[Senate Hearing 106-586]
[From the U.S. Government Publishing Office]
S. Hrg. 106-586
THE EFFECTIVENESS OF FEDERAL EMPLOYEE INCENTIVE PROGRAMS
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HEARING
before the
OVERSIGHT OF GOVERNMENT MANAGEMENT,
RESTRUCTURING AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
May 2, 2000
__________
Printed for the use of the Committee on Governmental Affairs
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington, DC 20402
U.S. GOVERNMENT PRINTING OFFICE
65-172 cc WASHINGTON : 2000
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Darla D. Cassell, Administrive Clerk
------
SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING, AND
THE DISTRICT OF COLUMBIA
GEORGE V. VOINOVICH, Ohio, Chairman
WILLIAM V. ROTH, Jr., Delaware RICHARD J. DURBIN, Illinois
JUDD GREGG, New Hampshire ROBERT G. TORRICELLI, New Jersey
Kristine I. Simmons, Staff Director
Marianne Clifford Upton, Minority Staff Director and Chief Counsel
Julie L. Vincent, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Voinovich............................................ 1
Senator Durbin............................................... 3
Senator Akaka................................................ 4
WITNESSES
Tuesday, May 2, 2000
Roberta L. Gross, Inspector General, National Aeronautics and
Space Administration........................................... 5
Henry Romero, Associate Director, Workforce Compensation and
Performance, Office of Personnel Management.................... 9
Colleen M. Kelley, National President, National Treasury
Employees Union................................................ 12
Michael Brostek, Associate Director, Federal Management and
Workforce Issues, General Government Division, U.S. General
Accounting Office.............................................. 14
Alphabetical List of Witnesses
Brostek, Michael:
Testimony.................................................... 14
Prepared statement........................................... 80
Gross, Roberta L.:
Testimony.................................................... 5
Prepared statement........................................... 31
Kelley, Colleen M.:
Testimony.................................................... 12
Prepared statement........................................... 69
Romero, Henry:
Testimony.................................................... 9
Prepared statement........................................... 43
Appendix
Letter from Ms. Gross to Senator Voinovich dated May 16, 2000.... 93
Letter from Mr. Friedman to Senator Voinovich dated May 19, 2000. 98
THE EFFECTIVENESS OF FEDERAL EMPLOYEE INCENTIVE PROGRAMS
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TUESDAY, MAY 2, 2000
U.S. Senate,
Oversight of Government Management, Restructuring,
and the District of Columbia Subcommittee,
of the Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:14 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. George V.
Voinovich, Chairman of the Subcommittee, presiding.
Present: Senators Voinovich, Akaka, and Durbin.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. The Subcommittee will come to order.
I first want to apologize for being late, I was presiding
this morning.
This morning's hearing of the Subcommittee on Oversight of
Government Management is on the effectiveness of Federal
employee incentive programs. This is the fourth hearing that we
have held in our effort to empower Federal employees, change
the culture of the Federal workforce, and address the human
capital crisis that is confronting our Federal Government.
Last July, we examined the experiences of State Government.
In October, we learned how some Federal agencies are
significantly changing and modernizing their operations, and in
March, we examined whether the government is positioning itself
to address the human capital challenges of the future. Today's
hearing will explore whether the Federal Government has the
right programs in place to attract, retain, and motivate a
world-class workforce.
I am reminded of a story that Senator Durbin told at our
last hearing. He mentioned how law firms are increasing the
salaries of their lawyers by $50,000 to $75,000 a year to
compete with rapidly growing high-tech companies which can
offer sky-high salaries and generous stock options to
individuals.
When I think about that story, I question whether current
Federal incentives, including recruitment bonuses, flexible
office hours, telecommuting, on-site daycare, vacation time,
and performance pay are adequate to bring the best and
brightest people into government service.
The Subcommittee will ask whether existing employee
incentive programs are effective in encouraging innovation and
creating an atmosphere in which employees feel there are
substantial rewards for excellence and productivity.
I am especially interested in learning whether agencies
have adequate budgets to offer whatever customized incentives
they may have developed in order to meet their particular human
capital needs. You have to have the money to offer them. In
short, are the current incentives enough to persuade people to
come to work for the Federal Government and, once working for
the Federal Government, remain with the Federal Government?
The government faces many challenges in this area. We
understand that most people who seek employment in the Federal
Government are motivated by the desire to serve their country,
and thank God there are still many people like that in our
Nation today. However, we cannot take that spirit for granted
when the employment opportunities in the private sector are
more attractive than ever before because of this country's
thriving economy. The pull for people to stay in the private
sector is greater than ever before.
According to the Office of Personnel Management, by 2004,
32 percent of Federal employees will be eligible for regular
retirement and 21 percent will be eligible for early
retirement. So the prospect is that by 2004 over half the
Federal workforce could say ``good-bye.'' As the baby boomers
leave government service en masse, the government will be hard
pressed to hire new workers with the right skills, which will
increasingly mean high technology skills. How do we get those
skills? This will require a much greater investment in pay and
benefits than Federal employees currently receive if the
government hopes to compete with that private sector.
Furthermore, surveys of Federal employees conducted by OPM
and others during the last few years indicate a majority of
Federal employees do not believe that creativity and innovation
are rewarded. Regardless of whether that understanding is true
or a misperception, if people believe that is the way it is,
then we need to respond to it.
Coupled with the example I mentioned earlier about the
enormous salaries being offered to young professionals, it
becomes clear that something has to be done. For one, we should
look at the private sector where many companies are finding new
and innovative ways to attract and retain people. I am sure
that many of you have heard that several large companies have
begun to offer all employees home computers. They are not doing
this as a give-away; rather, they have determined that
universal computer literacy of their workforce is going to be
essential to their company's future success. It sends a strong
signal of what they value and that they are willing to invest
in their employees.
I think it is a very interesting idea, and it underscores
an important point, and that is, the Federal Government needs
to undertake a substantive review of how it motivates and
retains its workforce in the information age. It is an
important element to building the kind of quality government
that our Nation should have. It is interesting that as the
private sector moves along, they are going to expect their
Federal Government to move along. And if they are going 85
miles an hour with technology and innovation and we are at 25
miles an hour, in effect we end up being an impediment to the
growing economy and our Nation.
It is really important that we start thinking about that.
We are very, very important to the future of this country's
economy, and more and more government is being involved, and
when it is involved, it should be involved in such a way with
the technology and people that are necessary in order to grease
the skids and at least not get in the way of progress in our
country.
Today, the testimony we will hear will tell us about
incentives that are currently available, and hopefully our
witnesses will share their suggestions on how to improve the
current situation. That is what I am more interested in than
anything else.
I now yield to Senator Durbin, our Ranking Minority Member,
for his comments.
OPENING STATEMENT OF SENATOR DURBIN
Senator Durbin. Thank you, Mr. Chairman, and I thank the
panel for joining us this morning.
Virtually every successful business that you have a chance
to analyze or get to meet the leaders of will tell you that the
reason for their success is the people that work there. They
can have the best technology in the world, but if they don't
have a creative, hard-working, inspired workforce, they are not
going anywhere. I think that is the story of human experience,
that we are as good as our Senate staff people who represent us
and come in contact with our voters and constituents much more
than we do on a personal basis. And the agencies of government
that we rely on to do the most important work also are as good
as the people that work there.
This is, I guess, an appropriate time for this hearing
because I understand that it is Public Service Recognition
Week. And although we haven't heard a lot of trumpets blaring
and people announcing this on the morning talk shows, the fact
is that public service for many of us who have dedicated our
lives to it means a lot. And for those who are here today
representing so many agencies, I thank you for your personal
contribution to public service and your continued devotion to
it.
It is interesting, Mr. Chairman, that we just went through
a hearing in the Armed Services Appropriations Committee about
the question of recruitment and retention of men and women in
our military. And it appears that our friends at the Marine
Corps are doing very well. They have a certain image which
attracts good men and women, and they continue to meet their
requirements in terms of recruitment.
But the other branches are having a tougher time. The Navy
is having a tough time, the Air Force as well, and the Army,
one of the worst.
The thing that has kept them going and has managed to
maintain their work in place is retention. They have convinced
a lot of men and women who are eligible to quit or retire to
stick around, stay a little while longer. And I am wondering,
as we look at this Federal workforce and the challenge that we
face here and talk about recruiting new Federal employees,
whether we ought to devote a few moments as well to talking
about what it will take to keep some of the veteran career
employees on the job a little while longer. It can make a
significant difference in terms of maintaining the key services
that we count on from the Federal Government.
I said to the Chairman at a previous hearing that before he
was elected to the Senate, we went through a very sad and
tragic period of time during the government shutdown, and there
were talk-show hosts who were blaring at full volume that no
one would ever notice if the Federal Government shut down, that
these were all faceless, bureaucratic paper shufflers who,
frankly, really didn't do anything important to the lives of
Americans across our Nation.
