As a federal employee, not much captures my imagination when it comes to new legislation, since many of those proposals seemingly have the stamina of a fruit fly - but mostly for the many unanswered questions they generate. However, I spotted one a week or so ago that caught my eye, and really got me thinking.
The bill, offered by Rep. Tom Cotton, proposes to, among other things – directly tie future pay increases for some federal employees to increases in median household income in the U.S. – after adjusting for inflation, and ostensibly through this linkage, reinforce for most of the 2 million federal employees their stake in the economic success of the United States, and that they have “skin in the game.”
At the individual level, this idea will probably have very limited appeal for the average federal employee. But why not consider this idea? Let’s take a closer look.
Just Basic Incentive-Based Compensation, Right?
Well, maybe. On the face of it, some of this conforms with general-accepted incentive compensation plan design. These are the handful of the team-based incentive programs requirements that I came up with:
- Objectives are specific and achievable.
- Objectives are communicated to employees in advance of the beginning of the performance period/cycle.
- Accomplishing the stated objective(s) have a clear purpose and have pre-determined and measurable goals.
- All program participants are able to contribute approximately equally to accomplishing the goals and objectives.
- Incentive program should be designed to elicit the desired outcomes and behaviors
- Business rules are communicated before the program is rolled out and establish: participant eligibility (full-time / part-time, proration), performance measures (quantitative, qualitative, sensitivity, thresholds), plus any other provisions for the program.
So far, so good? And the role of government (and all government employees), is to ensure the improvement of general economic conditions in the U.S., right?
Revisiting the Role of Government
A quick refresher from my high school civics class reminded me that something in Preamble to The Constitution states that the primary purpose of government is to:
- Establish justice for all
- Insure domestic tranquility
- Provide for the common defense
- Promote the general welfare
- Secure the blessings of liberty
Some broad statement of principles, but worth noting. . . strangely nothing about federal employees working collectively to increase median household income.
Good Intentions, But There May Be a Few Holes
Reflecting back on the basics of incentive compensation, some of the flaws in this proposal are immediately evident. First, is the very tenuous ability of federal employees to positively influence median household income in the United States, and how exactly are they supposed to accomplish this? If the U.S. economy was a more isolated and independent “island”, influencing its economic conditions might be possible. However, in an increasingly complex, interconnected, global economic system, this is almost impossible.
The Law of Unintended Consequences . . . on Steroids
We all know that what gets measured, gets managed. And since our ability to affect conditions on a global basis may be limited, we should anticipate an inclination to influence conditions at the federal level, a little closer to home. That could be realized by bringing new drugs or other consumer products to market faster, but achieving that by granting regulatory approvals just a little bit faster than in the past, by easing the application of existing compliance standards, criteria or judgment.
It’s quickly obvious, that without a conscious, directed and unified effort, it might be as likely that some action(s) by federal employees could just as easily have a negative impact on the U.S. economy, and in turn lower the average median income – or worse.
Fun and Games Aside
In the end, government and the purpose of government are not a game. If you want employees to have a stake in the future and success of their organization – even to include some broad or limited element of employees’ compensation, you need to ensure that they know and understand what they’re being held accountable for, and more importantly, that they can legitimately influence those outcomes, when you ask them to . . . put some skin in the game.
Everyone probably has a different perspective. What's yours?
Chris Dobyns, CCP, CBP, is Manager of the Office of Human Resource Strategies for one of the largest U.S. intelligence agencies. The Office of Human Resource Strategies is responsible for compensation and incentives, occupational structure, recognition and rewards, HR policy, and human capital program evaluation and assessment for his Agency. Chris has worked in the area of compensation for more than 30 years, and has been employed in various compensation-related positions by a number of large, private sector companies including, Sears, Roebuck, Arizona Public Service and Westinghouse Savannah River Company.
Image "Money in Pocket" courtesy of posterize / FreeDigitalPhotos.net