# Presentation: 194313

## Slide 1

## Federal Workforce of the 1940’s

## 1949 Classification Act 
70% of federal white collar jobs clerical work
Largely undifferentiated jobs
Expect long, stable career
2001 Age of e-Government
Workforce  highly specialized, knowledge workers
Expect to work for many employers
One size no longer fits all

**70% of federal white collar jobs ****clerical work**
**Largely undifferentiated jobs**
**Expect long, stable career**
**2001 Age of e-Government**
**Workforce  highly specialized, ****knowledge workers**
**Expect to work for many ****employers**
**One size no longer fits all**

**A System Whose Time Has Come—and Gone**

## Strategic management of human capital requires the strategic use of compensation.

**Unfortunately, our current system does not ****support strategy very well.**

## Strategic Rewards

## Stumbling Blocks(side issues that will divert us from the path to change)

## The White Paper

**Reflect evolving use of pay to support strategic objectives**
**Retain underlying values**
**Get the classification system onto the screen**

## The Federal Pay System:Founded on Timeless Values	

**Openness**
**Merit System Principles**
**Procedural Justice**

## The Foundation of theMerit Principles

**	****Equal pay**** should be provided for work of equal value,**
**	****with**** appropriate consideration of both national and local rates paid by employers in the private sector,**
**	****and**** appropriate incentives and recognition should be provided for excellence in performance.**
**5 U.S.C. 2301(a)(3)**

## The Merit Principle on Pay	

**Equal pay should be provided ****for work of equal value****, **
**with ****appropriate consideration of both national and local rates paid by employers in the private sector****, **
**and ****appropriate incentives and recognition should be provided for excellence in performance****.**
**– ****5 U.S.C. 2301(a)(3)**

## We’re Out of Balance

**We’re Out of Balance**

**Internal equity**** is overemphasized.  Job value - the position - is the primary determinant of pay. **
**External equity**** is underemphasized.  Pay should be more market-sensitive. **
**Individual equity**** is underemphasized.  Pay should better reflect  performance and results. **

**0****	****Internal Equity****	****100**

**0****	****External Equity****	****100**

**0****	****Individual Equity****	****100**

## A Rigid Connection	

- Position
- Description

**Classification**
**Points**

- =

**GS**
**Grade**

- =

**Base**
**Pay**

## Statutory Grade Definitions:“A Hierarchy of Adjectives”

**Grade GS-11**
**...****work of ****marked**** difficulty**
**...****work of ****considerable**** difficulty**
**...****requiring ****somewhat extended**** training and experience**
**...****demonstrated ****important**** attainments**

**Grade GS-12**
**...****work of ****a very high order of**** difficulty**
**...****work of ****marked**** difficulty**
**...****requiring ****extended ****training and experience**
**...****demonstrated attainments ****of a high order**

****** ****$9,000+ ******

## The ChangingGeneral Schedule Workforce

## An Internal Point of View	

**Classification system designed at a time when entering federal service was a lifetime decision**
**Comparisons tended to focus inward, i.e., inside the government**
**Not much concern about external markets or competitors**
**Since that time, issues about that external world and competitive labor markets have surfaced **

## The System Is Market-Insensitive	

**Pre-FEPCA ****	****One nationwide General Schedule**
**	****	****	****	****with few exceptions**
**FEPCA****	****	****A major stride forward for **
**	****	****	****	****external equity**
**	****	****	****	****Change was considered radical**
**	****	****	****	****at the time**
**	****	****	****	****Locality-based pay schedules**

## External Equity Mechanisms	

**Special salary rates**
**Recruitment and retention tools**
**Demonstration projects**
**Leave the title 5 system**
**Cumbersome and piecemeal**

## FEPCA’s Dilemmas	

**Only two dimensions are considered:**
**Grade level**
**Location of the work**
**Entails a lengthy process**
**One “gap” per locality area**

## Exploring the Gaps

- *  Does not include existing locality payments.