Those commentators were wrong, and as a result of that
shutdown, I think a lot of people on Capitol Hill and maybe
even some of the radio commentators learned a lesson. The
agencies of Federal Government do important work, and I can
list here 50 different examples my staff put together, from
getting out Social Security checks to making sure our planes
land safely at the airports, and everything in between. And we
know that we need the very best people to make that happen.
Thank you for having this hearing, and thanks to this panel
for joining us.
Senator Voinovich. Thank you.
Senator Akaka, welcome. Would you like to make a statement
this morning.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman.
As the Ranking Minority Member of the Senate's
International Security, Proliferation, and Federal Services
Subcommittee, I commend you on your unwavering interest, Mr.
Chairman, in empowering the Federal workforce. I know that our
Subcommittee jurisdictions overlap, and I just want you to know
that I appreciate sitting with your Subcommittee this morning.
I look forward to hearing from the witnesses today who
support my belief that our Federal civil servants are the
government's most valuable asset. How we recruit, train, and
retain these fine men and women is a critical dialogue that
deserves our full attention.
Having sat on civil service panels for most of my
congressional career, I know how important salary, benefits,
and other compensation incentives are to attracting and
retaining qualified employees. Federal agencies, if given
adequate funding, would be better positioned to utilize
incentive programs that are already available. Flattened
budgets and the pressure to reallocate limited resources do not
benefit Federal employees or the ultimate end users, and that
is the American taxpayers.
Our Nation's civil servants have given much to their
country, especially when Congress was balancing the budget
during times of crunching deficits. Now that the country is
enjoying record-breaking surpluses, I believe Federal employees
should be rewarded for their contributions, and I will continue
to push for realistic budgets and salaries for Federal agencies
and their employees.
Again, Mr. Chairman, I thank you for holding this hearing
today and for this opportunity to say a few words. Thank you.
Senator Voinovich. Thank you, Senator Akaka.
I would now like to introduce today's witnesses. The Hon.
Roberta Gross is the Inspector General of the National
Aeronautics and Space Administration. She will discuss how NASA
motivates its workforce and the policy her office follows to do
the same.
Henry Romeo is the Associate Director of Workforce
Compensation and Performance at the Office of Personnel
Management. He will discuss various incentives that are
currently available to Federal agencies through OPM.
Colleen M. Kelley is the National President of the National
Treasury Employees Union. Ms. Kelley will offer the union's
perspective on how to best attract, retain, and motivate
Federal employees.
And last, but not least, Michael Brostek is an Associate
Director of the Federal Management and Workforce Issues at the
General Accounting Office, and he will discuss GAO's work in
this area. And I have also asked Mr. Brostek to comment on how
GAO motivates its own employees. We are interested in that, Mr.
Brostek.
We thank you for coming, and we look forward to hearing
from you. And as is the custom of this Subcommittee, please
stand and I will administer an oath. Do you swear that the
testimony you are about to give before this Subcommittee is the
truth, the whole truth, and nothing but the truth, so help you,
God?
Ms. Gross. I do.
Mr. Romero. I do.
Ms. Kelley. I do.
Mr. Brostek. I do.
Senator Voinovich. Let the record show that all four
witnesses answered in the affirmative.
I would now like to hear first from Ms. Gross, and I think
the witnesses understand that we would like you to limit your
testimony, to the best of your ability, to 5 minutes. Your
written testimony will be made part of our record. We will
start then with Ms. Gross.
TESTIMONY OF ROBERTA L. GROSS,\1\ INSPECTOR GENERAL, NATIONAL
AERONAUTICS AND SPACE ADMINISTRATION
Ms. Gross. Thank you. Mr. Chairman and Members of the
Subcommittee, I thank you for the opportunity to be here today
to talk about retention and recruitment of NASA and NASA OIG
employees.
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\1\ The prepared statement of Ms. Gross appears in the Appendix on
page 31.
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NASA has a cutting-edge mission, and that requires a
creative and an informed workplace. The failure to recruit, to
train, and retain skilled workers has, in fact, caused some
problems for NASA: Very recent shuttle flights had some
anomalies. This problem caused, in part, the mission
vulnerabilities of the costly Mars Climate Orbiter failure.
Because of past flattened and reduced budgets, only
recently has NASA begun hiring again. This hiring authority
will allow the agency really to right-size, that is, it can
replace staff with essential skills that have been lost through
attrition and buyouts, and it will ensure new personnel so that
we can have future leaders. There are statistics that show the
aging force compared to the new recruits. At NASA, there have
been no recruits, almost, because of the downsizing.
A significant aspect of NASA's new staffing plans, however,
will be the use of temporary and term appointments, and in my
mind, it is a real question whether this strategy will attract
hard-to-reach skilled workers, and we will be following that
through some of our inspections and audits.
But let me turn to the NASA Inspector General experience,
and let me particularly focus on our efforts to increase and
manage the information technology environment at NASA Office of
Inspector General (OIG).
We needed to recruit professionals who could effectively
audit, inspect, and investigate information technology
security, which is obviously critical to an agency such as
NASA. We have a Computer Crimes Division which is small, but it
is smart and efficient. (I will take the time to say and
recognize my workers.) And, in part, we have been able to
successfully recruit some skilled staff for the CCD because I
made a policy we are going to offer them higher grades and
higher salaries, and, generally, compared to the workforce, my
other workforce, they are at higher levels.
We have also created a workplace known for its leadership
in the computer crimes field. It is the place to be. We sort of
look at ourselves as the Chicago Bulls. If you want to combat
computer crime, come to the NASA Inspector General's Office.
Senator Durbin. I appreciate that analogy. [Laughter.]
Ms. Gross. It is also a challenging agency environment.
After all, IT security at NASA impacts astronaut security,
satellite mission success, and protection of cutting-edge
technology from inadvertent loss or malicious attacks.
However, recruitment in this occupational field is
increasingly difficult because of the lure of the private
sector: Higher salaries, more lucrative benefits, profit
sharing, stock options, and greater flexibility to balance work
and private life. And it has been much more difficult because
of this lure.
We have had similar difficulties, and in some ways even
more difficulties, in recruiting for our IT audit staff. Over
the last few years, we have tried to use bonuses to recruit
experienced IT auditors and evaluators, but that is not good
enough. The private sector--your Big Ten firms that are going
to be using this kind of workforce for consultants . . . are
snapping up IT auditors with large salaries in the six figures,
promises of advancement, and education benefits. It has just
been very, very difficult.
There is also just a ``where the government does it to
itself'' problem. The occupational series for auditors requires
24 academic credit hours of accounting to qualify as an
auditor. If I need an information technology auditor,
information technology security auditor, I really don't need
those 24 hours of financial accounting. That is for the
financial audits. Everybody doesn't have to know how to do
financial audits. But if they are going to be called auditors,
they have to qualify in this series. And so I have had very
qualified people from the outside sector who want to retain
their title of auditor. They are qualified, they have passed
all sorts of tests, but they don't come because we have the
requirement of 24 hours of accounting. That is where we do it
to ourselves. And before the hearing, I did speak to Mr. Romero
on that.
Moreover, it is my experience that it just takes too long
to hire staff. We have lost leading candidates in both audit
and computer crimes arena to the private sector competitors
because companies can hire top-performing candidates faster
than we can. I would say a fast recruit--bringing somebody on
board--is 3 months. That is ridiculous. This is a fast-moving
market. People do not have to wait around for the Federal
Government. They want to know where they are going to work, and
they are always unsure about budgeting. Is the Federal budget
going to be there? The process is just too long.
We believe a key to one possibility for the recruitment
issue is to forge some partnerships with schools and
departments that emphasize criminal justice, computer science,
and other related academic disciplines. And here is where we do
hope for support from the administration, which does have
proposals in this arena, and Congress, because it is a real
budgeting issue to subsidize loan forgiveness programs for
graduates with IT specialties.
Let me turn to the issue of high-cost labor markets. This
is a huge problem. NASA and other Federal organizations face a
very real problem with the high cost of living in those areas
like Northern and Southern California. During the last 4 years,
we have continuously, but unsuccessfully, recruited for an
information technology criminal investigator and analyst in the
San Francisco Bay area. We have had two people that accepted,
and we told them make sure they looked at the housing market.
And after they did that, they turned down the offer.
The high cost of housing is just too high. We could always
force people to relocate, but then those valuable employees
would then take a different job rather than move.
The ability to subsidize or otherwise provide housing may
be one way to attract capable IT employees to such high-cost-
of-living areas, and maybe some of those base-closing areas or
other Federal facilities may be one way of looking at it. But
certainly something has to be done.
This Committee is rightfully emphasizing human resources
management. The private sector human resource community has
been aggressively recruiting in the current boom economy. They
have been focusing how to get the best and the brightest. But
look at what has been happening for the Federal human resource
community in the last couple of years. What are they focused on
because of the budget? It is not because they are bad people or
they are unenthusiastic about their job. They have had to focus
on running reductions in force, early-out retirements, and
buyout plans. Many of them have maybe lost the skills as well
as the network for recruitments. They just haven't had to learn
what to do to compete in this kind of market.
