRSROs'' submitted by Glenn Reynolds,
CreditSights, Inc.............................................. 241
Questions and responses from Senators Akaka and Voinovich for:
Ms. James.................................................... 263
Mr. Walker................................................... 277
Ms. Kelley................................................... 284
Mr. Harnage.................................................. 286
Mr. Shaw..................................................... 289
Mr. Priolo................................................... 291
Ms. Ban...................................................... 294
Questions and responses from Senator Akaka for:
Mr. Light.................................................... 299
Dr. Kelman................................................... 300
Questions and responses from Richard N. Brown, Directing Business
Representative, National Federation of Federal Employees
Federal District I, and Frank Carelli, Jr., Director,
Government Employees, International Association of Machinists
and Aerospace Workers, AFL-CIO................................. 301
THE FEDERAL WORKFORCE: LEGISLATIVE PROPOSALS FOR CHANGE
----------
MONDAY, MARCH 18, 2002
U.S. Senate,
Subcommittee on International Security,
Proliferation, and Federal Services,
of the Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 9:36 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Daniel K.
Akaka, Chairman of the Subcommittee, presiding.
Present: Senators Akaka and Voinovich.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. The Subcommittee hearing will come to order.
This morning, we begin 2 days of hearings on the Federal
workforce and several legislative proposals offered by Senator
George Voinovich and Senator Fred Thompson.
We have with us a distinguished group of witnesses both
today and tomorrow who will share their insights on how to best
meet the challenges of recruiting and retaining the people that
agencies need to carry out their missions. I thank you all for
being with us today and I wish to extend a special hello to
John Priolo, Director of the Hawaii Chapter of the Federal
Managers Association, who will testify on behalf of his
association's President, Michael Stiles.
Unfortunately, Senator Cochran and Senator Thompson are
unable to be with us today. However, I am delighted to be
joined by my colleague, and I would say buddy and good friend,
the Senator from Ohio, who has championed the importance of a
strong Federal workforce. I appreciate his support today, just
as I was pleased to support him during the many hearings he
held on these issues.
I will not recount statistics or talk about my concern over
the loss of critical institutional knowledge, and I leave the
discussion of the bills to our panelists. I will, however, talk
about the men and women who make up our government's workforce.
I am pleased that in the wake of the terrorist attacks last
fall, anti-government rhetoric has abated and a higher
percentage of young Americans say they would consider Federal
service as a job option.
We saw that for every essential service these attacks
disrupted, the government responded quickly and effectively.
Our Nation's recovery is being aided through the talents and
professionalism of our Federal workforce, who are selflessly
supporting the efforts of armed forces abroad. After September
11, more than 2,100 Federal employees were deployed in disaster
response teams, and to this day, thousands of Federal employees
are responding to the war on terrorism as a part of their
normal duties.
The Federal workforce is this Nation's backbone and I think
it is time to drop the pejorative use of the word
``bureaucrat.'' Our hearing continues the dialogue on what
needs to be done to make government service more attractive to
young people and to inspire and compensate those who have
chosen government as their job choice.
Just last week, this Subcommittee heard from agency and
expert witnesses that the lack of employees with language,
science, and technical skills threaten our national security.
That hearing focused on S. 1800, a bill I introduced with
Senators Durbin and Thompson and cosponsored by Senators
Cochran, Collins, and Voinovich. As we examine the Thompson and
Voinovich legislative proposals, I want to make sure that the
bills will not cause harm to either employees or their
agencies.
Federal agencies have been operating under flattened
budgets for years and the administration's fiscal year 2003
budget proposal, after removing funding for homeland security
and defense purposes, would see this discretionary spending
decline by 1 percent. This leaves no room to fund recruitment,
retention, and training programs. Moreover, the lack of parity
between the pay of civilian workers and military service
members sends the wrong message to prospective and current
Federal employees.
I support good management and I want to make sure that we
have the right people and the right skills to operate the
government in an effective, efficient, and economic manner. But
I do not see how we can expect young people to consider
government employment if we are unable to provide them with
comparable pay, benefits, and opportunities for training.
How do we advertise the government as an employer of choice
if agencies lack funding for incentives, including money to
implement fully the student loan repayment program? How do we
balance recruitment and retention goals with this
administration's goals for competitive sourcing? These are
among the questions I hope we will answer today. There must be
a commitment from the highest levels of government and a
willingness to allocate the resources necessary to achieve a
strong and vibrant workforce.
Again, I wish to thank our witnesses for being with us
today. You deserve our gratitude for your commitment to our
Federal service system, and together, we face this new kind of
national emergency in our country.
Now, I would like to yield to Senator Voinovich for any
statement he may have.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. Thank you, Mr. Chairman. I want to
extend my deep appreciation to you for holding this hearing on
The Federal Workforce: Legislative Proposals for Change. I
would also like to welcome our witnesses and I want to thank
you for being here today.
Mr. Chairman, I would like to congratulate you on the
hearing that we held last week on S. 1800, the homeland
security workforce bill you introduced with Senators Durbin and
Thompson this past December. I am very happy to be a cosponsor
of that legislation. I think the witnesses offered some
excellent testimony on the national security aspect of the
human capital crisis, demonstrating again the real urgency of
this issue.
As you know, Mr. Chairman, reforming the Federal
Government's strategic human capital management has been my
highest priority as a Member of this Subcommittee and I know
you share my concern over this human capital crisis. You have
been an important leader on this issue and I want to thank you
personally for attending all of the hearings I held on human
capital during the time that I was Chairman of the Oversight of
Government Management Subcommittee. It is encouraging to me
that we have forged a productive bipartisan partnership on this
issue, which is so important to our Nation.
Because of your participation in those hearings, we were
able to produce a report called ``Report to the President: The
Crisis in Human Capital,'' summarizing the hearings that we had
and making recommendations for action, and that was the report
that we were able to give the incoming new administration, a
benchmark on our progress at that time.
In addition to the Subcommittee's activities, other
government offices and agencies are addressing the human
capital crisis, which is very encouraging, and several have
joined us today. In January 2001, Comptroller General David
Walker designated strategic human capital management as a
governmentwide high-risk area, and he has also been elevating
the profile of and developing solutions to this problem as a
top priority. To quote Mr. Walker's admonition, and David, this
is going to be famous, ``Too often, we have treated Federal
employees as costs to be cut, rather than assets to be
valued.'' I think that is really it in a nutshell. That is what
our past has been and we need to change that.
Last August, the Bush Administration prioritized strategic
management of human capital as its No. 1 governmentwide
management initiative. OPM Director Kay James has done an
excellent job moving her agency and the Federal Government in
the right direction when it comes to Federal personnel issues.
Kay, I really appreciate how conscientious you have been in
picking the ball up and carrying it, and we are pleased that
you are here today.
Mr. Chairman, I have also been working closely with other
Federal organizations, particularly our employee unions,
organizations that are important to our efforts to address the
Federal Government's human capital challenges. Bobby and
Colleen, I am grateful for the partnership that we have forged
during my time here in the U.S. Senate.
I would like to take this opportunity to state publicly
that my legislation is just a down payment on reform. I would
like to encourage you, Mr. Chairman--and you have already
spoken about this--to hold hearings later this year on issues
such as pay comparability and compensation, health care
benefits, and the performance of Federal agencies.
Just last week, Steve Barr's ``Federal Diary'' column in
The Washington Post offered another example of how far Federal
pay lags behind comparable positions in the private sector--and
often among agencies--citing that there was a 40 percent gap
between the SEC and other banking agencies. A comprehensive
examination of these important but long-overlooked aspects of
the human capital crisis and a strategic plan for action are
urgently needed as next steps in the process of reforming the
Federal Government's personnel systems. I know, Kay, you have
put together a draft to try to respond to that problem, and it
is going to cost more money. Let us face it. We are just going
to have to be realistic and face up to it.
I would also like to acknowledge Carol Bonosaro of the
Senior Executives Association. Carol has provided a number of
excellent recommendations for strengthening our legislation, as
has John Priolo of the Federal Managers Association.
A great deal of action has been taken to address the human
capital crisis over the last several years, and we are building
momentum daily for the passage of reform legislation in
Congress. The continued involvement of these people and
organizations and many other stakeholders is critical to our
success in solving these problems. I would particularly like to
thank Pat McGinnis for her leadership on the human capital
crisis as President for the Council for Excellence in
Government. Pat has just done a wonderful job.
Many people and organizations have had an impact on the
provisions in our bill. As you know, my original proposal, S.
1603, was improved several times before I introduced it in
October. Since then, we have continued to solicit the advice of
many stakeholders, including a number of them that are here in
this room. Currently, I am working on a draft manager's
amendment that combines part of S. 1603 with S. 1639, the
administration's human capital proposal, which I introduced
last November. I believe this compromise--representing the
efforts of the Bush Administration, our colleagues on this
Subcommittee, and many others that are here--is really
something that we can be proud of.
It is my sincere hope that we can advance legislation
through the Governmental Affairs Committee that will
incorporate the best elements of my proposal and the broad
array of others that have been introduced in the 107th
Congress, such as S. 1800. I am extremely optimistic that we
can enact legislation this year that will really make a
difference to the Federal workforce.
All the bills that I have discussed, as well as several
others, including important flexibilities and innovative
programs designed to make the Federal Government a more
attractive employer for applicants. In the interest of time,
Mr. Chairman, as you did, I am not going to get into the
specifics of this legislation, but I would mention that a lot
of work has gone into it. If you want to make change, you have
to first underscore urgency for change and then you have to
have a vision, and I think that we do have a vision. Now we
have got to make sure that people understand that there is an
urgency to achieve the change we envision.
Senator Akaka, last week you mentioned the words of former
Secretary of Defense James Schlesinger, who testified before
our Subcommittee last March when he said, ``Fixing the
personnel problem is a precondition of fixing virtually
everything else that needs repair in the institutional edifice
of the U.S. security policy.'' He was a member of the U.S.
Commission National Security in the 21st Century.
Then last week again, Lee Hamilton, another member of that
Commission, reiterated this point before this Subcommittee when
he said, ``although there has been renewed public interest in
national security work since September 11, the U.S. Government
faces a serious problem in attracting and retaining talented
people for key jobs in national security departments and
agencies.'' That conclusion was backed up by a poll that the
Partnership for Public Service conducted. People are more
interested in government today as a result of September 11, but
the issue is, are we going to be able to take advantage of that
renewed interest to recruit them?
Each day, it seems we learn of a new example that verifies
this testimony and demonstrates anew the enormous impact of the
human capital crisis on our national security and our economic
prosperity. At the Immigration and Naturalization Service,
there are only 2,000 agents to enforce immigration within U.S.
borders. This has resulted in an enormous workload that
requires the INS to focus on their most serious cases, such as
deportation of immigrant felons. This leaves little time to
round up student no-shows, including at least two of the
September 11 hijackers.
In no way, Mr. Chairman, do I condone the fact that the INS
failed to properly screen the applications of these evil-doers.
However, the human capital problem INS faces must be addressed
in a priority fashion if we are to prevent similar instances
from occurring again.
As I mentioned earlier, at the Securities and Exchange
Commission, staffing levels have failed to keep pace with the
agency's growing workload and salaries are not aligned with
other Federal agencies due to a lack of resources.
At the Central Intelligence Agency, Director Tenet in
recent testimony before Congress said that, within 3 years,
between 30 and 40 percent of his workforce will have been there
for less than 5 years, and he proposed overhauling the
compensation system to keep the ``best and brightest,'' and
those with more experience.
Last week, Administrator Joe Allbaugh of the Federal
Emergency Management Agency, testified before the Environment
Committee that he is probably going to lose 55 percent of his
workforce in the next 2 to 3 years. And he said, after
September 11, many of them, as I am sure is the case at a lot
of other Federal agencies, have basically said, look, I
reevaluated my life. I am retiring. Many of them were not
thinking of retiring. But now they are going to take early
retirement to spend more time with their families.
So this is a real crisis that we need to face up to if we
are going to deal with our homeland security and our war
against terrorists abroad. I am very pleased, Mr. Chairman,
that you are holding the hearings today and tomorrow, and I
hope that our colleagues will understand how urgent this
situation is so that we can move on with this legislation.
Thank you very much.
Senator Akaka. Thank you very much, Senator, for your
urgent statement here.
Our first panel needs no introduction, but before we begin,
I wish to thank both of you for the outstanding support you and
your staff provide to this Committee and this Subcommittee. I
ask that you limit your oral statements to 5 minutes. However,
please be assured that your full written statements will be
made a part of the record.
Director James, you may now proceed.
TESTIMONY OF HON. KAY COLES JAMES,\1\ DIRECTOR, OFFICE OF
PERSONNEL MANAGEMENT
Ms. James. Thank you, Mr. Chairman and other distinguished
Members of the Subcommittee. Thank you very much for inviting
me here today and for holding these very important hearings to
bring these issues to the forefront of the American people and
to Members of Congress and to all those who are interested in
our Federal workforce.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. James appears in the Appendix on
page 77.
---------------------------------------------------------------------------
Among the goals that I identified when I was confirmed for
this position were that we would aggressively go after
recruiting the best and the brightest in public service and
expediting streamlining the Federal Government's hiring
process. Immediately after being sworn in, I reoriented the
focus of our agency and OPM began to provide tailored
assistance to agencies governmentwide through strike forces
staffed by some of the best career professionals that this
country has. They are equipped with outstanding skills and have
been providing service to our agencies around the Federal
Government.
Since September 11, however, the world has changed and OPM
has accelerated the pace of our activities to support the
growing human capital demands across government. Consistent
with the pledge that I made before you in June, we are working
to place tools in the hands of managers responsible for
reshaping their workforces to meet current and emerging needs.
The legislation that we are discussing today furthers these
objectives and is consistent with the pledge that I made to
ensure that agencies are accountable to merit principles and
other civil service core values, whether the agency is exempt
from or bound by the traditional civil service system. I want
to acknowledge and offer appreciation for the work of Senators
Lieberman, Akaka, Thompson, and Voinovich, who are key leaders
in this legislative effort. Without your leadership, I am not
sure we would be at this place and the Federal civil servants
would not be well served, and so thank you very much.
As you all know, good government is not a partisan issue.
This Committee on Governmental Affairs has a long history of
working in a bipartisan manner to improve the operation of
government. Indeed, this Committee oversaw the enactment of the
Government Performance and Results Act and the Clinger-Cohen
procurement reforms, and now the Committee has the opportunity
to move forward on reforms to improve the way we manage the
people who serve in the Federal Government, the people we need
to successfully wage the war against terrorism and to protect
our security at home.
In that spirit of cooperation, David Walker, who has
provided so much leadership on this issue at the General
Accounting Office, has agreed to work with OPM and OMB on a
common set of human capital management standards for Federal
agencies. This collaboration between the Legislative and
Executive Branches, I believe, promises improvements which will
lead to better management of the Federal workforce and will
result in shared measurable criteria for judging that
performance, and so David, I wanted to thank you this morning
for your leadership on these very important issues and for the
work that we have been able to do together.
But in addition to clear standards and assistance that OPM
is providing, our agencies and managers must have greater
flexibility to manage their workforces effectively to keep high
performance on the job and to compete successfully in the
market for talent. Over the last 2 months, OPM and OMB have
worked in partnership to train over 500 senior managers on the
many flexibilities that already exist. The legislation before
you today provides a very vital step toward giving Federal
agencies the additional tools that they need.
Many of the changes are technical fixes that remove
barriers to efficient management and allow even better use of
the flexibilities currently in place. Two of the bills, S. 1612
and S. 1639, contain proposals developed by the administration.
S. 1603 includes many of the same provisions but differs in
some ways. I will briefly outline the specific Federal employee
management reforms that we at OPM believe to be essential,
summarizing my written statement. I respectfully respect, and
you have already granted that we should include that.
There are many. I will just mention them because of time,
and I would also say that I am very pleased with the level of
cooperation that exists between staffs. As we work through
this, I feel confident that we will be able to resolve those
and end up with one bill we can all support.
As you know, we are talking about voluntary separation
incentives, recruitment and retention incentives, relocation
payments, and new hiring flexibilities, and we want to do all
of this within the context of making sure that core merit
system principles are protected, that veterans' preference is,
in fact, protected, and we also know that we have a lot that we
need to do to promote and encourage and look at how we treat
our senior executives.
In closing, Senators, I would just say that there is a lot
of work to be done and that, again, I am very encouraged with
the level of cooperation that exists on these important issues.
We have got to keep this issue before the American people, and
I think with the leadership that you are providing, we can do
that and we will get legislation that we can pass.
Senator Akaka. Thank you very much, Director James, for
your statement.
Mr. Walker, you may proceed with your statement.
TESTIMONY OF HON. DAVID M. WALKER,\1\ COMPTROLLER GENERAL,
GENERAL ACCOUNTING OFFICE
Mr. Walker. Thank you, Chairman Akaka and Senator
Voinovich. Let me first at the outset thank you for holding
this hearing and thank you for both of your leadership in this
important area. Clearly, you are making a difference and this
is an area where we critically need to make additional progress
as quickly as possible.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Walker appears in the Appendix on
page 95.
---------------------------------------------------------------------------
As Senator Voinovich mentioned, people represent our most
valuable asset. Government is a knowledge-based enterprise.
People are the source of all knowledge. It is time that we
recognize that and it is time that we come into the 21st
Century with regard to our strategies, policies, and practices
dealing with our most valuable asset, namely our people.
As you know, GAO designated strategic human capital
management, or I should say the lack thereof, as a high-risk
area in January 2001. Significant attention has been given to
this area. That is appropriate. When we put something on the
high-risk list, we want to bring light to a subject. With light
comes heat and with heat comes action, and action is exactly
what is needed in this area.
I am pleased to say that there is a lot of additional
attention and increasing momentum to take necessary steps in
this area. The President in August 2001 made strategic human
capital management the No. 1 item on his management agenda.
That was also a positive first step. That was, in part, due to
the encouragement of Director James, and I am sure Director
Daniels from OMB, as well, and I commend them for that.
We have said all along that it is going to take many
players working together collaboratively to make real progress
in this area, and we have a lot of players here today and
others that are not able to be here with us today but some of
which will be here tomorrow who are contributing positively in
that regard.
In GAO, we have said we need to take a three-step approach.
First, agencies need to do everything that they can
administratively. Eighty percent-plus of what needs to get done
can be done within the context of current law. Agencies need to
get on doing it.
Second, there need to be incremental legislative reforms
that provide management with reasonable flexibility, yet
incorporate adequate safeguards to prevent abuse of employees.
And third, we need to move towards comprehensive civil
service reform under which more decisions in the Federal
Government are based on the skills, knowledge, and performance
of the individuals rather than the passage of time or the rate
of inflation.
Senators, I found last year, for example, that over 80
percent of the billions of dollars that were appropriated by
this Congress for compensation was on auto pilot. It was
automatically predetermined who was going to get the money,
based upon cost-of-living increases and based on locality pay,
and it had absolutely nothing to do with performance. That is
unacceptable. It is unacceptable for any enterprise and it is
unacceptable, I am sure, from the standpoint of the taxpayers,
as well. So ultimately, we are going to have to take that issue
on.
Some agencies are making progress administratively, but not
enough. We need to make more progress in this area. One area
that is critically important and where more progress needs to
be made is in the area of performance management. Most agencies
do not have modern, effective, credible, and properly validated
performance appraisal systems that link their strategic plan,
their core values, and desired outcomes with both executive-
level performance appraisals all the way down cascading within
the organization. This is critically important to maximize
performance and assure accountability. It is also critically
important to make sure that we are making progress to
effectuate the needed cultural transformation in government.
We at GAO are trying to do three things. One, help others
to help themselves in this critically important area. We
earlier published a self-assessment guide. We are today
publishing a new strategic human capital model that is
available on our website. We have obtained input from a variety
of parties, including OPM and OMB, of which we are very
appreciative, and I look forward to working with Director James
and Director Daniels and others to try to see if we can come up
with a single set of tools and methodologies which the
Executive Branch may end up mandating and which we can help to
make sure that people are making appropriate progress in this
area.
Second, we are conducting a variety of audits and
evaluations in this area for the Congress in order to assess to
what extent people are making progress.
And third and not least, we are leading by example. We are
practicing what we preach, and I think that is critically
important.
I would say that the act that is before us, the Human
Capital Act today, represents a positive step, and as Senator
Voinovich said, a first step in what will be a long and winding
road. But it is a positive first step and I commend you for it.
There are a number of positive provisions in this legislation
that I think would help meet the two objectives that I
mentioned, provide management reasonable flexibility and at the
same point in time incorporating appropriate safeguards to
prevent abuse.
There are several areas that I would like for you to
consider as you look forward on this legislation, items that
you may want to consider incorporating.
First, I think consideration should be given to providing
OPM the authority to provide class or agency-specific
broadbanding for certain critical occupations. It is important
that in doing so, however, that agencies understand what skills
and knowledge they need and that they have appropriate
performance management systems to properly implement
broadbanding.
Second, I believe that it is important in looking at the
early out and buyout authority that performance be able to be
considered in determining who would be granted an early out or
buyout. I do not believe that it is appropriate to consider
performance in determining what functions or positions would be
offered early outs or buyouts. However, I do believe that it is
important that management have the ability to say no if one of
the top performers wants to exit under this program. It is time
that the government start managing based upon dollars and
results, not FTEs, and this provision is a positive first step
to doing that.
Third, I think it is critically important that independent
and objective studies be done of the real pay gap. We have had
a tremendous debate for a number of years. It is time that we
get the facts. Reasonable people can differ on how best to
proceed, but we need the facts on the pay gap.
In addition, we need additional facts on the existing
performance appraisal systems that agencies have, and I think a
study is necessary there.
And last but not least before I close, Mr. Chairman, I
believe the time is coming, if it is not already here, that the
Federal Government is going to need to consider whether or not
major departments and agencies need to have chief operating
officers, individuals who are focused on trying to deal with
the basic good government infrastructure issues that are not
partisan in nature and that should span administrations. We
have a significant amount of turnover among political
appointees and it is understandable that political appointees
are focused primarily on the President's agenda, the department
head's agenda, but somebody needs to be focused on the good
government items that span administrations and require extended
amounts of time in order to effectively address.
Having chief operating officers who are under performance
contracts with a term appointment who might be able to be
extended at least one term, I think would represent a positive
step to try to make real progress in these areas and to help
effectuate the needed cultural transformation in government.
These would be in addition to, not in lieu of, the current
deputy secretaries, who are properly focused on the President's
as well as the Secretary's priorities and agenda, and should
be. But there are things that just do not get done under the
current system that need to get done. Thank you.
Senator Akaka. Thank you very much for your statements.
Director James must leave by 10:30, so with your
indulgence, Mr. Walker, Senator Voinovich and I will direct our
questions to her first, and I will limit my questions also.
Director James, I want to thank you for your statement and
for all that you are doing. The bills under consideration today
would provide agencies expanded authorities for recruitment,
retention, and training. However, the compensation gap between
the government and the private sector also plays a critical
role in whether people consider a career in government.
I understand that OPM will release a white paper on pay
shortly, which I hope will address this problem. Added to the
pay issue is the fact that most agencies are unable to use
existing authorities for employee incentives because of
budgetary constraints. My question is, what do you feel are the
most critical funding requirements to address the government's
human capital needs?
Ms. James. Thank you, Mr. Chairman. Let me say a couple of
things. Yes, we will be releasing a paper fairly soon, and
before we can get to the point where we come up with a
solution, much as you are doing here today, I think it is
important to bring to the attention of the American people and
to policy makers the importance of compensation, the outdated
system under which we are currently operating, our inability in
many cases to be able to tie pay and performance. So the first
leg of our very long journey will simply be to ask the
question, to raise the issues, and to begin a dialogue.
