National Academy of Public Administration

National Commission on the Public ServiceImplementation Initiative

2004

TRANSFORMING THE PUBLIC SERVICE:PROGRESS MADE AND THE WORK AHEAD

A REPORT IN A SERIES OF CONVERSATIONS ON PUBLIC SERVICE

Summary Report

PAUL A.VOLCKER, CHAIRMAN

CHARLES BOWSHER

BILL BRADLEY

FRANK C. CARLUCCI

KENNETH M. DUBERSTEIN

CONSTANCE HORNER

FRANKLIN D. RAINES

RICHARD RAVITCH

ROBERT E. RUBIN

DONNA E. SHALALA

VIN WEBER

OFFICERS OF THE NATIONAL ACADEMY OF PUBLIC ADMINISTRATION

CARL W. STENBERG, CHAIR OF THE BOARD

VALERIE LEMMIE,VICE CHAIR

C. MORGAN KINGHORN, PRESIDENT

JONATHAN D. BREUL, SECRETARY

HOWARD M. MESSNER,TREASURER

NATIONAL COMMISSION ON THE PUBLIC SERVICE

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TRANSFORMING THE PUBLIC SERVICE:PROGRESS MADE AND THE WORK AHEAD

A REPORT IN A SERIES OF CONVERSATIONS ON PUBLIC SERVICE

NATIONAL ACADEMY OF PUBLIC ADMINISTRATION

NATIONAL COMMISSION ON THE

PUBLIC SERVICE IMPLEMENTATION INITIATIVE

SUMMARY REPORT

2004

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The views expressed in this document are those of the participants in the February 18,2004 forum. They do not necessarily reflect the views of the National Commission on

the Public Service or the National Academy of Public Administration.

The federal public service has undergone amajor transformation since the NationalCommission on the Public Service

convened in February 2002. The change has beengreater than any in the 25 years since the CivilService Act of 1978 was enacted, and in manyrespects greater than in the 50 years since thefederal pay and classification systems wereestablished. Congress and the Executive Branchhave now taken significant steps to modernize themanagement of the federal workforce to meetthe increasingly critical demands on governmentin the 21st Century.

As with any significant change affecting largenumbers of people, the process of creating andimplementing the elements of this transformationhas been difficult. To assess progress to date andthe challenges ahead, the National Commission onthe Public Service Implementation Initiative and theNational Academy of Public Administration co-hosted a conference with policy implementers andothers interested in the transformation of federalhuman resource management.1

The participation of key policy makers andimplementers and other leaders in this arena gaveevidence to the importance of the transformationunderway. We were fortunate to have LeonPanetta and Fred Thompson join us in co-hostingthe conference.

The National Academy of Public Administration isa congressionally chartered non-profitorganization that advises government leaders onimproving governance and public sectormanagement. The National Commission on thePublic Service Implementation Initiative isdedicated to the furtherance of the goals andrecommendations of the National Commission onthe Public Service.2 The Academy and theCommission Implementation Initiative have beenworking together since July 2003 on publicservice issues of common concern.

FOREWORD

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C. MORGAN KINGHORN

PRESIDENT, NATIONAL ACADEMY OF

PUBLIC ADMINISTRATION

PAUL A.VOLCKER

CHAIRMAN, NATIONAL COMMISSION ON

THE PUBLIC SERVICE

1The conference program is included as Appendix 1.2Urgent Business for America: Revitalizing the Federal Government for the 21st Century, Final Report of the NationalCommission on the Public Service,The Brookings Institution,Center for Public Service,Washington, January2003. Available in pdf at www.napawash.org.

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Leading off the conference discussion,AcademyPresident C. Morgan Kinghorn observed:“Asmuch as this forum will look back on what

has taken place, it also will look forward to theroad ahead and the crucial steps of implementation.This is where the ‘rubber meets the road’ andwhere promise can become reality.”

Commission Chairman and conference moderatorPaul A.Volcker noted the challenge of bringingabout change, but expressed the view that “eventshave conspired to make the federal governmentmore innovative.” With major personnel reforminitiatives underway at the Department ofHomeland Security and Department of Defense, hesaid,“there is an unusual and unexpectedopportunity in terms of civil service reorganization.”

Leon Panetta, former White House Chief of Staffand OMB Director, said that the prime question iswhether the government can be as responsive as it

needs to be to the challenges of the 21st Century,such as terrorism, economic changes, and thepressures from deficits and baby boom generationretirements. In addition, Panetta expressed concernabout polls showing lack of trust in government andlack of interest among youth for entering publicservice. “It will take bold action to makegovernment more responsible and to make itoperate efficiently and effectively,” he said.

Fred Thompson, former U.S. Senator and Chairmanof the Senate Governmental Affairs Committee,noted that in focusing on management reforms inrecent years, Congress had developed a newappreciation for personnel policy reform issues.This includes the quality of the people who areattracted to be part of the federal workforce andthe quality of the government’s personnelmanagement. The government has made progressin its information technology and financial systems,but the “challenge now is how to motivate people

EXECUTIVE SUMMARY

As much as this forum will look back on what has taken place, it also will lookforward to the road ahead and the crucial steps of implementation. This iswhere the ‘rubber meets the road’ and where promise can become reality.

