**DHS Human Resources Management System**

**Senior Review Committee Meeting**

**Held October 20--22, 2003**

**Summary Report of Proceedings**

**October 2003**

**[Table of Contents]{.underline}**

SRC Member Affiliations 1

Introduction 2

Pay, Performance, and Classification 6

Labor Relations 13

Adverse Actions and Appeals 19

Technical Advisor Observations 23

**SRC Member Affiliations**

**DHS Human Resources Management System**

**Senior Review Committee (SRC)**

[Members from the Department of Homeland Security:]{.underline}

Janet Hale, *Undersecretary for Management*

Robert Bonner, *Commissioner of Customs and Border Protection*

James Loy, *Director, Transportation Security Administration*

Eduardo Aguirre, *Director of the Bureau of Citizenship and Immigration
Services*

J. Michael Dorsey, *Chief of Administrative Services*

Ralph Basham, *Director,* *United States Secret Service*

[Members from the Office of Personnel Management:]{.underline}

Steven R. Cohen, *Senior Advisor for Homeland Security*

Doris L. Hausser, *Senior Policy Advisor to the Director and Chief Human
Capital Officer*

Ronald P. Sanders, *Associate Director, Division for Strategic Human
Resources Policy*

Marta B. Perez, *Associate Director, Division for Human Capital
Leadership and Merit System Accountability*

[Members from Unions:]{.underline}

John Gage, *President, American Federation of Government Employees*

Colleen Kelley, *President, National Treasury Employees Union*

Michael Randall, *President, National Association of Agricultural
Employees*

[Technical Advisors:]{.underline}

Robert Tobias, *Distinguished Adjunct* *Professor, American University*

Patricia Ingraham*, Professor of Public Administration, Maxwell School,
Syracuse University*

Maurice McTigue, *Visiting Scholar, Mercatus Center, George Mason
University*

Bernard Rosen, *Distinguished Adjunct* *Professor in Residence Emeritus,
American University*

Pete Smith, *President and Chief Executive, Private Sector Council*

**INTRODUCTION**

The Senior Review Committee (SRC) met October 20 through 22 to discuss
possible options for the Department of Homeland Security's (DHS) Human
Resources Management System (HRMS). The specific topics covered, as
designated in the Homeland Security Act, included pay, performance
management, classification, labor relations, adverse actions, and
appeals. The meeting was open to the public and was conducted in
association with Federal Advisory Committee Act (FACA) rules and
regulations. Mr. Albert Hyde, a professional facilitator, led the
meeting.

The following report summarizes the viewpoints expressed by the SRC
members on the options forwarded by the joint DHS/Office of Personnel
Management (OPM) Design Team. This document is not a verbatim transcript
of the session, but rather a summary of SRC members' perspectives on the
various issues discussed. The goal is to capture the essence of the
ideas expressed. The summary is not intended to reflect consensus, but
to reveal common perspectives and key distinctions among the
participants. The common form of address is used throughout this
document rather than ranks or titles. The document is intended to
provide information to Secretary Tom Ridge and OPM Director Kay Coles
James as they deliberate over human resources options for DHS; it does
not represent final decisions on the HRM systems.

SRC members first introduced themselves and provided some opening
remarks to highlight their initial views as they related to the design
of a DHS HRMS.

DHS members emphasized the criticality of the Department's mission,
which is to protect the country from terrorists and keep terrorists'
weapons from entering the country. Maintaining the security of the
homeland is so crucial, they said, that the Department cannot afford to
fail. Mr. James Loy asked members to recognize the responsibility
entrusted to them and to keep the harsh realities of the post-September
11 environment in the forefront of their minds. Mr. Ralph Basham added
that the mission of his organization has expanded to historic
proportions in that the U.S. Secret Service (USSS) is responsible for
protecting more people and events than ever before. DHS members
emphasized the need for human resources systems to support this critical
mission. Mr. Michael Dorsey noted that DHS needs a good HR system to
support the Department and that the system must also support employees,
and he agreed that a good system will do both.

OPM members focused on the need to develop a modern, merit-based system
that is responsive to the DHS mission. They stressed that the concepts
of "modern" and "merit" are not mutually exclusive and that DHS has,
according to Ms. Doris Hausser, a "golden opportunity" to prove that
this is the case. OPM members observed that the flexibilities given to
DHS are allowing them to rewrite the system, which is too homogenized
and longevity-focused, according to Mr. Ronald Sanders. These members
also highlighted the inextricable link between merit and mission and the
impossibility of achieving one without the other. Mr. Steven Cohen
emphasized the need to address the challenge of an outdated,
unresponsive civil service system and their opportunity to do so.

Union members cautioned, however, against creating change for its own
sake or rushing to implement changes too quickly. Mr. John Gage agreed
that the mission is critical, and he emphasized that DHS should not be a
testing ground for new policies nor can the country afford to have
operations disrupted or managers distracted. Ms. Colleen Kelley
emphasized that the Homeland Security Act requires that merit system
principles be preserved and promoted.

**Structure of Report**

The remainder of this section outlines several core areas that relate to
the DHS HRM systems in general, and about which strong views were
shared. The sections that follow provide more detailed information and
insights into SRC members' perspectives on the specific elements of the
future systems. The final section is an overview of the guidance
provided by the SRC technical advisors.

**Core Design and Process Principles**

During the 3-day meeting, a great deal of discussion and debate centered
on the best design for the DHS human resources system. Although several
topics evoked wide-ranging perspectives, some core areas and principles
related to system design and the design process drew a great deal of
consensus among members. Many of these topics parallel the Design
Principles that the SRC ratified in its first meeting, which was held on
July 25, 2003.

-   Mission-focused

-   Fair, transparent, credible

-   Tailoring, where appropriate

-   Participation and communication

-   Investment of resources

-   Training and development.

In addition, one point received unanimous agreement, that is, DHS
employees are doing an incredible job every day to protect our country.

**Mission-focused.** SRC members agreed that above all else, the HRMS
must be mission centered, and its design must facilitate mission
performance. According to Mr. Robert Bonner, the new HRMS should be
equal to the DHS mission and the men and women who perform that mission.
He felt strongly that "whatever system DHS develops must be mission
centered first and foremost." Mr. Loy observed that a change in human
resources policy was required to meet DHS mission requirements. Ms.
Kelley pointed out that no matter what changes are made, they should
minimize the burden on managers, supervisors, and employees, enabling
them to remain focused on the primary mission. Ms. Marta Perez observed
that DHS has been given a rare opportunity---and responsibility---to
develop and deliver a system that optimally supports its mission. She
noted that the system should clearly communicate the deep connection
between performance and results.

