[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE STATUS OF FEDERAL PERSONNEL REFORM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
POSTAL SERVICE, AND THE DISTRICT
OF COLUMBIA
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MARCH 8, 2007
__________
Serial No. 110-12
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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36-547 PDF WASHINGTON DC: 2006
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COMMITTEE ON OVERSISGHT AND GOVERNMENT REFORM
HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah
WM. LACY CLAY, Missouri JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts DARRELL E. ISSA, California
BRIAN HIGGINS, New York KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of VIRGINIA FOXX, North Carolina
Columbia BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota BILL SALI, Idaho
JIM COOPER, Tennessee ------ ------
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont
Phil Schiliro, Chief of Staff
Phil Barnett, Staff Director
Earley Green, Chief Clerk
David Marin, Minority Staff Director
Subcommittee on Federal Workforce, Postal Service, and the District of
Columbia
DANNY K. DAVIS, Illinois
ELEANOR HOLMES NORTON, District of KENNY MARCHANT, Texas
Columbia JOHN M. McHUGH, New York
JOHN P. SARBANES, Maryland JOHN L. MICA, Florida
ELIJAH E. CUMMINGS, Maryland DARRELL E. ISSA, California
DENNIS J. KUCINICH, Ohio, Chairman ------ ------
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
Tania Shand, Staff Director
C O N T E N T S
----------
Page
Hearing held on March 8, 2007.................................... 1
Statement of:
Tobias, Robert, director, public sector executive programs,
director, ISPPI, School of Public Affairs, American
University, Washington, DC; Curtis Copeland, Specialist in
American National Government, Congressional Research
Service, Library of Congress, Washington, DC; Charles
Tiefer, professor of law, University of Baltimore, School
of Law, Baltimore, MD; Joseph Swerdzewski, president,
Joseph Swerdzewski & Associates, Hampton Cove, AL; Hannah
Sistare, vice president for academy affairs, director,
human resources management consortium, National Academy of
Public Administration, Washington, DC; and Kevin Simpson,
executive vice president, general counsel, Partnership for
Public Service, Washington, DC............................. 33
Copeland, Curtis......................................... 52
Simpson, Kevin........................................... 101
Sistare, Hannah.......................................... 88
Swerdzewski, Joseph...................................... 80
Tiefer, Charles.......................................... 65
Tobias, Robert........................................... 33
Letters, statements, etc., submitted for the record by:
Copeland, Curtis, Specialist in American National Government,
Congressional Research Service, Library of Congress,
Washington, DC, prepared statement of...................... 54
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 130
Davis, Hon. Danny K., a Representative in Congress from the
State of Illinois, prepared statements of Mr. Pferrer and
Ms. Kelley................................................. 3
Marchant, Hon. Kenny, a Representative in Congress from the
State of Texas, prepared statement of...................... 29
Simpson, Kevin, executive vice president, general counsel,
Partnership for Public Service, Washington, DC, prepared
statement of............................................... 103
Sistare, Hannah, vice president for academy affairs,
director, human resources management consortium, National
Academy of Public Administration, Washington, DC, prepared
statement of............................................... 90
Swerdzewski, Joseph, president, Joseph Swerdzewski &
Associates, Hampton Cove, AL, prepared statement of........ 82
Tiefer, Charles, professor of law, University of Baltimore,
School of Law, Baltimore, MD, prepared statement of........ 67
Tobias, Robert, director, public sector executive programs,
director, ISPPI, School of Public Affairs, American
University, Washington, DC, prepared statement of.......... 36
THE STATUS OF FEDERAL PERSONNEL REFORM
----------
THURSDAY, MARCH 8, 2007
House of Representatives,
Subcommittee on Federal Workforce, Postal Service,
and the District of Columbia,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 3:05 p.m. in
room 2154, Rayburn House Office Building, Hon. Danny K. Davis
(chairman of the subcommittee) presiding.
Present: Representatives Davis of Illinois, Norton,
Sarbanes, Lynch, and Marchant.
Staff present: Tania Shand, staff director; Caleb
Gilchrist, professional staff member; Cecelia Morton, clerk;
LaKeshia Myers, editor/staff assistant; Mason Alinger and Alex
Cooper, minority professional staff members.
Mr. Davis of Illinois. The subcommittee will come to order.
Let me apologize to all of you for having to wait. This has
been one of those days where we have transacted a tremendous
amount of business and everybody has had some pretty heavy
schedules, and ours got caught in the midst of a legislative
schedule that wouldn't wait. But we just finished votes, and
that means that we certainly won't be disturbed between now and
the time that we end. Let me thank you for your patience and
thank you for participating.
The hearing will come to order. Welcome Ranking Member
Marchant, members of the subcommittee, hearing witnesses, and
all of those in attendance. I welcome you to the first Federal
Workforce, Postal Service, and District of Columbia
Subcommittee hearing of the 110th Congress.
Hearing no objection, the Chair, ranking member, and
subcommittee members will each have 5 minutes to make opening
statements if they so desire, and all Members will have 3 days
to submit statements for the record.
I look forward to working with all of the members of the
subcommittee in a bipartisan fashion to move forward with the
subcommittee's agenda. That agenda includes addressing bread
and butter Civil Service issues such as benefits, compensation,
public/private competitions, and labor/management relations.
The subcommittee is going to conduct aggressive postal
oversight and monitor the implementation of the Postal
Accountability and Enhancement Act of 2006, and it is going to
protect and advance home rule for the District of Columbia.
This hearing is the first in a series of hearings that will
be held on Federal personnel reform. Today, we will hear from
human resource stakeholders whose testimony will lay the
foundation for agency-specific personnel reform hearings.
At this point, I would like to ask unanimous consent that
the testimony of Jeffrey Pferrer, a Stanford University
professor, and Colleen Kelley, national president of NTEU's
statement will be submitted for the record.
Hearing none, so it will be.
[The prepared statements of Mr. Pferrer and Ms. Kelley
follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. If the Federal Government is going
to tinker with the employee protections of 1.8 million people
and how they earn a living and are represented in the
workforce, it should be evidence based. It should not be based
on anecdotes, theories, or ideology.
For example, some argue that Federal airport baggage
screeners at the Transportation Security Administration should
not be allowed to unionize because it would hinder TSA's
ability to fight terrorism. There is no evidence that Federal
employees who have been allowed to join unions since 1978 have
hampered our ability to fight terrorism. However, there is
plenty of evidence that management, particularly officials at
the highest levels of our Government, have made decisions that
undermine our ability to fight terrorism.
Over the years we have heard testimony from numerous
witnesses, some who will be testifying again today, that the
keys to successful personnel reform are significant funding to
train managers and employees on new systems, collaboration with
and buy-in from employees, and that the new systems be fair,
equitable, credible, and transparent.
In reality, the evidence that we have to date indicates
that in most cases employees have not bought into these
systems, funding for these systems have been cut, and the
systems do not appear to be fair or transparent, much less
credible. Today's witnesses will help us to better understand
and evaluate how these new personnel systems are being
implemented and how we can move forward to ensure that we have
a balanced and effective Federal personnel system.
Now I would like to yield to the ranking member, Mr.
Marchant, 5 minutes for an opening statement.
Mr. Marchant. Thank you, Mr. Davis. It is an honor to serve
on this subcommittee with you and be the ranking member. Thank
you for convening this hearing today. I look forward to working
with you over the coming days on many different issues faced in
the Subcommittee on Federal Workforce, Postal Service, and the
District of Columbia.
Today's hearing will examine efforts in recent years to
reform the decades-old Civil Service system at a handful of
Federal agencies, specifically the Department of Defense, the
Department of Homeland Security, the Transportation Security
Administration, and the Government Accountability Office.
Congress authorized all four of these agencies to overhaul
their personnel systems in recent years. Today's hearing will
give us an opportunity to evaluate the progress that has been
made to date.
In addition, Congress has also authorized reforms to the
personnel systems at the National Aeronautics and Space
Administration, Securities and Exchange Commission, and the
Internal Revenue Service, and the Federal Aviation
Administration. The efforts at these agencies will presumably
be the focus of future hearings.
Mr. Chairman, in conducting your first oversight hearing
today, I applaud you for gathering a panel of experts that will
provide the subcommittee with the analytical, dispassionate
perspective on the efforts to date to reform the existing Civil
Service system and to make recommendations as to where we might
be able to help from here. I believe that this panel will help
lay the foundation for subsequent hearings on the reform of all
the other individual agencies.
As a newly appointed Ranking Member of the subcommittee, I
look forward to learning from the witnesses before us today and
become better educated on the issues facing the Federal
workforce in the 21st century.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Kenny Marchant follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
Now we will go to opening statements by Members. Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman. I believe these people
have suffered enough waiting for the work on the floor to be
concluded. Mr. Chairman, I will submit my statement for the
record, if it would be allowed, and I would like to get a
chance to hear from this distinguished panel.
I want to thank the panel for helping the subcommittee with
its work.
I yield back.
Mr. Davis of Illinois. And it shall, indeed, be entered
into the record.
Ms. Norton.
Ms. Norton. I thank you very much, Mr. Chairman, and I
particularly thank you for having an early hearing on the
status of the Federal workforce. You and I have sat through a
number of years where, in amazement, we have seen the workforce
going under unusual change, to put it politely, but I do
believe that anyone who cares about the efficiency and the
realm of the Federal workforce would want this hearing held
now, given what I think most Members will agree is a major
repair job of some kind that needs to be done.
What began as an attempt by the administration at reform
has, by any standard, left the Federal workforce in disarray.
Courts have thrown out the attempt at a personnel system, and
not only thrown it out, but done so with quite caustic
criticism. The GAO, which touted itself as the pay for
performance model and the pioneer in use of other management
strengthening techniques, has reaped the whirlwind with an
organizing effort apparently underway at the GAO that, if I may
say so, with responses or reported responses from the GAO
which, like much of the administration's reform, looks like it
imitates some of the worst of the private sector in opposing
organizing efforts. That's something that I would ask
subcommittee to look into specifically.
The administration after 9/11 seems to have taken the need
to organize new agencies like TSA to be brought into the
Federal system in order to rigorize it with other Federal
workers, and then proceeded to take virtually all of the Civil
Service and personnel system safeguards out of the TSA system.