Second, I would say that in the whole arena of issues
facing us right now, recruiting, hiring, retaining employees,
that I would not like to place a value on which is more
important and where do we need to put the compensation dollars.
While we are aggressively looking for tools and mechanisms for
recruiting, I think at the same time we have to make sure that
our current employees know the value that we place on them.
They have a knowledge base which a new hire would not have.
They have experience and they have wisdom.
So at the same time that we are trying to recruit and
attract the best and brightest, I think that we have to look at
putting resources behind retaining those employees that we
currently have. I would not like to rank them and put them in
priority order because I think they are all important.
Senator Akaka. I know you have to leave. I have a final
question to you and then I will yield to Senator Voinovich.
The proposals we are reviewing today are intended to allow
agencies to better recruit and retain the people they need.
However, some of our next witnesses believe that personnel
ceilings act as barriers to this objective. How can recruitment
incentives be reconciled in the current personnel ceiling
limitations?
Ms. James. Well, let me say that in recruiting,
particularly people that we need in critical positions in the
higher ranks of our government, that the current issue that we
have before us with SES pay compression. Sometimes when you
bring someone in, it defies logic to explain to them what this
system is and when they are brought in at a certain level in a
senior position what that means.
I think that those issues have to be addressed in the
broader context of total compensation reform. It does not make
sense to many individuals, particularly--and I recently had
that experience in trying to bring someone in at a senior level
and saying, this is your starting salary and will pretty much
be your salary for the entire time you are in the Federal
Government. Those are issues that we must address.
Senator Akaka. Let me yield to----
Ms. James. Mr. Chairman, before you yield, I do want to say
thank you and that I would request to leave to attend a funeral
of a very dear friend. Many of you may remember Elaine Crispin,
who was Nancy Reagan's press secretary. I had the privilege of
working with her at ONDCP in a previous administration. She was
a great woman and her memorial service is at 11 o'clock this
morning.
Senator Akaka. I am sorry to hear that. Senator Voinovich.
Senator Voinovich. Kay, we have talked a lot and spent a
lot of time together. Would you like to just comment on what
provisions of this legislation you think will be the most
helpful to you?
Ms. James. I do want to comment on that and I want to
comment on one proposal that David Walker has laid before us
this morning, as well.
I think that we are absolutely right when we talk about the
flexibilities that managers currently have before them. I think
it is also important for legislators as they are considering
this legislation to understand that these are tried and true.
These proposals that they have before them have been tried in
pilot projects and been found to be effective, and so as a
result of that, they are things that we are ready to take
governmentwide.
Which are most important and will be most helpful? I think
anything that will help us to attract and maintain employees
are helpful and many of those provisions will. I think that the
targeted buyouts are an important measure so that we can have
an efficient right-sizing of government and not just downsizing
of government, that we can target those buyouts to where they
are needed.
I think the provisions that are in the bill for the SES
senior managers, where we are able to allow them to get their
full bonuses in a year, will do much to encourage those in our
senior management ranks, who are doing a fabulous job on behalf
of their government, are very important.
I think our ability to pay bonuses to individuals and
relocation fees, these are all things that folks are used to
getting in the private sector and will help us, I think, to
compete aggressively for those individuals so that we are not
losing the talent to the private sector and can attract them to
the public sector.
I just have one comment, and I know David feels very
strongly, and this is newsworthy because David and I hardly
ever disagree, ever, and so this is newsworthy because this is
one where we do, and that is on the chief operating officers.
My take on that is that this is a new administration and this
President has designated chief operating officers. What is
different, I think in this particular case, is that maybe
historically and traditionally, chief operating officers have
not focused on management but have focused on advancing the
President and/or the Secretary's agenda.
This President, as you know, is the first MBA President and
this President cares a great deal about management, and in the
portfolio of activities that these now-designated chief
operating officers have is the management of these agencies,
and as you know, the President has given them five management
agenda items, and I think any CEO coming into an organization
feels strongly that they would like to have their chief
operating officer be the one that is going to be responsible
for implementation.
I think that David is absolutely right when he says we need
chief operating officers who are, in fact, focused on
management agenda items. So we will continue to work through
that and I am sure that we can come up with something that will
be mutually agreeable to all, and as I said, that is about the
only thing I can find that we might disagree on.
Senator Voinovich. Thank you very much. I would like to say
that one of the concerns that I had, in fact, one of the things
that we worked with Mr. Walker on, was a questionnaire for
political appointees that the administration was recruiting to
find out whether or not they knew anything about management.
That is the key----
Ms. James. I do remember some of those questions during the
confirmation process, Senator, yes.
Senator Voinovich. The problem is, does the Federal
Government recruit individuals that appreciate how important
management is. That is the big hurdle. I know that Donna
Shalala, who headed up the Department of Health and Human
Services, said that when she came through her confirmation
hearing, no one ever asked her one question about management,
not one, and she had one of the largest agencies in the Federal
Government.
Mr. Walker. Can I comment quickly, Senator?
Senator Voinovich. Yes.
Mr. Walker. I am confident that we probably can work
something out that would make sense here. I have no doubt
whatsoever that this President, that OMB, that OPM, that the
cabinet secretaries and the President's management council are
committed to making meaningful progress on management issues
during this administration. I have no doubt about that.
However, that is this administration and that is these
individuals. The issues that we are talking about here will
concern every administration, will span every individual who
ends up having a responsible position, and I think history has
shown that there has not been an adequate amount of sustained
attention over time which is going to be necessary in order to
make the type of cultural transformation we are talking about,
and what we know for sure is it will take more years than the
current incumbents are in their jobs.
Senator Voinovich. I will say this to you, that I think
that setting a precedent is very important and this is very
interesting. When I left the governor's office, several of the
people who were my cabinet directors stayed on. Governor Taft
kept them on because they were talented professionals. For
example, in the Department of Transportation, he promoted an
individual to the position of Director of Highways. A new
administration can set a new tone for what is expected, through
actions like these.
I am hoping down the road here in the next year or so, Mr.
Chairman, we can start talking about quality management and
empowering the people who work in Federal agencies to have more
to say about the direction of those agencies. And again, if you
get that going in an administration, that can carry over from
one administration to the next.
Last but not least, I am going to be meeting with Mitch
Daniels today. I am very impressed with what you are doing,
Kay. I am very impressed with what Sean O'Keefe did and I am
pleased that the administration brought Bob O'Neill in from the
National Academy of Public Administration to help them develop
their recommendations in the area of human capital. But we
still do not have a Deputy Director for Management in the
Office of Management and Budget, and I really believe, in spite
of the great job that you are doing over at OPM, we need
somebody in the administration who concentrates on nothing but
the President's management agenda, somebody who gets up every
morning and stays up late at night working on that agenda and
who can keep hammering away at it and be your partner in
getting the job done. I hope that you would encourage the
President and Mr. Daniels and others in the administration that
we need to get that management person in the Office of
Management and Budget.
Thank you. If you want to take off, you can.
Senator Akaka. Thank you very much, Senator Voinovich.
As I said, you are looking forward to leaving at 10:30 and
I see we have a few minutes. I would like to ask you another
question, Director James.
Ms. James. Certainly.
Senator Akaka. It is along the line of this management that
Senator Voinovich has been speaking about. As we heard from the
Comptroller General of GAO, GAO has developed a new model of
strategic human capital management. This model was developed
independently of OMB, OMB's performance ranking scorecard that
shows how agencies are meeting the President's management
agenda and will aid OMB in evaluating agencies' budget
requests.
From what I have heard, the GAO model would provide
managers and employees with clearly defined objectives and
goals. I would be interested to hear your views on the GAO
model----
Ms. James. Certainly.
Senator Akaka [continuing]. And how you believe it could be
integrated into OMB's scorecard approach.
Ms. James. Thank you. The GAO was very gracious in allowing
us the opportunity to review that model and we had some input
into that. We are still working to make sure that we are not
confusing Federal agencies by having standards out there that
come from OMB, and from GAO, and they are pulling their hair
out and saying, well, which standard do we adopt and how do we
know we have made it and how do we turn to green on the
President's scorecard, because as you know, this President and
all of his managers are taking his management agenda so
seriously because you know that you get more of what you
measure, and so this President has decided to measure how
effectively his managers are adopting the management agenda.
So with that, our staffs have been working to incorporate
it and come up with one standard so that we will not offer
confusion to the Federal workforce and to managers as they
utilize this new tool. What you will probably end up with is
the GAO model, and we may add one or two things that we think
are important that are not reflected in that model.
But I think basically what you are going to see is we are
trying to reach consensus on that in the interest of not
confusing the Federal workforce. The model is an excellent one
and we very much endorse and support what the General
Accounting Office is doing.
Senator Akaka. You had another comment on that?
Senator Voinovich. No, I do not.
Mr. Walker. Mr. Chairman, if I can note, this is an
exposure draft and so, therefore, we will be experimenting and
others will be experimenting with this over the next several
months, and as a result, this gives us a period of time that we
can do exactly what Director James said, see if we can work
together towards one that we can all agree with, and I am
confident that is going to be possible.
Ms. James. I am, too.
Senator Akaka. Thank you so much, Director James.
Ms. James. Thank you very much, and I appreciate your
indulgence.
Senator Akaka. You may be excused.
Ms. James. Thank you.
Senator Akaka. Mr. Walker, I thank you for your patience. I
am pleased that you unveiled the GAO strategic human capital
model at our hearing this morning. I believe it is a good
complement to the OMB scorecard.
My first question is a theoretical one, but because GAO
provides nonpartisan assistance to Congress, I thought you
might be able to offer an unbiased view. Every administration
comes into office with a specific agenda and I feel that we
must separate policy from politics. Friday's Washington Post
included an article on career attorneys in the Justice
Department Civil Rights Division. Let me be clear, I am not
commenting on the merits of this issue but rather a statement
made by aides to the Attorney General who described the
transferring of certain responsibilities traditionally handled
by career lawyers to political appointees in this way. I quote
from the article, ``Aides describe the actions as part of the
normal process of a new administration taking over an agency
previously led from a different political viewpoint.''
Mr. Walker, how can we best achieve reform of the civil
service system without imposing changes dictated by political
considerations?
Mr. Walker. Whichever administration is in, they are going
to end up having certain priorities that they believe need to
be pushed. They are going to allocate resources based upon what
they believe those priorities should be and they are going to
have certain principles or strategies that they want to try to
employ in doing that.
I do, however, believe that it is important to recognize
that civil servants represent a vast majority of the Federal
workforce. Civil servants are to be professional, objective, as
appropriate, and nonpartisan in nature. In order for us to be
successful in the human capital area, it is going to take the
combined efforts and appropriate collaboration between both
political and career officials, and, I might add, also between
labor and management, whether the employees are organized, then
obviously the bargaining unit, if they are not organized, then
through other means such as our Employee Advisory Council in
our case because we do not have a bargaining unit.
I do not know all the details of that particular situation,
Senator. I had some concerns when I read that article, as well,
but quite frankly, I do not have all the facts and so it would
be premature for me to try to specifically address that
situation based on one newspaper article.
Senator Akaka. Thank you for that response.
You have said on many occasions that agencies already have
90 percent of the flexibilities they need. Your comments
prompted some of us on this Subcommittee to ask GAO to review
the use of flexibilities currently available to Federal
agencies to better recruit and retain Federal workers. However,
we know that agencies have used them sparingly, mostly because
of lack of resources.
In her written testimony, Colleen Kelley draws attention to
the statistic that in fiscal year 1998, less than one-fourth of
1 percent of the Federal workforce received any form of
recruitment, retention, or relocation incentives. Do you
believe that agencies will be more likely to use the
flexibilities offered under these legislative proposals than to
use the ones that currently exist, and if so, why?
Mr. Walker. I believe that this will be a positive step
forward and it will help. I also believe, however, that we have
got to recognize that it is not a panacea. In some cases,
people are not using the flexibilities because they have not
been properly educated with regard to what the existing
flexibilities are. In some cases, they have not used the
flexibilities because of the priorities that they have set.
For example, we all have a certain amount of money that we
have been allocated in order to accomplish our various
missions. Unfortunately, many agencies have tended to manage
more based on FTEs rather than dollars or results, and in some
cases, people have decided to try to maximize the number of
FTEs they have rather than deciding that, well, I need to
manage to a budget.
For example, at GAO, we do not always use our total FTE
limit. Sometimes we make a conscious judgment that we are going
to have certain incentives to attract people, certain
incentives to retain people, or training, development, other
types of things where we are investing in our existing
workforce and we may have somewhat fewer people than we are
authorized to have. On the other hand, we are investing more in
those people that we do have.
So I think it is a combination of education and setting
priorities. Let me also say that I think it is personally
inappropriate to be managing based on FTEs, period, either way.
In other words, I think it is inappropriate to have arbitrary
FTE caps. It would be much better if we managed to dollars and
managed to results and recognize that, over time, we are going
to be much better off if people are held accountable for
managing to a dollar budget and managing to desired outcomes
and results rather than an historical FTE approach.
Senator Akaka. Thank you for that response.
You mention in your testimony that GAO has a chief human
capital officer. I have a three-prong question for you. Has
this approach worked? Were there any problems associated with
creating this new position? And if this provision of the bill
becomes law, what advice would you have for agencies?
Mr. Walker. Well, first, I would argue that I am the chief
human capital officer at GAO. I think it is appropriate to
recognize that if people are your most valuable asset, and in
our case, they are really the only asset we have that will help
us get our job done on a recurring basis. So I think the agency
head clearly has to spend time.
Second, our executive committee, which is comprised of
myself, our chief operating officer, our chief mission support
officer, and our general counsel, spends from 25 percent to 35
percent of its time on human capital issues. So a significant
chunk of the time of our top executive body is spent on human
capital issues.
We do have a human capital officer, Jesse Hoskins, who came
to us within the last year or so with an extensive background
at local and State Government in the human capital area and
also had some prior Federal experience. He is doing an
excellent job in trying to help us lead by example in this
area. But for him to be successful, he has to have the support
of the agency head, he has to have support of the executive
committee, and he has to have the support of a variety of other
players because you need to have line management very much
involved in this area, as well. It is not something you
delegate to the human capital function.
As far as the provision under this bill, I think it is
appropriate to provide flexibility to allow agencies to decide
how best to accomplish the intent of this bill as to who is
going to be responsible primarily on a day-to-day basis for the
human capital activities. At the same point in time, I think it
is critically important that we recognize that human capital is
fundamentally different than human resources, which was
fundamentally different than personnel. We are talking about a
strategic position. We are talking about a person that has the
ability to deal at the executive level, as a partner sitting at
the table, trying to determine what modern, effective, and
credible strategies in the human capital area need to be
designed and deployed in order to achieve the objectives of the
agency.
Some people who are currently in the personnel or human
resources function in government may be able to make that
transition, but not all. And so it is critically important that
you have the right kind of person with the right kind of skills
and knowledge to be able to perform that role in order to be
effective. That may be the case at some agencies. In some
cases, they may have to hire, which we did in our case, to have
somebody who can fit that need.
Senator Akaka. I want to thank you very much, Mr. Walker,
for your insights and your advice. I wish I had more time, but
we have another panel, so I will yield to Senator Voinovich for
his questions to you.
Senator Voinovich. We have talked about the fact that,
since September 11, there is a new attitude toward working for
the Federal Government. We have had a couple of sessions at
Harvard, and I have had a chance to talk to some of the
students there. Ten years ago, about 75 percent of John F.
Kennedy School graduates would go into government. Now, about
30 percent of them are going.
I believe that if we do not capitalize on this new interest
in government, not only by young people but also some ``dot-
com'' people that are out there today who may be looking around
for more stable employment at mid-level positions, what is your
advice on how we would best capitalize on this new opportunity
that we have?
Mr. Walker. First, I think it is a positive step that
people are not bashing Federal employees as much as they used
to, which is clearly inappropriate and counterproductive. I
mean, if they are our most valuable asset, then we need to be
doing things to attract and retain good people in the Federal
Government and we need to recognize that, that is a fundamental
part of us being successful in government.
Second, clearly, the statistics show that there are a lot
more people interested in public service of which government
service is a subset of public service and the Federal
Government is only one level of government. You have obviously
had leadership responsibilities at all three major levels of
government, Senator Voinovich, and you know that. You have been
on the front line.
I think we cannot be deceived by numbers. The fact is while
there are a lot more people who are interested in government
service, while applications are up, we need to make sure that
we have an ability to get back to people in a timely manner to
let them know, to acknowledge that we have received their
application and to let them know what the prospects are for
there to be a match and what kind of timing that they can
expect to have a decision.
My brother is somebody who was with a dot-com that became a
dot-bomb, and he has been trying for months to do something in
public service and it has been a case study in what is wrong
with our system, just frustration after frustration after
frustration in lack of communication.
I think we also have to recognize it is not just getting
into government, it is keeping good people, and that is making
some of the changes to where we are investing in our people, we
are having more empowerment involving our people, that we are
creating learning organizations, that we are allowing people to
be promoted, recognized, and rewarded based upon their skills,
knowledge, and performance, not their passage of time and rate
of inflation.
And so I think that it is going to be more important for us
over time to be able to do those kinds of things that it will
take to keep people in government and to recognize that we will
never pay the same that the private sector pays. But then
again, we should not have to, because we have something that we
can offer here the private sector never can and that is the
ability to truly make a difference for your country and for
other people.
Senator Voinovich. Another thing that I am looking at is
this issue of pay comparability. Pay is not necessarily an
incentive but it is a disincentive if it is not comparable. You
were commenting that 80 percent of the people are on automatic
pilot. Part of the reason for that, I believe, is that we have
never made enough money available in the personnel area so that
the government can offer anything but a cost-of-living
adjustment. So if agencies do not have the money to reflect
performance evaluations, most managers just ignore that process
because it does not make any difference. And that gets into the
issue of broadbanding, which is something that you have talked
about that managers must have some more flexibility, but that
cannot have an impact unless they have the money in order to
make broadbanding work. So pay comparability, it seems to me,
is something that needs to be reinvented.
The other thing that is of concern to me currently is the
issue of outsourcing. Again, when I talked with these students
at Harvard, I would ask, ``Where are you going to go?'' They
would answer, ``Well, I can go to work for a nonprofit or I can
go to work for somebody that has a contract with the
Government.'' If you anticipate that a large share of the
Federal jobs are going to be gone in an exciting area, and I am
interested in your reaction, is that a disincentive for wanting
to come to work for the Federal Government?
Mr. Walker. We clearly need to reform how we go about
making key decisions in the competitive sourcing area right
now. As you know, the Congress passed an act about a year and a
half ago asking me, as Comptroller General, to chair a panel
dealing with competitive sourcing issues. We have had a number
of meetings. We are scheduled to issue our report by May 1. We
will hit that date. That panel is comprised of a number of
leaders, both within the government, with employee
organizations, including Bobby Harnage and Colleen Kelley, who
are going to be on a panel after me, and a variety of other
respected individuals in academia and the private sector.
I expect that we will be making recommendations for
consideration by this Congress and I would hope that the
Congress will give serious consideration to that, because
clearly, there are certain aspects of the current system that
are broken and that need attention.
Senator Voinovich. One of the frustrations that I have is
that, if you look at the motivation of people who work for an
agency, one of our problems today is that we have had this
reduction in the workforce without consideration to proper
reshaping. I think that is one of the reasons why we find
ourselves in this position is that, during those years, they
just lopped people off without considering what skills they
needed to get the job done. Also, I think, it cast a bad
reflection on working for the government in general because the
1990's downsizing was on autopilot.
If we want to attract and retain people today, to set up
targets of 5 percent, 15 percent, 50 percent is
counterproductive. The issue becomes, are the executives in the
departments going to be spending their time trying to figure
out what they can outsource to meet a target or are they going
to be spending their time trying to figure out what kind of a
workforce they need to get the job done. Again, I would like
your comment on this.
Do we not have a situation here where we have one message
that says, shape up your workforce and keep the people that you
need and attract the people that you need to get the job done,
and on the other hand it says, concentrate on what positions in
your shop can you outsource?
Mr. Walker. Competitive sourcing, I would say, is one
element that you need to look at as a potential tool. It is a
tool to enhance performance, to improve economy, and assure
accountability, but how you go about it matters.
My personal opinion is, it is inappropriate to have
quantitative or percentage targets in this area. One needs to
be able to have a more informed judgment based upon past
experience, based upon public and private sector trends, about
targeting areas of opportunity where you think it may make
sense to do it without having arbitrary number or percentage
targets in this area. I think that sends a mixed signal and I
expect that is one of the issues that the panel will end up
deciding whether or not to make a specific recommendation on in
our May 1 report.
Senator Voinovich. One last question and that is on
training. This legislation talks about training. I would like
you to comment about how important you think it is that we have
allocated resources for training in the departments in terms of
attracting and retaining people to the public service.
Mr. Walker. I think it is critically important. A number of
the people that we have are very good people, but they need
help in a variety of areas, whether it be dealing with new
technology, whether it be dealing with how to effectively
manage people, whether it be dealing with difficult situations,
whether it be technical training. We have to invest in our
people.
World class organizations make training a top priority and
they invest in their people, and it is not just the current
people you have but these new people that we are trying to
bring in. One of the primary factors that they will use in
determining whether or not they are going to stay or how long
they are going to stay is are they learning? Are they growing?
Is their employer investing in them?
And if the answer to any one of those three questions is
no, then the likelihood that you are going to have turnover
increases exponentially, and so it is, therefore, critically
important, and one of the areas that I have set as a top
priority for GAO this year is we are investing more in
training. We are doing more to invest in our people. We are
developing this fiscal year a modern and forward-looking
training and development program for our staff that will be
implemented over the future and we are allocating dollars to be
able to make sure that it is real, not just form, but there is
substance behind that form.
Senator Voinovich. And I suspect it is your intention to
use that also as a recruitment tool when you are going out
trying to get the best and brightest people to come, because
people want to come to work for an organization where they are
going to learn and grow and see a future. And if the word is
that there is no money for training it is a disincentive to
come to work there. You get to a point where the agency needs
some new people, and rather than giving current employees
training and upgrading their skills, they look around to try
and find some way they can to farm their work out to somebody.
Who wants to go to work for that kind of an operation?
Mr. Walker. You have to invest in your people. They have to
believe that they are part of a learning organization, and it
is particularly important for us. We are fortunate. We have a
lot of people who want to work for GAO and our applications to
work at GAO have tripled in the last year. I think some of that
is the economy, but some of it is because we are trying to lead
by example and truly make our organization a world class
professional services organization who just happens to be in
the government.
Senator Voinovich. I would think that many other
secretaries of departments ought to look at the good role model
that you have put together at GAO. I think if we could get some
of that throughout the Federal Government, we would see a whole
lot better situation. Thank you.
Mr. Walker. Thank you, Senator. We are not perfect, we
never will be, but we are sure trying hard, that is for sure.
Senator Akaka. Mr. Walker, we really appreciate you taking
time from your schedule to be with us this morning and I thank
you very much for your insights and your advice and what you
have said this morning will be useful to this Subcommittee.
Thank you very much.
Mr. Walker. Thank you, Mr. Chairman. Thank you, Senator.
Senator Akaka. I would like to ask our second panel to come
forward and be seated. We have with us four individuals whose
commitment to Federal workforce issues is well known.
I am pleased to welcome Colleen Kelley, National President
of the National Treasury Employees Union; Bobby Harnage,
National President of the American Federation of Government
Employees; Jerry Shaw, on behalf of Carol Bonosaro, President
of the Senior Executive Association; and John Priolo, a member
of the General Executive Board of the Federal Managers
Association, President of FMA Zone 7 and a longtime employee at
the Pearl Harbor Naval Shipyard in Hawaii.
