& 

I OF 

M E R I T 

a publication of 

the U.S. Merit Systems 

Protection Board, 

Office of Policy 

and Evaluation 

W ’ S 

I 

Using Pay for Performance 

to Support Merit 

Director’s Perspective 

Page 2 

Myths About Career 

Executives and Political 

Appointees 

Page 4 

Replace Warm Bodies with 

Working Bodies 

Page 5 

Customer Satisfaction 

Survey Results 

Page 6 

Background Investigations 

Page 6 

Checking References 

Means Working Together 

MSPB Departure 

A p r i l 2 0 0 5 

i n s i g h t s a n a l y s e s f o r F e d e r a l h u m a n c a p i t a l m a n a g e m e n t 

S S U E S 

H A T

N S I D E 

Shifting the focus from tenure to performance can be a better way to pay. 

Page 7 

Page 7 

As we have discussed in previous 

issues, maintaining effective pay and 

performance management systems 

requires both brains and brawn. Agency 

leaders must think about where they 

currently are, where they want to go, 

and what is required to get there—the 

brains. They must also be willing to 

invest the time, money, and effort to 

ensure that their good ideas become 

good practices—the brawn. 

Agencies don’t have to wait for 

perfect conditions to begin, but they 

do need a realistic understanding of 

the potential impact of shaking up 

something as significant to employees 

as their pay. Decades under the General 

Schedule with its virtually automatic 

increases based on time served and 

general, across-the-board pay increases 

have created a workforce that expects to 

receive regular pay increases, regardless 

of performance. 

In fact, some employees believe 

that although the current system has 

its faults, at least it treats everyone 

the same. They fear that providing 

supervisors with the discretion to 

evaluate individual performance 

and base pay increases will result in 

favoritism for the “in-group,” while 

“cheating” the others out of pay 

increases that they would have otherwise 

received. 

In practice, though, a properlymanaged performance-based pay system 

may produce a fairer distribution of pay 

increases, leading to improved trust 

between supervisors and employees. 

Better alignment between the pay system 

and the merit system principles may also 

occur, as we discuss below. 

Equal pay for work of equal value. 

The merit system principles call for 

“equal pay” for “work of equal value.” 

However, the value of work depends on 

more than the series, grade, and tenure 

of the employee performing that work. 

Instead, it may be fairer to recognize that 

value of work to the organization should 

drive pay. Performance-based pay can 

enable an agency to pay more to those 

who contribute more to the mission. In 

other words, those whose work is more 

closely aligned with the organizational 

goals may have an advantage because 

they contribute more towards the 

organization’s success. 

continued page 3 
I OF 

M E R I T 

& 

h u m a n c a p i t a l m a n a g e m e n t 

U.S. Merit Systems 

CHAIRMAN 

Neil A.G. McPhie 

BOARD MEMBER 

Barbara J. Sapin 

Office of Policy and Evaluation 

DIRECTOR 

DEPUTY DIRECTOR 

Our Mission 

Evaluation conducts studies to 

assess the health of Federal merit 

systems and to ensure they are free 

Issues of Merit 

We offer insights and analyses on 

topics related to Federal human 

capital management, particularly 

findings and recommendations 

Reprint Permission 

We invite you to reprint any of 

our articles. If you do so, please 

include the following attribution: 

Reprinted from Issues of Merit, a 

and Evaluation, U.S. Merit Systems 

Protection Board. 

For More Information 

Contact us at : 

www.mspb.gov 

(select STUDIES page) 

STUDIES@mspb.gov 

202-653-6772 x1350 

1-800-209-8960 

V/TDD: 202-653-8896 

(TTY users may use the Federal 

Relay Service, 800-877-8339) 

U.S. Merit Systems Protection Board 

Office of Policy and Evaluation 

1615 M Street, NW 

Washington, DC 20419 

S S U E S 

i n s i g h t s a n a l y s e s f o r F e d e r a l 

Protection Board 

Steve Nelson 

John Crum 

The MSPB Office of Policy and 

from prohibited personnel practices. 

from our independent research. 

publication of the Office of Policy 

D I R E C T O R ‘ S P E R S P E C T I V E

OPM Enters a New Era

Kay Coles James resigns her post as OPM Director. 