**Fair, transparent, credible.** Members of the SRC agreed that the
future HRMS should be fair, transparent, and credible. They felt that
these principles must be the foundation of the system's creation and
pervade implementation and operation. Ms. Kelley emphasized that
employees want a system that is fair, transparent, and credible and
asked that their voices be heard. Any system should be designed to
provide both internal and external equity. She also stated that there
must be accountability for managers on pay and performance
determinations, with the right to appeal to an independent third party.
She emphasized that employees must trust both the concept and the
implementation. Ms. Janet Hale agreed that, in developing the new
system, fairness must be maintained and the process to get there will
also need to be seen by employees as fair and credible.

**Tailoring, where appropriate.** Members agreed that establishing broad
general principles as a foundation for the future system will be
important to ensure integration; however, they acknowledged that human
resources options might need to be tailored to specific parts of the DHS
organization. It was recognized that this tailoring might be critical to
ensure that the systems optimally support the DHS mission in each of the
ways the mission is carried out. All agreed that in creating the new
system, simplicity is a critical goal.

**Participation and communication.** SRC members agreed that employee
and union participation will be critical to creating, implementing, and
operating a successful HRMS. Members described town hall meetings across
the country as an important mechanism for building goodwill and
recognized that these meetings established a strong pattern for
participation. Members agreed that involvement was an important
component of the process and that it would be crucial for employees to
believe in and support the new system. Ms. Hale commented that whatever
system was selected would be developed collaboratively---with
involvement by employees and their unions.

Effective communications was also highlighted as a critical part of the
design and implementation of the new HRMS. Although all noted that
Design Team communications efforts to date were very good, those
communications must be ongoing; and employees must continually be given
the opportunity to provide feedback.

**Investment of resources.** Members recognized that creating a new
system would take time and require substantial investment. Ms. Hale and
Mr. Cohen stated that DHS and OPM were committed to doing what was
needed to go forward with budget requests with strong justifications. In
addition to expressing budgetary concerns, the members agreed that the
detailed design and full implementation of the system will require a
long-term perspective and it must be managed well. Mr. Eduardo Aguirre
stated that "it is a very complex issue that will require more than
money---it will require commitment from all parties."

**Training and development.** The need for development and training as
part of any new HR system was strongly emphasized. Management members
expressed a need for tangible and intangible resources to effectuate the
initiatives they had been discussing. Mr. Aguirre, for example,
emphasized that training is a critical and costly component that must be
recognized. Mr. Loy felt that having adequate resources to train leaders
was important, but the importance of training is often underestimated.
He suggested that the Office of Management and Budget be included in
future discussions. Ms. Hale mostly agreed, but added that it is not all
about money but also about effort and holding managers accountable. Ms.
Hale also indicated that while final dollar amounts will be a
congressional decision, she recognizes that DHS's new systems will not
work if the investment in time and money is insufficient. Mr. Cohen
expressed support for these statements and indicated that OPM
understands that resources are needed to effectuate change and will
provide support for them to the extent that they can.

**PAY, PERFORMANCE, AND CLASSIFICATION**

SRC members discussed a range of ideas related to pay, performance, and
classification. The key topics covered were as follows:

-   Time-focused options

-   Performance-focused options

-   Competency-focused options

-   Other options.

**Time-focused Options**

DHS and OPM members strongly agreed that options based on the current
General Schedule, where time in grade is the primary standard for
progression, would not meet the needs of DHS. The general opinion of
these members was that the General Schedule system was outdated and
required substantial modernization, because it was designed originally
to meet the needs of a very different federal workforce. Mr. Loy stated
that the federal workforce is dependent on HR processes that may have
worked well at one time, but that these processes are no longer
effective in the current environment. DHS and OPM members supported
taking full advantage of the flexibilities granted by Congress without
compromising merit system principles.

One major flaw of the current system that DHS and OPM members identified
was its focus on time-based as opposed to performance-based salary
progression. Mr. Loy, citing numerous mission needs, advocated flexible,
adaptable, responsive systems that reward excellence, eliminate
mediocrity, and promote workplace values. According to Ms. Hausser,
"skills and technologies and initial competencies are changing so
rapidly that the fundamental premise underlying the G\[eneral\]
S\[chedule\]---that the longer you do \[a job\] the better you get---is
something I question whether we want to keep in place." Mr. Cohen
discussed the need to get away from the rigidity of the present system
to be able to reward employees appropriately for performance. He
advocated creating a measurable system that is results-oriented to help
DHS retain high performers. Ms. Kelley countered that the current system
offers performance-based tools that are not used appropriately or
frequently enough. For example, she said that the Quality Step Increase
(QSI) authority is not used as much as it should be.

Several DHS members also expressed concern about the current system's
ability to enable DHS to be competitive in the marketplace. Mr. Basham
discussed the need for greater consideration of external economic forces
and greater flexibility to set pay, citing the difficulties his
organization experiences in competing for talent with the private
sector. Mr. Loy felt that market-based pay is necessary to help DHS
attract the very best talent for these enormously important missions.
According to Mr. Sanders, the "process is irrelevant if pay is not
competitive in the marketplace."

Mr. Michael Randall discussed problems he has experienced with the
current classification system in that it does not recognize expertise
across a range of skills. For example, he stated that agriculture
professionals with diversified skills are needed, but soil specialists
are paid more than agriculture professionals with diverse skills. Ms.
Hausser echoed Mr. Randall's criticism that the classification system
does not allow organizations to effectively reward employees with
diversified skills. For example, if a job had 67 duties, but all of the
duties were graded at the same grade, employees with more skills could
not receive higher compensation.

Mr. Gage and Ms. Kelley both expressed concern about abandoning the
General Schedule. Mr. Gage said that the American Federation of
Government Employees (AFGE) will support improvements to the current
system but is skeptical about any major change, stating that the
"mission of this Department does not include serving as a testing ground
for radical change." As an alternative, Mr. Gage voiced support for a
proposal that would remove time-in-grade requirements to allow employees
to move up in salary faster through career ladders. He described that
approach as a type of "broadband" within the current system. Ms. Kelley
cautioned against "change for change's sake." She agreed that the
current system may not be perfect, but reasoned that it is familiar and
comfortable to employees. She advocated using the General Schedule as a
foundation for change.

Ms. Kelley stated that the National Treasury Employees Union (NTEU)
supports Options 2 and 3. Those options do not require cost neutrality
(cost neutrality is impractical), are performance-sensitive, and allow
DHS to reclassify positions without OPM review. Ms. Hausser, however,
cautioned that Options 2 and 3 suggest that existing statutory
definitions be retained, and that work currently being performed is not
adequately represented in those statutory definitions. Ms. Hale
supported the open pay range element listed in Option 4 because it would
allow people to be rewarded faster for performance. Ms. Kelley did not
support Option 4 because some employees could cap out at the equivalent
of step 7.

**Performance-focused Options**

A great deal of discussion centered on the performance-focused options,
with DHS and OPM members voicing strong support and union members
expressing skepticism. The discussion focused on the following topics:

-   Mission alignment

-   Pay for performance culture

-   Classification system

-   Open pay structure based on market conditions

-   De-linking individual and structural increases

-   Communications and employee involvement

-   Options for measuring performance

-   Forced distribution of performance ratings

-   Supervisor discretion

-   Oversight process

-   Funding.

