<DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:94775.wais]
DECISION TIME: A NEW HUMAN RESOURCES MANAGEMENT SYSTEM AT THE
DEPARTMENT OF HOMELAND SECURITY
=======================================================================
HEARING
before the
SUBCOMMITTEE ON CIVIL SERVICE
AND AGENCY ORGANIZATION
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
OCTOBER 29, 2003
__________
Serial No. 108-162
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri
CHRIS CANNON, Utah DIANE E. WATSON, California
ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma C.A. ``DUTCH'' RUPPERSBERGER,
NATHAN DEAL, Georgia Maryland
CANDICE S. MILLER, Michigan ELEANOR HOLMES NORTON, District of
TIM MURPHY, Pennsylvania Columbia
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN R. CARTER, Texas CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota ------
MARSHA BLACKBURN, Tennessee BERNARD SANDERS, Vermont
(Independent)
Peter Sirh, Staff Director
Melissa Wojciak, Deputy Staff Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Philip M. Schiliro, Minority Staff Director
Subcommittee on Civil Service and Agency Organization
JO ANN DAVIS, Virginia, Chairwoman
TIM MURPHY, Pennsylvania DANNY K. DAVIS, Illinois
JOHN L. MICA, Florida MAJOR R. OWENS, New York
MARK E. SOUDER, Indiana CHRIS VAN HOLLEN, Maryland
ADAH H. PUTNAM, Florida ELEANOR HOLMES NORTON, District of
NATHAN DEAL, Georgia Columbia
MARSHA BLACKBURN, Tennessee JIM COOPER, Tennessee
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Ronald Martinson, Staff Director
Chad Bungard, Deputy Staff Director and Senior Counsel
Chris Barkley, Clerk
Tania Shand, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on October 29, 2003................................. 1
Statement of:
Hannah S. Sistare, executive director, National Commission on
the Public Service; John Gage, national president, American
Federation of Government Employees; Colleen M. Kelley,
national president, National Treasury Employees Union; and
George Nesterczuk, president, Nesterczuk & Associates...... 36
James, Ronald L., Chief Human Capital Officer, Department of
Homeland Security; and Steven R. Cohen, Senior Adviser,
Homeland Security, Office of Personnel Management.......... 10
Letters, statements, etc., submitted for the record by:
Cohen, Steven R., Senior Adviser, Homeland Security, Office
of Personnel Management, prepared statement of............. 21
Davis, Hon. Danny K., a Representative in Congress from the
State of Illinois, prepared statement of................... 6
Davis, Hon. Jo Ann, a Representative in Congress from the
State of Virginia, prepared statement of................... 3
Gage, John, national president, American Federation of
Government Employees, prepared statement of................ 47
James, Ronald L., Chief Human Capital Officer, Department of
Homeland Security, prepared statement of................... 13
Kelley, Colleen M., national president, National Treasury
Employees Union, prepared statement of..................... 79
Nesterczuk, George, president, Nesterczuk & Associates,
prepared statement of...................................... 101
Sistare, Hannah S., executive director, National Commission
on the Public Service, prepared statement of............... 39
DECISION TIME: A NEW HUMAN RESOURCES MANAGEMENT SYSTEM AT THE
DEPARTMENT OF HOMELAND SECURITY
----------
WEDNESDAY, OCTOBER 29, 2003
House of Representatives,
Subcommittee on Civil Service and Agency
Organization,
Committeee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room 2154, Rayburn House Office Building, Hon. Jo Ann Davis of
Virginia (chairman of the subcommittee) presiding.
Present: Representatives Jo Ann Davis of Virginia, Murphy,
Blackburn, Mica, Danny K. Davis of Illinois, Norton, and Van
Hollen.
Staff present: Ronald Martinson, staff director; B. Chad
Bungard, deputy staff director & senior counsel; Robert White,
director of communications; Vaughn Murphy, legislative counsel;
John Landers, detailee; Christopher Barkley, legislative
assistant/clerk; Tania Shand, minority professional staff
member; Earley Green, minority chief clerk; and Jean Gosa,
minority clerk.
Mrs. Davis of Virginia. The Subcommittee on Civil Service
and Agency Organization will come to order.
Thank you all for joining us today at this important
hearing. When Congress created the new Homeland Security
Department last year, we included in the legislation a
directive to the Secretary and the head of the Office of
Personnel Management to develop a new, modern system of
personnel management that would fit the unique needs of the new
department. We hold this hearing today at a point in time when
the establishment of that system is nearing.
Last week, a Senior Review Committee, made up of officials
from DHS and OPM the employee unions and outside experts, met
for 3 days in public to discuss the many options, 52 in total,
that are on the table. These proposals would affect pay,
classification, employee appeals, adverse actions, and labor
management relations, every major element of a human resources
system.
I applaud the design team and the Senior Review Committee
for the many months of work on this issue. We gave you an
important task and you have taken it very seriously. That was
illustrated very clearly by the sessions last week.
We are holding this hearing now, while the decisionmaking
progress is ongoing, due to the significance of this process. I
think all of us are aware that the choices made by Secretary
Ridge and Director James are likely to reverberate throughout
the Federal Government. Homeland Security is viewed as a test
to see how the principles of performance-based management work
when put into practice on a large scale, how it will work. If
the new department does indeed move away from the General
Schedule and some of the statutory Civil Service provisions of
Title 5, its success or failure in doing so will be a lesson
for other departments and agencies.
So it is important that we get this right. And I hope I can
make it through this hearing and keep my voice going, so you
will have to bear with me. I say ``we'' because, after all,
Congress gave the department this authority to waive several
provisions of Title 5, and we specifically required the
department to develop a new personnel system. We have a lot
invested in this process, too. We want this to be a success. We
want the department to have the flexibility it needs to meet
its critical mission, and we want it to do so while creating a
workplace environment where good workers are rewarded and poor
performers are rehabilitated or removed.
One of the interesting items to emerge from last week's
public review sessions, I believe, was the wide agreement that
poor performers have no business working for the Federal
Government. I think this issue really gets at the essence of
creating a real, credible, performance-based management system
and an effective pay-for-performance plan.
Such a system begins with an effective way to measure
performance. Managers must be accustomed to giving real
performance ratings, not simple pass/fail marks, to their
employees, and these ratings must have a direct relation to
duties and responsibilities of each employee. This takes
training, to be sure, but it also requires a willingness to
make hard choices, and it demands that managers are held
accountable for their decisions.
Once you have a credible tool for measuring performance,
and managers who understand the system and want to implement
it, it is fairly logical to have a system that rewards the best
performers and does not coddle the worst. I hope and expect
that this is the direction the Department of Homeland Security
is heading. I look forward to our discussion today, and I thank
you all for being here.
[The prepared statement of Hon. Jo Ann Davis follows:]
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Mrs. Davis of Virginia. I would now like to recognize the
ranking minority member of this subcommittee, Mr. Danny Davis,
for an opening statement.
Mr. Davis of Illinois. Madam Chairwoman, I think your voice
is going to be fine, and I want to thank you for calling this
hearing.
The process that agency officials at the Department of
Homeland Security and the Office of Personnel Management
designed to help develop the new personnel rules at DHS has
been hailed as being very collaborative and inclusive.
A local columnist in last Sunday's paper described a recent
personnel development working session as, ``Bush administration
appointees and Federal union leaders gathered around a table
and tried to step outside their adversarial relationship. For 3
days, officials from the Department of Homeland Security and
Federal unions took stock of one another as they discussed how
best to overhaul pay and work force rules affecting 180,000
Civil Service employees.''
I am pleased that DHS' human resources development process
has been collaborative and inclusive, as called for in the
Homeland Security Act. However, the act also expresses the
``Sense of Congress'' that the ``human resources management
system envisioned for the Department should be one that
benefits from the input of its employees.''
It is not enough only to solicit the ideas of DHS employees
and union officials. Their ideas and proposals must be
considered and reflected in the proposed personnel system.
It is my understanding that the 52 personnel system options
that have now been forwarded to the Secretary of DHS and the
Director of OPM for consideration range from keeping the
current General Schedule pay system to implementing a new
performance-based pay system. In the area of collective
bargaining, some options increase management rights by limiting
the issues that can be bargained over, and other options
increase union rights by expanding the scope of bargaining.
The Secretary of DHS and the Director of OPM have a
difficult but congressionally stated responsibility to design a
system that reflects the ideas and concerns of the employees
who are the bread and butter of this agency. I hope that the
much touted collaborative design process results in a human
resources system that reflects the views of all those involved
in the design process itself. Collaboration requires a
tremendous amount of give and take. It also requires a great
deal and a high level of sensitivity. I trust that process can
in fact be implemented, and it can be done successfully.
I look forward to hearing from the witnesses and learning
where they believe there is room for consensus and compromise
in design of a new personnel system at DHS.
And again, Madam Chairwoman, I thank you for holding this
hearing and look forward to the discussion which will ensue.
[The prepared statement of Hon. Danny K. Davis follows:]
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Mrs. Davis of Virginia. Thank you, Mr. Davis.
Mr. Murphy.
Mr. Murphy. Thank you, Madam Chairwoman. I just want to add
my hopes too that throughout these hearings we will hear
certainly some great ideas for moving the Department of
Homeland Security forward as a model for helping Government run
more efficiently and to do what you had said, to make sure that
good workers get rewarded and those who are not working, we
find other ways of either helping to improve their performance
or helping them move on.
But above all, I want to make sure that all the parties
involved, we hear from them, whether they are representing the
workers or representing administration on this. I want to hear
how people are working together to resolve any issues or, in
the future, how they will do so. Those are some of the things
that I hope, as we hear testimony, I will hear some elaboration
on.
Thank you, Madam Chairwoman.
Mrs. Davis of Virginia. Mr. Mica.
Mr. Mica. Thank you, Chairman Davis. Good to be with you
this morning. I think this is an appropriate and long overdue
hearing, but timely in that we need to make decisions on new
human resource management system at Homeland Security.
Homeland Security is a unique consolidation of many
agencies, and I know that there has been an air of uncertainty
among the work force because of the nature of the consolidation
and some of the reorganization of activities within one of our
largest agencies of the Federal Government.
I wanted to speak for just a second, and, again, I think
this is very important. I think that we have to respect the
service and the loyalty of many of those who serve the country
in Civil Service positions, but also keep in mind that no one
is entitled to a position forever in the Federal Government,
and times do change and responsibilities change and
organizations change.
Having chaired the Civil Service Subcommittee, I watched in
awe some of the transition of the Department of Defense and the
downsizing that it faced in the post-cold war period, and they
did it, for the most part, without a whimper. Maybe that is the
nature of the Department of Defense. And many of the positions,
too, were represented by organized labor. But I think folks
have to realize that the purpose of Civil Service was to make
certain that there was not political interference, that there
wasn't the hiring of folks on nepotism basis, and that people
weren't dislodged from their positions solely on the basis of
political convenience, transition, and patronage.
So we have to keep in mind that the private sector does
make these transitions, that the Defense Department and others
have made these transitions, and that there will be
consolidations and new experience. We live in a different era.
All that said, we need to do our best again to properly
retrain, to reassign, and to place those who have been loyal in
their service to the Federal Government; I respect that. My
folks were both lowly paid State civil servants at one time, so
I have a great respect for that.
