How has the Economy Affected The Way Federal Managers Reward Their Staff?
Tonya R. Johnson
University of Maryland University College
Professor Kuyatt

Executive Summary This research paper provides an analysis and evaluation of the current state of the federal government budget and how federal employees are being affected. The methods of analysis include information on causes of the financial crisis the government is experiencing, the impact, program cuts and the burden it is having on federal workers including low morale. Other information show the various programs cut over the past 3 years and how employees are coping with this stress of footing the bill for the American people. Results of information provided show how employers can be creative and reward their staff in other ways besides monetary. Time-off awards in the form of 59 minutes, offsite work retreats used as team building exercises, and thank you and little awards from managers to show their employees appreciation and how they are valued. This research paper shows the difficulties managers face in tough economic times, but provides examples on how managers can turn situations that look hopeless in positive elements. Recommendations included: providing valuable feedback, discussing how best to deal with the work, allowing employees to be part of developing a solution to accomplish the mission, listening to their concerns and rewarding them no matter how small for their efforts. This research paper also shows that this was only one way a manager dealt with the current economic crisis of her agency, but there are other ways to be creative and reward your staff in tough times. The only limitations that mangers have on rewarding their staff are the limitations they put on themselves.

The financial crisis that began in 2008 was considered the worst of its kind since the great depression of 1929 (Ghadami, Aghaie, & Mohammadkhan, 2010). A few years earlier the financial market was booming and the economy was on the right track. The housing market was growing and the stock market was at its peak after crashing in 2000. In 2006, the economy began to change. We began to see more risky home loans. Loans officers began to take great risks on mortgage loans and consumers were willing to sign on the dotted line to get in to their ‘dream home’. Then the unthinkable began to take place. People started to default on those loans. Roughly over 3 million homes where in foreclosure status and the amount of people that were behind heading that way made the situation seemed bleak. As a result, the government began to scramble to come up with a plan to try to stop this disaster. There were over 3 million foreclosures as we headed into 2009. This quickly spiraled into a huge financial crisis for the U.S. Banks and other investors begin to feel the financial crunch. New Century Financial one of the top lenders filed for Bankruptcy followed by the Lehman Brothers. At the same time, J.P Morgan began selling it shares of stock, the U.S. Treasury took over Freddie Mac and Fannie Mae (Cheney, 2008), Bank of America acquired Countrywide and Merrill Lynch and the Federal Reserve loaned $85 million to the American International Group (AIG), followed by a $700 billion dollar bailout by the Federal Government (Cheney, 2008). The country also began to feel stress and the financial pressure from the cost of the trillion dollar war that began in 2003, the war that began as a response to the 9/11 attacks that took place in Washington, D.C. Pennsylvania and New York. The crash of the housing market along with the cost of the war had a devastating effect on the financial markets. The $700 billion dollar bailout cost the US plenty.
In 2009, the Federal Government began looking at the salaries of its employees in hopes of finding a way to cut back. The 2010 budget and salaries for federal employees were going to be hit hard. Federal employees were gearing up to take a hit for the failing economy. The federal government was looking at salaries, benefits, travel cost, pay increase and bonuses. Obama’s budget message stated: "As families are tightening their belts in this economic crisis across the country, Federal employees also will be asked to do their part: the 2010 pay increase for Federal civilian employees, 2.0 percent, is in response to the current economic climate, bringing Federal pay and benefit practices more in line with the private sector (McFadden, & Beam, 1988)." This was a huge decrease to federal employees who were used to receiving a 3.9 to 4.2 percent increase for cost of living by previous administrations. The next year, 2011 was followed by another pay freeze and the hated two-year federal pay scale freeze wasn’t going to end anytime soon. This greatly depended on how sluggish Congress was going to be, and how this fall’s election shaped up, the freeze is expected to last through 2013 — or longer (Juszczak, 2010). So, what did this pay freeze actually mean? The fact that employees were able to keep their jobs and not be unemployed (rifted); was the true meaning. Unions of federal employees agreed. This also meant no cost of living raise, no increases in salaries and bonuses would be very few if at all for both years.
The budget crisis not only spilled over into federal employees’ salaries but into much needed programs that were being cut. Federal spending at agencies was beginning to become under scrutiny and Senator Tom Corbin from Oklahoma begin questioning agencies on their travel costs and if this was the best way to spend taxpayers money. Congress began looking at agencies budget determining if funds were being spent properly and if all the funds that were allocated to agencies were being spent correctly. Congress began looking at funds that were left on the agencies book prior to 2000, and if funds were still available, they began rescinding these amounts. The cuts began in 2010 with a 17 billion dollar cut federal government wide.