So this Committee's attention on human resource management
is very, very key if you think of what those human resource
people have been doing in the past several years and what they
have to do in the current employment situation.
I am going to suggest a few ideas that this Committee can
be considering, that OPM needs to consider, and that the
private sector does use. We have got to be able to have those
flexibilities. Aggressive pay banding so that people don't have
to incrementally go up year by year for their step increases.
We should have that kind of flexibility where staff have a
range of salaries so we, as managers, can advance employees on.
I also think that we need limited, noncompetitive hiring
authority for highly specialized, hard-to-fill positions, such
as IT auditors. If it takes me 3 months at best to get somebody
in and I am able to locate people through some affirmative
recruitments, I should be able to have limited, noncompetitive
hiring. And let OPM or let GAO audit me to make sure that I am
not just doing an old-boy system or an old-girl system and not
getting the best and the brightest.
We should be expanding recruitment and retention bonuses
greater than the 25 percent of annual salary because we know it
doesn't work in all locations.
The other one, flexibility in annual leave entitlement for
experienced non-Federal recruits. If I have somebody from the
private sector who has spent 10 years in the private sector and
wants to work for NASA and wants to work in my Computer Crimes
Division--remember, it is a great place to work--that person
may have 4 weeks vacation in their current job. As a new
Federal employee, they get to start off with 4 hours per pay
period for the first 3 years. In other words, they get 2 weeks
vacation. That is a huge sacrifice. For all of us, time is
money. Time is very important. How are you going to be family-
friendly with that kind of inflexibility?
I have other ideas, but I see my time is coming to an end.
What I would say is that I was very glad to hear both Senators
using their offices as a bully pulpit in recognizing civil
servants. It is very important that in evaluating the work of
Federal employees--and, of course, that is one thing that we do
at the Inspector General's Office for fraud, waste, abuse, and
mismanagement. But we all have to make sure that it is well
balanced because government service is important, and that is
really something that we need to say is one of the chits of why
people come to serve. They come to serve because you can make a
difference, and like I said, I was very happy to see you using
your offices as a bully pulpit.
In conclusion, we know that budget constraints limit use of
incentives. However, the government cannot afford not to
attract and retain the best of Federal Government employees. I
would like to personally thank this Committee for emphasizing
this whole need to get the best and brightest for public
service.
Thank you.
Senator Voinovich. Thank you.
Ms. Gross. Senator, before you go on to the next witness,
my parents are here, and they have an Ohio connection. So I
couldn't help but introduce them to you. My mother was born in
Ohio. My father met my mother at Wright-Patterson where they
were working. My brother and I were both born in Dayton. So I
am sure they wanted to say hello.
Senator Voinovich. Well, thank you for being here, and I
say hello to you. One of the wonderful things that we have in
Ohio is Wright-Patterson Air Force Base, which I think is the
finest facility in the world. It is nice to know that it has
brought some wonderful people to Ohio, and I am sure you are
very proud that your daughter is working for NASA. Thanks for
letting me know that.
Mr. Romero.
TESTIMONY OF HENRY ROMERO,\1\ ASSOCIATE DIRECTOR, WORKFORCE
COMPENSATION AND PERFORMANCE, OFFICE OF PERSONNEL MANAGEMENT
Mr. Romero. Mr. Chairman, Senator Durbin, I appreciate this
opportunity to appear before you to discuss the numerous
Federal employee incentives and their effectiveness. As OPM's
Director Janice Lachance stated before this Subcommittee in
early March, the Federal Government is engaged in the war for
talent. Winning this war requires not only aggressively
competing for highly skilled new employees, but also retaining
and developing our current workforce. We intend to meet these
challenges by ensuring agencies effectively existing incentives
and flexibility tools, as well as developing additional
flexibilities.
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\1\ The prepared statement of Mr. Romero appears in the Appendix on
page 43.
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Traditionally, the most important incentive to attract new
Federal employees or to motivate current employees has been
pay. It is important that the basic salary we pay our employees
be competitive with other employers for similar kinds and
levels of work. This is a goal that has historically been
difficult to achieve. Also, there has been considerable
controversy over the years on how to compare the salaries of
Federal and non-Federal employees in a meaningful way.
During the last 2 years, the President and Congress have
agreed to increase Federal employee pay by more than 8 percent.
The President's budget for fiscal year 2001 continues that
trend by proposing an overall pay increase of 3.7 percent. If
enacted, this 2-year increase would be the largest 2-year jump
since the 1981-82 period.
A competitive salary is just one part of any employer's
strategy for attracting and retaining the workforce it needs.
Over the years, OPM and Congress have provided several
flexibilities for agencies. For example, current law authorizes
OPM to establish higher basic salaries, which we call ``special
salary rates,'' for specific occupations or geographic
locations when Federal agencies are experiencing significant
recruitment or retention problems. In addition, Congress has
also authorized recruitment bonuses and retention allowances.
The recruitment bonus authority gives Federal agencies a tool
to attract a specific candidate with special skills when the
position involved would be difficult to fill.
Similarly, the retention allowance authority helps Federal
agencies retain employees with special skills when they
otherwise would likely leave. These payments can be up to 25
percent of basic pay.
Since 1991, when these tools were created, Federal agencies
have taken a cautious approach toward their use. During fiscal
year 1998, however, we witnessed significant growth. In that
year, 1,089 recruitment bonuses were given. Retention
allowances were given to 2,300 employees in fiscal year 1998,
and we expect that when we get data from fiscal year 1999 the
numbers will be higher as a lot of agencies used these
retention bonuses to deal with the Y2K problem.
We are looking at legislative and administrative options to
enhance these authorities and make them more flexible. We are
exploring increasing the size of recruitment and retention
incentives and allowing a variety of payment methods.
But compensation is not the only component of a successful
strategy. That is why we have adopted a perspective we call the
strategic rewards approach. This acknowledges that an
organization's reward system involves all aspects of a work
situation.
Employers must recognize that many workers face the need to
balance work and family responsibilities on a daily basis. On
this score, the Federal Government, as an employer, clearly has
been a leader for more than 2 decades. Flexible work schedules
were first introduced in the Federal Government in the late
1970's. We are proud that about half of all Federal employees
take advantage of this program, which has become a model for
non-Federal employers as well.
We have also been a leader in introducing family-friendly
leave programs. The annual vacation leave and sick leave system
has been supplemented in recent years by a number of new
programs, including leave sharing, unpaid family and medical
leave, paid sick leave for family care and adoption purposes,
and additional paid leave for organ donation purposes.
In response to a Presidential directive last year, we will
implement a major enhancement to our sick leave program. Very
soon Federal employees will be able to use a total of up to 12
weeks of accrued paid sick leave each year to care for a family
member with a serious health condition.
The government's awards statute provides a broad framework
for recognizing superior performance and significant
accomplishments. OPM regulations and policies continue this
decentralized approach that allows agencies to design programs
that will work for them. OPM provides extensive guidance about
ways to use the incentives.
Over the years, the Federal Government has included many
more lower-level employees in such awards programs than the
private sector. Awards programs also give agencies a means of
providing additional compensation to reward short-term
accomplishments as well as designing long-term incentive
programs that focus employee energy on attaining specific
agency outcomes and goals.
During the 1980's and early 1990's, agencies primarily gave
cash awards to employees using bonuses tied to the employee's
annual performance ratings. Agencies are now moving toward
making greater use of awards based on specific accomplishments.
This reinforces the line of sight and recognition value of the
award by specifying what accomplishment is being rewarded.
Generally agency spending on awards has remained fairly
constant at about 1 percent of total salaries over the last 10
years. For fiscal year 1998, agencies gave out 589,000 rating-
based performance awards; about 33 in every 100 employees
received one. Agencies also granted over 650,000 other awards
based on specific employee contributions, a rate of 36 awards
per 100 employees.
Awards programs must be flexible to permit local
organizations to tailor their programs and to allow for
appropriate recognition of different forms and degrees of
accomplishment.
Further, to be successful, awards programs must be credible
to employees and their representatives. Agencies must develop
more transparent and credible criteria and increase employee
involvement in the development of their programs. Awards
programs have provided an arena where agency labor-management
partnerships produce positive results for the entire
organization.
In addition, design flexibility is important for keeping
programs fresh and appealing to employees and managers alike.
Adapting and refining awards programs and criteria are a
natural part of an organization's ongoing use of rewards and
recognition.
However, there is growing evidence about other factors that
really make a difference in retaining scarce talent to meet
future goals. Reward system designers have identified two. The
first typically is called ``learning and development,'' and the
second is often referred to as ``workplace environment.'' In
other words, the rewards that really matter to people and make
a difference in their decision to stay relate to how well the
organization supports their skills building and the kind of
work setting the organization provides.
With regard to the first item, for many years agencies have
had the authority to establish tuition assistance and
reimbursement programs. These programs pay some or all of the
cost of college courses and provide Federal employees with
opportunities to round out their academic backgrounds or
professional knowledge.
