Stepping into the spotlight

The Office of Personnel Management has a long to-do list — and it just got a little longer.

The good news is that after some time, "people are beginning to wake up and understand the importance of the strategic management of human capital," said Kay Coles James, OPM director.

The bad news, depending on how you look at it, is that this acknowledgment also means more work for the federal government's human resources agency.

Just last week, President Bush added management of a $500 million Human Capital Performance Fund to the list of OPM's responsibilities. Bush proposed the fund in his fiscal 2004 budget request to enable agencies to reward employees who do outstanding work and attract workers to critical, hard-to-fill positions.

James called the fund a down payment on overhauling the federal pay system. "How we pay federal workers is outdated, antiquated, outmoded — what other words can I throw in?" she said. "Our system is in dire need of reform. It is going to require legislation for the long haul. But that's okay, it needs to be done. We need to get the conversation going and we will."

Pay raises from the fund would be in addition to any annual, across-the-board pay raises given to civilian federal employees (slated for 2 percent next year) and would be permanently added to the base pay of an employee.

The current General Schedule pay system would remain the same, and employees would remain at their existing GS grade and step levels and would continue to receive annual across-the-board pay increases and within-grade increases. OPM must approve an agency's request to use money from the fund.

The proposal has attracted critics and supporters. Bobby Harnage, national president of the American Federation of Government Employees, said the performance fund was really a "slush fund" that, among other things, would allow Bush's political appointees "to lavish big raises upon themselves and their cronies and withhold career development raises from rank and file federal employees."

However, some employees welcome the opportunity. "Federal employees don't get the big bonuses that some companies give to their employees in the private sector," said Tom Mason, a logistics supervisor at the Department of Veterans Affairs Medical Center in Kansas City, Mo. "If used properly, this can be a tool to even things out for federal employees and acknowledge the outstanding ones."

The concept is a good one, said Max Stier, president and chief executive officer of the Partnership for Public Service. The real challenge, however, is to "devise a system that is both effective in identifying and rewarding those high performers and that is viewed as a fair system by employees," he said.

The Bush administration also plans to tie pay to performance in the Senior Executive Service. It proposes to raise the pay cap for those in the service to $154,700 from $142,500, broaden the range to allow more people into the service and abolish the service's six pay rates. Under this proposal, agencies will have total flexibility to set basic pay for members of the service at any amount in a range of about $102,000 to $142,500 (not including locality pay), according to performance.

"We're delighted," said Carol Bonosaro, president of the Senior Executives Association, which has campaigned to raise the pay cap for senior executives. "With this issue, we've been up a brick wall for some time now, and it's very important that this is the opening hopefully to get a resolution on pay compression."

Still, there are some concerns about how a pay-for-performance system would work, Bonosaro said. The particulars "remain to be ironed out with the Congress and administration," she said. Still, "it's a start."

Agencies should remember that pay-for-performance "isn't just your evaluation and, therefore, your raise is this much," James said. "It is a far broader issue than that and accomplishes a whole lot more strategic management. But training will be...essential for the success of the program."