C. Morgan KinghornPresident, National Academy of Public Administration

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and achieve discipline” in personnel systems. “Itseems all roads lead back to the issue of people.”

The conference hosts—whose very presence spoketo the importance of the transformation underwayfor the present and future of the public service—enthusiastically greeted an overflow audience.

Panelists agreed that a significant transformation ofthe public service was underway and that itssuccess will depend on how these changes areimplemented in the months and years ahead.While there were differences over the specifics ofimplementing more flexible personnel systems atthe Department of Defense (DoD) and theDepartment of Homeland Security (DHS),participants emphasized the value of thecornerstone principles of the civil service system:merit, equal employment opportunity, due process,veterans’ preference, and fairness—includingprotections against reprisal, discrimination, andother prohibited practices.

Looking ahead, participants identified some majorissue areas requiring careful consideration if

implementation efforts are to deliver theirintended results:

• coherence in the implementation effort, includingoversight of individual agency efforts and agreeingon a government-wide framework

• support for long-term implementation, whichrequires continuing commitment to the changeprocess from the White House, Congress, andnon-governmental organizations

• sufficient funds to reward employees for goodand outstanding performance

• effective change management, which means asubstantial investment in training and selectingsupervisors with skills for setting and enforcingperformance goals

Through all the challenges and issues raised, theconference’s discussions demonstrated that animportant corner had been turned in efforts toreshape federal personnel systems. This progressled to guarded optimism by many that thesereforms would enhance government performance,the attractiveness of public service, and restorecitizens’ trust in government.

It seems all roads lead back to the issue of people.

Fred ThompsonFormer U.S. Senator and Chairman, Senate Governmental Affairs Committee

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BACKGROUND

Since the dawn of the new millennium, a focuson public service and human capitalmanagement has emerged as a cornerstone

of efforts to make the federal government moreresponsive and results-oriented. Some of themilestones on this road include:

• In 2000, Members of the U.S. SenateGovernmental Affairs Committee issued a series of reports on manpower and management challenges facing the nextpresidential administration.

• The General Accounting Office (GAO)designated the federal government’s managementof human resources a “High Risk Area” in 2001.3

• In 2002, GAO suggested a model for strategichuman capital management to be used by federal agencies.4

• In February 2002, the National Commission onthe Public Service convened with the goal ofaddressing “the crisis in the federal publicservice.” After one year of study and publichearings, the Commission issuedrecommendations calling for “sweeping changes”in this arena, pointed to key indicators of serioustrouble ahead: young Americans are shying awayfrom public service, the

civil service system thwarts personal developmentand creativity, and the most talented people leavetoo early and the least talented stay too long.5

• The President signed legislation to create DHSin November 2002, which was given authorityto work with the Office of PersonnelManagement (OPM) to create a personnelsystem fitting its responsibilities.

• In November 2003, DoD was granted broadflexibility to adopt a National Security PersonnelSystem, also in consultation with OPM.

Paul Volcker described these and as many otherchanges that are transforming the federal publicservice in a pre-conference message to conferenceparticipants. His message, which is reprinted asAppendix 2, also outlined the 2003recommendations of the Commission and steps theCommission has taken to inform the debate onpublic service reform.

The shift in thinking, from managing employees in atraditional sense to strategically managing the federalworkforce, involves more than a simple change inprocedures or policies. Instead, the GAO modeldescribes a paradigm shift where people become “animportant enabler of agency performance” instead

3U.S.General Accounting Office, High Risk Series,GAO-01-263, January 2001. Accessible athttp://www.gao.gov/new.items/d01263.pdf.

4U.S.General Accounting Office, Exposure Draft, A Model Of Strategic Human Capital Management, GAO-02-373SP,March2002. Accessible at http://www.gao.gov/new.items/d02373sp.pdf.

5Urgent Business for America: Revitalizing the Federal Government for the 21st Century, Final Report of the National Commissionon the Public Service,The Brookings Institution,Center for Public Service,Washington, January 2003. Available in pdf atwww.napawash.org.

There is something in the air that tells me the time is ripe for reform.

Paul A.Volcker, former Chairman of the Federal Reserve Board,announcing the convening of the second National Commission onthe Public Service, February 2002.

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of being viewed as a cost item, and human capitalmanagement serves “as the cornerstone of anyserious change management initiative.”6

Together, current reforms hope to make the federalservice more attractive to workers with the skillsrequired to deliver the more complex and variedservices demanded in the 21st Century, as well asto create an environment of performance forresults. The approaches being followed to achievethese goals include:

• aligning pay and job descriptions to today’s labor markets

• replacing the 15-grade General Schedule payand classification system, which results inadvancement based primarily on longevity, withbroader pay bands and advancementopportunities based on performance

• adopting best practices of personnel managementin private industry

• improving recruitment outreach • rewarding performance

THE MAKEOVER OF PERSONNEL SYSTEMS:THE DOD AND DHS EXPERIENCES

Public policy creation occurs in the spotlight, implementation occurs in thetrenches—unless someone makes a mistake.