A more recent innovation is the individual learning account
which is now being piloted by 13 Federal agencies. These
accounts allow agencies to set aside specific dollar amounts
and/or official time for Federal employees to use for their
learning and development.
Federal employees have access to more than 250 federally
sponsored or assisted child-care sites around the country. We
are very pleased that recent legislation permits agencies to
use appropriated funds to make child care more affordable for
their lower-income employees. We also need to focus on the
leadership of the agencies to ensure that they are motivating
their employees.
In summary, we have special challenges and opportunities in
the Federal Government to keep employees engaged and working
toward shared goals. The fact is that many, if not most, people
do not enter public service for the money. They want a chance
to contribute and make their country a better place to live and
raise a family. Often the obstacles they face are enormous, and
the results of the policies and programs they developed to
conquer disease or clean up the environment may not be apparent
for years. In such situations, it is incumbent upon us to
recognize our employees' contributions.
It does not take piles of money or stock options to let
public employees know that they are valued and make a
difference. We do not have the money or stock options to give,
in any event, but we do have a powerful reward in the
recognition we can confer.
When we do these things, I am confident we can implement
strategies that will foster commitment and promote excellence.
Thank you for the opportunity, Mr. Chairman. I would be
pleased to answer any questions you may have.
Senator Voinovich. Thank you, Mr. Romero.
Ms. Kelley, we are anxious to hear your perspective on how
good our incentives are and perhaps some other ideas that we
ought to undertake.
TESTIMONY OF COLLEEN M. KELLEY,\1\ NATIONAL PRESIDENT, NATIONAL
TREASURY EMPLOYEES UNION
Ms. Kelley. Thank you, Chairman Voinovich, and Ranking
Minority Member Durbin.
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\1\ The prepared statement of Ms. Kelley appears in the Appendix on
page 69.
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NTEU represents more than 155,000 Federal employees across
the country, and I want to thank you for holding this hearing
today to examine the Federal Government's incentive programs
and their effectiveness. I share your belief that Federal
employees, just like their private sector counterparts, must
believe that substantial rewards and incentives exist for
excellence and for productivity. Without appropriate
compensation and incentives, the Federal Government will find
it increasingly difficult to recruit and retain quality
employees in the future.
The most critical compensation elements of Federal
employment--pay, retirement, and health benefits--have each
faced setbacks in recent years that have limited their
competitiveness within the private sector. As you know, the
Federal Employees Pay Comparability Act, or FEPCA, has not been
followed, leaving pay lagging far behind private sector wages
for similar work. Moreover, Federal employees have been forced
to pay more toward their retirement with no corresponding
increases in retirement benefits, and premiums for the Federal
Employees Health Benefits Program have increased almost 30
percent over the past 3 years.
According to many analysts, for most prospective employees
the most critical element in deciding whether or not to accept
a job offer is salary. Under the 1990 FEPCA law, Federal
employees were to receive an annual pay adjustment designed to
begin to close the gap between Federal and private sector
salaries, measured at that time at approximately 30 percent.
The law has never been implemented as intended, and a
substantial pay gap remains today. Fully implementing FEPCA
would do more to address recruitment and retention in the
Federal Government than all of the remaining incentive programs
in place today combined.
The same law that created this new Federal pay authority
also authorized a number of other programs geared toward
helping agencies to recruit and to retain employees. One
provision permits Federal agencies to offer retention
allowances of up to 25 percent. Another gave agencies the
authority to offer one-time bonuses of up to 25 percent of
basic pay to recruit employees and/or to relocate employees to
less desirable locations.
However, only 0.14 percent, less than one-quarter of 1
percent, of all Executive Branch employees have received
recruitment, retention, or relocation incentives that are known
as the three R's in fiscal year 1998. Furthermore, when these
incentives were awarded, they were most often paid at a rate of
only 10 percent of basic pay or less, versus the 25 percent
that is allowable. When asked what the most common impediments
were to greater use of the three R's, agencies cited budgetary
constraints and prolonged hiring freezes.
The same is true of performance awards, incentive awards,
and even bilingual awards. Agencies simply do not have the
resources to adequately fund these important incentives.
Until Congress provides adequate discretionary funding to
Federal agencies, these problems will remain. The fact is the
Federal Government faces stiff hiring competition. While the
Federal Government struggles under artificial budget
constraints to adequately fund its basic pay and benefits
package, private industry has recognized the impact our full
employment economy has had on attracting the best employees.
They have forged ahead with meaningful incentives, most of
which are not available in the Federal Government. They include
stock options, investments in employee education, top-notch
training programs, fitness centers, and a laundry list of other
benefits.
In the past few years, family-friendly programs such as
alternative work schedules, telecommuting options, leave banks,
child-care facilities, and opportunities to use personal sick
leave to care for ill family members have all provided
incentives to employees to join or to remain in the Federal
workforce. These family-friendly incentives have proven
effective in both the public and the private sectors, but here,
again, in the Federal Government funding remains an issue.
One of the benefits made available to private sector
employees is on-site subsidized child-care facilities. For
working families with children between the ages of three and
five, child care is their second or third largest household
expense. Private industry has found that making affordable
child care available to its employees helps make the inevitable
choice between family and work a little less stressful.
NTEU encouraged and Congress passed language in the fiscal
year 2000 Treasury appropriations bill giving all Federal
agencies the discretion to use their appropriated funds to
subsidize child-care expenses for their lower-paid employees.
Unfortunately, this language will expire on September 30,
providing little time to determine whether this provision is
helping to make safe, quality child care available while
positively impacting morale and worker productivity. And here
again, however, due to budgetary constraints, agencies have not
been provided with any new funding for this important purpose.
NTEU is seeking an extension of language permitting these
subsidies and would certainly appreciate assistance in this
effort.
I also want to bring to your attention what NTEU believes
has become a major disincentive for employees who we represent
at the Internal Revenue Service. As part of the IRS
Restructuring and Reform Act, known as RRA, of 1998, Congress
enacted Section 1203, which lists ten infractions for which IRS
employees face mandatory dismissal. IRS employees work in fear
of what have come to be known as the ``10 Deadly Sins.''
The broad scope and the vague nature of the 10 Deadly Sins
have created anxiety and confusion in the workplace. These
infractions, which range from IRS employees not paying their
taxes on time or improperly placing a lien on a delinquent
taxpayer, have always subjected employees to discipline, up to
and including dismissal, and rightly so. However, the RRA's
requirement for mandatory dismissal of employees is having a
chilling effect on the collection efforts and morale at the
IRS. No other government employee in the Executive, Judicial,
or Legislative Branch, and, in fact, no other American
taxpayer, must be fired solely on the basis of paying their
taxes 1 day late.
NTEU vigorously opposed Section 1203 and continues to
believe that this section of the act should be repealed or
changed. We would be grateful for any assistance with this
matter.
In conclusion, I believe we are in agreement that the most
valuable resource the Federal Government has is its employees
and that there is a direct link between employee job
satisfaction and whether or not the Federal Government's
customers are satisfied. NTEU hopes to work with you toward
solutions on these important issues.
Thank you very much, and I would welcome the opportunity to
answer any questions you might have.
Senator Voinovich. Thank you very much.
Mr. Brostek.
TESTIMONY OF MICHAEL BROSTEK,\1\ ASSOCIATE DIRECTOR, FEDERAL
MANAGEMENT AND WORKFORCE ISSUES, GENERAL GOVERNMENT DIVISION,
U.S. GENERAL ACCOUNTING OFFICE
Mr. Brostek. Mr. Chairman and Members of the Subcommittee,
thank you for inviting us to discuss the role of incentive
programs in motivating and rewarding employees to achieve high
performance that supports agency missions and goals. Incentive
programs can be an important part of performance management
systems because they serve to align employee expectations with
agency missions and goals.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Brostek appears in the Appendix
on page 80.
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In my testimony today, I concentrate on awards given to
employees for their performance on the job, although I would be
happy to participate in a discussion about other awards.
I will summarize my three main points.
First, Federal agencies have broad authority to design and
implement a variety of incentive programs, and this is very
useful because no one incentive program is optimal in all
circumstances.
Second, over the last 5 years, agencies have used this
flexibility to decrease their emphasis on awards that are tied
directly to employees' performance appraisals and to increase
their emphasis on alternative forms of monetary compensation or
awards such as special act or service awards or gainsharing
awards.
And, finally, while agencies have been making use of the
range of incentives available to them and have been altering
the types of awards they make, many agencies do not assess
whether their award programs are actually effective in
motivating employees.
Under their broad authority, agencies can and do offer
employees a mix of awards that include monetary and nonmonetary
recognition. Monetary awards include, as I mentioned,
performance awards that are based on the employee's rating of
record, and there are at least four other types of monetary
awards. Those include special act or service awards, quality
step increases, time-off awards, and gainsharing awards.
Nonmonetary incentives include such things as medals,
certificates, and other honorary recognition.
