Today, I’m joined by Scott Kupor, Director of the Office of Personnel Management, or OPM, best understood as the federal HR department.
Before joining the administration, Scott was a managing partner at Andreessen Horowitz — better known as 16z — where he spent 16 years building the firm. His book Secrets of Sand Hill Road is widely respected in the venture capital world. Now, Scott manages talent for an organization of 2+ million people with a $7 trillion budget.
Thanks to Shadrach Strehle, Harry Fletcher-Wood, Emma Steinhobel, and the IFP team for their support in producing this episode.
We discuss:
How DOGE cut federal headcount — and what comes next?
Why agencies rehired employees they had just laid off
Why merit-based hiring is back
How few federal employees get fired for poor performance
What OPM can do without congressional help
A few days after our conversation, OPM rolled out techforce.gov, a program in which technologists can serve for a two-year stint in the federal government.
I would describe the Office of Personnel Management (OPM) as the HR function of the federal government. Would you accept that description?
I think of it as the talent management organization. Yes, there are HR policies that we promulgate that are relevant across government. But a huge part of our job is to make sure that we have the right talent in government, and the environment that fosters that talent. We’re trying to make sure that we have a culture and a set of people that can deliver on behalf of the American people. Talent maybe encompasses that better than HR.
What was it in your background that made you, as this administration saw it, the right fit for this talent function?
My career has been mostly in the tech community. I was at a startup called LoudCloud for about nine years — it ultimately became a company called Opsware. If you’re looking for other interesting books to read, my partner Ben Horowitz wrote The Hard Thing about Hard Things, which details his experiences there. Then I spent the last 16 years at Andreessen Horowitz, building up that firm, investing in companies, and sitting on boards.
What I hope I bring is a sense of, “What does it take to build high-functioning organizations?” Having been in a company for a long time, managed organizations, and then been an investor and seen thousands of companies — most of which don’t ultimately become Facebooks, Pinterests, and Airbnbs — you learn the core of the organizational dynamics that are required to make companies successful. As venture capitalists, we love to spend time talking about products, strategy, and all that stuff, and it’s all important. But the things that separate great companies from good ones, or companies that fail, often come down to:
Do you have the right people in the right roles?
Is the organization set up to be able to deliver the things we need?
Is there good communication and alignment with what the CEO wants the company to do and what people ultimately do?
Do you have a culture that enhances performance?
What I hope to bring here is a keen understanding of what makes organizations successful.
I want to start with layoffs, or RIFs — reductions in force — the technical term for these at the federal level.
The flurry of activity at the Department of Government Efficiency (DOGE) died down around the time that you were sworn in as Director of the Office of Personnel Management (OPM) in early July. There are some parallels you have with Elon: you’re a successful tech figure making your first foray into public service. Then some obvious differences: you’re less controversial, and you haven’t had a public falling-out with the President.
How do you see your approach as compared to DOGE’s?
To complete your comparison, the biggest difference between Elon and me is I have not created a set of massively successful companies. When you’re talking about a behemoth as big as the government — $7 trillion budget, 2+ million people — it’s very hard to incrementally change organizations of that scale. Elon and the DOGE team were a catalyst to say, “We have to think about things differently. We’re going to take an outside view. And sometimes to make change, you have to do something big and bold.” That was the energy that team brought. They did a great job. That work — as you’ve probably seen in the news — continues. There is lots of fraud, waste, and abuse that are still very actively engaged on by the members of the DOGE community.
What’s exciting about the role we have at OPM is, how do we:
Institutionalize the concepts that DOGE created?
Make fraud, waste, and abuse a day-to-day part of everything that people address in their government functions?
Think about efficiency as a top-level metric for government?
Think about all the talent-related things?
It’s perfectly consistent — the work that Elon and the DOGE team started and continue and the work we do at OPM — they’re all part of this broader heuristic of, “How do we make government function more effectively for and on behalf of the American people?” We ought to be able to deliver great services, but also do it at cost levels that are appropriate — that don’t generate $2+ trillion deficits every year.
You’ve talked to reporters, and you’ve been writing a weekly blog on the OPM website, which I’ve enjoyed. On a podcast called The Federal Drive, talking about cuts and headcount, you said you acknowledge there are “some places where we’ve cut deeper than was appropriate.”
In your blog post Right-Sizing with Purpose, you said, “Eliminating jobs is not something that should be taken lightly. It is a fundamental breaking of trust between the leader of an organization and the employees — both those leaving and those staying.”