Robert TobiasDirector, Institute for the Study of Policy Implementation,American UniversityFellow, National Academy of Public Administration

In opening the panel discussion on policyimplementation, Robert Tobias,Academy Fellowand Director of the Institute for the Study of

Policy Implementation at American Universitynoted:“Public policy creation occurs in thespotlight, implementation occurs in the trenches—unless someone makes a mistake.” He emphasizedthat strong vision, a cohesive plan and a rationalefor change are critical to the implementationprocess. And he cautioned that “delivering efficientand effective government services is not the stuff of‘Hardball’—it’s the stuff of hard work.”

The two largest departments undertakingdevelopment of personnel systems tailored tonew 21st Century mission requirements are DoDand DHS. Together they employ nearly onemillion civilian workers. Panelists underscoredthe difficulties and opportunities involved inmodifying the half-century-old civil servicesystems—both from a government-wideperspective and the experience to date at DoDand DHS.

6GAO-02-373SP,op. cit., pp. 4,10.

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The Administration Perspective

We must ensure that the change process isinclusive, deliberate, mission-oriented, timely,fair, credible and transparent.

Kay Coles JamesDirector, U.S. Office of Personnel Management (OPM)

OPM Director Kay Coles James provided anoverview of the federal personnel systemtransition underway.

Describing herself as “the person responsible formaking all this happen,” James noted that thepublic service transformation underway was “notRepublican or Democrat, but good government.”

Acknowledging the magnitude and difficulty of theeffort underway, she said OPM can use “all thehelp we can get.” The role of her office is toensure that the change process is “inclusive,deliberate, mission-oriented, timely, fair, credibleand transparent.” While the civil service systemhas features that are “outmoded, outdated, andirrelevant,” she said, the basic merit principles ofthe system must be preserved.

Among the initiatives for which OPM is providingcollaboration and oversight are those involvingthe redesign and creation, respectively, ofpersonnel systems at DoD and DHS.

The DoD Process. The National SecurityPersonnel System (NSPS), authorized as part of the2004 Defense Authorization Act, provided DoD

with the flexibility to design new personnel systems.These flexibilities included the authority to adopt abroad-band pay system, performance-based pay, andsimplification of the employee appeals process. Atthe time of the conference, preliminary plans forthe new system had been announced.

At the conference,Academy Fellow Dr. DavidChu, Chief Human Capital Officer and UnderSecretary of Defense for Manpower andPersonnel Readiness, emphasized the desire of theDepartment to make DoD civilian positions assought after as are those on the military side ofDoD. Chu said that, in designing the NSPS, theyare drawing on lessons learned from theDepartment’s earlier pilot personnel systemchanges. Some of these lessons are:

• Although employees initially might be skepticalof change, their outlook improved over severalyears and led to new productivity.

• Supervisor training in managing forperformance and addressing employeeconcerns is very important.

• Employees need to understand that rewardswill differ by performance. In this regard, thechanges in the rules for the Senior ExecutiveService (away from automatic raises drivenmostly by tenure) are “a very powerful step” inestablishing this principle.

• Creating a culture change from tenure-based tomerit-based rewards and advancement is a huge undertaking.

• Changing to a performance-based personnelsystem takes time and is comparable in scopeand difficulty to the military shifting fromconscription to an all-volunteer system.

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7Subsequent to the conference, Secretary England announced that DoD would extend the period for the design and implementationof the NSPS over several years and that it would work closely with OPM and the affected workforce in that process.

8DHS Secretary Tom Ridge, in prepared remarks to the Harvard Business School, February 11, 2004.9DHS Deputy Secretary Admiral James M. Loy, in testimony to the Senate Governmental Affairs Committee, February 25, 2004.10In testimony at the Senate Governmental Affairs Committee hearing on February 25, 2004, James said that over the last ten monthsthe joint DHS/OPM design team talked with more than 2,500 DHS employees and managers in town hall meetings and focus groupsacross the country, consulted with dozens of companies and experts to identify promising and successful models from the privatesector, state and local government, and other federal agencies,worked closely and collaboratively with the presidents and key staffmembers of the Department’s major unions, and included on the team supervisors and front-line employees from the Department’smajor components, as well as local union officials.

DoD views the NSPS plan “not as a prescription,but rather an architect’s sketch of what the housewill look like,” Chu explained. The design isintended to allow the various DoD componentsto apply them to their individual situations. This isparticularly true for the pay-for-performance andwage provisions, he said.

