THE REPORT OF THE PRESIDENT'S COMMISSION ON COMPENSATION OF CAREER FEDERAL EXECUTIVES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00530R000501220001-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 80
• Document Creation Date: December 23, 2016
• Document Release Date: June 19, 2013
• Sequence Number: 1
• Publication Date: February 26, 1988
• Content Type: REPORT

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THE REPORT OF THE
PRESIDENT'S COMMISSION
ON. COMPENSATION OF
CAREER' FEDERAL
EXECUTIVES
February 26, 1988
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THE PRESIDENT'S COMMISSION ON COMPENSATION OF CAREER FEDERAL EXECUTIVES
Chairman
Donna Lynne Cullen
President
J.L. Associates
Alexandria, Virginia
H. Lawrence Garrett, III
Under Secretary of the Navy
Washington, D.C.
William R. Graham
Science Advisor to the President
Washington, D.C.
Janet L. Norwood
Commissioner
Bureau of Labor Statistics
U.S. Department of Labor
Julie A. Sackett
Vice President and Group Director of Personnel
Government Electronics Group
Motorola, Inc.
Scottsdale, Arizona
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Senior Executive Service Compensation
Introduction ..................................................3
Summary of Findings ...........................................6
Commission Recommendations ....................................9
1. The Senior Executive Service: Purpose and Policies..... 15
I.A SES Compensation Provisions ...................17
I.B Early SES Compensation Problems ............... 21
II. Fundamental Compensation Issues ........................ 24
II.A Changes in Executive Purchasing Power ......... 24
II.B Private Sector Comparability .................. 29
II.C SES Pay Versus General Schedule and
Executive Schedule Pay .................... 36
III. Effect of Compensation on Recruitment and Retention.... 41
III.A Agency Views ................................. 42
III.B Federal Executive Views ............:.........45
III.C Statistical Indicators of Compositional
Change in the SES .........................49
Conclusion ................................... ...............60
Dissenting Views of Commissioner Graham ...................... 60-A
Appendices
I History of Senior Executive Service
Pay Rates ................................ 61
II Summary of Agency Responses to Commission
Questionnaire ............................ 62
III Summary of Witness Statements and
Statements Submitted for the Record ...... 71
-l -
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Lists of Charts and Tables
Chart I - Structure of Federal Civil Service
2 - The Impact of Inflation: Current-and Constant-Dollar
Salaries for Federal SES Level ES-4, 1979-87
3 - Real Pay-Private Industry and SES:
Constant-Dollar Average Salaries (September
1979 Dollars) for all Federal SES and comparable
Private Industry Occupations, 1979-1987
4 - The Pay Gap:. Average Annual Salaries for all
Federal SES 66d Comparable Private Industry
5 - Turnover Among Career SES
6 - Percent of Eligible Executives Choosing Optional
Retirement
7 - Years of Service for Executives and GS/GM 14/15's
Table I - Current Pay Rates for the General Schedule, SES, and
Executive Schedule.
2- Career SES Who Left the Federal Government
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Introduction
The President's Corrmission on Compensation of Career Federal
Executives was established by E.O. 12592 (April 10, 1987) to
study "........the levels of compensation paid to career members
of the Senior Executive Service (SES) and shall advise the
President and the Director of the Office of Personnel Management
on its findings and recommendations, including its conclusions
(1) what effects inflation has had on these pay
levels;
(2) how these pay levels compare with those of similarly
situated executives in the private sector;
(3) how these pay levels affect recruitment and retention
of career executives in the Federal service;
(4) whether these pay levels are appropriate;
(5) how compensation of the Senior Executive Service should
relate to compensation of (a) Executive Level employees,
and (b) GS/GM employees; and
(6) whether legislation should be proposed to alter
the President's authority to adjust.SES compensation
levels."
As the members of the Commision explored the issues set forth in
this executive order, it became clear that the essential point
around which the others revolved was recruitment and retention
of the best qualified individuals for the SES--a critical
element for the proper functioning of this government.
Without retaining our best public servants and without
the ability to recruit equally qualified personnel, our
capacity as a nation to successfully respond to the
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domestic and international challenges we face will be
severely impaired. We approach the President's mandate for
this Commission from the perspective that being merely
competitive with private sector career choices is not enough.
The Federal Government needs to be competitive for the best
talent available, and compensation plays a significant role in
that competition.
At no level is such a recruitment and retention policy
more important than at the top of the career public
service, the Senior Executive Service (SES). These
executives provide the key link between the President
and his appointed policy makers and the vast career
federal' service. Without the highest quality SES
executives, responsive to and accountable for carrying
out the President's policy mandate, the link is severed. In
addition, SES career executives provide the institutional
history and experience needed to most effectively frame
the implementation of a new policy direction. An SES
beset by retention and recruitment problems results in
the will of the people, as expressed through national
elections, being seriously impaired.
In recent years many studies have pointed to problems,
often involving compensation issues, in recruiting and
retaining SES executives. The Commission, after
reviewing much of the literature and after exploring
several additional aspects, affirms many of these
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earlier conclusions and finds several areas in need of
irrmediate redress. An additional concern, perhaps
of even greater importance, is our perception that
recruitment and retention problems in the SES are
growing not diminishing.
This report is presented in three parts preceded by a Summary of
Findings and Recorrmendations.'"Section I provides descriptive
information about the Senior Executive Service: its purpose,
compensation provisions, and early problems encountered.
Section II focuses on basic SES compensation issues--the
relationship between SES pay and (1) executive purchasing power;
(2) pay for private sector executives; and (3) pay of other
federal employees. Section III examines how SES compensation
affects executive recruitment and retention based on: federal
agency views; federal manager views; and statistical indicators
measuring change in the composition of the SES.
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S,ununT ary of Findings
In its own analysis and in the review of the literature
concerning compensation of the SES, this Corrrnission has found
strong reasons for increasing concern. The disincentives for
recruitment and retention of the most capable incumbents or
candidate SES members are many--the history of broken promises
and pay caps, reduced bonus provisions, the effects of inflation,
the comparative pay gap with the private sector, compression
within and on either end of the SES pay range. More
specifically, we find the following:
Effects of Inflation: Since the SES went into effect in 1979,
real (i.e., inflation-adjusted) SES pay has fluctuated, but
the net effect has been negative. Falling rapidly in the
early part of the 1980's, it began to improve against
inflation in early 1982. By late 1987, however, average real
SES pay was still slightly below its 1979 value.
Comparison with Private Sector Executives: Historically,
federal executive pay has never been fully comparable with
private sector executive pay. Higher private sector risks and
deferred compensation measures are extremely difficult to
quantify. Regardless of the difficulties in comparing
salaries, federal executives do measure their compensation
against their perceived private sector counterparts. Studies
by the Bureau of Labor Statistics (BLS) (average salary
comparison of federal career executives and comparable private
sector executives between 1979 and 1987) and by the
Hay/Huggins Company (cash compensation and total compensation
comparison of federal and private sector executives in 1984
and 1987) show that both the average salary and total
compensation of private sector executives are substantially
above those of federal executives.
Appropriateness ofSES Pay Levels: The compression within the
SES pay level range (17% as of January 1988) is so great as to
make differentials between the pay levels meaningless in terms
of a compensation incentive. Bonus provisions are inadequate
for rewarding outstanding performance. The limited range,
with the ceiling for SES pay at Executive Level IV, is a
compensation and performance disincentive.
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Compensation and SES Retention and Recruitment: Additional
information collected from 39 federal agencies with 86 percent
of the total SES career population indicates that problems
with recruitment and retention of career executives vary by
occupational fields. The occupations in which agencies are
having the greatest difficulties are attorneys, medical
researchers, several types of scientific and engineering
specialists, economists, statisticians, and information
management/computer science specialists. The two highest
ranking concerns of the agencies were difficulty in attracting
high quality applicants for SES vacancies and having a federal
compensation package that is not competitive with compensation
provided for comparable private sector and academic positions.
The latter factor (compensation) was generally identified as
the primary reason for the"difficulties in getting and keeping
high quality SES career members. SES attitude surveys
indicate that compensation is generally viewed as a negative
factor.
While some data on the SES are available, no federal agency has
developed a set of time series indicators that can be applied to
their own SES population or the more general data available to
establish trends and pinpoint trouble spots. Such ongoing
analysis is urgently needed if we are to begin measuring the
health of the SES recruitment/retention effort with any real
accuracy. In a few years, the portability of the new Federal
Employees Retirement System (FERS) will present new challenges
both to the retention and recruitment effort. Action is needed
now to make better use of existing data (particularly time series
data demonstrating trends) to better measure the status and
health of the SES for the future.
Overall, this Corrmission finds the current SES compensation
system not conducive to recruitment and retention of the highest
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quality candidates and members of the career SES and poorly
positioned to meet the increasing challenges of the future. The
erratic nature of the implementation of scheduled compensation
recommendations in the past suggests that the President's
authority to adjust SES compensation levels needs to be
broadened. In light of the uneven recruitment/retention
problem being experienced by federal agencies, it becomes even
more important to have greater Presidential flexibility in
designing compensation systems.
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Corrrnission Recorrmendations
The design of the SES with its emphasis on promoting greater
risk-taking and performance with greater rewards simply has not
been realized. It is clear the current SES compensation system
provides neither the reward for performance nor the flexibility
for competitively recruiting and retaining the best quality
executive talent available. The Commission does not feel the SES
system should be discarded. ,Rather, the Senior Executive Service
should remain intact and its uniqueness enhanced. A number of
legislative proposals have been suggested which would remove
certain occupational groups (e.g., scientific, engineering, and
acquisitions personnel) from the SES. The rationale is that
sufficient flexibility does not exist within the SES compensation
system to allow agencies to recruit and retain top-flight
executives in particular areas.
The separate personnel systems being proposed would create a
precedent which other groups could use to justify their own
separate systems., The result could return the government to the
situation extant prior to the Civil Service Reform Act: that is,
having over 60 executive authorities governing small groups of
career executives--with the substantial management inefficiencies
and inflexibilities such a piecemeal system would create. A
better solution is to expand the compensation flexibilities
within the SES structure.
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In order to correct major shortcomings in the SES compensation
system, the Commission recommends legislation this fiscal year to
expand the flexibility and performance elements of the SES by:
(1) Setting the SES pay rates beginning at GS-16/step-?. for
the first SES a level. All following SES a levels are to
be established with a uniform differential of a minimum six
Percent increase between each eve . Non-career SES should
not be paid more than Executive Schedule Level 4 (EX-4).2
This will permit larger pay distinctions in recognizing the
ubstantial differences in the importance of difficulty in
SES ;
ti.. 3
-
INCREASING
SES SALARY LEVELS
DIFFERENCES
DOLLARS PERCENTAGES
TOTAL
DIFFERENCE
1
$66,544
2
70,537
$3,993
6.00%
3
74,769
4,232
6.00%
4
79,255
4,486
6.00%
5
84,010
4,755
6.00%
6
89,051
5,041
6.00%
33.82%
'The President currently has authority to establish
GS-16/Step 2 as the base SES salary level. New legislation would
be required to establish the minimum level differentials.
2A save salary provision would apply to the non-career SES to
preclude any loss in current salary. Adjustment in the
non-career SES salary would be based on changes in the current EX
pay schedule (specifically EX-IV).
