Investing in knowledge workers is important

Management consulting firm McKinsey argues, “Effective performance management systems [are] designed to help people get better in their work, and they offer clarity in career development and professional performance … companies that focus on their people’s performance are 4.2 times more likely to outperform their peers. Companies that focus on … organizational health also reap dividends in culture, collaboration, and innovation …”

Acting OPM Director Charles Ezell’s June 17 memo, “Performance Management for Federal Employees” focuses on the best approach for the majority of government’s white collar employees. That is relying on performance goals but the memo is silent on a core issue. To be fully successful, employees need to be involved in the goal setting process; that creates a sense of commitment. Goals need to be “challenging but realistic”. When managed effectively, the new policy should trigger better results.

However, the work of thousands is not suited to relying on annual performance goals. There are two large groups – highly educated knowledge workers and a related group where work assignments are based on proven individual skills. The latter group developed their unique skills through their job experience. With both groups it’s not possible to rely on performance goals. 

Knowledge workers

The idea of knowledge workers is not new. Management guru Peter Drucker coined the phrase in a book published over six decades ago. He described them as “high-level workers who apply theoretical and analytical knowledge, acquired through formal training.” He noted they “would be the most valuable assets of a 21st-century organization because of their high level of productivity and creativity.” 

Most have graduate degrees, although that was not true when Drucker coined the phrase. The traditional list of knowledge jobs includes physicians, scientists, engineers, economists, psychologists and lawyers.  The common characteristics – they “think for a living” and address complex problems where the facts are often uncertain. 

That makes it impractical to hold knowledge workers accountable for producing better results. Many devote their careers working, for example, to solve a societal problem like lung cancer without finding a solution. That makes it difficult at year end to confirm their work was productive. Often, it’s difficult to confirm, in the absence of breakthroughs, the best are more productive than the least qualified. 

Imagine what life in the U.S. would be like if government had not supported the best “thinkers” in solving society’s most difficult problems. Government’s role in developing computers and the internet is well documented. The military would not have had the nuclear bombs that ended World War II. Today, immunotherapy would not be available to fight cancer. The National Cancer Institute might not exist. The Federal Reserve System might not exist.

At the end of FY 2024, the FedScope website shows federal agencies employed over 38,000 medical officers, 5,000 economists, 144,000 engineers, 43,000 physical scientists and 44,000 general attorneys. Virtually all are paid significantly less than their counterparts in other sectors.  

A broader definition of knowledge jobs

There are additional jobs where defining performance goals is impractical. One that stands out is nursing. Degree requirements are now common for nurses; many have graduate degrees. But experience is important in skill development. In hospitals, the best nurses are often assigned to care for more acute and difficult patients. Federal agencies employ 110,000 Nurses (GS-0610).

Another, based on my experience, are the Community Supervision Officers (formerly parole and probation officers) at the Court Services and Offender Supervision Agency. The best are assigned to work with the most difficult offenders.

That’s also true in the many rapidly emerging IT fields. With those jobs and others where job assignments ride on proven expertise, performance cannot be assessed or managed with performance metrics or S.M.A.R.T goals. Federal agencies employ 101,000 information technology specialists.

There no doubt are other job series where goals are not feasible. Public health and criminal investigation are two possibilities. Senior incumbents in a series can address the question.

Historically, accounting principles have treated workers as a cost rather than assets, and that continues to be the basis for civil service systems at all levels of government. It’s a view shared by many politicians. The Reagan administration at one point proposed reducing the funding for the National Institutes of Health. Researchers would have had to shift their work to other research centers where they would have hired staff, probably at higher salaries, and invested in equipment and workspace, significantly increasing the costs. Fortunately, the plan was dropped.

Government is competing in very different labor markets

Pay survey data illustrate why the civil service system makes it difficult to compete for top talent. The example of nursing illustrates the point. A partial list of the nurse specialties includes Clinical Nurse, Psychiatric Nurse, Occupational Health Nurse, Community Health Nurse and Nurse Midwife. Certified Nurse Midwifes earn an average of $128,110 while Community Health Nurses earn $78,995.  