Chu noted that Secretary of the Navy GordonEngland, the point person for the DoDtransformation effort who had earlier assistedwith the personnel transformation at DHS, wouldbe meeting with DoD employee unions to workfurther through the details of the proposed NSPS.He added that in retrospect he believed DoDshould have found a different consultation processand that the Department would do so now.7

The DHS Process. One challenge at DHS hasbeen to shift 180,000 people from more than 22agencies to DHS and consolidate, integrate andupgrade 22 different human resources systems, 8different payroll systems, 19 financial managementcenters, and 13 procurement systems—just toassure that employees would be paid.8

DHS then took nearly a year to develop planswith OPM, including formal and informalconsultation with employees, their representatives,and experts from the public and private sectors.Part of this process was required by the DHSauthorizing legislation and part took place at theinitiative of the involved parties. The preliminaryregulations, which were announced just before theconference and formally published just after,included three main changes to the currentGeneral Schedule pay structure:

• open pay ranges eliminating the current stepincreases which are tied to longevity

• adjustment of pay by job type in each marketinstead of one adjustment for all job types ineach market

• performance pay pools for giving increased pay toemployees who meet performance expectations9

Extensive employee involvement10 produced“fundamental disagreements,” but it significantlyinfluenced the end product.

Vice Admiral Thad W.Allen,Academy Fellow andChief of Staff for the U.S. Coast Guard (which isnow part of DHS) told the conference that, givenDHS’s critical mission, the challenge is to convertto performance pay and preserve collectivebargaining “while meeting operational needs.”

The Employee Union Perspective

The federal employee is not afraid of change if the change is fair and the changes are made clear.

Colleen KelleyNational President, National Treasury Employees Union (NTEU)

Colleen Kelley, National President of the NationalTreasury Employees Union (NTEU), emphasized theimportance of labor being “fully engaged in anyplanned changes in the workplace” and for thechanges to be credible and transparent. From herown experience and the employee perspective,

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Kelley contrasted the experiences with personnelsystem transformations at the Internal RevenueService (IRS), DHS and DoD.

At the IRS, communication was key and NTEUwas engaged as a “full participant from thebeginning,” as provided in the 1998 IRS reformlegislation. Kelley noted that because of problemsresulting from “managers not being properlytrained,” she would favor extending the IRS’limited pay-for-performance system to managersas well as senior executives.

At DoD, by contrast, union leaders felt that theyhad been given no opportunity for input in theinitial design of the NSPS. “We feel as if it is beingdone to us, instead of with us…The federalemployee is not afraid of change if the change is fairand the changes are made clear,” Kelley said. “Wewant it to be fair, credible, and transparent to all.”

At DHS, the union role has been “wanted,acknowledged, and respected.” This began withCongress requiring employee involvement increating the new Department’s personnel system.She described the DHS town hall meetings as amajor step. The message from the employees atthese meetings was clear, however: fix, but do notdo away with the Civil Service system.

“Moving to pay bands is going totally in theopposite direction,” Kelley said, calling for greaterrecognition of employee concerns in the detaileddevelopment of the plan.

Finally, Kelley emphasized the value of flexibility inimplementation plans.

The Private Sector Perspective—Change Management is Key

The federal government is seeking to adopt orlearn from human resource management “bestpractices” in the private sector. “There are no ‘pulldown menus’”—as one conference participant putit. In fact, reports from the private sector suggestthat organizational change toward performanceoften fails to achieve the promised benefits.

Susan R. Pearson, Managing Partner for WorkforceTransformation at Accenture, described some of thelessons learned from organizational change initiativesin private corporations. “Management failures arethe leading reason given for the benefits oforganizational change initiatives being substantiallydelayed and/or negated,” she said. The managerialflaws include lack of buy-in—particularly from theimplementers—that change is necessary, inexperiencewith change management, and the absence of a seniormanagement champion for change.

Too often, Pearson said, organizational change isdesigned without the presence of theimplementers, those who carry out humanresource activities. In contrast with thetraditional transaction emphasis in the humanresource function (recruit, screen, hire, record,and process out), more companies are recognizingthe need to involve human resource personnel inleadership and policy decisions. In the future,Pearson predicted, much more time will be spenton performance enhancement pursuant to astrategy to align human resource activities andprograms with the mission of the organization.

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In organizations where organizational changefaltered in the policy creation stage,implementation is too little and too late, and mostof the energies are consumed at the front end. Insuch cases,“companies get as little as 20 percentof the promised payoff after having completed 80percent of the work. The remaining 80 percent ofthe benefit comes from dealing with peopleissues.” Too much effort is spent devising theperfect plan, according to Pearson. The mottoshould be:“Don’t worry about getting it perfect,get it moving,” Pearson said.

Successful organizational change managers,Pearson said, should do the following:

• bring implementation forward in time• identify the critical circumstances that shape

the change strategy• manage the change process as an enterprise• overestimate the need for leadership and

HR support

THE AGENDA AHEAD——MAINTAINING MOMENTUM

The panelists and commentators focused onthree objectives perceived as important toimplementing the future agenda of

personnel management reform:

• coherence in the implementation effort • support for long-term implementation• management of the change process

Panelists expressed differences regarding the mosteffective strategies to achieve these objectives. Buton the necessity of carrying forward the makeoverof federal human capital management, there wasone message: it must be done if the federalgovernment is to meet expectations of the publicservice in the 21st Century.

