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Key developments in the world of federal employee benefits: health, pay, and much more.

Whither the WIGI?

If you side with the Office of Personnel Management's new report on federal pay, you see the within-grade increase (WIGI) as a throwback to the old, questionable idea that the value of an employee increases with tenure. You argue that the WIGI puts too much stock in longevity and not enough stock in performance. You may even say the WIGI encourages federal workers to do just enough to get by, to be mediocre.

If you disagree with the report, you say the WIGI justifiably rewards experience, loyalty and the expertise gained from years of service. You say the WIGI compensates people for performing their jobs at increasingly higher levels of skill and expertise. You note that WIGIs are only supposed to be given to employees who are performing, in the belief of their supervisors, at "acceptable" levels. Poor performers are not supposed to get WIGIs, you point out.

In alternative pay systems that could replace the standard federal pay system if reformers have their way, the WIGI often takes on a completely different form or vanishes entirely. But protecting the WIGI is a key goal of people who don't want more power over pay placed in the hands of federal managers. Whether you hate the WIGI or love it, or whether you fall somewhere in between, you're going to see, and maybe say, some strong words about the WIGI over the next year, as reformers consider changes to the federal pay system.

What's a WIGI?

The glossary of OPM's new report, A Fresh Start for Federal Pay: The Case for Modernization, defines the WIGI as: "The increase of a General Schedule employee's pay from one step rate to the next higher rate for that same grade at the completion of the applicable waiting period."

Each of the 15 grades on the General Schedule, the government's pay scale, has 10 steps. Most employees start at Step 1 of each grade. They wait one year to progress to Step 2, another year to Step 3 and another year to Step 4. The waiting period for Steps 5, 6 and 7 is two years. It's three years for Steps 8, 9 and 10.

For example, a GS-12 employee in Washington hired in 1994 would have started at Step 1, with a $42,003 annual salary. Today, the employee would be a Step 6, making $64,975.

OPM's report offers a more complete definition of a WIGI in the main text, noting that employees aren't supposed to receive WIGIs automatically, simply with the passage of time. For an employee to receive a WIGI, the employee's performance must be at "an acceptable level of competence" according to the employee's supervisor. On a 5-level performance rating system, an employee must earn a 3 to get a WIGI.

So, by performing the same job year in, year out, at an acceptable level, an employee will move from the bottom of a pay grade to the top of a pay grade in about 20 years.

What's Wrong with the WIGI

OPM's report suggests two main problems with the WIGI. One is theoretical, the other practical.

The theoretical problem OPM has with the WIGI is the notion that an employee's productivity and value increase as the employee learns an organization's subject matter and work processes, the theory of the "learning curve," OPM calls it. "The assumptions underlying this practice-that value always increases with experience and that the increase does not vary across employees-are questionable," the report said.

The practical problem OPM has is that the WIGI has not been used-and perhaps cannot be used-to differentiate between average performers and better performers. "The merit system principles governing federal human resources management do not state that the federal government should or must compensate employees for years on the job or changes in either cost of living or the cost of labor. But this is, in fact, the current reality," the report said. In 1996, the last year for which OPM kept performance rating statistics, more than 99 percent of federal employees received a 3, 4 or 5 on a 5-point rating scale. That means all but 4,400 of the 1.3 million employees included in the stats were eligible for WIGIs. "It is no longer clear that WIGIs reflect or reward increased performance, but it remains very clear that they reflect the passage of time," the report said.

In addition, the WIGI doesn't offer a way for managers to vary rewards for employees who receive a 3, 4 or 5 rating. While some employees who earn a 5 can receive a quality step increase--which boosts them faster up the steps--most employees at the three top ratings end up with the same WIGI. "The preponderant message is that performance doesn't matter in the way pay is allocated," said Doris Hausser, OPM's assistant director for performance and compensation systems design.

Other Views

If the WIGI isn't being used to differentiate among performers, don't blame the WIGI, said Jacqueline Simon, a policy analyst for the American Federation of Government Employees. Instead, blame managers, she said.

"They like to pretend that a WIGI can't be withheld for performance reasons, but it can," Simon said. "When they try in the report to caricature the WIGI, they make it seem like some kind of entitlement. It's a tool not being used appropriately by managers. Managers are supposed to award it as recognition of good performance. One of the many tools that a federal manager has to make displeasure known is to withhold a within-grade."

Some observers say managers don't withhold the WIGI because employees have the right to ask their agency's leaders for a reconsideration of the action, followed by a review by the Merit Systems Protection Board. But managers don't want to subject themselves to the hassle of due process.

Regardless of managers' rationale for not withholding WIGIs, Simon said WIGIs are theoretically justified. "It seems as reasonable today as when within-grade increases were designed to reward someone for experience, gained skill and the ability to perform at a higher level."

If Not the WIGI, What?

Hausser said that even if the WIGI disappears, at least in its current form, it would be replaced by some sort of rational system of recognizing performance. In fact, to Hausser, the problem isn't so much the WIGI as it is the fixed 10-step-per-grade system. The 10-step system gives managers little leeway. A system with more frequent intervals could give managers more options for differentiating between average, good and great performers. A one-step increase could go to average employees, two steps to good performers and three steps to great performers. Another alternative could be systems that don't have steps, but instead have pay ranges and provide clear rules for paying people at different rates within the ranges. Several federal agencies have experimented with such alternatives in recent years.

"Any good system has to be explainable," Hausser said. "We're not saying, let there be a Wild West frontier."


Brian Friel is founder of One Nation Analytics, an independent research, analytics and consulting firm for the federal market.

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