Again, we appreciate your being with us today. Before we
begin, I ask that you limit your oral statements to 5 minutes.
However, please be assured that your full written statements
will be made a part of the record.
Ms. Kelley, we will begin with your statement.
TESTIMONY OF COLLEEN M. KELLEY,\1\ NATIONAL PRESIDENT, NATIONAL
TREASURY EMPLOYEES UNION (NTEU)
Ms. Kelley. Thank you very much, Chairman Akaka and Senator
Voinovich. I am very pleased to be here today on behalf of the
150,000 Federal employees represented by NTEU. I think we all
share the same goal. We want to entice the brightest, the most
talented, and the most committed employees to public service
and to ensure that the Federal Government becomes and continues
to be the employer of choice.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Kelley appears in the Appendix on
page 111.
---------------------------------------------------------------------------
A decision to fully implement FEPCA and to provide
compensation mirroring that received by the private sector
would do more to address the recruitment and retention problems
in the Federal Government than all of the Federal Government's
other incentive programs combined. In spite of this, of course,
the President's 2003 budget proposes a 4.1 percent pay raise
for the military while at the same time suggesting that the
Nation's civilian workforce deserves only a 2.6 percent raise.
This is not a proposal that the administration would make or
one that Congress will support if we are serious about the
human capital crisis. While I accept that S. 1603 is offered as
a downpayment on the human capital crisis, in NTEU's view, any
human capital legislation worth passing must address the crisis
in Federal pay.
The Federal Health Benefits Program, too, must be
addressed. This program has become too expensive for current
employees and unattractive to prospective employees.
Legislation is pending before this Committee, S. 1982, that
would increase the employer FEHBP premiums from the current 72
percent to the more common industry standard of 80 percent.
This would represent a modest step, yet the legislative
proposals pending before this body today do nothing to address
this issue, either.
Likewise, the administration's blind targets for
contracting out 15 percent of all commercial activities work of
Federal employees by the end of 2003 continues to erode the
morale of the Federal workforce and cannot possibly attract
prospective employees. Arbitrary one-size-fits-all quotas will
not work. Would you seriously consider employment with the
Federal Government knowing that your job may be contracted out
from under you to meet an arbitrary number? I do not think so.
And I do want to thank Senator Voinovich for speaking out
at the March 6 hearing on this issue. These mindless quotas
show a lack of wisdom of the impact they have for the
government as a potential employer. Congress must let the
administration know that these quotas are counterproductive and
will not stand. Until that happens, the Federal Government will
continue to send negative messages to current and to
prospective employees.
NTEU appreciates S. 1603 drawing attention to the need for
properly training employees. However, it does not address the
resource problems that prevent agencies from adequately
training their employees. This legislation also suggests
changes in hiring, and NTEU questions the advisability of
moving away from the current rule of three. A new hiring system
must be considered fair by employees, preserve merit
principles, and lead to the best candidate being hired. Critics
of the Department of Agriculture hiring system have raised
questions about expanding that system governmentwide. In
addition, a December 2001 MSPB report raises questions about
the protection of Federal merit hiring in today's decentralized
hiring system. With the lack of expertise in assessing the
candidates found in so many agencies, we believe that there
should be further discussions with this Subcommittee on these
issues.
S. 1603 would also grant critical pay authority to Federal
agencies on a limited basis. Serious questions about the use of
critical pay authority and how it has been used to date in the
Federal Government have been raised and, I believe, need to be
addressed before proceeding any further on this issue.
NTEU does not support language in S. 1603 reducing poor
performance employee notices of termination from 30 to 15 days.
Rather than focusing on the notice period to employees, NTEU
believes that it makes better sense to train managers and to
help managers develop the necessary skills to manage, mentor,
and motivate their employees.
I also want to comment on several provisions of S. 1612,
the Managerial Flexibility Act of 2001. NTEU objects to
changing the nature of demonstration projects as well as
permitting them to be made permanent without Congressional
approval. We also object to provisions that would grant certain
management-level employees 8 hours of leave each pay period.
Rank-and-file Federal employees must work 15 years before
earning 8 hours of annual leave per pay period. If Congress
believes that annual leave limits are a barrier to hiring, then
the system should be reformed and it should be reformed for all
Federal employees.
NTEU also opposes Title II of S. 1612, which would require
agencies to pre-fund retirement and health benefit costs for
their future retirees, subjecting these mandatory payments to
the annual appropriations process. If Congress did not
appropriate the money, agencies would be faced with several
choices: To restrict retiree benefits, to curtail employee
training, to reduce public services, or to conduct a reduction
in force, a RIF. And these possibilities are not far-fetched.
As you noted, Chairman Akaka, domestic discretionary spending
suggested in the President's 2003 budget declines by 1 percent
compared to the 2002 budget. These retirement costs are already
accounted for through mandatory payments to the retirement
fund. This change is unnecessary and NTEU will strenuously
oppose it.
I thank you for the opportunity to appear today and look
forward to any questions you might have.
Senator Akaka. Thank you very much for your statement, Ms.
Kelley.
Mr. Harnage, please proceed with your statement.
TESTIMONY OF BOBBY L. HARNAGE, SR.,\1\ NATIONAL PRESIDENT,
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO
Mr. Harnage. Chairman Akaka and Ranking Member Voinovich,
thank you for the opportunity to testify on the draft proposals
addressing various Federal personnel issues. In your
invitation, you requested that I address five broad questions
regarding the draft proposals. I have addressed all five in my
written statement and today I would like to focus on just two.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Harnage appears in the Appendix
on page 128.
---------------------------------------------------------------------------
But first, I want to commend the Chairman as well as
Senator Voinovich and Senator Thompson for removing several of
the provisions of the Federal Human Capital Act of 2001 and the
Managerial Flexibility Act which AFGE had opposed. We were
particularly gratified to see that the draft proposals exclude
extending to OPM the authority to make alternative personnel
systems permanent without the approval of Congress and shifting
Federal employees' earned retirement benefits from mandatory to
discretionary accounts. In addition, we were pleased to see
that the draft proposals rejected the concept of a one-on-one
ratio for buyouts and full time equivalent eliminations.
Chairman Akaka, you asked me to respond to two
extraordinarily important questions that are often excluded
from the debate over how to address the human capital crisis,
first, how recruitment and retention concerns could be balanced
with the administration's privatization quotas, and second, how
the gap between the compensation offered to private sector
employees and that offered to Federal employees can be
addressed. These questions hold the solution to the Federal
Government's human capital crisis. The draft proposals, while
clearly well intended, offered little of substance that will
affect the rank-and-file Federal employees AFGE represents.
However, if the administration's privatization quotas go
forward and they succeed in handing over 425,000 Federal jobs
to the contract, civil service reforms, such as those of either
the draft proposals, S. 1612 or S. 1603, will become truly
irrelevant. There will be no civil service, just a corps of
political appointees of acquisition officers churning through
the revolving door between contracting agency and contractor.
Likewise, the large growing gap between the pay and
benefits provided to employees of large private sector firms
and unionized State and local government employees on the one
hand and Federal employees on the other hand is not a mere
detail. A decade after the bipartisan Federal pay law was
signed by the elder President Bush, Federal salaries still lag
the private sector by 22 percent.
Thirteen years after the CRS wrote the definitive report
showing FEHBP to be inferior to the plans in the most
successful private firms and largest States by a substantial
margin, the benefit gap has also worsened. There is no excuse,
no physical excuse, no excuse that data describing the
dimensions of the gaps were not available, no excuse that
unions were intransited and unwilling to negotiate even partial
solutions.
The draft proposals include broad authority to provide
large recruitment and retention bonuses to select Federal
employees. We could not pretend that bonuses, especially
bonuses that come at the expense of adequate staffing or
adequate salaries and salary adjustments, will improve the
government's ability to recruit and/or retain Federal
employees. Bonus payments do not count as basic pay for
purposes of retirement or annual salary adjustments. If, in
fact, they are designed to recruit for temporary positions or
to recruit those with an intention to remain only a short time
with an agency, it must also be said that they are not a
solution to the human capital crisis as we understand it.
The government's crisis is that it is on the verge of
losing its workforce to retirement, privatization, and more
lucrative offers of State and local governments and the private
sector. When the workforce leaves, it takes its institutional
knowledge, skill, experience, and the public sector's devotion
to the common good. Bonuses will not solve such a problem.
Mr. Chairman, you also asked if the human capital crisis
could be solved in the context of the administration's
privatization quotas, as they call them, competitive sourcing
targets. The short answer is that unless the administration
rescinds its privatization quota, the government's recruitment
and retention problems will only worsen. The Department of
Defense has recently acknowledged that its plan is to
automatically replace retiring Federal employees with
contractor employees. As agencies are forced to privatize half
of the so-called commercial jobs on their FAIR Act list, they
will increasingly follow DOD examples.
The administration's privatization quotas should not be
referred to as competitive sourcing initiatives. AFGE does not
oppose competitive sourcing. In fact, our position is that
Federal agencies should be permitted to contract out commercial
work, but only if it can be shown that through public-private
competition it will be less costly to taxpayers than continued
in-house performance. Only through public-private competition
can taxpayers learn whether their interest is to have the
government's work performed in-house by Federal employees or
contracted out to the private sector.
As I have mentioned, there is no way to avoid the fact that
Federal salaries are inadequate and that the health insurance
program is inferior. Solving the human capital crisis requires
paying higher Federal salaries and improving both the
affordability and quality of the health plan.
We have our own recommendations on civil service reform. I
believe it is necessary for the true and lasting solution to
the human capital crisis. Components of this package are in S.
1152, the Truthful Responsibility, Accountability, and
Contracting Act, TRACT, to make sure that contracting out only
occurs when public-private competition shows it is in the
public interest to do so, and S. 1982, Senator Barbara
Mikulski's bill to improve the funding for the Federal health
benefit program.
We commend the Subcommittee for taking the issue of the
human capital crisis so seriously and we look forward to
continuing to work with you on this issue. I would be happy to
answer any questions that you might have.
Senator Akaka. Thank you very much. We appreciate your
testimony, Mr. Harnage. Mr. Shaw, you may go ahead with your
statement.
TESTIMONY OF G. JERRY SHAW,\1\ GENERAL COUNSEL, SENIOR
EXECUTIVES ASSOCIATION
Mr. Shaw. Mr. Chairman, I apologize that President Carol
Bonosaro was unable to attend today. She became ill this
morning.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Bonosaro with attachments
submitted by Mr. Shaw appears in the Appendix on page 144.
---------------------------------------------------------------------------
I am the General Counsel for the Association. I was one of
the founders of the Senior Executives Association while I was a
career executive in the Chief Counsel's Office of IRS and
subsequently was the first President of the Association and
have been its General Counsel ever since its inception some 23
years ago.
We appreciate this opportunity to testify and we want to
commend you and Senator Voinovich and Senator Thompson for
their concern and efforts on behalf of the Federal workforce.
The Subcommittee has requested that we address several
questions. It will come as no surprise that SEA will focus its
remarks on the questions of compensation and in particular with
regard to the executive corps.
First, an aside. The chief operating officer which is
proposed by the OMB Director has been something that the SEA
has supported for a number of years. We have put together a
number of proposals along that line and we think it would be a
great idea and it is something, I think, that could truly be
revolutionary in changing agencies and bringing about some
continuity in the workforce.
The compensation gap for career executives with private
industry was well illustrated by a 1996 study by the Hay Group,
which showed that average SES total compensation, including
bonuses--and this is total cash compensation--for jobs of
exactly the same difficulty in the private sector would have
required that SES pay be increased by a range of 46 to 137
percent to obtain comparability with the private sector. Now,
obviously, that is not going to happen, and SEA does not
propose that.
However, money, while not a motivator, is a substantial de-
motivator and what it goes to is the person's perception of
their own worth. This kind of a gap with the lack of raises in
5 out of the last 8 years for the career SES has truly damaged
their morale. Many of them have stayed on in Federal service
just because of the September 11 crisis and thereafter.
In 2000, GAO projected that by fiscal year 2005, 70 percent
of all career executives would be eligible to retire. It
behooves us, I believe, to ensure that we retain as many of
these highly capable, experienced, and accomplished executives
as possible while we develop and have in place the necessary
talent to succeed those who do retire. Yet right now, we are
driving these executives out and discouraging middle managers
on the executive track because of failure to address the pay
compensation problem, which has reached critical proportions
within the corps.
SEA welcomes the provision of S. 1603 which would raise the
total annual compensation cap to the Vice Presidential level
but it would do nothing to affect compensation other than to
allow employees to receive their earned bonuses and awards in
the year in which they were earned.
While the Association does not objection to Section 205,
which would shift oversight for critical pay positions from OMB
to OPM, we are in strong opposition to any substantial
expansion of the use of this critical pay authority throughout
the Federal Government. Reliance on this authority would
continue the piecemeal attack on the pay compression problem
which is most severe in the SES ranks.
After having their pay frozen in 5 of the last 8 years, the
pay cap has filtered down through the six pay levels or ranks
of the SES until approximately 70 percent of all career
executives receive the same pay. ES-4, 5, and 6, the top three
ranks, are now all capped at Executive Level 3 in all 32
localities. ES-3 is now capped in 15 localities. In Houston and
San Francisco, even ES-2 is capped. This would be similar to
having a pay cap and earnings by GS-15s, 14s, 13s, and 12s all
being paid the same pay as GS-11s.
We do not believe the administration or Congress would or
could allow that to happen. They should not allow that to
continue in the SES. The situation is unfair and would be
unthinkable in any private sector corporation, yet is tolerated
by both the administration and Congress. It must be rectified
with legislation. H.R. 1824 and S. 1129 would raise the
statutory maximum on pay and we strongly support those efforts
by Congressman Davis and Senator Warner.
The current system, in fact, encourages early or immediate
retirement by eligible career executives. From 1994 to 2001,
the average annual COLA adjustment on retirement annuities was
2.5 percent per year, higher than the average SES pay increase
of 1 percent over the same period. This results in SESers
losing 1.5 percent of their retirement annuity for each year
they remain in the government. Is it any wonder the best of
them feel compelled to retire as soon as they are eligible?
Substantial use of critical pay authority has been tested
in only one agency. The experience, while being studied, is not
uniform and there must be much more study before critical pay
authority should be extended anywhere else in government.
In closing, we believe it is critical that the Congress and
the administration consider and respond to the full range of
human capital issues and reject continuation of piecemeal
approaches. Agency and occupation-based fixes approved by
Congress are fragmenting the civil service, creating a crazy
quilt of personnel and pay systems across the government
without addressing fundamental issues affecting the workforce.
At the executive level in particular, pay compression has
clearly contributed to the pressure by agencies for separate
systems. In addition, however, we have heard over and over from
agency officials of the need for additional career executive
positions so that they can be independent of the OPM allocation
process.
During the Clinton Administration, the career Senior
Executives Service was downsized by almost 20 percent and that
downsizing is having a substantial impact today. We believe
that the top ranks were thinned unnecessarily. The ratio of SES
positions to the rest of the Federal workforce, after all, is
very slight, and the number of positions in the executive corps
should be increased to enable agencies to meet their mission.
Finally, the use of existing flexibilities and authorities
is limited by a lack of funding and a lack of an effective
mechanism for agencies to share successful approaches.
Therefore, the pressure for designer systems will continue
unabated and new authorities will continue to proliferate
unless and until the underlying problems are addressed through
a coherent governmentwide solution which provides overarching
principles, flexibility within limits, and some bottom line of
uniformity.
Thank you, Mr. Chairman. Thank you, Mr. Voinovich.
Senator Akaka. Thank you very much, Mr. Shaw, for your
statement. Mr. Priolo.
TESTIMONY OF JOHN PRIOLO,\1\ GENERAL EXECUTIVE BOARD MEMBER,
FEDERAL MANAGERS ASSOCIATION (FMA)
Mr. Priolo. Chairman Akaka, Senator Voinovich, on behalf of
the nearly 200,000 managers and supervisors in the Federal
Government whose interests are represented by the Federal
Managers Association, I would like to thank you for inviting
FMA to present our views. My statements are my own as a member
of FMA and do not represent the official views of the
Department of Defense or of the Navy.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Priolo appears in the Appendix on
page 178.
---------------------------------------------------------------------------
Mr. Chairman, thank you for the kind introduction. I would
be remiss if I did not personally thank you for your support
over the years of my chapter, Chapter 19 at Pearl Harbor Naval
Shipyard. Your efforts have been instrumental, particularly in
the area of workforce revitalization at the shipyard whereby we
have been able to hire over 520 new apprentices and 100
engineers over the past 4 years.
Established in 1913, FMA is the largest and oldest
association of managers and supervisors. We are responsible for
daily management and supervision of government programs and
personnel and possess a wide breadth of experience and
expertise that we hope will be helpful in seeking to address
the human capital crisis that we are currently faced with.
Before I present FMA's perspective, I would like to take
this opportunity to thank you, along with Senators Cochran,
Durbin, Voinovich, Thompson, and Collins for your leadership on
S. 1799 and S. 1800, providing additional educational benefits
for employees at those Federal agencies responsible for
homeland security. It is not a focus of today's hearings, but
they are certainly critical elements in the human capital
discussion.
As well documented and certainly mentioned quite often
today, we have been downsized by more than 400,000 positions
from 1993 to 2000 and we are continually being asked to do more
with less, to compete with the private sector, to streamline
procurement, and at the same time deliver higher quality
service to the American public. Civil servants have proven time
and time again that we are more than capable of fulfilling our
duty, but we need civil service reform to increase the
efficiency of the Federal Government.
We are facing a human capital crisis. We need added
flexibility to use existing resources to recruit new talent and
prevent the ``brain drain'' that will occur with the retirement
of so many career civil servants.
As the number of civilian employees continues to shrink,
the task of doing what is best for the American people becomes
more and more difficult. There are fewer graduating college
seniors that view the public sector as a desirable employment
option, though that seems to be changing, hopefully. The hiring
procedures takes so long that it becomes a deterrent to bring
on board personnel, and it becomes an impractical option for
mid-career professionals to transfer into the Federal
Government. And finally, our salaries still lag far behind
those of the private sector.
Hiring policies continue to be patterned after a World War
II era process. We post a vacancy, interview, offer a position,
and it can take a year to accomplish all of that. A lot of the
best people in that chain go somewhere else. We have got to
shorten that, and I am certainly pleased to see OPM attempting
to make inroads in those areas.
We need alternate ways of evaluating job applicants. We
need to be able to directly hire candidates when we have
identified shortages or critical need. We need to have the
authority to fill positions within respective agencies in an
expedited fashion. We believe full-time equivalent ceilings
must be made more flexible rather than use hard and fast
numbers. Let us manage to the dollars instead of to the
numbers.
S. 1639 offers some improvements in the area of hiring
personnel and retaining personnel, because truly, ``you get
what you pay for.'' Retention bonuses do not always have to
take the form of financial incentives. When we talk to
personnel exiting the Federal service, they complain about a
lack of recognition, of a long-term sense of purpose, and
career progression. That is not dollars speaking, though
dollars are clearly important. That is frustration at a lack of
development of the folks we already have on board.
We are supportive of S. 1603 to develop a career training
officer. We are supportive of pilot individual learning
accounts as a way of, again, developing our personnel and our
future leaders. All agencies should have structured
developmental programs, be they SES or, in our case, generally
second- and third-line managers and supervisors.
Obviously, I will never get through this report, but I
would like to wrap it up without going too far over, since you
have my written remarks. We would like to serve as a sounding
board for Congress and the administration to ensure that
decisions are made rationally and provide the best value for
the American taxpayer. We recognize, and value the importance
of a top notch civil service in the future.
Again, we would like to thank you, Mr. Chairman, for
providing an opportunity to present our views. We look forward
to working with the administration as well as with the Congress
to deal with the government's workforce challenges in our
mutual pursuit of excellence in public service.
Again, I would be happy to answer any questions you may
have.
Senator Akaka. Thank you very much, Mr. Priolo, for your
insightful observations.
The proposals we are reviewing today are intended to allow
agencies to better recruit and retain the people needed to
carry out their agencies' missions. However, as Mr. Priolo said
in his testimony, FTE ceilings must be made more flexible in
order to allow Federal managers to fill positions of critical
need in an expedited manner.
My question is, to all of you, do personnel ceilings act as
barriers to recruitment and retention? How do these ceilings
influence agency recruiting? What recommendations do you have
for an employee and managerial perspective? Let me start with
my left. Ms. Kelley.
Ms. Kelley. Thank you, Mr. Chairman. In my experience,
personnel ceilings are not the impediment to agency hiring. The
impediment are resources. It is the bottom line; agency funding
dollars. In many agencies, as we speak right now, hiring that
they had planned to do based on last year's budget is not being
done. It is now being delayed because part of the January pay
raise for Federal employees was not fully funded in their
agency budget and they are having to make up that money
somewhere else and it is coming in the way of delayed hiring
that they desperately need.
But in my experience, it is not about the FTE ceilings, it
is about the overall agency budget and even if they were to
hire with the funds that they had, what it leaves is nothing
for flexibilities. When Comptroller General Walker talked about
using resources, making a choice of whether to use them for
FTEs or for flexibilities, in my experience, again, that is a
difficult, if not an impossible, choice for agencies to make.
For example, in both the IRS and the U.S. Customs Service,
they have had staffing shortages for many years. In Customs,
this has been exacerbated after September 11. We did not have
enough inspectors on the borders before September 11. Now they
are working 12- and 16-hour days 5 and 6 days in a row with no
additional staffing.
So the idea of taking resources that are not even there for
adequate staffing and then converting them to flexibilities is
one that I have a hard time putting together in most of the
agencies that I am familiar with.
Senator Akaka. Mr. Harnage.
Mr. Harnage. Yes. The personnel ceilings or FTE ceilings,
we have been told now for 4 or 5 years that they do not manage
by FTEs, but you and I both know that they do and that they
have a ceiling, and very often, that determines the funding. It
is sort of an argument of the chicken or the egg, which one
comes first, but much of the funding is reduced based on the
expectations of being limited in the manpower ceilings and the
FTEs. So it is sort of an argument either way you want to take
it.
But, sure, it is a barrier in hiring and I think a lot of
that has to do with the level of approval. When OMB comes out
with a manpower ceiling, whether it be suggested or actually in
writing, then that goes to the agency and then the agency
passes that on down the different lines of management. And so
when a manager has a vacant position, it has to go all the way
back up through that line before they can get approval to fill
it and it appears to be a very long delay in hiring when really
it is the FTE ceiling that is causing that delay.
Sometime when we have more time, I will give you my Air
Force experience in weight control, which very much resembles
the FTE ceilings. But it is a way of OMB measuring the funding.
Therefore, they are bean counters, and that is what they are
doing with the FTEs. That is the way they are controlling the
funding.
Our position is, simply, let the managers be managers. They
have a mission. They should be able to come forward with a plan
that reaches the goal of that mission and whatever number of
employees it takes to be efficient and effective, that is how
many you approve without a magical number being picked out of
the air and that seems to be what this administration as well
as the past administration has tried to do.
Senator Akaka. Thank you. Mr. Shaw.
Mr. Shaw. I agree with both Mr. Harnage and Ms. Kelley. An
experience that I saw--in fact, I was thinking about David
Walker's brother-in-law where he was trying to come into
government. It depends on the time of year how fast that
process is going to work. For example, let us assume that
Congress delayed the amount of salaries or did not fully fund
the salaries. What they will do is put off the hiring process.
They will not hire until the back end. Then they really try to
hire everybody. Then you have got to get them trained, and then
the next year, depending on how much Congress gives them,
determines whether the agency can keep them or not.