Coherence in the Implementation Effort

Congress should mandate a government-widepolicy to provide accountability and protectemployee rights, while at the same time allowingindividual agency operating flexibilities.

Paul A.VolckerChairman, National Commission on the Public ServiceFellow, National Academy of Public Administration

Now that more than 50 percent of the federalworkforce is undergoing or facing likely changesin personnel policy, some panelists questionedwhether these changes could be carried out

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successfully agency-by-agency without agovernment-wide approach to personnel reform.Max Stier, President and CEO of the Partnershipfor Public Service, set the stage for this discussionwith the challenge:“Leave no agency behind.” (See“Six Propositions for a Future Agenda of Reform,”box at the end of the report).

Christopher Mihm, Managing Director of StrategicIssues at GAO, expressed the judgment that ifpersonnel reforms are successful for the militaryand DHS, the template could be useful for otheragencies. “If it’s good enough to two of the largest,it ought to be good enough for everybody else,” henoted. In support of continued transformation, heobserved that agencies are beginning to make thecase that performance can be improved withpersonnel policy reform.

Kelley, on the other hand, felt strongly thatdecentralized and unfocused reforms are morelikely to endanger workers’ rights. Sheemphasized that if reforms are not standardizedby Congress, workers who are affected will be leftout of the know about the systems and practicesunder which they will be working.

Further stressing the “downside” to the agency-by-agency approach, Panetta asked,“How are yougoing to put this all back together?” If everyagency and department establishes its ownsystem,“I don’t think it’s in the best interest ofthe civil service. Somebody needs to set theparameters of where we are trying to go.”Panetta expressed concern that now each agencywill go to Congress to “cut its own deal.”

From his perspective of having helped design thetransformation for IRS and DHS,Thompsonobserved:“Politically it is very difficult to get a

government-wide solution. What does it take toget additional management flexibility? Well…do abad job.” He also noted that the “advantage of anagency-by-agency approach in adopting newsystems is that if one gets into trouble in aparticular situation, it doesn’t affect the others.”

Chu also saw strength in variation, noting that thereis already considerable diversity in civil servicetoday, notably at DoD.

Several solutions were proposed to resolve thisdichotomy of views and concerns:

Volcker, both a strong supporter of individual agencyflexibility as well as preserving “a coherence” in thefederal public service, noted that agencies had beenmoving ahead with “a lot of ad hoc changes.” Herecommended that Congress mandate agovernment-wide policy to provide accountabilityand protect employee rights, while at the same timeallowing individual agency operating flexibilities.

Others recommended that lessons learned fromthe agencies that have undergone personnel systemchanges should be carefully applied to improve theprocesses in agencies that undergo transformationat a later date.

To be sure that agencies can make use of theflexibilities that are already provided by federalpersonnel law, it was recommended that capacityfor change be built into the agencies that do nothave newly transformed personnel systems.

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Support for Long-TermImplementation: Building Trust inGovernment

Several panelists emphasized that changingpersonnel systems will take time. “It’s going torequire a sustained effort for a considerable periodof time,” Thompson stressed.

Continuity in leadership commitment was thereforestressed as essential if performance-based personnelsystems are to avoid the fate of simply being “theprogram of the day.” Panelists noted the importanceof strong political leadership in affecting thesechanges. Consistent leadership must come not justfrom those in power, but also from public serviceorganizations, said James. She appealed fororganizations such as those represented at theconference to “weigh in” when personnel issues andfunding decisions surface on the congressional agenda.

Gaining public understanding and support for thechanges underway was seen as essential forrestoring trust in government. James suggested thateffective implementation of personnel reforms isone important way to create changes in publicassumptions about government.

Volcker emphasized stronger congressionaloversight of the reform process. To increase theeffectiveness of congressional oversight, headvocated realignment of congressional committeesalong the lines of government missions. Panettaagreed that, with 160 subcommittees, the Congressis “not very good at oversight.” Instead, Panetta

emphasized that leadership support for change hadto come from the White House, because Congressfocuses mainly on “dollars, rather than outcomes.”

Attracting young people to public service alsoemerged as an important concern for long-termimplementation. A current Presidential ManagementIntern11 said that the current federal culture does notencourage change. With the highest authoritiesbeing political appointees and rewards being tied tohigh grade levels, she said,“PMIs are stuck at a levelwhere they don’t have a voice for change.”12 Somepanelists acknowledged that the system “underminesthe incentive to move up” and that recruiters need toconvey the message that “government is someplacewhere you can go and make a difference.” Concernwas also expressed for better utilization of olderworkers now dominating the federal workforce.13

The Work Ahead

There was general agreement among theparticipants that transformation of the federal civilservice will continue. The questions addressedwere: how fast, how broadly and how uniformly?

