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New pay plan great first step, but follow-through needed

Louisiana’s Department of State Civil Service definitely is moving in the right direction with its new proposed merit pay system. But now the State Civil Service Commission must follow through and one final step must be taken to ensure that the gamesmanship of the past gives way to improved state employee performance.

Presently, the system is such where if an employee gets an evaluation in the three highest of five categories, regardless of which higher category placed in an employee gets, if a raise is authorized, a four percent increase. The new plan would give a zero to three percent pay raise to those in the middle category, four percent to those in the second-highest category, and six percent to those in the highest, making it a true merit system and not a quasi-cost-of-living compensation method. Within that middle category, agencies will have discretion in handing out raises within that range. These will be based upon criteria identified by the agency. Cost-of-living raises that would be across the board still could be authorized by the Commission, with the governor’s approval.

Noted was the biggest objection to this would be that the evaluations on which the increases would be assigned were “subjective.” However, this is no real problem because they are same as being done now, meaning the present evaluations are just as “subjective.” Therefore, if they are perceived as satisfactory now, there’s no reason they should not be satisfactory for the future under this plan.

Yet the issue of the outcome of the evaluations is the remaining hurdle to having a truly beneficial merit system that realistically captures the concept. The latest three year average of ratings show over 99 percent of classified (the ones covered under this plan) employees were ranked in the top three categories, with about a third in the middle and almost half in the second-highest category of “exceeds expectations.” Common sense tells us that it is highly unlikely in any objective sense that fewer than one in a hundred employees in any large organization are the only ones not up to snuff, and that almost half are doing noticeably better than what is expected.

This tells us two things, either than expectations are too low or evaluations are biased upwards, or both. As a rough benchmark, a “normal” distribution would estimate about 2.5 percent each would be in the lowest and highest categories (presently, 15 percent are in the latter while the former is about one in every three thousand), around 12.5 percent each in the second-lowest and second highest, and the remaining 70 percent or so in that middle. Therefore, the next step of reform is to find a method that reflects more realistically performance on evaluations, and/or to raise expectations that have been set arbitrarily low. Unless these are done, more gamesmanship (by unrealistically loading most employees into the “exceeds expectations” category) will largely moot the reform.

If done properly and in time for the 2010-11 fiscal year, it will produce two salutary effects. First, it will induce more efficiency into the system because employees will perceive a stronger link between pay and performance, and many will elevate their efforts to produce better for the same or reduced overall cost. Second, it will chase out lower performers who have floated along, perhaps for most of their careers, doing a bare minimum to get what was perceived as an entitled four percent salary raise every year, as lower amounts or even none at all will not motivate them. Those unwilling to elevate will see they face separation in the future, or will consider alternate employment, or many of the more senior ones simply will retire. This will assist the state in cost-savings measures because then more vacancies than would have occurred toherwsie to be eliminated through attrition will appear. Alone, as these duties are spread around, this may constitute the necessary elevation of expectations, meaning no formal reform of the evaluation process may have to occur (although it should be studied).

Program changes and deletions may grab headlines, but if implemented correctly this change can realize substantial savings beyond most of what is being discussed by other state government cost-cutting commissions. Credit goes primarily to the Gov. Bobby Jindal Administration for the initial push, and then the Legislature (especially resolutions authored by state Rep. Mike Danahay) and its leadership for signaling that this change had to come after decades of inaction. If done right, citizens will get better service for less, and since they are footing the bill, they deserve it.

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