Could pay for performance make an unexpected comeback?
While it’s unclear if feds will be subject to workforce cuts or a longer pay freeze as a result of the administration’s overall belt-tightening, it will be interesting to see if the idea of implementing a pay-for-performance system resurfaces as a way to lower costs and improve the government’s efficiency.
When President Barack Obama announced during his recent State of the Union address his proposal to freeze annual domestic spending for the next five years, many were likely wondering what this means for the federal workforce. Could pay for performance gain renewed traction in light of the urgency of cost savings?
The administration has already implemented a two-year salary freeze for all federal civilian employees. And House Republicans have introduced legislation to reduce government spending that includes cutting the federal workforce by 10 or 15 percent over a period of years, and extending the halt in salary increases.
In addition to the five-year freeze on domestic spending, Obama is proposing a reorganization of the government to reduce duplication and streamline federal agencies' processes.
“In the coming months, my administration will develop a proposal to merge, consolidate, and reorganize the federal government in a way that best serves the goal of a more competitive America,” the president said in his speech Jan. 25. “I will submit that proposal to Congress for a vote – and we will push to get it passed.”
While it’s unclear at this point if feds will be subject to workforce cuts or a longer pay freeze as part of the administration’s overall belt-tightening, it will be interesting to see if the idea of implementing a pay-for-performance system resurfaces as a way to lower costs and improve the government’s efficiency.
Federal agencies have experimented with pay-for-performance systems, but they have not formally taken root anywhere. It’s important to note that implementing pay for performance might be a hard sell, even if it is proposed by lawmakers or the administration, because of Congress’ decision to eliminate the Defense Department’s National Security Personnel System.
However, conventional wisdom says that a properly designed and managed pay-for-performance system will provide added motivation to talented, hard-working federal employees and pressure dead-weight employees to step up their game or get out. (See FCW’s October 2009 story on this issue.)
Do you think pay for performance is going to show up in future legislation or be proposed by the Obama administration? How would you feel if it did?
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