The broad flexibility available to agencies is key because
it enables agencies to devise incentive programs that their
employees are most likely to find to be motivating. Incentive
programs require careful construction because some employees
may respond well to monetary awards, other employees may
respond better to simple public recognition of their
performance, and those preferences can change over time.
Over the past 5 years, agencies have generally moved to
provide fewer employees performance awards, but to give those
who do receive those awards larger dollar amounts. In addition,
over that same period agencies have increased the use of other
monetary awards and increased the dollar amounts that are given
for those awards.
We do not know precisely why these trends are developing.
However, based on some work that we have done in the past, the
decrease in the use of performance awards, those tied to
performance appraisals, may be partly attributable to the
common perception that employees' performance appraisals may
not accurately reflect differences in employees' real
performance.
Because the motivating power of incentive programs is
difficult to predict and can change over time, it is essential
that agencies assess whether their incentive programs are, in
fact, effectively motivating employees to improve their
performance and to align that performance with the goals and
strategies of the agency. Unfortunately, many agencies do not
do so.
In assessing whether their incentive programs are
effective, agencies may benefit from considering key elements
that high-performing public and private sector organizations
have used in their incentive programs. These elements include
top management support, clearly defined and transparent
criteria for the awards, use of multiple awards for both
individuals and teams, targeting the awards only to high
performers, publicizing those awards, and regularly monitoring
and updating the program.
Mr. Chairman, you also asked me to comment a little bit
about the awards that GAO uses, and the incentive program that
GAO uses. We include, as do Federal agencies, a broad array of
awards and honorary recognition for our employees. Those range
from annual awards that the Comptroller General gives to a
small set of employees, distinguished service awards, and
meritorious service awards. We have various group awards that
relate to things like EEO and the functioning of teams. We also
provide throughout the year spot awards to employees as quickly
as possible after an act that is noteworthy. It is very clear
in the literature that the motivating power of an award is
often best if it is given as contemporaneously as possible with
the act that you really appreciate. So we have a spot award
program through which we do that kind of thing.
The last thing I would like to mention is that under our
pay system, we are a banded agency as opposed to having a GS
system. The pay that one gets within a band, and the pay
increases that one gets over time, are tied to performance. We
have an annual process in which we assess the performance of
each employee, and we consider the contributions they have made
to achieving the mission of the agency and decide upon salary
increases for employees based on that assessment.
In conclusion, the Federal Government's employees--as we
all agree, its greatest asset--define an agency's character and
its capacity for performance. Incentive programs can be a
critical element in aligning individual and team performance
expectations with the goals and objectives of the agency. But
incentive award programs are challenging to design and
maintain. Poorly designed programs can actually de-motivate
employees. Therefore, agencies should periodically assess their
incentive programs to ensure that programs do, in fact,
motivate their employees.
That concludes my remarks. I would be happy to answer
questions.
Senator Voinovich. Thank you very much.
I think that the first question I would like to ask is, in
a nutshell: In your opinion, are the incentives that we have,
adequate? And, second, if you had your way, what additional
incentives would be added? Maybe we ought to start with the
latter question. What new ideas do you have for incentives for
our folks in the Federal workforce? Let's start with that.
Ms. Gross. I would say that the greatest boon to being able
to manage a workforce that works at a creative agency like NASA
would be greater flexibility. And every kind of specific reform
that I would put would have flexibility at its root. I think we
are in a very inflexible personnel system, from the speed at
which it takes to bring people on to being able to package
incentives to recruit them, package incentives to retain them.
And I just don't need those kind of flexibilities but also the
budget. If you gave me all those flexibilities that I will now
start listing, it doesn't matter, if I don't have an
appropriate budget.
The NASA's Inspector General's Office is something like 93
percent personnel. What we do is audit, inspect, ane evaluate.
And so we have a very small percentage of our budget that is
remaining for discretionary spending. Discretionary means
travel, like go to where you have to go for the investigation.
That is not exactly discretionary.
This year, because of the circumscribed budget, I have
allocated $75,000 for my awards pool. It was larger last year,
smaller now because of a decrease from the President's
recommended budget. GAO asked whether or not you would know
whether there is a difference if your awards pool is larger and
smaller. I can tell you, my staff is very demoralized about a
smaller awards pool. I have 200 people, and we are spreading
out $75,000. So I am not flexible at all.
But when good times come, what I would like to be able to
have is the ability to have pay banding. Pay banding--GAO has
said they now have it. Right now you have employees that are
GS-11's or GS-12's or GS-13's. And to get them promoted, many
of them, you have to--even though you know who is eligible to
be promoted, you have decided who is going to be promoted, you
have to announce and have the eligibles apply for a promotion.
And everybody that is eligible for that level of promotion
applies for it. And then you go through a process.
If you had pay banding, you would have people that are GS-
11's, or whatever, and there is a range of salaries, a large
range of salaries, maybe $20,000 or something like that, and
you can decide who among those GS-11's is eligible to receive
more money because of their work. And you don't have to go
through this laborious, time-consuming process of announcing a
promotion. You are rewarding people on the basis of
performance. So that is a huge flexibility that I don't have.
I am recruiting people for information technology security,
criminal investigators and auditors. They are a rare commodity.
But because NASA is a nice place to work--NASA is a great place
to work--I have to say that as a NASA employee--and I think
that we (OIG) are on the cutting edge for this IT arena. But I
can't noncompetitively find people who are the best and
brightest who would like to come to NASA and say I could bring
you on in 2 or 3 weeks. I have lost prospective employees
because it took so long to get through the process. And by the
time we went and announced the position (like I said, a fast
recruitment would be 3 months--they can range anywhere between
4 and 6 months between the time that you announce it and bring
people on.) That is terrible----
Senator Voinovich. Ms. Gross, may I ask you something?
Ms. Gross. Yes.
Senator Voinovich. Why does it take so long? Don't you have
the authority within your agency to go out and hire, or do you
have to go through the Office of Personnel Management and fill
out paperwork and they are the ones that do the hiring?
Ms. Gross. The Inspector General's Office has more
flexibility than most of the agency enterprises. I am able to
write the personnel descriptions, and that takes a long time
because what you are having to do is write it very carefully so
that you select out all those people that you don't want
applying who look and say, hey, it would be nice to work for
NASA, but they don't really have the qualifications. And you
have to be very careful of your wording so that you are really
getting only those you want to apply.
Then what happens is you have to put the announcement out
for a period of time, 2 weeks to 30 days. Then you wait until--
because of the postmark, so you wait another 10 days because
mail can still come in. And then what happens is your
personnelist looks at it, and I have delegated authority from
OPM, so they look at it to weed out the unqualified people,
which you always want to do. If I have more than five
applicants, I have to have a panel of three people sit all day,
and I have to get panels of people who are qualified, either my
own staff who have to stop working or I get some people from
the agency if they have the expertise, and they sit and do a
paper screening to rank the highly qualified. Then the
resulting list is then referred to the selecting official who
does interviewing. Then we notify the people, and then they
have to work with their personnel offices and give notice to
their current employer.
So if we were able to circumvent this process, the
candidates could be giving notice a long time before current
practices. This current process just takes a long time. It is a
long process. It is not all with the Federal Government. It has
always been every job I have had. It takes a long time. But
with the Federal Government, it is particularly a long time.
And I am flexible. The Inspector General's Office has its
own personnel authority. It really is a nightmare. I would
request flexibilities to be able to just have some limited
noncompetitive hiring authority, where you have highly
difficult to recruit personnel--I am not asking that for most
of my staff. You know, half my staff are auditors. Except for
the IT auditors, I don't mind living with the normal slow
process. I could live with it. But where I am looking for
people who have skills that are highly competitive and they are
wanted by the private sector, I want to move like the private
sector.
You know, I can't offer them the same kind of pay. I can't
offer them stock benefits. But there are people that really
want to work for NASA, and they really want to work for the
Inspector General's Computer Crimes Unit. I can't get those
people because they have got families and they have got to have
certainty in life. So it is a huge flexibility to hire
noncompetitively and provide pay bands.
I think also even though Mr. Romero was talking about a
number of bonuses, we are not able to necessarily package all
these bonuses. Sometimes personnel are allowed just a one-time
bonus. Also they don't impact on the base of an employee. If
you had some flexibility of saying it is going to be 25 percent
but for you it is going to be a base--it is not that you are
just a GS-11. This 25 percent will be on your base pay, and it
will always be with you so the next year you actually have 25
percent higher than other GS-11's, it is not just a one-time
only, then that is an incentive.
If you go to the private sector, they do have incentives
that they give people, like recruitment bonuses, but they have
high bases. For select employees, if I had the budget, I would
like to be able to do a salary base change, and that would give
me the flexibility.
Remember I said my key theme is flexibility. It is fine to
have all of these different if personnel tools I could package
them in my way. I would be willing to give the paper trail and
let somebody audit me on that--even the inspector general could
be audited, right?--so that I would justify that really what I
am not doing is abusing the system but really hiring for merit.