We use the 9/11 to look at the Department of Homeland
Security, which we just created, and the DOD, and essentially
take away Civil Service protections, bargaining rights. In
effect, we use the major agencies where most of the Federal
workforce is to collapse the usual safeguards and hope that we
can get to what was left and it would simply come tumbling down
alongside it.
The fatal mistake, Mr. Chairman, if I may say so is not in
reform, particularly after 9/11. It seems to me that was a
perfect opportunity to step back and look at what must be done
in an entirely new period in American life. It was the failure
of the administration to do its homework, to ask first the
basic question: why do we have such a system? Why do we have a
section that builds in rights, for example, in the workplace?
We have limited collective bargaining, nothing like what is
found in the workplace. Why do we have rights in the first
place? Once we analyze that, we go from there.
It's not just the size of the workforce. It has a lot to do
with the history of corruption, but above all it has to do with
the fact that it is a public or Federal workforce and what the
administration has never understood, that due process
protections of the Constitution apply to public employees. You
can't get around that. Since you can't get around it, you have
to find a way to do your reform consistent within it. If you
don't, the course will take care of the rest, particularly if
the protections, collective bargaining protections, are taken
away at the same time.
Mr. Chairman, in the post-9/11 period we have been more
dependent on our Civil Service workforce than at any time in
our history. They are now doing things not only to make
Government run in the usual fashion, but to protect the
homeland, itself. It was just the wrong time to send the system
in spiral by trying all kinds of things that each and every
year it was clear were not only not working, but producing an
overall system far worse than the one that was in place and far
less efficient.
We have done major damage to the Civil Service system by
taking actions of every variety. I admire your boldness. I do
not admire your task and mission in attempting to repair what
is left while keeping reform of some kind ongoing.
I thank you, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much, Ms. Norton.
Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman.
It is remarkable that the Federal workforce is able to get
up every morning and come to work under the conditions that
have existed in recent years. One sadly comes to the conclusion
that there is an agenda underway--and this administration is
taking the lead on it--to discredit the Civil Service, and in
the process discredit the notion of good government.
I have been amazed in just the short time I have been here
at the number of hearings we have had that have focused in on
practices that undermine our civil servants. For starters, cuts
to resources that the Federal workforce needs to do its job
properly; second, the outsourcing of governmental functions to
private contractors who then are not managed properly, because,
again, the oversight is not put there and there is lax
accountability; and then, third, in the name of ``reform,''
proposals for personnel systems within the Civil Service that
really undermine collective bargaining rights and other rights
and opportunities that our Federal employees deserve.
Then, of course, when agencies under-perform because of all
those pressures that are being brought to bear on the
workforce, the administration turns around and says, see,
government doesn't work, and then cuts it again so it becomes
this kind of potential death spiral for all those folks that
are trying to do the right thing and improve the image of
Government, as they should.
So I thank you for conducting the hearing. I think it is
ironic that in the name of Homeland Security the administration
has sought to cut a lot of corners and limit or escape the
obligation from enforcing the rights of the Federal workforce,
because I certainly know that if I go to the airport I want
that screener to have high morale, to feel proud of what they
do and good about what they do, to have a sense of dignity and
a sense of productivity, because they are going to do their job
much better and much more effectively, and that is going to
protect our security much more than anything else would do.
So, again, thank you for conducting the hearing and looking
at issues that really can improve morale, productivity, and the
overall good government that we are trying to provide to the
taxpayers.
Mr. Davis of Illinois. Thank you very much, Mr. Sarbanes.
Now the subcommittee will hear testimony from the witnesses
before us today.
I would first like to introduce the witnesses, beginning
with Mr. Robert Tobias, who is a distinguished adjunct
professor in residence at American University. Mr. Tobias
teaches courses in public management, leadership, alternate
dispute resolution, and managing labor/management relations. He
served on the Human Resource Management System Senior Review
Advisory Committee, which was charged with reviewing the work
of the Department of Homeland Security, Office of Personnel
Management Design Human Resources Team, and provided options to
DHS and OPM's agency heads.
Next, we have Dr. Curtis Copeland. He is currently a
specialist in American Government at the Congressional Research
Service [CRS], within the U.S. Library of Congress in
Washington, DC. His specific area of research expertise is
Federal rulemaking and regulatory policy. He is also head of
the Executive and Judiciary Section with the CRS Government and
Finance Division.
Next, we have Professor Charles Tiefer. He is a professor
of law at the University of Baltimore School of Law. Prior to
joining the University of Baltimore's faculty in 1995, he
served as Solicitor and Deputy General Counsel of the U.S.
House of Representatives for 11 years. He is a quoted expert on
Federal Government and constitutional law.
Next, we have Mr. Joseph Swerdzewski. He is president of
Joseph Swerdzewski and Associates, a human resources consultant
and training firm. The firm is involved in helping Federal
agencies with human resources reform initiatives and
development of improved performance management systems. He
served two terms from 1993 to 2001 as the General Counsel of
the Federal Labor Relations Authority, where he was responsible
for the investigation and prosecution of unfair labor practice
violations.
Next, we have Ms. Hannah Sistare, who is vice president for
academy affairs at the National Academy of Public
Administration. She works with the Academy's 600 distinguished
fellows in their efforts to enhance government at all levels.
She also directs the Academy's Human Resources Management
Consortium and manages the National Commission on the Public
Service Volcker Commission Implementation Initiative at the
Academy.
Finally, Mr. Kevin Simpson is the executive vice president
and general counsel of the Partnership for Public Service. The
Partnership is a nonpartisan, non-profit organization dedicated
to revitalizing public service through a campaign of
educational efforts, policy research, public/private
partnerships, and legislative advocacy.
I want to thank each one of you for coming and being with
us this afternoon. It is the committee's policy that all
witnesses be sworn in, and so if you would please rise and
raise your right hands.
[Witnesses sworn.]
Mr. Davis of Illinois. The record will show that each
witness answered in the affirmative.
Thank you very much.
Your entire statements will be included in the record. Of
course, the green light, as you have done this before, you know
that the green light indicates that you have 5 minutes in which
to summarize your statement. The yellow light means your time
is running down and you have 1 minute remaining to complete
your statement. And the red light means that your time has
expired. Of course, at the end of the day all kinds of things
can happen.
Let me again thank you all for coming.
Mr. Tobias, would you begin?
STATEMENTS OF ROBERT TOBIAS, DIRECTOR, PUBLIC SECTOR EXECUTIVE
PROGRAMS, DIRECTOR, ISPPI, SCHOOL OF PUBLIC AFFAIRS, AMERICAN
UNIVERSITY, WASHINGTON, DC; CURTIS COPELAND, SPECIALIST IN
AMERICAN NATIONAL GOVERNMENT, CONGRESSIONAL RESEARCH SERVICE,
LIBRARY OF CONGRESS, WASHINGTON, DC; CHARLES TIEFER, PROFESSOR
OF LAW, UNIVERSITY OF BALTIMORE, SCHOOL OF LAW, BALTIMORE, MD;
JOSEPH SWERDZEWSKI, PRESIDENT, JOSEPH SWERDZEWSKI & ASSOCIATES,
HAMPTON COVE, AL; HANNAH SISTARE, VICE PRESIDENT FOR ACADEMY
AFFAIRS, DIRECTOR, HUMAN RESOURCES MANAGEMENT CONSORTIUM,
NATIONAL ACADEMY OF PUBLIC ADMINISTRATION, WASHINGTON, DC; AND
KEVIN SIMPSON, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL,
PARTNERSHIP FOR PUBLIC SERVICE, WASHINGTON, DC
STATEMENT OF ROBERT TOBIAS
Mr. Tobias. Chairman Davis, Ranking Member Marchant,
distinguished members of the subcommittee, I would like to
thank you for this opportunity to testify on the subject of
personnel reform in the Federal Government.
Congress gave the Secretaries of Defense and Homeland
Security the authority to design and implement broad personnel
reforms in their departments. My remarks will focus on pay for
performance and labor/management relations.
Creating a pay for performance system that actually
increases, that actually has the impact of increasing agency
outputs and outcomes requires a two-step process. First is the
creation of a performance management system that enables
supervisors to more objectively discern the difference in
performance based on outputs and outcomes, rather than applying
the more subjective works hard standard. Next, once the
discernment is completed, the reward attached to the outcomes
must be sufficient to motivate behavior that increases
individual and ultimately overall organizational performance.
Now, these steps have to be sequential. It is not possible
to build a successful pay for performance system onto an
unsuccessful performance management system. Until a credible
performance management system is in place, employees will
continue to perceive bonuses and awards as arbitrary. Even if
substantial sums of money were made available, the money would
not increase performance if the performance management system
is faulty.
Now, I think that it is imperative that we establish a
culture of performance where supervisors are able to credibly
discern differences in employee outputs and outcomes. We don't
need legislation to accomplish the creation of a performance
management system, but we do need recognition that achieving
such a system requires a collaborative, long-term, disciplined
effort by Presidents, political appointees, SES executives,
union leaders, and employees.
Both the promise of success and the cost of failure are
large. I reference an article in my prepared statement where
the author has concluded as virtually undisputed that goal
setting does increase performance at all levels--individual,
group, and organization.
Specific and challenging goals are associated with higher
levels of performance, more so than either no goals or general
``do your best'' goals.
Now, the authors also point out that goal setting in the
public sector is much more difficult than the private sector.
Output and outcome goals are difficult to define for employees,
managers, and the public, yet, if successful, goal setting
increases employee engagement, individual and organizational
performance, and taxpayer satisfaction. It is an outcome worthy
of pursuit. Creating a performance management system, however,
is very difficult. First, agencies have to define what
organizational output and outcome means, and they have been
struggling to achieve this since 1993 with the passage of the
Government Performance and Results Act. Agencies have made
progress, but there is a long way to go.
Second, a plan must be created for translating the output
agency goals into individual goals that are linked to
organizational goals.
Third, supervisors must spend time talking and listening to
those they manage, coaching, evaluating performance, and
monitoring organizational goal achievement. For most managers
in the Federal Government, this is a very difficult challenge.
Currently, supervisors generally evaluate an employee's
performance on whether the employee works hard. If an employee
works hard, he or she is likely to be rated highly. Under a
performance management system, the standard would be ``achieves
results.'' This would entail a change from a subjective
evaluation of performance to a significantly increased focus on
the achievement of objective performance results.