The cuts of FY 2010 included that of various programs government wide. The Antrax Vaccine $8 million, DOD Aircraft C-17 $91 million, Cotton Storage Payments $570 million, the Presidential Helicopter VH-71 or ‘Marine One $3.2 billion, DOD Construction $150 million, Military Recruitment & Retention $800 million, Limit 2008 Farm Bills Payments $126 million, eliminating Resource Conservation and Development Program $51 million, reduce support service contractors for federal government $900 million and a one-year freeze on pay raises, bonuses and other salary increases for civilian federal workers which would save $2.6 billion (McFadden, & Beam, 1988). Fiscal Year 2011 and 2012 were marked with the same stringent rules. In FY 2011 the government made $38 billion in cuts. The cuts included $13 billion from funding programs that were at Department of Labor, Education and the Department of Health and Human Services, State and Foreign Operations $8 billion, another 630 million in earmarked transportation, $18 billion in cuts at the Pentagon and another $2 billion in civilian federal salary workers (Dimick ,2012). In FY 2012 more cuts were done. This time the cuts total $60.8 billion, including $5 billion at the Department of Agriculture, the agency which I work. The biggest cut came at the beginning of FY 2013 budget for the agency. The Farm Bill which supports food aid programs such as food stamps and subsidies to farmers expired on 9/30/2012. The Bill cut $35 billion in agriculture programs, a portion of which is allocated to salaries. The Farm Bill programs cut at Agriculture had a great impact on salaries and cash awards which were already cut tremendously. This didn’t include the budget cut also proposed by Congress. No cost of living increases, no bonuses and cash awards, yet federal employees were burden with the cost of increase health and life insurance premiums. Dental and vision is covered very little by the federal government and most employees have to take out extra insurance to cover those costs. With no room for rewards and funds tight for the agency for the second year, employee morale reached an all-time low. I had to come up with a plan to continue to push my staff to grow, increase their morale and reward them at the same time. During the first and now second year of the freeze, I leverage morale and encourage growth and collaboration, I conducted team-building events, during which I announced to all staff that change was forthcoming. I made it clear that I would do everything I could to support their needs and described my plan to develop them. I provided regular status updates on their areas of progress, challenges, funding and program status. I mentored team members as their roles and responsibilities increased. To promote that FOD was all one team and that we were “in it together,” I used my own money to print T-shirts that read, “One Goal, One Team, Financial Operations Division,” which all of us wear each Wednesday. I also conducted “open” training for NIFA staff on Wednesdays so they could see us all wearing the same shirt, to promote the idea that we were one team and we all were working hard to do our best to get through this difficult time. I then began given out 59 minutes awards. These awards would be for special acts or contests that were held among my division. This would allow an employee to take leave 59 minutes early on any day they chose. I also began pushing telework. If I could not reward the staff due to budget restraints, I could allow them to stay home once a week and work as an incentive. I also purchased a Keurig machine for the office and then charge the staff only $5.00 a month to be in the club, they jumped at the idea. We order flavored coffees, teas and other flavored beverages which would save the employees from purchasing coffee greatly. I then took that money and save it and treated the staff to the Spirit of Washington for a luncheon, fully paid with the funds from the coffee fund. This proved to be a real treat. For three hours, two of which I used as team building exercises, we talked about the impact of the budget cuts and the importance of still being held accountable for all the work without over-time and being rewarded. We brainstorm on ideas that we could use to improve. The cruise was a much needed break and the staff felt empowered because of this gesture. Lastly, I held what I call the ‘The Oscars Award Ceremony”. I visited Crown Awards, online, which allows you to buy awards in bulk at cheaper prices. I purchased from my own pocket ‘Oscar’ like awards and identified different categories to award the staff. I choose the following award categories to give out awards: “MVE-Most Valuable Employee, “Making it Happen”, “Most Valuable New Employee”, “One Goal, One Team”, “Unsung Hero”, “Best Team Leader”, “Most Improved”, and others. I also had everyone to bring in a desert where I covered the food. I told them it would be a working ‘All Hands Meeting”. The staff was unaware that I was actually planning an ‘FOD Award Ceremony’. I instead referred to it as an “End of the Year” meeting. The governments end of the year ends on 09/30 each year. The “All Hands Meeting”, follows a few weeks after. I had honey baked ham, turkey, string beans, veggie tray, all the trimmings of a holiday party. The staff had no clue what treat they were in for. The staff was excited and overwhelmed by the event that I had planned for them. Some of them had tears in their eyes, others were speechless and wanted to know how did I pull this off and who paid for this. I think with everything I spent it was less than what it costs to feed my family for the holidays. The trophies ‘Oscars’ were only $5.95 each. The price on their faces for being rewarded in some form by management was priceless and it meant more to me than it meant to them. The federal government has hit our agency with over $300 million of our $1.2 billion budget taken. In addition, all of the agencies were suffering with no raises, no bonuses and increase living expenses. As the Director of our Financial Operations Division – FOD, I had to figure out a way to reward my staff and lead them in this difficult time. Morale was low and as with anyone who works hard, works late hours, and gives up their time off to fulfill the mission of the agency they want to be rewarded and feel valued. As a leader and a director it was and continues to be my job to ensure that my employees stay engaged and keep the mission of the agency going. It was my job to find a way to reward the staff and I did just that.

References

Ghadami, F., Aghaie, A., & Mohammadkhan, M. (2010). The Impact of Financial Crisis on B2C e-
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Juszczak, T. (2010). Primer for Budgeting Federal Labor Costs. Public Manager, 39(2), 9-11.

Dimick, M. (2012). COMPENSATION, EMPLOYMENT SECURITY, AND THE ECONOMICS OF PUBLIC-SECTOR
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McFadden, J. J., & Beam Jr., B. T. (1988). The Omnibus Budget Reconciliation Act of 1987: More Tax
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Cheney, G. A. (2008). Will the Federal Debt Become Yours? Financial Executive, 24(10), 34-37.