The final point that I wanted to make is on one of the
largest components of Homeland Security, and that is the
Transportation Security Administration. It was created with a
core of some existing Department of Transportation, and other
security-related transportation employees. It expanded and grew
to 55,000 plus, I am told. And one of the things in helping to
create and establish that agency, we wanted to make certain
that we did, because of the nature of their responsibility,
also the importance of accountability in a security system of
that sort, was not to have that agency as part of Title 5. And
I think that is important that we continue to respect that
decision. Most of the folks who are employed are screeners.
We converted the airline screening responsibility to
Federal responsibility, but I may remind the subcommittee and
Members of Congress and others that we do have a transition
provision which we put in the legislation to allow for private
screening, all with Federal supervision and Federal
responsibility and oversight audit, and that will continue. We
now have five demonstration projects that are working very
successfully, but I think that airports will soon be demanding
to opt out, and they have that right, 1 year from this month. I
have asked TSA to ensure a smooth transition, and I think that
it is important that the uniqueness of the creation and the
responsibility of this new agency, and particularly the
screening responsibilities, be recognized with both the past
intent and the current operations and the future conduct of
this important responsibility, and it will transition. This is
not unlike the European transition of that screening
responsibility, but it does involve a large portion of the
number of people who are now under the purview of Homeland
Security.
So a lengthy opening statement, but willing to work, as
chairman of the Aviation Subcommittee and with the Civil
Service Subcommittee, I am proud to be a member of the
committee. I, again, appreciate your fulfilling your
responsibilities and taking up this issue, and look forward to
hearing the witnesses.
And thank you again, Madam Chairwoman.
Mrs. Davis of Virginia. Thank you, Mr. Mica, and we
certainly appreciate your experience and expertise on the Civil
Service Committee and all that you have done with Homeland
Security and the TSA.
Ms. Holmes Norton, do you have an opening statement?
Ms. Norton. I don't have a formal opening statement, Madam
Chairwoman. I appreciate this hearing and thank you for this
hearing. I just want to say as we begin this process with the
Department of Homeland Security, and I am a member of the
Select Committee on Homeland Security, that we don't go through
another very polarizing process of the kind we have just
finished on the Department of Defense. That was not a model of
how to go about dealing with the interests of efficiency and
the justifiable interest of the people who work in the
Department. You can't organize a department around the people
who work there, and it is time the Government, if it is going
to reorganize these functions, took their cue from the way in
which the Fortune 500 does it. I served on the board of three
Fortune 500 companies, and I watched how companies had to be
elastic and flexible and change, particularly as the economy
changes. I have never seen anything like the DOD process. Any
company that went through that would be throwing its best
people out the window and telling them to go search for other
jobs, because people are not going to stand for changes that
don't take them into account; and I hope that is the kind of
process we are about to embark upon here, or I think we are
going to have the same kind of polarized response that we had
with respect to the Department of Defense.
And I thank you very much, Madam Chairwoman.
Mrs. Davis of Virginia. Thank you, Ms. Norton.
I ask unanimous consent that all Members have 5 legislative
days to submit their written statements and questions for the
hearing record, and that any answers to written questions
provided by the witnesses also be included in the record.
Without objection, so ordered.
I ask unanimous consent that all exhibits, documents, and
other materials referred to by Members and the witnesses may be
included in the hearing record, and that all Members be
permitted to revise and extend their remarks. Without
objection, it is so ordered.
On the first panel we are going to hear from the two key
agencies making the final decision about the new personnel
system. First today will be Ronald L. James, the Chief Human
Capital Officer at the Department of Homeland Security. He will
surely have a lot to say on this topic. Next will be Mr. Steven
R. Cohen, Senior Advisor for Homeland Security Issues at the
Office of Personnel Management. Joining him behind the table
will be Ronald P. Sanders, Associate Director for Strategic
Human Resources Policy at OPM.
We have also asked the Merit Systems Protection Board to
submit a written testimony for the record, which they are happy
to do. The MSPB has also played a significant role in the
development of the new personnel system at DHS.
It is standard practice for this committee to administer
the oath to all witnesses, so I am going to ask, if everyone is
here from the second panel as well as the first panel, we will
just swear everybody in at one time. If you will please stand,
I will administer the oath.
[Witnesses sworn.]
Mrs. Davis of Virginia. Let the record reflect that the
witnesses have answered in the affirmative, and please be
seated.
Mr. James, we will begin with you. We have your full
written statement in the record, and if you would just like to
give a summary or say whatever you would like to say, you have
5 minutes.
STATEMENTS OF RONALD L. JAMES, CHIEF HUMAN CAPITAL OFFICER,
DEPARTMENT OF HOMELAND SECURITY; AND STEVEN R. COHEN, SENIOR
ADVISER, HOMELAND SECURITY, OFFICE OF PERSONNEL MANAGEMENT
Mr. James. Good morning, Chairwoman Davis and distinguished
members of the subcommittee. I am Ron James, Chief Human
Capital Officer at DHS. Thank you for the opportunity to appear
before you today.
DHS was created with the overriding mission of protecting
the Nation against future terrorist attacks. Component agencies
analyze threats and intelligence, guard our borders and
airports, protect our critical infrastructure, and coordinate
the response of our Nation for future emergencies. DHS is also
committed to and being sensitive to protecting the rights of
American citizens and enhancing public services such as natural
disaster assistance by dedicating specific teams to these
important missions.
In creating the Department, Congress provided a historic
opportunity to design a 21st century human resource management
system that is fair, effective, and flexible. We, and I, take
this very personally, have a responsibility to create an
innovative system, while at the same time preserving basic
Civil Service principles for our DHS loyal, effective, and
hard-working employees.
Our Department has an incredibly important mission.
Whatever system we develop must be mission-centered first and
foremost. Day in and day out, our mission is preventing
terrorist attacks within the United States, reducing the
vulnerability of the United States to terrorism, and minimizing
the damage and assisting in the recovery from terrorist attacks
that do occur within the United States. The design must
facilitate our ability to perform this mission. In order for us
to achieve this mission, the system created must be
performance-focused, contemporary, and excellent. The system
must generate respect and trust and be based on merit
principles and fairness.
We have a responsibility to put into place a human
resources management system that meets employees needs, while
at the same time creates a high performing organization, one
which will effectively help us fight the war on terrorism. The
American public is depending on us to create such a system.
The bottom line: the world has changed, jobs have changed,
missions have changed, and our human resources system needs to
change as well to support this new environment. The current
system, while it has many positive features, is insufficient to
meet our needs and the different circumstances that we have
faced since September 11.
In order to successfully lead implementation of the
national strategy for Homeland Security, the Department must
excel at the management of its most precious resource: its
people.
We are and have been following a process, and are committed
to following a process that ensures maximum collaboration with
our employees and their representatives, stakeholders, and
subject matter experts. We created a Design Team of DHS front-
line employees and managers, union representatives, and HR
professionals from OPM and DHS. This team began its research
and design work in early April and presented to a Senior Review
Committee a wide range of options for pay, performance
management, classifications, labor relations, adverse actions
and appeals at the end of September. Their commitment and hard
work have been absolutely exceptional, and we owe all of them a
big and a gigantic thank you.
The SRC met last week for 3 days to deliberate the options
developed by the HR Design Team, and, as others have mentioned,
the team and the committee is very diverse. The committee had a
very candid and thorough and thoughtful discussion about the
options and key issues related to them. Committee members
openly shared their individual perspectives, and although there
was and will continue to be disagreement at times, the dialog
created new possibilities for a fair, credible HR system
through listening and mutual understanding.
One thing was clear: each and every SRC member agreed upon
the need for the HR system to support the vital mission of the
Department of Homeland Security and its employees. All SRC
members agree they wanted to develop a system that is fair,
credible, and transparent, and one that creates an environment
for openness, inclusiveness, and accountability.
Based on the discussions from the meeting, the SRC will
produce a summary report over the next 2 weeks. The report will
be available to members of this committee as well as the
general public. The report will be forwarded to Secretary Ridge
and OPM Director James, no relation. The Secretary and Director
will issue proposed new personnel rules for the Department
early next year. The proposed regulations will be available for
public comment for a 30-day period, and the issuance of the
regulations will also trigger the congressionally mandated
collaboration period with our employees' representatives, which
includes notice of the proposals. And I might add that even
though that is just being triggered now, the ongoing dialog has
been continuing with our employee representatives and employees
since April of this year.
We know change is difficult, but change is inherent in the
creation of the Department of Homeland Security. It is
incumbent on us to realize that changes which may result from
this process will need time to design in detail. We will need
to train our employees and managers, as we will need to assess
the effectiveness of these changes and continue to make
improvements. We are up to the challenge.
Thank you, and I welcome any questions you may have.
[The prepared statement of Mr. James follows:]
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Mrs. Davis of Virginia. Thank you, Mr. James.
Mr. Cohen, we have your complete statement, but you are
recognized for 5 minutes to either summarize or whatever. Thank
you.
Mr. Cohen. Thank you, Madam Chairwoman. Good morning,
members of the committee. I am Steve Cohen, and I serve as
Senior Advisor for Homeland Security at the Office of Personnel
Management, and I thank you for the opportunity to testify on
the design of a modern, merit-based human resources management
system for the Department of Homeland Security. As you have
indicated, Madam Chairwoman, I have with me Dr. Ronald Sanders,
who serves as Associate Director for our Division of Strategic
Human Resources Policy at OPM.
For well over a century, our Civil Service system has
served this country and its citizens well. Most importantly, it
has served as a source of strength and continuity during
periods of crisis in our history, and as a model for the rest
of the world.
Today, as never before, our basic Civil Service system is
facing a major challenge to its very existence. A system that
has served us so well in the past has grown out of date and
unresponsive to the needs of today and the likely needs of the
future.
The Homeland Security Act of 2002, which was signed by
President Bush just last November, presented to the Secretary
of the Department of Homeland Security, Tom Ridge, and to the
Director of the Office of Personnel Management, Kay Coles
James, an unprecedented opportunity to address that challenge
and, by so doing, to demonstrate to the world that what was
created 120 years ago can be updated once again to reflect the
needs of a new era while still holding true to those ideals
that we all value so very deeply: merit, veterans preference,
due process, and protections against prohibited personnel
practices, discrimination, and reprisal for whistle blowing.
Secretary Ridge and Director James addressed this challenge
to our Civil Service system by creating a Department of
Homeland Security human resources management design process
that has been, at their direction, inclusive, collaborative,
thorough, and timely. It has won the praise of the General
Accounting Office in a recent study entitled ``DHS Personnel
Design Effort Provides for Collaboration and Employee
Participation.'' It has won the praise of top managers of the
Department of Homeland Security and the presidents of the three
major employee unions within the Department: the American
Federation of Government Employees, the National Treasury
Employees Union, and the National Association of Agriculture
Employees.
The design process has demonstrated that an atmosphere of
mutual respect and trust can be created within which labor and
management can work effectively together, even when that
atmosphere was originally one of distrust and animosity, and
even when disagreements continue to exist. It also will shortly
demonstrate that human resource systems can be developed to
meet the unique needs of any organization and its employees,
and at the same time serve well the American people and our
obligation to preserve the world's greatest Civil Service
system and the core values I mentioned previously.
At the heart of the DHS human resources design process was
an outstanding design team, as was indicated by Mr. James, a
team made up of managers and employees from DHS, technical
experts from OPM and DHS, and professional staff
representatives from the Department's three major employee
unions, those that I mentioned previously. The nature of this
highly collaborative design effort has been recognized as being
the first of its kind and as a model for others to follow in
the future.
