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

Stepping In

"Everyone says we pay for performance," Jac Fitz-enz told an audience convened by the American Management Association's Federal Learning Institute last week. "And no one does it. Even in the private sector, people get paid for lots of different reasons. Maybe we feel guilty, so we give them more money."

The message of the man AMA calls "the acknowledged 'father' of human capital performance benchmarking" is this: If federal managers are going to move toward pay for performance, they need to be prepared to assess their employees' work much more aggressively, and to truly compensate workers based on those assessments.

"It is our obligation and responsibility and duty to prove that money spent on training or anything else has a return," Fitz-enz said. "We're not training people because we want to make them nicer or smarter. We're training people because we want them to achieve goals."

Jason Kovac, a compensation expert with the nonprofit organization WorldatWork who is designing training material for managers in the Defense Department's new National Security Personnel System, agrees that managers may have to steel themselves for the transition.

"What happens, and this happens in a lot of organizations, [is] it's sometimes difficult for individuals or managers to feel that they can truly rate their employees, so it's easier to give everyone a 3.5 percent increase than to give one person 6 percent and another person zero," he said. "If the performance management system isn't a very strong and relevant system, the merit system won't work."

That more aggressive approach might be a challenge for managers, but Fitz-enz said there already has been significant improvement in measuring performance since he first began researching the issue.

"Before 1970, all we had was feelings when we talked about our work," he said. "Where we're going now is predictability."

Today, more information is available to managers -- if they're willing to look for it.

"You measure any concept by making it a physical activity. We could ask people, 'Are you committed?' But in order to tell if people are really committed, we need to see their behavior," Fitz-enz said. "We've got to get out of our offices. You've got to get involved with your customers, management and employees."

That presence around the office, Fitz-enz said, is critical to gaining the kind of information that gives an accurate picture of what behavior is valuable and ought to be rewarded.

Then comes the hardest part: figuring out how to use pay to further motivate employees who already are performing well, and to signal to employees who are performing poorly that they need to do better, without completely demoralizing them.

"What motivates people is a very interesting question, because it really depends on the individual," Kovac said. "If you give someone a zero or 1 percent increase [that is a de-motivator]. I used to say 5 or 6 percent was pretty motivating, which makes it difficult with the current economy, where you're seeing most merit increases set around 3.8 percent."

Given that the average federal employee will get a pay hike of 3.5 percent in 2008 (an improvement over the 2.2 percent average raise in 2007), getting to that motivating 5 or 6 percent may be a challenge, if not an impossibility.

But maybe there's good news, even if the federal government can't reward its highest performing employees with the same percentage raises the private sector uses.

Kovac said that in his experience, the more active management style necessary for true performance measurement could also help identify struggling employees who could use extra attention and help from their supervisors.

And that timely intervention might translate into job satisfaction -- and job performance -- that money can't buy.

After all, said Kovac, "usually, when people want to leave an organization, they throw more money at them. That may last six months, but there are other aspects of the job that are more important. At that specific time, it could be a big deal to employees, but in the grand scheme of things, it's only one tool of many."

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