It is a very difficult process, but in one situation, an
individual was offered a job in February, and the decision was
not made until September because there was a requirement that
all the people in this agency be trained on a particular
program and they used all their money for training so they
could not afford to fund the hiring until the last month of the
fiscal year. So that FTE, to which $30,000 was allocated, was
used in the early part of the year to pay for training and
other things and, therefore, they could not fill the position
until the end of the fiscal year because they were counting on
the new funding to pay for it.
So it is a chicken-egg. Everybody wants to know whether an
agency has grown, has got more employees or less employees, so
you have to count them somehow on the one hand. On the other
hand, when you give people specific numbers and there are so
many dollars that goes with each number, you can play with the
dollars to try to meet your needs and, therefore, the hiring
process can really get slowed down in some situations.
Senator Akaka. Mr. Priolo.
Mr. Priolo. I must agree with everyone else on this panel.
I work at a Navy shipyard. We fix ships. Our motto is we keep
them fit to fight. We send them out to harm's way. Every year,
we do more work than what we plan on. Things happen when you
work ships as hard as we work them nowadays. Obviously, it is a
Department of Defense issue. It is a serious concern and we
certainly cannot solve that here.
But FTEs hard and fast are an impediment because then we
have to decide, do we fix ships or do we hire the personnel we
need so that we will be able to fix ships 5 years from now when
those people get qualified and the existing folks retire? It is
all rolled up together. It is all one big circular problem that
we have got to break so that we can do our jobs and to get our
jobs accomplished.
Ms. Kelley, you mentioned your concerns over the quotas for
contracting out that are in the President's management agenda.
How do the objectives for contracting out prevent the
legislative proposals we are considering today from achieving
high recruitment and retention?
Ms. Kelley. I think the quotas send a very negative message
to those who are even considering Federal service. They do not
provide any rhyme or reason or any kind of an explanation or
expectation that you would have a position in 3, 4, or 5 years
as these quotas move forward. There is no explanation or
criteria within agencies other than if they are commercial
activities, if they are designated as commercial activities on
the FAIR lists.
Other than that, there is no criteria in looking at the
agency's mission, at the overall budget, at how that fits into
the operations of the agency as a whole, how long they have
done those jobs, if there is a better way to do them, and to
provide them with the resources to become more efficient. So I
think it flies right in the face of the language in the
legislation that is being discussed today. I think the quotas
just derails it every step of the way because of the message
that they send.
Senator Akaka. Thank you, Ms. Kelley.
Mr. Priolo, I want to thank you for joining us today all
the way from Hawaii. Your testimony raised a number of
questions, not all of which I will have time to ask. You heard
Ms. Kelley and Mr. Harnage express their opposition to changing
the termination notification time from 30 days to 15 days. Do
you believe 15 days is adequate and would you expand on your
statement that a more comprehensive governmentwide employee
performance appraisal system is needed, including the idea of
tutoring an employee who receives an unacceptable performance
rating?
Mr. Priolo. As for the 15 or 30 days, I do not have a lot
of expertise in that area but I certainly think the more time
you have, the better off you are.
We have limited personnel. We have a lot of controls and we
have got to do our best to develop the folks we have. That is
my responsibility as a manager--to mentor the young folks. We
have started an apprenticeship program, thanks to your support,
that provides us hope for the future, because, frankly, without
the young folks coming in, without the apprenticeship program,
we would lose the expertise of the people that are of
retirement age and not be able to feed that back into the up-
and-coming workforce.
I actually left a job as a nuclear engineering manager to
move over into curriculum development because I am a firm
believer that if we do not develop our folks, we will die by
attrition. So you give us the ability to bring people in, which
you have, and we will go develop them so we will have the
people in place to do the jobs in the future. Thank you.
Senator Akaka. Thank you, Mr. Priolo.
You also said that OPM has delegated substantial personnel
authority to agencies over the past 5 years, but in many
instances, line managers do not have this authority. Why do
line managers not have this authority and what can be done to
change the current situation?
Mr. Priolo. What I tend to see, again, in my activity,
because that is what I can refer to, is there seems to be a
disconnect from the policies and the processes and the good
ideas that come out of OPM and the folks at my level that have
to execute. Somewhere in between, the train jumps the track and
it just does not get down to us. Maybe it is just a
communication problem. Maybe it is folks not wanting to change.
Maybe it is fear of trying to work outside-the-box and doing
something different. I certainly do not have the answer, but I
do definitely have the frustrations. We sometimes have to make
progress in spite of the system, not in accordance with the
system.
Senator Akaka. Mr. Shaw.
Mr. Shaw. I think one of the things that is absolutely
fascinating to me is the inability to use the performance
appraisal system to remove non-performing Federal employees. In
1978 when they changed the law, our first perception as a
lawyer, and I am in private practice and we represent hundreds
of Federal employees in performance cases, was that there was
going to be a wholesale slaughter of Federal employees thrown
out because the appeals and the rights of the employees are so
narrow in performance cases, (not in conduct cases but in
performance cases).
The 30 to 15 days is fine. It does not really make any
difference because by the time you get to proposing an adverse
action in a performance case, the employee should have been
through a performance improvement period and you should have
your ducks in a row.
The problem with the system is not the difficulty of the
system, it is the HR people in the agency and the lawyers in
the agency saying, ``Oh, you cannot do that.'' There is a
requirement in the statute for a performance improvement plan.
OPM extended the time for the performance improvement plan.
This agency not only required you to go through that
performance improvement plan, but after you got done with that
one, you had to start another one. They literally had two
performance improvement plan periods that you went into, and
then by the time they got finished, everybody had given up, it
had lasted so long and the under-performer remains there.
Let me just sum this up into two points. First, managers
have to be trained in how to use the system. We teach a course,
my law firm does, for the Senior Executives Association on how
to use the performance appraisal system to deal with poorly
performing employees and for every manager that attends that
course, it is mind boggling. They cannot imagine that they have
got this authority, and the reason they cannot use it is
because HR people and lawyers have taken it away from them. And
it is not the ones at OPM or OMB, it is the ones in their
agencies, because power is the ability to say, ``No, you cannot
do that. We know more than you do.''
And the second thing is that the agencies do it to
themselves. Most of the problems in dealing with under-
performers is not the OPM regulations, it is not OMB, it is not
the law, it is not MSPB, it is the agencies. They have grown a
culture on their own that you have to do five times more than
what the law requires you to do to handle a poor performer, and
it is tragic.
The system that is there now, in fact, if anything, gives
too much authority to a Federal manager and we very much feared
that there would be abuses of that. Instead, what has happened
is everybody says, oh, we do not want to use that system. It is
too complicated. We will use this conduct system. Well, the
conduct system can be tough. I mean, you have really got a high
burden of proof. The performance system, you do not have hardly
any burden of proof, substantial evidence, which is negligible.
Go ahead, sir, and make it 15 days. It does not make any
difference. Unless these people are taught how to use the
system, it is never going to work.
Senator Akaka. Let me ask Mr. Harnage and Ms. Kelley to add
to this discussion, if you wish.
Mr. Harnage. Well, I think Mr. Shaw really hit the nail on
the head. It has more to do with the agency culture than
anything else and it is the full employment act for the HR
people and the attorneys that work for the agencies. They have
simply developed a culture that makes their job more
significant, more important, and it prevents the managers from
being able to manage.
I think our biggest problem in performance and in
disciplinary situations is simply that the managers are not
adequately trained. They are not adequately trained on how to
handle the situation and then they are not allowed to handle
the situation as they should and I think we have got to get the
HR people out of that business and allow the managers again to
be managers.
One other factor that has played a role into that possibly
in the last few years is a manager is faced with a situation
where, if it is a marginal employee, do I get rid of this
individual and totally do without anybody because I have got an
FTE ceiling and I am going to lose that slot, or do I try to
make it do and hopefully this employee will do better? When you
do not have any control over whether or not you will continue
to have that position, managers will tend to try to hold on as
long as they can. At least 20, 30, or 40 percent performance is
better than zero. So I think that plays a very important role
in our problem.
Senator Akaka. Ms. Kelley.
Ms. Kelley. The issues identified as HR and legal issues, I
agree exist in all agencies, but I have concerns about the
discussion concerning under-performers and the performance
improvement period. I would hope that it is very consistently
believed that managers have their goal and that their
responsibility is to try to turn around and help an employee
who is having performance problems, not just to jump through
the hoops of some stated time frame to move them out the door.
There surely are employees whose employment will be
terminated at the end because they cannot or will not turn
around their performance, cannot improve it. But I believe that
managers, most managers I know, have an interest in trying to
figure out how to turn a marginal employee into a better-than-
average and even an outstanding employee with the right
mentoring, with the right information, with the right support,
with the right training, and that takes training for the
managers. Managers need to be trained on how to do that, how to
know when and what to provide in order to help an employee to
become better than marginal and also, then, on how to move
forward if, in fact, the process requires that the employee be
terminated.
But I would hope that as much energy goes into this process
as it should, I believe, in the private sector, not just in the
government, into supporting and trying to turn around
performance before an individual is terminated.
Senator Akaka. I have more questions, but let me yield to
Senator Voinovich for his questions.
Senator Voinovich. I could not help but smile, as I
listened to you. Mr. Priolo, I am so glad you are here, and
that is not to take anything away from our union leaders here
and Mr. Shaw. But I believe in quality management and
empowering the people closest to the problem, and I think your
testimony this morning talks about the practical problems that
you encounter in your agency.
Mr. Shaw, I smiled as you were talking about the
performance evaluation process. I will never forget when I
became Mayor of the City of Cleveland, and a lot of my
directors were complaining that they could not get rid of poor
performers. So I talked with the head of the Civil Service
Commission and she said, ``The problem, Mayor, is they do not
know what they are doing and if they would use the system, they
could get rid of poor performers.'' So I went back to the
directors and said, ``You are going to go to school to find out
just how the system works,'' and they did that and things
improved substantially. We were not trying to run people out.
If somebody has a problem, you try to help them deal with it.
But so much of the problem we have is that people are not
getting the training that they need, and I was impressed with
Kay James' testimony about the fact that they are training 500
people. They have a massive training program underway in the
Federal Government so people understand just what their
responsibilities are and what they can or cannot do.
I look at the problems that are there and it just seems
that for so long, they have been neglected. You are talking
about replacing people. One of the things that this legislation
allows is in the shaping of an agency, we are going to allow
the managers to give early separation or early retirement
without eliminating the position, so that they can fill that
position. It is something that it took me 3 years to do in the
Defense Department. Today, the Defense Department has this
workforce reshaping authority for 9,000 slots, and they are
starting to use it.
I suspect you think that is a good provision?
Mr. Priolo. Absolutely.
Senator Voinovich. And then the issue is, how do you fund
that? It took me 2 years to get it through to the appropriators
to fund it, and we were only talking about $82 million over 10
years. But it is so much easier to buy a F-22 or some----
Mr. Priolo. Piece of hardware.
Senator Voinovich [continuing]. Piece of hardware than it
is to concentrate on the people that you have.
I was just commenting to my staff, we have not had too many
people that have been talking about some of the flexibilities
that we try to provide in this legislation. You are all doing a
good job of representing your concerns, but underlying all of
this is the need to have more competitive pay than we have
today. And we need to allocate more resources if we expect to
be an operation that can retain people.
Mr. Shaw, 70 percent of the Federal Government's senior
executives receive the same salary due to pay compression we
could have, by 2005, 70 percent of them retiring. They receive
a greater cost of living adjustment on their annuities than the
pay increase they receive by staying in the Federal Government.
Mr. Shaw. They lose a percent and a half a year off their
retirement annuity.
Senator Voinovich. So those kinds of things just do not
make sense and we need to address those issues. At the same
time, understanding the pay, understanding the issue of health
care--and I can understand the issue of health care, although I
will say to you that the private sector today is moving toward
increased employee participation than they did before because
of the high cost. In fact, I see that across the country,
although I will say this, that in terms of the Federal
contribution to health care benefits, it is a lot lower than in
the private sector and many other agencies. I know in the State
of Ohio, the employee contributes 10 percent, which is far
different than, what is it for Federal employees?
Ms. Kelley. Twenty-eight percent.
Senator Voinovich. Twenty-eight percent. So those are
things that we need to look at.
But that being said, I would really like your opinion on
the flexibilities that we have tried to provide in this
legislation. Are you supportive of what we are trying to do
with this legislation?
Ms. Kelley. Other than the specifics that I noted in my
testimony, where I would hope there would be more discussion,
such as on the critical pay area, I guess where I always come
down on this issue of flexibility, Senator, is that
flexibilities without the resources will not make a difference.
I think that unless the agencies are given the resources and
are supported in their use of them, it is not going to make a
difference, and that is my hesitancy in supporting the
legislation. I wish it would go further in the area of Federal
pay, addressing pay as one of the largest issues that is
affecting recruiting and retention, and then saying, not only
do agencies have these flexibilities, but resources will be
provided to enable them to have the staffing they need and to
be able to use the flexibilities.
Senator Voinovich. I can understand that. I am interested
in the white paper that OPM Director James is going to be
coming out with on compensation.
Mr. Harnage.
Mr. Harnage. Well, as I said at the beginning of my
testimony, I really appreciate the changes that you have made
to the draft proposal that eliminated a lot of our objections.
Of course, in looking at the draft proposal, there is not a lot
in there that we see that is very favorable for the employees
that we represent, but there is not any harm there either at
current, with the exception of the 15 days. We do not think 15
days shorter in a 6- to 9-month process makes that much
difference, and the problem is not the amount of time the
employee has, it is the amount of time on the other side that
is required because of the bureaucracy.
Senator Voinovich. Do you agree with Mr. Shaw that a lot of
the people who are supposed to be doing this process do not
really know what they are doing?
Mr. Harnage. I will agree with that, yes, I do, and I
prefer your bill as opposed to the Managerial Flexibilities
Act, because I think following that act there ought to be a
parentheses that says, ``as long as you do it the way I say to
do it.'' There is not a lot of flexibility there when you look
at the controls and the approval up the line that it takes and
I think that is where you are trying to get to, is to get it
more closely down to the worksite where the manager that is
doing the job can be better managers, and we saw that act as
really, even though it talks about flexibility, it was still a
lot of checks and balances and controls at the OPM and OMB
level that I do not think that was going to amount to a lot of
flexibility.
Training, I think, is the main thing that will make it
work, and one of our concerns is when we talk about management
flexibilities, and we certainly believe that the managers ought
to be allowed to manage and they ought to be trained, not any
disrespect to the current managers. It is not their fault. The
government has diverted training funds in other directions and
people have not been able to keep up with current practices.
But one of our concerns is when you say flexibilities, we
are not sure what role does the employee or the employee
representative play in these flexibilities----
Senator Voinovich. Mr. Chairman, when I got started with
this, the concept was to change the culture of the Federal
workforce. I came to the Senate with that idea. I tried to do
that when I was mayor and then as governor, and changing the
culture has a lot to do with empowering the people who work in
the agencies. And that is what you are raising here--the issue
of flexibility.
The hardest problem we had was to get middle managers, who
had come up in a command and control environment, to give up
some of their power and empower the people working for them to
come up with solutions on how they could do a better job. It
was very difficult.
But I ultimately think, regardless of what we do in
legislation, that if we do not have more of that quality
management, that empowerment, the participation of the people
that are actually doing the work, we are not going to see the
improvement that all of us would like to see in the Federal
workforce. And I think it also contributes to an environment
where people get excited about the job that they are doing, and
if they are excited about their work, then they stay there. The
word gets out around the country that this is a great place to
come to work.
I have had more people tell me they have come to Federal
agencies, and after a couple of years, they leave because they
do not receive any training, it is not exciting, and what they
expected did not occur. We will be hearing from some panelists
tomorrow in terms of that outreach that we are going to need to
change the perception of Federal employment. We can do all we
want to publicize the opportunities in the Federal Government,
but there are some fundamental changes that we have to make if
we are really going to have the kind of environment that is
going to attract people and keep them.
On the issue of eliminating the link between senior
executive compensation to Members of Congress get paid, you
would support eliminating that, would you not, Mr. Shaw?
Mr. Shaw. Yes, sir, we would. If I can go down your list,
on the phased retirement Section 204, SEA supports that. We
think that is a great idea. We think it can help managers
transition out and new managers transition in and still have
the benefit of the one who is retiring to work part-time for a
period of time and help them become accustomed to the job.
On requiring OPM to provide approval or disapproval on the
qualification review boards for SESers, we would prefer 25 work
days, Around holiday time, they get people from all the
different Federal agencies, a number of them to serve on a
qualifications review board that an SESer's qualifications have
to go before and be approved, so that could be a little
problem. But the 30 days is not a problem, but 25 work days
would be a little bit better.
On the recertification elimination, recertification of the
SES system, we support that. We think that it has not added any
value to the current performance appraisal.
Your proposal on training, we think is excellent. It opens
up a lot of opportunities for a lot of people.
And on the annual leave provision, if the agencies say they
have trouble bringing people in from outside because they do
not have any leave when they come in, we do not have any
objection to it. We support it for managers, and if it works
for managers, it may work for some employees in specific
situations. But it is good authority and flexibility for
agencies to have.
Just one more thing. I want to reassure Ms. Kelley and you
that when we handle performance, under-performer cases, the
only way that we can be successful in keeping a non-performer
from being removed from their position is work with them during
the performance improvement period to bring them up to the
standards required by the agency. We have been very successful
in doing that. We supplement what training they have. We
actually sit down with them and go over the papers they are
preparing and that kind of stuff, so long as it is not
classified, obviously, and we assist them and are firm and that
is how we win cases in our law firm on non-performers is we
help make them performers, and that, in most cases, is the
answer.
Sometimes people just cannot do the job, and that happens
and they have to be removed. But we work first to make sure we
help them meet the requirements of the job and then the whole
thing goes away.
Senator Voinovich. That is interesting, because many people
wring their hands and say, well, you cannot get rid of a poor
performer. But the fact of the matter is that you can if you
know what you are doing and that person is truly a poor
performer.
Mr. Shaw. Right.
Senator Voinovich. There are a lot of stereotypes out there
today.
So, again, the provision of eliminating the link between
senior executive pay with the pay of Congress would----
Mr. Shaw. What we are proposing, and what both Senator
Warner and Congressman Davis's bill would do--as you know,
there are five levels of the executive schedule and Members of
Congress are tied to level two. What we are proposing is that
SES base pay be raised from the current cap, which is level
four, to level three and that they be able to earn their
locality pay on top of that. So, in effect, depending upon the
locality that the employee is in, some of them could wind up
making more than Members of Congress, but there is still a
level between them on their base pay and their other, but that
is going to depend on the locality they are in. In Los Angeles
and Houston, what locality pays the highest, they could be
making a little more than a Member of Congress.
But we are not committed to ritual suicide of trying to
break the tie between Members of Congress and career executives
because----
Senator Voinovich. But overall, from a good personnel point
of view, de-linking salaries to artificial barriers is a----
Mr. Shaw. We support that.
Senator Voinovich. It is a good public policy.
Mr. Shaw. It is a good public policy, and it is one that,
in fact, has happened in many agencies already. At the Senior
Biomedical Research Service, a number of programs over at HHS,
the SESers there make more. The law enforcement community, the
FAA, SEC, a whole bunch of agencies have broken loose from the
pay cap through necessity. They cannot keep the people that
they need and they cannot get the people that they have to
have, and that is going to be governmentwide soon.
Senator Voinovich. Are you familiar at all with the IRS and
the program that they put in place several years ago to bring
in outside people who had special expertise that they needed in
order to get the job done?
Mr. Shaw. Yes, sir.
Senator Voinovich. This legislation allows that kind of
flexibility in other agencies. There has been a lot of
controversy about whether that works or does not work, and it
is not intended to respond to the issue of pay compression that
senior executives experience, but the fact is that there are
certain agencies that do need to bring in people on a short-
term basis for mission-critical tasks. I would be interested in
your appraisal of that.
Mr. Shaw. SEA has--it is probably one of the most debated
issues within our board of directors, which are SESers from all
different agencies. But we think a limited critical pay program
could be useful in some agencies. We are absolutely opposed to
it if it would result in bringing in people from the private
sector and used to relieve pay compression for a selected few
and for the pay compression problem that we have not addressed
first. So if our pay compression problem was dealt with, even
though it would not be a complete solution, then we would be
supportive with certain safeguards.
One of the things, though, is that we should be able to
allow career executives to compete for those positions because
they may be available in other agencies.
Senator Voinovich. Are they not allowed right now?
Mr. Shaw. No.
Senator Voinovich. They are not?
Mr. Shaw. No. They have to come from outside government
now. They are term appointments for 4-year terms. Career
executives should be allowed to go into those positions. They
would have a 4-year term and they would have to come out of the
positions. We would want career SES employees to be able to go
back into the SES if that is where they had come from.
Senator Voinovich. By the way, we got into that when I was
governor. We had people who wanted to move up, but when they
moved from a covered position into one that was not covered,
they could not move back later. So some of them were not
willing to move because they said, ``Well, at the end of that
time, I am finished.''
Mr. Shaw. In the current SES system, if they do that, if
they go into a political appointment, they have fallback rights
to the SES. It is not unusual at all for people who have been
given Presidential appointments or non-career appointments in
one administration at the end of that administration to fall
back into the SES as a career employee, if that is where they
came from. But it has to be where they came from.
The other thing, though, is we think that use of critical
pay should be justified on the basis that the skill that they
are seeking or the experience that they are seeking does not
exist in the agency or in the government. It should be confined
to specific skill sets, for example, in the IT community, that
we do not have in the government because of the rapid
progression of change, and that may exist on the outside.
But the use of it to bring someone in to handle public
relations or something else like that is problematic, first,
and second, when we look at the problems in the government,
most of the critical issues, even in the IT community, it is
not like these career executives have only been talking to
themselves. They have hired and paid for some of the best
consultants in the whole world who sold them a bill of goods on
what they needed to do to get this IT system to work. Maybe
they would have been better, having more knowledge, knowing
that they are being sold a bill of goods, but they certainly
are not lacking in the ability to have people come in and give
them advice on particular challenges that they face.
Senator Voinovich. We have an example of that in the IRS.
You think, overall, they have used it for the intended purpose,
or do you think that they abused it? How would you rate that on
a scale of one to ten?
Mr. Shaw. The only basis I have got for that is the----
Senator Voinovich. One being the best.
Mr. Shaw [continuing]. One study that was done by Tax
Notes, I think they call it, and discussions with two or three
executives at IRS that are very knowledgeable about it. There
have been a number of pluses. There have been a number of
failures, some people who left very quickly.
Senator Voinovich. Well, the point is that when they bring
them in, they get a 4-year contract but it is not a guaranteed
contract. And if they do not meet the muster or have some bad
interpersonal skills, they have asked them to leave, I think.
Mr. Shaw. Right.
Senator Voinovich. So the fact that they leave maybe is not
a bad thing, but maybe it shows that the system works. What
would worry me is that you have people sitting there for 4
years that really are not getting the job done and are really
causing problems with the team.
Mr. Shaw. That is why if career executives went into it
from whatever agency they must be able to be removed from that
critical pay job at any time, the same as anybody else.
I guess where we come down is we think OPM has that
authority now, or OMB has it now, that critical pay authority
should be delegated to OPM, that agencies should come to OPM,
justify that they need this many critical pay employees for
these positions, and then go out and hire them. We would not
have a problem with a system like that, again, so long as
someone was looking at it and saying, yes, you do not have that
skill, go buy it.
Senator Voinovich. Basically, it is just using common sense
to shape an agency and get the job done----
Mr. Shaw. Yes, sir.
Senator Voinovich [continuing]. The way it ought to be
done, understanding that we need to have more money in those
agencies in order to take advantage of the flexibilities that
we would like to give the agencies.