To meet the charge of Director James, the team cast a wide
net in its research efforts, examining HR policies and
practices in private sector companies, non-profit
organizations, State and local governments, and other Federal
agencies. The team met with highly regarded human resources
experts, academics, and practitioners, and with over 2,000
front-line DHS employees, managers, and supervisors at town
hall meetings and focus group interviews.
Relying on that broad approach as its foundation, the team
created the 52 human resources options in the areas of pay,
classification, performance management, labor management
relations, adverse actions, and appeals that were the subject
of 3 days of intense discussion just last week by a highly
select Senior Review Committee. I was honored to serve as co-
chair of that committee, along with Janet Hale, Under Secretary
of Management for DHS.
The report of that committee's deliberations is scheduled
to be submitted to Secretary Ridge and to Director James within
the next 2 weeks. That report will serve as the foundation for
the subsequent decisions of the Secretary and the Director that
will ultimately result in a human resources management system
for the Department that is both responsive to the uniquely
critical mission of the Department and to the need to protect
the basic Civil Service rights of its employees, and that will
also serve as a model for the rest of the Government.
Thank you again for the opportunity to testify. I will be
happy to answer any questions the committee may have.
[The prepared statement of Mr. Cohen follows:]
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Mrs. Davis of Virginia. Thank you, Mr. Cohen. I would like
to thank you and Mr. James both for agreeing to testify here
before us today.
I would like to now yield to our Civil Service Subcommittee
ranking member, Mr. Danny Davis. You have the floor.
Mr. Davis of Illinois. Thank you very much, Madam
Chairwoman.
Mr. Cohen, you just testified that Secretary Ridge and
Director James will have 52 options in terms of development of
a system. Would both of you comment on how you think they will
go through the process of ferreting out and making use of those
options to arrive at a conclusion?
Mr. Cohen. I would be happy to, sir. I think, first of all,
it is important to note that the 52 options were presented or
were developed as a way of, one, categorizing all of the
different possibilities, or at least most of the different
possibilities that could be considered in a broad range. When
we are looking at performance management, labor relations,
appeals, and the others, they covered as broad a range as they
could of possible actions to take. Those options were
considered very carefully, as indicated previously, by the
Senior Review Committee, and the report of that Senior Review
Committee, that which will go to the Secretary and the
Director, will basically summarize the discussion, the sense of
where the committee members were coming as they deliberated not
option by option, but the parts of the various programs that we
are considering. So the report will not, as I say, go from
option 1 to option 52, but, rather, it will cover all of the
significant parts of those various programs and will present to
the Director the various views of the committee members.
As the Secretary and the Director then review the materials
before them, they will have the options themselves, and they
will also have the summary of those deliberations, that is, all
of that material that we hope will be helpful to them as they
go about their thought processes.
Mr. Davis of Illinois. So they will be summarized and
grouped together.
Mr. Cohen. That is correct.
Mr. Davis of Illinois. Mr. James.
Mr. James. I would just echo Steve's comments and maybe
just give an example. For example, among the first five
options, one essential element is that they basically say the
status quo, release simply variations of the status quo. And I
would echo Steve's comments, that is, if there is some desire
to mix and match, that could be one element, that some portion
of what is current could come out of those first five options.
So I think the Secretary will get a document that will point to
him like options and will basically say these are the status
quo, these options have this element of fairness with regard to
due process that was a concern of the committee, and this
seemed to be the sense of this group of individuals or this
seemed to be the sense of this one individual.
As to the second part of your question, the Secretary does
plan to consult with the senior staff, obviously. He also plans
to meet once again, probably at the end of the first week of
November or the beginning of the second week of November, with
at least, at a minimum, the presidents of the three largest
unions who represent our employees. So there will be ongoing
dialog and ongoing collaboration and ongoing requests for input
and ongoing requests for feedback from a number of sources.
Mr. Davis of Illinois. It is my understanding that a Booze,
Allen, Hamilton report prepared for the administration noted
that Homeland Security employees who participated in focus
groups during the summer voiced reservations about pay banding
and other performance-based alternatives. Do any of the pay-
related personnel options reflect the concerns that were raised
by employee groups in the focus activity?
Mr. James. Mr. Davis, not only was that expressed at the
town meetings and in the focus group, it was also expressed at
the Senior Review Committee. And while I don't want to pretend
to summarize any consensus that came out of the committee,
there were individuals who spoke eloquently to the issue of if
you want to do pay banding, you really need to build
credibility and fairness and accountability in the performance
system, and it was said time and time again that a critical
condition precedent to any pay banding would be training of
managers, getting an understanding and getting a buy-in. And it
is my belief, again, I have not seen the report and I am not
sure it will be written, that those kind of elements that were
articulated at the Senior Review Committee will in fact go
forward and the Secretary will have those kind of words, those
kind of concerns in front of him.
Mr. Cohen. If I may add to that, sir. I agree totally. In
addition to that, as was indicated earlier, the options do
obviously contain a broad range of possibilities, and the
status quo is always one of them, and that is in fact reflected
in one of the options. When we talk about the General Schedule,
for example, that is there as it presently exists, and it is
there also with modification. So my point simply is that we do
believe that the design options that were put together reflect
this broad range, that which would indeed reflect the concerns
of the employees and others who feel they like the
predictability of the system that presently exists, along with
others who believe that this is really the time for change.
Mr. Davis of Illinois. Thank you, gentlemen, very much.
And thank you, Madam Chairwoman.
Mrs. Davis of Virginia. Thank you, Mr. Davis.
Mr. Murphy.
Mr. Murphy. Thank you, Madam Chairwoman.
And thank you, panelists. I appreciate your being here. And
clearly as I read through many of these options, there is a lot
of work that has gone behind them, and I am sure a lot yet to
be understood, because they appear so complex. But let me ask,
in this process I think both of you alluded to the
inclusiveness issue here, working with groups along the way.
Can you elaborate on the extent that employee groups have been
involved in working on these plans, because obviously having
the early buy-in and working together is going to be
instrumental in maintaining that along the way?
Mr. Cohen. I would be happy to, sir. Our basic design team
consisted of employees and managers from the Department of
Homeland Security. It also consisted of a field review team
that had a large number of individuals, field employees and
managers, from the Department of Homeland Security who reacted
to where we were heading. As we indicated earlier, we met with
over 2,000 of the DHS employees and managers in our various
visits across the country to major locations of DHS employment.
These visits included town hall meetings as well as the focus
group meetings that we alluded to earlier. And their thoughts,
of course, were very much considered.
Also a major portion of this design effort and what made
it, I think, so unique is that part of the basic team itself
included professional staff from the three major unions that we
referred to earlier. So they worked with us, the union
representatives I am referring to, worked with us from day one
up through to today, and, of course, members of the Senior
Review Committee included the presidents of those unions. So we
really do believe that as part of this process we did the best
that we could to assure that employee views and the views of
their representatives were well represented.
Mr. Murphy. As you continue on with this and looking at
these many options, you are not going to be using all of them,
obviously, but could you describe the next steps in terms of
selecting the options that will be put into place? Will there
be a mixture of these depending upon people's job
classifications? Sometimes it appears least confusing if there
are multiple levels. Could you clarify what you are going to do
and how you are going to do that?
Mr. Cohen. Yes. The next step will be for a report to go to
Secretary Ridge and Director James that will include the
summary of the discussions of the Senior Review Committee along
with the options themselves. As Mr. James indicated earlier,
the Secretary and the Director will then not only obviously
carefully review with their staff all of those materials, but
they will be consulting with MSPB, they will be meeting with
the union presidents we mentioned earlier.
Mr. Murphy. Are you going to present all the options to
them or recommend certain ones proceed forward?
Mr. Cohen. I'm sorry?
Mr. Murphy. Are you going to be presenting all the options
to them or recommend that certain ones be put forward?
Mr. Cohen. To the Secretary and to the Director?
Mr. Murphy. Yes.
Mr. Cohen. They will be getting all of the options,
basically, which is a result of the product of the design team,
along with the results of the discussion on those options that
was held by the Senior Review Committee members.
Mr. Murphy. I am just wondering at this point if there were
some recommendations for certain ones to be implemented; that
there was some agreement among all the parties who have been
discussing this to say these are the ones that you think are
the most workable, fair, clear, transparent, etc.
Mr. Cohen. The discussion didn't go that way in terms of
the Senior Review Committee process, and that was rather
deliberate. We did not start with option 1 and go through to
option 52. Frankly, we thought it would be much more
productive, rather than doing it in that manner, to talk about
the major elements of the programs that we were talking about,
and when it was appropriate or when it seemed to fit properly,
many of the individual members would refer back to option 32 or
33 or option 4 or what have you. But we didn't either
discussion, nor will we present the report option by option.
What I think is important to keep in mind is that these
options really are intended to be conceptual in nature; I mean,
we could have added more. When you look at a pay banding
system, for example, there are a variety of different
approaches that could be used, and we certainly didn't make an
attempt to identify each and every one and present them that
way. So they are intended to be conceptual, and what we fully
expect is that when the Director and the Secretary sit down and
ultimately design what they believe would make most sense for
the Department, they will be looking at broad program elements
as opposed to specific options per se.
Mr. Murphy. All right, thank you.
Thank you, Madam Chairwoman.
Mrs. Davis of Virginia. Thank you, Mr. Murphy.
Ms. Holmes Norton.
Ms. Norton. Thank you very much, Madam Chairwoman.
Do you see what you are doing as a model for other
agencies? We have been trying to figure out how the
administration is going about this management reform involving
human resources. We didn't know whether DOD was the template.
We noted some differences. It seemed to be even more severe
than the statute setting up the Department of Homeland
Security.
I suppose I should be asking Mr. Cohen. Are you doing this
on an agency-by-agency basis? What are you doing?
Mr. Cohen. There are many who have asked the same question.
What we are doing, of course, is in response to really the
unprecedented authority that the Congress gave to the Secretary
and to the Director to develop a new personnel system for the
Department in the six areas that we talked about earlier.
Without that congressional authority, we wouldn't be able to
propose the design of the system as we are doing it.
Ms. Norton. Well, wait a minute. I don't recall that it was
specific authority for the DOD at the time they proceeded.
Mr. Cohen. No, this was contained within the Homeland
Security Act.
Ms. Norton. I understand that. But you said without this
authority you implied there is nothing you would be doing or
could do.
Mr. Cohen. We couldn't be basically reshaping all of those
chapters within Title 5 as we presently have the authority to
do.
Ms. Norton. Are you reshaping those because you regard
these functions that have been placed in the new Department to
be essentially different from the functions when they were
spread out among the other departments? And if so, how is that?
Mr. Cohen. Not that the functions are different, but I
think there are two issues here. One is the critical mission of
the Department of Homeland Security, which in many respects
makes the outmoded Civil Service system all the more outmoded.
The other is, as I was alluding to earlier in my statement, the
basic concern that we have for our entire Civil Service system,
and that, indeed, it needs to be updated and made more
responsive to the needs of today and the needs of the future.
We are looking at this opportunity to shape a personnel system
for Homeland Security that is indeed mission-oriented and is
reflective of the unique needs of the Department, but at the
same time one that can be used as a model for the rest of the
Government.
Ms. Norton. Well, of course, that is why we are going to
look at it very closely.
Mr. Cohen. Yes, ma'am.