**Mission alignment.** DHS and OPM members expressed support for
performance-focused approaches, citing the ability to more strategically
align HR systems and individual performance with the DHS mission as a
primary rationale. They believed that employees who contribute more to
the mission should be paid more. Mr. Bonner voiced strong interest in
pay systems that promote increased skills and mission accomplishment.
Mr. Loy offered several examples of the positive effects that a
performance-focused system has had on his organization to date,
including the ability to meet 30 strict performance deadlines imposed by
Congress.

**Pay for performance culture.** Several DHS and OPM members supported
performance-focused options because these options help instill a more
performance-oriented culture. Mr. Bonner advocated performance-focused
systems that "enable managers to meaningfully recognize exceptional
performance in ways we do not currently do." Mr. Cohen also expressed
the need for a mechanism that would ensure that individuals or teams
that achieve more would receive greater rewards. These options tie pay
to performance to reward high performers through higher pay rates,
faster movement through the range, or some combination thereof.
Regarding these approaches, Ms. Perez felt that they help create an
"environment of performance." Ms. Hausser stated, "We are saying that
performance matters. That's the contrast to the time-based approach.
It's an important cultural, strategic value shift that we have the
opportunity to make." Mr. Gage cautioned that "when you look at the
complexity of the systems and how they really play out in the workplace,
you might find that these systems don't promote the culture you want."
Ms. Kelley also stressed that, in reality, it is difficult to make
meaningful distinctions between employees and the levels of their
performance under the current performance system. Linking pay decisions
more directly to performance-rating decisions would be even more
problematic.

Some SRC members also noted that these options also impose greater
consequences for poor performance. For example, in some of these
options, pay structure increases would not be automatically given to
those not performing acceptably, a feature that would aid in the shift
to a more performance-focused culture. Mr. Sanders mentioned that
additional consideration of the link between performance appraisals and
adverse actions was needed.

**Classification system.** A simplified classification system was
another feature of performance-focused options that DHS and OPM members
strongly supported. These options rely on occupational groupings, which
implies a collapse, or merging and modernization, of the General
Schedule grading criteria. They felt that tying pay to simplified
occupational groupings would facilitate a job-based approach to market
pay. That was seen as a real benefit by Mr. Sanders, who suggested it
would offer "a degree of precision that we don't enjoy today."

**Open pay structure based on market conditions.** DHS and OPM members
and Ms. Kelley supported options that would tie pay ranges and
structural increases to market conditions. OPM and DHS members supported
options under which market-based pay increases could vary by occupation.
Mr. Loy noted the need to be competitive in the marketplace for talent.
Ms. Hale supported performance-focused pay bands and was concerned about
employees who could not afford the cost of living in some areas.
Mr. Sanders agreed with the need to be more market-sensitive, suggesting
that variation by location or occupation may be needed. Mr. Randall
supported maintaining locality pay. Ms. Kelley said, "even if the act
doesn't say so, DHS employees deserve to be compensated fairly." She
said some elements in Option 9 are "worth noting." For example, she
liked the fact that this option included a wider pay range. Also,
although this option did not allow for automatic increases, it did
provide for a minimum payment of 2 percent, and anything above that to
high performers. She also noted that, under Option 9, poor performers
would not be entitled to pay raises.

**De-linking individual and structural increases.** OPM members
suggested maintaining a distinction between annual increases to a pay
range and increases to individual salaries. Mr. Sanders said that
organizations had formerly considered these factors synonymous, and that
DHS should think about decoupling these two elements of a pay system.
Ms. Hausser discussed this as an important element of using pay more
strategically. She offered the example of the Department of Defense
(DoD) having more strategic flexibility, because what DoD achieved for
military increases in pay, summarized as 4.1 percent, was actually
delivered as highly differentiated adjustments to pay.

**Communications and employee involvement.** SRC members agreed about
the importance of employee involvement and communications in performance
management. Mr. Sanders said that while he is not particularly a fan of
the 360-degree review process, he agreed that some form of employee
input in performance management is important. For example, he suggested
that front-line employees and managers work together to define
performance standards. Ms. Hale agreed about the importance of involving
employees and managers. Ms. Perez felt that many concerns voiced by
union representatives would be addressed because these options compel
regular communication between employees and managers. She acknowledged
that it would require a great deal of investment in training and time,
but stated that, in light of its mission, DHS should make that
investment and not take the "path of least resistance."

**Options for measuring performance.** DHS and OPM members felt that
using performance measures would help maintain employee focus on the
mission, but opinions varied about what to measure. Mr. Sanders pointed
out that the options allow for various performance measures, aside from
the current elements and standards, including competencies or management
objectives. Mr. Loy offered that performance measures could be based on
a menu of opportunities, skills, knowledge, competencies, results, and
longevity, with varying emphasis or use of these measures throughout an
employee's career (e.g., novice through journey). Mr. Aguirre and
Mr. Sanders supported Option 11 because of its focus on organizational
balanced measures. Mr. Aguirre stated that customer satisfaction,
employee satisfaction, and business results could be easily measured and
were very important to the work they do. Mr. Dorsey said he preferred
rewarding teams rather than individuals. Ms. Hausser suggested that
team- or organizational-based rewards be distributed as variable pay.
Ms. Hale agreed that performance measures could be individual based,
team based, or organizational based, and that there could be ways to
implement all three. Whatever approach is used, Mr. Sanders argued that
it was important for employees to know with great clarity what those
expectations were.

**Forced distribution of performance ratings.** Some SRC members did not
support pay progression based on forced distribution of ratings
mechanisms, such as those based on a bell curve. Mr. Gage objected to
forced distribution mechanisms of any kind, stating that these systems
would create competition and would have an adverse impact on more people
than they would actually motivate. Mr. Sanders agreed that forced
distribution could be challenging. He offered that ratings distribution
could be linked to organizational unit performance, but this would
require a sophisticated and disciplined approach.

**Supervisor discretion.** Ms. Kelley and Mr. Gage voiced skepticism
over performance-focused systems that provide management sole discretion
to determine individual base pay increases, the number of pay bands, or
the job families and pay ranges associated with these bands. Ms. Kelley
stated that there should be collective bargaining if DHS wants to pursue
things like pay bands. Mr. Gage, for example, doubted the supervisors'
ability to make performance distinctions. Although the "rhetoric"
sounded good, he felt the "devil is in the details." Mr. Bonner
disagreed that managers are incapable of managing performance. He stated
that if managers are trained, receive effective direction, and are held
accountable, performance and competencies could be measured and
evaluated and thoughtful decisions could be made.

**Oversight process.** SRC members agreed that the performance appraisal
system must be fair, equitable, and credible, but they disagreed about
the best way to ensure that. Mr. Aguirre mentioned that until they know
what the system will look like, it is difficult to know what is
appropriate.