Volcker stressed the need for non-partisanship andfor inclusion of the following measures in managingthe change process:

• reducing the large layer of junior politicalappointees (who fall in between political agencyleaders and top career civil service managers) toput program managers closer to policy leaders14

11The Administration is revising the PMI program, which has been renamed the Presidential Management Fellows Program, to includemid-career fellows.

12In conveying the August 2001 report to Congress on the PMI program, the Merit Systems Protection Board chairman noted that thepercentage of PMIs who stayed in the federal service is slightly lower than the percentage of comparable non-PMIs who stayed. “This issomewhat surprising, because the PMI assessment process identifies candidates with interest in and commitment to public service, andnon-PMIs generally are not assessed for that characteristic. On the other hand, people enter federal employment for different reasonsand with different expectations. It is likely that many PMIs are attracted to the program because of the anticipated fast track to manage-ment. It is conceivable that if the expected assignments, training, or advancement do not materialize, the appeal of staying in governmentmay fade. USMSPB, Growing Leaders:The Presidential Management Intern Program, August 2001.

13The average age of the workforce has increased from 42 in 1988 to 45.6 in 2003. See Government Executive,“The State of the PublicService,” special report, February 2004, p. 26.

14Panetta noted that the number of political employees has increased over the years. The Commission report (p. 18) said that the politi-cal appointments to top level offices had grown from 286 positions when President Kennedy came into office in 1960 to 914 by theend of the Clinton Administration. Overall, President George W. Bush had 3,361 political positions to fill when he took office.

THE PROGNOSIS FOR CHANGE——POSITIVE SIGNALS

• forging an appropriate oversight role for OMBand OPM to guide individual agency personnelmanagement and reform efforts

• streamlining the political appointment processand addressing pay disparities between public andprivate sector executives

• adopting a government-wide legislativeframework for reform so that the unique statusof the federal public service may be retained

In terms of lessons learned from personnelreorganizations underway, the panelists placedparticular emphasis on several factors.

• “Employee engagement is incredibly important,”said Stier.

• Align individual performance measures with agencyperformance goals (this is a requirement under theproposed DHS regulations), cautioned Mihm.

• Develop metrics for individual performance.While the Coast Guard has outcome measures,such as reducing oil spills, it has not yetdeveloped outcome metrics for individualperformance, said Allen.

• Stier noted,“We’re not really good at measuringperformance. We need to clarify theexpectations of performance.”

• Agency personnel authority must be consistentwith program responsibility, according to Tobias.

• There must be buy-in to change at all levels,all agreed.

• Several panelists emphasized the importance oftraining. Given the expected wave of retirementsamong the older and managerial ranks of theworkforce, panelists emphasized that supervisortraining is crucial.

We all have a common goal: to ensure goodpeople are attracted to the public service.

Leon PanettaChairman,The Leon and Sylvia Panetta Institute for Public Policy

Despite the range of challenges and issues raised atthe conference, guarded optimism was evidentamong the presenters:

“With all the difficulties, we are well on the way,”said Thompson.

“Much more needs to be done, but there has alsobeen enormous improvement,” emphasized Kinghorn.

Mihm stated:“In the past there was no changeunless an organization was in crisis.…Now,increasingly, the dialogue is ‘we can do better.’ That’sa very important change in the conversation.”

“Events have conspired to produce an unusual andunexpected opportunity in terms of civil servicereorganization,” said Volcker.

Panetta added:“We all have a common goal to ensuregood people are attracted to the public service.”

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SIX PROPOSITIONS FOR A FUTURE AGENDA OF REFORM

1. No agency should be left behind. (Half the federal workforce will be getting a newsystem and that is the half that is in the political limelight. We need to make sure thatthe rest of government receives attention, too, though that doesn’t necessarily mean thesame changes.)

2. In addition to legislation, Congress plays key oversight and funding roles. (The former isvery important in a time of seismic changes and successful change will require significantinvestments in the short-term).

3.What gets measured gets changed. (The government environment is shy on usefulmetrics that can judge the effectiveness of the changes that are taking place and helporient future efforts.)

4. Employee engagement is a necessary ingredient to success. (If employees don’t believein the new systems, they simply won’t work)

5.Two problems are near-term priorities: Leadership/management capacity and thehiring process.

6.We need to build a robust public constituency for the civil service. (The publicconstituency that exists for the military offers a good model).

As outlined by Max Stier, Partnership for Public Service

“The system must be transformed. The process ishow we get there. It’s difficult. If it was easy,someone else would have done it.…In anenvironment in which you don’t have time to build[all the elements for success], it takes faith,” saidKay Coles James.

The conference achieved its purpose of focusingattention on what is required for successfulimplementation of the legislation already enactedand to keep the transformation process moving andevolving. The outcome depends on manystakeholders—agency managers, Congress,Administration leadership, employees and theirrepresentatives, and the public.

