The Search for a New Model for Salary Management: Is There Support for Private Sector Practices?

Abstract

There is rapidly growing interest in reinventing public pay programs. The pressure on government to reduce costs and improve performance is driving change in every department. Pay programs are often difficult to change because they affect every department and there is a concern that they may might be disruptive. Moreover, in many jurisdictions new programs cannot be introduced without the approval of elected officials. Now it is the elected officials who are pushing for change in response to the demands for better performance. In the past employers have adopted new pay programs almost in the way that people change cars. The basic functioning of the car is always the same but buyers feel good about the purchase because it's viewed as progress. Until recently, decisions related to new pay programs were made by personnel officials and the changes were limited to new bells-and-whistles rather than fundamental new directions in salary management. Now the reasons for change have nothing to do with glitz or advertising. The decisions reflect a meaningful understanding of how pay systems affect performance and how work is organized and managed. They have shifted from personnel decisions to management decisions. In the reinvention of government it is politically important to operate more like a business. The private sector is seen as efficient and performance oriented. In this context corporate pay systems are seen as an important tool to reach higher levels of performance. Government pay programs, in contrast, are seen as an impediment to change and as a very visible example of a costly and ineffective bureaucracy. Pay systems, however, have little chance to be effective if they do not fit the environment and have the solid support of the personnel executives who have to sell and defend a new program to the organization. The purpose of this article is to explore some of the differences in the way pay systems are viewed by senior personnel executives in industry and in government. The preliminary findings are based on surveys conducted with the assistance of IPMA and of the American Compensation Association. The New Model for Salary Management Pay programs have been based on the same model now for over 50 years. We have added those bells-and-whistles - the most recent hype was computerized administration - but the administrative logic is still the same. The model is based on highly defined jobs and close, centralized control. Its origins are in the work of industrial engineers in the factories of the 1930s and can be traced even earlier to the turn-of-the-century principles of scientific management. The common, virtually universal methods are based on pseudo-scientific logic from a long past era. The model was developed to fit and support the way work was organized and managed in that era. Jobs are defined in detail and then documented in lengthy job descriptions. Workers are expected to perform the stated duties as efficiently as possible. The detailed description of duties leaves virtually no room for discretion; thinking and decision making are effectively a managerial prerogative. One of the keys to the traditional model is the assumption that organizations, occupations and jobs change very slowly over time. That is best illustrated by the continued reliance by the federal government as well as other public employers on job standards that document how jobs are to be classified. It can take years and a major investment of time for OPM to develop and secure approval for new standards. Standards become dated and the resources are not available to keep them current. Of course the federal government is not the only public employer that continues to live with a classification system that necessitates extensive job documentation. That assumption of course is no longer valid. Change is now a constant in every sector of our economy. There are jobs that change every day; people are expected to do whatever needs to be done. …