Ms. Norton. This, in a real sense, is not like the rest of
the Government. That is why you were given the statutory
authority to do something very different, because the agency is
very different. The whole notion of defending the homeland with
an agency within the merit system is very different, I suppose,
from what DHS does or what the Department of Labor does and the
rest.
I found your testimony very thin, and I think the reason is
that we have called you as we had to, because we are about to
adjourn, I hope. We called you at a point before this report
was issued. Do I recall in this testimony you said there would
be a report in 2 weeks?
Mr. Cohen. Within 2 weeks, yes, ma'am.
Ms. Norton. So this is a kind of, we are going to try to do
everything right testimony, and I suppose without the report or
your willingness to talk about the report at this time, it is
difficult to get to what is really happening with respect to
this process. Therefore, I must ask you what you regard as the
major differences between you and employees that have arisen
thus far in the process, since we get no sense of anything but
a broad process from your testimony?
Mr. James.
Mr. James. Can I have the question repeated?
Ms. Norton. I would like to know what are the major issues
between the Department and its employees at this time.
Mr. James. The major issue is one of trust and lack of
confidence in the current performance appraisal system.
Ms. Norton. Mr. James, you misunderstand me. By issue I
mean substantive issues.
Mr. James. Well, I will try to repeat what I heard and the
concerns I heard raised, and the concerns I heard raised were
about trust.
Ms. Norton. Trust is not a substantive issue.
Mr. James. Well, I don't know how to answer the question.
Ms. Norton. It is a relationship issue. You know, this is a
congressional committee. I am trying to find out what are the
major issues. Let me put it this way. What are the major issues
that you have been discussing with employees? You are very
proud of this design system. All I am trying to find out is how
it works. What are you talking about?
Mr. James. The major issues have been the ones that have
been outlined: pay, labor relations, the appeals process,
employee scale.
Ms. Norton. So what have been the major differences on
those issues?
Mr. James. Well I will give you the kind of concerns I have
heard echoed. The question is like if you have an internal
panel, will we still have due process; will you have union
participation; will there be employee involvement in that
process. But with all due respect, that goes to an issue of
trust, and that is a substantive issue.
Ms. Norton. Well, they seem to be very specific issues that
can be answered yes, you will or no, you won't, or let us work
it out.
Mr. James. And that has been the process, it is like let us
talk about how can we balance the agency's mission and actually
talking to people about what the mission is and talking about
how do you in fact still have due process and at the same time
get to a faster resolution. Because it is unfair to employees,
it is unfair to the agencies to have an interminable process
that goes on where employees are in limbo for 2 or 3 years.
Those are concerns that were raised by employees, those were
concerns that were raised by managers; and, in fact, on that
issue, what I heard, and this is my individual I heard, was
agreement. And I come from the experience of dealing with the
Teamsters, and I am just absolutely amazed that people are
talking, because that is the first major issue, is getting the
people to the table and talking about the issues and saying we
disagree about this. You know, what is the level of due
process? If you change pay, how can I be assured that I can
trust my manager not to do the old boy system or the old girl
system?
Ms. Norton. Madam Chairwoman, I see my time is expired.
Mr. James, I just want to say, in closing, that the issue
is not trust. What did Ronald Reagan say? Don't trust, just
verify? I don't think the employees can ever know whether
management, with changes from administration to administration
or from person to person, is somebody you can trust. The
question is does the system work. So I have great problems with
your framing these notions in a way that does not allow the
committee or the employees to know whether it is working
because of systems that are in place that would enable us to
know, and I tell you trust isn't one of them. I don't know what
that means as an approach to a system.
Mr. James. If you install new systems in response to
concerns being raised by employees, one issue discussed is how
do we measure that we in fact have done what we promised to do,
that we are being fair, that we are being effective; and part
of that is initially the commitment of continued talk. I come
from a private sector experience, 25 years mergers and
acquisitions, and the reason that 50 percent of the private
sector acquisitions fail is because they fail to involve their
employees; they fail to develop their trust, they keep them in
the dark, they don't let them know what is going on. And I see
that issue as fundamental to building any kind of platform in
terms of talking about issues.
Mrs. Davis of Virginia. Thank you, Mr. James.
Thank you, Ms. Norton. We may have time for a second round.
Mr. Van Hollen.
Mr. Van Hollen. Thank you, Madam Chairwoman, and thank you
for holding this hearing at this particular juncture; I think
it is important that we get an update before the
recommendations are forwarded to the Secretary and the
Director.
And I thank both of you gentlemen for being here today. And
I have read ahead to some of the testimony from some of the
others who were involved in this process, Mr. Gage of AFGE, and
Ms. Kelley of NTEU, and both of them have strongly praised the
process you have gone through as being a collaborative process
that did bring people together, it was inclusive, and so I
congratulate you on that. But I want to get to this question of
credibility and trust, because now as I understood your answers
to Mr. Murphy's questions, these 52 options are now being
forwarded without being further condensed, really, they are
being forwarded to the Secretary and the Director, is that
correct?
Mr. Cohen. That is correct, along with an analysis of their
evaluation by the Senior Review Committee and others.
Mr. Van Hollen. But among those 52 options are obviously
very different routes that can be taken on each of these
issues, like employee rights, grievance process, and all that,
isn't that correct?
Mr. Cohen. That is correct, sir.
Mr. Van Hollen. Right. So the credibility that you have
gained by making this an inclusive process, and that will
disappear tomorrow if what happens is those 52 recommendations
are forwarded to the Directors and all of a sudden they come
out with conclusions, it would seem as if this whole process
had been wasted time because they are the conclusions that are
most diametrically opposed to the interests and rights of
employees. It will all be seen as a big sham if that is the
final result. So I am a little troubled by the fact that this
collaborative process, this group is not, and I don't know if
Mr. Murphy was suggesting this, but in listening to your
answers, I thought it would be a good idea, if the people who
spent the most time looking at these issues maybe narrowed the
options a little more so that out of this process didn't come
recommendations in the final form from the Secretary and the
Director that were least beneficial to the employees, because
that trust that you said is a little bit shaky, but I think you
have gained some trust in this collaborative process, but it
will be gone tomorrow if this all looks like the books were
cooked from the beginning with a predetermined answer.
I would like you to respond to that.
Mr. Cohen. I would be happy to, sir. I indicated that we
didn't specifically eliminate options, but maybe I ought to put
it a little bit differently and better. The result of the
discussion will show what was discussed and obviously,
therefore, what wasn't discussed, and it will make it clear, or
we will make sure that it makes it clear, those options that
really were not discussed by the committee and, therefore, by
definition, were not considered to be significant enough or
important enough or did not get the support of various members
of the committee where that exists; and that will be made
clear.
But beyond that, the process will not end with the report
of the committee and the options going to the Secretary and the
Director. There will be discussions with the union presidents.
There will be further consultation. There will be consultation
with MSPB and others. And there has been a commitment made by
the Secretary and others throughout the Department of Homeland
Security and certainly echoed, to the extent that we can, at
OPM, that there will be collaboration and involvement with the
unions and the employees and representatives in the development
and implementation of whatever it is that ultimately is
resolved or developed.
Mr. James talked about trust, and that is really important.
The other, I think, major aspect here to consider is the unique
mission of the Department of Homeland Security, and why that
unique mission, we believe, creates the need for different
systems. It creates the need to look at, for example, in the
labor relations area, the scope of bargaining and the timing of
that bargaining when critical conditions develop; or the
appellate process or whatever. It is that unique nature in that
organization that is responsible for keeping this country safe
that forces us to take a look at how these processes work that
were really developed for a totally different age.
Mr. Van Hollen. Just to very quickly followup. I appreciate
that. As I read the testimony, there is a recognition of that
on all sides, that we need to make sure that the system is
consistent with the mission. But even within those parameters,
as your report shows, there are lots of different options. I
mean, let us just take the issue of having an independent
appellate board. I mean, it may be true that you need to have
an expedited procedure. I think the critical issue, as one
example, is the independence of the board that is resolving
disputes. Because if it is a body that is clearly answerable
primarily to the Secretary or the Director only, and doesn't
have independence, it is not going to have any credibility with
the employees going forward. That is just one example. There is
a big difference between negotiations and consultation when it
comes to bargaining rights.
So within your 52 options there is lots of room for
maneuverability, and what I am suggesting is if you forward 52
options to the Secretary and Director, and they end up with a
proposal that is at the end of the spectrum that is least
favorable to the rights of the employees, then I think the
whole process, which currently has credibility, will become
discredited.
And I thank you, Mr. Chairman.
Mr. Murphy [assuming Chair]. Thank you. I guess it is back
to me for some questions here.
And a lot of this comes down to, I guess, what is going to
be in the reports. Let me ask, first of all, is there going to
be a draft of this or are you going to be releasing the whole
report in its final form when you come up with this?
Mr. James. One of the things that the Secretary has decided
is that in order to make sure that the report fairly and
accurately reflects the views of the members, he has decided to
extend the process slightly so that the report can go in draft
form to every single member of the Senior Review Committee so
they can make comments, edits, criticisms, and the like. So the
answer to the question is no, there are not going to be a
public draft, but the Secretary has committed to making sure
that while people may disagree with what was said, that their
views were accurately reflected. And that is why it is going to
be at least probably another week or two.
Mr. Murphy. When you say not a public draft, does that mean
we are included in the public, members of this committee?
Mr. James. No. Congress will be one of the first after the
members get their views in, and then the report is considered
final, absolutely.
Mr. Murphy. It is critical that the DHS' new human capital
system is linked to the DHS strategic plan. But has DHS
implemented a strategic plan? Does the Department plan on
implementing a personal management system that supports and
facilitates the strategic goals outlined in the strategic plan?
Is there a strategic plan?
Mr. James. There is a strategic plan in progress that is
being staffed currently, and that plan will obviously be
impacted by the elements from the various options that the
Secretary and Director James decide that will go in the
regulations; and that will further determine the balance of the
strategic plan.
Mr. Murphy. And I would think that these two have to be
working together.
Mr. James. Pardon for the interruption, but they are
inextricably intertwined. The answer is yes.
Mr. Murphy. So we can expect those reports to be paralleled
reports? I am just curious what the timeframe is and knowing
what the strategic plan is, along with the human capital plan,
timeframe-wise.
Mr. James. If I can get back to you on that, but let me
sort of walk at it this way. Hopefully, after consultation by
the Secretary and with Director James, the regs will hopefully
be published early next year. There will be a comment period
that is required, so we are probably talking about early next
year before we have final published regulations. And we are
going to need what are going to be the final regulations, the
final published regulations before we can complete our
strategic plan and begin that process. So I think my best guess
is that we are talking about the spring or late winter of next
year.
Mr. Murphy. OK. One other line I want to ask about, and
that is as people from Homeland Security are working here,
there inevitably will be times when this clashes with the
public, as they try, for example, at airports or aspects of
interfacing directly with the public and the public may feel
inconvenienced as luggage is taken and reviewed, etc. How will
these plans work in terms of making sure that if public does
raise some complaints about employees, that those are going to
be handled in a fair way? I mean, there obviously will be some
disagreements in terms of what really happened, and as someone
is inconvenienced, tempers may flare and they may say things
which may not always be accurate. We want to be fair for
employees here but obviously protect security. What are the
mechanisms in place for this to make sure that those are
appropriately weighted and handled to protect the needs of our
Nation as well as the employee rights here?