The admin has fired civil servants very publicly, and you’ve cut headcount at the OPM. I’m curious how you think about striking the right balance.
I want to take issue with “The admin has fired a lot of people.” Let me make sure you have the numbers. There are a little more than 300,000 people who will have left the government by the time we get to December 31st. A bunch of those people left on 9/30 as part of the Deferred Resignation Program (DRP). But there’s still people who are working their way through to 12/31. Of those 300,000 people, there’s two buckets:
Probationary employees. Those were either one- or two-year tenured employees. They’re like at-will employees in the private sector — you can terminate them without going through formal, for-cause things.
Reductions In Force (RIFs). We decided, ”This organization doesn’t need to exist anymore. It’s not delivering what it needs to do — we can’t be all things to all people.” We ultimately just eliminate a function.
Those two things combined are roughly 25,000 of the more than 300,000 reduction in headcount.
That means +90% of the reductions are a function of people taking the DRP, voluntary programs for leaving government — Voluntary Early Retirement Authority or Voluntary Separation Incentive Payment — and natural attrition that occurred over the year.
I say that not to make light of it — it’s meaningful. We started with an employee base of about 2.4 million. We’ll be around 2.1 million at the end of the year. But I do think it’s important to understand that, despite all the press coverage around firings, the actual numbers are a very small minority of what happened. My interpretation of why a lot of those people chose to leave the government was, they probably said, “This is different from what I signed up for. I get it. There’s a new leadership team.” That’s within any employee’s prerogative — if they decide, “The organization is not what I originally thought it was, or the terms on which we’re going to do business are different.” That was a very effective mechanism.
Any time organizations go through change like this, it’s a difficult thing. Again, I don’t want to make light of any of the probationary or RIF-related actions. Those are things where you do break trust with employees. You’re saying, “For no fault of your own, we’ve decided the organization can no longer support these activities, and therefore we’re going to make a change.” Those can and should be done in a way that’s respectful to those employees. Also, you’re being judged by the employees who remain in the organization. They want to see how you treat those individuals and how you realign the organization coming out of that. Those are the opportunities that we want to make sure we’re focused on.
Maybe two clarifications before I move on: The admin attempted more RIFs than it was able to complete this year, because some of those were pushed back in court. But for these judicial processes, many more people would’ve been RIF-ed. Is that right?
We don’t know the honest answer to that. There’s been a ton of court cases in this first year of the administration. On the employment-related stuff, very few of those ended up adversely, relative to the administration’s position. The only one that I can think of was a district court opinion that the RIFs that were attempted during the shutdown period were halted.
Part of the Continuing Resolution (CR) that came out from Congress to end the shutdown was saying, “While we’re in a CR, you can’t do RIF-related stuff. If you noticed a RIF during the period, you have to withdraw that.” That was the only one that ultimately was halted. There was a ton of litigation around DRP, RIFs, and probationary stuff. Almost all of those were resolved in favor of the administration.
To your point, which is fair, in the intervening periods, it turned out that there were more people who elected into the DRP programs. Many of the agencies feel, “We’ve done some of the right-sizing through these voluntary mechanisms.” So we didn’t ultimately need to do those. It’s speculative in the sense that we’re trying to argue what might have happened had there not been intervention on the legal side. But the outcomes are the outcomes: about 25,000 of the total headcount reductions — about 9% — were through those adverse actions.
I don’t want to nickel and dime on the percentages, and this is valuable, because I didn’t know that stat. The point I am pushing here is: Whether through firings, or through aggressively encouraging people to take things like the DRP, the admin has certainly been trying to cut headcount and signaling to civil servants, “We’re going to need to trim.”
I agree with that. The directive that the president brought to the government was, “We think we can perform better services for the American people at lower cost.” The idea of reshaping the federal workforce to make sure that it’s focused on the right things that are key to the success of the administration, and doing so with efficiency in mind — 100% agree with you.
That’s a good thing. Everything we do in the federal government is spending taxpayer dollars. We have a real obligation to make sure that those are spent as wisely as possible. If we can use technology, automation, or organizational restructuring to improve service delivery and reduce costs, that’s exactly what we should be doing. But I totally agree with your broader point — it was no surprise. Elon was literally campaigning with the government. There was no question that if President Trump was elected, efficiency and rooting out fraud, waste, and abuse was going to be a central tenet of his administration.