The Director of the Office of 

Personnel Management (OPM) plays a 

valuable leadership role in the Federal 

Civil Service. The incumbent is 

responsible for being responsive to the 

President and for aligning personnel 

systems with the strategic direction 

of the Administration. At the same 

time, the Director must ensure that 

those systems adhere to the merit 

system principles. This balancing 

act is often challenging. The Merit 

Systems Protection Board (MSPB) 

was chartered to help the Civil Service 

meet this challenge. 

On January 31, Kay Coles 

James left her post as the Director of 

OPM. Director James served during 

a particularly critical juncture in the 

Civil Service, and the effects of her 

leadership role will be felt for years to 

come. 

Under Director James’s leadership, OPM made many changes to 

Federal personnel programs that were 

a long time in coming and consistent 

with recommendations MSPB has 

made for many years. For example, 

the President’s Management Agenda 

emphasizes the importance of strategic 

management of human capital as a 

critical management function, and 

OPM has played a key role in working 

with agencies to identify how to 

improve their efforts in this area. The 

Board has often recommended that 

agency leaders treat human capital 

management as a key business function 

rather than something for which 

the human resources (HR) staff is 

responsible. 

The Homeland Security Act of 

2002 called for a number of needed 

personnel reforms in response to the 

terrorist attacks of September 11th, and 

OPM worked with the Department of 

Homeland Security (DHS) to develop the 

regulations and policies necessary to bring 

these reforms to life. The Act required 

most agencies to appoint a Chief Human 

Capital Officer (CHCO) and establish 

the Governmentwide CHCO Council— 

designed to advise and coordinate 

human capital activities across Federal 

agencies—which Director James chaired. 

OPM also developed the regulations to 

implement direct hire and category rating 

Governmentwide. Category rating is one 

flexibility that has long been supported by 

the Board to supplement, and hopefully 

replace, the outdated “Rule of Three.” 

OPM has worked with agencies 

to retool Government recruitment and 

retention efforts. As recommended by the 

MSPB, OPM is expanding the Presidential 

Management Fellows program to enhance 

its ability to recruit, select, and develop 

outstanding Federal leaders. It established 

new benefits that agencies can use to 

attract and retain employees. It developed 

hiring flexibilities that assist targeted 

recruitment efforts, including the Federal 

Career Intern Program. It organized 

Governmentwide job fairs across the 

nation and online to attract new talent. 

Finally, it is redesigning USAJOBS and 

Federal vacancy announcements to expand 

their capabilities and user-friendliness, 

again in alignment with recommendations 

MSPB has made. 

All of these are important 

achievements that attempt to provide 

agencies with the flexibilities, as well as 

the tools, to make merit-based decisions. 

But the achievement for which Director 

continued, page 3 

2 
OPM’s New Era

(continued from page 2) 

James will most likely be remembered is the role she 

played in redesigning the personnel systems at DHS and 

the Department of Defense (DOD). It was in working 

with these agencies to design the new regulations that 

she most likely learned of the difficulty in designing 

personnel systems that attend to the often competing 

demands of flexibility and merit. Flexibility is needed to 

ensure that agencies can meet their constantly evolving 

and unique mission require-ments. Merit ensures that 

the work-force is qualified and managed in the public’s 

interest. Congress provided DHS and DOD the freedom 

to redesign their systems so they would have the 

management flexibility necessary to meet the national 

security demands they face on a daily basis. At the same 

time, they were also required to adhere to the ideals of 

merit expressed in the merit system principles. 

At the end of Ms. James’s term as OPM Director, 

DHS and DOD each published regulations jointly with 

OPM that were designed to meet these often competing 

demands. There has been much discussion and debate 

over the regulations. The unions have let their opinions 

be known, as have agency and congressional leaders. 

Only time will tell what the future will bring for these 

agencies and their employees. But we do know that the 

new OPM Director will play an equally important role 

in overseeing the implementation of these new systems 

as Ms. James played in helping design them. The new 

personnel systems hold great implications for the future of 

the entire Federal Civil Service. They could very well set 

the direction for overall Civil Service reform. 

