TOPICS
TOPICS
Payband Aid
The government has some big plans to overhaul personnel reform in the federal workplace. The Defense and Homeland Security departments have plans in motion and the Bush administration is pushing to get congressional backing for governmentwide reform. The three plans vary, but there are a few common threads. Pay for performance is one that's received a lot of attention. But there's another universal feature in these overhauls: paybanding.
What is paybanding?
Paybanding is a classification and compensation system that compresses the current 15-level General Schedule into a handful of broader classifications based on occupation and makes a wider range of salaries available for each job.
"One of things people confuse frequently is merit- or performance-based pay versus paybanding," said Linda Rix, co-CEO of Avue Technologies Corp., a human resources technology provider that works with many government agencies. "Paybanding is an effort to provide, in essence, sufficient growth in a particular grade that allows for a person to be at that grade and continue to advance economically without having to advance from a grade structure standpoint. Merit pay treats a compensation issue."
There are several benefits to the concept. Generally, paybanding gives supervisors flexibility to set pay to compete with the private sector for talent. It can also be a means to move deserving employees seamlessly into higher levels of compensation, without having to wait a requisite amount of time, which is standard under the GS system.
The Defense Department, for one, said it's adopting a paybanding system so it can "assign work in response to changing mission requirements and new technologies," and not be bound by position descriptions. In fact, the department said once paybanding is implemented, "Lengthy, detailed job descriptions will no longer be needed."
Rix, however, said that "one of the other great misperceptions about paybanding" is that it eliminates intensive job descriptions. "In fact, because what you do is in essence going to be what gets you measured, a lot of details have to go around what you do."
Many of the federal agencies and subcomponents that have experimented with paybanding systems so far, either through demonstration projects or exemptions from the GS system, have set up their systems differently to suit their needs.
The Federal Aviation Administration, for example, has a system with 13 bands, with salary ranges such as $20,500 to $30,800 for the lowest level clerical support positions and $78,900 to $122,300 for higher level technical and engineering jobs. There are a number of general job classifications such as "professional" or "technical support" and each general classification can fit in a number of different bands. There's no automatic or career-level progression between bands, and employees can reach higher compensation levels without necessarily moving into managerial positions.
One inherent problem with paybanding: crowding at the top. Easier movement to higher compensation levels often means faster movement, but once an employee reaches the cap, there's nowhere else to go, which can be frustrating for high performers. Some agencies get around this crush by offering cash bonuses, but those rewards don't factor into a high-three for retirement annuity calculations, a major drawback.
"If you stay with it long enough you're going to hit the top of the scale," Rix said. "You're going to want to sort of make a leap into that next category. The American cultural norm is to want to advance...if you make bands really big then they don't get that vertical progression."
Crowding could mean raising salary caps and higher salaries for employees. It could also mean higher costs for agencies.
Finally, Rix notes, the GS system is already a paybanding system of sorts. "In state or local government, you're likely to find 40 or 50 grades," she said.
COMMENTS
- I was at the FAA when they began to transition to pay banding, and it was the first time in my government career when the reason to belong to a union made sense. The rush to unionize was unbelievable - management was caught off guard - managers couldn't image why employees would want to join. The unions mantra was "we will push back on pay banding until we can get good salary increases for you." This was right after the controllers who had replaced those fired after the '81 debacle won up to 25% raises through their union. Management couldn't explain the pay banding, hadn't completed what began as an experiment in one element before attempting to force it on the entire agency, and answered questions with "trust me things will work out." As a result of receiving independent agency status management was forced to replace the existing pay system and ended up with multiple systems depending on the organization, union, location, but all united by low morale. A major issue as I see it is performance reviews. If supervisors are doing their jobs as they should be then rewards will flow to good workers no matter the pay system, but if supervisors aren't doing their jobs then changing the pay system isn't going to work. GovExec.com reader Posted October 6, 2005 11:15 AM
- I've been in a "pay-for-performance" demo plan for more than 20 years. I have found it to be as fair as can be hoped (obviously there are going to be lapses in any system). However, if I worked for another agency/organization that is under the GS system currently I would not necessarily expect to be sanguine about the prospects. It would entirely depend on the trust I would have in the local management. If you work at an installation where the management understands the need to take care of their good people, I would look forward to the change. If you are where the management doesn't understand the need for good people, or how to recognize who the good ones are (yes, there are such organizations, I have worked for at least three) then I would fight tooth and nail not to be changed over. "But once an employee reaches the cap, there's nowhere else to go, which can be frustrating for high performers." I've heard about people whining about being a topped-out DP-3. I don't know any personally. There are worse positions to be than topped-out in your pay band (such as being any where else in the pay band). The pay bands need to be designed so the top-performers have the opportunity to be compensated similar to professionals working for private industry. GovExec.com reader Posted October 6, 2005 11:45 AM
- Paybanding has numerous flaws. The single biggest - and fundamentally fatal flaw - is that money is the sole reward. The federal government has never been able to compete on the basis of money. High salaries have never been and will never be what motivates Federal employees. Furthermore, how are paybanding employees to know if their merit raise was good, average, or poor? Supervisors cannot disclose the salaries of other workers. If I get a 2 percent merit pay raise, and I'm told by my supervisor that the pay pool was lean this year, did I do well? What did my coworkers get? Did I keep up with my counterpart in the private sector? The entire pay structure is so amorphous that I don't know if I'm doing well or not; if I've been treated fairly or not. Paybanding employees have no greater mobility than GS employees. If my assigned duties are not high profile within my branch or division, I'll be short-changed relative to those working on projects deemed more important. Do I have the mobility to leave my task in favor of a more important one? Absolutely not. Yet the supervisory chain of command will naturally reward the workers on the favored projects. Paybanding is having the effect of putting workers in pigeon holes for their career. No more promotions. No career ladder. And can anyone tell me if a 2 percent merit pay raise is good? GovExec.com reader Posted October 6, 2005 1:17 PM
