Top federal executives made $187,094 on average last year

The top performers in the Senior Executive Service made an average of $187,094 in fiscal 2014, according to data from the Office of Personnel Management.

That’s about four times the national average wage, but it’s barely adequate for the job, according to some.

“People who have an ideological ax to grind because they’d like to shrink government in any way possible will find stuff to quibble about,” said John Palguta, vice president for policy at the Partnership for Public Service.  “I’m not offended as a taxpayer that wants to get their money’s worth.”

A chief financial officer in the private sector makes much more than a senior executive doing comparable work, he noted.

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“Many executives are managing billions of dollars and tens of thousands of people. They work 80, 100 or more hours a week. This isn’t a 9 to 5 job,” said Jason Briefel, a lobbyist for the Senior Executives Association.

OPM tabulated data from 7,534 SES members. Salaries barely changed from fiscal 2013. But 12.2 percent more SES members received performance awards.  Government Executive first reported OPM’s SES performance award information.

The 12.2 percent increase marks a rebound, although neither the percentage nor the average amount of the awards — $10,560 — quite reaches the levels seen in fiscal 2012.

Still, SEA interim President Tim Dirks said the numbers were encouraging “after a couple years of suppression.”

“It better recognizes the significant meaningful contributions that SES are making to their agencies, notwithstanding funding issues that continue to exist and limit awards that agencies give,” he said.

Unlike the General Schedule, in which pay is determined by rank and the years served, the SES follows a “pay-for-performance” system, in which members are supposed to be compensated in part on their job performance. Yet budget concerns led the White House and OPM to direct agencies to cap performance awards a few years ago.

But agencies cannot restrain executives’ pay indefinitely if they want to keep them, said Jeff Neal, a former federal chief human capital officer who is now with ICF International.

“You can’t keep squeezing the pay for too long when you have a system designed for a pay and a bonus component. All you do is push people out of it,” he said. “You already have a situation where more people at the [General Schedule] 15 level are saying that they are not interested in SES positions.”

The Lake Wobegon effect

In the fictional town of Lake Wobegon, the setting for a radio show of the same name, all the children are above average.

The same could be said of the SES. With compensation supposedly influenced by an SES member’s job performance, the most controversial finding in the report might be the rating system itself.

Most agencies use a five-tier scale to determine whether an executive merits an award or salary adjustment. In fiscal 2014, 3,003 members — nearly half of those for which OPM has ratings data — earned the top rating of “outstanding or equivalent.” Another 42 percent exceeded expectations. Just 21 SES members — 0.3 percent — received such low ratings that they got no money beyond their base salary.

That makes perfect sense to Dirks because of the rigorous screening required to enter the SES.

“You don’t get into the SES if you’re average; only if you’re excellent,” he said. “There’s no reason to believe that excellence won’t carry over once you’re in the SES. It’s not surprising to me that the majority of people rated at the two highest levels.”

But Palguta said he suspected a bit of grade inflation simply because managers do not want to tell hard-working executives that they aren’t the best at their jobs.

“The whole rating scheme is geared to gratuitious insults like, ‘You’re cool but you’re not outstanding,’” he said, adding that some Fortune 500 companies were doing away with multilevel ratings altogether in favor of more frequent feedback and metrics.

Pay hews to performance at agencies with scandals in their past

Yet Palguta cautioned against reading too much into the governmentwide figures. Agencies’ treatment of senior executives’ pay varies widely. At the low end of the spectrum, the Veterans Affairs Department, still reeling from personnel-related scandals, awarded bonuses to 36 percent of its SES members, a drop of 28 percent from fiscal 2013. Those awards aligned more closely with executives’ performance ratings than at any other agency except the Small Business Administration and Education Department, according to OPM’s analysis.

VA was the most frugal with top performance ratings. It ranked 19.3 percent of its executives at the highest level. That probably will not satisfy critics in Congress, however. The House passed legislation earlier this week to stop VA from spending more than $2 million in total on executives’ bonuses and awards in fiscal 2016.

The General Services Administration was nearly as stingy as VA with executives’ awards. And like VA, it was embarrassed not too long ago by a scandal involving SES members.

In contrast, OPM found the weakest relationship between SES performance ratings and pay at the State Department. It rated 92.4 percent of its executives at the highest level, yet gave bonuses to 47.4 percent.

Even though performance is supposed to be a leading indicator, it’s not the only one that agencies consider when handing out bonuses.

“Agencies manage their executive awards programs and grant awards accordingly, taking into account various factors such as budget, organizational results and executive performance,” an OPM spokesperson said.