Senator Voinovich. So what you are saying is that the
incentives that you have right now, if you had the flexibility
and the budget, they would be adequate? You wouldn't be asking
for housing allowances or something of that sort?
Ms. Gross. Yes.
Senator Voinovich. Which are not included in a package to
date.
Ms. Gross. No, I don't think they are adequate. I think
what you don't have is the ability to bundle these up. A lot of
these are one-time bonuses. And so that is not flexible. I
might want for a certain employee to offer 25 percent every
year for the next 5 years, because for me this employee would
be worth it. I don't have these housing allocations. I don't
have a banding so that I could promote people.
Let me give you another example. We have had people who
have graduated----
Senator Voinovich. So you don't have pay banding now?
Ms. Gross. No.
Senator Voinovich. OK. So that would help.
Ms. Gross. It would help a lot. Another thing, again, the
inflexibility of the Federal Government system, students that
graduate with a master's in computer science, a number of them
have written to us and would like to get hired for my Computer
Crimes Unit or even for my IT audit group.
Personnel with an advanced degree in computer science come
in without any work experience, they have to be hired at a GS-
9. Well, excuse me, but people with a master's in computer
science is going to go to Microsoft or they are going to go to
KPMG. They can't afford to come to me even though I might be
their first choice. Talk about inflexibility.
And you are not--it is just a system that does not give----
Senator Voinovich. Let me ask you this: Is it regulated--
because I am new here--by law that you can't have bands, or is
it done by----
Ms. Gross. Right now that is by law.
Senator Voinovich. It is by law.
Mr. Romero. Senator, there is no statutory authority to
have agencies have broad banding systems other than in
demonstration projects, and we have several that are in effect
right now throughout the Federal Government, and most
demonstration projects, when agencies have undertaken them,
have really focused on pay-for-performance systems, and they
have been very positive in their results.
I think that we have found that when you have pay for
performance, which is the net result of having a demonstration
project that has a broad banding system, you do wind up with a
situation where the employees that are better performers wind
up getting rewarded at a higher rate or getting rewarded more
than marginal performers. And that is both good for them and
also a strong message to the ones that might be marginal
performers.
So there is a strong notion that pay-for-performance
systems such as you would have with broad banding systems are
effective in terms of rewarding and recognizing your good
performers.
Senator Voinovich. But the thing is, from what I heard, the
pay for performance is not being used as often----
Mr. Romero. It is not available to all Federal agencies.
Senator Voinovich [continuing]. Because, from what I have
read from testimony of others, many employees are not confident
of the performance evaluations that are being done. Therefore,
because there is an issue of whether or not they are adequate
or not, then you shy away from that and you go to some other
ways of rewarding employees.
Ms. Kelley. Right now, unless you have the authority, as
Mr. Romero said, under a demonstration project, the agencies
can't even do that.
Ms. Gross. Right.
Ms. Kelley. But when they do--and from NTEU's perspective,
moving away from the grade and step system might be a good
thing to do, if the employees believe that the performance
appraisal system is a fair and a credible one. And so where
NTEU is on this is that the employer representative must be
involved in the design of a system that would be seen as
credible to employees. But it all does come back to the issue
of budget because, in a pay-banding system, if one employee is
going to move up the ladder faster someone else must lose out.
There is only so much money in the agency's budget. That money
has to come from somewhere.
So the involvement of the employer representative in the
design process is something that we have supported and have
worked in the past with OPM on and with agencies where we have
had that opportunity.
Senator Voinovich. Well, I would welcome some
recommendations on how the system could be improved. Mr.
Romero, you should gather together folks that really have the
knowledge to make recommendations and understand that there is
a variety of needs that are out there. New programs should be
fairly flexible. And once you have done that, you estimate the
amount of money that is needed. I mean, $75,000?
Ms. Gross. Is a joke.
Senator Voinovich. You have got to be kidding me.
Ms. Gross. I am not. I wish I was.
Senator Voinovich. These unmet needs that are very
important to retaining and attracting people are getting the
back of the hand, and we are going off on a lot of what I
sometimes refer to as boutique programs, which have high
visibility and popularity, and we neglect basic necessities. It
is like the shoemaker whose kids are going around with holes in
their shoes.
Mr. Romero. I agree, Senator, and that is why we are
working right now with the various stakeholders in designing
legislative proposals that would give agencies authority to
begin the design of broad banding systems. And we recognize
that the key would be to have the authority out there so that
agencies can determine for themselves what will be a valid
performance management system that will have credibility and
that will be accepted by the employees as being fair and
equitable. So we are looking at that in terms of giving broad
banding authority to all Federal agencies.
Also, Ms. Gross mentioned the flexibility in the existing
three R's, and as I indicated in my written statement, there
was a cautious approach when the statute was first enacted, and
we have taken steps to provide more flexibility and more
information about those authorities, because in a recent study,
it was determined that even the current authorities, which may
or may not be flexible enough for all agencies, there was not
as extensive use made of them as there could be. And a lot of
the reasons were that, for one thing, there wasn't information
about them outside of the headquarters organization. There may
not have been even the knowledge at the operating level that a
manager or supervisor could exercise that kind of authority and
have that flexibility.
Also, in many cases, agencies kept the authority level at a
very high level, so it became an administrative burden to even
request authority to give a recruitment or retention bonus, and
that is something that we are trying to get the agency to push
down to operating levels.
Finally, there is also the problem that it is always a
budget problem where both Senator Durbin and Senator Akaka
talked about the budget crunch in the 1980's, and it is no
surprise that awards and recognition programs were the ones
that were sacrificed first whenever there is a budget crunch.
And even now with the case of retention and recruitment
allowances, there is not a sufficient amount of money budgeted
to provide them even where you have a situation where it is
most appropriate. Where you have that highly skilled candidate
that is the perfect situation that these allowances and bonuses
are designed for, there may not be enough money to pay that
bonus, whether it is 10 or 25 percent, because of the budget
situation in many agencies.
But we are working on a proposal to provide even more
flexibility to be able to give larger amounts, provide more
variety of the situations in which these allowances might be
payable, and to provide more payment options so that there
could be biweekly or lump-sum or scattered payments. All of
these will be features of what we are looking at in terms of
more flexibility in these allowances and bonus programs.
Senator Voinovich. Thank you. I would just make one more
comment, and, Senator Durbin, I am sure you have some questions
that you would like to ask.
The question is: How do you get people's attention to this
crisis that we have? You mentioned, Ms. Gross, that you are
having some real problems where your personnel issues were
impacting on your agency's mission.
Ms. Gross. Yes.
Senator Voinovich. I met recently with some folks from the
Air Force, and their lack of people in the area of maintenance
and maintaining military aircraft.
Ms. Gross. Scary.
Senator Voinovich. I met a pilot who is leaving the Air
Force who said, ``I am leaving because I don't have confidence
anymore.'' This is starting to impact our national security and
our government. We ought to try to make the public and Members
of Congress more aware of the importance of this issue.
Sometimes people say, well, you are losing half your
employees. That is good because you have too many people
working for the Federal Government anyhow.
Ms. Gross. Right.
Senator Voinovich. Too many of them don't understand how
important what you do is to our country and to their future,
quality of life and well-being.
Senator Durbin.
Senator Durbin. Mr. Chairman, as I listened to this panel
suggest that Congress has been remiss meeting its
responsibility in appropriating appropriate funds for
incentives and daycare centers and some of the things that we
did as the Taxpayer's Bill of Rights when it came to the
changes at the IRS, I am reminded of the Walt Kelly ``Pogo''
cartoon where he announced, ``We have met the enemy and they
are us.'' When we called in these agencies to find out what
they were doing wrong, they told us that we are doing it wrong
here on Capitol Hill. And I think there is a lot of truth to
that.
I have listened carefully to what they have said. It
appears that in most instances there are many incentives that
could be funded and used to attract and retain Federal
employees. But it depends on Congress doing its part. We have
to appropriate the money. And if we don't put the money in
place, all the authority in the world isn't very valuable, and
also be a little sensitive, as Ms. Kelley says, to the climate
that you create in a punitive environment.
I note, incidentally, that recently OPM had a survey of
some 32,000 Federal employees, and 40 percent of them responded
out of 48 agencies. Sixty percent of the Federal employees in
the survey indicated they were satisfied with their jobs. That
is slightly below a comparable private sector rate of 62
percent. That is pretty encouraging, really, when you consider
it, all things considered.
When you took the highest levels of job satisfaction, two
of the agencies that have a high level are represented here
today: NASA and OPM. When it came to low job satisfaction among
Federal agencies, it was interesting that INS and Customs
Service came out, and I wouldn't be surprised if the IRS wasn't
too far away in terms of the job satisfaction of the employees.
It may reflect to some extent contact with the public. If you
have to work with the public every day under a stressful
situation, it takes it out of you after a while. We find that
in our business because we are constantly in touch with our
constituents, and you have to be ready for your game every day
or it shows.
