Commentary

Federal Government Should Increase Firing Rate

Since Tuesday’s elections, President Bush has been pressing Congress to enact a Homeland Security bill. In that proposal Congress should look at how the federal government handles the firing of incompetent employees, a problem that plagues the entire federal leviathan.

The continuing debate over legislation to create the 170,000-person Office has focused on the need for greater flexibility in federal workforce rules. The Bush administration is seeking the “freedom to manage,” including greater ability to fire poorly performing workers. Recent incidents of dangerously sloppy performance in the Immigration and Naturalization Service, the State Department, the FBI, and other agencies make it clear that too much poor performance is currently tolerated.

Federal personnel data shows that just 434 civilian federal workers were fired for poor performance in 2001. Just 210 non-defense workers, or 1 in 5,000, were fired for poor performance. Firing rates were similarly low in prior years, and are low across all agencies. For example, the 28,000-person State Department has fired just 6 employees for poor performance since 1984, yet this agency is known for its sloppiness in handing out visas, mishandling secret documents, and letting Russian spies bug a meeting room down the hall from the former secretary’s office.

Unfortunately, no private-sector firing data exist to compare with federal data. But we do know that the “involuntary separations,” which include both firing and layoffs, are only about one-fourth as high in the government as the private sector. No doubt private-sector firing is below optimal, as well, since firms are under threat of expensive wrongful discharge lawsuits. Only five states adhere to “employment at will,” which allows broad freedom to dismiss workers. Because workers are free to “fire” their employers at any time, employment at will is a balanced approach that should be the rule in both the private and the government sectors.

The dearth of federal firing is consistent with the general lack of incentives for good performance in the bureaucracy. Official surveys find that most federal workers do not believe that the best-qualified people are the ones receiving promotions. One federal study concluded, “the federal white-collar pay system sends and reinforces the message that performance does not matter.” Thus, federal workers put in time, automatically move up the pay scales, and are nearly immune from dismissal.

The low federal firing rate reflects both agency cultures that are undemanding and the difficulty of terminating bad workers. The White House has noted that it can often take 18 months or longer to fire employees, thus requiring a major commitment of time and effort from managers. Former Vice President Al Gore’s reinventing government initiative recognized the problem and sought to “reduce by half the time required to terminate federal managers and employees for cause.” Another problem is that poor performers often receive good performance reviews from negligent managers who do not want to rock the boat. There is an ingrained federal culture to score virtually all workers highly-the government’s Merit Systems Protection Board has found that just one percent of federal workers are rated below “fully successful” in annual reviews. False high scores create a hurdle for new managers trying to prove that worker performance has actually been poor.

Further protections for bad workers come from abuse of federal “whistle-blower” rules. For example, earlier in 2002 the number two official at the Bureau of Indian Affairs was fired after being put under two federal probes for influence peddling. But he fought his ouster by filing for whistle-blower protection.

Newspapers are filled with stories of incompetent federal workers and managers. For example, in what is being called the “Indian Enron,” the Bureau of Indian Affairs has mismanaged billions of dollars in Indian trust funds. Recently, former special trustees of BIA gave scathing testimony about the agency’s striking inability to clean up the mess. Thomas Slonaker testified that the BIA is incapable of reform, unwilling to follow the law, and does not “hold people accountable for their actions with consequences for poor performance.” Paul Homan testified that the “vast majority of upper and middle management at the BIA are incompetent, [yet] in previous reform efforts over the last 25 years, no senior manager … has been removed.”

That story will recur repeatedly across the government unless reforms are enacted to greatly increase the ability and incentives to fire poorly performing employees.

Chris Edwards is director of fiscal policy at the Cato Institute, and Tad DeHaven is a research assistant in that department.