3The Commission reviewed a variety of options regarding the
setting of an upper SES pay limit (range percentages, limiting the
number of pay levels and setting no formal limit are examples).
While the Cormission makes no formal recorrmendation in this
regard, any decision reached should maintain enough flexibility
to move with any adjustments to the pay levels. The objective is
to prevent compression within the SES pay levels.
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The impact of this new SES pay scale is demonstrated by the
following table. The dollar and percentage increases of the
new scale appear to the right of the current SES pay levels.
Compression is relieved at all levels with a monetary
differential that provides incentive to strive for the next
pay level.
CURRENT SES PAY SCALE NEW SES PAY SCALE
SES Level Dollars Dollars Percent Increase
1
65,994
550
0.83%
2
68,952
1,585
2.30%
3
71,910
2,859
3.98%
4
73;400
5,855
7.98%
5
75,500
8,510
11.27%
6
77,500
11,551
14.90%
This Commission views flexibility within pay the SES levels
to be of greater importance than pay scale overlap (i.e.,
where GS/GM-15 step 8 overtakes ES-1), provided there is a
substantial benefit or incentive to switch from the high end
of the GS/GM scale to the low end of the ES scale.
Heretofore, this incentive in the form of performance bonuses
and substantial pay level differentials has been lacking.
(2) Increasing the size of the bonus pool and allowing
recruitment and retention payments.3 The bonus pool would be
equal to 10% of aggregate career SES payroll with recruitment
and retention bonuses not to exceed forty percent of the
total pool.4
Bonuses comprise a much larger percentage of pay for private
sector executives than for federal executives. On average,
comparable private sector executives receive annual bonuses
equal to 20 to 30 percent of their salaries.
3As is currently the case, an expanded bonus pool would not
apply to non-career SES executives.
4The guidelines and criteria for authorizing these recruitment
and retention payments could be similar to those under 5 U.S.C.
5948, Physicians' Comparability Allowances.
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Expanding the bonus pool from the current three percent to
ten percent of aggregate career SES payroll would allow
agencies to give awards to a larger proportion of SES
members, give larger awards on average, and have more
latitude in the application.of pay-for-performance
principles.
In addition agencies should be permitted retention and
recruitment bonuses of up to forty percent of this expanded
bonus pools. Agencies currently have limited flexibility
within the SES pay range to provide substantial pay to
recruit top quality private sector managers and retain
superior career executives. Adding the recruitment/retention
bonus provision would give federal agencies greater ability
to compete with the-private sector.
(3) Increasing the size of Presidential Rank Awards. Rank
awards go to the very best of the career SES--exactly the
individuals the government should make the greatest effort to
retain. Since the establishment of the SES in 1979, the
dollar amount of individual awards has remained the same at
$20,000 (Distinguished Rank) and $10,000 (Meritorious Rank).
Agency performance bonuses ($15,500 maximum) can now be more
than Meritorious Rank Awards. To eliminate the overlap,
thereby restoring the unique honor of the Presidential Rank
Awards, these should be raised to 40 percent (Distinguished
Rank Awards) and 20 percent (Meritorious Rank) of the top SES
pay rate, thus avoiding the future need to raise award levels
on an ad hoc basis.
(4) Eliminating the aggregate compensation ceiling set at
EX-I. This would allow greater latitude for paying
substantial performance and non-performance bonuses in the
year earned. While legislation allowing carry-over of
compensation earned in excess of EX-I has proved helpful,
more leeway may be needed for certain shortage positions.
5Commissioner Norwood has reservations about recruitment and
retention bonuses on equity grounds.
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(5) Changing annual leave accumulation rules.6 SES managers
are allowed unlimited annual leave accumulation per year;
unused leave may be cashed out when the employee leaves
government. By allowing annual cash out of a portion of
leave above 120 hours--effectively shifting this deferred
payment into the current compensation category--SES members
would be given access to additional lump sums on a yearly
basis .7
The Corrmision acknowledges these recommendations have budgetary
implications. Recommendations one, two and three represent an
increase of approximately 14 percent over the current base SES
compensation aggregate in these areas. More than 50 percent of
the dollar value of the increase is in the area of performance
related bonuses. The remainder creates a more meaningful
incentive differential between the SES compensation levels.
The Commission recommends several non-legislative actions as well
that will enhance SES recruitment and retention in a more
indirect fashion:
(1) SES pay should be studied on a regularly scheduled basis
as are General Schedule and Executive Schedule ay. The
President's Pay Agent should include SES pay as part of its
annual review of General Schedule pay and discuss such
changes in its report to the President.
6Conmission Chairman J.L. Cullen and Commissioner Norwood
have expressed reservations about this recommendation. They feel
SES executives should be encouraged to take off the leave time
earned.
7For example, an SES member at the current ES-1 level who
chose to cash-in one year's earned leave above 120 hours would
increase his income by $2,728.00 This asumes he is accumulating
leave at eight hours per pay period, (208 hours total for the
year), the rate provided after 15 years of federal service. Most
career executives meet this criterion. The figure of $2728.00
was reached by subtracting 120 from 208 (88) and multiplying this
by. the hourly rate ($31.00). The 120 hours could be accumulated
by the executive for eventual cash-out at retirement as is the
current law. This portion, equal to three weeks, would not be
available for annual cash-out , due to recognition that some time
off should be taken each year.
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(2) OPM should assist the agencies in making better use of
existing ata a out the SES. Identification of comparable
time service indicators should be developed inorder to
identify potentially damaging recruitment/retention trends in
SES composition.
OPM, with agency participation, could develop overall
workforce planning measures that determine optimal
recruitment/retention ratio bands and assist the agencies in
developing flexible compensation packages to meet these
goals.
A cautionary note needs to be made concerning the workforce
planning and development indicators. Neither should be
massive or complex in design. The objective is to develop
benchmarks for measuring change in key areas, not an attempt
to measure the full range of elements and their constantly
changing relationship. The workforce planning and indices
will alert agencies and OPM to areas where
retention/recruitment problems are developing and will assist
in developing the most efficient change in compensation to
address the problem.
(3) Efforts should be made to enhance the public image of
career federal executives. Presenting the career federal
executive as a highly valued member of the government team is
possible through a host of mechanisms.
One is simple, for politicians to refrain from the
deceptively easy but damaging practice of denigrating the
role and performance of career federal executives. Another
potential mechanism that would demonstrate the high value
placed on public service and have the additional feature of
being a strong performance incentive for the SES would be an
annual dinner with the President for all Distinguished
Service Presidential Rank award winners.
OPM should review in some detail the status and activities of
the SES counterparts of other countries, particularly Canada
and Great Britain. The Civil.Servants in these countries tend
to be held in higher esteem by their respective publics than
is the case in the U.S. While not directly transferrable,
some adaptations of positive reinforcement of public service
could be derived and possibly applied here in the United
States.
$Conmissioner Norwood has expressed reservations about the
development of new indices. She believes that OPM should develop
definitions to be used by agencies in maintaining data on the
SES, including a questionnaire for exit interviews with S ES
executives who resign or retire from government.
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1. The Senior Executive Service:, Purpose and Policies
Established by the 1978 Civil Service Reform Act (CSRA), the
Senior Executive Service serves. as the cornerstone of the
government's effort to improve the federal personnel management
system. It was designed to create a corps of competent and
dedicated executives, held accountable for the execution of
government programs, and motivated by tangible rewards an'd risks.
In return for the possibility of higher pay, substantial
performance bonuses, increased development and mobility
opportunities, and some additional benefits, senior executives
were asked to give up some measure of job protection to allow
agency heads greater flexibility in setting up effective
management teams.
The SES provided for.a uniform, government-wide system for
developing, selecting, assigning, rewarding, and managing career
executives. Prior to the SES, about 60 executive authorities
governed various groups of career executives. The myriad laws,
regulations, and procedures made it difficult for agency heads
to use their senior-level staff effectively, hold managers
accountable for program accomplishment, and reward them based on
performance.
The SES, which went into effect in July 1979, covers about 7700
high-level managerial, supervisory, and policy positions. While
most of the SES population consists of permanent career -
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employees, up to 10 percent of allocated SES positions may be
filled by non-career appointees (primarily political appointees)
and up to five percent may be filled by limited emergency or
term appointees on temporary, assignment. (As of September 1987,
there were 6223 career appointees, 682 non-career appointees and
43 limited emergency or term appointees.) About one-third of SES
members are scientists and engineers; one-fifth are other
professionals, such as attorneys, economists, accountants, and
medical officers; and just under one half are
administrative/technical personnel.
Most of the original SES work force came from the GS-16/17/18
"supergrades" or equivalent positions, with a small additional
number transferring from the Executive Schedule.' The respon-
sibility and pay levels of the SES generally fall between those
of the Executive Schedule above and the General Schedule below:
o The Executive Schedule (EX) covers the President's top
political appointees e.g., Cabinet Secretaries, Deputy or
Under Secretaries, Assistant Secretaries, Independent
Agency Heads, Members of Commissions). This schedule has
five pay levels, with EX-I the highest, and each with a
single pay rate. It covers about 500 employees. (This
figure does not include White House staff, Foreign Service
Chiefs of Missions, U.S. Attorneys, or part-time appointees
to boards and corrmissions.)
'General Schedule 16-18 and equivalent still cover a small
number of other senior-level jobs, such as Administrative Law
Judges and non-supervisory scientists and other professionals
engaged in research and development. Also, a small number of
other career executive systems--such as those for the Senior
Foreign Service and VA medical center directors--exists.
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o The General Schedule (GS) covers most white collar
federal employees below the political and career executive
levels. It has 18 grades, most of which have 10 pay rates
or steps. Progression within each grade is determined by
seniority and performance. There are about 900 employees
in the top three grades (GS 16-18). The next three grades
(GS/GM 13-15) contain both managerial and non-managerial
employees: the 126,000 managerial employees are designated
as GM employees, while the 87,000 non-managerial employees
are designated as GS. The grade 13-15 pay ranges are the
same for both groups, but a unique pay-for-performance
system applies to the GM population (described in Section
II). The remainder of the General Schedule, grades 1-12,
covers over 1,200,000 employees.
Chart I shows the hierarchical structure of the federal civil
service. Table 1 shows the January 1988 pay rates for the
General Schedule, SES, and Executive Schedule.
I.A. SES Compensation Provisions
The SES compensation system is outlined below. (The'major
changes in this system, since the enactment of the CSRA, are
described in Section I.B.)
(1) The SES is a rank-in-person system, with six pay
levels (the law requires at least five), ES-1 through
ES-6.1 Unlike the General Schedule, which is a rank-in-
position system, pay in the SES is not dependent on the
position held, but on the qualifications/attributes of the
individual (although the duties, responsibilities, and
organizational location of the position may be taken into
account). Agencies may assign any of the six pay levels to
an SES member upon appointment. Following appointment,
individual pay adjustments (up or down) may be made once a
year based on such factors as performance, changes in
duties and responsibilities, and changes in geographic
location, e.g., movement from a low to a high cost-of-
living area. Under current OPM regulations, pay may be
increased any number of levels at the time of an adjustment
(e.g., ES-3 to ES-5), but may be decreased only one level
(e.g., ES-3 to ES-2).
lAs of September 1987, the distribution of SES members
(career, non-career and limited appointment) among the six SES
rates was as follows: ES-1, 6.0%; ES-2, 8.1%; ES-3, 15.3%;
ES-4, 51.6%; ES-5, 13.8%; ES-6, 5.3%.
