The Foreign Service Journal, April 2006

A P R I L 2 0 0 6 / F O R E I G N S E R V I C E J O U R N A L 5 The first member reaction AFSA re- ceived to news that the administration had finally approved the phase-in of over- seas comparability pay — but only at the price of linking it to the conversion of the entire Foreign Service personnel system to a “pay for performance” (PFP) model —was to liken this trade- off to “a poisoned chalice.” While I am personally not so negative, this trade-off is extremely serious and entails real risks. It is impossible to measure pre- cisely its costs and benefits, not now and probably not ever. There are simply too many unknowns. Nor is it something on which AFSA has bargaining rights, so we cannot simply accept or reject it. It is a top management initiative and AFSA can either try to make the best of it or try to get it defeated legislatively. We have chosen the former option. Getting OCP for the entire Foreign Service has long been AFSA’s highest priority. We came very close last year. The entire House of Representatives passed it, without the PFP quid pro quo, despite White House opposition. But the Senate proved more difficult, and there is no reason to expect a dif- ferent outcome this year, particularly given the dire overall USG fiscal situa- tion. So AFSA is grateful that after five years of rejection, State Department management has won White House approval for OCP, albeit at a disappoint- ingly low initial level and with a long phase-in. Pay for performance is an unknown for most of us. From media reports of DOD/DHS efforts to convert their civil servants to a PFP system and the administration’s Working for America Act targeting the rest of the Civil Service, one can easily view it as menac- ing, ideological, and anti-employee. But it is clear from State’s own experience with the Senior FS conversion to PFP two years ago that it should be possible to make this work and have a win-win situation all around. The reality is that the present FS personnel system, with its rank-in-person, not in-job, annual evaluations, and competitive up-or-out system is inherently PFP already. So the changes in the system should be much less dramatic than many of our members fear. The primary trade-off for FS mem- bers will be the loss of the 3-percent automatic, annual, within-grade in- crease, which over a career accounts for close to half of one’s salary growth. In principle, this loss will be offset by an equally large pool of performance pay money to distribute based on relative performance. Details of the new sys- tem will be negotiated with AFSA after Congress has passed the enabling legis- lation and the OCP provisions. Our main concern is that the performance- pay funding is not guaranteed and could be reduced or eliminated for budgetary or other reasons. This concern is con- firmed by the provision in the draft WFAA that guarantees equivalent funding for only five years after passage. AFSA’s support for the trade-off is based primarily on one basic calcula- tion. Almost two-thirds of the FS that is overseas will receive close to a 20-per- cent salary increase when full OCP comes into effect. We reckon that this will offset much of the initial PFP risk, particularly if the Foreign Service pre- cedes the Civil Service in adopting it and its proponents want to demonstrate that it works. AFSA is very mindful that the FS has many disparate components and that members could easily find them- selves in situations that prejudice their competitiveness for PFP increases. What about those in long-term lan- guage training, specialists in small skill groups, or specialists who compete with generalists? We will negotiate to pro- tect all our members and construct a system that is fundamentally fair and efficient. We anticipate that the ulti- mate system will be much less winner- take-all than the PFP system imple- mented for the SFS two years ago. This process is likely to play out for much of the next two years, and we will provide regular updates and ask for feedback as it evolves. But although much work remains, AFSA believes that, on bal- ance, the administration’s FY-07 budget request offers an important plus for our members. n P RESIDENT ’ S V IEWS The Pay-for-Performance/OCP Trade-Off: Poisoned Chalice or Win-Win? B Y J. A NTHONY H OLMES J. Anthony Holmes is the president of the American Foreign Service Association. We will negotiate to protect all our members and construct a pay system that is fundamentally fair and efficient.