Mr. James. There are a couple of processes, and I am not
qualified to speak to one, but just as an overview, the
Department has hired an ombudsman. Part of the responsibility
of that office, which is independent of the Secretary, is to in
fact investigate, interview, inquire about complaints, for
example, of passengers who feel they have been abused or feel
they have been mistreated. So there is that separate,
independent component. And there is, within TSA, a review
process by supervisors and managers that is part of their
personnel process to in fact respond to inquiries, complaints,
and to do interviews and do investigations.
Mr. Murphy. Well, I know probably every member of this
panel has probably been stopped at airports checks, so I know
they certainly are thorough and fair about those things as
well.
Thank you.
Mr. Davis.
Mr. Davis of Illinois. No further questions.
Mr. Murphy. No further questions? Then I will just keep
going, then. Thank you, Mr. Davis.
I want to go back to some of these questions about what we
may expect here in terms of this. It is hard to guess right
now, because you are coming up with this report, the 52
options, etc., but it seems to me that a tremendous amount of
work has gone through this panel. And I know as I read through
these options, without having been to many of these meetings,
they are pretty difficult to understand in terms of what are
all the specific meanings of these phrases in here, etc., but
surely something must have come out of this in discussions with
the many partners at the table of seeing what are some of the
more efficient mechanisms to use. So let me ask about what you
may see as efficient mechanisms to use in evaluating employee
performance and meeting the strategic needs of DHS.
As part of this, have you reviewed what has worked outside
of the Government sector, what has worked in private industry,
what has worked with other labor management issues in terms of
implementing some of these options?
Mr. Cohen. Yes, sir, we have. That was a very important
aspect. In fact, more than half of the time spent with the
design team that started around April 1st or April 2nd was in
research and data gathering, that form, indeed, the bulk of the
time of the members design team. We did look at what other
governments were doing, State and local; we did look at what
the subject matter experts told us would make most sense, and
academics, as well as the literature search and all that we
could really do to see what was going on and what worked best;
and we think that the options reflect that. So, yes, that very
much was taken into account.
Mr. Murphy. So given that, I am just curious, then, because
I thought the idea was, when you are going to present this
information to the Secretary, that there is not going to be any
particular recommendations that come through all this. I mean,
I just would think that there would be something out of all
these options. You are saying this appears like it might work
for these kinds of jobs and this mechanism might work for these
job descriptions.
Mr. Cohen. Yes. What the Secretary and the Director will
get, of course, are the best thoughts of the members of the
Senior Review Committee and their staff, and further
consultation. So, sure, they are going to be getting
recommendations based on what the discussions told us and what
our literature search has revealed and everything else, so
certainly. But it is not going to be in terms of a specific
option, necessary, but rather in terms of a system. There are,
for example, when we talk about pay for performance or
performance management based systems, we look at those that are
time-based, that are basically the systems that exist today,
the General Schedule. You know, how long you have served in a
particular job is the basic determinant as to whether or not
you are going to get a next increase. We look at that. We look,
rather, at results-oriented, which is really where we believe
we should be going, with results-oriented systems, those that
focus on performance, those that focus on competency, those
that focus on the results of individuals, on teams, on
organizations. That is the type of change that we are talking
about; that is the type of thing that we think will be
important for the Department.
Mr. Murphy. Thank you, Mr. Cohen.
Ms. Holmes Norton, you have further questions?
Ms. Norton. Thank you very much, Mr. Chairman. I just have
one question about the process.
Look, I fully appreciate that when you are putting a new
human resources system in place, somebody has to do that,
management has to do that. You can't have that system put in
place by a group; that is not the point. I ran an agency when
it was very, very troubled, the Equal Employment Opportunity
Commission, so I know something about what management faces
when a system is completely up in the air and you are trying to
change everything; and, in a real sense, that is what I was
trying to do, reorganize from top to bottom. So everybody is
concerned about what is going to happen with her job, and that
is natural, but the buck stops with management. The question
then becomes how management deals with that buck.
Now, as far as I am concerned, you are already way ahead of
the game. I remember sitting here when the DOD reorganization
was before us, and there were bitter complaints from employees
that the consultation was a sham, that they hadn't been
consulted on many things, and I thought the whole process was a
total disaster; and you are having just the opposite being said
by your own unions, and that I want to say puts you way ahead
of the game, as far as I am concerned.
I also think you are in a quandary. It is true that there
is this long list of options and everybody would like to see
those options winnowed down, but at the same time management
has to understand what all those options are. I note a 30-day
period, I think it is in your testimony, after management has
chosen its version of the options, and I would like to ask you
about that period. I don't expect that during that period
everything is open for discussion and we can start all over
again, but I am wondering how you see that period being used by
all who want to comment, but especially employees, who are most
directly affected.
Mr. Cohen. As you indicate, there is a 30-day public period
comment that follows the issuance of the proposed regulations,
and then there is yet another 30 days. There is a basic 60-day,
minimum 60-day period reconciliation, consultation, and the
like that was written into the law itself. But that is minimum.
And I am certain that if there is the need for further
discussion felt by the Secretary and by the Director, further
discussion with the union leadership and whomever else that
they feel it might be necessary to consult with, I am certain
that 60-day period will be extended to the extent that it is
necessary.
No one is going to, I am sure, and I can't speak for them,
but I certainly feel comfortable in saying no one is going to
rush to judgment. As you indicated earlier, and has been
indicated, this is a very, very critical issue that we are
dealing with here; it involves the lives of all of the
employees of the Department, it involves our security, it
involves other aspects of the Federal Government. So these
issues are not going to be taken lightly, I am certain.
Ms. Norton. When I came to the EOC, I found out that the
APA, the Administrative Procedure Act, didn't have to be
followed. I, indeed, insisted upon following it in the way you,
of course, under the statute are doing, which is to say to put
everything out for comment and to receive comment. And I can't
say enough about how important comments were in keeping us from
making mistakes. You live only in your own brain and your own
head. The notion that comments are necessary is a fool's
errand.
Mr. Cohen, I must say I was pleased by your answer
regarding the period of time and that there is no rush here. It
is a whole great big agency you are dealing with. No one has
done it before. If the public is commenting, of course, what
they will do is they will write comments and you look very
closely at those comments.
Mr. Cohen. Yes, ma'am.
Ms. Norton. Is it possible that employees could have face-
to-face meetings, understanding that the parameters are limited
and that people are not negotiating? But assuming that comments
in fact help to improve a system, do you envision that the
comment period could involve face-to-face discussions and
meetings with employees about the final option or the proposed
option that is on the table?
Mr. Cohen. I don't want to preclude anything in terms of
the Secretary and the Director; that will ultimately be their
decision. They certainly are committed to meeting with and will
indeed be meeting with the employee representatives, without
any question. Whether they will subsequently feel that another
round of town hall meetings or something might be desirable, I
really can't speculate; I honestly don't know.
Ms. Norton. I appreciate your response.
Thank you, Mr. Chairman.
Mr. Murphy. Thank you, Ms. Norton.
Just as a reminder, members of the committee will have 5
legislative days to submit other questions, so if any members
will have questions, I hope you will get back to us in a timely
response.
I would like to thank this panel for participating, and we
will move on to the next panel now. Thank you.
I would like to invite our second panel of witnesses to
please come forward to the witness table. And first off we will
hear from two employee groups. I will go ahead and introduce
them as they come forward. John Gage, the national president of
the American Federation of Government Employees, making his
first appearance before this subcommittee. Welcome, Mr. Gage.
Beside him will be Ms. Colleen Kelley, national president
of the National Treasury Employees Union, who is also with us
today. Next we have Hannah Sistare, the executive director of
the National Commission on the Public Service, also called the
Vocal Commission. The bipartisan Vocal Commission has been
instrumental in making far-reaching recommendations to improve
the Civil Service. And last we will hear from George
Nesterczuk, president of Nesterczuk & Associates, who has a
long history of expertise in Civil Service reform.
I believe you all took the oath before. Am I correct? Thank
you very much. The panel will now be recognized for an opening
statement. We will ask you to summarize your testimony in 5
minutes time, and any fuller statement you may wish to make
will be included in the record.
I would like to welcome you, Ms. Sistare. Thank you for
being with us today. You are recognized for the first 5
minutes, if you are ready.
STATEMENTS OF HANNAH S. SISTARE, EXECUTIVE DIRECTOR, NATIONAL
COMMISSION ON THE PUBLIC SERVICE; JOHN GAGE, NATIONAL
PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES; COLLEEN
M. KELLEY, NATIONAL PRESIDENT, NATIONAL TREASURY EMPLOYEES
UNION; AND GEORGE NESTERCZUK, PRESIDENT, NESTERCZUK &
ASSOCIATES
Ms. Sistare. Thank you very much. Mr. Chairman, Congressman
Davis, and other members of the subcommittee, thank you for
inviting me to testify on behalf of the National Commission on
the Public Service on the performance management
recommendations made by the Commission and how they relate to
the pay system now being designed for the Department of
Homeland Security.
The Commission gave substantial weight to the role of
performance in assuring the future health of the public
service. Commission Chairman Paul Volcker introduced the
Commission report writing: ``Disciplined policy direction,
operational flexibility, and clear and high performance
standards are the guiding objectives of our proposals.''
The bipartisan group of public servants who made up this
Commission was united by a deep concern about the level of
public trust in Government. The decline in trust during the
past 40 years deprives our Government and Government officials
of the support they need, and it discourages talented Americans
from joining the Federal service.
Whatever the full range of causes, surveys have shown a
strong correlation between public trust and Government
performance.
The Commission identified several barriers to improve
Government performance, including: a system under which most
pay increases are based on time on the job and geographic
location; employee appraisal systems where nearly everyone is
rated superior, surpassing even Lake Woebegone, where everyone
is merely above average; pay caps, which in an ever-increasing
number of cases make it impossible to reward strong
performance; bonus systems that are so underfunded that they
are spread around like peanut butter to give everyone a little
taste; a conviction held by two-thirds of the Federal work
force that management doesn't deal adequately with poor
performance; and an organizational structure which produces
duplication overlap and gaps in program application, and which
is burdened with excessive numbers of political appointees.
How would the Commission recommend that the Department of
Homeland Security rectify such problems in its own HR system
design?
Organizationally, the Department's design is consistent
with the Commission's vision of mission-centered departments
with considerable operating flexibility. But also, to protect
against abuse, the Commission recommended that the authorizing
statute for each department specify the principles that would
underlie any personnel system that was established.
The Department of Homeland Security authorizing statute did
set out important core principles, rights and responsibilities,
but as Paul Volcker noted in speaking to this issue last week,
the principles and protections spelled out in the statute have
not been sufficient to assuage the concerns of many who will be
affected by these new systems. Clearly, employees are still
concerned about the assurance of fundamental fairness,
objectivity, and due process protections in a pay-for-
performance system.
In light of these concerns, the Commission and the National
Academy of Public Administration jointly sponsored a public
forum last week with the goal of informing and advancing the
debate about performance-based pay. From this discussion, we
were able to identify some lessons that have proven important
in the successful adoption of pay for performance in the
private sector, in GAO, and at the IRS.
There was considerable agreement among the participants
about the safeguards that were necessary for a pay-for-
performance system to be effective. The safeguards that most
felt should be assured at DHS and elsewhere are: a credible
appraisal methodology; a transparent system; a timely set of
processes; consultation with those affected; peer review,
possibly even by a neutral third party; ongoing communication,
including feedback from all involved; training of managers and
supervisors, who themselves would be evaluated how well they
manage performance. And as former Secretary Donna Shalala noted
in her testimony before this committee last March, you have to
have credible people in both political and career management
positions for such a system to work. And finally, of great
importance, training of employees to participate in the system.