As I’ve said on here, I’m open to the idea that Elon, you, and the President are right, and that federal headcount is too high.
But I want to push you here. You flagged that in some cases, maybe the headcount cuts were deeper than was appropriate. There’s been lots of rehiring over the course of the year:
The Internal Revenue Service rehired thousands of employees.
The National Weather Service brought back about 100 meteorologists after firing a bunch of them.
The Food & Drug Administration rehired employees.
The Forest Service asked staff who took the “hard fork” to come back because it’s fire season.
The Department of Health and Human Services (HHS) told about 500 laid-off employees they’re un-RIF-ed.
Why did that happen? Should that happen in an organization with a good talent function?
Having lived through these things in the private sector — in companies that I was managing, as well as companies that I’ve been invested in and on the board of — this is not uncommon, unfortunately. In the perfect world, you would get all these things right and layoffs would be a one-and-done thing.
My experience is, in almost all these cases, you end up with two potential problems:
Many times, you don’t end up cutting sufficiently. You think you need to do a 5% or 10% reduction, and it turns out the business was not sustainable at that level. You end up doing death by a thousand cuts, which is one of the most challenging things for a company to survive.
Sometimes there are areas where, in trying to solve the first problem, you push people harder and say, “What you turned in here is not sufficient for the goals we have. You’ve got to do more.” In those cases, sometimes you do overcut. There may have been areas that you didn’t realize were as critical as you thought, and/or you didn’t understand the staffing levels appropriately.
In a perfect world, you would have none of that. Unfortunately, that’s not reality, particularly when you’re dealing at the scale we’re talking about — a starting workforce of 2.4 million people. All the examples you cite are accurate. I don’t know what they add up to, but you’re talking probably thousands of people. It’s unnerving and unpleasant for people to have to live through that. You certainly wouldn’t wish that on anybody.
But the process of reshaping organizations unfortunately has that as a byproduct. That’s not a failure of the process. These are complex organizations, and none of us gets it right all the time.
There is an executive order that OPM is helping to implement, asking every agency to do “strategic workforce planning” every year; to put out a document saying, “Here’s how we’re thinking about our workforce, here’s the right-sizing we want to do, or where we want to do aggressive hiring.”
When I talk to people who have been in OPM, or in past administrations, their sense has been, “Agencies are awful at this.” What can you do to make agencies better at it?
You have to exercise your muscles to make them stronger. My impression is probably not that different from what you hear from other folks — it’s a muscle that most people haven’t exercised in a long time. It’s foundational to the budget process. A budget is a reflection of your priorities. Once you understand that, the question is, “Are you staffed appropriately to fulfill those priorities?” That’s the exercise we’re asking people to go through.
The good news, at least in this administration, is we do have a lot of people who come from the private sector, and this is not a new concept for them. I can imagine, in the broader career milieu of federal employees, maybe this isn’t a muscle they’ve exercised. But many of the leaders of these organizations have done this in their private-sector areas. I hope it’ll be a very effective process.
We’re trying to say, “You’ve submitted a budget. What are the objectives that align with that budget? Are those objectives the right ones? Are we doing things that support the broad priorities of the administration? Or are we doing things because we’ve been doing them for 20 years and no one figured out, are they statutory, or in concert with what the administration wants to accomplish?” That would be an opportunity to potentially reduce or reprioritize headcount.
In the past, when the government has done restructuring, headcount numbers go down, contractor numbers go up. That’s an abomination of the whole purpose of the headcount exercise. At some point, headcount is a vanity metric. The real metric is, “Are you being efficient? Are you spending money in a thoughtful way?” One of the things we’ve asked as part of these headcount plans is, “You should re-look at your contractor headcount.”
There’s great roles for contractors where you’ve got plus-ups that may be time-limited — where you have to bring people in. Sometimes you do contractors because there’s a particular skill set that we don’t think we can recruit or retain in government. That’s fine too. But we’ve created this shadow Full-Time Equivalent (FTE) organization of contractors. It’s somewhere two to three times the actual FTE headcount. We spend $750 billion a year on it. It’s totally reasonable for us to ask folks to do that.
If strategic workforce planning is important, should the big RIFs at the beginning of the admin have had a strategic workforce planning element to them?
I wasn’t here, and one of the things I’ve learned from being on boards and part of organizations is, if you’re not day-to-day inside the organization, you don’t understand all the ins and outs of what’s happening. Trying to Monday-morning quarterback it and ask, could’ve, would’ve, should’ve — I don’t think I’m the best person to do that. Maybe your next podcast should be with Elon, and he can decide if he wants to critique anything there, but I don’t think I have the context to be able to thoughtfully answer.