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Structure of Federal Civil Service
1,990,000 Full-Time Employees
(March 1987)
Excludes U.S. Postal Service, Central Intelligence Agency, National Secunny Agency
Chart 1
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GENERAL SCHEDULE
Providing a 2 Percent Increase
Effective in January 1988
3
4
5
.10
GS-1
$9,811
$10,139
$10,465
$10.791
70
$11,117
103
12
$11,309
459
12
$11,631
12,815
$11.955
13,171
$11,970
13,527
$12,275
13.883
2
3
4
5
11,032
12,038
13,513
15,118
11,294
12.439
13,963
15,622
11,659
12,840
14.413
16.126
11,9
13,241
14,863
16.630
,
13,642
15,313
17,134
,
14.043
15,763
17,638
14,444
16,213
18,142
223
20
14,845
16.663
18,646
785
20
15,246
17,113
19.150
21,347
15,647
17.563
19,654
21,909
6
7
8
9
10
11
12
16.851
18,726
20,739
22,907
25,226
27,716
33,218
17,413
19,350
21,430
23,671
26,067
28,640
34.325
17.975
19,974
22,121
24,435
26,908
29,564
35,432
18.537
20,598
22.812
25,199
27,749
30,488
36.539
19,099
21,222
23,503
25,963
28,590
31,412
37,646
19,661
21,846
24,194
26,727
29.431
32,336
38,753
086
46
,
22,470
24,885
27.491
30,272.
33,260
39,860
403
47
,
23,094
25,576
28,255
31,113
34.184
40,967
720
48
23.718
26,267
29.019
31,954
35,108
42,074
50,037
24,342
26,958
29,783
32,795
36,032
43,181
51,354
13
39.501
40,818
42,135
43,452
44,769
,
459
54
,
015
56
,
571
57
59,127
60,683
14
46,679
48,235
49,791
51,347
52,903
.
057
64
,
887
65
,
717
67
69,547
71,377
907
54
737
56
567
58
60,397
62,227
,
.
.
5*
15
16
.
64,397
,
66,544
,
68,691
70,838
72,500
73,660*
75,765*
77.870*
79,97
17
73,958*
76o423*
78,888*
81,353*
83,818*
18
86,682*
* The rate of basic pay payable to
of the Executive Schedule. which
employean at these rates
is currently $72,500.
is limited to the
SENIOR EXECUTIVE SERVICE
EXECUTIVE SCHEDULE
ES-1
$65,994
level I
$99,500
500
89
2
68,952
II
,
3
71,910
III
82.500
4
400
73
IV
77.500
5
,
75,500
V
72,500
6
77,500
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rate for
level V
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(2) The basic._pay levels are set by the President through
an Executive order (5 U.S.C. 5382). They are subject to
adjustment whenever there is an adjustment in General
Schedule pay. The lowest.rate must be at least as much as
GS-16/1, and the highest rate may not exceed Executive
Level (EX) IV. Under E.O. 12622 (effective January, 1988),
the lowest rate (ES-1) is set slightly above GS-16/1, at
$65.994, and the highest rate (ES-6) is set at the EX-IV
level, $77,500.
(3) Career SES members are eligible for two types of lump-
sum performance awards:
o Performance Bonuses (5 U.S.C. 5384). Initially, the
law established that up to 50 percent of executives
could receive performance awards of up to 20 percent
of basic pay. (The evolution of this policy is
described in the next subsection.)
o Presidential Rank Awards (5 U.S.C. 4507). The
government-wide Presidential Rank Award program
provides $10,000 each to up to five percent of the
career SES for sustained accomplishment (Meritorious
Executives) and $20,000 each to up to one percent of
the career SES for extraordinary sustained
accomplishment (Distinguished Executives).
(4) Physicians comparability allowances of up to $20,000
may be paid to eligible SES members (5 U.S.C. 5948).
(This amount was increased from a previous maximum of
$10,000 by P.L. 100-140, effective October 26, 1987.)
(5) Aggregate compensation, including basic pay,
performance bonuses, rank awards, and physicians
comparability allowances, for a fiscal year may not
exceed the pay for an EX-I employee (currently $99,500) in
effect at the end of that year. Originally, under the
CSRA, any excess above EX-I was forfeited. (Modification
of this policy is discussed in the following subsection.)
(6) Other forms of compensation include:
o Incentive awards of up to $25,000 for suggestions,
inventions, inventions, and special acts or service (5
U.S.C. 4502). Awards of up to $10,000 can be
approved at the agency level; OPM approval is required
for awards between $10,000 and $25,000. Presidental
awards for improving the efficiency of the service or
for meritorious acts may be granted in addition to the
agency awards. (Use of these awards is not extensive.
Fewer than 100 career SES members received cash
incentive awards in FY 1986.)
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o Cost-of-living allowances of up to 25% of base pay
in non-foreign in non-foreign areas (e.g., outside
the Continental U.S.) (5 U.S.C. 5941) (rarely
employed).
o Post and danger pay.of up to 25% of base pay in
foreign areas (5 U.S.C. 5925 and 5928). (rarely
employed).
These forms of compensation are not subject to the
EX-I aggregate compensation ceiling.
(7) SES members are not eligible for premium per, e.g.,
overtime, Sundays and holidays, night, standby, irregular
hours, hazardous duty differentials (5 U.S.C. 5541
(2)(xvi)).
(8) Annual leave accumulation is not subject to the 240
hour limitation placed on other employees (5 U.S.C. 6304
(f)) and is paid in a lump sum at the time the employee
leaves the government at the individual's current pay rate.
(9) Retirement, health, and life insurance benefits are
similar to those for other federal employees.
I.B Early SES Compensation Problems
Key provisions of SES compensation policy ran into difficulties
almost immediately after implementation. While some of the
specific problems have been addressed partially, the
dissatisfaction they produced on the part of SES members lingers
on. This dissatisfaction will disappear only with the
implementation of a consistent and equitable compensation policy
over the long term that addresses more fundamental issues still
unresolved.
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The problem areas and the extent of their resolution are
(1) y cap. One of the benefits of the SES system over
the "supergrade" system was that career executives would
have the opportunity to earn higher salaries than
previously available. While the ceiling for GS salaries
was, and remains, EX-V (now $72,500), the ceiling for SES
salaries was set at EX-IV (now $77,500). Because of
continued pay caps on SES salaries resulting from
appropriations legislation, however, the top SES salary
remained at the payable rate for.EX-V during the
first 2-1/2 years of the SES. This situation was improved
with the January 1982 pay raise, at which time pay for ES-3
through ES-6 was adjusted upward to the payable rate for
EX-IV. It was not until December 1982 that the cap was
lifted from all SES pay rates. Appendix II shows SES pay
level changes between July 1979 and the present.
(2) Paycompression within the SES. By setting the SES
pay floor at GS-16/1 and the ceiling at EX-IV, it was
expected that a significant pay range would be available to
allow for meaningful pay differentials based on
performance, recruitment and retention needs, area cost-of-
living, etc. Pay caps, however, made such differentiation
impossible. When the SES was established, the available
pay range was only 6 percent, from $44,756 to $47,500.
This situation had worsened by October 1980, at which time
all SES levels were receiving the same salary, $50,112.50.
When the pay cap was raised in January 1982, the range
widened to 7 percent; with the complete removal of the pay
cap in December 1982, the range expanded to 18 percent. In
February 1987, the range stood at 20 percent--the most
extensive since the creation of the SES. The freeze on the
top SES levels in January 1988, however, reduced this range
to 17 percent.
(3) Pay compression with GS/GM-15. A substantial overlap
with GS/GM-15 pay will limit incentives to move into the
SES unless additional compensation benefits are added.
Grade 15 employees entering the SES may find themselves
accepting greater responsibility and greater risk for no
increase in pay. When the SES was implemented, GS/GM-15
employees at steps 9 and 10 were already earning the same
level of pay as the _highest paid SES members. By October
1981, this situation extended to the majority of GS/GM-15
employees (i.e., down to step 4). Since that time,
subsequent pay increases and the raising of the pay cap
allowed an expansion of the SES range, thus diminishing the
extent of salary overlap between SES and GS/GM-15 rates.
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The top SES rate is now 41. percent higher than GS/GM-15/1
and nine percent higher than GS/GM-15/10. While a small
amount of overlap remains (ES-1 and 2 with GS/GM-15, steps
8-10), agencies may provide substantial pay increases to
grade 15 employees--at any step--to induce them to join the
SES. (As noted above, however, the SES does not provide
.any permanent pay level entitlement. The assigned SES pay
rate could decrease over time, potentially down to ES-1.
While pay decreases are rare, the risk does exist.)
(4) Aggregate compensation limit. Setting the aggregate
SES compensation limit (including salary and bonuses) at
EX-I works well when a large pay differential exists
between SES rates and EX-I. Without a sufficient
differential for much of the time since 1979, however, some
SES award monies had to be forfeited. A legislative change
enacted in 1984 (P.L. 98-514) allowed any compensation in
excess of the EX-I ceiling to be paid out at the beginning
of the following fiscal year.
(5) Bonuses. While the CSRA allowed agencies to provide
performance bonuses to as many as 50 percent of SES
members, Congress apparently expected this to be an unusual
occurrence. When, in fiscal year 1980, two of the first
agencies to pay out bonuses awarded them to half of their
SES members, congressional reaction was immediate. Only a
year after the establishment of the SES, appropriation
limits restricted eligibility for bonuses to 25 percent
of SES members and, later, to 20 percent.
In FY 84, Congress eliminated the 20 percent appropriation
restriction on the number of SES members eligible for
bonuses, returning to the 50 percent maximum contained in
the CSRA. Effective the following year, Congress
eliminated even the 50 percent restriction. OPM's guidance
recommended an eligibility level of between 30 and 35
percent for fiscal years (FY) 84, 85, and 86. For FY 87,
this guidance was rescinded, providing agencies maximum
flexibility to determine the number of career executives
who should receive bonuses.
Congress also enacted (P.L. 98-514) a fixed bonus pool at
three percent of total career SES salary, effective in FY
85. (For small agencies, an alternative formula of 15
percent of average career SES salary is used.) It set
minimum bonuses at 5 percent of salary (to ensure a
reasonable incentive level), and retained the maximum level
at 20 percent of salary.
The most recent data available (FY 87) show that 33
percent of career SES members received bonuses. The
average bonus was $5894 or 8.1 percent of average SES pay.
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II. Fundamental Compensation Issues
This section will examine the overall compensation package
offered to the government's senior career employees in relation
to the following questions:
(1)-How have SES members been affected by inflation?
(2) How have they fared relative to their private sector
counterparts?
(3) How have they -fared relative to their subordinates and
superiors?
Definitions of terms used below are as follows:
o basic.oay.or salary: Actual salary for the six SES pay
rates.
o cash compensation: basic pay or salary plus bonuses,
including both performance and rank awards.
o total compensation: cash compensation plus .fringe
benefits, such as: retirement benefits, life and health
insurance, annual and sick leave, profit-sharing plans,
company cars.
o constant or real dollars: inflation-adjusted dollars,
used to provide a consistent indicator of purchasing power
over time.
o curr-ent or nominal dollars: actual dollars, not
adjusted to account for inflation.
