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Testimony of Dr. Costis
Toregas
President, Public Technology, Inc.
before the House Subcommittee on Technology and Procurement
Policy
October 4, 2001
Good afternoon, Mr. Chairman and members
of the Committee. The National Academy of Public Administration
appreciates the opportunity to share the findings and recommendations
of its recent study on federal information technology (IT)
compensation. I would ask that a copy of the Academy's recent
report, The Transforming Power of Information: Making the
Federal Government an Employer of Choice for IT Employees,
be made part of the hearing record.
The National Academy of Public
Administration is an independent, nonprofit organization chartered
by Congress to assist federal, state, and local governments
in improving their effectiveness, efficiency, and accountability.
For more than 30 years, the Academy has met the challenge
of cultivating excellence in public management and administration.
Its membership of more than 550 Fellows includes current and
former members of Congress, cabinet-level appointees, senior
federal executives, state and local practitioners, businesspeople,
nonprofit leaders, and scholars. The Fellows are the foundation
of the Academy's activities, from inception through implementation.
They serve on project panels and guide other major endeavors.
As with other Academy reports, this one provides the independent
assessment of a Fellows panel, that oversaw the project.
The Chief Information Officers Council's
Federal IT Workforce Committee and the Administrative Office
of the U.S. Courts requested the Academy study of alternative
IT pay systems and human resources management issues. The
objective of the study was to generate recommendations that
would allow the federal government to attract and retain well-qualified
IT employees needed to meet the challenges of the 21st Century.
This study benefited from the participation
of representatives from many agencies. They were involved
in every stage of the year-long study. The project panel was
composed of individuals who possessed first hand knowledge
of the needs of the IT community, as well as the needs of
federal agencies and local governments. I served as chair
of the panel which included individuals from the private sector,
public sector, and academia. In addition, a committee composed
of current members of the federal community-chief information
officers, human resources managers, and line managers-and
the private sector met throughout the project to give its
input and observations and share questions and issues with
employees. The goal of this convening group was to make sure
that the problems and solutions identified by the project
team were in line with the situations that the government
faces. Additionally, the Office of Personnel Management and
General Accounting Office were briefed throughout the process
to share ideas and gain insight into the types of measures
these two organizations were proposing or implementing. Focus
groups were held with federal IT, human resources, and finance
line managers to ensure that individuals directly affected
would have a chance to provide feedback. This was critical
as the compensation models were mapped out. Private sector
experts from IBM and SRA briefed the team on compensation
in their organizations. During the study's research phase,
more than 30 agencies participated and gave accounts of their
best practices and mission needs.
The challenge facing the federal IT community
centers on the growing need for IT skills: IT now impacts
the mission of every agency and has the capability to transform
the relationship between citizens and their government. In
the overall labor market, there are more than two IT positions
available for every qualified candidate. Within the federal
government, there will be significant retirements in IT leadership
and experienced talent during the next five to ten years.
How will government fill these upcoming vacancies? Outsourcing
is one option and IT is a leader in seeking alternative sources.
In 2001, approximately 70% of federal dollars spent on IT
will be paid to contractors. Many agencies rely on outside
experts for new technologies, a trend consistent with private
industry. Internal resources must be focused on core functions
including strategic planning, procurement, and project management.
Although the federal government is a major
consumer of IT products and services, it has just begun to
explore the use of technology for delivering services electronically
to citizens, creating systems for citizen engagement, and
using forces of the market to obtain products and services.
Recent e-gov legislation illustrates the need for government
to become even more involved in providing citizen services
through advances in technology. To aid in this effort, government
and industry must facilitate the exchange of ideas and employees.
The IT senior executive exchange legislation sponsored by
Chairman Davis is a vital first step toward meeting that goal.
Based on its assessment of the current IT
workforce, the Academy panel believes the following recommendations
will help make the federal government an employer of choice
for IT professionals. First and foremost, the government must
establish a market-based, pay-for-performance compensation
system. This recommendation is consistent with the stated
goals of the Clinger-Cohen Act. Younger IT workers look to
be recognized for their contributions to their organization,
validated by their compensation. The panel-recommended model
provides for and maintains competitive pay by establishing
broad pay ranges and tying base pay to market pay.
Recent OPM special pay rates for IT positions
help to bring government salaries closer to current industry
salaries. Yet they will not keep government pay attuned to
the fluctuations in the market-they are a retroactive fix,
not a proactive solution. In addition, the OPM rates do not
address the salary needs of higher-level IT supervisors and
managers. As the IT workforce grows older, the federal government
must be able to entice managers to stay beyond their retirement
eligibility, rather than allow them to walk away and take
their institutional knowledge with them. Furthermore, incentives
are lacking to draw high-level executives into the government.
To have the "best and the brightest" IT skills in
the federal workforce, benefits for IT professionals must
be competitive, especially for the senior executive level,
and offer profit-sharing and other incentives currently provided
by private sector companies.
Under the new system proposed in the Academy
report, pay increases would be linked to competencies and
results. Some characteristics of the new pay system include:
Four pay levels
- Entry (GS 5/7)
- Developmental/Technical Supervisor (GS
9/11)
- Full Performance/Analytical Supervisor
(GS 12/13)
- Expert/Manager (GS 14/15/SES)
Raising the pay cap for IT executives to the level of the Vice
President's salary.