Union members stated that pay, classification, and performance
management decisions should be subject to independent review and/or an
appeals process. They consider the appeals process as an essential
factor for ensuring that the system is fair, credible, and transparent.
Mr. Randall stated that "placing a new system with the possibility of no
or highly modified appeal process on a group that largely expects one,
that is what I call a big experiment." Ms. Kelley said these changes
will impact every employee in the Department, and she believed it is
important to make sure that employees retain appeal rights. She
suggested that an internal panel of three (see labor relations section)
could provide the same type of review and opportunity for fairness. She
suggested that expedited processes be used for appeals if DHS members
were concerned about speed. Mr. Gage also strongly supported having
"checks and balances."

Mr. Basham recommended independent review of performance ratings for
consistency and fairness, such as the system used by the Senior
Executive Service (SES), described in Option 23. He recognized, however,
that this approach could be labor-intensive. Mr. Sanders agreed that
approach could help guard against potential rater bias. Ms. Perez stated
that while she is not a proponent of appeal rights for performance, she
believed that if the process leads to an adverse outcome, employees
should be able to appeal the process, not the results. Mr. Cohen said
that systems must be given an opportunity to work before being subjected
to external appeals.

**Funding.** SRC members discussed funding issues related to
pay-for-performance systems. One approach that was discussed involved
pay pools, where employees would receive a proportional share of the
annual salary increase budget based on their performance. Ms. Hale
suggested funding performance pay pools using locality adjustments or
other factors, such as that provided in Option 6. Mr. Randall advocated
maintaining locality pay increases. He suggested that performance-based
pay be drawn from the annual salary increase budget. With this approach,
not everyone would receive an equal or proportional share of the salary
increases; instead, it would be distributed differently based on
performance ratings. Ms. Kelley said that NTEU would not support
including locality pay raises in pay-for-performance pools, such as that
described in Option 8. She also found it unacceptable to fund pay pools
with the January pay raise. She believed that acceptable performers
should receive those increases as recognition of doing the job that is
expected.

**Competency-focused Options**

Although DHS and OPM members supported performance-focused systems, they
agreed that these systems also needed a competency focus. They expressed
support for competency-focused systems because of their ability to link
clearly with the strategy and mission of DHS. For example, Ms. Perez
said that the mission requires that DHS always be in a state of
readiness and that competencies could facilitate planning for current
and future human capital needs. Similarly, Mr. Bonner was supportive of
competencies, stating that his organization requires new skill sets that
go beyond traditional missions, such as protecting against bio-terrorism
and agro-terrorism and the ability to use strategic intelligence
information to better manage risk. Mr. Loy discussed specialty pay used
to reward teams, such as rescue swimmers, in military pay systems as an
example to consider. Mr. Dorsey agreed there is a role for competencies.
He suggested that competencies and training required to attain these
competencies must be defined for new employees as they enter the agency
at every level of their job. There must be a testing or certification
process. Competencies should also be measurable, and the training must
enable employees to apply these competencies to the job.

In addition to focusing on competencies, DHS and OPM members emphasized
that these systems must be performance focused, and the use of
competencies may vary across the Department. Ms. Hale said that in parts
of DHS, competencies will be a factor, and she described competencies as
"part of the toolkit." Mr. Randall felt that it might be difficult to
use competencies as a way to measure performance for some jobs; but he
agreed that employees who acquire additional skills, such as an
inspector with experience with cargo, passengers, maritime, and airport
inspection requirements, should be compensated accordingly.

Ms. Kelley voiced concern about competency-focused systems, stressing
the need to ensure equal access to training and development
opportunities for all employees. She cautioned that competencies might
sound good in theory, but they require testing and validation, which
does not always happen. Ms. Kelley stated that front-line managers,
employees, and their unions need to be involved in the design of any
competency-based system. She also cautioned that competencies could
result in adverse impacts or have other pitfalls.

**Other Options**

**Rank in person.** There was a brief discussion and some interest
expressed for Option 17, particularly for law enforcement and related
occupations. Mr. Basham, who has experience with this type of system,
noted that rank in person provides a great deal of flexibility with
respect to a mobile workforce; however, he also recognized that cost
might be an issue. Ms. Hausser said that rank in person is attractive
because it is "person-based rather than position-based pay." She said
that an up-or-out element is an important part of this system,
particularly in terms of managing the workforce and budget. Ms. Perez
agreed that this option has some merits and could be combined with other
features. Ms. Kelley said that if Option 17 was adopted, there would
have to be union involvement in issues like market surveys and pay
ranges and that employees would also need appeal rights (not currently
featured in this option). She also questioned what would happen if the
budget did not support the requirements.

**Collective bargaining.** Ms. Kelley suggested that pay,
classification, and performance management be bargained. She said that
whether minimal or major changes took place---especially if there is a
move from the General Schedule---DHS would need input from employees.
She acknowledged that unions do not currently bargain over pay because
pay is set by statute. She believed that if the system is changed,
unions would have the right to collectively bargain over pay. Ms. Hale
expressed concerns about collective bargaining over pay and performance.
She stated that the system would be developed with input from employees
"and their unions" and expressed a commitment to continuing to work with
unions.

**Gainsharing/goalsharing.** Option 26 provides for payment of cash
awards to team members based on goal accomplishment or cost savings in a
production environment. Ms. Kelley noted that NTEU is not opposed to
considering it as a stand-alone issue but does not view it as a total
system. She said this option could be utilized if ways existed to truly
measure and truly reward. Although Mr. Gage could support gainsharing,
he stated that in his experience at the Social Security Administration,
it came down to a management information system, and gainsharing didn't
translate, so it was abandoned.

**Managing to budget.** Ms. Hale said that whatever system is selected,
the Department would have to ensure that it took fiscal constraints into
account by managing to budget. At the same time, she emphasized that the
Department clearly intended to ensure that any system selected would
have the appropriate budget associated with it. Ms. Kelley voiced
concern that a manage-to-budget approach may affect system transparency.

**LABOR RELATIONS**

SRC members expressed a range of views on topics related to labor
relations. Discussion included the following areas:

-   Scope of bargaining and duty to bargain

-   Time limits on bargaining

-   Labor relations administration

-   Collaborative initiatives

-   Level of issue resolution and bargaining unit structures.

**Scope of Bargaining and Duty to Bargain**

With regard to this subject, members from both DHS and OPM highlighted
the criticality of the Department's mission and expressed concern about
the bargaining provisions currently in place. Many emphasized that the
post-September 11 environment is worthy of new tools and flexibilities,
including a modernized labor relations program that complements the
environment. Several managers underscored a need to revisit current
scope of bargaining and duty to bargain provisions to ensure that the
labor relations system is flexible enough to meet the significant
demands and high stakes of their new operating environment.

Ms. Hausser challenged the members to think about the historical
foundations of the labor relations statutes and their appropriateness in
today's environment. She stressed that Congress directed the
establishment of a modern human resources system and, in a way, signaled
that non-traditional approaches may be appropriate.