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Conference SponsorsNational Academy of Public AdministrationNational Commission on the Public ServiceImplementation Initiative

Conference Co-HostsLeon Panetta, Chairman,The Leon and SylviaPanetta Institute for Public Policy Fred Thompson, former Chairman, SenateGovernmental Affairs Committee

Conference Co-SponsorsGovernment Executive MagazineCouncil for Excellence in GovernmentPartnership for Public Service

Conference Program

8:45 Greetings and Program Opening

Call to order: Timothy B. Clark, Editor andPresident, Government Executive

Welcome: C. Morgan Kinghorn, President, NationalAcademy of Public Administration

Overview: Paul Volcker, Chairman, NationalCommission on the Public Service

Presentation and Discussion:Leon Panetta, Chairman,The Leon and SylviaPanetta Institute for Public Policy

Fred Thompson, former Chairman, SenateGovernmental Affairs Committee

Joined by Kay Coles James, Director, Office ofPersonnel Management

9:20 Panel I: The Critical Role ofImplementation

Moderator: Robert Tobias, Director, Institute for theStudy of Policy Implementation,American University

Panelists Dr. David Chu, Undersecretary of Defense forPersonnel and Readiness and Chief Human Capital Officer

Colleen Kelley, National President, NationalTreasury Employees Union

Dr. Susan Pearson, Managing Partner,WorkforceTransformation,Accenture

10:30 – 10:50 Break

10:55 Introduction of Director of Office ofPersonnel Management by C. Morgan Kinghorn

11:00 The Agenda Ahead: Remarks by KayColes James, Director, OPM

11:15 Panel II: The Agenda Ahead

Moderator: Christopher Mihm, Managing Directorfor Strategic Issues, U. S. General Accounting Office

PanelistsVice Admiral Thad W. Allen, Chief of Staff, U.S.Coast Guard

Max Stier, President and CEO, Partnership forPublic Service

12:20 pm Conclusions and Call to Action:Paul Volcker, Leon Panetta and Fred Thompson

APPENDIX 1——CONFERENCE PROGRAM AND PRESENTERS

Transforming the Public Service: Progress Made and the Work Ahead

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A. Leading Recommendations ofthe National Commission on thePublic Service

THE ORGANIZATION OF GOVERNMENT

• Organize government around mission-centereddepartments

• Apply flexibility and modern management skillsto the operating agencies within each executive department

• Enact expedited authority for the consideration ofreorganization plans

• Align House and Senate Committee structureswith the mission-driven organization of theexecutive branch

LEADERSHIP FOR GOVERNMENT

• Speed and streamline the presidentialappointments process

• Reduce the number of executive branch political positions

• Divide the Senior Executive Service into amanagement and a professional and technical corps

• Modify "ethics" regulations imposed on federalemployees where there is no demonstratedpublic benefit

• Provide a significant increase in judicial, executiveand legislative salaries to ensure a reasonablerelationship to other professional opportunities

• Break the statutory link between the salaries ofmembers of Congress and other government personnel

OPERATIONAL EFFECTIVENESS INGOVERNMENT

• Develop more flexible personnel managementsystems for government agencies

• Continue efforts to improve recruitment offederal employees

• Set employee compensation based on currentmarket comparisons

• Establish and follow clear standards and goals incompetitive sourcing that advance the publicinterest and do not undermine core competenciesof the government

Dear Conference Participants:

In anticipation of the upcoming conference on Transforming the Public Service: Progress Made & theWork Ahead, here is a summary of recent efforts toward reform with particular attention torecommendations of the National Commission on the Public Service. I hope you find it useful asbackground for a lively and constructive conference discussion to help advance the common cause of publicservice transformation. I greatly appreciate your participation.

Paul A. Volcker

APPENDIX 2——PAUL A.VOLCKER’S PRE-CONFERENCE MESSAGE

TO PARTICIPANTSFebruary 13, 2004

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B. Overview of Progress to Date onImplementation of theCommission’s Recommendations

THE ORGANIZATION OF GOVERNMENT

The Department of Homeland Security’sauthorization was developed concurrently with theCommission’s work. It is the type of reorganizationthe Commission envisioned in calling for a limitednumber of mission-oriented departments, withstrong central policy leadership, and operatingagencies with management and personnelflexibilities. Imminently, the Department and theOffice of Personnel Management will issueproposed regulations to establish pay, performancemanagement, classification, labor relations andadverse action systems for the Department.

The same is true for the new authorities grantedthe Department of Defense and for the defensemanagement and operational reorganizations beingconducted by the Secretary. Early last summer,Paul Volcker joined Secretary Donald Rumsfeld at apress conference to argue the case for greaterpersonnel flexibilities. A Commissionrepresentative later testified before the SenateGovernmental Affairs Committee in support of thelegislation introduced by Senators Susan Collins andCarl Levin and later incorporated in part in thenew DoD personnel authorization. These newflexibilities authorize DoD to institute a humanresources management system that is "flexible andcontemporary" and which may include featuressuch as a broadband pay system, compensationbased on performance, and simplification of theemployee appeals process.

The Commission also testified in support of grantingthe General Accounting Office the authority tomove to the next level of instituting its pay forperformance system. This legislation passed bothHouses and is awaiting final Congressional approval.

