Pay for performance may not work as well for federal workforce

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The idea of pay for performance has appeal in the federal workplace. The superior performers get rewarded for superior work, thereby helping keep the federal workforce strong and engaged. But is it true? One guest is skeptical. A professor in the Key Executive Leadership Program at American University, Bob Tobias joined Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: Bob, you found a study that kind of confirms something you have suspected, I guess that every administration comes up with this idea, we got to have pay for performance instead of the schedule system, and everything will be improved — but you’re not so sure.

Bob Tobias: I’m not Tom. The whole idea of pay for performance started in the private sector, we would motivate people to perform more by giving them pay for their performance. And in the private sector, it’s very, very easy to measure performance, because if there’s net revenue, there’s money to distribute. If there’s no net revenue, there’s no money to distribute. There is money to distribute and then there’s no money to distribute. So, easy. But in the federal sector, it’s not easy because first have others know revenue. Agencies don’t receive revenue, they receive appropriations, which may or may not be related to how much money they really need to do the work. So there’s no revenue. And second, the outcomes in agencies are harder to find, hard to measure. Good health, good education, very hard to measure. And so when the results are hard to measure, what happens is supervisors subjective evaluation determines pay for performance. And supervisors subjectivity varies from supervisor to supervisor. So if I’m in a workgroup with five different supervisors, and my work is, I believe is equivalent to your work Tom and you have a hard grading supervisor and I have an easy grading supervisor. I will be paid and you will not. So that kind of a system was tried in the Department of Defense, and it collapsed precisely because of the subjectivity of the ratings and evaluation.

Tom Temin: That was the National Security Pay System. I think that existed for a few years during the Bush administration, George W. Bush administration, then it was scrapped if I recall,

Bob Tobias: It was scrapped. But this research discovered something else that I believe is very interesting. So we rely in the public sector on the motivation of people to accomplish a mission. And what these researchers found was that internal motivation is depressed in a pay for performance system because people focus on the pre determined goals, not the overall program objective. And so I try to achieve whether or not it’s consistent with the overall objective and as a result, the overall objective in a pay for performance system is less than in a pay for performance system.

Tom Temin: Interesting. And the study you mentioned is by three professors, two from the University of Zurich, and one from the University of Liechtenstein. I didn’t know that country had a university, the whole country smaller than American University. But anyway, there’s a university there. The study looked at a lot of factors in not just the United States, but most of the developed countries and found similar patterns.

Bob Tobias: Correct. And this internal motivation is what I believe gives the federal government that kind of resilience that it has. Another study showed that 80% of federal employees come to the federal government because they want to be involved in something larger than themselves. They’re internally motivated. And when they have interesting jobs, they perform. These researchers also found that if you are an in uninteresting job, for example, like doing data entry, a paper performance system might motivate you slightly to perform more. But if you’re in an interesting job, it depresses performance.

Tom Temin: So that idea then mitigates in favor of trying to automate a lot of those dreary type jobs. And I think we’ve noted before that over the decades, the number of clerks and typists and data entry type people in the federal workforce that gave rise to the GS system in the first place, have disappeared. And many, many of the jobs are thinking type jobs. So the question is, is there a better pay system than the schedule that’s not predicated on business types of motivations that you mentioned earlier?

Bob Tobias: I think that the solution Tom is better performing leaders, leaders that really leverage the motivation that federal employees come to the workplace with. They create the kind of engagement, personal engagement, with those they lead. They’d provide support to those they lead. They create jobs where the internal motivation can be realized in the workplace. So I think the solution is not a different pay system, but a huge investment in leadership development.

Tom Temin: Yes, I mean, a great leader in any situation, business or government, the people that work for that person will jump over a cliff for them if they have enough respect, and feel that that person is watching their back and watching the ceiling above them where danger can cascade down from.

Bob Tobias: Well put. When I describe it, do those who lead choose to give you their discretionary energy? If they do, you’re going to have great results. And if they don’t, you won’t. So the real test, I believe is whether a leader can create an environment where those that leader leads give the leader their discretionary energy to accomplish goals.

Tom Temin: So then, in your opinion, does the pay system in the federal government at this point really need the overhaul that we keep hearing, again, from administration after administration coming out of maybe from different political philosophies — but they all seem to come to that same, we need to be more like a business mantra?

Bob Tobias: Well, the pay system might need to be changed in order to better link employee pay to similar jobs outside of the federal government. But I definitely believe that pay for performance should not be part of the equation.

Tom Temin: And along with what you’ve been saying, too, I think that from hearing so many managers over the years talk about recruiting, they always acknowledge that even if the salaries aren’t equal in the federal government, we can debate that till the cows come home, but presuming that they are somewhat lower, or they can’t match what the private sector can do, they always say but are real selling point is the mission.

Bob Tobias: That is correct. Come and be part of something larger than yourself, come and be part of solving this nation’s problems and implementing solutions that you will never get to do in the private sector. That’s the calling card. And that I believe is not sufficiently leveraged.

Tom Temin: And do you think there are some non paid types of changes in the workplace that could make it more normalized with what people expect in the private sector outside of pay, just the day to day routines that would make federal employment just a little bit more appealing relative to what people get to do, I don’t know, knock off early on Friday occasionally. I realize picture that paints in the political repercussions that could occur, but sometimes it seems like they have an overly structured, formalized environment.

Bob Tobias: Well, Tom, I think that one of the very few benefits from COVID is proof that federal employees can work at home more productively than they do in the workplace. And the opportunity to work at home and the flexibility to work at home, if that survives post COVID I think will be a huge way of attracting particularly younger people into the federal government because they’re used to having technology guide them. So if they can work at home with the flexibility of working at home, I think that’s going to be a huge opportunity for the federal government.

Tom Temin: Bob Tobias is a professor in the Key Executive Leadership Program at American University. Thanks so much.

Bob Tobias: Thank you very much Tom. Nice to talk to you.

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