If an employee is performing poorly, his manager should be able to hold back raises or step increases or take away annual leave, said John Berry, director of the Office of Personnel Management.

That's because managers now have only "one stick in the toolbox" when it comes to poor performers, Berry said: firing them. But that can be an arduous and difficult process, he said, and doesn't allow for the poor performer to improve or encourage someone to work harder.

"We need to empower our managers with a broader toolbox," Berry said at the Human Capital Management-Federal conference in Arlington, Va., on Tuesday.

"Trust me, if your manager says, ‘You're not doing your job and I'm taking some of your annual leave away,' you're going to wake up. And that is a loud and clear signal that I better get my act together," he said.

Employees also need a faster, more efficient appeals process if they think they are not being treated fairly by management. He suggested creating a jury system made up of average federal employees to hear complaints. Berry said this would not replace the Merit Systems Protection Board or Equal Employment Opportunity Commission, but would present another avenue for employees.

"No lawyers," Berry said. "You make your case, the manager makes his case, and the jury is gone. What they decide, the agency abides by and you abide by, and you get your answer in four weeks. We've got to come up with a quicker, cleaner appeals process."

Berry also suggested that the juries be empowered to punish managers who have acted egregiously — up to and including firing them.

Berry said his comments were more suggestions and brainstorming ideas than concrete proposals, and he said he wants to engage many human resources officials, labor representatives, managers and members of the public over the next few months as OPM decides how it will reshape the civil service.

"This is one nobody has all the answers on, and I certainly don't," Berry said.

Berry also reiterated his call to get rid of the General Schedule pay system and replace it with a shorter "career ladder" with three steps: apprentice, journeyman and expert. He also said federal employees should be rated on a three-level system, where the vast majority of employees would be rated as "in good standing."

"What that person [in good standing] needs is a good pat on the back, a [cost-of-living adjustment] or within-grade increase, and sent on their way," Berry said. "It'll take the monkey off managers' backs and let them focus on [employees who are] ‘outstanding' or ‘not in good standing.' "

Besides having more flexibility to punish employees who are not in good standing, Berry said managers would have more ability to reward extraordinary employees with large raises or bonuses. But he said managers must be able to explain why employees deserved those rewards.

"If you cured cancer, we ought to give you a big pile of money," Berry said. "No taxpayer would have a problem with that as long as we say why."

OPM will begin work on a new civil service system in early 2010, and will have concrete proposals in spring or early summer, Berry said. OPM will use its Web site to receive input from the public on its proposals, he said.

Berry added that OPM will be reorganized in January to create five offices devoted to employee services and benefits, retiree services and benefits, merit system compliance, security clearances, and business products. The retiree office will be put in charge of setting a new strategy for modernizing the government's retirement systems, he said.

OPM canceled its retirement systems modernization contract with Hewitt Associates last year after its system failed numerous tests.

Berry said in May that OPM would scale back its original plans that included an online annuity calculator and instead focus solely on modernizing the government's legacy paper-based system. That system currently takes several months to accurately calculate a retiree's pension.