Union members took exception to any suggestion that mission
accomplishment and unionization were somehow incongruous or
contradictory. They emphasized their unions' collective interest in
supporting DHS and its mission. Mr. Randall said unions are appropriate
in a modern human resources system and that full bargaining rights would
not inhibit mission accomplishment.

**Ability to act in emergency situations**. DHS, OPM, and union members
agreed that management must have the right to act immediately in
emergency situations, without regard to collective bargaining. All
agreed that this management flexibility already exists under the current
labor relations system; however, there was some disagreement over how to
proceed in situations that may be viewed as critical by management but
fall short of the "emergency situation" criteria.

In general, DHS and OPM members favored union consultation before making
decisions but indicated a need to be more agile in the current
environment. They stressed that issues related to homeland security
should not be subject to bargaining and that managers should be able to
make decisions immediately when they deemed it necessary. Mr. Sanders
expressed a need to empower DHS managers to act without hesitation and
asserted that full collective bargaining may be incompatible with
departmental requirements, such as the need to deploy individuals
quickly and, in some instances, without being able to communicate the
rationale for the deployment. Mr. Loy noted that Congress gave the
Transportation Security Administration (TSA) exclusive personnel
authority as a means of offering maximum flexibility to best meet its
national security mission.

**Duty to bargain in critical, but non-emergency situations.** Union
members agreed that managers may need to act in some critical
non-emergency situations, but suggested those types of decisions should
be the exception rather than the rule and that the vast majority of
decisions should be subject to collective bargaining. Ms. Kelley
suggested developing a list detailing the types of issues not subject to
bargaining, recognizing that the list may need to be dynamic to
accommodate the Department's changing circumstances. Some DHS and OPM
members responded that it would be impossible to presuppose all events
and issues that may fall under this category, and they reemphasized the
need for flexibility.

In instances when management feels it must act immediately, union
members, including Mr. Gage and Ms. Kelley, offered a couple of
solutions to mitigate the effect of eliminating predecisional impact and
implementation bargaining. First, they asked to be notified and
consulted before a decision was implemented. Second, Ms. Kelley
highlighted the need for post-implementation bargaining and review to
ensure that management did not abuse authorities and that the decisions
made were not in conflict with the spirit of the Homeland Security Act.
To accomplish the review, Ms. Kelley suggested using an internal panel,
made up of one member appointed by the Secretary, one member appointed
by the unions, and one member who was jointly appointed. Mr. Gage
concurred, adding that a post-implementation review would add
credibility to this system. Ms. Kelley said that these special
procedures should be the exception, and not the rule.

Mr. Sanders, however, responded that no third party is ultimately
responsible for homeland security and that given the DHS managers'
enormous accountability, they need to be able to quickly make decisions
and deploy response teams to address security needs. Mr. Loy indicated
that he supported consultation and notification but did not want panels
making critical operational decisions.

Mr. Gage offered an additional suggestion that all decisions have a
natural business exigency date of implementation. If unions were aware
of that date, they could bargain beforehand or continue negotiations
after the fact. Such a date would, in Mr. Gage's estimation, address
management's need to act yet also provide an avenue for employee input.
Ms. Hale, a DHS member, expressed a concern that those natural business
exigency dates of implementation might not work in a classified
environment. According to Mr. Gage, "We will be flexible. You don't have
to tell us why." Mr. Sanders expressed an additional concern that
developing a new terminology would make an already difficult process
more complex and litigious.

DHS members also expressed specific concerns regarding potential
information disclosures that could impact homeland security and might be
an outgrowth of the bargaining process. Mr. Basham expressed concern
that such disclosures could jeopardize mission accomplishment. Mr. Gage
responded that he accepted the fact that the USSS was not going to
release sensitive information.

**Scope of bargaining**. Ms. Kelley stated that many of the options
developed appear to conflict with provisions of the Homeland Security
Act. She added that consultation with unions is not a substitute for
collective bargaining, and that while consultation can run parallel or
sequentially with collective bargaining, it cannot replace it.
Furthermore, Ms. Kelley said narrowing or eliminating bargaining rights
would be offensive to employees and their unions and, therefore, NTEU
supports options that do not restrict bargaining rights. Ms. Kelley
expressed specific support for Option 34, adding that it meets the
unions' needs and makes business sense.

Mr. Bonner contended that some issues should not be subject to
bargaining. He used the deployment of technology as an example,
stressing that this technology should be able to be implemented without
any bargaining given the nature of the issues and the classified
information involved. Another example offered by Mr. Bonner was staff
deployment. He highlighted the need to act, in some cases, without delay
to ensure the security of the homeland. Mr. Loy indicated that he
supported consultation and notification, but did not want critical
operational decisions being constrained by anyone but DHS management. He
emphasized that the new labor relations system should include some
post-event resolution of issues but also allow for preempting bargaining
when it is in the best interest of the DHS mission.

In response, Ms. Kelley disagreed and suggested that bargaining should
occur prior to the implementation of the aforementioned decisions.
According to her, areas that should be bargained include the safety of
employees, selection for temporary duty (TDY), and training for
different types of equipment.

**Restrictions based on number of employees or magnitude of issues**.
Ms. Hale articulated an interest in discussing options that limit
bargaining based on the number of employees affected or the comparative
magnitude of the issues involved. Ms. Kelley and Mr. Gage expressed
concern that changes affecting a small number of employees would be
thought of as unworthy of collective bargaining. They felt that
collective bargaining could still have a significant impact, even if
only for a small number of employees. Ms. Kelley also said that such
restrictions are too vague. For these reasons, she stated that NTEU
would not favor such options. Mr. Gage added that such restrictions
might lead to increased litigation and would be completely arbitrary.

Mr. Sanders suggested revisiting the de-minimis standard established by
the Federal Labor Relations Authority (FLRA) given the prevalence of
"unnecessary churn" that currently exists. Mr. Gage responded that such
issues can be resolved at the local levels and that while they should
not become federal cases, employees need to have a voice and that
revisiting the de-minimis standard would be "splitting hairs."

**Time Limits on Bargaining**

With regard to mid-term bargaining, management members stressed the need
for time limits so that bargaining does not take an interminable amount
of time, impeding the Department's ability to focus on mission
accomplishment. Mr. Bonner expressed a concern about the length of time
required to negotiate seemingly small matters. Ms. Kelley responded that
NTEU had suggested 45 days as a limit for negotiating mid-term issues
and 180 days for negotiating term contracts. Although there was
relatively little discussion about time frames, most SRC members agreed
that the bargaining process should and could be streamlined.

**Labor Relations Administration**

**Use of an internal panel.** Much of the discussion on labor relations
administration focused on potentially replacing the FLRA as the primary
body overseeing the DHS labor relations system with an internal panel or
administrator. Some members saw benefits in this type of administration,
in that an internal panel might be more focused on the importance and
urgency of the DHS mission and could streamline the process. However,
others expressed concern about the increased number of full-time
equivalents (FTE) and deepened bureaucracy that could accompany such a
system. Mr. Bonner expressed some concerns with the process and
indicated he wanted to discuss it further.

