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.