In thinking about the future direction of the Civil 

Service, the next OPM Director will also have to think 

about problems yet to be resolved. The Government 

still has a hiring process that is long, complicated, and 

burdensome for applicants, and we continue to use 

inadequate assessment procedures. We need to develop 

more effective mechanisms for measuring employee 

performance as we increasingly tie those ratings to salary 

decisions. These decisions are critical to ensuring that 

we have a flexible personnel system that supports merit 

and are the challenges OPM faces under its next Director. 

We look forward to working with the new Director as 

these and other human capital management issues are 

addressed. 

Steve Nelson 

Director, Policy and Evaluation 

Pay for Performance and Merit

(continued from page 1) 

Appropriate incentives and recognition for excellence 

in performance. Yet, even if two people hold similar jobs, 

one can still earn substantially more if their performance 

levels differ. Basing pay on performance, instead of 

role or tenure, may encourage 

higher performance and facilitate 

recruitment and retention of the best 

employees. Pay for performance 

provides agencies with the ability to 

monetarily recognize achievements— 

not just with token cash awards, but 

with pay increases that are limited 

only by the agency payroll budgets and statutory limits. 

Consideration of private sector national and local 

pay rates. Finally, flexibilities often associated with 

pay for performance may allow agencies to vary starting 

salaries in order to compete with the private sector to 

attract high performers and obtain critical skills that 

they’re lacking. Ongoing attention to salaries offered by 

the competition may also enable agencies to retain current 

employees who have gained valuable experience and 

made significant contributions to the organization. 

So, if you support the concept of 

paying more to those who contribute 

more to achieving organizational 

goals, then your remaining challenge 

is to make it work. 

To assist agencies with 

successfully implementing pay for 

performance, we have drafted a 

report titled Using Pay for Performance to Effectively 

Recruit, Retain, and Motivate the Workforce, which will 

be released in the next few months. Look for it to be 

posted on our website at www.mspb.gov under STUDIES 

or sign up for the LISTSERV to receive a notification 

when it’s available. 

3 
Myths About Career Executives and Political 

Appointees 

A recent study finds that some long-held assumptions need to be reconsidered. 

The IBM Center for the Business of Government 

recently released a report, Getting to Know You: Rules 

of Engagement for Political Appointees and Career 

Executives. This report looks at myths frequently held by 

political appointees about career executives and by career 

executives about political appointees. After discussion 

with numerous political and career executives, the authors 

identified the following myths that career executives 

believe political appointees hold about them, such as: 

• Career executives are loyal to the previous 

administration. 

• Career executives are not passionate about their work 

and they don’t work hard. 

• Career executives are mostly interested in job security. 

• Career executives always resist new policy ideas. 

• Career executives don’t want their political bosses to 

succeed. 

When the authors explored these beliefs, they found 

they seldom had much basis in fact. Contrary to the first 

myth, the authors concluded that most career employees 

check their personal politics at the door because they view 

their role in Government as technical rather than partisan. 

Similarly, they found that most career executives work 

extremely hard under tight deadlines and often stressful 

conditions. Rather than being motivated by job security, 

the study showed that most career executives are 

motivated by a strong sense of public service, mission 

dedication, participation in the policy process, and 

intellectual challenge. 

The authors also found that most career executives 

are not against new policy ideas, but they are sensitive 

to the various implementation challenges. Frequently 

the career executives have had many years of experience 

dealing with changes in organizational direction and, as a 

result, they tend to see change in very pragmatic terms. 

Perhaps most importantly the study concluded that 

most career executives want their political executives to 

succeed because they believe in the system and because 

they want their agencies to succeed. The typical career 

executive wants to add value to the process. If the 

political boss does not succeed then this diminishes 

the career executive’s perception that he or she is 

contributing. 

For their part, many political appointees also believe 

that career employees mischaracterize them in a number 

of ways. The myths they think career employees hold 

about them include: 

• Political appointees care only about ideology and not 

about organizational stewardship. 

• Political appointees are not really competent for their 

jobs. 

• Political appointees do not want to hear information 

that contradicts their ideological agendas. 

