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Congress and the Obama administration must move quickly to address workforce challenges ranging from a crumbling pay system to an overly rigid definition of the workday, the government's personnel chief said during a speech in upstate New York on Monday.

"There is an increasing risk that the nation will not be able to continue to attract and retain the best and brightest employees who have made this nation great," Office of Personnel Management Director John Berry said at Syracuse University's Maxwell School. "The very procedures that were supposed to ensure that job applicants are evaluated based on merit, are discouraging applicants from completing the arduous quest of actually getting a civil service job. We must make changes now if we are to maintain the quality of our civil service."

Reformers must realign personnel systems to recognize, reward and promote merit within the federal workforce, while making the merit system principles a matter not simply of fairness but of job performance, Berry said. He emphasized that he did not have all the answers, but he did lay out an ambitious portfolio of options for stakeholders -- including unions, agency leaders and lawmakers.

Reiterating a point he made early in his term as OPM director, Berry said, "the cracks are showing" in the General Schedule pay system, and government "could limp along for a few more years [in it], or we can seize this moment to build something new."

During an interview with Government Executive, Berry declined to discuss the specific changes to the federal pay system he was considering, but said he drew the larger principles outlined in the speech from wide-ranging conversations with federal employee groups, academics, private sector employers and agency leaders.

"Whether it gels into something more solid is something we'll see over the weeks and months," Berry told Government Executive. "I am not anywhere near saying, 'This is what the administration or I would say will work.' [I am] just trying to invite others to think about this."

One option would be to expand the pool of employees who can receive significant financial bonuses beyond the Senior Executive Service, whose members are eligible for Presidential Rank Awards, Berry said during the speech. If anyone could nominate any federal employee for a significant merit bonus, and those payments could be awarded through a peer review process and publicized, then employees might be motivated to do better work, the personnel chief said.

Berry's address also noted the possibility of a "results-only work environment" where employees could set their own hours as long as they met certain standards for performance and productivity. Such an approach has worked well for private sector employers such as Best Buy, and would allow federal agencies to "treat our employees like responsible adults," Berry said.

During the interview, Berry said he planned to set up a series of demonstration projects where agencies could give their employees goals and allow them differing degrees of flexibility to accomplish the objectives. Such projects could help agencies with successful telework programs move a step further into flexible work models, and could jump-start adoption at agencies that have been slower to embrace telework, he said.

The personnel chief also plans to consider whether the current federal job classifications system helps employees find career paths, or whether it is too time-consuming and inflexible to accurately capture rapidly changing federal positions. A three-tiered system, where employees are designated as apprentice, journey-level or expert, might provide a more meaningful breakdown of employee skills and simplify the promotions process, according to Berry.

Berry said repeatedly that he is open to ideas and his visit to Syracuse was part of an ongoing process to gather wisdom on personnel issues. But he said it was clear the federal government fails to adequately reward and encourage merit.

"If you're one of those smart, ambitious people and you come into a well-run company and show leadership potential, they'll put you on the fast-track," he said. "Not in government."

Berry noted leadership will be critical to successful reforms. "We can devise the greatest system in the world, but if we don't train managers to manage in it and we don't train workers to work in it, it will fail," he told the audience.

In response to the speech, National Treasury Employees Union President Colleen Kelley said she looked forward to working with Berry on reforms. But she argued the General Schedule should serve as the foundation for further improvements, noting it already offered managers ways to reward effective performance, such as quality step increases. The real problems, she said, include failure to use those flexibilities, lack of funding for effective recruiting and retention, and heavy reliance on initiatives such as the Federal Career Intern program -- which NTEU has filed a lawsuit to end.

"Strengthening the existing systems is the best place to start to build a vibrant, talented and flexible federal workforce," Kelley said.