Creating a dual track system. In the current
system, technical experts are pushed into supervisory roles
as they have no other way to advance. Research has shown that
this process is extremely frustrating to many employees already
in the system. Agencies lose their best technical talent yet
gain an ineffective supervisor.
Establishing an opt-in provision. The panel
recognizes that many IT workers have a long history with the
federal government and may not want to accept the risk associated
with this new market-based system. All new hires would be
placed in the system while established members of the IT community
could decide whether to
move into the market-based program.
The system outlined in the panel report
allows for flexibility in the treatment of individuals and
occupations. Each individual's pay is based on what that individual
brings to an organization. IT helps support the mission of
every federal agency. Yet as the missions vary among agencies,
so too do the IT needs of the agencies. For example, the Social
Security Administration's critical IT needs are different
from the State Department's. The panel realizes that a one-size-fits-all
solution will not work in today's federal government. Each
agency is encouraged to tailor the panel's recommendations
to fit specific needs.
Another recommendation is the need to improve
recruiting and hiring processes. Hiring practices must be
faster, better enhanced, and provide more feedback to the
applicant. Anecdotal information indicated that IT professionals
have been offered jobs up to 18 months after submitting their
applications. For an atmosphere in which those with "hot"
skills are being offered private sector jobs in a matter of
days or weeks, cumbersome recruitment processes place the
federal government behind the power curve from the outset.
Equity has come to mean equal pay for an
equal position within the federal government. This is known
as internal equity. In reality, there is a need to balance
three dimensions of equity, not just that one. The government
must examine external equity aspects, or how one IT position
is paid relative to all others in that occupation across sectors.
The third is contribution equity, or how IT workers are compensated
based on their contribution to their organization. With the
number of contractors working in IT shops, individuals sitting
side by side on a project are already likely to have compensation
differences.
The Academy's study revealed an encouraging
sign. Research indicates that federal work-life balance programs
are in-line with what IT professionals are looking for. Many
private sector companies pointed out that if federal agencies
actively marketed their work-life programs to prospective
hires, the private sector would be given a run for their money.
Telecommuting, alternative work schedules, and programs such
as child care facilities are exactly what IT professionals
are looking for. Several agencies started a "brand"
for their programs, with great success.
Management ownership and participation are
key to the success of this new pay system. Pay-for-performance
will require federal supervisors to make tough decisions setting
pay. Managers must have the necessary tools to support them
in their decisionmaking so that they truly have the "freedom
to manage." Additionally, agency budgets and management
decisions must support full implementation of the system.
In times of budgetary shortfalls, there is a tendency to cut
training budgets first. IT employees place a high value on
keeping their skills up-to-date. As a result, there must be
support for continuous learning. IT workers must be challenged
on exciting projects. Doing so provides the opportunity for
them to learn on the job, and participate in classroom training
sessions and other opportunities.
Champions are needed for implementation
to be successful. Fortunately, the project leadership committee
members and the CIO Council have been very willing to give
their time and effort to ensure this moves forward, but they
cannot do it alone. Legislative support is critical. The approaching
wave of retirement provides a unique opportunity to restructure
the methods used to compensate federal IT employees. As with
any new implementation plan, there must be an involved communications
and education strategy to educate employees and managers on
the benefits and procedures of the new system. Last, there
must be sufficient funding for pay-for-performance; otherwise,
the incentives used in the program will have little meaning.
The Academy team took preliminary steps
to examine the costs associated with implementing these recommendations.
Academy research, expert views, and demonstration project
results provided several conclusions. Demonstration project
data were used as many provide excellent baselines for cost
comparisons. Cost projections point to an initial increase,
both in costs for salaries and continuous learning. Yet, over
a 10-year period, there will be a return on learning and growth.
Not having to rely on the current, antiquated pay classification
system will produce even more cost savings. The indirect financial
benefits include reduced retraining costs, improved customer
satisfaction, and improved productivity. Another important
benefit is a long term return on investment based on IT's
ability to implement transformation objectives.
Our research shows that the recommendations
being offered fit with the desires of "Generation Y."
These individuals are comfortable with technology and want
to perform well at work. The Journal of Career Planning and
Employment (Spring 2000) points out that candidates expect
"realistic" recruiting, job training, career clarity,
career development, work autonomy, competitive salary and
benefits, job alternatives, mentoring, and opportunity for
advancement. The National Association for Colleges and Employers
(NACE) surveyed current college students and their perceptions
of federal government careers. Eighty-four percent expressed
interest in federal careers. Thirty-seven percent had little
awareness of the application process. Forty-nine percent considered
the application process lengthy or complicated. Across all
sectors, NACE discovered that the most effective techniques
for hiring IT talent included (in order of effectiveness)
offering internships and co-ops, offering projects using cutting
edge technology, employee referrals, sourcing through career
services offices, offering higher salary, and signing bonuses.
Most students expect to stay with their first employer less
than 3 years (NACE 2001 Graduating Student and Alumni Survey),
while 22% leave within 5 years.
None of the recommendations that the Panel
proposes is radical. In fact, over 80% of the recommendations
are currently being implemented somewhere in government. In
short, we propose a market solution for a market challenge,
offering a premium for performance. In addition, we believe
the sharing of best practices and skilled staff among agencies,
and between public and private sector organizations, are vital
to infusing the federal workforce with new, innovative IT
talent. The time is now for a rational transition to allow
the federal government to become an employer of choice for
IT employees.
Mr. Chairman, this concludes my prepared
statement. I would be pleased to answer any questions that
the committee may have.
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