Once again the authors of the report found that 

these beliefs frequently do not reflect the facts. Instead 

of being rigidly ideological, the study showed that most 

political appointees care about leaving the agency a better 

place than they found it. In a similar vein, rather than 

being incompetent, political appointees are often highly 

educated, have prior Government experience, and have 

expertise in policy. 

Accordingly, most political appointees also want to 

make sound decisions based on evidence. In fact, the 

authors conclude that most political appointees are more 

interested in “getting it right” than in adhering to a rigid 

political agenda. According to the authors, whether a 

person is effective as a political appointee has little to do 

with political party; managerial and interpersonal factors 

are far more important. 

The report concludes that the reality is far more 

positive and affirming than the mythology would imply. 

The authors discuss “constructive rules of engagement” 

and provide recommendations on how political and 

career executives can form productive partnerships to 

achieve policy objectives. In this time of post-election 

appointment changes, these are important lessons to 

review. See the report at www.businessofgovernment. 

org/pdfs/FerraraRossReport.pdf for more information. 

4 
Replace Warm Bodies With Working Bodies

It pays to invest in good recruitment and assessment practices. 

It’s a quandary many supervisors face. They 

advertise a vacancy and find that the candidates don’t 

meet their expectations for the position. At the same time, 

the work is piling up, the office is short-staffed, and the 

cost and time it will take to re-advertise the position will 

set the work back even further. They wonder if a warm 

body—someone who can at least do some of the work—is 

better than no body. 

Public service is a public trust. Each employee 

has a responsibility to the United States Government 

and to its citizens. For supervisors, this responsibility 

includes ensuring that all employees are fully contributing 

members of the workforce. Yet, hiring a warm body is 

tempting. One supervisor told us, in response to a recent 

survey question, “Government organizations want you 

to overlook a lot for the sake of filling a position. The 

philosophy is ‘any body’ to fill the position regardless of 

whether they are qualified or suited for the job.” 

But what price do we pay for these employees who 

do not perform up to expectations? Bodies that are warm, 

but not particularly effective, can be expensive. Over 

the course of a career, a marginal performer can harm the 

productivity and morale of the office, the effectiveness 

of co-workers, the reputation of the work unit or agency, 

and the ability of the organization to accomplish its goals. 

This is aside from the financial cost of years of salary and 

benefits paid to an underperforming individual. 

Ignoring the problem is not a solution. Once 

employees complete the first year of probation, they are 

actually quite likely to remain in the Civil Service for 

many more years. And the more time employees invest in 

the Government, the greater the likelihood that they will 

choose to remain for the rest of their career. 

The likelihood of being removed is also diminished 

with time. Once the probationary or trial period is 

completed, agencies tend not to take action to remove 

an employee, even if performance is marginal or poor. 

Even in probationary and trial periods, removals of these 

employees are rare. This needs to change. If you have an 

employee with conduct or performance problems, or an 

employee who just isn’t as effective in the job as he or she 

should be, the facts are clear: the problem will not just go 

away. 

Removing an employee and recruiting a replacement 

costs time and money. However, if you look at the length 

of a typical Federal employee’s career, keeping a marginal 

performer costs the Government much more. 

Therefore, agencies must do a better job recruiting, 

assessing, and selecting candidates. This means investing 

the resources up front to make sure that recruitment 

strategies target necessary skills and that quality 

assessments are used to evaluate which candidates will 

be the best fit. In addition, managers need to use the 

final phase of the assessment process—the probationary 

period—to its full advantage. The probationary period 

provides the easiest avenue for separating employees who 

cannot perform well on the job. Using the probationary 

period appropriately also means a culture change for some 

who have long believed that a warm body is better than no 

body. In the end, the warm body just can’t compare to the 

value of an effective employee. 

Federal employees invest in Government service, the 

Fast Facts on Resignation/Removal Rates 

The numbers support the fact that the more time 

more likely they are to stay in Government service. 

Source: OPM, Central Personnel Data File 

5 
Background Investigations: A Barrier to Timely Hiring

Most would agree that the Federal hiring process 

takes too long. There are many reasons for this. One 

component of the process that has received little attention 

until recently is the background investigation. 