But I guess the point that I am driving at is I want to get
down to some specifics here of some areas that have been
discussed, and I want to ask for some response. We had a
previous hearing, and at the previous hearing, there was talk
about one incentive that is available, and that is the
forgiveness of college loans, educational debts. And I thought
to myself that is a pretty good one, because so many young
people come out of college burdened with heavy debt, and if you
could offer an incentive to them to reduce their college
indebtedness if they come work for the Federal Government, that
is as good as a pay raise. In fact, it may be, as soon as you
get out of college, a great incentive to consider public
service.
And so I wrote to the Director of OPM, Ms. Lachance, and
asked her to give us some background on these programs. And,
again, it comes down to appropriations. If we don't appropriate
enough money for you to offer this incentive, it is on the
books but it doesn't mean anything. It is an incentive that
might work, but won't unless you can pay for it.
But a couple things came through that were interesting, Mr.
Chairman. The student loan repayments basically say up to
$6,000 a year, not to exceed $40,000 per employee. They apply
to 22 job classifications containing almost 300 job series. I
am not sure exactly what that means, but it appears it is
fairly limited in terms of those who could quality for it.
In order to qualify for it, you agree to work for the
Federal Government for at least 3 years, absent some
extraordinary circumstances. And if you continue beyond 3
years, you can obviously make beyond the first 3 years'
reimbursement.
Here is the part that I found interesting, though. We
passed this law in 1990. The OPM is still working on the rules.
It is 10 years later. And they haven't put the rules in place
to implement the legislation that we passed 10 years ago.
That is not encouraging. We have a responsibility to
appropriate the money, but, Mr. Romero, could you comment on
the fact that it would take so long to develop the rules for
this incentive, which I think could be very appealing on
college campuses.
Mr. Romero. We agree, Senator, that in this climate it is
the most appropriate incentive, and that is why we are
proposing regulations to implement the provisions of 5 U.S.
Code 5379.
During the 1990's, as you talked about the budget crunch,
there really wasn't any call on the part of the agencies for
this kind of added authority, primarily because they wouldn't
have had the money to pay--first of all, there wasn't any
recruiting being done. In fact, as several of the other
witnesses have indicated, most people were involved in
downsizing and being concerned about maintaining current
staffing levels. So there was not a climate, there was not a
mentality of we need all these tools to recruit new people, new
college hires. Some agencies have not done college hiring in 4
or 5 years. So there was not a demand, even though the law was
on the books.
It is a different situation right now, and now it is why
have we waited so long. But we are proposing regulations to
make this available to all agencies, the authority to repay
student loans. All the Perkins, Stafford, and PLUS loans that
most college students take out would be covered.
You mentioned the coverage. We are talking about 22
occupational categories, 300 job series. That is a lot of jobs.
A single series might have as many as 10,000, 20,000 Federal
employees in that series. The statute was clear that it was
supposed to be for those kind of occupations that college
graduates usually pursue in terms of Federal employment, and
that is why it wouldn't be applied to just some of the
occupations that we didn't think that you would need to give
this kind of benefit to.
So there is in the statute some coverage limitations, but
it still covers an awful lot of Federal employees. Primarily
all the technical, scientific, and more professional kind of
jobs that we have in the Federal Government would be ones that
would be able to apply the student loan repayment benefit.
Senator Durbin. Your explanation makes sense, but at this
moment in time, can you give me an idea when the rules and
regulations might be coming out of OPM on this law?
Mr. Romero. Today I don't know where they are right now in
the clearance process, but I can get that information to the
Committee by the end of the day or tomorrow.
Senator Durbin. If you would, please.
Let me go to Ms. Kelley, because I think you raised a point
regarding my daughter and son-in-law--my daughter works for the
Department of Agriculture. When our new grandson came along,
they were very excited at the possibility of getting our
grandson into the U.S. Department of Agriculture daycare. It
takes a year or two in advance for you to apply--I don't know
how that works--but in order to be admitted, and for some
reason it didn't work out. But it was disappointing to my
daughter because the thought of having her new son close by so
she could visit on break or at lunchtime meant a lot to her.
So when you mentioned daycare, it really struck me. That is
something as a grandfather that I thought about, that I like a
lot. And it appears from what you say we just haven't done
enough in that. We haven't really made that a priority. And
after college loans, if you are talking about new parents, I
can't think of another thing that you could offer to an
employee at that stage in their life that might be more
appealing: Affordable, quality daycare, accessible to your
place of work.
I am going to focus on that a little more now. You have
really piqued my interest in it. And I also think you have done
a good job in your testimony talking about the Taxpayer's Bill
of Rights.
Ms. Kelley. Thank you.
Senator Durbin. And maybe we ought to revisit it. I know it
was extremely popular. I voted for it. I think everybody in
sight voted for it. Go after that mean old IRS and protect the
taxpayers.
I am going to take a look and see how we are doing on
enforcement actions now that we have created this different
environment, and take a look as well as to whether or not we
are creating an onerous and really unjustifiable burden when it
comes to the employees who have this special responsibility.
But thank you for your testimony on that.
Ms. Kelley. Thank you, Senator. I appreciate that and will
look forward to your help.
Senator Durbin. We will.
Ms. Gross, one of the things that you brought up that I
thought was interesting is, if you want to hire an experienced
employee and bring him on the job, many times you don't have
the flexibility to say, incidentally, we will match the leave
time you have already accumulated in the private sector.
Ms. Gross. Right.
Senator Durbin. You don't have to go up the ladder to the
point where 10 years from now you will have the same number of
vacation days you already have at your private firm.
Now, is that statutory? Is that regulatory? What would it
take to give you the authority to make that decision? That
doesn't seem like it has a direct budget impact, direct
appropriations impact.
Ms. Gross. It is statutory.
Senator Durbin. Statutory. Here we are again.
Ms. Gross. It is such an amazing inflexibility. I have
hired, for example, an investigator who had worked at Amtrak,
which is a Federal corporation. It is a mixed-government
Federal corporation. And he had something like 5 weeks'
vacation, but he is a new Federal employee because the Federal
corporation, you are not a Federal employee. He didn't qualify
for that. And so now at this stage of his life, he is starting
back with 2 weeks.
It is the same kind of issue that really is a door closer
for some people in the private sector that are interested in
working in the criminal investigative----
Senator Durbin. It is very understandable. And, Mr.
Chairman, I can't speak for you, but I would like to take a
look at that, and maybe we can work on this together.
Ms. Gross. Thank you.
Mr. Romero. Senator, we are working, we are already working
with many of our stakeholders on a proposal that would give new
Federal employees--and we started talking first about senior
executives, but the discussion has centered around any Federal
employee that is in a hard-to-fill occupation. We ought to be
able to have the flexibility to give them the accrual rate
benefit of someone who has been around 15 years that from the
start you actually can be accruing at a high--or get credit for
some of what you might have earned had you been working for the
government for a while. So that is something--the idea of
providing people a greater annual leave benefit is something we
are looking at.
Senator Durbin. The last thing I would like to ask you--and
any one of you can comment on it--is on this retention
question. When you have reached a person who has the time in
and they are eligible for retirement, do you find that there
are one or two things that they are particularly sensitive to?
If you went to them and said we can change things a little bit
in terms of your workload or in terms of time off, would you
stick around for another year? We are going to need you in this
job while we transition into a new project or bring someone
else on board.
Is there anything that stands out on this retention
question that seems particularly appealing to career employees?
Mr. Romero. We have always surveyed employees as they
leave, exit interviews of a lot of employees, especially those
that may be leaving because it appears that they are unhappy.
But it is very constant through the years that people want to
stay and will stay around if they value their work, if they
enjoy what they are doing, and if they feel they are valued.
And this is why this hearing is so appropriate in terms of how
do you recognize and reward people so that they feel like they
are doing something meaningful and want to stick around.
Something very interesting that has been emerging in a lot
of recent surveys is that they also--something that is very
critical is who they work for. And a lot of people leave not
because of the money or the leave accrual rate. They just don't
like the person they are working for. They don't feel that that
is a nurturing environment, and so I think we need to do a lot
of work in terms of our supervisory and management development
and training. People leave because they just don't like their
bosses.
Mr. Brostek. Mr. Durbin, we did some work on this very
issue: How could you get employees who are nearing retirement
age to stay on longer? It has been a while since we did that.
It was in the early 1990's, and I don't remember all the
specific reasons why employees said they might stay, and what
kind of things would induce them to stay. We will be sure you
get a copy of that report.
One of the things that they did mention was compensation
and whether they might get an increase in their retirement
benefit for staying longer with the government. I think some of
the reasons that were mentioned here today are probably
appropriate as well.
I would like to go back, if I could for a moment, though,
to your point about, once again, it is Congress' responsibility
here or fault, if we were giving fault. I would give you a
small out on that, if I could, Senator. We continually bring to
the table the message that what agencies need to do in this
whole area of their greatest asset, their human capital, is do
some self-assessment on how well their current systems are
working and bring to the table some fact-based analysis about
where there are impediments to improving their performance.
