discussions with officials of the OEO in an effort to encourage corrective action by the agency, and recognizing the difficult problems posed by administrative turmoil within OEO, the Commission on August 30, 1973, ordered the termination of 12 Schedule C appointees and revoked the authority of the Office of Economic Opportunity to fill 38 of the 64 Schedule C positions allocated to it. Thus, it can be seen that fiscal year 1974 produced unprecedented actions by the Commission to protect the integrity of the Federal merit system and to restore citizen confidence in the day-to-day operations of Government. Pay Systems Nothing is more basic to sustained effective work than fair pay. Under the Federal Pay Comparability Act the salaries of Federal white-collar employees are periodically realigned to keep them comparable with similar jobs in private industry. The Civil Service Commission took action during FY 1974 to make certain that the basic process by which pay comparability is determined is sound, and fair to both employees and taxpayers. During the year the Commission initiated no less than a dozen separate studies, examining each phase of the comparability process. Previous studies indicate present methods of determining comparability are reasonably accurate. But in the future, as the result of these new studies, the Government will be able to set Federal salaries that are comparable with those in the private sector to a very high degree of accuracy, supported on a thoroughly sound statistical basis. Pay for executives and managers in the Federal service also presents a severe problem. Because employees at the top of the regular pay schedule and those in the executive levels are fixed by law and tradition into a strict relationship with Congressional pay, and since Congress has been reluctant to raise its own pay in recent years, FY 1974 saw another 12 months go by without an increase in the pay of executives. Because the General Schedule of graded pay levels continually rises to maintain comparability with private sector salaries, and executive pay is effectively frozen, there is increasing compression at the top. One effect of this compression is to place an increasing number of reporting levels at the same pay level. Top Federal managers, scientists, and engineers in jobs that would pay $50,000 to $70,000 in private employment, as shown by our studies, have been at $36,000, without a raise, for 3 to 5 years. As a result the Government is losing some of its most talented and experienced managers and other professionals. The Commission continues to urge the Congress to correct this situation, which saves a minimal amount in comparison with the overall Federal payroll, and costs the taxpayers a considerable investment in top-rank employees who are greatly needed to meet the demands for effective governmental operations. Fair Labor Standards Act and the Federal Service Effective May 1, 1974, Public Law 93-259 extended coverage under the Fair Labor Standards Act (FLSA), as amended, to all Federal employees. The Civil Service Commission was designated to administer the Act for most of these employees. Three basic provisions of the Act apply: minimum wages, overtime compensation, and protection against discrimination for Federal employees and job applicants. When it originally passed the Act in 1938 to protect employees from potential abuses by their employers, Congress did not intend to apply it to management personnel. Therefore, the Act includes a number of exemptions based upon the nature of the work performed by employees. Bona fide executive, administrative, and professional positions are exempted from coverage. For those covered by the Act, it provides a minimum standard for overtime pay to which employees are entitled. Because Public Law 93-259 does not repeal, amend, or otherwise modify any existing Federal pay laws, this provision of the act conflicts with certain other Federal pay laws. As the fiscal year ended the Civil Service Commission was studying the conflicts between the FLSA and other Federal laws in order to provide guidance to agencies in implementing FLSA. A compliance procedure and a system for resolving complaints within the existing organizational and functional structures of the Commission is being developed. The Commission is also working closely with the Department of Labor to ensure consistency in administration of the law between the public and the private sectors. Executive Development The public manager today needs more systematic development and training than ever before. And the Government must prepare its future managers now. The average Federal executive is now 53 years old. Close to 28 percent of all Federal executives are eligible to retire immediately. Attrition among executives is running about 10 percent annually and may go up even higher because of current limitations on Federal executive pay. The steady exodus of highly talented key executives is impacting heavily on the continuity of Federal program management. The Federal Government is refining its methods of using training facilities, to introduce more systematic planning into the equation. In executive development, the objective is to have the development program take the form of planned assignments to progressively more responsible managerial positions, supplemented by formal management training based on individual needs. The most innovative feature and the key element in this new approach to executive development in the Federal Government is the individual development plan. It is a simple concept that emphasizes joint decisions by the employee and the supervisor on the specific developmental experiences needed to prepare that particular employee for assumption of higher managerial responsibilities. Steps taken during fiscal 1974 to supply additional numbers of well trained managers and executives to fill the needs of Government are detailed in Chapter II. Putting Tests to the Test As part of the Commission's program of rebuilding from the ground up to keep Federal personnel processes as modern as the challenges they face, reevaluation of Commission testing and qualifications programs continued during FY 1974. This action is necessary to be sure that we meet the standards in the Equal Employment Opportunity Act of 1972 and the requirements of recent Supreme Court decisions, and it is moving forward as rapidly as available funds permit. However, funds available to the Commission are not sufficient to make possible the improvement of all examinations as quickly as the situation requires. One step in the reevaluation process was the introduction of the new Professional and Administrative Career Examination (PACE), as detailed in Chapter IV. This examination replaces the Federal Service Entrance Examination, which served Federal agencies well for 19 years; PACE is expected to serve even better, since it measures a wider range of abilities. Fair Treatment Builds Morale As part of its continuing effort to aid Federal agencies in their methods of motivating employees to do their best work, the Commission took action during FY 1974 to ensure that the Government keeps and deserves its reputation for fairness in its treatment of employees. Since disciplinary action is sometimes necessary in the best run of organizations, the appeals system is one of the most important components in the assurance of fairness. During FY 1974 a major overhaul of the adverse action appeals system in the Federal Government was finalized and adopted by Commission action. It went into effect shortly after the end of the fiscal year. The revised appellate