II.A Changes in Executive Purchasing Power
Public sector pay systems should be responsive to trends in real
earnings throughout the relevant private sector labor force.
SES members, like other federal and private sector workers,
expect that periodic pay adjustments will allow them to maintain
a reasonable level of purchasing power over time. Any .
significant decline in real earnings can hamper recruitment and
retention. The impact of inflation on SES pay is examined over
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two time periods below: from 1979 to the present (i.e., since
the creation of the SES); and from 19692 to the present.
During the eight years since the creation of the SES, real
(i.e., inflation-adjusted) SES pay has fluctuated, but the net
effect has been negative. Falling rapidly in the early part of
the decade, it began to improve against inflation in early 1982.
By late 1987, however, average-real SES pay3 was still slightly
below its 1979 value.
Chart 2 shows the pay increases between 1979 and 1987 for the
ES level 4 pay rate (currently 51.6% of all SES executives are
in this level) and compares these to the rates which would apply
if purchasing power had remained constant (i.e., if the rates
had been adjusted according to the Consumer Price Index or CPI).
In constant dollars, the ES-4 level remained steady, the
exception being a substantial drop in purchasing power in
1980-81.
It is important to note, however, that the apparent maintenance
or gain in purchasing power for ES-4 and ES-5 and 6 as well is
an artifact of the highly restrictive pay cap in 1979. Had
these rates been
2The 1969 date was selected to allow comparisons between
the data in this report and that in the 1986 Quadrennial
Commission Report. (The latter report illustrated the effects
of pay erosion over time using 1969 as the starting poin.t.)
3"Average SES pay" is a weighted average, taking into
account the total number of SES members at each pay rate.
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THE IMPACT OF INFLATION
Current- and Constant-Dollar Salaries for Federal SES Level ES-4, 1979-87
Source: Bureau of Labor Statistics
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paid at the "scheduled level" and not the lower, "payable" level
in 1979 (see Appendix I), the loss in purchasing power between
1979 and 1987 for these three levels would have been about six
percent.
When change in the level of purchasing power based on cash
compensation (rather than basic pay) is considered, the results
are slightly more favorable. In constant dollars, average SES
cash compensation increased thFee percent between 1979 and 1987.
(In nominal dollars, cash compensation increased 60 percent over
the same period.)
Several important qualifiers should be made concerning the
bonuses and their role in overall compensation. . First, as
bonuses are awards for performance, they are not distributed
evenly across the SES population. Thus, while those who receive
bonuses are better off than they would have been pre-SES, many
SES members receive no bonus money. Second, the awards are
more likely to be given to SES members at the higher pay rates.
(These tend to be the more experienced of the executives, and
the ones who have advanced to the higher pay rates because of
past high performance levels.) Third, such awards do;-not become
a component of base pay, and cannot be "counted upon" year-to-
year. Fourth, award money does not count in determining the
level of retirement annuity; hence, its long term value is less
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than that of a permanent pay increase. Thus bonuses should be
viewed and structured as an important incentive for superior
performance and as a mechanism for adding flexibility to
compensation packages. Bonuses should not be considered a means
for supplementing base salary.
SES pay dissatisfaction is not simply a result of the decline in
purchasing power between 1979. and 1987. Three related factors
have also contributed. First, real (constant) salary rates have
had a rocky history under the SES: during the first few years
of the SES, salary rates remained basically unchanged, while
inflation was high. As shown in Chart 2, the average SES
salary--in constant dollars--fell sharply (16 percent) from late
1979 through 1981. It then rose quickly in 1982, exceeding the
real 1979 rate by one percentage point by December of that year.
Experiencing some fluctuation during the next 5 years, the
.average salary in 1987 was within one percentage point of the
real 1979 rate.
Second, and closely related to the first factor, SES members
face some uncertainty relative, to expected pay. While the Civil
Service Reform Act promised an opportunity for higher pay for
those who joined the SES, some members have seen their real
-rates of pay decline during certain periods due to freezes on
pay levels or reductions in pay increases.
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Third, SES members consider not only changes in their own
relative purchasing power, but the rate of increase their
private sector counterparts are receiving. Looking at Chart 3,
we see that real salaries of private sector executives were also
hurt by inflation during this period. However, their salaries
did not experience as much initial purchasing power decline, and
then recovered more quickly. By December 1984, in constant
dollars, the average private sector salary had regained its 1979
level; in 1987, it exceeded the 1979 level by about three
percent. The SES salary over this period declined slightly.
Examined over a longer time period--since 1969--career executive
pay experienced an even greater decline relative to inflation.
In nominal dollars, average SES (or equivalent) pay rose 158
percent between 1969 and 1987, while inflation rose 210 percent
during this same period. Had average SES pay maintained its
1969 purchasing power, it would now be 20 percent higher than it
is: $87,560 rather than $72,875 (as of January 1988).
The Corrrnission finds that SES compensation has eroded from the
effects of inflation. This erosion can be. expected to impact
negatively on SES recruitment and retention.
II.B Private Sector Comparability
Defining what constitutes true "comparability" with the
private sector remains a matter of continuing debate.
Regardless of how difficult it may be to establish a consensus
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REAL PAY--PRIVATE INDUSTRY AND SES
Constant-Dollar Average Salaries (September 1979 Dollars) for All Federal SES or
Comparable Private Industry Occupations, 1979-1987
Source: Bureau of Labor Stotlatica
Chart 3
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on comparability, the fact remains that SES executives do
compare their compensation with their perceived counterparts in
the private sector. Thus, as a factor affecting recruitment and
retention, it is necessary to look at comparability, regardless
of how imprecise that measurement may be.
On the simplest level, the. debate revolves around how to
establish appropriate job matches and whether to compare average
basic pay, average cash compensation, or average total
compensation. On a more complex level, the debate recognizes
monetary and non-monetary benefits of different jobs. That is,
it recognizes not only average basic pay and benefits, but level
of job security, rapidity of promotion, scheduling
flexibilities, opportunities for development and mobility,
opportunities to have an impact on public policy, and other
intrinsic rewards. Evaluating the effect of stock options and
deferred payment plans in the private sector play a significant
role but have proven extremely difficult to measure.
On the more complex level, the more appropriate concern is an
employer's "competitiveness" with other employers rather than an
arbitrary comparative formula differential. The proper
fundamental question to ask is, "What type of compensation
package do I need to offer to recruit and retain the quality of
worker I require?"
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For obvious reasons, data on the simpler comparability issue are
easier to obtain. While imperfect, they do provide a general
frame of reference in which to look at absolute monetary
differentials and, more importantly, changes over time. (The
more important "competitiveness" issue is discussed in Section
III.)
The Conmission reviewed two analyses comparing the compensation
of federal career executives to that of their private sector
counterparts: one prepared by the Bureau of Labor Statistics
(BLS) for this Commission and the other by the Hay/Huggins
Company.
The BLS analysis4 examines differences in average salary between
federal career executives and comparable private sector execu-
tives. Using 1979 data collected as part of their annual
Professional, Administrative, Technical and Clerical (PATC)
survey and an OPM methodology for extrapolating higher level pay
from that data, BLS researchers derived an approximation of the
average salary of private sector executives comparable to
federal executives in the "supergrades" (GS 16-18). To estimate
salary changes over time, they adjusted the March 1979 private
4The BLS analysis was prepared for the specific use of
this Conmission
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sector figure by the Employment Cost Index.5 These figures were
compared with average SES salary changes from 1979 to 1987.
The results are shown on Chart 4. In September of 1979,6 the
average private sector executive salary was $61,619, while the
average SES salary was $47,304. The differential was 30
percent. By the beginning of 1988, the differential had
expanded to 34.8 percent, with the estimated average private
sector salary at $98,267 and the average SES salary at $72,875.
The Hay/Huggins study,7 conducted in 1984, compared both
cash compensation and total compensation of federal executives
with that of private sector executives. Representing the
federal executives were 38 SES positions at the highest pay
level, ES-6; for comparable private sector executives,
Hay/Huggins referred to their substantial private sector data
base (which includes 1,249 medium and large firms).
5The Employment Cost Index (ECI) is a quarterly
measure of the rate of change in compensation per hour worked
and includes wages, salaries, and employer costs of employee
benefits. For the purposes of this analysis, a narrow ECI data
series was used which considers only the wages and salaries of
private industry, white collar executive, administrative, and
managerial jobs.
6The ECI is available only on a quarterly basis: March,
June, September, December. This measure covers all size firms.
7Hay/Huggins Company and Hay Management Consultants,
Study of Total Compensation in the Federal, State, and Private
Sectors, U.S. Government Printing Office, Washington: 1984.
Study was prepared for the Committee on Post Office and Civil
Service, U.S. House of Representatives.
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Average Annual Salaries for All Federal SES and Comparable
Private Industry Occupations, 1979-1987
Average,
Salary
THE PAY GAP
Private
$25,392
All Federal SES
1979 1 1980 1 1981 I1982 1 1983 1 1984 1 1985 1 1986 1 1987
Source: Bureau of Labor Statistics
Chart 4
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The Hay study found that the average cash compensation for the
ES-6 executives was $71,927 in March, 1984; for the private
sector executives, it was $113,968. Thus, the latter were ahead
of their federal counterparts by 58 percent. When total
compensation was examined, the differential was reduced four
percentage points, to 54 percent.8 (Federal retirement benefits
under the Civil Service Retirement System>(CSRS) are
significantly better than priva-te retirement benefits, though on
other benefits the federal government lags behind.) This
comparative advantage of the CSRS system has changed for new
federal workers with the introduction of the portable FERS plan
in 1984. With a retirement system portable to the private
sector, comparability of factors other than retirement benefits
may be even more important in SES retention/recruitment success.
In 1987, Hay/Huggins was asked by the Congressional Research
Service9 to update their comparability statistics. The new
figures show that the gap has widened: focusing on cash compen-
sation, ES-6 federal executives were reported to be 65 percent
81n the same study, Hay/Huggins also examined the
General Schedule and found GS/GM-15s were 24 percent behind
their private sector counterparts in total compensation. It
would seem a reasonable assumption to expect ES-1 through ES-5
executives to fall somewhere between the GS/GM-15 and ES-6
estimates.
9James P. McGrath, The Senior Executive Service (SES):
Morale and Staffin&_Problems--A Brief Overview. Congressional
Research Service, Washington: 1987, p. 33.
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behind comparable private sector executives, up from 58 percent
in 1984. (An updated total compensation figure was not given.)
Both studies show a substantial compensation comparability
gap. The relative size of the compensation package and the
perception of a pay gap will play some role in the recruitment
and retention of SES executives. While historically federal
executive pay has never been fully comparable with private
sector executive pay, if the value of the compensation package
shows significant erosion over time in comparison to inflation
or to private sector compensation, increased turnover and
increased recruiting difficulties can be expected. As noted,
both the BLS and Hay/Huggins analyses show some comparative pay
erosion over the last few years, and the Commission views this
erosion as another negative influence on SES recruitment and
retention.
II.C SES Pay Versus General Schedule and Executive Schedule Pay
The SES stands between the top level presidential appointees (in
the Executive Schedule) and the General Schedule white collar
employees (GS 1-15).
The actual appropriateness of the pay relationships (as
opposed to the grade relationships), though, depends on the
extent of pay compression within the SES and salary overlap with
the General Schedule. As discussed earlier, both have been
problems during certain periods since 1979.