Long-term supervisory employee relationships have been
built on a works hard set of expectations. Those relationships
would have to evolve to accommodate another set of
expectations. Supervisors would have to be trained to expect
results and evaluate employees' work accordingly, and employees
will want and expect support. It doesn't happen. Achieving this
requires more than training on process. It requires a real
focus on changing culture in an organization.
Supervisors are rated in the Federal Government for what
they do, as opposed to how well they manage. But if we want
increased organizational performance, that has to change.
Employees have to be included as part of this effort, and they
are not today. Employees have to learn. Managers have to learn.
There has to be an exchange of what they do, how they do it,
and how what they do are linked to organizational goals. Union
leaders have to be involved in order to make this work. Union
leaders have to be involved in creating a performance
management system, and they haven't been effectively involved.
If they are involved, there are fewer impact and implementation
negotiations, there are fewer adversarial relationships, and
faster implementation.
I also suggest that in order to be successful we need
support from Presidents and the Congress. If importance on
increasing performance were measured by the rhetoric of
Presidents, performance would be important. If it were measured
in terms of how much time Presidents spend on this effort, I
think we would see that Presidents spend time on public policy
creation, not public policy implementation.
If we want public policy implementation to be effective, if
we want performance increases, there has to be a focus on
public policy implementation starting at the top. Without
Presidents spending time, political appointees won't spend time
because there is only risk and no reward. Political appointees
are evaluated not on the basis of how well they implement
public policy, but rather on the public policy that they
create.
So it seems to me that the President has to change his
behavior before political appointees will change their
behavior, before the Senior Executive Service will change their
behavior, but I believe it is important that we find a way,
working collaboratively, to define, design, and implement a
performance management system that challenges employees to
achieve agency mission by working better.
I think that if we look at the pay for performance system
and evaluate its success, all we need to do is look at the
surveys recently completed by the Senior Executive Association
where the performance system----
Mr. Davis of Illinois. I'm going to ask you to summarize.
Mr. Tobias. Am I over? I'm sorry.
Mr. Davis of Illinois. Yes. Wrap up. And, if I could just
say to the other witnesses, we don't personally have any
difficulty in terms of listening. The ranking member has
another appointment that he is going to have to try to keep,
and so I would like to ask that the witnesses would stick to
the 5-minute rule----
Mr. Tobias. I apologize.
Mr. Davis of Virginia [continuing]. So that he can hear
each one of the witnesses before he has to go, and have an
opportunity for questions. But thank you very much, Mr. Tobias.
[The prepared statement of Mr. Tobias follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. We will proceed to Mr. Copeland.
STATEMENT OF CURTIS COPELAND
Mr. Copeland. Thank you very much, Mr. Chairman and members
of the subcommittee. I am here to discuss several issues that
CRS was asked to address related to the implementation of the
GAO Human Capital Reform Act of 2004.
The first such issue is whether the Comptroller General
told Congress and GAO employees during consideration of the
legislation that all employees who received a meets expectation
performance evaluation would receive annual adjustments to
their base pay. The record indicates that the Comptroller
General gave such assurances on several occasions. For example,
at a July 16, 2003, hearing held by the predecessor to this
subcommittee, the record indicates the Comptroller General said
GAO had agreed to ``guarantee annual across-the-board purchase
power protection and to address locality pay considerations to
all employees rated as performing at a satisfactory level or
above, absent extraordinary economic circumstances or severe
budgetary constraints.''
He reiterated this concept several other times during his
written testimony, and he confirmed that assurance when
answering questions from Representative Chris Van Hollen during
the hearing.
Minority views in the House committee report on the GAO
Reform Act state the Comptroller General has ``assured GAO
employees that anyone performing satisfactory work will receive
at least a cost of living adjustment.''
During a September 16, 2003, hearing before the Senate
Committee on Governmental Affairs the record indicates the
Comptroller General told Senator Thomas Carper, ``For the 97-
plus percent of our employees who are performing at an
acceptable level or better, we will protect them against
inflation, at a minimum.''
The Senate Committee on Governmental Affairs report on the
GAO Reform Act states the committee had ``received a commitment
from the Comptroller General that, absent extraordinary
circumstances or serious budgetary constraints, employees or
officers who perform at a satisfactory level will receive an
annual base pay adjustment designed to protect their purchasing
power.''
The next issue CRS was asked to address was whether all GAO
employees with meets expectations ratings had received these
annual adjustments. The short answer is no. According to GAO,
308 of 1,829 GAO analysts and specialists, about 17 percent,
did not receive the 2.6 percent permanent pay increase that
other GAO employees received in January 2006. These 308
employees all had meets expectations ratings or better. Most of
these employees were at the second of GAO's three-banded pay
system, roughly GS-13 and 14 employees, but some employees at
all three levels were affected.
In March 2006, the House Appropriations Committee asked GAO
to explain the difference between its statements in 2003 and
its actions in 2006. GAO responded by saying the Comptroller
General's statements in 2003 were ``accurate at the time,'' but
that subsequent events had altered his views on this issue.
The most significant of these events was a market pay study
by the Watson Wyatt consulting firm indicating that many GAO
employees were already paid more than what should be the
maximum pay for their positions.
Another question CRS was asked to address was whether the
Watson Wyatt study was correct that many GAO employees are, in
fact, overpaid. The only way to make such a determination is to
understand how the Watson Wyatt study was conducted.
Specifically, what organizations were compared to GAO and what
occupations were compared to GAO analysts. GAO has declined to
provide this kind of detailed information to CRS, and it is not
included in other sources, including its annual report to
Congress on the GAO Reform Act. Therefore, we are unable to
offer any observations about whether GAO employees are, in
fact, overpaid.
Finally, CRS was asked to describe the financial
implications of the Comptroller General's decisions to deny pay
increases to certain GAO employees. Forecasting these kinds of
financial implications is difficult and depends on a variety of
factors; however, using what we believe to be reasonable
assumptions, it appears the financial implications may be
significant. As detailed in my written statement, by the year
2010 a GAO band 2A employee making $110,000 a year in 2005 made
far more than $10,000 a year behind a comparable non-GAO
Federal employee. Such a differential would also have a
significant impact on GAO employees' pension. Assuming
retirement at 2010 and receiving a pension for 20 years
thereafter, a GAO employee could lose a cumulative total of
base pay and pension of nearly $120,000.
Mr. Chairman, this concludes my prepared statement. I would
be happy to answer any questions.
[The prepared statement of Mr. Copeland follows:]
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Mr. Davis of Illinois. Thank you very much.
We will go to Professor Tiefer.
STATEMENT OF CHARLES TIEFER
Mr. Tiefer. I applaud your holding hearings on this vital
and controversial topic, and I appreciate the opportunity to
testify.
I am a professor of procurement law. I am the author of the
book ``Government Contract Law.''
Pay for performance not only just hasn't succeeded. One set
of numbers from TSA illustrate what it has done to morale. Of
TSA screeners, 82 percent, 17,000 who returned forms, 82
percent disagreed with the proposition high-performing
employees are promoted; 86 percent disagreed with the
proposition pay raises depend on how well employees perform
their jobs. There is no confidence in the system.
But worse than that, it is not simply that it is not a
success; it has channeled scarce personnel resources, the
money, the training, the attention from the top level away from
where they really could be used and really are needed.
I testified last May at a hearing about Department of
Homeland Security, where you have a stark example. They have an
impending shortage of people who can deal with IT, information
technology, and procurement, and they should be devoting these
personnel resources to training these people, recruiting them,
retaining them. What happened? Because they diverted the
resources over to this thing, this personnel system, look at
what happened with FEMA after Hurricane Katrina. An agency
which used to handle very competently disasters brought in a
disastrous performance, itself. What it was doing personnel-
wise was attending to the wrong things.
An even more serious concern from the legal perspective is
the other radical elements besides pay for performance in the
personnel reform of this administration. Suppressing collective
bargaining, suppressing ruling out arbitration, doing away with
appeal rights, these are core elements in NSPS in the
Department of Defense and in what was attempted in Max HR for
the Department of Homeland Security. They are the heart of
labor representation.
Now, some mistakenly believe that the administration's
efforts in that regard are just going to sort of run out of
steam on their own because of lack of appropriations to carry
them out and because of adverse legal decisions. As Delegate
Norton's opening statement pointed out, courts have thrown out
in their rulings aspects of these personnel systems. But I have
to note that the key decision in this regard, which is a
decision by the Department of Defense, by Judge Sullivan of
this District, is on appeal. It was heard by a panel in
December. This is a panel that has on it Judge Cavanaugh,
formerly White House Associate Counsel, and so it is considered
not impossible that he will rule and that the panel will rule
for the White House in this regard.
Now, the House voted in July 2006, to withhold funding of
the radical parts of NSPS, the ones I just ticked off, not the
pay system, just the radical parts--the suppression of labor
representation that Judge Sullivan had held illegal. That vote
did not become the law, but, especially if there is an
appellate ruling that overturned Judge Sullivan's decision,
that issue will be back front and center for this Congress and
hearings by this subcommittee will be absolutely crucial. This
is the forum. This is the place where that issue will be
debated.
So much has changed since 2003, and it was a close decision
even then to give the authority that was given, that it is hard
to imagine the administration would be given a blank check to
go ahead.
Another somewhat technical issue I want to mention, as far
as we named the big systems. The big systems where personnel
reform is taking place were all named earlier by Ranking
Minority Member Marchant, who had the number. But there is one
specialized one, and that passed last September. The Director
of National Intelligence, John Negroponte, set in motion a pay
banding system for the 16 agencies of the intelligence
community that are under his supervision, which amount to about
50,000 civilians. DNI says it is going to be asking the
Congress for what it calls ``gap filling legislative
authority'' because it doesn't have complete legislative
authority to do this. Its charter doesn't give it that.
Well, this subcommittee needs, as it is doing oversight
over these personnel reforms, to get its views on this subject,
so that when the DNI--Director of National Intelligence--tells
the intelligence committees on their annual bill that it is
just gap filling, that they will get someone who knows about
personnel issues who says no, it is more controversial than
that.
That completes my testimony.
[The prepared statement of Mr. Tiefer follows:]
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Mr. Davis of Illinois. Thank you very much. Of course, we
will have opportunities during the question and answer period
to dab deeper and further into these issues.
Mr. Swerdzewski.