To this list, Paul Volcker and his fellow Commissioners
would add the protection of careful and ongoing oversight by
the responsible leadership in the executive branch and by the
Congress.
Participants in the forum also identified several factors
for which implementers must be prepared: one, adequate time for
the adoption of such a system. GAO began laying its groundwork
many years ago, and this may require a phased implementation
starting with those agencies or units that are ready to do a
good job. Verifiable performance systems, where individual
performance is linked to organizational goals and sound
performance management systems, including agreement and buy-in
among all those who are part of the system; culture change,
which also takes time. Adequate funding. There must be enough
money to make meaningful rewards for a commendable performance.
Careful assessment. Pay for performance is very complicated
because it is difficult, once you get below the clear top
performers, to really make meaningful distinctions.
In conclusion, I thank the subcommittee again for its
interest in the Commission's work, and the Commission and the
National Academy of Public Administration hope these
recommendations made by participants at the forum will be of
value to the subcommittee in its work.
Thank you.
[The prepared statement of Ms. Sistare follows:]
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Mr. Murphy. Thank you, Ms. Sistare.
Now proceed on and recognize Mr. Gage. Thank you for being
with us today. You may proceed with your opening statement for
5 minutes.
Mr. Gage. Thank you. You have my prepared comments and
those reflecting the attitudes of our membership and employees
in Homeland Security regarding this process. I am sorry if my
remarks led many of you to believe that we were entirely
pleased with the inclusion in the system in this process of
developing these new personnel systems.
My experience last week in the 3-day debate, if you will,
left me with some mixed feelings. Much of the rhetoric and
theory behind, for instance, pay for performance, is something
that, as a negotiator of union contracts and someone who has
really worked most of their adult life in trying to develop
good performance plans that people have confidence in and also
that recognize the important missions of the management of
these agencies, I was a little bit lost in the lack of details
that are being put forward in these options. I have seen this
before, some high-sounding academic type plans, and I think the
round file is full of them. It is for agencies, I think, and
practical operational managers, and those are the ones myself
and I think Colleen tried to talk to last week when we were
there, that there really is a threat that some of these
theories really are a black hole of resources and maybe full-
time employment for human resource specialists.
Let me give you some examples. And, first of all, when you
look at the research, and I have heard a lot said this morning
about the research, not one of these pay-for-performance plans
shows any increase in employee productivity. Not one. I was
really struck by that when I looked at the research that was
done. Second, they all are admitting that there are problems
with employee acceptance of these systems. And I will give you
a good reason, and just one, and that is this idea that is
littered through the pay-for-performance options, and that is
forced distributions. Now, what that means is going into a pay-
for-performance system someone has to pay for it. And the way
these systems, the options are rigged is that there are a
predetermined number or percentage of employees that is deemed
up front that they will not get any money at all. That money
will then be given to high performers, with a couple cuts in
between.
The problem I have with that is that it doesn't reflect a
modern, and especially law enforcement type of work force. To
say that hard working people are no longer being measured
against a performance standard, but they are subject to a
predetermined cut of whether they will receive base pay, I
think that putting in a system like that will have no
credibility with employees, and it is a basic flaw of the pay-
for-performance systems. The reams of material that are going
to come down from some lucky consultant about all these
performance standards and all these technical ways to judge
performance are going to be a drain on resources, but they
really are false because an employee is not really being
compared to a performance standard and judged on what he does;
he is being compared to a predetermined percentage of employees
that, by definition, is being said that they will receive no
money and that the performance is not acceptable.
That is a cannibalism that I think destroys the type of
unity and cohesiveness that is needed, especially in law
enforcement. Most of our law enforcement people, in the border
patrol, in customs, and INS, really scratch their heads when
they look at how this system will be implemented. For instance,
some of our law enforcement border patrol, some see their
supervisors once a week, some once every 6 months. Others, for
instance, our adjudicators in the legacy INS, right now the
state of supervisor, and for a lot of reasons, is not good. We
have, for instance, 57 employees who are adjudicators, some of
them trainees, and they are supervised by two temporary
supervisors who are located in a building 30 miles away. There
has been a real problem in getting supervisors because of a
test that has been imposed by OPM, which really limits
management's judgment in determining who can be a supervisor.
Now, we have some suggestions, and I hope this committee
really interjects some practicality and some realism into what
is going on. When I hear the theorists say that we have to go
full speed ahead, we have to throw out the classification
system, we have to throw out all performance management, we
have to throw out the Federal pay system because the iron is
hot, and don't worry, managers, you are going to get criticism,
there is going to be disruption in the agencies, but take it
all up front, now, that is irresponsible. That doesn't match
the mission of this agency. That is HR theorists really
imposing a system that they don't know that it will work, and I
believe won't work.
Now, many of the operational managers, and I think this was
a good thing at the meeting that we had last week, after they
heard kind of a debunking of some of this theory and really
ideology, began to say, well, we can't judge whether it will
take away collective bargaining rights or union rights; we
haven't even seen this system, no one has seen this system.
There are some conceptual options that are up.
Now, I really think that before we decide on anything about
this system, that we ought to get some real meat and potatoes,
a little more chicken on the bone to take a look at this system
that is being talked about in these conceptual means, because
the harm this can do to an agency work force, especially one
that is good, especially one that is a law enforcement type of
work force, where that unity and that cohesiveness and that
teamwork are essential to getting this mission done, to really
drive a supervisory work force that is not equipped to do this
and can't make these types of discussions I think is something
that we ought to really take a look at, and I am hoping this
committee will moderate.
One thing that really irritates me, though, is to say that
even though we don't know what the system is going to look
like, the one thing we know is there can't be collective
bargaining and there can't be independent employee rights,
appeal rights. Now, that is a notion that I hope we debunked
last week. We have put up recommendations here, practical
recommendations. For instance, using our career ladder. We also
think that adding a grade at the top for super achievers and
solid techniques or leads would really go to solving the
problem of people topping out in grade.
Also at the bottom, Madam Chairwoman, on poor performers,
we think we have some answers to that on poor performers.
Nobody likes to see poor performers. I mean, our work force
certainly doesn't like to see someone who is not pulling their
fair share. But to determine that 20 percent of our people are
going to be poor performers, that is wrong and theoretical, and
can't be part of the system. I think that we can go into poor
performers in a better way. We have agreed already with
management, and I think that Colleen and I could sit down with
the agency managers and work out some systems on collective
bargaining and appeals in an hour; and that is to speed up
collective bargaining, to speed up the time it takes for
appeals. But this committee, and I think the American public,
really should stop and slow down this headlong plunge into a
new system that is based on some premise that there can be no
collective bargaining and there can be no outside independent
appeals.
Wiping out employee rights before a new system is known or
designed, implemented or tested, is just wrong. It will
certainly not enhance our national security, and it will end up
harming it, as morale plummets in the face of this confusion
and anger. The stakes are high at DHS. The pay-for-performance
ideas that appear to have found favor with some individuals in
OPM are among the most indefensible and dangerous. The agency
needs to slow down and think before it unleashes a program that
will be a competition among those who must cooperate and an
enormous strain on resources that are desperately needed for
the urgent task of national security.
I thank you for the opportunity to testify today, Madam
Chairwoman, and I would be happy to answer any questions.
[The prepared statement of Mr. Gage follows:]
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Mrs. Davis of Virginia [resuming Chair]. Thank you, Mr.
Gage.
Ms. Kelley, it is always good to have you back here
testifying. You are recognized for 5 minutes.
Ms. Kelley. Thank you, Madam Chairwoman.
Ranking Member Davis, distinguished members of the
subcommittee, thank you very much for the opportunity to
testify on the human resources management options that are
being considered for the Department of Homeland Security.
I have the honor of representing over 12,000 Federal
employees who are now in the new Department, and I am proud to
have served as the representative for NTEU last week on the
Senior Review Committee. This committee was the most recent
part of a process that, to date, has been OK. But the real test
for this process, as Mr. Van Hollen mentioned earlier, is what
final decisions are actually made by Secretary Ridge and
Director James, and if they are reflective of this process.
NTEU believes that in order for any new human resources
management system to be accepted by employees as fair and
ultimately to be successful, it is essential that it
incorporate a number of basic Federal employee protections.
Concerning labor relations, NTEU strongly believes that any
labor relations systems must preserve the right to organize and
to bargain collectively. The scope of bargaining and the
bargaining process must allow meaningful negotiations over
working conditions, and not simply consultation. It is also
essential that any new labor relations system balance the
agency's legitimate need to address national security matters
against the Homeland Security Act's statutory guarantee of
collective bargaining rights.
In the area of adverse actions and appeals for Federal
employees in the DHS, it is essential that any new DHS human
resource management system includes an adverse action and
appeal process that treats employees fairly and ensures that
their due process rights are protected. Employees must be given
reasonable notice and an opportunity to make a meaningful reply
before disciplinary action is taken against them. Employees
must be able to appeal agency actions to an independent
adjudicator whose decisions are subject to judicial review and
agencies should bear the burden or proving just cause for
actions taken against employees. In a workplace without these
bedrock protections, employee morale will suffer, which in turn
will adversely affect performance.
NTEU also strongly believes that in designing pay,
classification, and performance management systems for DHS
certain core principles must be honored and applied.
First, any changes must be justified by mission needs and
designed to minimize the burden on managers, on supervisors,
and employees to administer and implement the systems so that
all can remain focused on the mission to protect homeland
security.
NTEU does not believe that radical changes are needed in
the pay, performance, and classification systems. More
importantly, employees in Homeland Security consistently stated
this in the town hall meetings and focus groups. The basic
structure of these systems is sound, and they must be fair,
credible, and transparent to employees, but also to provide
opportunities to recognize and to reward superior performance.
This is not to suggest that NTEU opposes any changes in the
status quo. We believe some modifications could be made that
would improve the HR systems for the benefit of DHS and its
employees, as well as for the accomplishment of its mission.
Options that provide fairness by ensuring that employees who
meet all performance expectations identified by management must
receive annual pay increases that at least include the amount
of the General Schedule increase plus some reasonable amount to
recognize an individual's successful performance or a step in
the right direction.
NTEU also does not support diverting all or part of the GS
increase to fund a pay-for-performance fund, or trying to
implement a pay-for-performance system on a cost-neutral basis.
Many of the options prepared by the DHS design team would make
fundamental changes to the basic pay system for DHS employees
by eliminating the GS grade structure. NTEU does not support
these options, as we believe they are unduly disruptive to
employees, to the agency, and its mission, and are not
justified by business or mission needs.
The Homeland Security Act requires the Secretary and the
Director to review pay and benefit plans that are applicable to
DHS employees, and to recommend a plan to eliminate disparities
in pay and benefits, especially among law enforcement
personnel.
Among the issues that must be considered is the need to
provide 20-year law enforcement retirement to CBP officers.
Recently, DHS announced its ``One Face at the Border''
initiative and the creation of a CBP officer position which
combines the duties of three positions, customs inspectors,
immigration inspectors, and agriculture inspectors, into one
job. We have concerns about this initiatives impact on
maintaining the expertise of legacy customs, INS, and APHIS
inspectional personnel. We have written to Secretary Ridge and
expressed NTEU's belief that inspectors and canine enforcement
officers of the CBP should receive the same law enforcement
retirement benefits as those received by other Federal law
enforcement personnel.