Engineers are a similar example. The average Civil Engineer earns $99,590 while an Aeronautical Engineer earns $158,772.

In both job series, along with all knowledge jobs, the best qualified – experts – can and do command significantly higher salaries. That’s ignored in administering General Schedule system salaries. 

The GS system is based in theory on average market salaries. Moreover, the Federal Employment Pay Comparability Act, drafted 45 years ago, requires the Bureau of Labor Statistics to report average pay levels by GS grade level, ignoring occupational and industry-specific differentials, as well as local market factors (e.g., commuting patterns). The data fail to show which, if any jobs are paid competitively.                                                                                                                                                                                                            

The pay differentials across labor markets drive home a key point – the rigidity and political caps on pay make the General Schedule badly out of sync with what’s necessary to compete for talent. Agencies have reported losing talent to employers offering more than double their GS salary.

Managing pay and competency models

The first time I saw competencies in use was a meeting with the nursing leaders at the NIH Clinical Center in 1990. Today, the idea is widely used and growing as employers switch from hiring based on degrees to key knowledge and skills. A proven model is based on developing a profile of the important competencies at each career stage, with the salaries at each level defined by salary bands.  

The NIH website defines competencies to include:

• “Knowledge: Information developed or learned through experience, study or investigation”
• “Skills: The result of repeatedly applying knowledge or ability”
• “Abilities: An innate potential to perform mental and physical actions or tasks” and 
• “Behaviors: The observable reaction of an individual to a certain situation. 

As discussed on the website, “Competencies are not only about what you know, but how you apply what you know. [Competencies] define expectations of your position (not tasks). Identify measurable and/or observable knowledge, skills, abilities, and behaviors, and provide flexibility to respond as job functions and technology evolve.” The idea “fits” managing knowledge specialists far better than the GS system.

The argument for relying on salary bands, instead of traditional ranges, is that the careers of knowledge specialists progress steadily as incumbents develop their competence. Their daily work activities may not change but at each career stage new knowledge and skills – new competencies – are important. At each stage, they are expected to address more difficult problems. Promotions from one stage to the next depend on demonstrated competence. Salary survey data are used to define the bands.

Competencies and salary bands are the proven basis for managing salaries in the demonstration projects. It’s not a new program model. The Navy’s China Lake demo created the model 45 years ago to emulate college faculty salary systems (Professor, Associate Professor, Assistant Professor, Instructor).

The proven planning strategy

My first federal client, where the focus was on defining salary bands and competencies, was CSOSA, now 25 years ago. At the time, CSOSA was transitioning from being part of the District of Columbia government to becoming a federal agency. Unfortunately, after months of meetings, the then head of the agency had problems and was forced to resign by OPM’s director. OPM rejected what we had developed and imposed the General Schedule pay system.

With the key job, Court Supervision Officer, a team of experienced CSOs identified and defined the important competencies. An important competency for recent hires, for example, is “writing skills” since they have to draft reports for judges. For senior CSOs, a key competency is the ability to switch instantaneously between the roles of “social worker” and “law enforcement” to be effective in meetings with offenders.

The strategy of relying on teams of agency people for planning is essentially the approach used when the National Geospatial-Intelligence Agency was formed years ago. It was also important in planning China Lake and the other demonstration pay systems. 

Relying on employee teams is a common practice in planning workforce programs in universities. It follows from the collegial culture. Employees understand their organization, its culture and employee issues better than any outside “expert”. They also know what competencies are key to good performance at each career stage. With guidance, they are fully able to develop solid programs that meet their organization’s needs and will be accepted by their co-workers.

Unfortunately, federal hiring, career management and pay policies continue to focus on degrees and job seniority, not expertise. Too often individual expertise is not recognized or rewarded. Seniority overrides performance. The goal should be to bring out the best in employees, to recognize their value and to engage them in improving agency results. It’s an investment that pays off.