Paying for the next generation of federal managers

Commentary by Doug Criscitello
Managing director at Grant Thornton LLP

Attending the always-inspirational annual dinner of the Partnership for Public Service a few months back, honoring outstanding public servants, got me once again thinking about the tremendous value provided to taxpayers by senior staff in many areas of the U.S. government.

Undoubtedly, it’s been a tough time to be a federal manager in recent years. Shutdowns, infrequent and minimal pay raises, no bonuses, furloughs, less training, unfilled senior positions, and the elimination of a marquee award program for federal managers conspire to create an unstable work environment that adversely impacts the federal workforce.

While all levels of staff are affected by this creeping normalcy that’s making federal employment less attractive (see Brookings’ John Hudak’s interesting piece on this this topic), the senior management workforce is particularly vulnerable.

(Photo courtesy of Doug Criscitello)
Our political leadership doesn’t seem to understand that strong managers are critical to delivering programs enacted by Congress and the President. They must be compensated fairly and treated respectfully for doing that. While it’s certain that government executives are driven by more than remuneration, the salaries of both political appointees and senior executive service (SES) members have been falling in real terms for decades.

From a basic supply and demand point of view, if what is offered in pay falls below what’s needed to attract able managers, the government won’t be able to. We may be approaching that point.

Compensation for the senior-most government officials — political appointees — has fallen by 32 percent since 1970 when adjusted for inflation. Similarly, non-political SES managers have taken a 15 percent cut. Such pay has failed to keep pace with inflation, in part, because Congress is responsible for setting pay not only for itself, but also for federal executives. Concerned with constituent ire, Congress now regularly denies raises not only for itself but also for other government executives.

Because the SES pay limit for employees hasn’t changed, many SES managers have bumped up against that ceiling and are now paid identical amounts. Oddly, though, many make more than their politically appointed bosses. Even lower level employees may be catching up. The person answering phones and keeping track of office supplies can be paid in the same ballpark as a senior official who might be responsible for managing billions of taxpayer dollars.

While Congress sets salaries, the denigration of the federal workforce comes from both ends of Pennsylvania Avenue. President Barack Obama has sought to keep a lid on senior political appointee pay and has frozen most federal pay, though a small increase occurred earlier this year as part of the agreement to re-open government last October. Holding a firm line on federal pay might make sense if pandering to voters but does little to address our country’s structural budgetary challenges. It does, however, severely impact the quality and commitment of the senior most federal workers who do the work of the American people. Also, it’s important to understand that sequester-induced furloughs — which could be rearing their ugly head once again in the years ahead ‐ are nothing but pay cuts in disguise. Such actions may appear to make sense in an era of budgetary austerity, but what does it mean for our federal management corps?

Instead of attracting top-quality managers across government, we risk only attracting three types: 1) fat cats; 2) altruists; and 3) retirement seekers. A fourth category is high achievers, capable professionals not looking to get rich, but whose real-world financial needs, like affording a home in the DC area, preclude them from entering federal service. Those are the ones we really need to attract.

Pay raises for government managers are now met with skepticism, if not derision. Conventional debate on this topic paints federal workers and their pay with too broad a brush. Rather than across-the-board raises, we need to reward a leaner, next generation federal management workforce with performance-based pay that attracts and retains our best and brightest: a cadre of executives able to innovate, think creatively, and modernize delivery of essential services at less cost to taxpayers.

Is holding an ever-increasing tight line on compensation the best way to get there? Not unless we intend to be millions wise and trillions foolish.


Doug Criscitello is a managing director at Grant Thornton LLP, focusing on government efficiency and fiscal stewardship matters. Previously, he was chief financial officer at the Department of Housing & Urban Development and was founding director of the New York City Independent Budget Office

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