In conclusion, NTEU supports the mission and the personnel
of the Department of Homeland Security. NTEU wants the same
thing that I believe everyone wants who has had anything to do
with the creation of this Department: we want a workplace
environment where employees can be successful and do the
quality work they want to do, and can be recognized and
rewarded for doing that work, and can be treated with dignity
and respect.
It would be a mistake to underestimate the impact that a
new human resources system at DHS could have on all employees.
A human resource system that is fair, credible, and transparent
not only can coexist with the mission of homeland security, but
it must coexist if employees and the Department are to be
successful.
Thank you.
[The prepared statement of Ms. Kelley follows:]
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Mrs. Davis of Virginia. Thank you, Ms. Kelley.
Mr. Nesterczuk, you are recognized for 5 minutes.
Mr. Nesterczuk. Thank you, Chairwoman Davis, Mr. Davis. I
want to thank you for the opportunity to express my views here
today on the issues that are before you. I was specifically
asked to address the questions of adverse actions and the
appeals process. Let me begin by making a comment about the
Senior Review Advisory Committee. I have a full statement for
the record. I just want to summarize the key points.
I was an observer in that process last week, I sat through
the public hearings, and it was a first-rate set of debates.
The staff prepared the members, I think, very well, they
briefed them very well; you saw the options packages that were
prepared. And if nothing else, they will serve as a reference
guide for other agencies around town who may be considering
various types of modifications and reforms to their Civil
Service rules. It doesn't mean that they would necessarily
undertake as broad or vast a set of changes as DHS is facing;
nevertheless, that compendium of options will be very, very
useful to a large number of agencies.
Let me address the questions on the adverse actions and
appeals procedures. Just so that we stay focused on what that
represents, it is a set of procedures that currently are fairly
cumbersome, don't necessarily serve all agencies well,
particularly an agency like Homeland Security, with a national
security and law enforcement focus. It takes a lot of time to
go through there, and there are cases that we have seen in the
past that have taken months and even years to finally
adjudicate.
I would underscore that 98 to 99 percent of Federal
employees will spend 20, 30, 40 years in their Federal careers
without ever going through that process. Let us keep in mind
that is a safety net for a very small number of employees that
fall afoul of the system, either violating the rules or not
meeting standards of performance.
Now, one of the things that is really wrong with the
current system, it creates a level playing field in effect
between management and some of these problem employees. There
is a great burden on managers to prove their case. There is a
perception, in effect, that a poor performer's judgment is
equal to that of the manager who wants to take the performance-
based action against him or her. In many cases managers have to
spend more time dealing with problem performers than with good
performers. That sends a wrong message to the system, to the
entire work force, and it creates an entitlement paradigm, in
effect, in the work force. That is one of the things that is
important for DHS to change if they are going to be a
performance-driven organization of excellence.
Now, again, let me underscore 98 to 99 percent of Federal
employees will spend 20, 30, or 40 years in their Federal
career without ever having to resort to an appeal. We are
talking about a very small statistical number of people. Now,
what kinds of reforms might DHS undertake? There is a variety
of options that are presented. I am not going to go through all
of those. We don't know which ones are going to be ultimately
recommended. What I found interesting was that in addition to
the status quo options, there were options that provided for a
little more of the status quo, a little less of the status quo,
as well as some that provided real significant change to the
current system; and those are the ones that I tended to focus
on because I feel some radical changes do need to be
entertained in the adverse action and appeals area.
Specifically, on pay for performance and performance review
situations, that should be the sole purview of management. None
of those questions should be appealable. Any pay determination,
any performance appraisal should be the responsibility of
management; it is management's job to effectuate those actions.
It should definitely be subject to review, higher level review
to ensure that there is fairness and uniformity in application
of the pay and performance systems across the organization, but
the results of those actions should not be appealable.
In the case of misconduct, I believe only removal actions
or suspensions of 30 days or longer should go through the full
appeal process. Those are very cumbersome. Those are the
instances where significant harm can be afforded an employee if
management makes a mistake; and management can and does make
mistakes, they don't necessarily walk on water in all
circumstances. So the appeal process should take that under
consideration.
Finally, what kind of adjudication? I think an external
panel to handle appeals to maintain some credibility in that
appeals process, when it is necessary to exercise it, is
probably the appropriate way to go.
Those are all options that are presented as part of the
reviews for the Senior Review Advisory Committee, so I have
touched on those. There are many others that are far closer to
the current status quo.
Let me make one final comment. We talk a great deal about
good performers and the soundness of the Federal work force,
and what a great work force it is, and I am a firm believer in
that; I have had hands-on experience in the Federal work
environment. When it comes to evaluating managers, however,
very often the debate turns sour. One would think that there is
a lack of competence in the management levels of the work
force, that we can't trust them to do their jobs, including
evaluating employees, and so we have to create all these
special safeguards and procedures to review their work products
and to second guess them.
I would remind you that managers come out of that same
Federal work force that we all think so highly of. It is not
like, 1 day, when they are selected to be managers, they take
dumb pills or stupid pills and all of a sudden lose all common
sense. So as we get through this debate, let us keep that in
mind. We are talking about basically the recruitment pool for
the management work force, and it is a fairly decent work
force. Thank you.
[The prepared statement of Mr. Nesterczuk follows:]
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Mrs. Davis of Virginia. Thank you, sir.
And thank all of you for your patience and being willing to
be here to testify today.
I will yield now to our ranking member, Danny Davis. Mr.
Davis, you have the floor for questions.
Mr. Davis of Illinois. Thank you very much, Madam
Chairwoman.
Ms. Kelley and Mr. Gage, am I to discern from your
testimony that collective bargaining and independent appeal
rights are two areas relative to options that you have some
serious concerns about and have really drawn a place in the
sand in terms of where you are probably willing to go with
that?
Ms. Kelley. Yes, Mr. Davis. Collective bargaining and
appeal rights are two of the critical areas. In our discussions
regarding collective bargaining, the idea of replacing
collective bargaining with consultation is one that I think
actually is totally opposite of what is intended by the act.
There has been a lot of discussion about need for change in
regard to the mission of the Department, and I think history
has shown, since September 11th, that when incidents occurred,
when changes need to be made in working conditions, that
employees did what they needed to do in order to make the
country safe and to help the Department be successful, and no
one was waiving their collective bargaining agreement saying I
don't have to do this or I don't want to do that because of
this agreement.
So I think the history and the recognition is there on the
part of employees and the union that when there are issues that
working conditions cannot be addressed before implementation
because of whether they are national security issues or
decisions that the Department feels it needs to make because of
information it has, which we heard a lot about last week at the
Senior Review Committee, was a lot of the information that the
senior executives have from intelligence briefings, of course,
are not available to and would not be available to the unions
and to employees; and I accept that. I accept there will be
those situations. But I believe that a framework can be
designed that acknowledges those legitimate situations, and
that they are not the rule for how we operate between the
unions and the Department, but that there are those situations
and that they may then have the need for what we would call
post-implementation bargaining should a situation last for a
long period of time.
And I guess going to that issue as well as the adverse
actions, one of the comments I would like to add to that Mr.
Cohen made on the prior panel, when he talked about these
options, he talked about them as conceptual; and there surely
are some of them that are conceptual, but I would suggest that
if you have looked at the 52 options, there are many of them
that are very, very specific, and that is for a very valid
reason. The options that NTEU helped to draft or support were
specific because we were trying to be responsive to the
legitimate business interests that we heard identified by OPM
and the Department throughout the design process. So we have
gone to great lengths to provide specifics that have been
responsive, and see those options that we have put forth for
support as much more than just conceptual.
Mr. Gage. I would just like to add that every argument that
was brought forth saying that some collective bargaining or
employee appeals were damaging to the mission of this agency
were debunked. Collective bargaining is the only checks and
balances that exist, as well as an independent employee appeal
for these personnel systems, and to get rid of them at a time
when proposals are out there that a manager or superviser can
determine an employee's base pay, to think that there won't be
mistakes I think is an illusion. Good managers like checks and
balances, good managers are not afraid of collective
bargaining, and good managers certainly want a mistake in
management down the chain to be able to be looked at and to be
handled fairly. It is just incredible to me that before these
systems are even devised, the first decision is that we can't
have collective bargaining and we can't have independent
employee appeals, and I think both of those statements are
wrong and illogical, and will result in any system that
management comes up with to have just no credibility in the
work force.
Mr. Davis of Illinois. Ms. Sistare and Mr. Nesterczuk,
could you respond to the union's positions relative to the
comments they have just made?
Ms. Sistare. Speaking to the Commission's report on these
issues, the Commission recognized the role for collective
bargaining, certainly, in the Federal system, and the
preservation, again, of the basic principles on which the
Federal system is established.
Mr. Nesterczuk. I think it will probably ultimately come
down to looking at collective bargaining in the proper context;
not isolated as an entity onto itself, but in the context of
certain kinds of actions. They will probably reserve certain
actions for management exclusively and will probably negotiate
with representatives on other issues. It is just difficult for
me to try to second-guess where that unity of thought might
occur.
Mr. Davis of Illinois. Thank you very much.
Mrs. Davis of Virginia. Thank you, Mr. Davis.
Mr. Murphy.
Mr. Murphy. Thank you, Madam Chairwoman.
Mr. Gage, you had mentioned some things that really caught
my interest. You talked about some of the employees really may
not see their supervisor perhaps sometimes once a week, perhaps
once in 6 months; they may not even be on the same site, and so
it would be hard to evaluate them. You also brought up a point
and I want to make sure I understand it. You talked about this
20 percent issue, that 20 percent will not do well. Do you see
the way that some of these evaluation systems go is much like a
bell curve or something, some who will be at the very top will
get big raises, some will be in the middle, and some, no matter
how well they do, will not see any benefits from this?
Mr. Gage. That is exactly it. I think the financing of many
of these options that are neutral are based exactly on that, a
bell curve where you take away from the bottom, even though
they may be producing according to their performance standards,
but just how the thing is defined and how it is set up, that
they are not going to be eligible for pay raises and that money
will be used to do the top. And that really is driving a round
peg in a square hole, because our work force is not made up of
these arbitrary percentages of poor performers and good
performers.
Mr. Murphy. I was struck by Ms. Sistare's comment before
about the Lake Woebegone effect; sometimes evaluations is
everybody is above average or superior. And I am sure you
wouldn't want to see a system like that too, because that could
be unfair in terms of rewarding people who are not performing.
But let me ask you about ways we can do this.
Is part of what you see in interference here, if there was
a finite amount of dollars and say we can only reward people so
much, so we are only going to reward those on top, that may be
part of the problem. But another part I wonder about is this.
When some of the organizations require teamwork, and some may
not, depending upon the type of job description, but some of
the organizations may require that. Do you see this as helping
or interfering with developing teamwork if they recognize that
some people are going to be getting the increase and some are
not on the team?
Mr. Gage. I think it is going to be terrible for trying to
continue the teamwork that we have in our law enforcement; it
just breaks away the entire unity and cohesiveness that law
enforcement organizations have been trying to build. And it
takes away from the mission. Most of these performance
standards, and I have been doing this for years, they are
gobbledygook; they really don't help a supervisor evaluate
employee performance. And many of the good agencies have seen
the time, effort, and the results of these type of really top-
down, heavily theoretical types of systems as just being a
resource drain. So I think for a lot of reasons, but especially
how these systems will break that cohesiveness in law
enforcement, you have to go slow and really determine and test
the effects this will have on employee morale.