DHS and OPM members expressed mixed views on the benefits of an internal
panel. Mr. Sanders indicated that an internal panel may be preferable to
an outside agency because it could focus solely on DHS and its unique
needs, whereas an outside entity would have wider ranging
responsibilities that may override the DHS focus at times. Usability was
another benefit to the internal panel given that, as noted by Mr.
Sanders, the FLRA writes decisions with appellate courts and not users
of the labor relations systems in mind.

Union members were largely supportive of an internal panel, though their
level of support and types of concerns varied. Ms. Kelley indicated that
NTEU would support an internal three-person panel comprising one member
appointed by the Secretary, one member appointed by the union, and one
member jointly appointed. She believed the panel could handle most labor
relations and collective bargaining issues, but she added a caveat that
their decisions should be subject to judicial review and not be able to
be overridden by the Secretary. She explained that implementing any
labor relations system that did not have a review process built in would
not be viewed as credible. Mr. Loy also supported the idea that panel
decisions could be challenged.

Mr. Gage said that AFGE would support Ms. Kelley's panel concept, but he
worried about the increased FTEs and bureaucracy that such a system
might create. Mr. Gage noted that an independent third party was
essential and indicated that his preference was to use arbitrators. Mr.
Randall said that the National Association of Agricultural Employees
(NAAE) would support an internal panel and offered a suggestion that
could bridge conflicting interests in arbitrators and panels. He
recommended developing a list of labor relations experts from which the
third person would be picked. Mr. Sanders disagreed with this approach,
reiterating previous concerns that labor relations experts may not have
expertise on the mission of DHS.

Mr. Loy expressed general opposition to using outside arbitrators,
suggesting that it was difficult to get uniform and consistent decisions
from arbitrators.

**Collaborative Initiatives**

SRC members largely agreed on the importance of collaboration between
managers and unions, though some had concerns about the role of
collaboration and the distinction and relationship between collaboration
and collective bargaining.

DHS and OPM members generally supported collaboration but wanted to draw
clear lines between collaboration and collective bargaining. Ms. Hale
indicated that she was in favor of collaboration and the benefits it
could provide. She said that DHS is highly supportive of collaboration
and specifically commended the unions for their help in bringing
together and communicating with 180,000 employees during the DHS
formation. However, Ms. Hale stated that there was a need for management
to retain exclusive authority and not have to bargain over some areas.
Mr. Sanders agreed that collaboration was an excellent trust building
mechanism but also emphasized the need to be specific about what is
subject to bargaining and what is subject to collaboration. , He was
concerned that without effective boundaries collaboration could result
in "two bites of the apple" in that managers may feel that they have
reached consensus with the union on a predecisional basis only to find
that collective bargaining has been invoked.

Union members supported collaboration, though they did not believe it
was a substitute for collective bargaining. Ms. Kelley stated that NTEU
supports collaboration and believes that the process has supported many
other agencies and their employees well, but that collaboration can only
be on a parallel track with, and an enhancement to, collective
bargaining. She stressed that predecisional involvement greatly enhances
bargaining because unions can influence the way changes are made and, as
a result, issues in bargaining tend to be much narrower than they
otherwise would have been. Mr. Gage said use of collaboration and
collective bargaining does not represent "two bites of the apple" and
labeled collaboration an essential ingredient to the union-management
relationship and dealing with problems that arise. He emphasized that
collaboration could in some cases shorten the amount of time spent
bargaining and that often unions support management "right out of the
box" as a result of collaboration, eliminating the need for
negotiations.

DHS and OPM members did not agree or disagree that collaboration would
speed up the collective bargaining process but were generally supportive
of collaboration as a means for enhancing relations and decisions. They
expressed interest in working with the unions. Likewise, Mr. Gage
acknowledged that he had a greater appreciation for the stakes involved
and an interest in working with management in the future.

**Level of Issue Resolution and Bargaining Unit Structures**

**Level of issue resolution.** Much discussion revolved around the
organizational level at which labor relations disputes are resolved,
with many SRC members citing a need for and interest in resolving
matters at lower levels. Mr. Loy emphasized the need for leaders to
invest in their people so that they would be more effective at resolving
issues at the lowest levels possible. He expressed his commitment to
Alternative Dispute Resolution (ADR) and general conflict management
resolution and suggested that such measures can influence what goes to
an internal panel.

In response, Mr. Gage suggested that AFGE was "ambidextrous" and could
work at any levels necessary to resolve issues in the interest of
expediency. He indicated a need to begin direct and fruitful
conversations now. Mr. Gage acknowledged that NTEU is a little more
centralized, which may make multitiered problem resolution more
difficult. Ms. Kelley responded that she supported resolving issues at
the lowest levels and has trained the NTEU union stewards to do so, but
that success largely depends on the individual.

**Bargaining unit structures.** DHS members indicated that the current
structure was cumbersome and unwieldy from a management perspective.
They suggested using a "most appropriate unit" standard may be more
suitable in the DHS environment. Mr. Bonner stated that dealing with
three unions and five collective bargaining agreements at the U.S.
Bureau of Customs and Border Protection (CBP) was a management challenge
and that he would support a new system that "rationalized the bargaining
unit structure."

Mr. Gage stated that the unions would work together and with management
to address structural issues. He also indicated a willingness on his and
his colleagues' part to play an active role in the labor relations
process so that critical decisions could be made at the highest levels
in the interest of expediency. At the same time, he acknowledged that
practicality might drive the level at which some issues are dealt with,
with many likely being addressed at the lower levels. Ms. Kelley
concurred that strategic decisions need to be made at the national level
but suggested that implementation is often better at the lower levels.
She stated that she would not want to see a loss of recognition of the
value of front-line employees and their managers in bargaining.

Ms. Hale concluded the discussion on bargaining unit structures by
saying that it is an area in which unions and DHS managers will continue
to have discussions and that she will want various stakeholders to weigh
in on the subject.

**ADVERSE ACTIONS AND APPEALS**

SRC members expressed a range of views on topics related to adverse
actions and appeals. Discussion included the following areas:

-   Employees covered

-   Actions covered

-   Adjudication

-   Time limits on actions.

**Employees Covered**

DHS and OPM members recommended increasing the probationary period from
the current standard of 1 year for some occupations. They based this
recommendation primarily on the belief that it often takes more than 1
year to develop and train an employee and, therefore, more time is
needed to ascertain whether that employee is a good fit with the agency.
Two union members, Mr. Gage and Ms. Kelley, were opposed to extensions
of the probationary period, mainly citing that a year was sufficient
time to assess an employee and that the new system should not reduce or
eliminate any current employee rights.

