Agencies, unions clash over pay-for-performance programs

Agency leaders and labor union presidents painted sharply contrasting pictures of federal pay-for-performance systems at a Senate hearing on Monday, with federal officials saying the programs needed time to take root, especially during the upcoming change of administration, and union leaders arguing that they had eroded employee morale.

The two senators who held the hearing outlined the dilemma the government faces: performance management systems show promise for improving efficiency and fostering organizational transformations, but they cannot succeed without the support of the employees they govern.

"The federal government has begun an important cultural transformation in how it manages its most important asset: its people," said Sen. George Voinovich, R-Ohio, the ranking member on the Senate Homeland Security and Governmental Affairs Federal Workforce Subcommittee. "Such transformation does take time. Understanding and accepting the systems being implemented takes a shift. We owe the American taxpayer something to show they are getting value for their hard-earned dollar."

But Sen. Daniel Akaka, the subcommittee chairman, sounded a more cautionary note.

"Employee buy-in is essential to the government's effectiveness and efficiency," he said. "If employees are not involved and their concerns are not addressed, morale will drop and hinder agency mission."

Agency leaders tended to characterize pay-for-performance systems as largely successful works in progress. "Successful implementation of performance-based pay has come only after substantial effort, but has resulted in transformed performance cultures that are much more results-oriented than previously," Office of Personnel Management Director Linda Springer said.

Akaka said agencies have based their claims of success on employee surveys that showed more mixed results.

"Employees are not necessarily satisfied with their pay. They do not understand the basis for decisions. And many do not see meaningful distinctions in their evaluations," Akaka said. "You say pay-for-performance programs are a success. Our reading is not along those lines."

But Springer protested that early results should not invalidate the concept of performance-based pay.

"What we find in the surveys is most of our respondents do believe that performance should be a factor in determining pay," she said. "In the areas where the implementation has not been at the level that we would expect, that doesn't negate the premise that people believe their performance should be recognized."

Gale Rossides, deputy administrator of the Transportation Security Administration, said the agency was making performance records available to employees online and using workforce surveys to help guide changes in the performance management system.

Ron Sanders, chief human capital officer in the Office of the Directorate of National Intelligence, said he understood impatience with a long-term approach. But he said the intelligence community's new performance evaluation system had strong roots, and had learned important lessons, from the National Geospatial-Intelligence Agency's pay-for-performance program, enabling DNI to fully implement its system quickly without need for major course corrections.

"About 50 percent of the intelligence community has five years or less of service. To be quite blunt, they're not going to have the patience to stay with us for a system that has a 10-year timeline," Sanders said.

But union leaders said agencies had pushed forward with pay-for-performance plans at the expense of employee input and collaboration, setting back their own goals as employees rejected evaluations they saw as unfair.

"I don't know of a single so-called pay-for-performance system that is getting good reviews from the employees who are working under it," National Treasury Employees Union President Colleen Kelley said.

American Federation of Government Employees President John Gage said issues with the size of pay pools that determine the level of performance-based payouts tied to employee ratings gave employees little faith that their managers could give them fair ratings.

Voinovich expressed concerns that budgetary constraints were subverting full implementation of true pay-for-performance systems by forcing agencies to implement de facto quotas on the number of employees who could receive top ratings.

"I'm going to get the transcripts of what Mr. Gage and Ms. Kelley had to say today and get them over to the departments and get to the bottom of this," he said. "If this is true, it's shocking."

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