There have been a couple of folks from DOGE I would love to have on, and those offers are still on the table.
You just mentioned the federal government spends about $750 billion on contractors every year, and there are about 2x as many contractors as there are full-time workers. We pay contractors a significant premium to do this work.
Does that suggest federal headcount should be higher — and we should massively reduce the amount we spend on contractors?
The quick answer, which you won’t like, is maybe, but let me give you the reason for the maybe. If contractors are substituting for full-time employees, that’s a bad thing. I love contractors. Some of my best friends are contractors. They perform a very vital role.
Some, I assume, are good people.
What’s happened — you have to go back to Clinton-Gore. They were the first DOGE people. To their credit, they did try to do some meaningful work on efficiency, and they did a very good job on reducing top-line headcount by 200,000. [Statecraft interviewed John Kamensky, who led this effort.]
They got it down to about 2.1 million, which is where you are now.
The unfortunate thing was, that’s where you see contractors start to substitute for FTEs. It’s unfair for me to blame everything on the Clinton-Gore administration, because they’re not here to defend themselves. You see this in companies too. When they do restructurings, the Chief Financial Officer will say, “You need to cut 10% of heads.” Mark Zuckerberg made an announcement on December 4th at Meta that he’s cutting the metaverse significantly. More generally, he’s asked all of his managers to go back and cut 10%. The problem is some people will hear 10% and say, “I’ve got 100 people, I’m going to cut 10.” What Mark means, I believe, is, “Cut 10% of your expenses.” Maybe that means cutting 5% of your people and 20% of your contracts. So I worry about using headcount alone as a metric, because it doesn’t tell the story.
Maybe the right answer is we should have more FTEs and fewer contractors. That’s a better solution for everybody: you’ve retained the knowledge in the organization, it costs you less money. You referenced that memo we put out on strategic hiring. In my blog post, I was very clear that we would look favorably on increases in headcount that generate savings overall from a reduction in contractors. The reason for my “maybe” is, honestly, I don’t know what the right number is. The agencies know that better than I do. Part of this process is to hopefully push them to think about those trade-offs and get to a more optimal mix.
One concern is, if you’re reducing headcount, keeping the process the same, and not reducing what you’re asking agencies to perform, you reduce government efficiency, because you’re asking fewer people to do the same work.
I’m going to give you a yes-and-no answer. The no part is the assumption that the existing headcount is optimal. It’s hard to assume that. It’s a misnomer to say, “The government was this well-oiled, massively efficient machine.” If we’re starting for an efficient organization, we end up cutting things, and we don’t also revisit “What are the actual deliverables for that organization?” Then I agree. I’m not trying to be argumentative.
I’m being argumentative, that’s fine.
But there may be parts of the organization where we cut too many heads, and we didn’t reset our expectations on what should be done. Therefor,e we made a mistake and we’ve got to hire back those heads. This is not a broad statement, but the key assumption in my mind is, “Is the government optimally maximized for efficiency?” I don’t think it’s that controversial to say it was not.
But the real way you get to efficiency is — I’ll make this up.
“I’m HHS. There’s 20 things that I’ve been doing for the last 20 years. These 10, we absolutely have to do, they’re statutory, or they add a huge amount of value. Don’t touch those things. These five, we need to do them, but the organization’s not set up right, or we have too many people, or the metrics are wrong — let’s go fix that. Then maybe there are five where the honest answer is, they’re not statutory, they don’t add value, and we should consider reducing them.”
In a good financial-planning process, all those things are required.
This gets us to the question about how you engage with Congress. My worry is there are areas that are statutory — Congress has said, “You shall do X or Y” — and they’re low value. The Paperwork Reduction Act is statutory. It makes the Executive Branch’s performance worse [as Statecraft has discussed], but OPM can’t un-pull that lever.
How are you thinking about working with Congress on this?
There has to be a legislative agenda. We do have that. We work with the Office of Management and Budget (OMB), figure out the priorities, and then determine the right things to go forward. We’re going through the budget process for 2027 right now. We have submitted what are the important priorities to OMB. We’re waiting for passback — we’re in the sausage-making on budget and priorities.
There are things we cannot do without legislative authority. If we want to say, “Everybody at General Schedule (GS)-15 should make $300,000 instead of $159,000” — I can’t do that on my own.