STATEMENT OF JOSEPH SWERDZEWSKI
Mr. Swerdzewski. Thank you, Chairman Davis, Ranking Member
Marchant, for the opportunity to speak to you today and
testify. Thank you for holding this hearing.
My firm has been actively involved in assisting unions and
management with the implementation of NSPS. We have assisted in
understanding how the collective bargaining system will work
under SPS and assisting agencies with training their managers
on how performance management will work and the classification
and compensation systems. My summary remarks address two areas
which I think are of significant concern.
As you are aware and as the previous speaker noted, the
labor relations system, which is a crucial aspect of NSPS, is
currently subject to a Federal district court injunction. The
Federal district court in Washington, DC, has determined that
the labor relations system created by DOD does not meet the
requirements Congress established in the NSPS statute for
collective bargaining. The case, as mentioned, is current on
appeal to a three-member panel of the D.C. circuit.
The outcome of the litigation at this time is uncertain.
The case before the D.C. circuit concerning the implementation
of the new personnel system at the Department of Homeland
Security was recently decided in favor of Federal unions. The
D.C. circuit found that the regulations DHS issued on labor
relations, which are strikingly similar to the labor relations
regulations of NSPS, violate the union's right to engage in
collective bargaining.
The NSPS system was designed, premised on there being
little or no collective bargaining over any aspects of the new
personnel system. It was based on immediately terminating
provisions of collective bargaining agreements, which it found
were in conflict with NSPS, and implementing the NSPS
requirements without bargaining. This approach avoided
bargaining with approximately 1,800 bargaining units in DOD.
While this was the approach chosen by DOD, there were
numerous other alternative ways to implement NSPS, such as
using ability to bargain at the national level with heads of
DOD unions, rather than with each individual union.
As a result of DOD deciding to begin implementation for
non-bargaining unit employees, which is happening as we speak,
DOD could find itself with a bifurcated personnel system
dependent on the decision of the D.C. circuit. Should the D.C.
circuit decision be similar to the decision of DHS, DOD would
have to determine whether redesign of the system would be
necessary to accommodate the impact of collective bargaining.
This would be a costly undertaking and time consuming.
Another option would be to bargain over NSPS under the
current title five labor relations statute, once again
incurring significant cost and delay for new potential
litigation.
However, should DOD be successful in the current
litigation, they would be faced with implementing the new
system for a large number of employees and then having its NSPS
labor relation system subject to the NSPS labor relation sunset
provision in 2009. With the significant overhang of the entire
labor relations controversy in DOD is that the labor relations
system, itself, may be sunset in 2009, with little time in
between the time that a successful decision for a DOD would be
implemented and new collective bargaining taking place.
DOD is faced with a difficult decision. If it was to
determine to proceed with implementation of NSPS with the
outcome of the litigation uncertain, it may end up with a dual
personnel system with attendant cost and inefficiency. A dual
system increases the cost of personal administration and can
have significant impact on the morale of employees. It may lead
to inevitable comparisons of which employees are doing better
under which system.
The second area of concern is tying a new performance
management system to pay for performance before the performance
system has matured. Every performance management system has
implementation problems and kinks as it is first implemented.
Some of these problems take a number of years to be worked out.
Performance management under NSPS is of significant new
importance. It is just not an evaluation of performance, but it
determines an employee's pay, bonus, and, most importantly,
particularly in the area of rack and potential RIFS, retention
and RIF, it significantly changes the aspect of how an employee
is treated in RIF, and also leads to potential for non-
competitive promotion.
The new system has significant strengths; however, it will
take a period of time for employees and supervisors to be
comfortable with its use and impact. To prevent the possibility
of significant frustration with a new system and costs
associated with disruption cause, using a step-by-step approach
implementing pay for performance would appear to be more cost
effective.
Thank you for the opportunity of testifying today.
[The prepared statement of Mr. Swerdzewski follows:]
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Mr. Davis of Illinois. Thank you. Thank you very much.
We will proceed to Ms. Sistare.
STATEMENT OF HANNAH SISTARE
Ms. Sistare. Chairman Davis, Ranking Member Marchant,
members of the subcommittee, thank you for inviting me to
testify on the operation of pay for performance systems in the
Federal Government and recommendations for moving forward. My
comments today represent my own views and those of a number of
Academy fellows with extensive experience in this field.
I appeared before this subcommittee in 2003 to discuss
performance and pay recommendations of the National Commission
on the Public Service, chaired by Paul A. Volcker. The Volcker
Commission was concerned that Federal personnel systems were
not designed to establish and measure progress toward
performance objectives and that the quality of performance was
too often ignored. Today, performance based management systems
are being implemented at agencies across the Government.
The experts predicted from the beginning that the design
and implementation of these systems would take time, focused
effort, and committed resources. This proved particularly true
in the two huge departments Congress provided with new
authority to institute such systems. The very size and
complexity of Defense and Homeland Security has served to slow
the process, and, as others have commented, there have been
other intervening factors.
Despite these difficulties with these agencies, there is
evidence that the Federal workforce and its leadership are more
attuned to performance than in the past. As the Volcker
Commission and many others have concluded, this change in the
culture and operations of government is necessary for it to
serve the public and the Nation in the 21st century.
The Academy has assisted several Federal agencies by
conducting readiness reviews for the implementation of
performance management and performance based pay systems. These
include the FBI, the Navy, and the Federal Judiciary. Notably,
the Academy and the agencies that it has worked with have found
that such independent outside review is very helpful in
identifying problem areas that need to be addressed.
Based on a review of its own studies and those by others,
the Academy has produced a report on recommended actions for
Federal agencies working to adopt pay for performance systems.
We have provided copies of this report for the subcommittee's
use. I will note a few findings which we feel have particular
applicability for the successful implementation of pay for
performance in the Federal Government today.
The first set of factors have to do with readiness. First,
top leadership that is committed and capable of leading
organizational change; preparation of first line supervisors
for their critical role; clearly defined organizational goals
and objectives; necessary reporting systems and infrastructure;
sufficient human and financial resources; and an established
policy and legal framework, including a clear definition of
employees who are covered and how the program policies will
affect them.
Factors contributing importantly to effective design and
implementation are: top leadership support and expectations for
the system, which is reinforced by managers and supervisors; a
clear and persuasive statement as to why the new system is
needed, and its anticipated benefits, particularly how it will
contribute to employees' ability to better accomplish their
work; a well-established, credible, valid performance
management system; open communications and program transparency
between and among all levels of the organization; a commitment
to test the system components and refine them as needed; and a
willingness to utilize independent reviewers to assess key
steps in program design and implementation.
Some of these factors were identified early on in the
Federal Government's pay for performance initiatives. Some have
gained clarity as systems have been implemented. All have been
validated by experience. They can serve as useful benchmarks
for examining pay for performance programs and development and
implementation.
In studying the track record in pay for performance in the
Federal Government and its future, we believe there are some
preconditions to future success. First, leadership commitment
to the system--I have mentioned leadership three times now;
commitment throughout the organization to the system; and
recognition and understanding of its importance in achieving
program goals; time for rehearsal, review, redesign, and
retrying, all of which will build participant buy-in and trust;
and consensus among policymakers and the Executive as to the
overall design, implementation, cost, and financing of pay for
performance systems and a commitment to support that consensus
over a number of years.
That concludes my prepared remarks. I hope my comments and
this report will be of use to this subcommittee.
[The prepared statement of Ms. Sistare follows:]
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Mr. Davis of Illinois. Thank you very much. I am certain
that they shall.
We will proceed to Mr. Simpson.
STATEMENT OF KEVIN SIMPSON
Mr. Simpson. Thank you very much, Chairman Davis and
Ranking Member Marchant.
I represent the Partnership for Public Service. We are a
nonpartisan, non-profit organization. We are dedicated to
revitalizing the Federal Civil Service by inspiring a new
generation to serve our country and transforming the way the
Federal Government works.
I think the biggest contributions that we can make to this
conversation are to convey, first of all, a sense of urgency
about the need for reform; two, a historical context for the
different flexibilities and innovations that are represented by
the two most currently prominent reform efforts at DOD and DHS;
and, three, the importance to this committee and to agencies of
import focusing on matrix during the course of implementing
these new innovations.
First, the question of urgency. It is our long-held view at
the Partnership that modernizing current personnel systems is
essential. Many personnel systems are still based on a general
schedule of pay and position classifications that was first
implemented in 1949. The result is that the Federal
Government's current system for recruiting talent, top to
bottom, under-performs on almost every task it has. It is slow
in the hiring, it is insular in the promoting, it is out of
touch with actual performance and the rewarding, and it is
stingy with the training.
When young Americans are asked to picture themselves in
public service careers, they imagine being caught in stifling
bureaucracies where seniority and not performance rules.
Perhaps most alarmingly, large numbers of employees, including
many senior executives carrying a vast amount of institutional
knowledge are soon going to be retiring. The Federal Government
will have to be much more aggressive than it has in the past to
attract new talent at all levels, and the American people are
increasingly concerned that government is often unable to
execute its assigned roles in a competent manner.
We strongly believe that the path to renewed vigor and
competence requires continued innovation of the Federal
Government's personnel system. The stakes are high and the
status quo is unacceptable.
The next question is what shape should the reforms take,
and that is where an awareness of the historical context of
these reforms becomes important. The new personnel systems we
are talking about now at DOD and DHS did not develop in a
vacuum. Many elements of those new systems were drawn from
preexisting demonstration programs, and those programs have
yielded measurable improvements in hiring and retention and
employee engagement. Other elements, unfortunately, are brand
new and essentially untested, including those in labor
relations and employee appeals.
Now, over time many Federal agencies have made the case for
HR reforms, and, as Chairman Davis noted in his opening
statement, DOD and DHS are simply the latest and the largest.
My written testimony offers some detail about the progress that
they have made, but I would like to offer three over-arching
observations about that track record.
First, past demonstration projects offer an assurance to
employees and supervisors that reforms like recruitment
flexibilities and pay banding and revamped performance
management systems can work, but the converse is also true. The
farther we step away from those proven models, as in the
proposed labor/management sections of the NSPS, which would
have no real precedent in the various demonstration projects,
the more difficult it is to draw on those past experiences to
ensure successful implementation.