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With the February 1987 pay adjustment, the SES salary range
was 20 percent from ES-1 to ES-6. With the January, 1988
adjustment, however, the range was reduced to
17 percent since the top ES-6 level rate was.frozen. Further,
relatively few SES members are found at the ES-I and ES-2
levels, making the effective range closer to eight percent.
This obviously leaves limited room for long-term salary growth.
As a result, agencies have li.t.tle flexibility to provide SES pay
differentials based on performance, work responsibilities,
recruitment and retention needs, area cost-of-living, etc. (SES
bonuses and Presidential Rank Awards provide leeway to
differentiate based on performance, but cannot be used to
differentiate based on the other factors.)
In the private sector, however, pay ranges tend to be broader.
At one large firm, for instance, the minimum differential
between levels in a given pay range is 15 percent. A typical
executive pay range in the private sector is 50 percent.
A review of much of the existing literature, particularly those
that survey current or retired members of the SES, shows the
compression of SES levels to be so great that the levels are
essentially meaningless if they are meant to reward superior
performance.
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The salary overlap between GS/GM-15 and SES levels has
also been a concern. Clearly, without the potential for
significant salary increases, interest in promotion from the
grade 15 level to the SES will be limited. With much increased
responsibility, accountability, visibility, and risk, those
accepting SES positions expect to get rewarded through monetary
as well as non-monetary means. A meaningful differential in
compensation levels within th-e-SES and between the SES and GS/GM
15 is needed to recognize the added risks and responsibilities
of membership in the SES.
Throughout the early period of the SES, this problem was
exacerbated by the highly restrictive pay cap. For example,
between October 1980 and December 1981, all SES members and many
GS/GM-15s were paid at the same rate: $50,112.50. This left
little monetary incentive for grade 15 employees to seek or
accept an SES position. Even the potential of earning a
substantial bonus was, at that time, not very promising: it was
during this period that only 20 percent of SES employees were
eligible.
The situation has since changed. Currently, the overlap
between GS/GM-15 and SES pay exists only at GS/GM-15/8 and
above. For a GS/GM-15/10 employee entering the SES, however,
the effective pay range extends only nine percent further than
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his current pay. Of course, the SES member is given no
guarantee of any advancement across the SES pay rates, much less
a steady progression upward. In addition--while rare --the
potential exists for the SES member to have his pay rate
lowered.
Performance awards of between five and 201percent of pay and
Presidential Rank Awards of $10,000 or $20,000 are available
within the SES. Here again, however, a caveat must be noted.
No guarantee of getting an award is provided, regardless of how
high a rating an SES member receives on his performance
appraisal. The awards system covering the GM-13 to GM-15
population, on the other hand, does provide such a guarantee.
All such employees rated "outstanding" onltheir performance
appraisals are guaranteed a merit increase of about three
percent (i.e., an advancement of one step!in grade),10
plus a cash award of between two and 10 percent of pay.
Because most GM-15s selected to join the SES tend to have
received "outstanding" ratings as grade 15s, some may lose money
by moving into the SES if they do not receive performance
bonuses. That, in and of itself, is not a problem: the SES is
a performance-oriented system. The greater risk, however,
should be recognized and balanced by greater potential rewards.
'0This guarantee would not apply to employees who had
reached the maximum step in grade, i.e., step 10. _
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In summary, the Commission finds the compression within the SES
pay range so great as to make the current differentials between
levels virtually meaningless in terms of a compensation
incentive. The overlap with the GS/GM-15 level also is a
disincentive for potential SES candidates to assume the greater
risks of SES membership. The mandatory linkage and ceiling for
SES pay at Executive Level IV is also a compensation
disincentive. The Con-mission.f_inds pay compression at the top
and bottom of the SES compensation scale to be a negative
influence on recruitment and retention.
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III. Effect of Compensation on Recruitment and Retention
How competitive is the government in recruiting and retaining
career executives of the high calibre it deems necessary? In
order to obtain additional insight on this most basic question
of the compensation issue, the Corrrnission approached it three
ways: (1) federal agency views; (2) .,federal executive views;
and (3) statistical indicators measuring change in the
characteristics of the?SES.
Our attempt at answering this fundamental question revealed a
serious weakness in the analytical work to date on the SES
recruitment/retention issue. While studies abound from a
multitude of government and private services, they fail to
provide a basis that allows for measuring changes in SES
recruitment and retention over time with comparable indicators.
None of the agencies responding to the Commission survey kept
formal track of SETS recruitment and retention, and none had
developed any framework or indicators that enabled a trend to be
measured. Thus, it is very difficult to establish a trend in
recruitment/retention patterns, particularly at the agency level
where particular needs may be masked in more general aggregate
statistics. More detailed information is needed to target
additional resources to the areas of most critical need.
The federal agency views and federal executive views are two
areas in critical need of more refined indicators. These two
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approaches represent beginning points, not comprehensive
analyses presenting strong evidence, and caution must be taken
in extracting any conclusions from them. It is clear, however,
that in the future better use of information over time to
measure more accurately the effects of inflation, comparability
and compression on SES recruitment and retention must be made.
The third approach, measuring change in characteristics of the
SES, makes better use of existing data; but here again a more
refined analysis is needed for extracting strong conclusions and
for determining effects at the agency or bureau level.
III.A Agency Views
The Commission attempted to obtain the views of agency officials
on recruitment and retention problems. Top officials at 43
departments/agencies with ten or more career SES appointees were
asked to report whether they had experienced or were expecting
to experience difficulties in recruiting and retaining
executives across three major occupational categories: science
and engineering; other professions (e.g., law, medicine,
economics, accounting); and administrative/technical. Agency
suggestions on what actions could be taken to improve the
government's recruitment and retention capabilities for the
future were also requested. Thirty-nine of the 43 surveys were
completed and returned, for a response rate of 90 percent. (See
Appendix II for a copy of the questionnaire and for the
results.)
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Agency views were thought helpful in analyzing SES recruitment
and retention for two reasons. First, it was felt the agencies
would have the most accurate knowledge of where the major
recruitment/retention problems existed. Second, the agencies
were viewed as a logical source for finding out what measures
they felt could enhance recruitment and retention.
Based on these agency Yesponse,!j, problems with recruitment and
retention of career executives do not appear to be uniform
across the SES work force. Rather, they appear to be specific
to certain occupations, in particular: attorneys; medical
researchers; certain scientific and engineering professions;
economists; statisticians; computer scientists and actuaries.
(Appendix II shows individual agency responses for recruitment
and retention problems by occupational group.)
We recognize that our attempt to collect information on agency
views has several shortcomings. It is difficult to phrase
questions of this type with precision and different respondents
may have interpreted the words differently. It is also possible
that some of the information--especially on problems of
recruitment and retention--might be more accurately supplied by
personnel officers within the individual bureaus of each
Department. Nevertheless, the views of agency officials are
helpful in establishing perceptions about recruitment/retention
problems.
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Most (95 percent) of the agencies recommended increases in
either basic pay, bonuses, or both. These agencies see the need
for additional flexibility in the compensation area for several
reasons: to increase pay for shortage occupations or for
individuals with special skills; to increase the emphasis on
pay-for-performance in basic pay and bonuses; to allow for non-
performance bonuses (e.g., to deal with recruitment, retention,
and relocation difficuities);.to decrease pay compression within
the SES itself and between the SES and the SES candidate pool--
basically GS/GM-15s.
Agencies also recognize that the existing level of
recruitment/retention problems across the work force is a result
of having a "captive" population. That is, many career
executives have too much invested in the non-portable Civil
Service Retirement System (CSRS) to resign prior to retirement.
Thus, turnover may be kept artificially low despite the fact
that some SES members are dissatisfied with their pay and
believe they could do better in the private sector. As the
newly-installed and highly portable Federal Employees Retirement
System (FERS) covers an ever-greater proportion of the work
force, these "golden handcuffs" will be removed. At that point,
determining the government's competitiveness will be a much
simpler matter. Employees will "vote with their feet," and any
compensation inadequacies will be more easily discernible.
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III.B Federal Executive Views
Executive views were obtained through focus groups with
randomly-selected career SES members conducted by the Commission
in November and December, 1987, and attitudinal surveys
conducted by the Merit Systems Protection Board (MSPB) and OPM
over the past eight years.
The views of SES members closely parallel those of the agencies.
As career executives see it, compensation improvements would aid
in recruitment and retention, but the compensation package is
not the dominant factor in determining the government's
competitiveness, only one of several major factors. Its
importance, however, rises or falls in inverse proportion to the
frequency and (inflation-adjusted) size of pay increases.
According to SES members participating in the focus groups,
salary levels are a continuing source of frustration. They see
a need to raise compensation levels overall: to decrease the
pay comparability gap with their private sector counterparts and
to maintain the value of their pay against inflation. By and
large, the SES participants supported the structure of the bonus
system and its premise of pay for performance.
These executives would like to see an expansion of the bonus
system, a system which by virtue of its dollars limitations
currently is not viewed as the incentive it was supposed to be.
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Currently, the SES career bonus pool is set at three percent of
SES career payroll and dollar amounts of individual awards must
be between 5 and 20 percent of basic pay. Although no limit is
set in law on the percent of SES members eligible to receive
bonuses, the combination of the three percent pool and five
percent minimum individual bonus means in fact no more than 3/5
or 60 percent of career SES members may receive bonuses.
Similar views were expressed in attitudinal surveys which,
unlike the focus groups, provide generalized data across the
executive work force. When executives were asked whether the
SES compensation system accomplished the goal of recruiting and
retaining highly competent executives, a 1986 MSPB survey found
60 percent said it did not. While a very negative finding, it
shows some improvement from an earlier, 1983 MSPB survey in
which 75 percent said it did not.
The 1983 MSPB survey also asked executives whether they believed
they could earn higher pay in the private sector; 67 percent of
executives said they could. (This question was not repeated in
MSPB's 1986 survey.) When these executives were asked whether
their federal salary was a reason to stay in government, 46
percent in 1983 said it was not, while a greater percentage--64
in 1986--said it was not. While responses were more favorable
with regard to the retirement system being a reason to stay,
even these views showed some decline between 1983 and 1986.
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Sixty-nine percent in 1983 compared with 57 percent in 1986
agreed that the retirement system was a reason to stay. (The
decline in favorable responses was likely due to
Congressional/Administration discussions on cutting the level of
retirement benefits and establishing a new retirement system
(FERS) for newly-hired workers.)
Despite dissatisfaction with the pay system, however, executives
in both the focus groups and the attitudinal surveys indicated
that they had not chosen to serve in government for the
financial rewards. Far more important were the intrinsic
rewards: the opportunity to have an impact on public policy and
to serve the public. Three-quarters of executives in both the
1983 and 1986 MSPB surveys agreed that the opportunity to have
an impact on public affairs was a reason to stay in government.
A still greater proportion (85 percent) agreed in both surveys
that the opportunity to perform the work they were doing was a
reason to stay. The same percent believed that good use was
made of their skills and abilities in their present jobs; three-
quarters agreed that they were satisfied with their chances to
accomplish something worthwhile.
On more general job satisfaction questions, a large majority
reported favorable views in 1986. Nevertheless, these showed
some decline since 1979. (The 1979 data are from an OPM survey;
the same question wording and sampling procedures were used in
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both the MSPB and OPM questionnaires.) When executives were
asked in 1979 whether they were satisfied with their chances to
accomplish something worthwhile, 87 percent said they were.