MSPB reported in a 2000 study that background 

checks are a substantial barrier to timely job offers. This 

problem has worsened since September 11, 2001 with 

the subsequent increase in agency clearance requests. 

Currently, there is a backlog of up to 500,000 cases, 

and it takes upwards of one year to complete many 

investigations. However, relief may be on the way. Four 

recent initiatives may help to streamline the clearance 

process and speed agencies’ ability to appoint candidates 

to sensitive positions. 

Automation. In May 

2004, OPM launched e-QIP. 

This automated system allows 

candidates to fill out clearance 

forms online—reducing the 

burden on applicants, cutting 

processing time, reducing 

duplication, and improving 

tracking of clearance information. 

Consolidation. OPM is in the process of acquiring 

over 1,800 security personnel from DOD’s Defense 

Security Service, which handles background checks 

for Defense employees and contractors. After the 

merger, OPM will be responsible for up to 95 percent 

of all Government background investigations. Partly, 

the merger is intended to reduce duplication, increase 

economies of scale, and expand clearance reciprocity 

among agencies. 

Expanding Capacity. The Government 

Accountability Office indicated in a recent study that 

OPM and DOD need almost twice the current number 

of field investigators to reduce the backlog. In response, 

OPM approved a plan to establish Blanket Purchase 

Agreements for Federal background investigation 

services, helping to alleviate the backlog and expanding 

the nation’s investigative capacity. 

Legislation. The Intelligence Reform and Terrorism 

Prevention Act of 2004 puts forth a rigorous plan to 

trim the time it takes to complete investigations. The 

legislation sets out an agency structure to better oversee 

and conduct background investigations; requires that 

by 2009, 90 percent of all investigations be completed 

within 60 days; and requires agencies to recognize each 

other’s clearances—a goal long sought by some to reduce 

duplication, burden, and expense. 

Background investigations are necessary to ensure 

that our Federal employees are not only qualified, but 

also suitable to hold positions of public trust. Applicant 

interest, recruitment costs, productivity, mission 

accomplishment, and national security may be negatively 

impacted the longer it takes to check backgrounds and 

bring people on board. Therefore, it is important for 

agencies, OPM, and Congress to address the problem of 

time-consuming clearance processes. 

Staying In Touch

In the spirit of continual improvement and customer 

service, MSPB’s Office of Policy and Evaluation 

(OPE) periodically conducts surveys of our customers 

to improve how we share information. During the 

summer of 2004, we conducted a short web-based survey 

about our Issues of Merit newsletter, our most recent 

study reports, and our website. About 300 individuals 

responded. 

As in previous surveys, OPE products are well 

regarded. Almost 9 out of 10 respondents agreed that 

report topics are timely, relevant, well written, and well 

analyzed. About 8 out of 10 of our respondents agreed 

that newsletter articles are timely, relevant, and that 

information is presented clearly. A key component in 

the distribution of OPE products is our webpage, found 

at www.mspb.gov under STUDIES. The majority of 

our survey respondents found the website appealing and 

found it easy to locate copies of our publications. 

While we have achieved positive results, we realize 

that more can be done. Suggestions and comments are 

always welcome, so stay in touch by emailing us at 

STUDIES@mspb.gov. For more information on this 

survey, please visit our STUDIES webpage. 

An MSPB SEARCH engine allows ready access to recent 

OPE reports or newsletters pertaining to a selected topic 

area. 

will result in automatic notifications of any new releases. 

Also, adding one’s e-mail address to the LISTSERV 

Website Quick Fact 

6 
Checking References Means Working Together

It takes the cooperation and support of many to make reference checking work.

Right after eager 

job searchers read a 

vacancy announcement, they will check 

their resumes to 

compare their skills 

with the ones in the 

announcement. If 

they apply for the job, 

hiring officials will 

then check applicants’ resumes. A smart hiring official 

will go one step further and check their references too. 

Why? Because an over-eager applicant can easily create 

a fictitious job history to match the vacancy. Fortunately, 

hiring officials can unravel these fabrications by spending 

a few minutes asking the applicant’s former supervisors 

about his or her job performance. 