What we can do — which is part of the opportunity and challenge in the Executive Branch — is there is a whole regulatory apparatus through which we can go through rulemaking processes. One of my positive surprises, coming into government, is there are quite a few degrees of freedom you have to use the rulemaking process to change a certain number of things. We’re going to have to do that.
We’ve got to start to crawl before we walk and run. We have to get to a budget, for example, before we can find substantive pieces of legislation that we can attach our objectives to. Order of priority: let’s get through the Continuing Resolution process in January, and hopefully we will have a budget.
Let me stop being such a pessimist and ask you about three things that seem to be making real changes to the hiring process:
In 2024, the Chance to Compete Act passed: a bipartisan bill which pushed agencies to hire based on merit as much as possible.
A court victory this summer for the administration overturned the Luevano consent decree, which barred the use of a particular objective screening test in federal hiring. Now you can use these tests.
The third is one you’ve championed: the move to a two-page resume.
This is a great example of where we can work effectively with Congress and then, through our rulemaking process, promulgate rules and advisory guidance that’s consistent with the rules. That’s what happened here. You got the Chance to Compete Act. Then, when the president came into office, he put out an Executive Order around merit hiring and directed OPM to promulgate the appropriate policies. If everything worked that way the world would be a much better place. Hopefully that’s a harbinger of good things to come.
Several things had to fall into place. The first was the Chance to Compete Act and the EO. The second was the Luevano decision, which goes back to 1980-81 — to the Carter administration. We used to use a civil service test called the Professional and Administrative Career Examination (PACE). It was demonstrated that it had a disparate impact: the results for minorities were lower than for others. The government entered into this consent decree — it just sat there for 40-plus years. We were able to reengage with literally the original plaintiffs and end that consent decree as part of this broader merit-hiring process.
The third piece that we have to do, and we’ve started, is make sure we have appropriate assessments. I would bifurcate it into:
Technical assessments: You’re applying for a financial analyst job — we ought to test, “Do you understand what a balance sheet looks like? Do you know what debits, credits, and discount rates are?”
Social-psychological assessments: “Are you a good team player? Are you going to be able to work well with others? Do you play in the sandbox well?”
We are further ahead on the psychosocial than the technical merit side. We have a group called Human Resources Solutions that leads this. We need to develop, where appropriate, the technical assessments. But we also put a Request for Information out two weeks ago to ask the private sector, “Here’s the long list of things that we think we want to do on the technical merit side. Are there things that we should consider from the private sector?”
“If you guys already have a test for financial analysts and it matches our analyst role, can we just buy that off the shelf?”
That’s exactly right. The directive that I’ve given the team is, “Let’s figure out what are unique government jobs, for which we have the only appropriate skill.” We have procurement officers. It’s not that those don’t exist in the private sector, but the rules of government procurement are pretty specific. We probably need to go build that test to figure out, “Can somebody be a good procurement officer?”
At IFP, we’re hoping to do some work to change that. It should not be that specific. I think at the Department of War there has been some movement on this incredibly arcane process.
Right. Under the existing process, unfortunately we probably have to build that test. But, “Can you be a nurse? Can you be a software developer?” Those tests exist. We need to validate them — to make sure they don’t have inherent biases or things that might make them not useful in the government context. But my hope is there’s a lot that we don’t need to create on our own. Then all we need to worry about is, “How does that test integrate into our broader USAJOBS suite?” That’s thing number one we’re working on.
Thing number two is making sure that job classifications reflect the use of these merit-hiring tests.
Why does the job classification system matter? There’s a bajillion classifications in the federal government for different roles. It seems ugly and clunky. But if you streamline those down to 80 job classifications, what does that give you?
A lot of things in government developed out of very risk-averse behavior where somebody got sued at some point. Now we’ve built this entire apparatus to never have to go through that lawsuit again. I don’t want to be in the business of defending lawsuits. But when you unpack these things, people have way overestimated the risk and way underestimated the upside value of having a more streamlined classification process.
That’s a common theme in a lot of these interviews: lawsuits are bad, but the odds of getting sued over this tend to be much lower than the most risk-averse actors think.
A lawsuit is just like any other risk that a business takes. Let’s try to assess the likelihood and the economic impact. We shouldn’t do things that invite lawsuits, but there are times where we might say, “The upside benefit of having 80 classifications instead of” — I think we have 614 or some crazy number — when you balance that against, “Are we making the hiring process so complicated that we’re not able to get great people to apply for these jobs?” That’s a trade-off we should make.