OPM members expressed support for extending the probationary period. Ms.
Hausser reminded the committee that probationary periods were designed
to be extensions of the examination period, which is partly why no
rights are associated with probation. She added that an examination
period might need to take longer than an arbitrary 12-month period. Mr.
Sanders was hesitant to put a time limit on the probationary period but
agreed that flexibility was necessary. He said that the end of a
probationary period may be more of a qualitative event than an amount of
time, and it may vary by occupation. Mr. Sanders said that as long as an
employee was in a "developmental state," the agencies should have
greater leeway in terms of separation. Ms. Perez agreed with Ms.
Hausser's comment that probationary periods are designed to allow
employers to assess the contributions of employees on the job and also
suggested that the periods may need to be variable based on occupations.
Mr. Cohen emphasized that OPM sought to recognize that DHS requires
additional flexibilities.

DHS members offered practical examples of the need for more flexibility
around the probationary period. Mr. Aguirre indicated that employees of
Citizenship and Immigration Services are administering a complex set of
laws and require 2 years to complete the learning process. Mr. Aguirre
felt a probationary period should be commensurate with that
organizational reality. Mr. Basham also supported a lengthier
probationary period, explaining that in the USSS it is difficult to
assess someone until that person is ready to go out on his or her own.
Mr. Bonner indicated that while he expects CBP inspection officers to
acquire competencies within a year, it takes longer for them to
demonstrate them. He stressed that he does not think that a manager can
judge an employee's competency after a year and, therefore, probationary
periods should be commensurate with the length of time it takes to make
that very important judgment.

Some union members took exception to the need for extended probationary
periods. Ms. Kelley indicated that she would not support extending the
probationary period, given that she had not seen any persuasive examples
of occupations where such an extension was necessary. Ms. Kelley that
said she believed it was important that all current rights remain in
place, including the right to mitigation, to be consistent with the
language in the act protecting merit system principles and to preserve
due process. Mr. Gage also disagreed with extensions, saying that if
good people are hired, employers should know within a year whether they
should be retained. He also suggested that extended probationary periods
would be a recruiting concern because new recruits might find it
disconcerting to be on probation for an extended number of years.

Mr. Randall felt that longer probationary periods were perhaps needed in
certain occupations, but added that simply because someone was on
probation did not mean that person's rights should be eliminated. Mr.
Randall asked the committee to consider the employee's investment as
well as the organization's investment.

Mr. Dorsey suggested a system where probationary periods are based on
the training periods and a period of time after training until a person
has acquired a certain level of competency. Mr. Gage countered that such
a system would not work with the current jobs, because the 5-7-9 career
ladder is too long for a probationary period. Mr. Gage then asked if
competence can delay someone from reaching permanent status, why could
it not also work in reverse---that employees could achieve permanent
status earlier. Mr. Sanders stated that Mr. Gage's second point was a
valid one and should be considered.

In addition, Mr. Basham posed the question of whether individuals under
probationary periods should have appeal rights. Ms. Kelley responded
that they had considered offsetting probationary period extensions with
some appeal rights.

Limited discussion occurred concerning the distinctions between employee
types that were presented in the appeals and adverse actions options
presented to the SRC. Ms. Hausser indicated that fewer distinctions
among employee groups may make more sense to the employees themselves.

**Actions Covered**

SRC members discussed the potential for establishing a list of offenses
that were of such a serious nature that they would preclude an employee
from appealing a termination decision, such as the "ten deadly sins"
approach required by the Internal Revenue Service (IRS) Restructuring
Act.

Union members were largely against establishing such a list of offenses.
Ms. Kelley felt that restricting appeal rights would drive employees to
other forums for resolution, including the Equal Employment Opportunity
Commission or the courts. In addition, she expressed concern over the
wide range of examples of "deadly sin" infractions offered as examples
by Mr. Sanders and wanted to emphasize that people make mistakes. Ms.
Kelley expressed familiarity with the system at the IRS and suggested
that results could have been, and could still be, arbitrary and
capricious had it not been for the process established by the
Commissioner.

Mr. Gage urged the SRC to think about the implications of restricting
employees from having the right to appeal. He argued that no matter how
egregious an offense may seem, there are always additional facts to
consider. Furthermore, he stressed that the system cannot rely on
management, particularly when final termination decisions are at issue.
Mr. Gage agreed that employees committing serious infractions impacting
national security should be immediately removed from their jobs but said
an appeals process, during which the employee can present facts that may
mitigate or disprove the allegation, was fair and credible. Ms. Kelley
agreed that if an act warranted immediate termination, the employee
should be terminated, but that summarily terminating someone without
review was a violation of due process. She also indicated that
management should not be so concerned with a review process because
employees lose the vast majority of termination cases brought before the
Merit Systems Protection Board (MSPB). Mr. Randall argued for a certain
tolerance level and expressed concern that strict regulations would make
employees leery of making decisions on the job because they might be
concerned they would then lack the backing of management.

Several DHS members supported the concept of bright line offenses. Mr.
Bonner, for example, suggested that someone who accepts money for
overlooking the law should not have appeal rights, a provision that is
especially important in a border agency. Similarly, Mr. Loy suggested
that there are absolutely things that warrant immediate termination
simply because the stakes are too high. Mr. Sanders expressed his
support for a system that recognizes bright line offenses.

**Adjudication**

Mr. Dorsey suggested that the new appeals system should use the MSPB to
some extent and that it would not be credible for DHS to eliminate MSPB
completely. In short, Mr. Dorsey said that the process required some
level of outside party involvement.

Mr. Sanders stressed the importance of having a mechanism for review
that puts the DHS mission first. Mr. Sanders also reiterated the
complexity of dealing with outside oversight bodies. As an example, he
explained that the MSPB has a four- or five-part test for theft and that
the language of their decisions is written for the courts.

Mr. Gage and Ms. Kelley supported arbitration as the primary means for
resolving appeals, indicating that it provides the best means for
settling disputes. Ms. Kelley indicated that an internal three-member
jointly appointed panel option was developed in response to the
Department's expressed interests but would also be suitable to NTEU. Mr.
Gage indicated that he could support the internal three-member jointly
appointed panel, but he also expressed concern about the bureaucracy
that would accompany internal panels.

**Time Limits On Actions**

Mr. Gage stated that there was an interest in reducing delays and
reaching decisions more quickly, but suggested that taking away the
basic rights of employees was not the way to do it. DHS and OPM members
also expressed support for a faster and more streamlined appeals
process. Mr. Sanders suggested that there are some cases, ones with
direct homeland security impact, for which due process may need to be
truncated. Ms. Hausser agreed that a better process is needed for
dealing with employees and that DHS has to uphold a higher standard in
the Federal Government given its mission and the consequence of error by
its employees. Mr. Bonner stated that the process must be speedier.

