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Step increases threatened

Apr. 3, 2011 - 06:00AM   |  
By STEPHEN LOSEY   |   Comments
Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, almost certainly will make another attempt to cancel step increases for the rest of the year.
Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, almost certainly will make another attempt to cancel step increases for the rest of the year. (Agence France-Presse)

Two leading House Republicans have set their sights on federal employees' step increases, and they aren't likely to give up until they make sweeping changes to the government's pay structure.

Rep. Darrell Issa, R-Calif., the chairman of the House Oversight and Government Reform Committee, has already tried once to cancel step increases for the rest of the year, and is certain to try again. Issa said the fact that General Schedule employees are still getting those increases shows President Obama's pay freeze is a sham.

Rep. Dennis Ross, R-Fla., chairman of the federal workforce subcommittee, says the system of automated step increases and pay raises is no way to run a federal workforce.

And new data reported by Federal Times on March 22 showing the federal government rarely denies pay raises to poor performers is intensifying the calls to overturn the General Schedule's system of automatic step increases. Only 737 out of more than 1.2 million GS employees or one in every 1,698 employees were denied a regularly-scheduled step increase and accompanying raise in 2009 because of poor performance, according to data provided by the Office of Personnel Management at Federal Times' request.

That equates to a 0.06 percent denial rate, which is far lower than any estimates of the number of poor performers in the workforce. OPM estimated in 1999 that poor performers make up approximately 3.7 percent of the federal workforce. A 2000 survey by the Merit Systems Protection Board found that 14.3 percent of federal employees were judged by co-workers to be performing below reasonably expected levels.

Ross last week said the data proves that within-grade step increases have no connection to an employee's job performance. As a result, they should be disbanded, he said.

"The Federal Times report puts to rest the notion that step increases are, in any way, related to performance," Ross said in a statement. "Never, in my 20 years as a small-business owner, did virtually every employee deserve a raise."

Ross is determined to replace the step increase system with a method that pays employees based on how well they do their jobs.

"The status quo is unacceptable to taxpayers, unfair to federal employees who work hard, and won't continue as long as I am chairman," Ross said. "America has put men on the moon, taught the world to fly, and cured disease. We can figure out how to create a performance-based payroll system that works."

Unions: Managers at fault

Federal unions defend the GS system and oppose establishing new pay-for-performance systems intended to make it easier to withhold pay raises from unsatisfactory employees.

"These step increases are tied to performance," Colleen Kelley, president of the National Treasury Employees Union, said at a March 9 hearing on federal pay. "The General Schedule is a structured system. It has both merit and market-based components. Within-grade and career-ladder promotions are subject to merit standards. Non-performers can be denied merit pay increases."

If the government isn't holding poor performers accountable, unions say, blame the managers.

"We think supervisors should do their jobs," Beth Moten, legislative director for the American Federation of Government Employees, said in a statement.

Kelley said managers need more training if the process is failing.

"Any mismanagement of that process should be corrected through increasing supervisor training," Kelley said in a statement. "If managers currently have trouble with the GS system, it does not make sense to go to a more subjective system. That would only exacerbate the problem."

Federal Managers Association (FMA) leaders agreed that training on performance management is lacking. But they also cited cultural challenges. Many managers are afraid they'll open themselves up to equal employment opportunity or MSPB complaints if they withhold a step increase, FMA said.

"The fear of reprisal alone is enough to make a manager not take action," said Jessica Klement, FMA's director of government affairs. "It's easier to ignore them, or transfer them to another department."

FMA President Pat Niehaus, a manager at the Defense Department, said managers need more training to remind them that withholding within-grade increases is an option, and to teach them how to build a case against an employee that will withstand an appeal.

"If managers are trained on what they have to do, they will be more comfortable with the idea," Niehaus said. "Someone may file an EEO complaint, but I've got my ducks in a row."

Effectively documenting poor performance is a crucial step toward guarding against an appeal or reprisal claim, FMA said.

"It can be as simple as sending an email to yourself, saying ‘I talked to X about X, and here's the issues,'" Klement said.

But John Palguta, vice president for policy at the Partnership for Public Service, thinks the problem goes far deeper and probably can't be fixed by beefing up supervisor training.

"There's nothing in history that suggests anything will turn this around," Palguta said. "We're talking decades' worth of experience where we see these types of numbers. If after decades of experience, [withholding raises is] still way below 1 percent, that tells you the within-grade increase system … isn't seen as a useful tool" for performance management.

Ross said he thinks current disciplinary rules favor employees and place too much burden on managers to prove their case. He wants to give managers more discretion to discipline poor performers.

John Crum, director of MSPB's Office of Policy and Evaluation, said some managers don't get support from their supervisors when they attempt to hold poor performers accountable, and are afraid to even try.

"If an employee has a within-grade increase withheld, in addition to filing an appeal, they can stir up concern in the office by claiming how unfair this was," Crum said. "You're opening up a whole issue that you'll have to struggle with, and there may or may not be support in your organization."

Chris Edwards, an analyst at the libertarian Cato Institute and a vocal critic of the government's pay structure, said the statistics show managers don't want to "rock the boat" and cause strife.

"The easiest thing in the bureaucracy is to give a step increase each year and not worry too much about poor performance," Edwards said.

Palguta said managers are required to give poor-performing employees at least 90 days notice before their next performance evaluation that they are at risk of losing their next step increase, to give them a chance to improve.

But Niehaus said that doesn't always happen, and sometimes step increases go through automatically without a manager knowing.

Each grade under the GS system has 10 steps, and depending on their seniority, employees are eligible for step increases every one, two or three years until they reach their grade's top level. Raises vary between 2.6 percent and 3.3 percent. Employees ranked GS-5 or below get less than $1,000 for each step increase. GS-6 through -11 employees get between $1,000 and $2,000. GS-15 employees currently receive $3,321 raises with each step.

OPM was unable to provide statistics on how many employees were eligible for step increases in 2009 or in previous years. But using previously provided statistics on the number of employees in each step and grade, about 57 percent of GS employees were eligible for step increases in 2010.

If that rate held true in 2009, that would mean more than 713,000 employees were eligible for an increase, and 0.1 percent of those were denied an increase.

‘A pretty low standard'

Part of the problem, Palguta said, is that the government only requires employees to perform at an acceptable level of competence to merit a step increase.

"That's a pretty low standard," Palguta said. "It doesn't say you're even doing satisfactory work. It just says when you get your work done, it's acceptable. If somebody is not performing at that level, rather than withholding, you should be looking at possible removal … or should be under a performance improvement plan."

Crum said he believes the small number of step increase denials shows the GS system has to be overhauled. He supports requiring employees to meet stricter performance standards before moving to the next GS step.

"We use a model that is 60 years old, and developed in a time when there was not nearly the variety of jobs at a given grade," Crum said. "We need a system that considers performance to a greater degree. But there's a lot of inertia behind GS."

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