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Making Pay Decisions Transparent

Federal workers have many positive things to say about their workplaces, but not about the merits of pay or promotions, according to a recent survey. While that attitude is mostly due to the tenure-based pay structure, HR leaders can also make a difference by better managing -- and making transparent -- pay and promotion decisions.

Tuesday, January 3, 2012
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The times certainly are challenging for federal workers. In fact, just recently, the U.S. House of Representatives passed a bill that would freeze federal workers' salaries for the year.

Yet, despite the tough economic and political environment -- and the resulting stress on workers -- results from the Office of Personnel Management 2011 Federal Employee Viewpoint Survey show a motivated workforce, with positive views of their agencies and the work they do -- with one glaring exception: performance and the way it's managed.

On the up side, OPM reports that nearly seven of every 10 federal employees surveyed would recommend their organization as a good place to work. Federal workers also believe the work they do is important (92 percent), feel a personal sense of accomplishment from their work (74 percent), and like the work they do (85 percent).

At the same time, a relatively high number of federal employees hold negative views about performance-based raises and merit-based promotions.

The 2011 FEVS found that nearly half (47 percent) of federal employees believe pay raises are not tied to performance. In addition, more than one-third say promotions are not based on merit (35 percent) and that differences in performance are not recognized (34 percent).

Finally, 41 percent say that poor performers are not dealt with.

So what gives? How can an employer mostly deemed a good place to work reconcile that view with the lack of confidence in pay and promotion decisions?

Patrina Clark, president of Pivotal Practices Consulting in Hyattsville, Md., says the negative views on performance management are not at all surprising, considering the federal government's pay strategy is based on step increases -- meaning tenure is the most critical element in pay raises (though not necessarily promotions). 

"Federal employees have favored tenure-based raises because as long you are doing an OK job, you'd get a raise every year," Clark says.

Prior to moving into the private sector in October, Clark held leadership positions, including in HR, at the U.S. Government Accountability Office, the Federal Election Commission, the Department of Navy and the Internal Revenue Service.

"I will say that the federal government, on many fronts, is trying to move more to performance-based pay increases, so eventually those survey numbers should start to track downward. But I am not surprised by those results," he says.

HR professionals in the federal government have it especially tough, she says, because being on the "support" side of the house, they are often the first ones to go when budget cuts -- a mantra in today's political landscape -- become reality.

Even so, Clark says, to be a strategic stakeholder, HR leaders must look for ways to introduce pay-for-performance management into their workplaces. And while the change management challenges are formidable, it can be done.

"While the federal government is massive, it is not homogenous when it comes to HR programs and initiatives," she says. "It's like looking at Dell, Apple and Google and trying to globally apply one view to a single entity. The federal government is no different. There is room for innovation within the different departments."

Furthermore, she says, you can't extrapolate how those negative survey results apply to all 2.4 million government workers.

"You need to drill down to get answers and solutions," Clark says. "HR must play a key role and partner with management. After all, the causes and drivers for those negative views of performance management are not HR's fault. They are the result of the practices managers are doing in the broader organization."

Chicago-based John Bremen, managing director in New York-based Towers Watson's talent and rewards practice, says the federal government can learn much from private-sector approach to compensation --which, today, is to treat salary increases not only as a function of performance, but also as a function of skill and competency development.

"Many, many private-sector companies have done away with using the term 'merit' increase, in fact," he says. "Because it's not just about only merit any more."

Despite the historical step-based salary process in the federal government, Bremen says, there is room and desire for innovation, noting that agencies and departments can have very different cultures, which means they can also have very different answers to managing performance and pay.

"To me, the thing government has in common with the private sector is its workers still have skills, competencies and performance," he says. "I believe it is possible to bring the notion of skill-based or competency-based pay into the federal government, and not rely on step increases. If schools can do it -- and they are doing it -- I know the federal government can do it."

Federal employees often unfairly get a bad rap, he says, noting they tend to be painted with the same broad brush when it comes to performance.

"There are so many different branches, and some are actually using programs that are differentiating and using skills- or competency-based pay," Bremen says, adding that solutions such as talent management technology platforms can work just as well in the federal government as they are in the private section.

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Along those lines, Jason Corsello, vice president of corporate development and strategy at Cornerstone OnDemand, the learning and talent-management provider in Santa Monica, Calif., says the federal government can overcome performance-management concerns by making the process more transparent, repeatable and continuous -- just as many private-sector counterparts have done.

But most importantly, he says, performance management should be actionable, with a focus on identifying knowledge and skill gaps as well as providing the training and development tools to address them.

Corsello says this type of strategy gives employees an opportunity to succeed in their roles, and it ensures they are more aligned with the organization's goals.

Unfortunately, he adds, the public sector, historically, has been fueled by an entitlement mind-set, and as a result, performance-management processes often were mired in a lack of transparency.

"That lack of transparency translates into a lack of confidence by employees around decisions of merit," he says.

Performance-management technology, he says, can "help address the question most employees want answered -- namely, what's in it for me? -- and drive activities such as ongoing development and training."

Of course, some business experts -- including Stephen Balzac, president of 7 Steps Ahead, a business consulting firm in Stow, Mass. -- say creating a meritocracy in the workplace is always doomed to fail.

 
"The biggest problem with meritocracies is that the fundamental concept is based on the idea that we are rational professionals who are capable of always recognizing merit and rewarding it," Balzac says. "Unfortunately, no matter how much we like to believe we're rational beings, we're just not that good at it."

He says the concept of merit is biased by choice of dress, charm, eloquence and skill in building relationships. For example, employees who have common interests, hobbies or experiences as their bosses are almost uniformly perceived as better performers than those employees who are not as socially adept.

"Yes, no matter how supposedly cut and dried our standards or metrics may be, our perceptions can make us believe that a ruler has 13 or 10 inches," Balzac says. 
 
Another reason managers may fail to recognize merit is they haven't defined it correctly: They see an employee working long hours and assume he or she is harder working and is more dedicated than those who are working an eight-hour day.

But those long hours, he says, could be necessary to clean up the messes they caused through careless work or because time was wasted during the normal workday. When performance reviews are done, however, that perception of dedication -- or its lack -- colors how each employee's performance is viewed. 
 
"Real meritocracies in the workplace do exist," Balzac says, "but they're a lot harder to implement than most people think."

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