**TECHNICAL ADVISORS OBSERVATIONS**

Each SRC technical advisor provided unique and valuable insights into
the requirements of a new DHS HRMS. Their comments are summarized below:

**Bernard Rosen**

Mr. Rosen expressed appreciation for the variety of options produced and
the work completed by the team to date. He also expressed optimism
regarding the team's ability to identify important policy areas and make
decisions regarding implementation of options that are in the national
interest.

Mr. Rosen brought attention to the importance of meeting the statutory
requirements of fairness and equity in designing a new DHS HRMS and
adhering to the merit system principles. As such, he suggested that the
system be adaptable, that DHS implement effective training and
monitoring, and that OPM make periodic on-site reviews focusing on the
HRM systems' performance with regard to meeting merit system principles.
Mr. Rosen advised that such reviews focus on the system's ability to
meet statutory requirements and system goals.

Mr. Rosen suggested the use of compensation flexibilities, relocation
bonuses, and the use of alternative work schedules in meeting
recruitment and retention needs. He also advocated providing training
for managers on conducting meaningful evaluations, providing feedback,
and establishing employee development plans. With respect to the length
of probationary periods, Mr. Rosen suggested that reducing the
probationary period and confirming employees as "permanent" and fully
committed to their positions can be an advantage in securing a stable
workforce, especially during times of personnel shortages and hiring
freezes.

Mr. Rosen advised the implementation of a plan that includes a
constructive and collaborative relationship with employee unions to
further ensure an effective and equitable HR system that meets statutory
requirements and promotes the Department's national security mission.

**Pete Smith**

Mr. Smith expressed his view that any DHS HR program design should be
strongly integrated with the Department's overall strategy, not made to
"fit" after implementation.

Mr. Smith also indicated that whatever is done for the SES must be
integrated and coordinated with the systems now being developed for the
general workforce. He felt it was important for the same principles to
apply and stated that he has never seen a successful system implemented
from the bottom up.

Mr. Smith also addressed the need for open channels of communication
between DHS management and employees, including them in each step of the
transition to a new HRMS. Specifically, he recommended communication
from Secretary Ridge to employees updating them on the recommendations
of the committee and soliciting feedback from employees before making
any final decisions. Feedback from employees could be used to make
modifications to the system, or not, as appropriate.

Mr. Smith promoted the use of a performance management system that
rewards high achievers and does not restrict the Department to paying
all employees in the same position the same wage. He acknowledged that
moving to such a system would require a commitment to improved training
for leaders on the part of the Department and making available the
necessary resources. In addition, Mr. Smith indicated that the team
should focus on options that favor pay for performance with a base
salary range set by market demand and the need for pay adjustments
dependent on locality. He was also concerned that any reductions in pay
would have negative effects on the workforce.

Mr. Smith suggested that streamlining or "sharpening" the process
through which employees may appeal an adverse action could be more
beneficial than restricting any rights. He also commented that the DHS
team should be considerate of the sensitivity needed when addressing
union rights. He promoted the implementation of a system that works
collaboratively with employee unions and felt that their input would be
valuable.

**Patricia Ingraham**

Ms. Ingraham brought attention to the fact that virtually no successful
organizations exist that do not have successful HR systems. As such, she
stated, the team's work in selecting a new system is critical to the
Department's mission.

Ms. Ingraham expressed frustration with the current classification
system, stating that it results in narrow job descriptions that do not
allow organizations to effectively reward employees with diversified
skills. She expressed concern that without classification changes, it
will be difficult to make other improvements.

Ms. Ingraham discussed the importance of career development for
employees as well as recognition for work well done in the form of
financial and nonfinancial incentives. To that end, she felt a more
broadly defined performance tool is necessary, so that managers can
reward employees for all the functions they perform, within or outside
of the narrowly defined duties of a particular job.

Ms. Ingraham also concurred that a successful DHS HRMS is contingent on
collaboration and cooperation between DHS management and union
representatives.

Ms. Ingraham was excited about the opportunity to create the first real
change in government human resources in more than 100 years; and for
that reason, thought it was critical to ensure that the change be
strategic and complete.

**Robert Tobias**

Mr. Tobias promoted the need for an HR system that can produce and
maintain a "high performing agency" to meet the country's needs. He said
that in selecting and designing this system, the parties should conduct
a serious business case evaluation of the following: should they develop
a labor management strategy based on compliance with law, rules,
regulations, and negotiated collective bargaining agreements, or should
they develop a collaboration strategy that relies on building a
labor-management relationship. This labor-management relationship, he
said, would recognize that each participant has value necessary for
creating a high-performing agency, include predecisional involvement in
all aspects of the DHS business decisions, and create credible
independent problem-solving mechanisms when necessary. Mr. Tobias
advocated establishing specific obligations, guarantees, and milestones
for the system and to measure its credibility and efficacy. Ensuring the
accomplishment of certain goals and steps, he felt, will be critical to
stakeholder acceptance of the system. He further advised that the DHS
and OPM SRC members should continue the dialogue started during the
public meetings and attempt to reach agreement on a proposal to submit
to Secretary Ridge and Director James.

Mr. Tobias stated that the new DHS HR system will need to provide
management with flexibility, while maintaining credible and effective
union involvement. He advised that the opportunity to bargain in certain
circumstances should be maintained, with post-implementation
consideration for other circumstances, as well as the mandate for a
review. He suggested that any successful system implementation would
require building an atmosphere of trust and collaboration between DHS
management and union representatives, as well as "an environment of
continuous learning." Unions, he advised, "can be a great way to assist
agencies in fast implementation," because they can promote the
implementation of regulations or resolutions through local
representatives.

Mr. Tobias called attention to the need to ensure that good employees
are not discouraged by a system that would penalize poor performers.
Decreasing salary for good performers to pay higher wages to great
performers could lead to good performers feeling "lumped in" with the
poor performers, as would forced rankings, he stated.

Mr. Tobias also called for a system that provides for employee appeals,
to ensure a fair, transparent, and credible process.

**Maurice McTigue**

Mr. McTigue argued that the Department is obligated to be a "good
employer and a good leader." He advised the team to consider a
performance-based system that looks at "achievements" and
"contributions" that benefit the public and that further the
Department's mission. Competency and performance, he advised, are "not
mutually exclusive; both can and should be used." Competencies are core
to the Department's mission; therefore, employees should be recognized,
rewarded, and trained for skills, and competencies should be expanded to
include many not currently recognized to be in furtherance of the
Department's mission.

Mr. McTigue emphasized that human capital strategies---ones that ensure
that the right people with the right skills are in the right place at
the right time---require planning and do not happen by accident. He
stressed that organizations need to determine where skill gaps exist and
how to close them.

Mr. McTigue advised that the selected system should also look at fair
market compensation to allow the Department to attract and retain the
most qualified employees, and that the system must be viewed as "fair,
just, and accountable." He felt strongly that the government and private
sector markets must be brought closer together.

Finally, Mr. McTigue advised, the team should move forward with a
strategy that includes a "competent communications plan" and ensures
collaboration between DHS managers and union representatives.