Senator Akaka, one of the jobs we have is working with the
appropriators, and I am going to talk to the administration,
also, about the issue. They put a budget together and in the
budget, I think there should be some reconsideration of how
resources are allocated. I mean, we have the issue of homeland
security, and so often when the budgets are put together, the
focus is on hardware and not enough attention is given to human
beings.
You win with people, and I will never forget our March 2001
hearing, where former Defense Secretary Jim Schlesinger said,
``fixing the personnel problem is a precondition to repairing
everything else in our national security edifice.'' That is it.
And somehow, we have to get people to understand that human
element, that good people really make the difference, and if we
have them at Federal agencies, a lot of these other problems--
even national security problems--might be a lot less prevalent
than they are today.
Mr. Shaw. That is true. I agree.
Senator Akaka. Thank you for that discussion.
Mr. Harnage, in talking about flexibilities, you point out
in your remarks that these bills offer incentives and bonuses
to upper management without focusing on the majority of the
Federal workforce. You note that the human capital crisis is as
severe for those in the skill trades who are paid under the
Federal wage system as those under the general schedule. How
can a wider range of Federal workers be better served by these
flexibilities?
Mr. Harnage. Well, in the first place, we have to fix both
pay systems, the wage grade pay as well as the GS or the white
collar pay. But our concern with the bonuses is it appears to
us to be more of a band-aid fix where we are providing bonuses
because our pay system is not sufficient. If we fixed the pay
system, there would still be places for bonuses, but it would
not be a band-aid fix, it would really be an incentive to
either stay with the government, come to work with the
government, or do a better job. But a bonus over a 4-year
period is looking for a transit employee rather than a career
employee, in our opinion, and that was the reason that we were
concerned about the bonuses. We are not so much in opposition
to a bonus. We are saying, but you have got to fix the pay
before the bonus has any significance to the entire workforce,
to fixing the problem.
Last year when there was a change in for the SES, I raised
a little objection to it, but not because of what was done but
because it was a band-aid approach. I think we need to fix
everybody's pay, and I am certainly in favor of raising the
cap, eliminating the cap on the SES, as well as the cap on
Congress. I think it is just a bad way of doing business.
The pay ought to be based on a formula that decides it from
year to year rather than it having to be voted on every year by
Congress. It puts you in an embarrassing situation where you
are voting on your own pay. I think you need to find a way out
of that and you will find a way out of the SES, as well. So we
are in favor of raising those caps or eliminating the caps
altogether.
Senator Akaka. Thank you for that.
Mr. Shaw, you and I have talked about pay compression
within the ranks of the senior executives before and I believe
your testimony provides a strong case in support of legislation
to fix this problem. In addition, your statement notes that
within 5 years, 70 percent of all senior executives will be
eligible to retire.
Mr. Shaw. Yes, sir.
Senator Akaka. I found it interesting that Mr. Priolo
recommends in his testimony that there needs to be a program to
mentor new managers. He also suggests the need for a structured
senior executive development program to identify and train
potential SES candidates. Both seem like necessary components
of any strategic human capital program. How are prospective SES
candidates identified and what arrangements currently exist
between SES and Federal managers to foster promotion?
Mr. Shaw. The SES members that are in our Association do
mentor. They have to be very careful, however. If they are
mentoring someone, it might look like you are picking out one
or two people that you are going to help along, then other
people are concerned that they are not going to be helped
along. That is something that they have to be careful of. One
or two agencies have formal mentoring programs. Everyone
should.
There are two types of career development programs,
executive development programs in the government today. There
is the one such as the IRS, where the agency, through a very
rigorous process, selects a number of managers to go through a
6-month training program and some on-the-job training, (and
these selectees come from both outside and inside government).
They look at all government agencies, and private companies to
solicit applicants. Those who are selected and successfully
complete the program are going to become senior executives and
that is an excellent system, in my judgment, for two reasons.
One, you have gotten all of the requirements out of the way
going into the system so that the people who graduate from the
system, know they are going to become executives. You give them
development, etc., as they go along.
The other system is the one that just about every other
agency has, which in our judgment and experience is not a good
system. What it does is they advertise that they are going to
have a career development program or an executive development
program. People apply for it and come into the program. They
take just about everybody who is interested, unless they
believe the applicants are not able to make it at all. They run
them through the program and then they send them back to their
old jobs and they are called executive development potentials;
or something like that. And then whenever an SES vacancy comes
up, they look at those people in the program, but they also
look at people who have never gone through the program, and in
many instances, they select people who have not gone through
that program.
So the people in the program have said, ``What did I waste
my life for, for a year going through this program, and I have
got nothing except I feel good and I feel like I accomplished
something, but I am not going to get these jobs, so that does
not do anything.'' That is how most of the agencies' programs
work.
They have been a failure, in my view, other than the
candidates who have gone through them have learned something
and been trained in a variety of skills. But because of that, a
lot of people have given up on the executive development
program just because so many people who have gone through it
have not been selected.
So we strongly recommend that there be executive
development programs, and they do as in the IRS, and that is a
track all the way up from GS-13, up that. All know what they
have got to do to qualify for it. They get selected for the
training, and it means they are going to be an executive. That
means a lot of things, good things and bad things. For example,
you have got to be mobile, etc. We would suggest if you are
going to set up a program or require agencies to have a
program, that it be a program that when you complete it, you
are going to be selected for an executive position in the near
future.
Senator Akaka. I thank you very much for your responses. I
have additional questions that I would ask for the record and I
would appreciate your timely responses.
I wish to thank you for being with us this morning, and I
feel we had an extremely engaging discussion. We heard where
there is agreement and where there is disagreement.
One thing is very clear. We should not create new
flexibilities today that will become the constraints of
tomorrow. It is the responsibility of us all to work together
to ensure that the Federal Government has the workforce that is
needed to carry out government services.
I would like to call on my friend, Senator Voinovich, do
you have any closing remarks or any further questions?
Senator Voinovich. No, I have not, except to say I really
appreciate your being here today and look forward to continuing
to work for you as we shape this legislation up so that it gets
the job done. Again, I do understand that we need to do some
serious work in some other areas if this is going to be
successful.
Senator Akaka. Your responses will be useful to this
Subcommittee.
Again, I thank everyone for attending the first day of our
2-day hearing. I invite you to join us tomorrow morning at 10
a.m. when we will hear from Dr. Paul Light, Dr. Carolyn Ban,
Max Stier, and Dr. Steven Kelman. We will look forward to that
hearing.
I again thank you very much. This hearing is adjourned.
[Whereupon, at 12:09 p.m., the Subcommittee was adjourned.]
THE FEDERAL WORKFORCE: LEGISLATIVE PROPOSALS FOR CHANGE
----------
TUESDAY, MARCH 19, 2002
U.S. Senate,
Subcommittee on International Security,
Proliferation, and Federal Services,
of the Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:03 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Daniel K.
Akaka, Chairman of the Subcommittee, presiding.
Present: Senators Akaka and Voinovich.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Good morning. This hearing will come to
order.
Today is the second day of our hearing on the Federal
workforce and legislative proposals offered by Senator George
Voinovich and Senator Fred Thompson.
For those lucky enough to have been with us yesterday, like
Dr. Ban, you know that we had a stimulating discussion which
was enhanced by the diverse views expressed on how we should
proceed with civil service reform.
I am pleased to have with us this morning a panel of
distinguished witnesses who have had years of experience
working with the issues we are grappling with today, and I am
equally pleased to be joined by my friend, Senator Voinovich.
Again, I thank you and I had a great hearing yesterday, and you
had some great questions yesterday, too.
With about half the Federal workforce eligible for
retirement within a few years, there is no question that we
must look toward new employees. Unless we are able to convince
sufficient numbers of young people to seek careers in public
service, our government will be unable to meet the needs of the
American people.
At the same time, we must ensure that the current Federal
workforce has the tools they need to perform their jobs. There
must be adequate resources devoted to training and enhancement
of skills, better utilization of institutional knowledge, and a
commitment from the highest levels of government to honor
Federal employees for their contributions to our great Nation.
Yesterday's witnesses differed in their approaches to the
problems we face. However, they agreed that the pay gap, lack
of funding, performance appraisals, better training for
managers, and outsourcing quotas were issues that must be
addressed in order to strengthen the Federal workforce and make
Federal service more attractive.
Because you all have held positions in the Federal
Government, your recommendations are grounded in practice and
offer unique perspectives on how to best recruit, retain, and
motivate the Federal workforce.
Every administration comes into office with a specific
agenda, and I am convinced that we must separate policy from
politics. Therefore, I want to know how we can best achieve
balanced reform of the civil service system without imposing
changes dictated by political considerations.
Again, we look forward to your statements. I now want to
yield to my good friend and colleague, Senator Voinovich, for
his opening statement.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. Thank you, Mr. Chairman. I would like to
thank you again for convening this hearing. I thought
yesterday's hearing was very worthwhile.
I welcome our witnesses and thank them for being here
today.
As I indicated at yesterday's hearing, the human capital
legislation being considered by the Subcommittee is extremely
important to the Nation, and every day we hear more and more
examples of why there is real urgency to get this legislation
passed.
I mentioned yesterday that I was at a hearing last week
with FEMA Director Joe Allbaugh and after his presentation on
his agency's new role in dealing with first responders, I asked
him what was going on in terms of FEMA's staffing, and he said
he is in panic over it. He said, ``I think we are going to lose
55 to 60 percent of our top people.'' One of his concerns was
that after September 11, many of the people in FEMA--which is a
very high-pressure operation--indicated that they were going to
retire, that they were looking at life a little differently
than they did before September 11. I suspect we will be seeing
more of that in some of the other agencies, so that adds an
additional dimension to the challenge that we have.
Today I am looking forward to learning our witnesses' views
and recommendations on the legislation that is before the
Subcommittee, S. 1603 and S. 1639, particularly the draft
managers' amendment which we are developing. The focus of these
bills is, of course, management flexibility. While compensation
is important--and we certainly got into that yesterday--it is
only half the picture. The other things that we are talking
about are also significant, I think, if we are going to have a
competitive total employment package that is going to change
the situation.
Our witnesses today bring a wealth of experience in the
area of Federal personnel management, and I want to thank each
of you for taking time out of your very busy schedules to be
with us.
Paul Light's name has been synonymous with civil service
reform for many years; it is great that he is again playing a
central role in the work of the National Commission on Public
Service, chaired by former Federal Reserve Chairman Volcker. I
look forward to a productive relationship with that panel and
have read in your testimony what you expect to accomplish with
Mr. Volcker.
While Max Stier's organization, the Partnership for Public
Service, is fairly new to the Federal scene, Max is not. Having
served in all three branches of the Federal Government
throughout his career, he brings a great deal to the table in
our ongoing conversation on reforming the civil service.
I think it is wonderful that the Partnership's benefactor,
Sam Heyman, has chosen to give back to our Nation by founding
this organization. It has come at absolutely the right time as
far as I am concerned.
Harvard University's Kennedy School of Government, one of
the premier public affairs institutions in the world, has also
taken a lead role in addressing the human capital crisis. Under
the leadership of Dean Joseph Nye and with the assistance of
Professors Steve Kelman and Elaine Kamark, the Kennedy School
has convened a series of executive sessions on the future of
public service that are proving valuable in the discussion of
how to fix these pervasive governmentwide problems.
These sessions have yielded a wealth of information and
provided many excellent recommendations for improving our
legislation, resulting in a number of positive changes of the
bill--and Steve, I am very grateful to you and Dean Nye for
your contributions.
I am also pleased that you are here today because as a
former Clinton Administration official, I think you demonstrate
that our work together on this issue is a truly bipartisan
effort.
Finally, it is great that Carolyn Ban is on this panel of
expert witnesses. I was so honored last October to address the
National Association of Schools of Public Affairs and
Administration, the organization that Dr. Ban leads, and to
receive an honorary national membership in Alpha Alpha, the
public affairs and administration honorary society.
The involvement of our colleges and universities is a
critical element in our campaign to attract our Nation's best
and brightest young people to public service. I recently sent a
pair of letters to the public affairs departments of Ohio's
NASPAA institutions and to the presidents of all major colleges
and universities in the State, encouraging them to proudly
advertise careers in public service as great opportunities for
their students.
I think the future of our Nation depends on the kind of job
that you are going to be doing. We are going to try to
straighten this situation out to make it a lot more attractive,
and we have to go out and take advantage of opportunities to
attract these young people who are so important to the future
of our country.
Again, Mr. Chairman, I thank you for holding these
hearings, and I really look forward to the witnesses' testimony
today and to our discussion.
Senator Akaka. Thank you very much, Senator Voinovich.
Now we will hear from our panelists. I ask that you limit
your oral statements to 5 minutes. When you see the red light
come on in front of you, please try to wrap up. Be assured,
however, that your complete and full statement will be made
part of the record.
Our first witness is Dr. Paul Light, and I will refrain
from saying more about each of you, because Senator Voinovich
has done a good job of that.
So Dr. Light, please proceed.
TESTIMONY OF PAUL C. LIGHT,\1\ SENIOR ADVISOR, NATIONAL
COMMISSION ON THE PUBLIC SERVICE, AND VICE PRESIDENT AND
DIRECTOR OF GOVERNMENTAL STUDIES, THE BROOKINGS INSTITUTION
Mr. Light. I am pleased to be here this morning
representing The Brookings Institution and the Center for
Public Service. I am also a senior advisor to the Second
National Commission on the Public Service which is chaired by
Paul Volcker.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Light appears in the Appendix on
page 191.
---------------------------------------------------------------------------
We had a meeting of the Volcker Commission last week and
discussed specifically the question of the Volcker Commission's
use as a possible impediment to forward motion on reform. The
Commission does not want to play a role here as being anything
but supportive of activities in forward motion on improving the
public service, be they incremental or comprehensive.
We talked about the issues pending before this Subcommittee
and the full Committee, before Congress and the administration,
and the Volcker Commission wants to be clear that it does not
want the comprehensive to be the enemy of the incremental. I
would just put that on the record in behalf of the Commission.
It does not have a position on any of the legislation pending
before this Subcommittee. We have not had an opportunity to
discuss these issues--we are just getting under way--but the
chairman and the members of the Commission who were at the
first meeting last week were clear that they support all good
faith efforts to improve the public service, be they
incremental or comprehensive, and they do not wish to be seen
as in any way, shape, or form acting as an obstacle or hoping
for a delay in action pending our final report next October or
November/December, whenever we actually bring this report to
completion. We have a term limit on the Commission of about 12
months, and we hope to be done by December.
I would say personally that we have before ourselves on
this Subcommittee and in Congress and the administration a
pile-up of distress that we see in hearings like the one you
held yesterday. There are a ton of issues to be addressed on
public service reform, from pay to career structuring to the
flattening of the hierarchy to Presidential appointee reform. I
personally believe that we ought to have a moratorium on
further outsourcing until the Comptroller General and his panel
complete their work, but we cannot allow ourselves to fall into
the trap of doing reform once every 25 years and then leaving
it to the next generation of legislators to repair what we did
a quarter century ago. If we look at the tide of legislative
reform over the past half-century, we have done civil service
reform twice--in 1946 with classification reform; and in 1978
with the Civil Service Reform Act--and then we have done a
little bit of tinkering around the edges in 1990 with FEPCA and
occasionally other legislation. But we have converted the civil
service reform issue into a once-ever-25-year affair.
There are three reasons for that. One is a lack of
systematic data that we can use to track and adjust in real
time. Senator Voinovich knows the story very well about the
lack of meaningful data within the agencies on training. We do
not know what is being spent, and therefore, we cannot track
it, therefore, we cannot adjust appropriately.
We have also had a long-term belief that one size fits all
as far as Federal reform goes. We need to struggle a little bit
more with decentralization as an issue, and the Volcker
Commission is most certainly going to do so.
There has also been a search for the perfect reform. Let me
tell you there is no such thing. Whatever reform we try is
going to need to be adjusted; we are going to need to fine-
tune; we are going to find agencies where it does work and
agencies where it does not work. We have got to stop searching
for the perfect reform, and we cannot allow the perfect to be
the enemy of the good.
The impact is clear, as I write in my testimony, in the
anti-terrorism workforce. We have a terrific workforce in the
Departments of State, Justice, Treasury, and Defense. We have a
terrific workforce at FEMA. We have employees who want to do
better at INS and in the Border Patrol and in Customs. The
motivation is good. The recruitment is lousy. The resourcing is
shameful. The rewarding is casual, and the trust is declining.
I do not believe the recent reports on INS will do anything
but weaken public support and public confidence in the war on
terrorism and public confidence in the battle for homeland
security.
What are you to do as a Subcommittee? As I said before,
there are lots of areas for work. The Chairman has his own
history on the human resource issue. We would not find a single
private corporation in America that waited 25 years to adjust
its human resource policies, especially in a labor market like
the one we have currently. I wish I had a nickel for every time
a Federal recruiter told me last fall that the best thing for
the Federal Government workforce recruitment effort would be
furtherance and a deepening of the recession; that is how we
operate in this town.
I believe that practically everything this Subcommittee
will do in terms of legislation pending before it will help. I
believe the key is to get started on reform and to make forward
motion as soon as possible. We need to show the Federal
workforce and the labor market that the Federal Government
means business about being a more effective recruiter. The best
way to do that is to start passing legislation. It will not be
perfect, but it can be very good.
Thank you very much.
Senator Akaka. Thank you very much, Dr. Light, for your
comments and your advice to all of us.
Senator Akaka. Our next panelist is Dr. Carolyn Ban. Please
proceed, Dr. Ban.
TESTIMONY OF CAROLYN BAN,\1\ DEAN, GRADUATE SCHOOL OF PUBLIC
AND INTERNATIONAL AFFAIRS, UNIVERSITY OF PITTSBURGH, AND
PRESIDENT, NATIONAL ASSOCIATION OF SCHOOLS OF PUBLIC AFFAIRS
AND ADMINISTRATION
Ms. Ban. Good morning, Mr. Chairman, and good morning,
Senator Voinovich.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Ban appears in the Appendix on
page 207.
---------------------------------------------------------------------------
I am delighted to be here. As the Senator pointed out, I am
the dean of one of the major schools that is training people
for public service. I am also president of NASPAA, the National
Association of Schools of Public Affairs and Administration,
which represents over 250 programs offering degrees in this
area. I am a scholar who has studied the Federal civil service
for over 20 years, and I am very proud to be a former career
civil servant.
I am not going to read my written testimony; I appreciate
the Chairman telling us it will be in the record.
I think all of us share a common value here. I think we are
all concerned with reforming our human resources systems with
the goal of improving government capacity, but we may disagree
on some of the specific proposals. I also appreciate very much
Senator Voinovich's statement because this should not be a
partisan issue. I am very hopeful that we are at a point where
meaningful change is possible. So I applaud you, Senator
Voinovich, and all of the Senators who have sponsored this
legislation.
I do not think this is the major reform, but it is an
incremental process, and I think most of the reforms in this
bill are things that I support very strongly. I do want to
spend my time talking about the bill itself and some of the
provisions within the bill, both those that I support and those
that I have some concerns about, because I think now is the
time that we can perhaps make some adjustments. And I am going
to focus my remarks initially on three areas--on the area of
hiring, on the area of training and education, and on the
general issue of dealing with problem performers.
In terms of hiring, I think this bill contains a potential
reform that is a very important and significant one, and that
is allowing agencies to use what is called ``category rating.''
Category rating in some other jurisdictions is called ``zone
scoring'' or ``band scoring.'' Whatever we call it, it is a
little bit in academic terms like giving people an A or an A-
minus rather than a 95 versus a 94. Even when we are using
valid selection methods, I think even the folks who develop the
tests and the selection methods would agree that our methods
are not so precise that we can really tell a manager that
somebody who gets a 95 on a selection procedure is going to be
a better employee than somebody who gets a 94.
The way the Rule of Three currently works in the Federal
system, if you have 10 people who score a perfect 100 on this
selection procedure, whether it is a written or what is called
an ``unassembled examination,'' the HR office can only give the
manager a list of three people. Now, how do they get down from
10 to 3 when these people are all equally qualified and have
identical scores?
First, they use veterans preference, and I think that is
legitimate. Second, if the manager tells the HR office, ``I am
interested in seeing a certain person on the list of people,''
and there is a tie-breaker, that recommendation by the manager
might break the tie.
Absent those, we use a random selection process. They use a
table of random numbers. It is like pulling people's names out
of a hat. This is not an equitable way to make those kinds of
decisions, and there is no reason why the manager should not be
allowed, even under the current Rule of Three, to see all of
the people who got the top score. But I think that moving to a
carefully drawn category ranking system is a far fairer, more
equitable system that gives managers reasonable choices but
still upholds a concept of merit.
I would recommend that you look at State Governments that
have done this as a model. One of them is New York State, which
has moved effectively to band scoring, and the director of the
Department of Civil Service there, George Sennet, who is a
Pataki appointee, has been very successful not only in doing
this but in getting the unions to buy into it. The unions
initially opposed it, but when the system was made a little
more carefully drawn, unions did go along with this. So I think
we need to look at how to allay the concerns of the unions in
this area.
The second area is training, and I applaud the reforms that
both require agencies to develop training programs in the areas
of training managers and dealing with poor performers; I
applaud and strongly support allowing agencies to pay for
people to get a college education or a graduate degree when it
is in the interest of the agency; and I strongly support the
emphasis on training.
My time has run out, but when we have time during the Q and
A, I would like to be able to go back to the issue of dealing
with poor performers.
Senator Akaka. Thank you very much, Dr. Ban. I now call on
Max Stier. You may proceed with your statement.
TESTIMONY OF MAX STIER,\1\ PRESIDENT, PARTNERSHIP FOR PUBLIC
SERVICE
Mr. Stier. Thank you, Chairman Akaka and Senator Voinovich.
Thank you for inviting me to testify here today, and thank you,
most importantly, for your leadership on these critical issues.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Stier appears in the Appendix on
page 215.
---------------------------------------------------------------------------
I appreciate the opportunity to discuss the challenges
facing the Federal workforce, and I will offer the Partnership
for Public Service's perspective on the Federal Human Capital
Act and the Managerial Flexibilities Act.
The Partnership was founded just under 1 year ago in
response to the very issues that the Subcommittee is examining
today. Skills gaps created during the downsizing of the
nineties are soon to be exacerbated by a wave of retirements,
and at the same time, very few talented Americans see Federal
jobs as good jobs.
All of the government activities that are so vital to us,
from protecting our country to regulating our markets, will
soon be severely threatened unless we improve the government's
management of its most important asset--its people.
I would like to use my time here today to focus on the
importance of the Chief Human Capital Officer position that is
created by the Federal Human Capital Act. The Partnership has
worked very closely with congressional staff in developing this
proposal, and we believe it is vitally important not only for
the success of the measures you are considering today, but also
for the success of subsequent civil service reforms that this
Subcommittee may be asked to consider in the coming years.
Simply put, the Chief Human Capital Officer proposal is the
logical continuation of a long process begun under the first
President Bush to require agencies to manage for results. In
1990, Congress passed the Chief Financial Officers Act in order
to improve the financial management of the Federal Government.
The Act required each Federal agency to designate a person to
serve as its chief financial officer and to oversee all of the
agency's financial management activities.
Although much remains to be done, the CFO Act has sparked
substantial improvements in government financial management
practices. We have financial standards, we have financial
auditing, and we have reporting on these measures--something
that did not exist previously.
Six years ago, Congress enacted similar provisions with
respect to agency information practices, including the
requirement that all agencies designated a Chief Information
Officer. The Government Performance and Results Act has also
required agencies to track and report on the results they are
able to achieve.
These reforms, taken together, have put in place most of
the structures that are needed to manage a high-performing
organization with one notable exception, and that is human
capital management.