Second, change can take time. Even successful demonstration
projects initially engendered employee resistance. That is only
natural. People don't like change. Over time, however, if the
system is being successfully implemented, you should see
reduced levels of resistance. For example, the pay banded pay
for performance demonstration project at the Navy's China Lake
Naval Weapons Center was initially favored by only 29 percent
of employees, but by 1998 that number had grown to 71 percent.
Significant organizational change can frequently take 5 to 7
years to accomplish.
Third, as Congress weighs how to proceed with these
personnel reforms, it will be important to find agreement on
what we hope to achieve through these reforms and then
regularly measure our progress toward these goals. Choose your
key matrix and stick with them.
In that regard I would commend to your attention work that
the Partnership has done in the form of the best places to work
rankings, which build off of OPM's Federal Human Capital Survey
to provide consistent measures over time of relative levels of
employee engagements, as well as several other workplace
environment characteristics, such as the quality of leadership
that has been mentioned quite a bit by the other panelists
here, and support for diversity.
More broadly, we recommend special attention to the areas
of recruitment, retention, the existence and extent of skills
gap, the ability of performance management system to make
meaningful distinctions, and leadership.
That concludes my testimony. I look forward to answering
your questions.
[The prepared statement of Mr. Simpson follows:]
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Mr. Davis of Illinois. Thank you all so very much. I will
begin the questioning process.
Mr. Simpson, you indicated a sense of urgency relative to
the need for reform. Should we not be as urgent as you
indicate? What do you see happening, or what would be the
consequences of a lack of that urgency?
Mr. Simpson. I think our fear is that we see a continued
deterioration of the ability of government to perform its core
functions in a competent and accountable way. Every
organization depends on its workforce to get its job done, and
I think there is a growing consensus that the quality of your
workforce influences the ability of the organization to achieve
its stated goals. I think what we fear is that the ability of
government to perform in the way the American taxpayer expects
continues to decline if we don't continue to innovate on these
systems.
Mr. Davis of Illinois. You stated in your written statement
that GAO has shared some of its annual employee survey results
with the Partnership in order to be included in your best
places to work in the Federal Government rankings. Since the
Partnership did not conduct the survey, itself, how
knowledgeable are you as to how GAO conducted the survey and
whether or not the results were validated?
Mr. Simpson. We had several discussions with GAO and we
were satisfied that the manner in which GAO implemented the
survey to their employees was comparable to the way in which
the OPM administers the FHCS across government, that employees
were free to fill out the survey and respond in ways that they
thought appropriate. In fact, the GAO, relative to many other
Federal agencies, still registers at a very high level of
employee engagement. They are a very professional, dedicated,
talented workforce.
Mr. Davis of Illinois. Were there questions in the survey
specifically about pay increases and the band two split?
Mr. Simpson. The only questions that we used were those
that we could compare to the questions administered in the
Federal Human Capital Survey. I know that there are questions
about satisfaction with pay, which we incorporated into our
index, but I'm sure that there are probably very specific
questions unique to OPM which we did not incorporate into our
analysis.
Mr. Davis of Illinois. Then how comparable would you say
that the GAO study is to other Federal agency studies that you
have reviewed or come into contact with?
Mr. Simpson. The GAO provided us enough data points with
respect to overall employee engagement--and really this is just
a matter of essentially four key questions trying to gauge what
your overall satisfaction is with government--to allow us to
include them in our overall rankings. That's all that was
necessary for us to incorporate them into the best places to
work product. Beyond that I can't really speak in a very
knowledgeable way to exactly how well the GAO does or does not
track the rest of the Federal Human Capital Survey.
Mr. Davis of Illinois. Thank you very much.
Ms. Sistare, in your written testimony you stated that,
despite the difficulties DOD and DHS are experiencing in
implementing their new personnel systems, that there is
evidence that much productive work has been done and that the
Federal workforce and its leadership are increasingly more
performance attuned. Specifically, what productive work has
been done by DOD and DHS in regards to its personnel system?
Ms. Sistare. Well, regarding those two agencies, I would
say that the initial work they have done, and redone in some
cases where they found they had problems, has started to lay
the basis for a performance management system. I distinguish
that from performance based pay in that I think if a
performance management system is established appropriately, you
are 80 percent of the way there.
Now, my particular comment related more to the work that
the Academy has done in looking at work that has been done at
other agencies, the early work that was done in setting up
demonstration projects, work that has been done, for instance,
at FAA where they had trouble at first but have now gotten more
on track. One of my colleagues is working with the IRS and has
found that many of the components for performance management
are in place. There still is a need to pull it all together.
So my comment was not so much referring to DHS and DOD,
where they have had significant problems, but elsewhere in
government where this kind of effort is ongoing.
Mr. Davis of Illinois. Thank you very much.
I would now yield to the ranking member, Mr. Marchant, for
his first round of questions.
Mr. Marchant. Thank you, Mr. Chairman.
I think on the first round I only have one question, and
then ask for a response from each of the panelists.
What would you have this committee do to correct these
situations? We have been in a period of change now for almost a
decade, it looks like. There doesn't seem to be a lot of
happiness and joy with the system. So we have a committee, we
have a new majority, we have kind of an opportunity now, so
what would you have this committee do? Would you have them
withdraw the congressional authorization to proceed with this
whole concept?
Would you just drop the whole idea, go back to the way
things were before? Would you abbreviate the goals? Would you
shorten the timeframe for implementation? Would you file new
bills? Would you file legislation that gave specific guidance
and direction to how anything would be implemented?
It seems like there has been a lot of study about the
subject and how it has not worked. From my background and
perspective, I think the most important work this committee can
do, Mr. Chairman, would be to come up with an idea, a better
idea of how to move forward.
I would like to have your response. We will just go in the
same order as the original witnesses, if you don't mind.
Mr. Tobias. I think, Congressman Marchant, that the real
focus of attention needs to be on performance management, not
pay for performance; defining goals, creating evaluation
systems, and supporting the change in the culture to a more
results oriented situation in agencies. I believe that if
employees see how their work is linked to agency mission, that
you will get a significant increase in employee engagement and
productivity in agencies across the Government.
I think what has happened in DOD and DHS is that the focus
has been on the second step in the process, pay, and not enough
focus on the first step, a performance management system. So
what we have is people getting pay when there is no real
distinctions that are made on a credible basis of performance,
so people get very angry about that.
Until you have a performance management system in place,
you can't have a pay for performance system. And, with respect
to what Congress can do about that, I think it goes in a couple
of ways. One, I think Congress, most committees, have not
really cared much about performance and what agencies achieve
or don't achieve or whether the goals are outcome or works hard
goals. I think Congress is very concerned when the executive
branch makes a huge blunder, as it often does, but on a day-to-
day basis or on a week-to-week or month-to-month basis there's
not much attention on the kind of performance goals that
agencies create.
So I would urge more focus of attention on the kind of
performance objectives that agencies create and whether or not
they achieve them. Do they create outcome performance goals and
do they achieve them? That would give the political appointees,
the Senior Executive Service reason for doing the hard work
necessary to create a performance management system.
Mr. Copeland. Mr. Congressman, I am with CRS. CRS doesn't
take positions on legislation or make recommendations, so I
will pass and leave it to my other panel members.
Mr. Tiefer. Too tempting for me. I can't resist that way. I
think you could act on two different sets of things. One is
that, as to the parts of the personnel systems that impact
collective bargaining, arbitration, and appeal rights, the
labor representation provisions, you should de-authorize those.
You should simply codify the decision of the D.C. circuit panel
in the Chertoff case that did so for the Department of Homeland
Security and not wait for or not care what happens with other.
And then, as for pay for performance, I think that you
should report conditions such as the availability of sufficient
money for ample pay raises and say without these conditions
being fulfilled, without enough training, without the measures
that people are talking about here, and so forth, it can't be
ruled out.
Mr. Swerdzewski. I would simply look at the same question
that Mr. Tobias talked about, which is the performance
management system, which to me is the key to the entire reform
effort. The concept is you are trying to improve performance.
Unfortunately, when you immediately link pay to a brand new
system it looks more like cost containment to employees than
improving performance, and that's a significant issue. It is a
concern to managers, not just a concern to employees,
themselves.
Taking a new system such as performance management, having
dealt in the trenches with people trying to work with a new
system in SPS, they understand the value of linking
organizational goals to achievement. That's a significant
strength of the new NSPS system, linking those goals, making
sure that people are actually getting results, not just simply
performing duties.
The problem with the system, however, is that it is very
difficult to take a one-size-fits-all system relating to
800,000 employees and say it is going to work perfectly the
first time out. It is a very complex system to begin with, and
it is very difficult for an employee to understand how
something which is going to apply across the board to everyone
is going to apply to them, linking that directly to their pay,
and particularly more so than just their pay but to their
status in RIF, which really is a very significant issue to many
employees because of the ups and downs of what happens in DOD.
A step-by-step approach where Congress first authorizes a
new performance management system similar to the one
authorized, which is linking goals to achievement, and then
reviewing and giving the agency an opportunity to show the
results of that system and then linking it to pay, if that is
an appropriate process.
Ms. Sistare. I definitely agree. Focus on performance
management and getting it right first. Also, I would suggest
that employees know more, not less, about how the system is
going to affect them and they have a chance to participate in
the development of those standards. I think some of the early
regulations left a lot for later manipulation. But maybe most
important is that Congress and the executive branch and all
concerned parties reach consensus on where we are going to go
next and a commitment to understanding what resources that
takes and a commitment to provide them.
Mr. Simpson. I would like to associate myself with the
comments of the other members of the panel in terms of the
importance of putting performance management first, and I would
add that I think an appropriate thing to do would be to require
agencies to obtain some kind of outside certification that can
be provided by OPM or GAO or even NAPA that their system, in
fact, does meaningfully differentiate between levels of
performance, because I think we all agree that is the
predicate. Once that is in place, then you increase
dramatically the likelihood that your attempts to then link pay
to performance are going to succeed.
I also believe that Congress should probably revisit the
labor management and adverse appeal provisions of the NSPS,
because I think that they stand in the way in a very
fundamental way of the kind of employee buy-in and engagement
and communication between supervisors and employees that are
going to be necessary for the systems to succeed.
Mr. Marchant. Thank you, Mr. Chairman.
I would just have one followup question. Are you aware of
any major corporate or public entity that has gone into a
performance based management that did not have the element of
the additional pay that was mixed with it, that was successful
that did not have the element of additional pay involved in it,
where it was performance based but there was no reward for the
performance?