You started this question about the two-page resume. The honest answer is it should be a one-page resume. The only people who have long resumes are academics and people who work in government. It’s a test of your communication skills, “Can I convey what I think my qualifications are for this job that’s relevant?” You probably ought to be able to get that on one page. Because the resumes were ten pages to start with, two probably sounded better than one. My hope would be people realize that the value of a resume is to give a recitation of some of the things that you deem relevant. But if we have merit-based hiring assessments that complement the resume, and you do some interviews, I don’t think you need a ten-page resume — you probably don’t need a two-page resume. Maybe I should be able to send you my LinkedIn, and that should be sufficient.
Let me push a little more on the history:
Why are federal government resumes typically 10-15 pages?
Regular readers [see our interview with Judge Glock] will know that many job applications in the federal government have relied on “self-attestation,” where you just say, “I’m a master-level JavaScript coder.” That has been taken at face value.
Both those things seem wild. Where did they come from?
Prior to Luevano, the vast majority of jobs were hired based upon some test. Then we enter this consent decree and for 45 years — it goes back to this litigation risk-averse culture in government. “We have to let people do self-attestation because if we introduce a test, maybe that will also show disparate impact. Or maybe the Luevano consent decree is so broad that we immediately create a legal claim for somebody saying, ‘You guys are violating this.’” Those may have been well-reasoned ideas, but they go to the same cultural question, “Are we balancing the value of merit-based assessment relative to self-attestation?”
The self-attestation thing is crazy. It can’t be the case that you can represent that you have certain skills when you know you may not. Some of it may not be bad actors. I think I’m an expert at Excel. Compared to my buddies from private equity, I’m a kindergartner. My assumption is all those things built up — the ten-page resume, the self-attestations — from the fact that we were looking for substitutes for merit-based functional tests. My hope is that we have turned a new page where we can say, “We are now ready to go back to a more rational process of skills assessment and hiring that would include assessments as a key part.”
Once the system allows bad actors to game it, it creates this enormous pressure on people who don’t want to be lying. The only way to get hired is to fudge a little bit. Somebody’s trying to hire you, and they say, ”Just check those boxes.” That’s the only way the hiring manager will even see you.
I’m willing to start with the assumption that most people are good and well-intentioned. When people see that the playing field is not level, they don’t want to disadvantage themselves. Sometimes they’ll do things that may not be 100% truthful. The fundamental problem with non-merit-based hiring systems is exactly that — they can and will be gamed. Even in the merit-based system, it’s not going to be perfect. People may have an AI bot do the software development test for them. You can’t blindly go by, “Did they get 100% on the SAT?” as an answer to determine, “Are they qualified for this job?” Even in the merit-hiring principles, an assessment is one tool, but there have to be other things. At some point, there’s no substitute for an interview or some other form of determining people’s qualifications for jobs.
I’m thinking in particular of the Federal Aviation Administration hiring scandal that played out over the last 10 years. It was this big class-action lawsuit where the test was designed to fail a bunch of people and privilege a specific racial group.
People can use their skills for evil as well as for good, hopefully on net, we have systems and we design ways to them and hopefully roots that out. But it’d be crazy to think that there aren’t bad people out there who are either cheating on things and/or trying to disenfranchise certain groups through the way they developed a test.
In 2024, fewer than 6,000 government employees were removed from their jobs for poor performance or bad behavior through the Merit Systems Protection Board process. That is 0.2% of the federal workforce. Based on the private sector, in a given year, what percentage of people should be removed for not being good at their jobs?
There’s clearly organizations where everyone is truly world-class class and maybe the answer could be 0%. But if you look across the private sector, 5-10% involuntary turnover of employees would probably be where the 90th percentile of almost all companies would fit. 0.2% is way outside that.
It’s a function of a number of issues. One is that we have a performance management system that is not well run. 0.2% is exactly identical to the percentage of people that were ranked below meeting expectations that year. I don’t know if those were the same 6,000 people, but mathematically it’s about the same. 98% of federal employees in government receive a “fully successful,” which is a 3 or higher on a five-point scale. 70% are 4s and 5s, the rest are 3s, the 0.2% are below that.
The protections that we have put in place for civil servants can be very onerous and make it difficult — even for people who truly are not performing their jobs and/or who commit acts that are not deserving of [being] a federal employee. It’s very difficult, time-consuming, and expensive because of this whole appeal process.