The top corporations in this country uniformly acknowledge
the importance of having a human capital officer in a position
of top responsibility--a position that is equal to other vice
presidents responsible for the organization's performance and
success. Each of the top 10 corporations on the Fortune 100
list has such a position. I think we need to look to the
private sector and learn from the example that we have there.
Jack Welch, the former CEO of GE, emphasized the importance of
human capital management. As he bluntly put it: ``We spend all
our time on people. The day we screw up the people thing, this
company is over.''
Both the Federal Human Capital Act and the Managerial
Flexibilities Act propose to grant agencies new flexibilities
and authorities in the hope of improving the government's
ability to recruit and retain the talent and skills that it
desperately needs. I would urge the Members of this
Subcommittee to think of a chief human capital officer as an
indispensable agent of change, acting under the direction of
the political leadership but not being political themselves
within each agency, who will be equipped with the authority and
the expertise to ensure that these new tools are deployed
efficiently, strategically, and to maximum effect.
In order for the chief human capital officer to play this
role, we believe that the current legislative proposal could be
strengthened even further, and we are eager to work with the
Subcommittee to accomplish this. Our suggestions focus on two
areas. First, we must use competencies to select the right
people for these positions--a point that Comptroller General
Walker made. This bill is not simply about putting a new label
on positions currently held by HR directors across the
government but about transforming the very nature of the job.
Second is to ensure that these officers have a clear
mandate to develop, use, and report to Congress on meaningful
measures of their agencies' human capital performance, a point
that Dr. Light made earlier.
In our view, the most critical management tool is
information. If you can measure it, it can change. The chief
human capital officer should be required to develop specific
groups of metrics that are aligned by the agency's strategic
plan, with special emphasis on such areas as time to hire,
success of recruitment efforts, and employee development.
Again, this is akin to the training positions that are already
in the bill.
There are many other positive steps being proposed in these
bills--the category ranking system proposed in the Federal
Human Capital Act, for example, has been proven to be a fair
and effective way of selecting qualified applicants that gives
managers better choices and still preserves the important merit
principles of fairness, diversity, and respect for veterans
preference, a point which Dr. Ban made very well. And the
Partnership generally supports the enactment of both sets of
legislative proposals with a few caveats which are set out in
the written testimony.
Thank you very much. I look forward to further discussion
during the question time.
Senator Akaka. Thank you very much, Mr. Stier. Our last
panelist is Dr. Steven Kelman. We look forward to your
testimony. Please proceed.
TESTIMONY OF STEVEN J. KELMAN,\1\ PROFESSOR OF PUBLIC
MANAGEMENT, JOHN F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD
UNIVERSITY
Mr. Kelman. Thank you, Chairman Akaka and Senator
Voinovich. It is a privilege to have the opportunity to come
before you today, and I am here to express my support for the
managers' amendment and for other activities this Subcommittee
might initiate to help the Federal Government win the war for
talent.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Kelman appears in the Appendix on
page 221.
---------------------------------------------------------------------------
For the last 22 years, I have been a professor of public
management at Harvard and have devoted my professional life to
working to improve the management of the Federal Government and
to attract young people to public service. So I feel just like
Dr. Ban--I am on the front lines of the war for talent in the
Federal Government and trying to attract young people.
As a citizen and as a teacher, I want to suggest that
everybody here honor and applaud both of you, both Chairman
Akaka and Senator Voinovich, for the commitment to the public
good, really in the best tradition of the U.S. Senate, that
both of you are demonstrating by your interest in this issue.
This is not going to get headlines; no one is ever going to win
an election on this. But this is the right thing to do. This is
statesmanship.
I have been to enough hearings so that I know what I am
about to suggest is very unusual, but I am going to do it
anyway, at the risk of being very unusual. I am going to ask
that my fellow panelists and the people in the audience join in
a round of applause for Chairman Akaka and Senator Voinovich
for your work in this area.
[Applause.]
I hope that does not take away from my time.
I want to just highlight a few of the features of my
testimony. First, although today's hearing is not on S. 1800,
the Homeland Security Federal Workforce Act, I would like to
endorse the provisions of that bill establishing National
Security Fellowships, a National Security Service Corps, and
improvements in student loan repayment.
Second, I want to agree with Professor Ban and Max Stier. I
believe that one of the most important provisions of this bill
is Section 202, which would establish a category ranking system
as a replacement for the Rule of Three.
Right now, the criteria that are used to set up the Rule of
Three are for various reasons quite formulaic and bureaucratic,
and there are lots of things that typically, the hiring
manager, the person who actually has to deliver the results
from the organization, does not get to look at--when they
choose the top three--for example, community service, work
ethic, things like that. Once the candidates get to the hiring
manager, they can look at those things.
So our goal should be to get a larger pool of people into
the hands of the hiring managers so they can start looking at a
broader range of criteria rather than just the formulaic,
bureaucratic ones, and getting the three people who are
established by the personnel folks who do not have a direct
interest in the agency actually producing the results in the
same way as the hiring manager does. So I think that is a very
important provision of this legislation.
Third, I would urge that the managers' amendment have an
additional provision to amend Title 5, which currently states
that hiring and promotion decisions should be based on ``the
knowledge, skills and abilities of candidates,'' by adding to
that list ``the knowledge, skills, abilities, and
accomplishments.''
The current language was written a long time ago at a time
when we did not have the same focus on getting results out of
the government. I saw a recent article in my home town
newspaper, The Boston Globe, on how private sector firms
evaluate resumes of people who are applying for jobs. There are
a lot of quotes here, but the basic point of the article was
that what people look at when looking at resumes is
accomplishments. They quote a person as saying, ``If you just
list responsibilities of previous jobs excluding
accomplishments, an employment manager is like to say `So
what?' and move on to the next resume.''
I think Congress can send a real signal that we really care
about a results-oriented Federal workforce by adding the word
``accomplishments'' to the statute.
Next, I want to briefly talk about things that the
Subcommittee and Congress can do other than legislation to get
a Federal workplace that is a workplace oriented toward results
and oriented toward our employees, because a lot of the things
that you can do do not have the words ``human capital'' or
``civil service reform'' attached to them.
For example, I think there is nothing this Subcommittee can
do more than continue working on the Government Performance and
Results Act as a way of expressing interest in this. Second, we
should not forget the Hippocratic injunction, ``First, do no
harm.'' We have a real habit in this town of doing what I call
``management by scandal,'' where we create an overly
bureaucratized Federal workforce and Federal workplace by
focusing on a small number of scandals. We saw it last week in
the hearings on the Federal credit card, where you take a small
number of fraud examples, and that might be used as an excuse
to destroy a very valuable program and create a more
bureaucratic workplace. So, first, do no harm.
I want to conclude with a message to the Subcommittee from
one of my students, Michael Jung, from Ashland, Kentucky, who
is representing the students in our executive sessions at the
Kennedy School. I asked Mike what message I should give to
Senator Akaka and Senator Voinovich, and his message is this:
``Sirs, I take your deliberations very seriously because there
are lots of people in my generation who are interested in
service. But we need to have faith that the government will
value our abilities and challenge us to realize our full
potential as professionals.''
So let us not disappoint Mike. Thank you.
Senator Akaka. Thank you very much, Dr. Kelman.
We usually do not have panelists who call for applause.
Mr. Kelman. I know it is unusual, but I am so happy that
both of you are taking an interest in this very important
issue, because no one is every going to win an election on it.
Senator Akaka. And I want to pass through you to Mike that
there is no question that this government values the abilities
of young people. We depend on them and their accomplishments.
I appreciate your insightful and thoughtful comments,
panel. Let me begin my questions by asking all of you, except
Mr. Stier, whose statement focused on the need for a chief
human capital officer, do you believe that the creation of
these positions will ensure that human capital management is
given equal priority across the agencies? What authority would
this position need to make the strongest contribution?
And finally, should this be an appointed position or one
filled by a career employee?
I will start by asking Dr. Light for his comments.
Mr. Light. The first chief financial officer in the Federal
Government was actually created in 1988 under the Department of
Veterans Affairs Act, which came through the Governmental
Affairs Committee. Senator Glenn at the time was the Chairman,
Senator Roth was ranking. The notion was that a chief financial
officer would create a presumption in favor of greater
attention to financial management.
Whether it has done so over the past 10 years is really in
the eye of the beholder, but the notion of creating chief human
capital officers, or CHCOs as they are called now at least in
some quarters, creates a presumption in favor of paying greater
attention to human capital issues. That by itself will not do
it. The chief financial officers were given substantial
authority. The Chief Financial Officers Act and the 1988
veterans elevation required the chief financial officers to
produce financial statements. It also required the chief
financial officers to have those financial statements audited
by the inspectors general or contractors selected by the
inspectors general.
In other words, you had an enforcement mechanism; you had
something for the chief financial officers to do. We hear year
after year that the audit statements are not quite right and
that some of them are not coming in quite right, but they are
working on the issue.
If you create chief human capital officers in government
and give them nothing to do by way of measurement, tracking,
auditing, and so forth, then all of you have done is create a
new title. And I think the legislation takes an important first
step toward giving them substantial authority.
I think they have got to be Presidential appointees. That
is the coin of the realm. If you want them to sit at the table
with CFOs and CIOs and chief operating officers, all of whom
are political officers, you have got to make them Presidential
appointees. Lord help us, we have not quite fixed the
Presidential appointee process. You have a bill pending here in
the Subcommittee that could easily be attached as part of this
legislation to improve the process. But if they are career
officials, they are not going to be invited to the table. We
have to be blunt about it. They have to be Presidential
appointees with the full Senate advice and consent function
attached. That is the coin of the realm. And I have made that
argument with regard to other officers in the Federal
establishment.
Senator Akaka. Dr. Ban.
Ms. Ban. I do support the proposal to establish chief human
capital officers. I do not think that simply creating the
position will ensure that human capital will be given uniform
attention, but I think it will help.
I agree with Dr. Light's comment; there needs to be some
oversight of this function and a clear sense of the difference
between the human capital approach and the more traditional
human resources approach.
I just had an extended email exchange with the director of
research of the Partnership last week on this very question of
whether it should be political or career, and I took the
position that Dr. Light does, that it should be a political
appointee, because they will be given a seat at the table. But
I need to at least acknowledge that there is another side to
this. We all know that political appointees come and go,
sometimes fairly quickly.
The other side of the argument, the advantage of having a
career person, is that you have a more stable, long-term
leadership in this area.
So I do recognize there are two sides to this question;
however, if forced to come down on one side, I will say that I
would prefer to go with the political appointee.
I think the issue, however, is not just the chief human
capital officer; it is the person who heads the agency--it is
the secretary, it is the director. And when we confirm people
in those positions, I do not think we necessarily emphasize
their ability to manage their organizations. If they understand
and value good management, they are going to be more likely to
listen to their human capital officer.
Senator Akaka. Dr. Kelman.
Mr. Kelman. I think that both establishing a chief human
capital officer and also, nobody has talked about a Chief Human
Capital Officers' Council--I think both of them have some real
potential advantages.
In terms of the chief human capital officer within the
agency, I would agree with the earlier speakers that getting an
increased level of visibility and attention on these issues,
particularly the strategic value of people, and talented
people, in delivering results to the government, I think is a
good thing, and it is a new focus.
As Senator Voinovich mentioned, I served in the Clinton
Administration, not in this area but in a related area, and I
think that in the Clinton Administration, we did a number of
good things in this area, but I think it is fair to say that
the strategic approach toward human capital management that has
come to the fore in the last few years just really had not come
to the fore in the same way at that point. I think that having
the chief human capital officer can help in that regard,
assuming that the person either meets some competencies, as Max
Stier suggested in his testimony, so it is not necessarily just
the existing HR person or, worse, ``personnelist,'' to use the
old phrase, from the Federal Government.
I think the Council is important because more and more
academic research on how organizations work well suggests that
setting up networks of people to share knowledge, share best
practices, share information, share approaches, is a very
important thing in getting organizations to perform well.
So I think that having a situation where the different
human capital officers in the different parts of the Federal
Government meet regularly, get to know each other, talk to each
other, can be very valuable.
I do not have a strong view one way or another, frankly, on
the political versus senior career, and I am not sure there
needs to be a one-size-fits-all. Some of the chief information
officers in the Federal Government are political, but most of
them are actually career. And one argument for career--and I
recognize the arguments on the other side, but since everybody
has come out on the political size, let me remind you of the
argument on the career side--is that from a career progression
point of view for a career civil servant, the higher the job
that she or he can aspire to if they do a good job in their
public service--that is, they start as a GS-5, the more they
can have to look forward to--``Gee, if I really do a good job,
someday, I might be the chief human capital officer of this
agency.''
That is an argument for making it career. I also recognize
the arguments on the other side, and if the Subcommittee would
like, I can talk to my colleagues at the Kennedy School and
submit something additional for the record on this. I think
there are arguments on both sides.
Senator Akaka. Thank you very much, Dr. Kelman.
Let me ask Mr. Stier, briefly, do you care to add anything
in response to this question?
Mr. Stier. I think the arguments have been well-presented
here. I think from the Partnership's perspective, there clearly
are arguments on both sides as to whether or not the position
should be political or career. We come down on the side of
career for the arguments that have been presented already. Dr.
Ban suggested, and I think it is right, that you need
continuity from administration to administration. What we
really need here is focus on a set of issues that are not easy
for political leadership to pay much attention to.
So I would say that in the ideal world, you would have a
chief human capital officer who was career and then have a
political leadership in an agency that recognized the
importance of the issue and relied on the career person to do
their job and invest in the people part of the agency. That is
the model that I think is the stronger model.
I would say that the more important pieces are to ensure,
again, as Dr. Light suggested, that there really are some
substantial functions that officer is playing and there are
measurements or metrics that are included at some point so we
have some way of knowing what is happening inside the agencies
and across agencies. I think that is going to be absolutely
critical.
Senator Akaka. Thank you so much.
Today, some of our witnesses, along with Senator Voinovich
and I, raised pay comparability as a critical issue in solving
the recruiting problem. The National Commission on Public
Service will examine nine areas of concern in the Federal
Government, including the pay gap between private and public
sector jobs for upper management employees.
At yesterday's hearing, David Walker said there should be a
study to develop more realistic and workable methods and
solutions to Federal pay issues. What is the rationale for
limiting the Commission's review to upper management employees,
and do you personally believe that there should be a
governmentwide study of pay issues similar to the one that was
performed prior to the enactment of the Federal Employees Pay
Comparability Act?
Mr. Light. Let me respond in two ways. First, the number of
issues that the Commission is considering now is up to 14. It
seems to be an ever-expanding list. We are going to release on
Friday of this week at Brookings a report on pay comparisons,
compensation comparisons, between Presidential appointees and
the private sector, and that is going to show an outrageous
gap, the question being how much of a discount or price do you
want Presidential appointees to pay to come into government.
We think there is very good statistical evidence of pay
compression at the top of the Federal hierarchy. We think there
is less good evidence of pay gaps toward the middle and the
bottom, which would argue for less of a comprehensive approach
to compensation reform and more of a layered approach that
might take on the Presidential appointee, the judges, and
others who are trailing the private sector by significant
margins, and try to understand a little bit better what is
happening at the entry and middle level, where research by the
RAND Corporation among others suggests that the pay gap in
position is quite different between the pay gap in person--in
other words, that we hire people in positions that are
substantially less well-paid than the private sector, but we
promote them rapidly, so that by the end of the second or third
year, these individuals may no longer experience much of a pay
gap at all.
I guess what I would say to the Comptroller General is that
if he can do the study quickly, let us get it done, but we
cannot afford a 2- to 3-year analysis here. I believe the
Director of OPM is working the pay issue, the compensation
issue, and data will be coming out soon on some of these
comparisons.
Senator Akaka. Thank you very much, Dr. Light.
Dr. Kelman, we appreciate you coming from Cambridge to be
with us today.
Mr. Kelman. It was snowing yesterday in Cambridge.
Senator Akaka. The proposals that we are reviewing today
are intended to allow agencies to better recruit and retain the
people they need. Yesterday's discussion included outsourcing
quotas and the negative effect that numerical quotas have on
these essential human resource needs.
Drawing on your tenure at the Office of Federal Procurement
Policy, do you believe that outsourcing quotas are barriers to
these objectives, and how would you convince your students to
work for the government, knowing that some could lose their
jobs to a contractor?
Mr. Kelman. Well, of course, in the private sector as well
there is, if anything, more outsourcing that goes on in private
sector to private sector than goes on in the public sector
toward the private sector. So any person going to work for a
Fortune 500 company or whatever, there is some risk that for
reasons of, in the case of the corporation, good corporate
policy or in the case of the government, good taxpayer policy
or good public policy, that some jobs might be outsourced.
Those are things that are just part of the risk that any young
person going into a job faces.
Also, it should be noted that in A-76, if there is a
public-private competition, and if the public side loses the
competition, there is a right of first refusal in A-76 so the
public sector workers are given an opportunity to go and work
for the private sector contractor if they choose to. And in
fact, in many of these competitions, they do end up going to
work for the private sector contractor.
My overall view, Senator, is that we should make decisions
on what jobs are in-house and what jobs are outsourced based on
what is going to produce the best result for the government,
for the taxpayer, and for the mission of the agency, and those
considerations end up sometimes favoring doing it in-house and
sometimes favor contracting it out.
I am inclined to be skeptical of trying to piggyback the
politics of outsourcing onto the human capital crisis of the
Federal Government. I think that those decisions about
outsourcing--outsource or not outsource--should be made on
their own merits based on what is in the interest of taxpayers,
what is in the interest of good government performance, who can
do the job better, government employees or contract employees.
I am skeptical of trying to piggyback this onto the human
capital crisis, frankly.
Senator Akaka. Thank you very much, Mr. Kelman.
I now yield to Senator Voinovich for his questions.
Senator Voinovich. Dr. Light, in regard to the issue of pay
comparability, I would be very interested to see what kind of
methodology you would come up with to recommend how we can
address this, because it is not an easy issue. I went through
this when I was Mayor of the City of Cleveland, and it took us
a year to look at all of the comparable positions. We have not
looked at the classification system around here since 1949, and
it has to be a giant mess right now. Finding some way to review
the system so you do not get bogged down in years of analysis
is very important, and I think that one of the things that
needs to be understood straight out is that when you get into
this issue, you are going to find people who are ``red-
circled.'' I think that in your testimony, you mention that. I
think everybody should understand that if you do this review
objectively, you are going to find that there are people who
are substantially underpaid, and there are going to be some
people who are overpaid. That is a real challenge.
I had to look at some folks who had been in city government
for years and say, ``You are red-circled,'' and some of them
were very unhappy about it, and I said, ``The only thing I can
say to you is that for the last several years, you have been
paid more than what you really should have been paid for the
job that you are doing.''
I think there is a tendency to think that everybody is
underpaid, and the fact of the matter is that we are going to
find that there are people in the Federal Government who are
overpaid in the positions they have when you compare them with
jobs that their counterparts have in the private sector.
Everybody should understand that when we go into this area.
Another comment I would make is about the issue of the
chief human capital officer, and whether these should be
appointed or civil service positions. We are going to be
marking up the Presidential appointments bill this week. But if
you look at how slowly things have operated here in the last
year, and you have a new administration trying to figure out
where to find competent human resources people in the private
sector who would be willing to come to work for the Federal
Government, the process of finding those individuals, I think,
is going to be very difficult. I think we would be better off
with perhaps having the chief human capital officers be civil
servants. That does not necessarily mean that the new political
appointee coming in may be happy with the CHCO, but if he does
not like that individual, he can look around and find someone
who meets his requirements. And that even gets to the issue
that David Walker brought up yesterday, that is, the issue of
an agency chief operating officer in the Federal Government to
provide some continuity on management issues from
administration to administration.
I have one other point about the appointment process. I
mentioned yesterday that Donna Shalala said that when she came
in for her confirmation hearing, nobody ever asked her about
what management experience she had. And we tried to get at that
with this administration, asking questions of the new
appointees. We had a series of questions that David Walker
actually put together that we asked them, and hopefully, that
did some good to highlight the fact that when these people are
hired, they ought to have some experience in the area of
management, because they are taking on some enormous
responsibilities. I just wanted to comment on those.
I would like you, Dr. Ban, to explain to us how the
categorical hiring would work in the same example that you gave
where you have 10 people, each of whom has a score of 100. How
would it be different if we had categorical ranking procedure
as contrasted with the Rule of Three? This is an area where we
have some concern among our labor unions, and I think the
Subcommittee would like to feel comfortable that if we go
forward with this, which has been the practice at two agencies
in the Department of Agriculture. We have some additional input
on it.
Would you explain how that would work?
Ms. Ban. And it has worked well in the Department of
Agriculture based on the evaluations that I have seen.
As I understand it--and it does work slightly differently
in different jurisdictions--depending on the size of the pool
of applicants, you decide what the top tier will be. That might
be everybody from 95 to 100 on your selection method. And the
manager can look at all of those people.
Senator Voinovich. So in this case, the manager would look
at all 10 of them?
Ms. Ban. In that case, it might be more than just the 10
who got 100. You might also have some people who got 99, 98,
97, depending on where you draw the line, maybe all the way
down to 95, and you might get 30 or 40 people if you had a
large applicant pool. If you have a small applicant pool, you
might even want to drop the bottom line a little bit lower. But
all of those people would be considered roughly equally
qualified, and the assumption is that if you have gotten into
that top tier, you have got what it takes in terms of the
technical skills, you have passed that kind of hurdle; then,
the manager gets to look at all of those people, bring them in
for interviews, ask for additional information, and say which
one is the better fit in terms of some of those more intangible
qualities that really make a difference on the job.
I have seen evaluations of category rating in other
jurisdictions. If done right, it does not hurt veterans. In
fact, veterans float to the top, and you have to pick them
first if they are in that top category. So I do not think that
veterans need to worry. And it does allow for a bit more
diversity, because you can look at a wider range of candidates
and maybe get a little bit more diverse workforce that way.
So I have not seen it abused; I have not seen it used for
political purposes or other kinds of abuse. When it is done
well, what I have seen is managers happy to have a few more
people to look at before they have to make a decision.
Senator Voinovich. Would anybody else like to comment about
it?
Mr. Kelman. Yes, I would. Senators, imagine in your offices
if you were hiring a legislative director, and the rule for
hiring an LD or an AA was that a separate Senate Personnel
Office looked at all the candidates and at how many years of
experience they had had on the Hill, what courses they had
taken, and that was basically what they looked at; and based on
that, they came up with a ranking of only three people whom you
could consider--they gave that to you and said, ``Here are the
three who have the longest number of years of experience on the
Hill, who have taken the right courses, whose job description
looks good''--maybe they have been an LD already or something
like that--``and those are the only three you can look at, and
that is it.'' That is the Rule of Three that is imposed on
Federal managers right now.
I suggest you would never accept that as a way to hire an
LD for your offices. You would like a larger list of people who
are all qualified, whom you can look at and use your judgment
about who is the best fit for the job.
Mr. Stier. If I might, Senator, I would just add very
quickly that, as Dr. Ban suggested, there is data out there
that suggests that in the Federal Government, the system has
worked quite well and that veterans have, if anything, been
benefiting from the category ranking system. The study done by
MSPB indicated that for those veterans who were selected or
were considered to be qualified, many more of them were
selected under the category ranking system than were done under
the alternatives.
I think that, as has been well presented by Dr. Kelman and
Dr. Ban, it is a system that provides managers with the kind of
flexibilities that we would be very supportive of.
On the flip side, I think it is quite important, though, to
remember that we need to ensure that government managers are
given the training and support so that they can appropriately
make these decisions, and I think that is again an area that
the Federal Government needs to begin focusing on, investing
in, ensuring that the mangers themselves have the tools they
need to make these decisions in smart ways.