Mr. Murphy. Well, then in terms of going slow, not for the
sake of going slow, but for the sake of being effective, I
assume you mean on that, as these reports come out, will there
be parts that you might be able to recommend and say that some
of these options may work better with implementing now in terms
of phasing them in, so some may work well with some
departments, but not others, so that we can be most effective?
Will there be some things you will be able to recommend?
Mr. Gage. I hope so. We have already made some
recommendations. For instance, on the whole collective
bargaining and appeals, I think that we can sit down and really
clean that up to make an efficient, speedy appeals and
collective bargaining system and just take that right off the
table. This delay and all that, we can take those straw men
really right off the table. And I also think some existing
systems we have, for instance, like career ladders, tinkering
with those solves a big one of management's objectives, and
that is let people move up according to their performance, and
that is the basic pay banding. But using the career ladders is
a system we already have; people know about. Just removing the
time in grade, where you can't move up until you fulfill a time
in grade, moving that out of it is certainly something we could
support and I think would help the agency right now in
recruiting and retaining some of these law enforcement
personnel.
Mr. Murphy. I might add, without having gone through all
these options in detail, but I also recognize with some
employees sometimes, in my own business that I ran or once when
I worked in a Federal program, that sometimes a person who may
not be getting the best rating, the answer is not that they are
a bad person or bad worker, it is just that is not the best job
for them. And I would hope that part of the options that might
go with this is working with the people in a very proactive
way, of saying, Mr. Smith or Ms. Doe, you are a great worker,
but we have to find another place for you to show that
greatness. And I hope that is part of the options that come
through in these things.
Unfortunately, I have to leave to go to some other
meetings, but I would like to continue our discussion at some
point about some of the issues you see about collective
bargaining and how we might protect it in a way that helps DHS,
helps the employees for all the mutual goals, as Ms. Kelley,
you outlined so clearly. We have mutual goals in this, and I
welcome the opportunity to continue those discussions with all
of you. Thank you.
Mr. Gage. Thank you.
Mr. Murphy. Thank you, Madam Chairwoman.
Mrs. Davis of Virginia. Thank you, Mr. Murphy.
Ms. Holmes Norton.
Ms. Norton. Thank you, Madam Chairwoman.
Mr. Sistare and Mr. Nesterczuk, I have a question for you
about pay-for-performance, because, when it gets down to it,
that seems to be what this is all about; that is the major
concern. In fact, it seems to be the major push of the
administration. One could argue that there is a structural flaw
in pay-for-performance that has nothing to do with the agency,
but originates with the Congress. Without adequate funding,
which, of course, depends upon us, what is the key pay-for-
performance from simply redistributing the scarcity imposed by
Congress? And agencies have seen what that means; that is
nothing new. And if you can't predict what Congress will do
each year, how can you know that pay-for-performance would
work? I would like both of you take a stab at that.
Mr. Nesterczuk. Well, I am a firm believer in the concept;
I have seen it work back in the 1980's in the old PMRS, the
Performance Management Recognition System, that we used to run
for merit-pay managers. It suffered, as you said, from the
funding scenario, the lack of funding, in that good performers
were very happy because they moved right through the grade
structure and up the steps, much faster than they would have
otherwise; so there was a favorable comparison to where they
might have been had they not gone into merit pay. The poorer
performers, moving more slowly, still had the old General
Schedule to say, well, at this point in this year or next year
I will be earning such and such, and, yes, I am now behind the
curve. And then some folks in the middle started to slip, so
there was a very adverse comparison compared to the General
Schedule, so that hurt. And that was a situation where you
started with the same level of funding and you basically
redistributed, reprogrammed available funds.
The expectations for any pay-for-performance system have to
be carefully managed to avoid that same pitfall in the future,
and to get it started with credibility, I don't see how you can
avoid adding more money, spending more in payroll than you
currently do. Eventually, as things sort out, you will get
redistributions that will start to mirror a status quo for a
good part of the work force, accelerate the better ones and the
slower ones will fall behind.
One thing that I would recommend that DHS do now if they
get serious about pay-for-performance, is to take the bottom
end of performers and withhold the normal pay increases, the
step increases within grades, etc., just withhold them as a
signal that some component of pay today will now be evaluated
on the basis of performance and awarded on the basis of
performance.
Ms. Norton. I am sorry, I don't know what you mean by
withhold. What do you mean withhold them?
Mr. Nesterczuk. Just don't provide the within grades or the
step increases of a poor performer that currently is basically
automatically awarded. There is a statutory requirement that
says, yes, you can withhold that for less than adequate
performance.
Ms. Norton. So you mean if somebody gets a poor
performance, at that point you would not allow.
Mr. Nesterczuk. Yes. Correct.
Ms. Norton. I see.
Mr. Nesterczuk. It requires first promoting a performance
management system, and then on the basis of that taking the pay
actions. But at that point you could start to change the
culture and get people to learn to accept the fact that, yes,
pay will be awarded on the basis of performance without
basically staying budget neutral at the beginning.
Ms. Norton. Ms. Sistare.
Ms. Sistare. The Volcker Commission felt that you did have
to adequately fund these systems to have them work. You raised
the issue if Congress did not. I think it is up to the
administration and the Department in adopting and selling such
a system to get buy-in, from Congress as well, that the system
has to be funded to be effective.
Ms. Norton. Well, of course. I mean, I just think you have
demonstrated what I mean by a structural flaw. Congress
couldn't if it wanted to bind itself to adequately fund any
system. And as long as we have the form of Government we have,
one has to wonder about a pay-for-performance system. I hope I
don't have to go down the things we are not funding now that we
promised employees. I see that as a fundamental question. Those
of you who are for pay-for-performance, you have to tackle that
question to be credible yourselves.
I want to know how the employee representatives respond to
Mr. Nesterczuk's notion that somebody gets a poor performance,
and as a result of a poor performance. You are not dealing now
with anybody except somebody who has been found to be a poor
performer. A person hasn't been fired, now. How do you respond
to the notion that you can withhold the in-step increases and
the pay for increases for that person?
Ms. Kelley. The current system provides for that today.
There is no need for a new HR system to allow that to happen;
it should be happening.
Ms. Norton. Even the step increases?
Ms. Kelley. Yes. That should be happening. If a manager is
properly trained and supported in the work that they are doing,
of evaluating their employees; and very often I think that is
the problem, is that managers are not provided with the
training or the support to make those distinctions about
performance and, therefore, they don't step up to that. But
that process exists today. If there is an employee who is not
performing acceptably in their job, they should be identified,
they should be given appropriate notice. What we call in our
negotiated agreements a performance improvement period so that
they can have every opportunity to bring their performance up
to an acceptable level. But during that time their within grade
is denied. So that is a process that exists today and should be
implemented today, and there is no need for a new HR system to
do that.
Ms. Norton. Thank you very much, Madam Chairwoman.
Mrs. Davis of Virginia. Thank you, Ms. Norton.
We do have several votes, but we have a few minutes before
we have to go, so I am going to ask a question to all of you.
Should employees have a right of appeal on all performance
appraisals if the Department creates a system where the
appraisal determines the amount of each individual pay
increase?
Mr. Nesterczuk. I will start.
Mrs. Davis of Virginia. Anybody can start.
Mr. Nesterczuk. No, absolutely not.
Mrs. Davis of Virginia. Ms. Sistare.
Ms. Sistare. At our forum, that view was expressed, but the
view that was held by a greater number of people was that there
should be an independent perhaps peer review of the entire
system so that there was an ongoing check to make sure it was
working.
Ms. Kelley. Yes, there definitely needs to be a process for
employees to appeal. The idea that they would be harmed
financially based on a decision that may not be based with ill
intent. I am not even assuming that is the starting point from
this, but everyone is human. Managers manage in different ways;
they are provided with different training, they have different
spans of control of the number of employees and the locations
of employees that they supervise; they have different first-
hand knowledge of that. And there needs to be a process to
ensure that there is credibility and transparency to the
system, or it will not be accepted by employees.
Mr. Gage. I would like to go even a little further. If you
don't have an independent review, an independent appeal, this
system will end up as one of patronage and basic unfairness,
and it will be management by coercion, intimidation, and fear.
But we are not talking about full-blown MSPB appeals. Most of
our contracts have provisions called mini-arbitrations, where
performance issues are worked out in an expedited type of
hearing, which is informal by nature and fact-finding. So there
is not a big time delay or a big resource issue involved with
appealing these things. But if employees do not see an
independent review, and if supervisors don't see an independent
review, I think the decisions are starting to be made in a way
that just doesn't go to judging performance, but is more toward
some elements in a work site that I don't think anybody here
wants to instill.
Mrs. Davis of Virginia. To those of you who said that there
should be an appeal on all performance appraisals, can you
explain how the Department could operate efficiently if every
appraisal or every performance-based increase or decrease, or
what have you, would probably trigger an appeal? I mean, how
could the Department operate efficiently under that system?
Mr. Gage. Everyone doesn't generate an appeal; however,
when one sees an organization this big, there are going to be
those situations which are blatantly unfair. And to let a work
force see that a supervisor can do something which is seen as
blatantly unfair, with no avenue or recourse, just spreads
through the work force and will just kill credibility in this
system. Usually in the pay-for-performance area it is not the
bottom-feeders that make the appeals, it is those people who
see themselves as outstanding and have always been outstanding,
have felt that way, and through arbitrary numbers they get
dropped down a notch. The good workers are usually the ones
that are upset by this type of forced distribution system.
Ms. Kelley. I would just add that NTEU has some experience
with agencies where they have pay systems that are different
than the GS system because they are not funded through
appropriated funds, and in our experience the assumption that
the system would be clogged with appeals just is not true.
Whether it is the FDIC or ATF or the SEC, there are a small
number of employees who use that process, and it is, in my
experience, as John described, those who are designated average
because of whether it is a forced distribution or just a
manager evaluation, that believes factors were not considered
that would acknowledge their outstanding performance and thus
would result in some additional pay for them.
So I do not think that there is any experience out there
that shows that it would bring the system to a halt. And if the
system is built, one that is credible and transparent that lets
employees know how they are being evaluated, that alone will
eliminate many of the appeals and bring them to a realistic
number.
Mr. Nesterczuk. If I might make a comment. It is not just a
question of efficiency or bringing the system to a halt; it is
also the responsibility of management to issue those
performance appraisals. They are not subject to debate; they
are not a tit-for-tat. Those managers basically assign work,
they evaluate that work throughout the course of the year. They
are in the best position to make an ultimate judgment as to how
the performance laid out for the course of the year. Plus they
have the perspective of looking at peers, a cohort, and, with a
second level review, an organizational perspective. To put that
up for grabs in some appeal process makes absolutely no sense
to me.
Mrs. Davis of Virginia. I am going to have to cut you all
off because I have to go vote. I do have some more questions,
and if I could just impose upon each of you, I would like to
send them to you in writing and get you to respond back for the
record, if you don't mind. And I do apologize. I would let you
stay here and come back and ask more questions, but it is just
me, and I don't want to hold you up.
But I do thank you all for being here today. And if any of
the other Members have additional questions for our witnesses
today, they can submit them for the record.
In closing the second panel, I would like to again thank
all of the witnesses for being here, and again I appreciate all
your input and all your expertise, and wish I could just sit
here and ask you a bunch more questions, but thank you all so
much.
The hearing is adjourned.
[Whereupon, at 12:14 p.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
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