We’ve got to have a performance management system that works. We also have to figure out ways to streamline that process — without compromising civil service reforms and patronage concerns — but getting to a system that allows this to happen. I don’t want to be cavalier, but I guarantee if you sampled everybody in every organization, they could tell you, “Here’s the two or three people who we don’t think are carrying their weight.” None of this is a secret. If you look at the Federal Employee Viewpoint Survey, one of the consistent things we see is people saying, “I don’t feel poor performers are well managed out in government.” These are endemic challenges.
I don’t think there’s anything evil about trying to have an organization where — if people are given feedback and can’t conform to the standards that are required — they ultimately decide, “You can’t stay in this organization.” That’s a fair, well-functioning organization.
In past conversations, people have lumped this into the problem of “broadbanding”: pay scales are compressed in both directions.
The bottom to the top pay scale should be wider. We put out guidance for the Senior Executive Service crew, effective for Financial Year 26. Not only are we limiting the number of people who can be rated above “fully successful” — 4 and 5 — to 30%. But we’ve also given guidance that 60% of the bonus pools should go to that 30% of the population.
We need to address both things. There should be way greater distinction for people who are truly knocking the cover off the ball: rewards, recognition, paid time off — all the things that we can do. We’re never going to pay people half a million dollars. I’m not advocating for that. But we could have a wider band and a much more disproportionate bonus pool. On the other end, we do need to have a system where there’s greater differentiation between a 1, 2, or 3, and across the full GS scale, so that you can reward behavior.
The third thing is you need to eliminate tenure requirements that drive the step functions in the GS schedule. I want to hire somebody and they can perform at a GS-15 level, but they haven’t worked the 10 years or whatever the tenure requirement is — that’s silly. We should hire that person and hold them accountable to a GS-15. I don’t care if they’ve worked one year or fifty. Those are proxies for success, but they’re not real metrics. At the same time, if somebody’s doing a great job, we shouldn’t have to wait 12 months to promote them. We shouldn’t make people sit on this plateau if they’re truly outperforming. Some of those are things that will require Congressional help. But we need to at least do all the things within our own authority at OPM to create a proxy for a system that fundamentally needs to be re-looked at by Congress.
The basic civil service pay scale is capped by Congress. How much of a constraint does that pose for you?
That’s a real constraint. I cannot change the top end of the GS-15 scale without Congress. That’s a legislative priority — whether it sees the light of day, your guess is as good as mine.
What can we do? One is basic education, which we do at OPM, but we can do a better job. We’ve got to help people understand all the tools that are available to managers. I didn’t know this, but OPM has the ability — for limited numbers of total headcount across government for critical skills areas — to approve higher compensation — up to a certain cap, but above the traditional GS levels. If a manager comes to us and says, “We need this technical person in this area, but I’ve got to be able to pay them more than I can pay at a GS-15,” we have authority to do that. It’s capped at 800 people. But there is a process by which we could go to the President and say, “This is an important area,” and the President could waive that cap or give us authority to do stuff. There are a bunch of tools that are imperfect, but — at least in limited circumstances for critical areas — [can help]. There’s Special Act Awards, there’s retention bonuses. There are other things that very well-educated CHCOs understand, but don’t always filter to the managers.
CHCOs?
Sorry, Chief Human Capital Officer, the HR heads in the organizations. I stumped you on an acronym in government. That’s good.
It happens all the time. I’ve got my Anki flashcards of horrifying acronyms — I’ll add that one to the rotation.
There’s a bunch of authorities we have that we need to educate people on and make sure they’re used appropriately. We should not arbitrarily hand out candy to everybody, but there are policies and procedures for this stuff.
The second thing — which goes to the classification and job description side — is through reclassification we can eliminate tenure and degree requirements from all job requirements. That will be helpful because there are some artificial barriers that are a function of that. I believe, and my team is working on it right now, we don’t need Congress to pass a law to do that. That would help. If we can’t change the pay schedule, some of it’s making sure we can hire people at a level that is commensurate with their demonstrated skill, instead of saying, “You’re great, but we’ve got to hire you at a GS-7 because you failed the tenure requirements.” We can and will do those things.
We’ve got to use our bully pulpit with Congress and, with the President’s support, say “There are particular things from a legislative perspective that could and should make sense here.”