Senator Voinovich. Yesterday the issue of training was
raised. We were talking about performance evaluations and
getting rid of poor performers, and there seemed to be a
consensus that with better training and understanding of what
the roles are, managers could do a lot better job. So often,
managers are frustrated and say the system does not work, but
they really do not have the training they need to use the
system that currently exists.
We focused on categorical ranking. What other provisions in
this legislation do you think are really key things that will
make a difference in terms of maintaining our Federal workforce
and attracting others to it? I will open it up for the panel.
Mr. Light. Carolyn, do you want to go ahead? [Laughter.]
Ms. Ban. I would be glad to; it would be my pleasure.
I am very supportive of recruitment, relocation and
retention bonuses, and I think that making them more flexible
is a very positive move. I am concerned--and this came up
yesterday as well--that absent additional funding, managers are
not going to use them, but I nonetheless think it is very
appropriate to broaden that.
I am supportive of phased retirement. As I was preparing my
testimony, I talked to some senior people in HR offices in the
Federal Government who said that would be a really important
tool. Allowing people to do phased retirement would allow them
to have the conversation with people about when they are
planning to retire and would allow them to plan for succession
planning in a way that they cannot do. So I think that one has
strength.
In the current version of the bill, it simply calls for a
study of phased retirement, and I think that is OK, but we
should probably move quickly to provide that as a tool.
Senator Voinovich. Is it more important today than it may
have been in the past because of the crisis that we have in
terms of regular and early retirement----
Ms. Ban. Yes.
Senator Voinovich [continuing]. That if we do not take
advantage of that, we would have this large gap of
institutional knowledge that is walking out the door----
Ms. Ban. Exactly.
Senator Voinovich [continuing]. And the concept is that
because we find ourselves in this very difficult situation,
phasing it out would help with succession planning and be able
to execute this transition in a more logical way.
Ms. Ban. That is very well put, and I see the proposal for
phased retirement as linked to the proposal for training for
managers, managerial succession training.
What we have in many agencies is a senior executive and a
top management group ready to age out and not very many people
standing behind them, ready to move into those positions.
So phased retirement allows the new person moving in to be
in essence mentored by the more senior person before he or she
goes out the door, but at the same time, some management
training to prepare people to move into the ranks is very
important.
The other option, of course, is hiring from the outside,
and we have a system that traditionally does not hire very many
people at mid-level management or senior management positions
from the outside.
Senator Voinovich. Well, there seems to be some controversy
about the issue--and we have two groups that we are going
after--one, we want to keep as many of our good people as
possible, and two, we want to recruit ``the best and the
brightest'' both in entry-level jobs and mid-level jobs. But
there was some concern about the provision of the bill that
would give individuals coming in at mid-management levels
additional vacation. Do you want to comment on that?
Ms. Ban. Yes, I do support that. I know that some of the
folks yesterday from the unions were uncomfortable with that,
and I do not think it is a huge issue, but as somebody who did
come into the Federal Government in a mid-level management
position, it is a deterrent to know that you can only have a
very small vacation period. So it is a tool that I think would
help government recruit from the outside. It is not as
important, say, as raising the pay cap on the SES, but it is
nonetheless one more tool.
I think the streamlined critical pay authority is again not
a huge tool--it is limited in the number of positions that are
covered, but it is nonetheless an important tool that I
support.
Mr. Light. I think there is a general consensus that there
is a lot to admire in this legislation, but that we need to
make sure that there is a will to recruit. Let us say we give
tax-exempt status to loans for Federal employees--the GOFEDS
bill, which is a nice bill--but the tax exemption that you can
take on a loan that is not given is zero. If we cannot get the
administration to make basic investments in training and
recruitment, if the administration, be it a Democratic or a
Republican administration, focuses on hard outsourcing targets
as they have that disincent and send the message that you would
be better off looking at another employer, if your recruitment,
retention and relocation expenses are never granted, there is
no money in the budget to do so without cannibalizing your
training, if you come in at the mid-level and you are punished
for having made the boundary crossing from private or nonprofit
into government by being denied adequate vacation and benefits,
it just does not make sense to make the change.
We have got to send a consistent signal both legislatively
and administratively that we want talented people to apply, and
that is part of what this whole reform effort is about.
Mr. Stier. Senator, to echo what has been said a bit here,
from the Partnership's perspective, there clearly are a number
of very positive provisions in this bill. Obviously, it is
incremental reform, and we are looking forward to working with
you and with the Volcker Commission and others to talk about
the comprehensive steps in addressing some of the larger
problems like the compensation issues that clearly need to be
done.
I think it is important to realize that it is a system and
not simply respond to individual problems, and I think that in
order to do that, we do need to be thinking about how these
different pieces play into each other. So on the compensation
issues, that clearly relates to performance management, it
relates to the issues about poor performers and how you reward
top performers as well, and I think we need to be thinking
about these things in an integrated fashion.
The specifics in this bill, however, I think offer some
important steps. The vacation time that you have raised and
asked about I think is a positive step. We have issued a report
on mid-career hiring in the government that I think
demonstrates how few jobs are actually filled from the outside.
Indeed, barely 50 percent of jobs are even advertised at the
GS-12 and above level to folks outside the government, and only
13 percent of GS-12 and above jobs are filled from outside the
government.
I do not think that is a situation that is good for the
current workforce, who have expressed unhappiness with the
system as it currently exists, and it is clearly not good for
the system as a whole not to be drawing from as broad a range
of talent as exists----
Senator Voinovich. In other words, you are saying that for
some of the top jobs, only 13 percent of them are being filled
from the outside.
Mr. Stier. And when you say ``top jobs,'' I am not talking
top jobs. I am talking about GS-12 and above. That is
essentially a third of the Federal jobs that are available, so
approximately half a million jobs that are in the Federal
Government that are GS-12 and above.
I think we need to look at a variety of ways of expanding
the reach that the Federal Government has, not only at the
entry level with young people but with experienced workers. I
think, though, that President Harnage and President Kelley
raise some important points with respect to this issue. I do
not see why it should be a benefit that is offered only to
senior management and to SES. We should be looking to expand
the ability of the government to reach out to needed people and
offer the kind of incentives such as vacation time that are
going to be market-based, and that may be for an SES person, it
may be for a GS-12 person; it may be for a senior IT person who
is not a manager.
I think that really what we need to be looking at is a way
of expanding the opportunities that the government has to
attract new talent and to retain existing talent.
Senator Voinovich. One of the things that was brought up
was the critical pay authority that I think some of the Senior
Executive folks are concerned about. Are we bringing in high-
paid outsiders to avoid the problem with pay compression? Is
that the reason why we are doing it--that we have to get this
talent, and the pay schedule that we have here is not realistic
so we have got to bring them in from the outside at special
rates? We tried in the bill to limit that to not too many
individuals. I would like you to comment on that. Do you think
that we have taken a realistic approach to that, and what do
you say to the argument that perhaps this would just be another
excuse for us not to face up to the fact that we need to do
something about the caps on our senior executives' salaries?
Mr. Stier. Frankly, I think this is in line with the
discussion that we started with, with respect to Paul Light's
comments, and that is that the incremental change is
beneficial, but we cannot lose sight of the fact that what we
are talking about here is a series of problems that have to be
addressed in the very near term and that we need to be looking
toward more comprehensive solutions, but in the meanwhile, let
us move on what we can.
On the critical pay authority issue, the IRS, despite some
problems, has by and large been a successful model that we need
to look to and learn from--but it also teaches us that these
things need to be done in concert and as a plan. Critical pay
authority to the extent it works in the IRS works because it is
being done in conjunction with a lot of other changes to reform
the whole system.
Mr. Light. Having looked at the IRS critical pay issue, I
think that to say it was done haphazardly is basically a good
characterization.
Critical pay authority is very difficult to do well. I
think we ought to have critical pay authority. I embraced
critical pay authority in the Tax Reform Act in 1997-1998. But
it creates a new opportunity for the kind of story about
dismantling that undermines public trust, and I think we have
got to deal with the pay compression issue.
Why not give critical pay authority for a set period of
time in the hope that by the expiration of critical pay
authority, we can get the pay compression problem solved in the
Senior Executive Service?
Senator Voinovich. And would you require that any
permission to do that would have to come from OPM?
Mr. Light. If OPM under the current restructuring proposals
enhances its ability to respond quickly and considers the
agencies its customers, yes.
Ms. Ban. But critical pay authority is really designed for
term-limited appointments, for people who are there for not
more than 4 years. So it really is not a way around pay
compression for the majority of people. It is a quick fix for
bringing in a few people who have critical skills that you do
not have. It certainly does not address the broader issue of
pay compression, which is very serious, and I think you already
know that.
Senator Voinovich. Yes. The other thing that is very
interesting on that issue is that there is a concern among both
SEA and Kelley and Harnage that there is a tendency now that
any time you need something done, you farm it out. And their
feeling is that some of these things should be done in-house.
This is another way of looking at this, that if you have
critical pay, you bring in some key individuals that you need
in your organization to provide leadership and perhaps even
training and get it shaped up, and then they leave, as
contrasted with I have a problem, I do not have the money, I do
not have the talent, so call some outsource agency to have them
take care of it.
I do not think that some people are looking at it in that
respect, but it could be part of the answer to just moving
anything that they cannot take care of out to a third party.
Mr. Light. The problem being that most of the outsourcing
is not motivated, really, by a desire to find somebody who can
come in quickly; it is motivated right now by the desire to
meet an arbitrary target, which you raised yesterday and the
Comptroller raised yesterday.
The outsourcing pressure right now is driven just by a
statistical head-count mentality, and I suspect into 2004 and
2008, we will hear stories about how many jobs were converted
as evidence that government is somehow smaller.
Senator Voinovich. I think that one of the things that was
brought out in one of our hearings was by Ms. Stiles, who is
with the Department of Defense--it was interesting that she
clarified what the administration's attitude was toward that,
and I thought it was a very fine explanation, and hopefully,
OMB Director Daniels and OPM will look at that and maybe soften
it up a little bit, because it really does give the impression
that you have just stated, that the emphasis will be on how do
we figure out how we can outsource rather than looking at how
do we shape our organization to get it to respond to the
demands that we have and deal with the transition situation.
Outsourcing may be one way of doing that--it is an option--but
it should not be the driving factor so that every morning they
get up and say, ``I have got to figure out how I am going to
outsource `x' percentage of jobs.''
I think that is really something that this administration
can handle, depending on the messages that they are getting out
to their people. But at least on the surface, the appearance is
not, I think, conducive to what we are trying to accomplish.
Thank you, Mr. Chairman.
Senator Akaka. Thank you very much, Senator Voinovich.
I have a question to ask Mr. Stier, but before I do that, I
want to ask Dr. Light if he has any comments on categorical
rating.
Mr. Light. I have none. I have a comment on political
appointees if you are willing to ask the question.
Senator Akaka. Thank you.
Mr. Stier, the Partnership for Public Service conducted a
survey last year which found strong public satisfaction with
the Federal Government's response to the events of September
11. However, your findings reveal that this change in public
sentiment may not necessarily translate into greater interest
in the Federal Government. Why is this the case, and how can we
turn today's positive view of government service into
tomorrow's recruitment strategies?
Mr. Stier. Mr. Chairman, you are absolutely right about the
survey results. Essentially, we found that the American people
appreciated government workers more but did not want to be
them, and I think that the reasoning is at least twofold.
First, as data from Brookings has indicated, we are still at
risk now of seeing that confidence in government go down.
There is a window of opportunity that we do need to take
advantage of, and in order to do that, we need to do a variety
of different things, including what the Subcommittee is
contemplating today.
First, we need to create a situation where the Federal
Government is actually reaching out and recruiting. By and
large, it is not so much that the government does a bad job of
recruiting--it does not do any job at all. And indeed, we are
engaged in a process right now of a colleges and universities
initiative that Senator Voinovich has been very supportive of
and helpful in, trying to reconnect college campuses with the
Federal Government. Today we have over 150 colleges and
universities that have signed onto this initiative in the last
3 or 4 weeks.
So the first thing is in fact to inform the American people
about the opportunities that exist in the Federal Government,
because what the data shows is that people simply do not know
what they can do in the government; they are not aware of the
jobs themselves.
Second, we need to reform the hiring process itself. It is
one thing to interest folks in government jobs; it is a
separate thing to get them actually into the government. They
need to know how to get a government job, and the process needs
to be transparent, it needs to be simple, and it needs to be
quick, and unfortunately, it has none of those characteristics
today.
Then, finally--and this goes back to Professor Kelman's
point regarding his study--the government jobs need to be
supportive of high performers and innovators. When I talked
earlier about this being a systemic issue and not simply a set
of problems, I think we need to be working on all three
levels--the outreach level, the intake level, and the jobs
themselves. I think that if we do those three things, and we
work on that now, we will in fact take advantage of the window
that has been opened from changing attitudes on September 11,
and I think we can actually make a very big difference.
Senator Akaka. Thank you. Dr. Kelman, would you like to
comment?
Mr. Kelman. Yes. I would just like to second what Mr. Stier
said with some examples. First, it is absolutely the case that
what most inhibits our students from going to work for the
Federal Government more than anything else is a perception that
the government is too bureaucratic, too hierarchical, too
rulebound, and does not emphasize performance and rules enough.
That is why, when I said ``Do no harm''--some of that pressure
that creates bureaucracy in government and creates too many
rules, too many check-offs and so forth, frankly comes from
Congress and comes from this management by scandal kind of
approach that gets the headlines and gets members on the news,
but it actually hurts the taxpayer and hurts good government.
So when I try to persuade my students to go to work for the
government, the biggest worry they have is what Mike Jung said.
So I think we need to keep that in mind. Dr. Light has used the
words ``Show me the work,'' and his surveys show that what
young people want out of a job is responsibility, an ability to
make a difference, an ability to be in a results-oriented
workplace.
Second, on the recruitment side, just to add two anecdotes
from our executive sessions--we hope, by the way, Senator, that
you will be able to join us at the next one. I know that you
have not been able to make it to the last two, but hopefully,
you will be able to come to the next one.
Anyway, at the last one, my student, Mike Jung, is looking
for a job after he graduates in Columbus, Ohio, because his new
bride is a med student there. So he needs to find a job there,
and he wanted to look at the Defense Logistics Agency, which
has a big facility in Columbus. So he checked out their
website, and he said what he was looking for was the website
telling me why I would want to work at the Defense Logistics
Agency, and what about this would make it an interesting job.
The website gave him no clue to that.
He then made a phone call to the Defense Logistics Agency
in Columbus and said, ``I am about to graduate. Tell me why I
should want to come to work for the Defense Logistics Agency.''
And the person on the other end of the phone, as he put it
to our group of people, treated him like a person to be
processed--started asking him a bunch of questions like, ``Are
you a Section 11?'' and all of this bureaucratese, just to
check off some things, and made no effort to say here is why
the Defense Logistics Agency is an exciting place for a young
person to work.
Another example, again from the last executive session--Tom
Tierney, who is the retired CEO of Bain and Company, the
consulting organization, said that when he was CEO of the
company, he spent 10 percent of his personal time as CEO
interviewing college students and business school students and
being on campus, because he felt that recruiting young people
was part of his job description as CEO. I know the Comptroller
General, David Walker, is spending some of his personal time
recruiting people to the GAO, and I think that is one of the
reasons why GAO is turning around and making a difference. He
is probably the only person in the whole Federal Government who
is going that route--I think--but I hope there are others.
We do really need to attack these things comprehensively.
Legislation cannot do it all, but for example, on some of these
issues about senior officials caring about recruiting and
having recruiting plans, what kind of workplace you are
creating, in my view, that is the kind of constructive
oversight that this Subcommittee and this Committee should be
engaged in--far more constructive than some of the scandal-
mongering.
Senator Akaka. Dr. Ban, do you wish to add?
Ms. Ban. Yes, if I may add to that briefly--because I think
this brings us back to category rating. It has been difficult
for managers to go out and recruit in the Federal Government,
because when they try to bring those candidates in, they run up
against the Rule of Three.
Category rating will make it easier when managers
effectively recruit for them to actually get these outstanding
candidates considered and be able to hire them. So I see those
two as linked.
Mr. Kelman. I strongly agree.
Senator Voinovich. They go out and recruit the candidates,
and then tell them, ``We want you to come to work for us; now
apply, take the test, and we will see you in 6 months.''
Mr. Kelman. And we hope you get on the list of three--or
what they do----
Ms. Ban. Exactly.
Mr. Kelman. They do one of two things, and both of them are
very damaging from the perspective of the Federal Government.
One is they say, ``Apply, and we hope you get on the list of
three.'' The other is they start gaming the system--how can we
redo the position description so you can get on the list of
three. And what are we doing then? What an awful message. The
first message a young person gets from the Federal Government
and from his potential employer is ``Here is how I am going to
game the system so I can get you on this bureaucratic list of
three.'' It is the most destructive, awful message we can give
those young people.
Ms. Ban. He is correct.
Senator Akaka. Let me finally ask Dr. Light if you wish to
comment about these questions, but in particular, I would like
to go back to what you said and hear any comments you may have
on political appointees. [Laughter.]
Mr. Light. I would direct the Subcommittee to the Inspector
General Act of 1978 to see whether or not there is embedded in
that statute a way of getting a political appointee to take
these jobs who is presumed to have a commitment to continuity.
We have been through a lot of travail with the inspectors
general over the years. We may be in the midst of a purging of
the IGs even as I speak. But the presumption has always been in
favor of that position which is politically appointed, it is
confirmed on a sequential referral so that the authorizing
committee does the first review, and then the Governmental
Affairs Committee does the sequential, which gives the
Governmental Affairs Committee an opportunity to really weigh
in on the issues that the Senator from Ohio cares about. And
the presumption in that statute is for continuity, and
generally speaking, it has worked pretty well. That was my
point about the political appointees.
I have been against the proliferation of political layering
for the better part of 20 years, but every once in a while, you
see an opportunity where, if you really want these folks to be
sitting at the table, I am not sure how you get them there
unless they come through a process where they have the Senate
advice and consent; I am just not sure about it.
Mr. Kelman. May I just comment briefly?
Senator Akaka. Yes, Dr. Kelman.
Mr. Kelman. One way to get them to the table is--I think--
again through oversight and, during the confirmation process
for Cabinet Secretaries or other political appointees, to
emphasize the importance that you as Congress see in working
with your senior career appointees. We should not give up--I
think this is a defeatist attitude of saying there is no way
that a senior SES person is ever going to ``be at the table''
with political appointees. That is awful. What about all the
other SESers--are we in effect saying to them, ``You are mere
SES, and you are never going to be at the table?''
I will say that when I served as a political appointee in
the Clinton Administration, the senior procurement people in
the Federal Government were all career people. They were at my
table every day, and I very much valued--extraordinarily
valued--their input.
Yes, there are some or many political appointees who have
this attitude, but Paul, what are we saying to all the other
SESers--``You are never going to be at the table?'' We are
going to give up on that?
Mr. Light. I think that what you are seeing here is the
difference between an Article 1 person and an Article 2 person.
I think that may be it--that if you bring them through the
Senate, that increases the prestige attached to the position.
But I can see how you could bring a careerist into it. I just
feel that the human resource function has been so denigrated
and disparaged over the past two decades, humiliated and
eviscerated, that we need to do something to bring it up to
grade and to say to the people involved in human capital work
``You are important, your work is important,'' and the
appointments issue is a small thing. The other pieces of the
legislation are certainly much more important than whether this
is career or political.
Senator Akaka. Thank you very much for your responses. I
have no further questions, although I may have some for the
record.
I would like to ask my colleague, Senator Voinovich, do you
have any additional questions?
Senator Voinovich. Yes. You have all been following this
legislation and the managers' amendment and so forth. Are there
any other controversial issues that I may have forgotten to
bring up in my questions that you would like to get information
on the table that would be helpful to me and to Senator Akaka?
Ms. Ban. I would like to raise two. We have been talking
about hiring and focusing on category rating. There is also a
section in the bill that talks about noncompetitive hiring, and
I am concerned about that section. It sets forth four criteria
for when agencies can hire noncompetitively. I am concerned
about how broad they are. They are: Severe shortage of
candidates, need for expedited hiring, unique positions with
unique hiring, and positions that are historically hard to
fill.
I have not seen final language of this section of the bill
in the combined bill, but if we are still committed to a merit
system, we have to look at where we draw the line and how
appropriate it is to be quite this broad in allowing agencies
to do noncompetitive hiring. I do not know a single manager who
would not say that his or her position needs to be filled right
now. So I am concerned about how many positions would not fall
under one of these four categories and whether we need to be a
little bit more constrained.
I also want to agree with Ms. Kelley from the NTEU about
reducing the notice period for poor performers from 30 days to
15 days. We are under a constitutional requirement of due
process. If you go back to the history of the Civil Service
Reform Act and the original proposals that were being developed
before that legislation was finalized, there were similar
proposals to shorten the notice period and simplify the process
for firing that fell out of the final legislation because
people were not convinced that the courts would accept this.
I think we have a question there about whether we meet our
constitutional requirement for due process if we shorten that
notice period. I frankly think that is not where the problem
lie in dealing with poor performers. That is a very trivial
change. The big delays are in how we prepare the case and then,
after we take action, what the appeals process will be.
I think this is one where I would not fight with the unions
over it; I do not think it is worth it.
Senator Voinovich. Are there any other comments about any
provisions that you think might be controversial that you would
like to get on the record?
Mr. Kelman. Just two. One, I would endorse the buyout
authority for restructuring without FTEs going down. And we
were talking earlier about outsourcing; I think one of the
benefits of this provision is that it more levels the playing
field between the government and an outsourcer, because one of
the reasons why agencies sometimes outsource is that they feel
they do not have enough flexibility. If they at one time had
hired a COBOL programmer, they are stuck with a COBOL
programmer even if nobody is using COBOL anymore.
Senator Voinovich. This is the provision on the early
retirement, that is a good idea.
Mr. Kelman. Yes, to allow it to be done--to do buyouts for
restructuring the agency. That is to say, you can do a buyout
because there are positions or job skills that are no longer
needed at the agency. Under current law, you can get rid of
those, but you lose the FTE, and therefore, the agencies are
more skeptical about doing them.
I would say allow the buyout authority for restructuring
without losing the FTE. That will give agencies more
flexibility to change their skill mixes as demands on them
change, and it is one of the ways of leveling the playing field
in terms of outsourcing.
I would also urge--and this is not in the bill, but I urge
that it be added to the bill--a provision to expand the
Outstanding Scholars Program authority from the GS-7 to the GS-
9 level. That would basically allow us to use the Outstanding
Scholars hiring authority which already exists to hire students
who are graduates of master's programs and not just
undergraduates. Master's programs in public administration,
public policy, public health, international affairs are not now
covered by Outstanding Scholar, and if you extend it to GS-9,
it would allow them to be covered.
Senator Voinovich. I just have one other question that I
would like you to respond to, and it does not deal with the
bill. There was a lot of talk about linking pay to performance.
I think it was David Walker who said that 80 percent of Federal
employees just get an automatic pay increase, and that is
basically the way that people are compensated. It occurred to
me that, first of all, if you have meager pay increases which
are less than cost-of-living, there really is not any
flexibility to do that kind of evaluation. A manager would just
say, ``I have 1 percent,'' or whatever it is, and it is a
little bit less than cost-of-living, and why bother, because
they do not have any flexibility within that framework. I
understand that if there is a cost-of-living adjustment,
everybody gets it right across the board. The recommended cost-
of-living adjustment this year is 2.6 percent for civilians. So
you start with that, and if that is all you have, well, there
is nothing left to talk about performance-based increases. I do
not know how they do it.
