# Presentation: 072713

## Strategic Compensation Update

- Strategic Compensation Conference 2001
- August 28-29, 2001

## Background

- Chorus of calls for compensation change from
- Agencies and interagency councils
- GAO and Congressional leaders
- Government experts (e.g., NAPA, Brookings)
- Agencies now poised to use pay strategically - dissatisfied with “one size fits all” system

## Background  (Continued)

- Difficult to “fine-tune” system
- Agencies have limited authority to make changes
- Law specifies many details (e.g., grades and step system)
- Agencies have sought and obtained exemption from the General Schedule
- Congress increasingly willing to grant exemptions
- Jobs moved from the regular General Schedule pay system now at  20% of workforce

## Background  (Continued)

- Many Federal compensation systems and policies (e.g., GS structure) designed decades ago for a world where:
- Work was routine and process-oriented
- Performance and skills requirements were stable
- Top-down approach was the norm and was unquestioned
- One size _did_ fit all

## Background  (Continued)

- Today’s Federal Government faces:
- Unprecedented competition for talent
- Rising expectations
- Demand for better, faster, lower-cost services
- New ways to provide service (e.g., e-government)
- Stable or declining resources
- Greater complexity and pace of change
- Greater diversity in the workforce and the public it serves

## President Bush’s Agenda

- ...if government reform is to help the Federal Government adapt to a rapidly changing world, its primary objectives must be a Government that is:
- Citizen-centered,
- Results-oriented, and
- Market-based
- President George W. Bush
- July 11, 2001

## How Does Federal Pay Stack Up?

- Citizen-centered?
- Results-oriented?
- Market-based?

## Current Environment

- Based in law (title 5, U.S.C.)
- Internal equity a central value
- Considered important
- Rigidly defined in statute
- Heavily outweighs other forms of equity
- Limited market sensitivity

## Current Environment - Title 5 Features

- Position-centered:
- Classification = grade = pay
- Grades defined in law
- Narrow pay ranges (30%)
- Performance differences have little effect on an employee’s pay

## Current Environment

- Agencies have sought flexibility to:
- allow more factors to influence pay
- balance internal, individual, and external equity

*Current Process*

- Labor Markets

- Results

- Performance

- Classification

- PAY

- Mission Impact

*Desired Process*

## Federal Alternatives

- Demonstration projects (DoD, Commerce)
- Non-title 5 systems (VA, FIRREA, FAA)
- Based on examination and adaptation of private sector practices

## Federal Alternatives - Major Themes

- Agencies use pay to
- attract and retain critical staff
- communicate and reward desired performance and results
- support organizational culture

## Federal Alternatives - Major Features

- Support mission, strategic goals
- Include wide range of private sector practices
- Greater market sensitivity
- Less emphasis on position
- streamlined job evaluation
- looser link between job evaluation and pay
- broadbanding common

## Federal Alternatives - Major Features(Continued)

- More emphasis on person
- Wider pay ranges
- Pay changes linked to employee’s value (contributions, competencies, performance)
- Requires credible measures to work well
- Continuing challenge in public and private sectors
- Agencies must invest thought and effort

## OPM Leadership

- Developed a comprehensive strategic rewards framework
- Creating and leading a compensation community
- Strategic Compensation Conferences
- Compensation an emerging HR specialty

## OPM Leadership (Continued)

- Improved existing system:
- Administrative flexibilities (3 Rs)
- Performance management deregulation
- Support for learning and development
- Family-friendly leave
- Paybanding (demonstration projects, IRS)

## Strategic Compensation Initiative 

- Goal – develop legislative and regulatory proposals to improve the ability of Federal compensation tools to support agencies’ strategic goals
- Timeframe – complete process in FY 2002

## Strategic Compensation Initiative  (Continued) 

- Method
- Conduct research
- Outreach to Federal community
- Work with stakeholders

## Identified seven major components of Federal compensation
Established review process with stakeholders
agencies
unions 
management associations
public service organizations

- Established review process with stakeholders
- agencies
- unions
- management associations
- public service organizations

*Strategic Compensation Initiative - Progress*

## Strategic Compensation Initiative - Progress

- Researched compensation practices
- Workgroups underway to:
- review major components
- produce observations about possible new pay practices
- Informing and educating stakeholders
- 	(web site, focus groups, presentations, etc.)

## Special Sneak Peek!!!

**The SCPC Web site!!!**

## Next Steps

- Inform new OPM leadership
- Complete working group discussions
- Pursue interim steps, like “Freedom To Manage” legislation
- Proceed with preparing more comprehensive reforms

## Strategic Rewards

**Compensation**
- Base Salary
- Variable Pay
- Other Payments
- Paid Time Off
*	**Support Processes*

**Benefits**
- Health Care
- Retirement
- Savings
- Other Insurance

**Learning & Development**
- Workforce Planning
- Training
- Career Development
- Learning Experiences

**Work Environment**
- Work/Life Balance
- Leadership
- Performance Support
- Organizational Climate

## Strategic Rewards and OPM

**Strategic Rewards and OPM**

**Compensation**
- Pay
- Classification
- Pay-for-Performance
- Performance Management
- Leave

**Benefits**
- Retirement
- Regular
- Disability
- Insurance
- Health
- Life
- Long-term care

**Development & Learning**
- HRD Leadership
- Training
- Individual Learning 	Accounts
- Career Development
- Workforce Planning

**Work Environment**
- Flexible Schedules
- Family-Friendly	Workplace Advocacy
- Leadership
- Organizational Climate

- Workforce Compensation and Performance Service

- Office of Workforce
-   Relations

- Employment Service

- Retirement and Insurance
-   Service

- Office of Executive and
-   Management Development/
-   Office of Executive Resources  Management