framework, called the Federal Employee Appeals Authority, will streamline the system by eliminating adverse action appeals within agencies, while assuring "due process." It will install a single level of appeal within the Civil Service Commission, eliminating unnecessary duplication and delay. Toward Good Government at All Levels The Intergovernmental Personnel Act, passed in 1971, strengthens the central management capability of State and local governments. Its emphasis is on a shared intergovernmental approach to meeting central management needs and solving problems through improved personnel systems. Through this Act, in fiscal year 1974, the various levels of government in the United States, Federal, State, county, and municipal, were given new means to pursue improvement in personnel administration. The Civil Service Commission has a leading role in this effort to bring about improvement in government at all levels by helping to assure a corps of qualified competent civil service employees in cities, counties, and States. Some excellent civil service systems already exist at these levels, but others do not have the basic capacity to meet the clear need for competence in government operations. The Commission's work during fiscal 1974 to foster more effective government at all levels is highlighted in Chapter VI. 1974 a Test of Effectiveness In the pages that follow, the Commission's operations during fiscal 1974 are described under several umbrella headings designed to fit them into a unified framework, highlighting their interrelationships and showing how they contribute to the Commission's long-range goals. Labor-management relations, personnel management evaluation, performance evaluation, and management by objectives, for example, are presented in relationship to more effective government. Productivity, treated in a separate chapter, is CIVIL SERVICE COMMISSIONER L.J. Andolsek visits with Girls Nation Civil Service Commission Chairman Sandra Abboud (left). Ann Brassier (right), Assistant Area Manager of the Commission's Washington Area Office, escorted Miss Abboud on her tour of the Commission. Effectiveness The goal of organizational effectiveness may be pursued in many different ways. Better planning is high on the list of priorities. Improvement of present executive resources is a close second, with better provision for development of future executives close behind. Organizational effectiveness requires that labor and management understand each other and work productively together. Accurate classification of jobs (which also attaches a price tag to them) is highly important to organizational effectiveness, as is the careful evaluation of personnel management practices. And when the organization is the Federal Government, organizational effectiveness can be substantially improved by the development of reliable methods of setting Federal salaries in such a way that taxpayers and employees are both treated fairly. During fiscal 1974 the Civil Service Commission employed all of the foregoing methods of advancing our progress on the road to greater organizational effectiveness within the Commission. In addition, to further better planning within the Commission, we initiated an operating system of managing work by goals and improvement objectives prior to fiscal year 1974. During the fiscal year, planning staffs moved to integrate this system with the total budgetary process. This was achieved through the development and implementation of a Commission-wide Unified Planning System. Specific program objectives were established, together with the resources required to accomplish them. These formed the basis for allocating resources for fiscal 1975 and for planning our next budget submission to the Congress. Developing Executives Improvement of executive resources, another step on the road to organizational effectiveness, requires both long-range and short-range efforts. The Office of Management and Budget designated 12 representative departments and agencies* and strongly encouraged them to devote adequate resources for special executive development efforts *They are the Departments of Agriculture, Army, Commerce, Health, Education, and Welfare, Housing and Urban Development, Interior, Justice, and Transportation; the General Services Administration, the National Labor Relations Board, the National Science Foundation, and the Veterans Administration. during fiscal '74. These agencies were asked to identify three-fourths of their career executives and about ten percent of their high-potential career mid-managers for developmental work assignments and/or management training during the year. During fiscal 1974 the Commission, in collaboration with OMB, assisted these 12 agencies in developing and implementing their programs. CSC and OMB also worked together in monitoring agency progress and the Commission's Central Personnel Data File was used to track training course participation. CSC/OMB teams are sched ment Program, provided opportunities for 25 outstanding Federal career managers to participate in a year-long program of formal training and developmental work experience. The first group was selected from among 3,000 applicants at grade GS-15, the top career grade below the "supergrade" levels. After a rigorous screening process which included supervisory appraisals, agency nominations, an assessment center operated by the Commission, and review by a panel of top public service career officials, the 25 participants from 16 departments and agencies were selected. The program began in March 1974 with 8 weeks COMPTROLLER GENERAL ELMER STAATS meets with the first Federal Executive Development Program participants in Washington. FEDP is a year-long program of formal training and developmental work experience for 25 outstanding managers. uled to visit these agencies in fiscal 1975 and make a final evaluation of their efforts. This particular effort is not a continuing program-it was a one-year effort intended to increase the awareness of agencies to the importance which the CSC and OMB attach to executive development. It set the stage for continuing executive development throughout the Federal service. Within the range of executive training and development opportunities provided by agencies for their promising managers, it appears that only minimal use has been made of interagency work assignments. In an effort to demonstrate the benefits of interagency exposure on the perspectives and decision-making capabilities of public managers, the Civil Service Commission cooperated with the Office of Management and Budget in implementing a special developmental program for career GS-15 managers in fiscal year 1974. This program, the Federal Executive Develop of residential training at the Federal Executive Institute, followed by one or more developmental work assignments in various Government agencies. It will be continued, with certain modifications, in 1975 and perhaps beyond if evaluation indicates that this would be wise. Looking to the Future The Federal Government's strategy for the future calls for executive development as an integral part of day-to-day personnel management operations in all agencies. The blueprint for Governmentwide executive development activities was contained in guidelines sent to Federal agencies early in the fiscal year from the Civil Service Commission. Each agency was required to identify its managerial positions, specify the knowledges and abilities needed by people occupying these positions, identify nonmanagers with managerial potential, assess the degree to which incumbent or potential |