Results of an MSPB survey reveal that most agency 

supervisors (76%) who hired a new employee conducted 

reference checks. Supervisors check references to 

verify applicant claims about education, training, and 

experience. Whether these claims are made on resumes, 

job applications, or as answers to rating schedule 

questions, they should be supported by someone other 

than the applicant. MSPB recently conducted a best 

practices review to determine how reference checking 

can best be used in hiring decisions. Our findings show 

that different members of the employment community 

must each play their roles to make reference checking 

successful. 

Hiring officials should check references. They can 

improve the quality of reference checking by insisting that 

job applicants provide at least three references who have 

observed their performance on the job. Friends, family 

members and other “character references” cannot answer 

the specific, job-related questions that yield the most 

useful information about job performance. 

Former supervisors should discuss the performance 

of their former employees with prospective employers. 

Some former supervisors will only provide “name, rank 

and serial number” facts about employment history 

because they are concerned with protecting the privacy of 

former employees. Their concern is understandable but 

need not interfere with reference checking. So long as 

reference checking discussions focus on job-related issues 

such as performance, reference giving is appropriate 

and legally defensible. Former supervisors who support 

reference checking inquiries can reward good employees 

for their past contributions and avoid “passing on” a 

problem employee to another agency. 

Agencies can support reference checking by 

including it in their hiring model, as OPM has recommended. Agency human resources personnel can work 

to remove barriers to effective reference checking. For 

example, applicants should be required to complete 

Declaration of Federal Employment (OF-306) forms early 

in the application process. This form explicitly grants 

permission to check references. And this sets applicants’ 

expectations appropriately—their performance in previous 

employment will be investigated. 

In a previous report, MSPB demonstrated that 

employment interviews are more effective hiring tools 

when structured according to interviewing best practices. 

Reference checking can also be improved through 

appropriate structuring. MSPB’s forthcoming report, 

Reference Checking: Best Practices for Federal Agencies, 

makes additional recommendations to hiring officials, 

reference providers, and agencies that will help the 

Government make good hiring decisions. Look for this 

report on MSPB’s STUDIES website in the near future. 

ANNOUNCING. . . 

On March 1, 2005, 

appointment as Member 

of the Merit Systems 

Protection Board expired. 

During her tenure with 

the Board, Ms. Marshall 

served at various times as 

operate with only two Board members until the appointment 

The employees of the Board wish 

Ms. Marshall well in her new endeavors. 

 . . . 

MSPB Departure

Susanne T. Marshall’s 

Member, Vice Chairman, 

and Acting Chairman. 

She has played a pivotal role in rendering precedential 

opinions in personnel cases affecting the Federal workforce. 

With Ms. Marshall’s departure, the Board will once again 

of a new third member. 

7 
U. S. Merit Systems Protection Board

1615 M Street, NW 

Washington, DC 20419 

I S S U E S OF 

A p r i l 2 0 0 5 M E R I T V o l u m e 1 0 I s s u e 2

I N T H I S I S S U E * 

Pay for Performance Can Support 

Merit. Why pay for performance may 

actually encourage a fairer distribution of pay increases. (Page 1) 

OPM Enters a New Era. Our Director takes a look at the leadership of 

OPM’s former Director, Kay Coles 

James, and the challenges her successor will face. (Page 2) 

Can Career Employees and Political Appointees Get Along? We take 

a look at a recent study that explores 

the myths held by career executives 

about political appointees and vice 

versa. (Page 4) 

I N T H I S I S S U E * I N T H I S I S S U E 

Warm Bodies are Just Not Good Cooperation is Needed to Make 

Enough. Look at why it pays to Reference Checking Work. Referinvest in good recruitment and assess- ence checks are an important part 

ment strategies. (Page 5) of the assessment process. Take a 

look at how hiring officials, former 

Your Views Matter. See what you supervisors, and agencies can work 

and your peers had to say about our together to make the most of reference 

studies, newsletter, and website and checking. (Page 7) 

why we think it’s important. (Page 6) 

Background Investigations Impact 

Timely Hiring. Background investigations often serve as an impediment MSPB Departure. The Board says 

to appointing candidates to sensitive farewell to one of our Members. 

positions. Find out what’s being done (Page 7) 

to overcome this barrier. (Page 6)