The final thing we can do is provide regulatory authority around forced distributions of performance management rankings for people, and then correspondingly how that drives bonus-based compensation. Even if we can’t change someone’s pay grade, if they’re doing great, we can disproportionately reward them from a bonus perspective. I’m not nihilistic about, “We’re totally at the mercy of convincing Congress to do these things.” That would make our lives easier, but there’s things we can do — even in the absence of congressional action.
Some of my new colleagues, the inaugural leadership of the CHIPS Program Office, are doing a lessons learned project for IFP called Factory Settings. One of the biggest things they talk about is hiring. They got Direct Hire and Excepted Service Authorities — two ways you can do end runs around the GS scale. That enabled them to hire a huge amount of private-sector talent from Wall Street institutions. It’s hard to see where those folks would’ve come in absent that authority. But that took going to the White House and saying, “These 25 spots.”
There’s other agencies — the Securities and Exchange Commission, for example — they’re on a totally different pay scale because they’ve determined, “We cannot recruit and retain people.” I think the Defense Department has some authorities. There are piecemeal things we can do in the absence of wholesale review of the GS schedule. The answer may be — in this political environment, given the narrow margins that exist in Congress — that’s the way to do it.
You’ve been doing a big push trying to get young folks into the federal government. For some of the reasons you mentioned, it’s quite hard: the tenure requirements, to get into these roles you have to know how the system is played, the pay scale, and maybe the boringness of DC — the perceived boringness. The median federal employee is much older than in the private sector.
7% of the federal workforce is under the age of 30, versus 22-23% in the non-federal workforce. 42% of the federal workforce is over the age of 50 compared to about 33%. We definitely have a demographic skew.
What tools do you have?
We have two fundamental challenges in the government. One is — and this is not an ageist comment — we have an aging demographic in the federal workforce. If people stick to normal retirement timeframes, lots of them will be retiring over the next 5-10 years. We’re doing a bad job of replenishing that with a pipeline of people who are early-career.
Problem number two is, it’s particularly acute in areas where the pace of change probably requires people who have recent training. Tech and AI would be a great example. I can say this because I’m in the over-50 crowd: my ability to adopt new technology is less good than my 25-year-old daughter. She’s at a different stage in life and she’s grown up around these tools. We have a dearth of people who are modern in their thinking around some critical areas.
We have to solve both these problems. Endemic problems make this hard:
There are tenure or college degree requirements. We can solve those problems.
The hiring process is clunky. It’s hard to get through the whole process. We can solve that.
We can do more centralization of hiring through OPM and make it easier for people.
We’re not going to solve the pay gap problem, but if we can solve the leveling problem, that reduces the pay gap problem quite a bit.
We do have special authorities where needed for particular roles.
The other piece, and this is what I’m very excited about — we’re going to have some more news on this, hopefully shortly — we’ve got to tell people the exciting narrative about coming to work for government. One of my first meetings, the story I heard from one of the managers here was, “Generally, people have joined the government because of lifetime employment. That’s been the pitch.” I said, “Sorry to tell you, but number one, that doesn’t exist. People have been lying to you if they’ve been telling you that. Two, that’s a terrible marketing message for an under-30 person who’s early in their career. They’re not making a decision for 40 years when they take a job. They’re making a decision for two or three years.”
We need to message, “Here’s all the cool stuff you can do. There are critical problems. You can do it at a scale that you can’t even see in the private sector. We can eliminate a lot of these bureaucratic and other things that prohibit you from being able to progress through the organization as you demonstrate your skills. By the way, it’s totally fine for you to go back and forth between the government and the private sector. If you want to come to government and you think it’s awesome for two or three years, and then, God bless you, you want to go work for Zuckerberg at Facebook — that’s awesome. Go do that.”
Let’s not build an entire system around a tenure-based promotion and career path that isn’t consistent with how people in the early-career stage think about the world anymore. That was probably true in the ‘50s and ‘60s, and maybe even in my generation — we thought about more lifetime-employment things — but that’s not how the world works anymore.
This is critical. If we don’t solve this problem, we certainly won’t solve the tech and AI needs the government has.
Are you familiar with the Revolving Door Project? They’ll have a fit when they read this.
There’s no question — there are some bad actors. I’m sure some people will take advantage of it and will violate the conflict-of-interest rules. I don’t want to make light of it. But I don’t think that means we should force people into 40 years of indentured servitude working for the government — because we’re worried that there are some bad actors out there. Maybe there’s a happy medium somewhere.