Mr. Tobias. In the article that I cited in my testimony the
authors review about 2,600 situations where a combination of
elements were examined. There are a subset of where only
performance management was included. I don't recall exactly
which, but the answer is yes.
Mr. Simpson. If I could offer one additional response, I
also believe--and I would like to offer specifics in a
supplemental submission to the subcommittee--that you can have
a successful and there have been examples of successful
performance management systems without adding additional pay or
adding additional resources. You take the resources you have
and then improve the way in which you are distributing them
across your existing employees.
It also might not always be pay. Sometimes it is reward,
recognition. So long as those recognition and other intangible
rewards flow from a credible determination by a manager that
this person has performed better than this person, or this team
has performed better than this team, that is all you need for a
strong performance management system.
Mr. Marchant. Thank you, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much.
Mr. Lynch is recognized for 5 minutes.
Mr. Lynch. Thank you, Mr. Chairman. Again, thank you and
the ranking member for holding this hearing.
I would like to ask the panel--and, again, thank you for
your willingness to help this committee with its work. The
National Treasury Employees Union National President Colleen
Kelley has raised a number of, I think, valid concerns about
the whole pay for performance protocol, and just recognizing
that the challenges we have, with the massive impending
retirements from the Federal system is really at a critical
level right now. We would be hard pressed to replace these
experienced, high-performing, very well-trained employees, and,
as well, we are having tremendous turnover at DHS, you know,
the baggage screeners, we have just got big turnover with new
employees. I think the system is bordering on crisis.
Since it is really the organizations we want to work, we
want these--in other words, the airport is not safer just
because one employee is doing their job. They need to all work
as a cohesive team. Same with all the departments and DHS, as
well as Treasury.
It just seems to me that it is counter-intuitive to think
that by rewarding one employee here and there and denying pay
to other employees here and there in a system that may be
working or may not be working, it doesn't achieve our goals. As
a former iron worker, as someone who actually, you know, has a
little bit of experience working in a union environment, it
seems to me that would be a disincentive.
As a worker, to me that would appear as just being
favoritism, because there is no system here. There is no
objective system here for when the extra pay is to be rewarded
and to whom. So it will appear, from a worker standpoint, as
just being arbitrary. I think it would be disastrous to morale
in the workplace. That's what I am hearing. That is what I am
hearing from the employees at DHS.
I know that the National Treasury Employees Union has
pointed out that there was a study conducted--I believe it was
the Hayes Study that they referred to--that they did a senior
manager pay band evaluation on this system for the IRS in 2004.
Here are some of the results: one, 76 percent of the covered
employees felt the system had a negative impact or no impact on
their motivation to perform their best.
Now, 63 percent said it had a negative or no impact on
their overall performance of senior managers. This is a quote
from the study: ``only one in four senior managers agreed that
the senior management pay band evaluation is a fair system for
rewarding job performance or that ratings are handled under the
system.'' Last, increased organizational performance is not
attributed to this senior management pay band evaluation.
I think it is about leadership and about getting teams to
work together. You have positive peer pressure, you have
leadership, and that's what leads these organizations to
perform to our expectations. I just am a little bit frustrated
in talking with the employees because they are disheartened and
there's very poor morale.
One of the systems that has gone through the A-76 process
and has sort of adopted this model is the system that is in
existence right now over at Walter Reed. It went from a system
of all Federal employees that were doing a tremendous job,
world class institution, they went in and did an A-76, all the
Federal employees left. Big exodus. They put in a bunch of
employees who were not qualified, that were judged by the
patients over there and the people who are our constituents as
being inadequately trained, and it has just been a disaster
over there.
I hope that, first of all, I would like to hear the
thoughts of the panel, rather than just going on, about the
idea of working as a team unit and as an organization to
achieve the goal. It is no good if I am a team leader and I am
getting a good evaluation and all my employees get lousy
evaluations and don't do their jobs. Why the heck should I get
a performance bonus? I'm not doing my job because the people
who work for me are not doing their job.
And right now, I don't know, I was going to say this sounds
good on paper. It doesn't even sound good on paper. I'm very
discouraged by it and I think there has to be a better way to
get our act together here and get the most out of our
employees. We can start by treating them with a little bit of
dignity and get them to work together.
I will just yield. Try to do your best to respond. Thank
you.
Mr. Tobias. Well, I think the issue of whether there should
be individual or group awards is a really critical question. I
think that is part of how you design the performance management
system. Is it you against you? Or is it you two working toward
a common goal? Getting that right, as you suggest, is an
important element, and it hasn't been achieved.
I think the statistics that you cite point out the risk of
going forward before you are ready. If the goal is to increase
productivity and the result is to decrease productivity, then
you have had just the opposite result, and I think that shows
up in the statistics you cite.
Mr. Swerdzewski. One thing that has always struck me about
pay for performance is that it assumes that the most
significant factor that influences an employee's performance in
the Federal sector is pay, which is basically a private sector
model. Pay is what you look for. Pay is what increases your
esteem in the organization. I think part of it is saying that
pay is the most significant thing that an employee looks for in
the Federal sector, I think that's probably inaccurate.
Many Federal employees did not come for pay, because many
Federal employees would have made a lot of money in the private
sector, not in the Federal sector. I think that's part of the
concept of marrying the Federal employees' public service,
which is not based on pay, which is based on avocation, which
is based on something they want to do with being paid a living
wage and being paid a valid wage. It's different than what the
private sector is. The private sector does not necessarily have
the same mission or the same confidence in that mission that
the Federal employees do.
Mr. Lynch. I couldn't agree with you more. I think, in
closing--and I want to yield back--when you look at many of the
jobs that are performed by Federal employees, you know, I just
think of September 11th and the days thereafter. I was elected
on September 11th. You know, we had 465 fire fighters who all
went up the stairs and public employees, all union employees,
by the way, covered by a collective bargaining agreement,
heroes every one of them. All those firefighters went up, did
their jobs.
And in the days after that when we had the anthrax attacks
here in Washington the postal employees, in great risk to
themselves--you know, we were nervous at the time that the
mails would stop, that commerce would stop. It was the postal
employees who went to work, knowing that there was anthrax in
some of those packages at Brentwood and elsewhere, those loyal
postal employees went to work, not because of their pay scale
but because they believed very much in the work they were doing
and they are as patriotic as anyone.
So I agree with what you are saying, that it is an
avocation. It really is. There is a lot more self satisfaction
and self fulfillment that goes into a lot of these jobs,
although pay is definitely important. I want to say that. But I
think this model misses a lot of that. I think we have to just
take another look.
I agree with the assessment that we have to make sure we
have this right before we implement it. Thank you.
I am sorry for going on, Mr. Chairman.
Mr. Davis of Illinois. I think we are trying to get as much
information, and I always think that passion helps to bring it
out.
Ms. Norton.
Ms. Norton. Thank you, Mr. Chairman.
I have a question first for Mr. Copeland. On page 10 of
your testimony you indicated that, though you got some
framework, some general sense of so-called Wyatt study--and
here I am quoting--you were not told which companies,
government units, or other organizations were included or which
occupations in those organizations were used in the study and
how they were matched to the GAO occupations. Could a study be
validated without this information?
Mr. Copeland. Ms. Norton, I don't believe so. I think in
order to validate a pay study you have to know basically what
went into it. You have to know what occupations were compared
to a GAO analyst. You would have to know what organizations
were compared to GAO. Without that information, I think you
would be at a loss to know whether or not the study, itself,
was valid.
Ms. Norton. Well, I must say I am surprised, to say the
least, that GAO, whose job it is to pull such information out
of others, would have declined to give that information about
itself, particularly since it has literally preened before this
committee about how successful its own efforts have been. I
note that for the record.
But let me tell you where I began. I began with the notion
that this system has been in place for a very long time, so it
stands to reason that if you favor a fair system, as I do, then
the burden is on you to, in fact, change it, as opposed to
leaving it to people who would essentially see it go to do so.
So you start out with I named some of the major assumptions
I believed were at the root of a system that otherwise would
seem quite mysterious. One was to avoid favoritism. Another was
to avoid corruption. Remember, a lot of these have to do not
with efficiencies but with what to avoid. A third was simply to
manage a large number of employees, you know, almost 2 million.
There are other values, other reasons, but you ask anybody
who knows anything about the system in the broad, I think there
would be agreement on that. Therefore, if the GAO does not want
to be transparent about its study, then it seems to me they are
stopped right at the gate right then.
The whole notion of not getting information back,
information at least says to employees that they are basing
this on something that has been validated. Then they have to go
from there if they have other problems with it.
Second, just let me say that I also start from the notion
that if you have had a system in place for decades and you want
to wean people away from it, you had better think about how
that is done, especially if the perception is that you are
asking them to give up something that they had before. It may
seem quite intangible. It may be something like pay, which is
the most tangible.
My own experience in the private sector, the fact is that I
served on the board of three Fortune 500 companies. One was
unionized, the other was not. I know for the record that one of
the processes--sorry, that's the wrong word for it--one thing
that the private sector does to keep unions out is to try to
equalize the pay and benefits. So, to the extent that there is
a perceived or actual reduction in any, and you are trying to
reform a system, you are not even at the gate, much less out of
the gate. How do you draw people to a new system?
I think most in the private sector are results oriented,
not process oriented. I am the first to agree that there are
major differences and we can't imitate that sector entirely,
but in its results orientation it is important to note that one
of the things they would to is to make sure employees didn't
think they were losing something. So there is something about
beginning with pay. Some of you have testified about this.
Right out of the gate you say hey, by the way, some of you are
going to lose, and then you expect the whole workforce to
salute.
Mr. Simpson, on page 6 of your testimony, ``changes that
have occurred in the aforementioned agencies have been a mixed
record, to be sure, especially in terms of employee
acceptance.'' I appreciate that you have gone through, in your
testimony, those agencies. ``We note, however, that a number of
the Federal agencies that have been allowed to operate under
alternative personnel systems, such as SEC and NASA, and GAO--
'' better watch out whether or not you can continue to use that
one--``have consistently been rated by their employees as among
the top rated, best places to work.''
Now, given the agencies--SEC, NASA, GAO--I ask you whether
you regard the employees of those agencies as typical of the
Federal workforce.