My thought would be that perhaps we look at granting a pay
increase and then, above that, providing money to an agency so
that--let us say it is 2.6 percent, and we would go to 3.0
percent, and say that the four-tenths of 1 percent is to be
used to be linked to performance so that there is some money
there that could be used for rewarding top performers or paying
for bonuses that agencies do not have the money to pay for now.
I have talked to State Department employees who regularly
relied upon bonuses to subsidize their pay because they were
locked into or could not get more money than ``x''--and then
the money is not there for the bonuses, so they get nothing.
I just wonder what you would think about possibly looking
at something like that to see if it would help stimulate some
of this performance evaluation that should be going on right
now that is not going on because there is no reason to do it.
Mr. Stier. Senator, I would suggest that clearly, there is
a great need for greater investment in the human component of
our government, and we need more resources devoted to providing
for the existing workforce and recruiting new talent.
I would also, though, comment that rather than simply
increasing a pool of money for potential compensation, we need
to also be looking at the performance appraisal system itself,
because it is not simply the case that we have in place right
now a management system that allows for identifying high
performers and therefore supporting them through additional
resources, but clearly in the interim, I think we need to be
looking at ways to create a better system and putting in more
resources both for compensation as well as paying for the
authorities that currently exist.
Dr. Light's comment about the loan forgiveness authority is
quite apt. The government has that authority now. Very few
agencies are using it. We have supported a bill that would make
it a more effective measure, but the bottom line is there has
to be money for the agencies to actually have in order to be
able to make it a useful authority.
Senator Voinovich. Dr. Light.
Mr. Light. You know, there is really no more controversial
issue than pay and performance, and put together, you are
talking about nuclear-quality debate. The current performance
appraisal system as you know is hyperinflated in part because
Congress has restricted agencies from using a quota or curve
system for allocating ratings, so everybody is rated above
outstanding or above average, and we are well on the way to a
government that is outstanding.
I would not take it on in this particular bill, Senator.
Senator Voinovich. No, I am not talking about taking it on
in this bill, but I am talking about looking at the broad
picture of how do we deal with this situation. And I guess even
more important than that is the urgency to the security of the
United States of America to really get at this issue of human
capital and the resources that we need to have the ``best and
brightest'' people stay in government and be attracted to
government.
Somehow we have to get that message across today. There
seems to be a feeling--and we have had hearings in the
Governmental Affairs Committee with Senator Lieberman--that,
for example, we ought to revisit the issue of airport security.
The amount of equipment and people that we are going to have to
put on the payroll is just astronomical. If I were Osama bin
Laden today and I looked around the United States and could see
what he has wrought, he would have to be, if he is alive, as
happy as anything, because he really has changed this country
in terms of our attitudes. And also, we are about to spend
ourselves into oblivion to try to secure the homeland.
We have to get across that if we really want to secure the
homeland, the No. 1 priority should be investing in human
capital. That is the best way. And I am really worried that we
are only going to invest in new technology and gizmos while
neglecting the most important aspect of this issue, and that is
people. We talked about this yesterday, September 11--there is
another committee looking at why that happened. But my brain
tells me that maybe Federal employees did not have enough
people; they had materials in front of them that people could
not read; they did not have people who spoke Arabic. What a
ridiculous thing. After this happened, we asked for volunteers
in the country--can anybody speak Farsi, Arabic? We do not have
the people we need. This is incredible, and it is a reflection
on the part of Congress that we have nobody who lobbies for
people. Everybody lobbies for F-22s, for aircraft carriers, for
submarines, and for all kinds of things, but nobody is out
there hustling and promoting people.
It is interesting--and you brought it up--Jack Welch--at GE
and at all of the top companies in this country, the No. 1
issue with them is people.
Ms. Ban. I want to agree with your general point. The Hart-
Rudman Commission made this point long before September 11,
that we could not address the national security challenges in
the country without addressing the problems with the civil
service system and with hiring.
However, let me take the unpopular position of arguing
against pay for performance. It sounds great. It is one of
those things that has what we call ``face validity''--it makes
sense that if you pay people and reward them, they will perform
better. However, there is virtually no research over the past
25 years that supports this actually making a positive
difference. It has more negative effect on motivation than it
has positive effects.
The amounts have been very small, and you would have to
budget a lot more than I think you can to give significant
rewards that could make a difference--and it does not work. The
bottom line is that it just has not had the effect we wanted it
to. Even though we think it should, it does not work. So I
would not go there.
Senator Voinovich. Dr. Ban, with all due respect, when I
was mayor and when I was governor, it worked. And I am talking
about my top people, believe me. First of all, it lets them
know that you care about what they are doing, and you pat some
of them on the back, and others, you kind of give a little bit
of a nudge. And one way that you get their attention is to let
them know that, ``This time around, I am sorry, your
performance is not what it should be.'' It made a big
difference, and I was 10 years as mayor and 8 years as
governor, and I fought to get that kind of authority when I was
mayor of the city; we did not have it, and I got it.
So I am not saying that it will work straight across the
board, but I can tell you that in top management positions, at
least from my experience, it has made a great deal of
difference.
Mr. Kelman. Senator, if I could come in on this dialogue
for a second, I think definitely the sentiment behind pay for
performance, which is let us focus on results in the work
place, is a very good one.
I think it is fair to say that the private sector evidence
on pay for performance in the private sector is much--I do not
want to say it does not work anywhere--but I think Dr. Ban is
right that it is much more mixed than a lot of us would think.
I think that if you are going to design the pay for
performance systems for the middle- and lower-level people, you
have to be careful. One of the pieces of evidence is that you
probably want to give team rewards rather than individual
rewards, because if you give too many individual rewards,
people fight against each other rather than collaborating in
the workplace.
I guess where I would go--and I will give airline security
as an example--maybe the first places to try to do real pay for
performance are those agencies that have good, intelligent
goals under the Government Performance and Results Act of
delivering things. For example, on airport security workers, we
could have a performance goal in there about what percentage of
time does the ``mystery shopper'' who tries to get in not do
it. What I would suggest, taking your example, is that we have
genuine performance goals for those teams at the airport, and
if the team meets the goal, the team should be rewarded. Again,
the sentiment behind this, I am 100 percent in agreement with.
It is not as straightforward or easy--Ford Motor Company last
year eliminated a pay for performance system that they had set
up 2 or 3 years ago because it led to too much fighting among
individual employees, and they were sabotaging each other so
they could be relatively one higher than another. It did not
help the organization.
It can work, but it should be, I think, in the first
instance limited to where you have performance goals for the
organization under the Government Performance and Results Act
that make sense, and I would be inclined toward tying it to
teams rather than individuals. But under those circumstances, I
think we should be experimenting with some of the ideas that
you suggest.
Senator Voinovich. My response to that is that that fits in
with quality management.
Mr. Kelman. Absolutely.
Ms. Ban. Yes.
Senator Voinovich. One of the things that we did when we
implemented our quality management initiative was to reward
teams of individuals. We had a program where if someone came up
with an idea that would save the State money, we would give out
checks to individuals for $5,000. What we ended up doing at the
end was rewarding teams of individuals because of the fact that
they had come up with this idea and made it happen. That meant
a lot more to them, because there was some concern when one
individual ended up with a $5,000 or $10,000 check for a good
idea, and a lot of them said, ``Well, gee, he would not have
had that if I had not talked to him,'' and ``How did you figure
that one out?''
So that is a good point.
Mr. Kelman. Yes, of course, you had one of the outstanding
TQM programs in the public sector in Ohio, and I think you are
absolutely right. One of the principles of TQM is to reward
teams, not individuals; you do not want to have the individuals
fighting with each other.
Mr. Stier. And again, I think the point is to look at
performance management and not necessarily pay for performance,
and to look at it in the broader context.
Ms. Ban. I would agree.
Mr. Stier. And this is something that is not easy but is I
think well worth investing in. One size does not fit all. We
already have examples inside the government where there are
mechanisms that are in place that are rewarding the high
performers or productivity--PT&O is an example of that where
they have been quite successful on the trademark side in terms
of rewarding attorneys who produce a certain number of finished
applications.
Senator Akaka. Thank you very much. I wish to thank you all
for being with us today.
Over the past 2 days, we have had extremely engaging and
productive discussions. The bills we reviewed are important
because their introduction begins the dialogue on how to find
legislative solutions to make sure the government has the right
people with the right skills in the right place at the right
time.
Again, I wish to thank all of our witnesses for taking part
in this important hearing. You may be assured that your
contributions are appreciated.
Finally, I want to thank Senator Voinovich. Thank you for
being here with me to participate in this discussion.
Senator Voinovich has brought these bills to fruition. I
look forward to working with you to educate our colleagues on
the need to address civil service reform. Thank you again for
your commitment to this goal, Senator.
Again I want to say thank you, and if there are no further
comments----
Senator Voinovich. I just want to thank you, Mr. Chairman.
When I had hearings on this in the last couple of years, there
was one individual who was always there, and that was Senator
Akaka, and I was very impressed with that and will never forget
it. I really appreciate the fact that he is taking the time to
continue this effort on a bipartisan basis to make a difference
for our country.
I thank you, Senator.
Senator Akaka. Thank you very much, and remember--human
capital.
We stand adjourned.
[Whereupon, at 11:50 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
[GRAPHIC] [TIFF OMITTED] 79887.001
[GRAPHIC] [TIFF OMITTED] 79887.002
[GRAPHIC] [TIFF OMITTED] 79887.003
[GRAPHIC] [TIFF OMITTED] 79887.004
[GRAPHIC] [TIFF OMITTED] 79887.005
[GRAPHIC] [TIFF OMITTED] 79887.006
[GRAPHIC] [TIFF OMITTED] 79887.007
[GRAPHIC] [TIFF OMITTED] 79887.008
[GRAPHIC] [TIFF OMITTED] 79887.009
[GRAPHIC] [TIFF OMITTED] 79887.010
[GRAPHIC] [TIFF OMITTED] 79887.011
[GRAPHIC] [TIFF OMITTED] 79887.012
[GRAPHIC] [TIFF OMITTED] 79887.013
[GRAPHIC] [TIFF OMITTED] 79887.014
[GRAPHIC] [TIFF OMITTED] 79887.015
[GRAPHIC] [TIFF OMITTED] 79887.016
[GRAPHIC] [TIFF OMITTED] 79887.017
[GRAPHIC] [TIFF OMITTED] 79887.018
[GRAPHIC] [TIFF OMITTED] 79887.019
[GRAPHIC] [TIFF OMITTED] 79887.020
[GRAPHIC] [TIFF OMITTED] 79887.021
[GRAPHIC] [TIFF OMITTED] 79887.022
[GRAPHIC] [TIFF OMITTED] 79887.023
[GRAPHIC] [TIFF OMITTED] 79887.024
[GRAPHIC] [TIFF OMITTED] 79887.025
[GRAPHIC] [TIFF OMITTED] 79887.026
[GRAPHIC] [TIFF OMITTED] 79887.027
[GRAPHIC] [TIFF OMITTED] 79887.028
[GRAPHIC] [TIFF OMITTED] 79887.029
[GRAPHIC] [TIFF OMITTED] 79887.030
[GRAPHIC] [TIFF OMITTED] 79887.031
[GRAPHIC] [TIFF OMITTED] 79887.032
[GRAPHIC] [TIFF OMITTED] 79887.033
[GRAPHIC] [TIFF OMITTED] 79887.034
[GRAPHIC] [TIFF OMITTED] 79887.035
[GRAPHIC] [TIFF OMITTED] 79887.036
[GRAPHIC] [TIFF OMITTED] 79887.037
[GRAPHIC] [TIFF OMITTED] 79887.038
[GRAPHIC] [TIFF OMITTED] 79887.039
[GRAPHIC] [TIFF OMITTED] 79887.040
[GRAPHIC] [TIFF OMITTED] 79887.041
[GRAPHIC] [TIFF OMITTED] 79887.042
[GRAPHIC] [TIFF OMITTED] 79887.043
[GRAPHIC] [TIFF OMITTED] 79887.044
[GRAPHIC] [TIFF OMITTED] 79887.045
[GRAPHIC] [TIFF OMITTED] 79887.046
[GRAPHIC] [TIFF OMITTED] 79887.047
[GRAPHIC] [TIFF OMITTED] 79887.048
[GRAPHIC] [TIFF OMITTED] 79887.049
[GRAPHIC] [TIFF OMITTED] 79887.050
[GRAPHIC] [TIFF OMITTED] 79887.051
[GRAPHIC] [TIFF OMITTED] 79887.052
[GRAPHIC] [TIFF OMITTED] 79887.053
[GRAPHIC] [TIFF OMITTED] 79887.054
[GRAPHIC] [TIFF OMITTED] 79887.055
[GRAPHIC] [TIFF OMITTED] 79887.056
[GRAPHIC] [TIFF OMITTED] 79887.057
[GRAPHIC] [TIFF OMITTED] 79887.058
[GRAPHIC] [TIFF OMITTED] 79887.059
[GRAPHIC] [TIFF OMITTED] 79887.060
[GRAPHIC] [TIFF OMITTED] 79887.061
[GRAPHIC] [TIFF OMITTED] 79887.062
[GRAPHIC] [TIFF OMITTED] 79887.063
[GRAPHIC] [TIFF OMITTED] 79887.064
[GRAPHIC] [TIFF OMITTED] 79887.065
[GRAPHIC] [TIFF OMITTED] 79887.066
[GRAPHIC] [TIFF OMITTED] 79887.067
[GRAPHIC] [TIFF OMITTED] 79887.068
[GRAPHIC] [TIFF OMITTED] 79887.069
[GRAPHIC] [TIFF OMITTED] 79887.070
[GRAPHIC] [TIFF OMITTED] 79887.071
[GRAPHIC] [TIFF OMITTED] 79887.072
[GRAPHIC] [TIFF OMITTED] 79887.073
[GRAPHIC] [TIFF OMITTED] 79887.074
[GRAPHIC] [TIFF OMITTED] 79887.075
[GRAPHIC] [TIFF OMITTED] 79887.076
[GRAPHIC] [TIFF OMITTED] 79887.077
[GRAPHIC] [TIFF OMITTED] 79887.078
[GRAPHIC] [TIFF OMITTED] 79887.079
[GRAPHIC] [TIFF OMITTED] 79887.080
[GRAPHIC] [TIFF OMITTED] 79887.081
[GRAPHIC] [TIFF OMITTED] 79887.082
[GRAPHIC] [TIFF OMITTED] 79887.083
[GRAPHIC] [TIFF OMITTED] 79887.084
[GRAPHIC] [TIFF OMITTED] 79887.085
[GRAPHIC] [TIFF OMITTED] 79887.086
[GRAPHIC] [TIFF OMITTED] 79887.087
[GRAPHIC] [TIFF OMITTED] 79887.088
[GRAPHIC] [TIFF OMITTED] 79887.089
[GRAPHIC] [TIFF OMITTED] 79887.090
[GRAPHIC] [TIFF OMITTED] 79887.091
[GRAPHIC] [TIFF OMITTED] 79887.092
[GRAPHIC] [TIFF OMITTED] 79887.093
[GRAPHIC] [TIFF OMITTED] 79887.094
[GRAPHIC] [TIFF OMITTED] 79887.095
[GRAPHIC] [TIFF OMITTED] 79887.096
[GRAPHIC] [TIFF OMITTED] 79887.097
[GRAPHIC] [TIFF OMITTED] 79887.098
[GRAPHIC] [TIFF OMITTED] 79887.099
[GRAPHIC] [TIFF OMITTED] 79887.100
[GRAPHIC] [TIFF OMITTED] 79887.101
[GRAPHIC] [TIFF OMITTED] 79887.102
[GRAPHIC] [TIFF OMITTED] 79887.103
[GRAPHIC] [TIFF OMITTED] 79887.104
[GRAPHIC] [TIFF OMITTED] 79887.105
[GRAPHIC] [TIFF OMITTED] 79887.106
[GRAPHIC] [TIFF OMITTED] 79887.107
[GRAPHIC] [TIFF OMITTED] 79887.108
[GRAPHIC] [TIFF OMITTED] 79887.109
[GRAPHIC] [TIFF OMITTED] 79887.110
[GRAPHIC] [TIFF OMITTED] 79887.111
[GRAPHIC] [TIFF OMITTED] 79887.112
[GRAPHIC] [TIFF OMITTED] 79887.113
[GRAPHIC] [TIFF OMITTED] 79887.114
[GRAPHIC] [TIFF OMITTED] 79887.115
[GRAPHIC] [TIFF OMITTED] 79887.116
[GRAPHIC] [TIFF OMITTED] 79887.117
[GRAPHIC] [TIFF OMITTED] 79887.118
[GRAPHIC] [TIFF OMITTED] 79887.119
[GRAPHIC] [TIFF OMITTED] 79887.120
[GRAPHIC] [TIFF OMITTED] 79887.121
[GRAPHIC] [TIFF OMITTED] 79887.122
[GRAPHIC] [TIFF OMITTED] 79887.123
[GRAPHIC] [TIFF OMITTED] 79887.124
[GRAPHIC] [TIFF OMITTED] 79887.125
[GRAPHIC] [TIFF OMITTED] 79887.126
[GRAPHIC] [TIFF OMITTED] 79887.127
[GRAPHIC] [TIFF OMITTED] 79887.128
[GRAPHIC] [TIFF OMITTED] 79887.129
[GRAPHIC] [TIFF OMITTED] 79887.130
[GRAPHIC] [TIFF OMITTED] 79887.131
[GRAPHIC] [TIFF OMITTED] 79887.132
[GRAPHIC] [TIFF OMITTED] 79887.133
[GRAPHIC] [TIFF OMITTED] 79887.134
[GRAPHIC] [TIFF OMITTED] 79887.135
[GRAPHIC] [TIFF OMITTED] 79887.136
[GRAPHIC] [TIFF OMITTED] 79887.137
[GRAPHIC] [TIFF OMITTED] 79887.138
[GRAPHIC] [TIFF OMITTED] 79887.139
[GRAPHIC] [TIFF OMITTED] 79887.140
[GRAPHIC] [TIFF OMITTED] 79887.141
[GRAPHIC] [TIFF OMITTED] 79887.142
[GRAPHIC] [TIFF OMITTED] 79887.143
[GRAPHIC] [TIFF OMITTED] 79887.144
[GRAPHIC] [TIFF OMITTED] 79887.145
[GRAPHIC] [TIFF OMITTED] 79887.146
[GRAPHIC] [TIFF OMITTED] 79887.147
[GRAPHIC] [TIFF OMITTED] 79887.148
[GRAPHIC] [TIFF OMITTED] 79887.149
[GRAPHIC] [TIFF OMITTED] 79887.150
[GRAPHIC] [TIFF OMITTED] 79887.151
[GRAPHIC] [TIFF OMITTED] 79887.152
[GRAPHIC] [TIFF OMITTED] 79887.153
[GRAPHIC] [TIFF OMITTED] 79887.154
[GRAPHIC] [TIFF OMITTED] 79887.155
[GRAPHIC] [TIFF OMITTED] 79887.156
[GRAPHIC] [TIFF OMITTED] 79887.157
[GRAPHIC] [TIFF OMITTED] 79887.158
[GRAPHIC] [TIFF OMITTED] 79887.159
[GRAPHIC] [TIFF OMITTED] 79887.160
[GRAPHIC] [TIFF OMITTED] 79887.161
[GRAPHIC] [TIFF OMITTED] 79887.162
[GRAPHIC] [TIFF OMITTED] 79887.163
[GRAPHIC] [TIFF OMITTED] 79887.164
[GRAPHIC] [TIFF OMITTED] 79887.165
[GRAPHIC] [TIFF OMITTED] 79887.166
[GRAPHIC] [TIFF OMITTED] 79887.167
[GRAPHIC] [TIFF OMITTED] 79887.168
[GRAPHIC] [TIFF OMITTED] 79887.169
[GRAPHIC] [TIFF OMITTED] 79887.170
[GRAPHIC] [TIFF OMITTED] 79887.171
[GRAPHIC] [TIFF OMITTED] 79887.172
[GRAPHIC] [TIFF OMITTED] 79887.173
[GRAPHIC] [TIFF OMITTED] 79887.174
[GRAPHIC] [TIFF OMITTED] 79887.175
[GRAPHIC] [TIFF OMITTED] 79887.176
[GRAPHIC] [TIFF OMITTED] 79887.177
[GRAPHIC] [TIFF OMITTED] 79887.178
[GRAPHIC] [TIFF OMITTED] 79887.179
[GRAPHIC] [TIFF OMITTED] 79887.180
[GRAPHIC] [TIFF OMITTED] 79887.181
[GRAPHIC] [TIFF OMITTED] 79887.182
[GRAPHIC] [TIFF OMITTED] 79887.183
[GRAPHIC] [TIFF OMITTED] 79887.184
[GRAPHIC] [TIFF OMITTED] 79887.185
[GRAPHIC] [TIFF OMITTED] 79887.186
[GRAPHIC] [TIFF OMITTED] 79887.187
[GRAPHIC] [TIFF OMITTED] 79887.188
[GRAPHIC] [TIFF OMITTED] 79887.189
[GRAPHIC] [TIFF OMITTED] 79887.190
[GRAPHIC] [TIFF OMITTED] 79887.191
[GRAPHIC] [TIFF OMITTED] 79887.192
[GRAPHIC] [TIFF OMITTED] 79887.193
[GRAPHIC] [TIFF OMITTED] 79887.194
[GRAPHIC] [TIFF OMITTED] 79887.195
[GRAPHIC] [TIFF OMITTED] 79887.196
[GRAPHIC] [TIFF OMITTED] 79887.197
[GRAPHIC] [TIFF OMITTED] 79887.198
[GRAPHIC] [TIFF OMITTED] 79887.199
[GRAPHIC] [TIFF OMITTED] 79887.200
[GRAPHIC] [TIFF OMITTED] 79887.201
[GRAPHIC] [TIFF OMITTED] 79887.202
[GRAPHIC] [TIFF OMITTED] 79887.203
[GRAPHIC] [TIFF OMITTED] 79887.204
[GRAPHIC] [TIFF OMITTED] 79887.205
[GRAPHIC] [TIFF OMITTED] 79887.206
[GRAPHIC] [TIFF OMITTED] 79887.207
[GRAPHIC] [TIFF OMITTED] 79887.208
[GRAPHIC] [TIFF OMITTED] 79887.209
[GRAPHIC] [TIFF OMITTED] 79887.210
[GRAPHIC] [TIFF OMITTED] 79887.211
[GRAPHIC] [TIFF OMITTED] 79887.212
[GRAPHIC] [TIFF OMITTED] 79887.213
[GRAPHIC] [TIFF OMITTED] 79887.214
[GRAPHIC] [TIFF OMITTED] 79887.215
[GRAPHIC] [TIFF OMITTED] 79887.216
[GRAPHIC] [TIFF OMITTED] 79887.217
[GRAPHIC] [TIFF OMITTED] 79887.218
[GRAPHIC] [TIFF OMITTED] 79887.219
[GRAPHIC] [TIFF OMITTED] 79887.220
[GRAPHIC] [TIFF OMITTED] 79887.221
[GRAPHIC] [TIFF OMITTED] 79887.222
[GRAPHIC] [TIFF OMITTED] 79887.223
[GRAPHIC] [TIFF OMITTED] 79887.224
[GRAPHIC] [TIFF OMITTED] 79887.225
[GRAPHIC] [TIFF OMITTED] 79887.226
[GRAPHIC] [TIFF OMITTED] 79887.227
[GRAPHIC] [TIFF OMITTED] 79887.228
[GRAPHIC] [TIFF OMITTED] 79887.229
[GRAPHIC] [TIFF OMITTED] 79887.230
-