This figure declined to 78 percent in 1986. When they were
asked to agree or disagree with the statement, "In general, I
like working here", 90 percent agreed in 1979 compared with
77 percent in 1986. Likely reasons for the decline in favorable
responses are: dissatisfaction with the level of pay and
bonuses; unhappiness with the public image of the civil servant
and frustration over their inability to truly manage programs.
Many executives noted that compensation is only one aspect of the
job affecting recruitment and retention. Other, less tangible
aspects of the job are linked to executive satisfaction and
interest in serving. Two areas which executives and agencies
singled out for attention were: extent of managerial authority
and the image of the public service. Concerning the former,
managers still feel highly constrained by federal personnel and
other rules, unable to exercise the same level of discretion as
do their private sector counterparts.
Concerning the public service image, declining public perceptions
of the federal work force over the past two decades, aided by
attacks from political leadership of both parties, have taken
their toll, demoralizing many federal employees--SES members and
others alike. This problem, however, is not directly amenable to
any simple solution, dependent as it is on the fundamental
-48-
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relationship between the government and the American people.
What can help in developing a more positive public image is a
decision by political leaders to publicly recognize the crucial
role of that group in developing and implementing public policy.
Finally, the MSPB surveys also questioned mid-level managers
(GS/GM 13-15s) about their willingness to accept a position in
the SES, were it offered. Problems with extreme pay compression
and the bonus system, as well as concerns about potential risks,
caused 40 percent of mid-level managers in 1983 to report that
they probably would not accept an offer of an SES job. By 1986,
with some resolution of the pay and bonus problems and fears
about job risks in the SES subsiding, only 23 percent of mid-
level managers reported they would not accept an SES job.
III.C Statistical Indicators of Compositional Change in the
SES11
Measuring changes in work force composition, using relevant
statistical indicators as proxies, can provide critical
information, particularly if done over time. The indicators used
below present a rather stable overall picture, with most measures
showing little change. As indicated from our agency views,
11Data on the SES come primarily from two sources within
OPM: the Central Personnel Data File (CPDF), which maintains
data on all federal employees; and the Executive Personnel and
Management Development Information System (EPMDIS), which
maintains data on SES and equivalent executives. Where possible,
this report presents data for career SES employees only. In some
instances, however, data are available only on the total SES
population (non-career as well as career) or on SES and
equivalent employees.
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however, certain areas are experiencing major problems. One
agency for example, reports that over the past 35 months it has
experienced a 40.4 percent turnover rate of all executives, 79
percent of whom were attorneys. Attorneys fill 78 percent of the
executive positions at the agency. Annual turnover for the
agency as a whole has averaged about 15 percent over the last
three years.
o Turnover
Table 2 shows
the number of career
SES members who left the
federal service
between July 1979 and December
This compares with a
employees during the
1987. The average
for the 8-1/2 years period was 8.9 percent.
7.8 percent rate for GS 16-18 and equivalent
eight-year period preceding the
establishment of the SES, 1971-1978. (Since the SES population
is somewhat different from the pre-SES GS 16-18 and equivalent
population, the comparison is only indicative.)
An important factor to note is that turnover in the SES has not
been steadily increasing, but rather has been subject to peaks
and valleys. (The same was true in the 1971 to 1978 pre-SES
period, when the rate varied between a high of 14.2 percent and a
low of 3.1 percent.) Chart 5 shows changes in turnover between
1980--the first full year after the establishment of the SES--and
1987.
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2/22/88
CAREER SES WHO LEFT THE FEDERAL GOVERNMENT
Year (CY)
Average
Number Leaving
Annual
Percentage
Career
Employment
Resignation
Retirements
Other
Total
1979 (July-Dec)
6301
70
195
9
274
---
1980
6347
162
738
26
926
14.6%
1981
6198
320
273
40
633
10.2%
1982
6044
221
223
40
484
8.0%
1983
6164
153
206
32
391
6.3%
1984
6254
166
212
55
f33
6.9%
1985
6208
164
388
28
580
9.3%
1986
6113
140
440
43
623
10.2%
1987c
6225
107
236
29
372
6.0%
Total
6200b
1503
2911
302
4716
8.9%
a Feb. 1980 was end of retirement "high 3" resulting from ceiling rise in Feb. 1977 fran $39,600 to $47,500 (20%)
Jan. 1985 was end of retirement "high 3" resulting from ceiling rise in Jan. 1982 fran $50,112 to $58,500 (17%)
Dec. 1985 was end of retirement "high 3" resulting from elimination of ceiling in Dec. 1982. Pay increases
ranged from $3,115 (5%) at ES-3 to $8,700 at ES-6 (15%).
b Weighted by month (i.e., 1979 counted for only 6 months).
c Preliminary figures.
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TURNOVER AMONG CAREER SES
Calendar Year
Chart 5
* 1987 data are preliminary figures
Totals include other types of separation
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The peak career turnover occurred in 1980 when it reached 14.6
percent. The turnover rate then steadily declined to 6.3 percent
in 1983, at which point it began to increase until reaching 10.2
percent in 1986. This increase led to fear by some observers
that the rate would continue to climb, causing the government to
experience a "brain drain" of its career executives. Seen in
context, however, the three-year "trend" was temporary--as
evidenced by~the steep decline in 1987 6.0 percent--and not-so
much an indicator of a continuing "brain drain" as an indicator
of the close relationship between retirement annuity values and
retirement rates.
The fluctuating turnover rates result largely from rational
decision-making on the part of executives eligible to retire.
Annuity levels are based, in part, on the average annual pay
received during the three consecutive years of highest earnings.
Thus, employees eligible to retire tend to do so when their so-
called "high three" has been maximized, i.e., three years after a
substantial pay increase. This tendency is exaggerated at the
SES level because the pay adjustments for executives are provided
on a more irregular basis.
Chart 6 shows the strong correlation between retirement rates of
eligible executives and earlier pay increases. (To highlight the
relationship, the chart shows the pay increases offset by three
years.) For example, in 1980, over 40 percent of executives
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PERCENT OF ELIGIBLE EXECUTIVES
CHOOSING OPTIONAL RETIREMENT
CHART 6
50
40
30
20
10
0
erce
40.3
Y
25.7 :
25.4
Oft
21.9 19.2
???? ???.
?'
'
'?
?.,
?
1 9.7
?.~
14.9 ?~
?
???.
1 1.2 1 3.0
.??'''
1 &9
10.3 ???~'?
~
~
1 3.4 ,~~~~~'~~.?~'~~?~?~??
?
SON
9.1
5.0
5.5
RL
4.1
I
I
1983 1985
*19W *1982
-----Fiscal Year----
1 987
? 1064
Reti red ^ Pay Increase (at ES-4 Level)
*Pay increases Offset by Three Year's
Source: Central Personnel Data File. U.S. Office of Personnel Management
nt)
P
1 977
+1974
.1976
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eligible to retire did so; this very steep increase in the
retirement rate was associated with a steep pay increase in 1977.
Similarly, the increase in the number of eligibles who chose to
retire in 1985 and 1986 is associated with two substantial pay
increases in 3anuary and December 1982. The lack of a
substantial pay increase in 1984 (4.1 percent for ES-4), is
reflected in a drop in'the percentage of eligibles choosing to
retire in 1987.
o SES Candidate Pool
With an average career SES turnover rate of about 9 percent per
year, the importance of a highly-qualified candidate pool is
apparent. The candidate pool is composed of two basic groups:
internal, federal government candidates, basically the GS/GM-15
population, and external, non-federal candidates.
The internal pool is quite large--just under 30,000 people.
Replacing all departing career executives with members of the
GS/GM-15 group would (temporarily) deplete the latter population
by less than two percent. Thus, agencies desiring to select from
internal candidates may be very selective in their appointments,
choosing only a tiny fraction of grade 15 employees each year.
(In fact, these employees, many of whom have served at the
GS/GM-15 level for a number of years, may be discouraged by the
limited opportunity for promotion. Should SES retention be
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enhanced further, the relative prospect of advancing from GS/G.M-
15 will be further reduced, creating a retention problem of a
different sort.)
Those agencies desiring or needing to attract external candidates
face greater problems. It is here that the competitive test
between the government and the private sector for senior
executives is most severe. As discussed above, preliminary
evidence indicates agencies with a large need for special skills
in high demand have major recruitment problems. Longitudinal
data indicate that external hiring of career executives has never
occurred at a very high rate. For example, external hires into
the pre-SES career executive corps accounted for eight percent of
all new recruits in 1976. Available comparative data for post-
SES recruitment show external hires accounting for: eight
percent in FY 83; three percent in FY 86; and eight percent in
FY 87.
o Proxies for Skill Level
Two measures frequently used as proxies for skill level are years
of experience and educational level. While both are imperfect
measures, more valid data tend to be qualitative in nature and
not amenable to precise measurement.
The average length of experience measure is particularly
problematic. Some observers have noted that the post-SES figures
were lower than the pre-SES figures and cite this as evidence
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that the most talented SES members are leaving federal service.
First, and least important, this "evidence" is not accurate.
Chart 7 shows the average years of service of federal executives
over time. During most of the last decade, the figures remained
basically unchanged, fluctuating between 20 and 21 years. The
decline in 1980 to 19.3 years is clearly related to the high
level of retirements in that year, the prime reason for which was
explained above. Since-.1980, the average length of service
figure has gradually climbed back to the 20-21 year range.
Second, and far more important, viewing length of experience as a
good proxy for skill level essentially confuses seniority with
performance. To improve the quality of its career SES workforce,
the government should focus on the latter, not the former. In
fact, attracting and retaining young "fast-track" talent may be
more of a problem today than retaining more experienced
employees--whether high quality or mediocre. The low chance of
promotion to the SES of employees in the executive candidate pool
is a situation which proves demoralizing for candidates and
encourages turnover. As shown on Chart 7, GS/GM-14's/15's show an
experience level almost equivalent to that of the executives.
The average education level of executives is quite high and has
remained stable since 1979. In both 1979 and 1986, 70 percent
had graduate degrees (e.g., M.A., Ph.D., LL.B., M.D.), 27 percent
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YEARS OF SERVICE
for Executives & GS/GM 14/15's
CHART 7
23
21
19
Years
1 17
21.0 21.0
20.6 20.6 20.9
-- - -
20.3 i
19.3 19.4
19.9
19.6
19.5 19.5
.3 ;;.._.~.;
19 ?' X19.1
18.8
19.7 19.8 19.8 19.8 19.8
1 I I a
1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1981
Fiscal Year
-+- Executives
GS/GM 14/15's
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had a B.A., and 3 percent had less than a B.A.12 Moreover, the
education levels remained unchanged while the SES occupational
mix changed slightly, in favor of executives with administrative
backgrounds. Because executives with professional backgrounds
are more likely to need graduate degrees, a decrease in the
number of such executives might have caused some decline in the
average education level. (In 1979, those with professional
backgrounds comprised 36"-percent of the. population, comparedwith
44 percent for those with administrative backgrounds. By 19'86,
the former comprised 33 percent; the latter, 47 percent.)
l2Data on educational level of federal executives come
from OPM and MSPB attitudinal surveys.
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Conc1us10ns
The Federal Government is at a substantial disadvantage in
competing for the best of our nation's executive talent. This is
not a temporary or transient phenomenon, and it is due in great
measure to the defects in the SES compensation system addressed
in this report.