Mr. Simpson. In some ways they are atypical, in that their
level of technical expertise and educational achievement is
very, very high. Overall, for the whole Federal workforce, that
is a progression that has been happening for some time, as the
Government has moved from a largely clerical workforce to a
more educated, more accomplished set of workers. But I take
your point that, to some extent, smaller agencies with more
focused missions, have an easier time of cultivating high
levels of employee engagement.
Ms. Norton. So if you wanted to convince Federal employees,
unionized or not, that the movement of this system is going to
be fair, couldn't your demonstration programs more clearly
mirror the average worker, particularly since the others are
apparently being asked or are going to be asked to accept the
very same system that is used for these top tier workers?
Mr. Simpson. I'm sorry, I didn't catch that.
Ms. Norton. I'm asking whether these demonstration projects
should be geared to the average employee if the average
employee in time will be asked to live under the same processes
that have been used for the top tier.
Mr. Simpson. If I understand your question correctly,
Congresswoman, I do think that is a fair thing to ask of the
people who may be subjected to those demonstration project
processes, with the caveats that we have talked about already,
that there should be assurances that managers know how to
differentiate in terms of performance and that there is buy-in
from the employees about the ways in which their performance is
going to be measured and what it is that the organization is
trying to accomplish. Does that answer your question?
Ms. Norton. Well, of course. I think you have answered my
question. I think you have answered it honestly. If we are
talking about typical employees, you are not going to get them
to think they ought to go for pay for performance when you
tested it with master scientists, SEC employees, who, under
Federal law, because they compete with one another and they
don't want them stealing one another, we have been very clear
must, of course, meet market rates, and that means these people
are being very highly paid.
Again, one has to ask who is the Federal employee, and
perhaps get a composite. I appreciate your demonstration
examples. I am trying here to learn how to get the Federal
employee to buy in. I am very disturbed that the opposite has
occurred. And GAO, which is unionized, I mean, what do you have
to do to teach employees? And GAO wasn't unionized, and now
gets a union, or attempts to get a union as a result here, does
seem to me that that was not the result that this
administration desired. It has to be learned from. I don't want
to keep the union out, but I would like the union to come in in
the usual way.
Normally, the Federal workforce has not been unionized
because there has been some radical transformation forced upon
them.
You and your agencies, I was curious. You named the FAA.
That's an agency that is under my jurisdiction in another
committee. You said for a time they seem to be the--and I
realize they are even more different--seem to be the
negotiation of higher wages for employees. Then you say the
lesson learned here is that some guidance from the Congress and
clear expectations are beneficial in reform efforts.
What have you referenced? What should Congress have done
there? Because FAA were, in fact, bargaining for wages.
Mr. Simpson. You know, I am actually not familiar enough
with the situation at FAA to offer you an intelligent comment
on that particular piece of the testimony.
Ms. Norton. Well, I appreciate that. Let me tell you what I
think you suggest here, at least in large. When employees
accept a new system--and the ranking member, it seems to me,
was getting to this question when he asked about whether or not
there had been pay increases of any kind. I believe that was
the word. But his implication certainly was whether or not
people thought they were losing anything or gaining anything.
My question to you, or for that matter, to others, is
whether or not, when you are trying to accomplish a, let us
say, very significant change in the system, whether you should
assume that there is going to have to be--forgive my use of
this term--some version of a quid pro quo. Yes, what you had
here you are losing, but you are not losing in the long run,
and here is why. I wonder if any of you sitting at that table
would accept changes that did not assure you that, for what was
taken from you, something perhaps entirely different but
comparable enough would come forward so that it was worth the
change and it was worth your going along with it without
protest.
I am essentially asking whether you think, in the history
of humankind, there are people who want to give up something
without recognizing that they are getting something in return,
or whether you think that efficiency for the Government, 9/11,
changes that we require should be enough for the average
Federal employee to say, OK, you say change, we give up. We
won't sue. We won't unionize. We understand what your needs are
and we will do what you say. Is that not counter-intuitive?
Mr. Simpson. My sense is, Congresswoman Norton, that it
helps if you can convey to a workforce that the implementation
of a new personnel system is never going to result in a
reduction of the current set of benefits and pay that they
have. I think workforces can be persuaded to give up a
certainty of a certain set level of benefits in exchange for a
less certain set of benefits if they are convinced that those
less certain set of benefits could be distributed in a way that
is credible, that tracks actual performance.
Ms. Norton. And so, Mr. Simpson, you would say, for
example, that at GAO they should at least have been assured
that the Wyatt study was validated enough to make that
assurance, wouldn't you, given what you just said?
Mr. Simpson. Yes.
Ms. Norton. And if you were sitting at the GAO and you had
met what appeared to have been the standards set by the
leadership, but the study hadn't been viewed by any outside
expert, could you possibly accept the changes that the GAO was
asking you to put into place?
Mr. Simpson. I think that goes to the attitudes that the
GAO employees have toward the ways in which GAO employees can
move up and flourish. Do they believe that their supervisors
are credible in the way in which they are distributing what
rewards are available to them to give?
Ms. Norton. Does anyone else have an answer to that
question? I know some of the questions I am asking now are what
can only be called intuitive human actions and reactions.
Really, I'm trying to stay away from how much training you
need, how good managers have to be, what the steps have to be.
I am trying to step back and look at the whole system and say
it is after 9/11, haven't changed the system in three or four
decades, go. How do I go at it? The first thing I look at is
what is the average person going to respond to.
Mr. Tobias. Well, I think you are on to something, and what
were the changes that were implemented? Narrowing the scope of
bargaining so as to exclude unions and employees from the
process, the implementation of, as you suggest, a pay for
performance system where people gave up and got little when
this was supposed to stimulate them or incentivize them to
perform more. And I think, in answer to your first question,
what does somebody get from participating in an effective
performance in a system where there is effective performance
management.
The answer is it leverages why people come into the Federal
Government. If I come to the Federal Government and I come to
the SEC or I come to NASA, I come to HHS, or I come any place
else with the idea that I am going to make a difference and
that my work will make a difference in how the agency does its
work, and I have performance goals that are linked to that
difference, I will perform better, I will be more engaged, I
will be more satisfied. That has nothing to do with pay. It has
only to do with setting targets that are clearly linked to my
interests in why I came to the agency in the first place.
Mr. Copeland. With regard to GAO, clearly the GAO employees
were very concerned about the changes that were being proposed
by the GAO Human Capital Reform Act. The Comptroller General
mentioned those concerns in his testimony before this
subcommittee 3\1/2\ years ago and before the Senate. In fact,
the GAO Employee Advisory Council said that the GAO employees
were very concerned about the changes. But the Comptroller
General repeatedly assured them that if they met performance
expectations they would get a cost of living increase, and the
fact that 308 employees at GAO did not get that, despite those
assurances, I think is the source of a lot of the concerns and
some of the activities that you mentioned.
Ms. Norton. Mr. Chairman, I do want to say that I think
that is a poison pill. I'm talking about a poison pill for
doing this anywhere else in the workforce now. If you take the
GAO, which is generally accepting these changes, and then you
have what appears to be a breaking of the word of top
management, even though they may slice it differently, that
appearance is going to kill any acceptance for the rest of the
workplace employees, especially those at a lower level, which
are most of them.
Finally, Mr. Chairman, may I say we are not even following
our own best practices, which are do as much centrally as
possible. Do as much quid pro quo or appearance of quid pro quo
as possible. I take the buy-outs during the Clinton
administration, the huge downsizing of the Federal workforce.
Buy-outs are now going to be far more punitive, and so they are
being fought.
But essentially the Federal Government said here's some
money--I don't know, it was $25,000 or something they were
talking about. Anyway, we need all of them back now. But they
said, essentially, to those of you who are near retirement,
here's $25,000. We have invested a lot of skills in you, so
these employees knew that they could go into the workforce, and
a lot of them were Baby Boomers, continue to earn, and then
centrally thousands upon thousands left. Not a peep. You didn't
hear the unions, you didn't hear studies, you didn't hear GAO
reports, because there was a sensible way, not all this fancy
stuff, just looking to how human beings have to be treated in
order to get them to lead.
Now we, of course, had other ways to thin the workforce. We
chose that way. It worked. I note again for the record, Mr.
Chairman, I think we need to do a hearing on forced buy-outs
such as occurred in the Library of Congress, other agencies.
Finally, let me just cite perhaps the ultimate example of a
sector in terrible trouble, perhaps the worst trouble of all,
and that's the manufacturing sector and the automobile
industry, in particular. Look at GM just floating downward. You
can give it all the reasons you want to. You can blame it on
the union, you can blame it on the cars, you can blame it on
the global economy. But GM, there are ways for an employer who
has collective bargaining to quickly get rid of these
employees. One is to just shut the place down.
It is interesting how GM is proceeding. It, too, is
proceeding on a quid pro quo basis. Its health care is the
problem. People are giving up and recognize they are giving up
some of the best health care in the planet in order to accept
certain kinds of buy-outs. I cite examples from our own
workforce and our own experience, I cite examples from perhaps
the worst of the private experience to say I think we have been
playing around the edges of how people deal with human
experience and get people to want the same thing that their
adversary wants.
I think, Mr. Chairman, it may be too late, particularly
with the GAO experience. That will reverberate throughout the
Federal workforce like a wildfire, so whatever you are able to
do, Mr. Chairman, in repair work, I think at least for a long
time is only going to be repair work. I thank you for trying,
and especially by beginning with this hearing this afternoon.
Mr. Davis of Illinois. Thank you very much.
Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman.
I wanted to see if you could validate a way that I am
trying to look at this and analyze it. We talked a lot about
the performance management system and whether the system,
itself, that is being implemented at DOD and DHS and so forth
is well structured and whether it makes sense, and so forth,
and we have talked about whether you have to sort of nail down
the performance management side of it first, in terms of people
understanding clearly what they are trying to achieve, and then
maybe the pay portion of it can come later. Those are all
important things.
My colleague also addressed this issue of quid pro quo,
that people aren't going to buy into any system that they are
transitioning to unless they feel like they are getting
something, but that is really just one side of the equation.
The other side of the equation is the conditions under which
you implement any new system. In other words, even if the
system, itself, was the best system in the world--and you have
talked, Mr. Simpson, about how it could take 5 to 7 years to
transition any workforce to change a culture from where it has
been to where it needs to be.