And what I would ask you, Senator, is how often you have
seen that kind of fact-based analysis, how often you have seen
in the budget submission from an agency a case that they needed
greater money to offer retention allowances or bonuses or to
pay their employees differently. I think that it would be
useful to take a look at that, because our impression based on
the plans that are required under the Results Act, the
Government Performance and Results Act, is that agencies
frequently have not included any kind of analysis about what
they really need in order to use their people more effectively.
Senator Durbin. Good point. Thank you.
Thanks, Mr. Chairman.
Senator Voinovich. I have always said to my directors, if
you can't measure it, don't do it. And so if you don't measure
how this is working out, then it is very difficult to pinpoint
what works and what doesn't work.
You have X number of dollars in a budget, so, first, we
need to determine what percentage of a budget is adequate to do
some of these things that the Federal Government allows you to
do. And second, is something that we ought to look at in terms
of appropriations: When a budget is submitted by a department,
do you specifically earmark X percent that would be used for
taking advantage of these incentives? Do agencies get a salary
or personnel level?
Mr. Romero. Usually just a salary--an expenses line item.
It is an additional earmark for----
Senator Voinovich. So that is what you get. You get a
personnel line item, and then you are supposed to deal with all
the things related to personnel through that. That might be
something, Mr. Romero, that the administration at this stage of
the game might look at. We have these incentives, and maybe
there should be a specific budget allocation for them.
Mr. Romero. I know that in the past, though, where there
has been on the part of Congress in a statute a sort of
mandatory minimum or maximum, there have been problems where
people see that as a dictate that they have to meet certain
goals, or whenever there is a budget crunch, there is a
statutory requirement that X amount go to awards, and in order
to meet that requirement, they sacrifice other things. So there
is always a caution in terms of having any minimum or maximum
that are generally applicable to the whole workforce.
Senator Voinovich. Well, let me just say this to you. I
don't know the answer to that. That is your baby. But you ought
to look at what other governments do, maybe in other States, or
what the private sector does and how they work that into their
budget so that they have the flexibility to get the job done.
Obviously, there isn't enough money now to do it. I request
that you look into this and take it to the Office of Management
and Budget and talk about that issue.
I am not kidding you. We are talking about creating new
programs this year, and we are not taking care of the things
that need to be taken care of. The house is not in very good
shape right now, and we want to go out and build new houses
when the one that we have is in bad shape. So I think that we
ought to do first things first.
The other thing is, which of these incentives would really
make a difference in terms of retention? We want to attract,
but how do we retain people? If you look at the numbers and
know 31 percent are going to retire, and you have another 21 or
22 percent that could retire early, what can we do now to make
sure that that 21 percent doesn't retire early? What is it that
will create the kind of environment that convinces them to
stick around? Is it the training budget? We have a survey out
right now asking questions like what percentage of the agency
budget is being used to upgrade the skills of individuals and
what kind of opportunities do you afford them? What would cause
employees to say, I want to stick around here?
Ms. Kelley and I have talked about quality and empowerment
of employees and getting them involved in the operation of
their departments. What influence does that have on somebody
wanting to stay in an agency?
A friend of mine had a son that worked at one of our
Federal agencies at Los Alamos. He is a Ph.D. and the rest of
it. He left this Federal agency because he said it was
Dullsville. It lacked excitement, and he decided not to stay.
So I think that even though, Mr. Romero, this is the end of
an administration, I think it is incumbent on the current
administration to make some serious recommendations on how to
respond to this human capital crisis that we have. I would like
to work out a timetable with you and see if we can't gather the
people together that are necessary so you can come back with
some recommendations in the next maybe 6 to 8 weeks regarding
what we can do in the short term and then look at some of the
long-term solutions that we need to incorporate that will be
looked at by the new administration when they come in.
The new administration needs to know that they have a real
problem here and they had better get on this one and give it a
high priority, because if they don't, they are in deep trouble.
So I would like to figure out something that we can do to
address this immediately.
Mr. Romero. We will be glad to work with you on that.
Senator Voinovich. And then look at the long term and get
the folks that are necessary to deal with this in a very
constructive way.
Mr. Romero. Yes, sir.
Senator Voinovich. Would any of you like to add anything to
your testimony here today?
Ms. Gross. I would just like to add that one of the issues
is if you have stable funding and you know what your funding is
going to be as agencies and they know that they are not going
to be in a downsizing environment, then you can have these
reforms, both the current ones as well as future ones that are
needed. I think it is very difficult, and I think as Mr. Romero
said, OPM just stopped looking at what to do to implement the
law on----
Mr. Romero. Loan repayment, student loans.
Ms. Gross [continuing]. The student loans, because
everybody was in a spiraling downsizing mode.
Now, that doesn't mean they shouldn't have still been
proposing the regulations, but, nevertheless, I know it is true
about NASA. NASA offers many opportunities to its employees for
training, for going to school, but what happens is, we have to
get the work done. We have a space station that NASA has to
finish. In my case, we have computer crimes and hackers are
there all the time. I mean, they are not just waiting for us to
go to school.
And because of that, you don't have the staffing levels
that you may need, so it really makes it difficult to take
advantage of some of the training. But my staff tells me that
is something they absolutely do want. Technology changes so
fast. They feel that also they want to have those credentials
for when they have to testify in court that they have a
master's in some of these programs, they want to be
credentialed. And so we are balancing that need. I think a
stability in terms of funding and workforce will go a long ways
so that, in fact, you can do these other things that are
absolutely crucial so that you can have the Federal Government
that the public deserves.
Senator Voinovich. When I first became Governor of Ohio we
had very little in the area of training, but when we finished,
we were able to offer each employee of the State Government up
to $2,500 a year for upgrading their skills or pursuing higher
education. And it was a combination of the State and the unions
working together. In fact, the unions gave up some of their pay
increases and said, look, we will give this up, if we put a
nickel in, you put a dime in, so that we could build this fund,
because they understood how important it was for their workers
to be upgrading their skills.
Ms. Kelley, you were talking about the child-care issue.
Refresh my memory. We need to get that reauthorized so it
doesn't sunset.
Ms. Kelley. Yes, the current legislation expires on
September 30, and we need to have that language extended into
the 2001 budget so we can really get this thing going.
Senator Voinovich. And repeat it again.
Ms. Kelley. The ability to use appropriated funds by the
agencies to subsidize child care, and this is the first time
that has ever been authorized. Now, no additional funds were
allotted to the agencies to do it, but the fact is they now
have the authority to use appropriated funds, and we are
working with many of them to try to put pilot programs in
place. But it is due to expire September 30.
Senator Voinovich. OK. This would be----
Mr. Romero. The legislation has a 1-year limit.
Senator Voinovich. Is it subsidizing the cost of child
care, or is it money out of your budget for building child
care?
Mr. Romero. No.
Senator Voinovich. It is just strictly----
Ms. Kelley. The cost of child care. It is a reimbursement.
Senator Voinovich. It is additional money that you would
provide someone as part of their compensation for child care?
Ms. Kelley. Yes.
Senator Voinovich. Was it experimental?
Ms. Kelley. Well, it was just set up with a 1-year life on
it in this appropriations bill, and that is why it will expire
September 30.
Mr. Romero. The President has included in his budget
request, Senator, that the law be extended for another year.
Senator Voinovich. Well, it probably ought to be extended
for 5 years. In Ohio, we offered businesses up to a $100,000
tax credit to create a facility either on their premises or
work in conjunction with other businesses in their area to
create the physical facility. We gave them a tax break and said
if you paid up to X dollars in subsidizing child care for your
employees, this would be a direct credit against your State
tax.
This would seem to be a major incentive that would attract
new people, but I don't know what impact it would have on
retaining folks that have been around for 20 years. All these
things have to be put on the table and looked at, the costs
involved in implementing them measured, and then figure out
which ones within a limited budget you would offer to make a
difference.
One last comment. This Thursday we are going to have a
hearing on the National Partnership for Reinventing Government.
We have had significant downsizing of the Federal Government
but the administration did not consider the effects that
downsizing would have on the delivery of government services.
When we consider downsizing an agency or creating new
incentives, we need to keep the mission of the agency in mind
and ensure that we do not adversely affect the ability of the
agency to carry out its mission. So I am interested in the
testimony that we are going to hear on Thursday.
But I want to emphasize again that we need to evaluate this
human capital crisis, do something short term, and then look at
the long-term picture. And we need, Mr. Romero, some
recommendations back from the administration. I will certainly
do what I can to let the appropriators know that this is
something that they ought to be paying some attention to.
I know we are going to see an increase in the defense
budget this year. One of my concerns there is that it is all
going to be spent on hardware when we have a human capital
crisis in our military.
Thank you very much for your testimony today.
Ms. Gross. Thank you.
Mr. Romero. Thank you.
Ms. Kelley. Thank you.
Mr. Brostek. Thank you.
[Whereupon, at 11:48 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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