House Government Reform Chairman Tom Davisopened his Committee’s 108th Congress agendawith a hearing on the Commission Report.Chairman Paul Volcker, former Secretary of Healthand Human Services Donna Shalala, and formerSecretary of Health Education and Welfare andDefense Frank Carlucci, testified on behalf of theCommission. A subsequent hearing specificallyfocused on the recommendation that PresidentialReorganization Authority be renewed. CommitteeChairman Tom Davis and Nancy Dorn, DeputyDirector of OMB, representing the BushAdministration, endorsed such legislation.Chairman Davis has stated that he will introducelegislation to accomplish this early this year.

As recommended by the Commission, the Houseof Representatives has looked at its own structurein light of the Homeland Security reorganization. Itcreated an ad hoc Committee on HomelandSecurity and the House leadership has indicatedthat it will make that committee permanent in thenext Congress. In support of this goal, DavidWalker, Comptroller General, testified this fall thatCongress could be more efficient and effective in itswork if it would realign its committee structure.

LEADERSHIP FOR GOVERNMENT

The President proposed that judicial salaries besubstantially increased by approximately 25 percent.The Senate included a provision to increase judicial

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salaries by this amount in an appropriation bill lastfall, but it was not included in the final conferencereport because of an objection from the House.This legislation will be offered again in 2004.Congress did provide a 4.1 percent pay increase forcivilian employees and the military.

The pay cap impacting the top four levels of theSenior Executive Service was lifted, a single bandreplaced the SES pay grades, and a performance-based pay system was authorized for the SES.When fully implemented, that system will increasethe basic pay rate for members of the SES from$134,000 to $157,000.

Senator George Voinovich introduced legislationoriginally proposed by Senator Fred Thompson tosimplify and rationalize ethics regulations applicableto all senior federal employees, including incomingPresidential appointees.

OPERATIONAL EFFECTIVENESS INGOVERNMENT

The Commission testified in support of its payrecommendations at three Congressional hearingsin 2003. It specifically testified in support of the SESreforms which were adopted, in support of theDoD authorities which were adopted, in support ofthe new GAO pay authorities which will soon beadopted and in support of instituting a modern,performance based system at DHS, the regulationsfor which will soon be issued.

In addition, Congress authorized a government-wide performance-based bonus fund and providedsufficient funding to design the program.

These new flexibilities at DHS and DoD, and similarones available to federal organizations such asGAO, IRS, FAA, FDIC, SEC, NASA and others, meanthat more than half of all federal civilian employeeswill be working under federal HR laws andregulations that are significantly more flexible andresponsive to modern organizational needs thanthose available to the rest of the government. Thisincludes alternative approaches such as replacementof the General Schedule and classification systemwith pay banding, a significant new emphasis onperformance, including performance-basedcompensation systems, improved appeals processesand new recruitment and hiring authorities. Forexample, the NASA flexibilities will allow thatagency to pay recruitment, redesignation, relocationand retention bonuses; to develop a program togive science and technology scholarships tostudents in exchange for their commitment toNASA upon graduation; to appoint distinguishedscholars as NASA employees; and to providesuperior qualifications pay to eligible employees.

Prior to actually releasing its recommendations, theCommission testified in support of legislationauthored by Senators Daniel Akaka and GeorgeVoinovich and OPM initiatives to improverecruitment and other personnel practices.

Additional legislative initiatives and executiveincentives have enhanced the government’s abilityto attract and retain a high-quality workforce. Mid-career hiring will be enhanced by the changesrecently proposed through regulation by OPM forthe Presidential Management Intern program. Thename of the program has been changed to thePresidential Management Fellows Program.

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PROGRESS MADE ON IMPLEMENTATIONSTRATEGIES

• The Commission urged that itsrecommendations be pursued by coalition ofprivate non-profit organizations designed tospearhead reform. Subsequently, theCommission Implementation Initiative haspartnered with the National Academy of PublicAdministration, the Center for Public Service atthe Brookings Institution—which initiated theCommission—and Conference cosponsors, theCouncil for Excellence in Government and thePartnership for Public Service.

• The Commission recommended the developmentof underlying principles for new federal personnelsystems. The Commission ImplementationInitiative has since co-sponsored forums with theNational Academy of Public Administration onperformance-based pay and the employee appealssystem. The recommendations developed bythese forums have been published and will beavailable at the February 18 Conference.

Hannah SistareExecutive DirectorNational Commission on the Public ServiceImplementation InitiativeE-mail: hsistare@napawash.orgPhone: (202) 347-3190, ext. 3020

Ryan J.WatsonResearch and Communications AssociateNational Academy of Public AdministrationE-mail: rwatson@napawash.orgPhone: (202) 347-3190, ext. 3133

PROJECT STAFF

National Academy of Public Administration

1100 New York Avenue, N.W. Suite 1090 EastWashington, DC 20005Phone: (202) 347-3190Fax: (202) 393-0993Web: www.napawash.org

National Commission on the Public ServiceImplementation Initiative