The recommendations made by this Commission should enhance the
Federal Government's competitiveness by providing Increased
managerial flexibility within the current parameters of the
compensation system, and by increasing managerial ability to
focus greater resources upon special aspects of compensation,
such as recruiting, retention and performance bonuses.
For every fiscal and political reality that impairs expansion and
restructuring of Federal executive pay,-there Is also a simple
and stark reality of the marketplace: you get what you pay for;
and the Federal Government Is not paying enough to attract,
develop and retain its share of the talent needed to ensure
efficient, effective fulfillment of the public trust.
The Commission calls upon our institutions of government to
recognize this reality, and join together to take the necessary
action to make the Senior Executive Service what it was meant to
be--the finest career federal executives lending their efforts to
provide the best government services and stewardship available to
the American public.
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THE WHITE HOUSE
WASHINGTON
February 29, 1988
Dear Madame Chairman:
I wish to dissent from Recommendation 1 of the Commission's
report. By decoupling the pay of career executives from that
of political executives, we- would seriously damage the ability
of the Executive Branch to function effectively. The call for
a minimum 34 percent pay range for career executives--absent
any pay change for political executives--would essentially
bring the top career salary to Executive Level II, the salary
level for deputy secretaries and heads of independent
agencies.
Such decoupling is problematic for two reasons. First, it
would relieve pressure for needed increases in Executive
Schedule salaries. While the purchasing power of career
executive pay has declined since 1969, that of top political
executives has declined at twice the rate. Unless we are to
confine our recruitment of politicals to only those who are
independently wealthy, we must recognize that a fair level of
compensation is essential if we are to avoid a decline in
competence. The Commission's report placed considerable
emphasis on the need to raise pay levels in order to recruit
and retain highly competent career executives. The same
emphasis must be placed on ensuring the government can bring
in highly competent political executives.
Second, a rational compensation system does not allow for pay
inversion. Paying career executives more than many of their
bosses is likely to cause dysfunctional friction between
political and career executives. The effective management of
government demands that political and career executives work
as a team.
A strong core of top political executives has been a
traditional characteristic of our Executive Branch--a
characteristic which has stood this democracy in good stead.
A proposal which would have the effect of undermining this
tradition--by decreasing the quality and standing of the
political leadership of the federal bureauracy--is one this
country can ill afford.
60-A
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The pay of both our political executives and our career
executives needs to be raised. Let's do it in a way that will
strengthen and not threaten our federal bureauracy.
Sincerely,
William R. Graham
Science Adviser to the President
Miss J. L. Cullen
Chairman
President's Commission on
Compensation of Career
Federal Executives
Washington, D.C. 20415
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AVY6ntlLA 1
HIS1Vl
Cr SENIOR VMCUTIVE SEiMCE PAY PATES
ES-1
ES-2
FS-3
ES-4
ES-5
ES-6
(48,250)
(508100)
(51,450)
(52,800)
a
July 1979
$44,756
$46,470
$47,500
$47,500
$47,500
$47,500
(51,450)
(52,800)
b
October 1979
44,756
46,470
48.250
50,100
50,112.50
50,112.50
(51,164)
(52,884)
(54,662)
(56,500)
b
October 1979
47,889
49,499
50,112.50
50,112.50
50,112.50
50,l12.50
(52,247)
(53,996)
(53,804)
(57,673)
(59,604)
(61,600)
October 1980
50,112.50
50,112.50
50,112.50
50,112.50
50,112.50
50,112.5(
(54,755)
(56,936)
(59,,119)
(61,300)
(62,950)
(64,600)
b
October 1981
50,112.50
50,112.50
50.112.50?
50,112.50
50,112.50
50,112.50
(59,119)
(61,300)
(62,950)
(64,600)
January 1982
54,755
56,936
58,500
58,500
58,500
58,500
(59,230)
(61,515)
(63,800)
(65,500)
(67,200)
October 1982
56,945
58,500
58,500
58,500
58,500
58,500
December 1982
56,945
59,230
61;,515
63,800
65,500
67,200
January 1984c
59,223
61,615
64;008
66,400
68,150
69,900
January 1985
61,296
63,764'
66,232
68,700
70,500
72,300
January 1987
63,200
65,700
`68,200
70,700
72,500
74,500
February 1987
64,700
67,600
70,500
73,400
75,500
77,500
January 1988
65,994
68,952
-71,910
73,400
75,500
77,500
= Scheduled rates as established by the President where different from payable
rates as the result of appropriations restrictions.
a if individual was previously an.:mcecutive Level IV, the rate was $50,000.
b if individual was previously an Executive 1 ;V., the rate was $52,750.
c These are the rates as they %are adjusted in1 1984 retroactive h January 1984.
Notes:
1. Pay rate changes were effective beginning the first pay period in the months
indicated except for July 1979 (July 13,,the date the SES was established),
the first adjustment in October 1979 !October 1), January 1982 (January 1),
December 1982 (December 18), and February 1987 :(first pay period beginning
on or after February 4).
2. As the result of a July 1984 decision of the 7th U.S. Circuit Court of Appeals
( illaoote vs. United States), the payable rates for the period October 1, 1979,
t u December 31, 1981, were revised to $52,750 or the scheduled-rate, whichever
was lower. Lamp-sum payments to reflect the revisions were made April 1986.
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SUMMARY OF AGENCY RESPONSES*
TO QUESTIONNAIRE FROM
TUB PRESIDENT'S COMMISSION ON
COMPENSATION OF CAREER FEDERAL EXECUTIVES
1. Major, Some, or No Problems in Retention and Recruitment
of Career SES Members?
II. SES Recruitment and Retention: Key Agency Concerns
III. Agency Recommendations
IV. Agency Abbreviations
* 39 of 43 (90%) of the agencies to which the
questionnaire was sent completed it. These
respondent agencies have 5,330 career SES
members which represents 86% of the total
6,223 career SESers (as of 9/30/87).
January 28, 1988
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I. MAJOR, SOME, OR NO PROBLEMS IN RETENTION
AND RECRUITMENT OF CAREER SES MEMBERS?
Agencies were asked to classify current and near-term (next three
years) problems with retention and recruitment of career SES members
as being a major problem, some problem, or no problem. Their
responses were collected in three broad occupational groupings:
Science and Engineering - physical and biological sciences,
mathematics and statistics, operations research, and
all engineering occupations;
Other Professions - law, medicine, economics, accounting,
auditing, etc.; and,
Administrative/Technical - personnel, budget, computer and
information 'management, general administration, program
management and any other occupation not included in
the other two areas.
Table 1 on the next page presents agency responses to these ques-
tions. Note: (1) Agencies were also provided with a "not
applicable' response category if they did not have any positions
in one or more of the three occupational categories; (2) OSD
completed the questionnaire in terms of the entire DOD, but as Air
Force and Navy responded individually, OSD's response is presented
only for OSD positions; (3) The responses of the Justice and HHS
Departments subdivided the administrative/technical occupational
category into two parts and rated the degree of problem differently
(major for one and some for the other)--both responses are included
in the table; and, (4) Section IV contains the list of agencies
for which abbreviations are used in Tables 1 and 2.
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TABLE It DBGitEII Or CO MM PROIRM WITH ftTa CIN AND
RECRUIZl4f t Q CARk3:R SF.S HIMERS IN 3 BROAD OOWPATIONAL AREAS*
SFS wicit sow NO NOT
AGCY CAREER PRO8LQ1 PAOBL 4 PRMLEM APPLIC.
retent.1 recruit.
Agriculture 274
Commerce 343
Defense
Air Fbrce 196
Na 707
06D 381
Education 4S
Energy 393
472
HUD 8
Justice ?07
Labor 137
State 82
Transportation 306
Treasury 482
C-1-
retent.l recruit.
I_ 2 _I 2 _I
1,2,3
1,2,3
_
1 3_
recruit.
3:
EPA 2111-,,- -:1-X,, -- -- 3 3 --------- --
NASA 454 1 27,3 _ _2,3
VA 130 --------- ---- ----
ACDA 19
----
---_-
__--
__--
-1,2,3_
1,2,3
CF7C 16
2
- Z --
- 3
3
- ---
----
1
CPSC 8
---
- 2.3
1,213
_1 _
- -
EDOC 36
----
--
FCA
FCC 33
----
-
-
?
FEMA 36
----
_
_-
--
_
-
3
3
-
1,2
FLRA 19
----
--
--
--
--
-
-- 2'3 -
- 2.3
FZ+C 24
2--
--
- 2
--
--
1
- - 3
-----
-----
1
GSA 97
ICC -11
- --
1,2,3
2,3
112,3
2 3
----
----
-
1
IDCA(AID) 27
3D1d
not comp
lete Is se
_
ction
____
_
_
_
PEPB 16
_
- -
-
--
3 -
1 -
NCUA 10
Z--
---
--
----
- -
- -
-- -
-
13
NLRB Si
- --
--
----
- -
2'3-
- 2I -
1--
_
NSF
---
- -
2
2--
3
"
-- 3
OMB
37
2,,'3-
_--
OPM 43
----
-
2,N
2'3
3-
1 --
RRB 10
3
2,3_ _
--
SBA _3i
-
-2
--2_-3 -
1 --
SDC 44
----
-- 3 -
1--
27
Total 5,330 (86% of 6223 total career SFS, as of 9/30/87)
*1 - Scientists 1 Engineers; 2 - other Professions; 3 - Administrative & wchnical
-64-
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II. SES RECRUITMENT AND RETENTION: KEY AGENCY CONCERNS
Agencies were also asked to identify specific occupational fields
in which they have problems or anticipate having problems with
retaining and/or recruiting SES career members, and to suggest
causes for these problems. Most agencies provided narrative
responses rather than lists. These were analyzed to identify
common themes.
The two most frequently mentioned concerns across agencies were
these: difficulty in attracting high quality-applicants for SES
vacancies and having a federal compensation package that is -not
competitive with-compensation provided for comparable private
sector and often academic po,s,itions.
Two other concerns were also cited by several agencies: the low
status and image of the federal career service and current or
potential SES turnover rate.
The incidence of these concerns is summarized in Table 2 on the
next page.
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as-a
TABLE 2: AGENCIES' MOST tROQIJP. i1LY )MCI)
OONMINS WITH CAREER SES REC*JIMW i REZE MCM
GETTING HIQI 10I
1 SFS QUALITY APPLICS. OM M. '1U - STA'IUS-
AGENCY CARFFR OUTSIDE INSIDE DISAIN. OVER DMGE
Agriculture
274
_
x x X
Coaneroe
343
_-
x x X
Defense
Air force
196 _
X
Navy
407
x
A6D
381 _
X
Biucation
45
Energy
393
X__ ---- x
HHS
x
x X
HUD
Justice
207
---- x
x
Labor
_
137
X
State
x
Transportation
306
X
Treasury
482
EPA
212--- -------X-----------
-1
-------
---- -------
-' -
NASA
VA
1
X
X
454 __
130--- --------------------X--
----------
-----------
-----------
ACDA
CFTC
X
CPSC
- - - - - - - - - - - - - - - - - - - - - - -
EDOC
- - - - - - - - - - - - - - - - - - - - - - -
PICA
12
P'OC
_
3 _
373
-
- - - - - - - - - - - - - - - - - - - - - - -
376
36
FLRA
-----------------------
GSA
---------- x ------- x --
- - -
-
-
IOC
21
X
--X----X-----------
IDCA(AID)
_
27 _--_-
-----------------------
MSPB
16___
----------
--
-------
NCUA
10
---
X
z
-----
-
NLRB
57
-----
------------
NSF
88---
-X-------X--
--------------
OMB
57
-----------------------
OPM
43___
x
RFO
10
----------------------
SBA
31
x
x -
-------- ---------
SEC
44
X
-
---------
----------
USIA
X
x
5330 (861 of
6223 total career SES, as of 9/30/87)
Note: Some agencies either identified no concerns/problems or ones which were
not classifiable in the four areas covered by this table. The concerns
columns for these agencies contain no entries.
