Establish Broadbanding Systems

2. Provide agencies with flexibility to establish broadbanding systems
built upon the General Schedule framework.

The director of OPM should submit proposed legislation to Congress by
fall 1994 that would (1) authorize OPM to approve the banding of GS
grades (and associated pay ranges), subject to the condition that the
content definition of any band be linked to the GS grade-level
definitions, and (2) reduce the restrictions on the demonstration
project authority so that it can be a more proactive management tool.
The proposed legislation should also include provisions making clear
that matters relating to the setting of base pay rates are not
conditions of employment subject to collective bargaining. Within one
year of enactment of this legislation, OPM should publish detailed
information on the initial set of options available to agencies under
these new authorities.

OPM should work with agencies to develop standard banding patterns that
incorporate job banding, grade banding, and within-band pay progression
schemes. Some of these standard patterns may permit the incorporation of
blue-collar jobs now under the Federal Wage System.  Agencies can choose
among the menu of standard patterns without need for OPM approval. In
addition, agencies will be able to request OPM approval of minor
variations in the standard patterns. OPM approval of these minor
variations would not be time-limited.

Unique broadbanding systems that do not fit under one of the standard
patterns should be approved under a revised demonstration project
authority. The demonstration project authority should be revised by
eliminating (1) the limit on the number of employees covered by any
project, (2) the limit on the number of active demonstration projects
permitted, (3) the requirement that Congress be notified regarding the
tentatively approved project plan 180 days in advance of the beginning
of the project, and (4) the requirement that OPM promulgate
regulations.(14) OPM regulations on demonstration projects will be
repealed and replaced with written guidance.(15) OPM will require only
the minimum amount of data needed to evaluate the project, and overly
burdensome quantitative research methodologies will not be imposed.
Demonstration projects will be approved by OPM for a five- year test
period, after which a successful project will be converted to a
permanent alternative system. For broadbanding demonstration projects,
OPM will publish special project approval criteria so that any agency
meeting the criteria will be assured of approval.(16) 

Based on tests in the federal government (e.g., the Navy's China Lake
demonstration project) and on the experience of private sector companies
with broadbanding systems, broadbanding does not appear to be a panacea.
It carries its own set of challenges and may not be a good fit for every
organization or every occupational group.  Broadbanding can meet
resistance in organizations in which hierarchical rank is important. It
can also lead to increased salary costs if the organization does not
have (1) managers who are skilled at managing employee pay, (2) an
effective performance management system, or (3) appropriate budget
controls. However, broadbanding does offer many potential benefits,
including simplified classification procedures, empowered managers, more
broadly skilled employees, greater lateral job mobility, more
flexibility in establishing dual career ladders, and the opportunity to
redesign work and create flatter organizations.(17) The recommended
approach allows agencies that are ready to move toward broadbanding
under a structured approach that manages the associated risks. It would
also allow OPM to assume the role of facilitator and promoter of
innovation.

Endnotes

14. Title 5, United States Code, sec. 4703.

15. Title 5, Code of Federal Regulations, Part 470.

16. In the case of occupational fields that do not fit well in the
standard GS classification and pay framework, special governmentwide
occupational systems can be approved by the President's Pay Agent (i.e.,
the director of OPM, the director of OMB, and the Secretary of Labor)
under current law. See 5 U.S.C. 5392.

17. Braddick, Carol A., Michael B. Jones, and Paul M. Shafer, "A Look at
Broadbanding in Practice," Journal of Compensation and Benefits
(July-August 1992), pp. 28-32; and U.S. Office of Personnel Management,
Broad-banding in the Federal Government:  Management Report (Washington,
D.C., February 1993), pp. 14-22.