So even if the system, itself, is the best kind of system
it can be, the next question is: is the environment into which
you are placing it one that facilitates the transition or does
not facilitate it. That is what I am particularly interested
in, because my sense is that the conditions that the workforce
is in now are ones that all contribute to resistance.
You are going into an environment where collective
bargaining rights are being challenged, where personnel are
working under difficult conditions where you don't have enough
personnel to handle the job, where they are subject to these
outsourcing, which destroys morale, etc. So is that a fair
point?
In other words, for those of you who have studied what
makes a transition in a performance evaluation system work
best, isn't it highly relevant the conditions into which you
are putting the system and you are making the transition?
Mr. Simpson. Congressman Sarbanes, I think you are on to
something. I think you are on to something, as Mr. Tobias would
say. It is particularly with respect to two points.
You know, challenges to collective bargaining are really
very corrosive to employee trust and the ability of employees
to communicate in a very effective way with supervisors inside
of that agency, and it strikes me that I think that is a very
hostile condition in which to try to implement the kind of
really more vigorous dialog that is necessary to implement any
kind of pay for performance system.
Pay for performance is a good goal, not just because it
puts more pay in the hands of people who are performing well,
but it obligates all of the parties to pay attention to what it
is that the organization is trying to accomplish. It has a
salutary effect of focusing them on what it is that is good
performance, what is exemplary performance.
The question of resources is also incredibly important, as
I have tried to note in my opening remarks. Very frequently
resources are lacking with respect to particularly training and
development of the next generation of leaders in the Federal
Government, and those things are frequently being overlooked in
the Federal space and I think that when you are facing a
challenge as large as DHS they shouldn't be, and that actually
this subcommittee and Congress as a whole has a very important
role to play in trying to make sure that those kinds of needs
are adequately resourced.
Mr. Tobias. I agree totally, Congressman Sarbanes, and I
would put it this way: everything you have described increases
the risk that the effort will fail, and so if the issues that
you identify are not tended to, if they are not focused on, if
they are not addressed and satisfactorily resolved, it will
make it very difficult if not impossible to do the steps that
we have been describing today.
Mr. Sarbanes. Right, and that doesn't have to be about
politics or ideology; it could simply be saying when you
implement reform, particularly reform to an evaluation system,
it is important, if you want it to work, to make sure that the
conditions that people are working under are positive
conditions or it is not going to work as a matter of structure.
Forget about whether you believe in unions or you don't believe
in unions, whatever. You want that workforce to feel like
somebody respects them, is paying attention to them, is giving
them the resources they need, etc., because it is tough enough
to implement a system like this and make the transition, even
if all those conditions are the best they can be--and, of
course, they are not the best they can be.
So Mr. Chairman, along the lines of what the ranking member
said, I would hope that recommendations that come forward from
you and others as to what we can do with respect to improving
this transition would not only address the system, itself, as
we have done, but there would be a second set of
recommendations that says the conditions, the environment in
which a change like this is going to happen well has to be
improved and supported and enhanced in the following ways or we
can predict now that it is not going to work.
I yield back.
Mr. Davis of Illinois. Thank you very much.
I have a few additional questions, if the panel doesn't
mind.
Dr. Copeland, let me ask you, last fall, in response to a
request that I made, you researched the GAO Human Capital
Reform Act, and are you aware of any statements made by the
Comptroller General or the GAO prior to the passage of the
Reform Act in July 2004, indicating that a market-based pay
study might prevent GAO employees with meets expectations
performance ratings from receiving the annual pay adjustment?
Mr. Copeland. Mr. Chairman, I am not aware of any such
statements. The statements prior to the enactment of the
legislation centered--the caveat that was offered in relation
to the failure to provide these annual pay adjustments was
whether there would be, in the Comptroller General's words,
extraordinary economic conditions or severe budgetary
constraints. No mention was made, to my knowledge, of market
pay studies as a possible intervening variable.
Mr. Davis of Illinois. You indicated in your testimony that
GAO would not discuss the details of how the Watson Wyatt Study
was prepared. Did you come across any information that would
indicate that Watson Wyatt would allow GAO or other clients to
pre-select the organization occupations to which pay
comparisons would be made?
Mr. Copeland. I did. One of Watson Wyatt's brochures refers
to a product line known as peer pay reports, which they say--I
will just read briefly from it. It says, ``Peer pay reports are
custom compensation reports that include the responses of
companies from our data base that you decide are relevant for
your information needs.'' Their Web site goes on to describe
these peer pay reports as allowing the client to review
demographics and determine the best fit for your sample, and
then you pick the final list of companies to be included in
your peer pay report. It goes on to say that if the on-screen
report does not yield the data that you want, you may repeat
the steps until the appropriate sample has been identified.
I would caveat this by saying I do not know that GAO used
these peer pay reports. I do not know the extent to which GAO
pre-selected these companies. I just offer that as an
observation that is a product line that Watson Wyatt does
offer.
Mr. Davis of Illinois. Let me ask you, in the course of
your research did CRS ask to meet with GAO to obtain
information on the implementation of its new pay system. And,
if so, did you meet with GAO? And, if not, why not?
Mr. Copeland. We did ask to meet with GAO. We scheduled a
meeting. The meeting was canceled the day before the meeting
was to occur. GAO indicated they would respond to our questions
only in writing.
Mr. Davis of Illinois. Did you send questions to GAO in
advance of the proposed meetings? And did GAO answer all of the
questions? If not, which ones did GAO not answer and why?
Mr. Copeland. We did submit questions. They answered most
of the questions, but not all. The questions that they didn't
answer centered on issues related to the statutory authority
under which the Comptroller General decided that these 308
employees should not receive an annual increase. The other
questions that they did not answer focused on the Watson Wyatt
Survey, itself. The one document, in particular, that we asked
to receive that was referenced in another document, a 2004
document, they indicated was deliberative in nature and
therefore they would not provide it.
Mr. Davis of Illinois. Let me ask if each one of you would
respond. Perhaps this will be our last question. Would it be
accurate to surmise that pay for performance is a very
difficult system to actually design and implement, and that, if
it is going to be used, there are still a great many kinks that
need to be worked out of the system. I mean, those kinds have
to be dealt with in an open, honest kind of way from my
assessment. Would you just respond, and perhaps we will begin
with you, Mr. Tobias, and go right through and perhaps would
end our hearing.
Mr. Tobias. I think a critical value in any effective pay
for performance system is transparency, not 90 percent, not 95
percent, but 100 percent transparency. You can't have a
credible pay for performance system without 100 percent
transparency. I think that goes without saying. And I think it
is also true that there is no agency--not DOD, not DHS or
anywhere else in the Federal Government--who has a performance
management system in place today that would be the basis for a
fair, credible pay for performance system. They don't have it.
So it seems to me that it is premature to be implementing
pay for performance when we don't have a performance management
system in place. I believe that is why DHS 2 weeks ago backed
away from implementing a pay for performance system. They
recognized that they have not gotten the performance management
system right, so they are not going forward with pay for
performance. Not so in DOD.
Until you get it right, until you get the first step right,
you should not be taking the second step.
Mr. Copeland. The difficulty that you mentioned in
implementing a pay for performance system is evidenced by the
fact that 26 years ago now I was working at GAO, and the second
job that I worked on at GAO was looking at the implementation
of merit pay for GS-13s to 15s. The end result of that review
was that you really have to get the performance management
system right first before you implement merit pay, so the
comments made today are very reminiscent of 25 years ago.
Mr. Tiefer. Mr. Chairman, I happen to agree with Mr. Tobias
completely. The example he picked is not a small example, it is
a giant example; namely, that the Department of Homeland
Security backed away 2 weeks ago because of, as you say, to put
it mildly, that it is very difficult to design and it has a lot
of kinks.
To read from the Washington Post story at that time by
Steve Barr, the reason that it had to be lost momentum, the DHS
system, the personnel system for that Department, was because
of overly ambitious goals, adverse court rulings, and budget
cuts. One would imagine that one can't quite understand why the
Department of Defense is moving forward. It just must assume
that it has a budget flow that isn't limited the way DHS is.
Otherwise, it would see reality also.
Mr. Swerdzewski. Working with Federal employees for many
years and having asked this very simple question--what's the
worst part of your performance management system, whatever the
system is--the worst part universally they seem to answer is:
my supervisor never talks to me, never tells me what my
performance is.
An essential part of performance management is the
interaction between supervisors and their employees. Those
employees are concerned that they want to know where their
performance is. That issue, which is the interpersonal
relationship, is not really addressed by any of the pay for
performance systems, any of the performance management systems.
It is the intangible which is the glue, which is the teamwork,
which was mentioned by one of the Congressmen, that keeps
people working successfully, is this relationship. When we have
pay for performance, which includes significant levels of
review and performance ratings that go well above the level of
the individual's supervisor, we have undermined that confidence
and we have undermined that support.
These issues have to be resolved. Employees need to
understand that they can trust this system before the
supervisor who never talks to them has significant sway over
their future with the Federal Government.
Ms. Sistare. Well, as I posit that, by definition a
successful performance management system includes those
conversations, and until people are able to have them they are
not going to have a successful system. But those successful
conversations, when they take place, can drive individual
productivity and performance and Government's meeting its
missions.
Mr. Simpson. I don't think there is any doubt that
effective leadership is important in terms of getting the
greatest productivity out of an organization. Leaders can also
use pay for performance systems to aid and abet their own
leadership abilities and their ability to engage and cultivate
engagement among their staff. Clearly, their transparency and
their credibility are important factors in their ability to
effectively use pay for performance systems. I think there have
been records of achievement and benefits achieved through pay
for performance systems in the demonstration projects that we
referenced in our written remarks.
Mr. Davis of Illinois. Well, let me thank each one of you
for not only your contribution but also for your patience and
your willingness to perhaps readjust and to be here longer than
we had anticipated. Of course, sometimes schedules are such
that there isn't much that you can, in fact, do about it. But
we want to thank you also because you have contributed
significantly to the very first hearing of this subcommittee
during this session of the Congress. We think that it sort of
sets precedent for what is yet to come, so we look forward to
continuing to interact with all of you in a very meaningful
way.
Again, I want to thank you for having come, and we
appreciate your participation.
This hearing is now adjourned, and without objection it
stands adjourned.
[Whereupon, at 5:10 p.m. the subcommittee was adjourned.]
[The prepared statement of Hon. Elijah E. Cummings and
additional information submitted for the hearing record
follow:]
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