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,.-6
III. AGENCY RECOMMENDATIONS
Finally, agencies were asked to provide recommendations about what
Thesetacenhance
wembecs.needed
careeractions
Congressional an~e~e~tionvofStanch
recruitment and
summarized below.
Compensation
over 95 percent of the agencies made one or more recommendations
for some improvement in the SES compensation package. Among the
more frequent suggestions were these: increasing base pay, elimi-
nating the overlap in SES acid-GM/GS-15 salaries, providing a greater
SES salary range, increasing the number and amount of performance
bonuses, instituting new types of "bonuses' (for geographic moves,.
recruitment or retention in hard-to-fill occupations), and increa-
sing the amounts of Presidential Rank awards to reflect the proportion
be indexing
in to
salary hey represented
maintained them
proportion originally
could and
increases e
nsewithout legislative action.
There were also some non-compensation recommendations for improving
recruitment and/or retention of career SES members. These included
the following: increasing executive mobility opportunities within
the SES; making the SES a small, elite cadre of "real' executives;
creating a separate senior service or services for scientists,
engineers, and biomedical specialists; reforming the government's
exectoutimprivesovemorethecontimagerolandovesr
ope
federal service.
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IV. AGENCY ABBREVIATIONS
ACDA Area Control and Disarmament Agency
AF Air Force
CFTC Commodity Futures Trading Commission
CPSC Consumer Product Safety Commission
EEOC Equal Employment Opportunity Commission
EPA Environmental Protection Agency
FCA Farm Credit Administration
FCC Federal Communications Commission
FEMA Federal Emergency Management Agency
FLRA Federal Labor Relations Authority
FTC Federal Trade Commission
GSA General Services Administration
HHS Department of Health and Human Services
HUD Department of Housing and Urban Development
iCC interstate Commerce Commission
IDCA(AID) International Development Cooperation Agency (Agency
for international Development)
MSPB Merit Systems Protection Board
NASA National Aeronautics and Space Administration
NCUA National Credit Union Administration
NLRB National Labor Relations Board
NSF National Science Foundation
OMB Office of Management and Budget
OPM Office of Personnel Management
OSD Office of Secretary of Defense
RRB Railroad Retirement Board
SBA Small Business Administration
SEC Securities and Exchange Commission
USIA U.S. information Agency
VA Veterans Administration
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PRESIDE WS C 4QSSIQ1 ON OC WENSATION W CAREER MOM E?.Vriv
QIESTI 1IRE ON R IMNP/RE'm1rION W CUM SES MIOWNS
Department or Agency
(Where additional space is needed for a response, please attach a sheet with
the question i er.)
1. Do you currently have .& problem, or do~you foresee a problem within the
next three years, with the retention of career SES members in your department
or agency in the following tonal areas? (After giving the approximate
number of career SES appointees in the occupational areas, please check the
appropriate box showing the retention problem for each occupational area as
a whole. Problems in specific occupations are addressed in Question #3.)
a. Science and Engineering
b. Other Professions
c. Administrative/ clinical
Approx. W.
Career SES
Major
Problem
Some
Problem
Ab
Problem
Abt
lic.
"Science and Engineering" includes physical and biological sciences, mathematics
and statistics, operations research, and all engineering occupations.
"Other Professions" includes law, medicine, eowmics, accounting, auditing, etc.
"Jdministrati e//echrd " Includes personnel, budget, computer and information
management, general administration, program management, and any other
occupation not included in the other two areas.
2. Do you currently have a problem, or do you foresee a problem within the
nett three years, with the recruitment of career SES members in your department
or agency in the following occupational areas? (Please check the appropriate
box showing the recruitment problem for each occupational area as a whole.
Problems in specific occupations are addressed in Question 13.)
a. Science and Engineering
b. Other Professions
c. Administrative/Technical
Major
Problem
Some
Problem
No
Problem
Pbt
lic.
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3. If you currently have major recruitment and/or retention problems in specific
occupations. or if you ressee problems within the next three years:
a. Please list the occupations in priority order aid indicate whether the
problems are with recruitment, retention, or both? Wwre possible,
please provide Bane examples of the problems, such as:
o ascent and effect of turnover,
o quality of those leaving,
o length of time to fill positions, and
o mxrber and quality of applicants for a recent position you filled or
tried to fill.
b. got in your view are the main factors (not more than five) that contribute
to the problems?
c. That activities is your department or agency taking to help resolve the
problems?
4. If your department or agency has done any study within the last three years
of recruitment or retention of career SES members (e.g., as the result of
exit interviews), please provide a copy.
5. That in your view are the most important Government-wide actions, in priority
order, that the Congress or the Executive Branch could take that would
enhance recruitment and retention of career SES members in your department
or agency?
6. Do you have any other cx ents or suggestions regarding compensation for
career SES mswbers? (Including base pay; performance boruses; Presidential
rank awards; comparability allowances for physicians; benefit programs,
such as leave, retirement, and health and life insurance; and proposals
that have $10,00made for recruitment and 0 for an individual recruited retention
in a hard-to-f ill occupation.)
a ayment at
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Summary of Witness Statements
The following summarizes the statements presented to the President's Commission
on Compensation of Career Federal Executives at its September 17, 1987 meeting:
Smithsonian Institution The Smithsonian is in effect the moral equivalent of a
m um sized resear university. Competition for the specialized expertise
needed is extraordinary. Many institutions are paying museum directors well into
the six figures with benefit packages that Include cars and houses and children's
education. Similarly, in the hard sciences, good people are last to larger research
universities that can offer tenured positions and a nine months work year at a
higher salary than the Smithsonian can offer for 12 months. Forty percent of the
Smithsonian's annual operating budget comes from business activities, l.e. museum
shop items, magazines, books, records, and a variety of product licensing
arrangements. In order to give flexibility In recruiting and retaining people, some
of the profits are devoted to salary costs. When SES was established, the
Smithsonian was not included, and-still operates under the supergrade system.
Legislation is needed that would permit the Smithsonian to offer salaries that are
at least comparable to SES with a benefit package that Is also comparable
Seer Executive Association There Is a disturbing slippage of senior executive
salaries. The gap between Federal executives and private executive counterparts
has widened alarmingly. From 1969 - 1985 purchasing power of corporate
executives rose 69% while the purchasing power of Federal executives' salaries
declined more than 30%. In recent years, the Federal bureaucracy has suffered
from pay compression. Increasing numbers of SES executives are accepting
optional retirement when eligible and/or seeking careers in the private sector,
often at higher pay. 61% of SES executives who responded to a recent GAO
questionnaire expressed dissatisfaction wtih salary levels. During the period 1979
to early 1987 no scientists have been successfully recruited for NIH from outside
the Federal Government. The overlap with GS-15 steps creates serious
disincentives to take on the greater responsibilities and risks of the SES positions.
Recommendations: (1) Overlaps between GS-IS and Senior Executive Services pay
be eliminated; (2) Four year schedule be adopted, beginning 3anuary 1989 and
ending January 1992$ to bring comparison levels of public/private salaries to 90% of
comparable private sector salaries; (3) Increase agency bonus pool from the
statutory 3% to 3%; (4) Increase Presidential Rank awards to $30,000 and the
Meritorious awards to $13,000 with annual adjustments for inflation.
Political Science Professor Mark Huddleston, University of Delaware We need to
make a commitment to real comparability at the Senior Executive level. The
system should be designed not to pay people for a specific job but for the attributes
they represent, i.e. pay people according to their skill levels, education, and
perceived competence regardless of the particular position they occupy at the
moment. We need to move toward much less compression across the whole range
of executive pay, from the upper GS level through the executive level positions.
We have gotten into a situation where we are paying everyone virtually the same.
We should get rid of the link between Congessional and Federal Executives' pay.
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Advisory Committee on federal Pay Several problems exist because Government
falls to provide an adequate compensation system, and because of a lack of esteem
for public service, which is creating a demoralizing effect on the entire work
force. There needs to be greater attention paid to the compression problems that
have developed In the upper grades. We urge that linkage between Congressional
and executive pay be broken, In order to achieve fair and resonable adjustments.
Congress can suplement income through honoraria speeches, etc -- a benefit
unavailable to the government executive. The Government Is operating a penny
wise pound foolish pay policy. We suggest efforts be made to raise the public
awareness of the problems asoclated with non-competitive pay rates, that working
relationships be established with other groups seeking to enhance the Image of the
public servant, and that all salaries and SES pay be adjusted more closely to be in
line with those In the private sector. Board of Contract Appeals Judges Association The Board submitted documentation
on the history of these approximately 71 administrative judges. When created In
1979, they were classified as GS-16,17 and 18. Due to the need to assure their
independence, they were not Included in the newly created SES In 1979. They
remain caught between the highest'levels of the General Schedule (from which the
SES was drawn) and the fact that the SES pay schedule is now higher than the GS
scale.
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Bibliography
Cjyjj Service Reform Act of 1278s Report of the Committee on Post Office and
Civil Service on H.R.11290 to Reform the Civil Service Laws. U.S. Government
Printing Office, 1978.
[Government's Manager s. Report of the Twentieth Century Fund Task Force on
the Senior Executive Service. Mark Huddleston. New York: Priority Press
Publications. 1978.
The Senior Executive Service (SES Morale and Staffing P'r obkms;.; * Brief'"
Overview. James P. McGrath. Washington, DM.: Congressional Research Service,
Library of Congress. August 199 1997.
Stud ,Q# T_gtja Compensation in the ederal, State and rivate Sector Committee on Post Office and Civil Service, House of Representatives, prepared
by Hay/Huggins Company and Hay Management Consultants. Washington, D.C.:
U.S. Government Printing Office, 1984.
Reports of the U.S. Advisory Committee on Federal Pay.
Salary .ianagement Practices in the Private Sector. Philadelphia, PA: The
Wyatt Company. September 1987.
Report 2n the Fiscal Year jy Adjustment Under the Federal Statutory
System'.. U.S. Advisory Committee on Federal Pay: Wa"~is nnggton, D*C*:-
Government Printing Office. August 19, 1987.
Reports of the Commission on Executive, Legislative and Judicial Salaries.
ualit Leadership: Our Government's Most Precious Asset. The Report of
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Testimony of the Comptroller General on the Impact of the Senior Executive
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Re rt on the Si nificant Actions of the Office of Personnel Mama emeent
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Staff of the
The President's Commission on Compensation of Career Federal Executives
The Commission deeply appreciates the excellent support
provided to it by the Office of Personnel Management
and the Bureau of Labor Statistics.
Stephen A. Gleason
Executive Director
Vivian J. De Lisi
Administrative Officer
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