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Houston, we have a problem

May. 26, 2013 - 11:26AM   |  
By HOWARD RISHER   |   Comments

On May 16, the Partnership for Public Service and Booz Allen Hamilton released a report, “The Biggest Bang Theory,” which discusses strategies to attract specialists in the STEMM professions: science, technology, engineering, math and medicine. It was worth reading, but it had a huge void. It was silent on the importance of compensation. The only statement acknowledging that pay is relevant was the reference to “pay disparities” in the concluding paragraph of the introduction.

The report emphasized how important those professions are to government — “mission-critical” was the phrase. STEMM specialists account for 28 percent of the workforce — almost 525,000 — and almost half are age 50 or over. Less than 20 percent are under age 35. A serious brain drain is inevitable in the current climate.

The report’s focus was on recruiting, selecting and onboarding new graduates. It’s these jobs where the pay disparity is the widest. The typical 2013 graduate in a STEMM field starts at a salary in excess of $60,000. The current class of petroleum engineers is starting at over $90,000. And those are averages — graduates of the better universities and those with the best grades can command even higher salaries.

To compound the problem, the competition for new grads is driving up the starting salaries at rates unimaginable for government. Overall starting salaries for 2013 graduates are 5.3 percent higher than last year; graduates in the health sciences enjoyed a 9.4 percent increase, while business majors saw a 7.1 percent increase. High demand inevitably drives up salaries. It’s expected to get worse.

The fact is that the best of these graduates could work for contractors and focus on the same federal problems, but at higher salaries, inflated when charged to an agency to cover overhead and profits. Those companies are often the primary competitors in the talent markets.

Starting salaries are only a small element of the problem, however. The report did not discuss the management of current STEMM specialists until Page 20 and then it was limited to the idea of dual career ladders to provide a nonsupervisory career alternative for technical experts. The report made no reference to the management of this talent through the years until they reach the top of their career ladders.

In other sectors, the career progress and the pay of STEMM specialists is commonly based on an assessment of their performance and professional development. As students, they would have become accustomed to the recognition of their abilities and accomplishments. In business, the emphasis is now on rewarding the best performers with larger salary increases, bonuses and special development opportunities. Companies are willing to invest in their “A players.” For high-achieving graduates, tenure-based civil service practices would be an impediment in recruiting; and if they were to accept a job offer, the experience is not likely to be satisfactory.

These are fields where some of the most highly regarded experts are under age 35. In technology companies, the leaders are often in their 30s. STEMM graduates have the advantage of recent exposure to leading-edge professional developments. Performance in these fields is unrelated to age.

A number that stood out in the report is that less than 10 percent of the interns in these fields are hired once their assignments are completed. In contrast, companies are reported to hire almost 60 percent of their interns. That suggests agencies are doing something wrong — and an element of the problem is likely to be the reaction of the interns to their work experience. That is consistent with anecdotal reports of higher turnover among recent hires.

There is no possible way government can attract, retain and motivate STEMM specialists under the General Schedule system. In 1989, numerous federal financial regulatory agencies were allowed to establish separate compensation systems to provide greater flexibility to compete for talent. This situation is similar. The problems attracting talent will continue until the GS system is replaced.

Outside of government, career progress is based on professional growth, demonstrated competence and accomplishments. Salary increases do not depend on “time in grade.” That career pattern is best managed in a banded salary system. Career ladders commonly have at most four levels, with the highest reserved for experts. The bands are defined to support the ladders and linked to market pay levels.

This is not a new recommendation. Salary bands were first adopted in 1980 for STEMM specialists at the Navy’s China Lake research facility in California. The National Institute of Standards and Technology has had a pay-for-performance system for years. The program model has proven to be successful in several demonstration projects.

Fortunately, there are several sources of market pay data for these jobs. These are, of course, the occupations that are believed to be paid below market — but it’s been years since the data were last assembled. Agencies can also take advantage of the human resources practices refined over time by other employers of these specialists.

No company would ignore these problems with “mission-critical” occupations if it expected to continue in operation. Important federal operations depend on the expertise of STEMM specialists. I’m sure the residents of Moore, Okla., want the assurance that experts will be tracking future tornadoes. Heavy retirements combined with the hiring freeze are already altering agency plans — at what cost?

Howard Risher is a consultant and writer on federal pay and performance issues. He was the managing consultant for the studies leading to the 1990 Federal Employees Pay Comparability Act and is author of “Planning Wage and Salary Programs.”

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