## Exploring the Gaps

## Exploring the Gaps

**Exploring the Gaps**

## The Gaps Behind “The Gap”

## The Gaps Behind “The Gap”

## The Gaps Behind “The Gap”

## Overall, FEPCA is a Winner	

**Successfully implemented and administered a locality-based pay system**
**Gained a better understanding of labor markets**
**Developed experience in conducting and applying salary surveys**
**Introduced market-oriented tools such as recruitment bonuses and retention allowances**
**Learned that simplified approach to disparity would eventually and inevitably both overpay and underpay**

## 2002 General Schedule Pay Rates

| GS | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1 | 14,757 | 15,249 | 15,740 | 16,228 | 16,720 | 17,009 | 17,492 | 17,981 | 18,001 | 18,456 |
| 2 | 16,592 | 16,985 | 17,535 | 18,001 | 18,201 | 18,736 | 19,271 | 19,806 | 20,341 | 20,876 |
| 3 | 18,103 | 18,706 | 19,309 | 19,912 | 20,515 | 21,118 | 21,721 | 22,324 | 22,927 | 23,530 |
| 4 | 20,322 | 20,999 | 21,676 | 22,353 | 23,030 | 23,707 | 24,384 | 25,061 | 25,738 | 26,415 |
| 5 | 22,737 | 23,495 | 24,253 | 25,011 | 25,769 | 26,527 | 27,285 | 28,043 | 28,801 | 29,559 |
| 6 | 25,344 | 26,189 | 27,034 | 27,879 | 28,724 | 29,569 | 30,414 | 31,259 | 32,104 | 32,949 |
| 7 | 28,164 | 29,103 | 30,042 | 30,981 | 31,920 | 32,859 | 33,798 | 34,737 | 35,676 | 36,615 |
| 8 | 31,191 | 32,231 | 33,271 | 34,311 | 35,351 | 36,391 | 37,431 | 38,471 | 39,511 | 40,551 |
| 9 | 34,451 | 35,599 | 36,747 | 37,895 | 39,043 | 40,191 | 41,339 | 42,487 | 43,635 | 44,783 |
| 10 | 37,939 | 39,204 | 40,469 | 41,734 | 42,999 | 44,264 | 45,529 | 46,794 | 48,059 | 49,324 |
| 11 | 41,684 | 43,073 | 44,462 | 45,851 | 47,240 | 48,629 | 50,018 | 51,407 | 52,796 | 54,185 |
| 12 | 49,959 | 51,624 | 53,289 | 54,954 | 56,619 | 58,284 | 59,949 | 61,614 | 63,279 | 64,944 |
| 13 | 59,409 | 61,389 | 63,369 | 65,349 | 67,329 | 69,309 | 71,289 | 73,269 | 75,249 | 77,229 |
| 14 | 70,205 | 72,545 | 74,885 | 77,225 | 79,565 | 81,905 | 84,245 | 86,585 | 88,925 | 91,265 |
| 15 | 82,580 | 85,333 | 88,086 | 90,839 | 93,592 | 96,345 | 99,098 | 101,851 | 104,604 | 107,357 |

## 2002 General Schedule Pay Rates

**2002 General Schedule Pay Rates**

**$24,777**

## The System Is Performance-Insensitive	

**System’s pay delivery mechanisms carry a strong message:**
**“****Performance doesn’t matter”**
**Lots of latitude to measure performance**
**Little latitude to deliver rewards strategically**

## The Role of Performancein Pay Increases

**Total increase in payroll:  7.1%**
**Over three-fourths of the ****total payroll increase was insensitive**
**General increase and locality pay adjustment:  4.8%**
**Over half of the remaining 2.3% of payroll increase was also insensitive to performance**
**Source: Central Personnel Data File — 2000**

- General Inc.+ Locality Adjustment
- Within Grade Increase
- Career Ladder Promotion
- Competitive Promotion
- Quality Step Increase

## The Changing Face of Performance	

**Shift from process to results**
**Changing nature of work**
**Then: “Check your brains at the door”**
**Now: “Be creative”**
**Individual **_**can**_** make a difference**
**Individual **_**and**_** organizational performance matters**

## A Look Into the Future	

**Federal pay is more market sensitive**
**Measures of workforce performance make trusted, credible distinctions**
**Agencies have the expertise to plan for their human capital requirements and to make the business case for funding their strategic rewards**

## Still Need SensiblePay Delivery Mechanisms

**To align rewards with values and strategy**
**To let competencies and performance drive pay**
**To create opportunities for substantial variable (non-base) pay**
**To achieve fairness by considering multiple dimensions**