Summary: The Government brain drain caused by inadequate salary levels, irregular pay adjustments, and distorted pay interrelationships of top Federal officials is one of the most critical but perhaps least understood and appreciated problems facing Government today. Because of pay restrictions legislated by appropriation acts, Federal officials at seven different levels of responsibility now receive the same salary. Continuing the pay cap into October 1981 will extend the pay compression to an eighth level of responsibility. As effective management and operation of Government programs may be very critically jeopardized, Congress must face up to the pay compression and its related problems. Congress and the Office of Personnel Management have limited the maximum number of Senior Executive Service employees that could receive performance awards from 50 percent to 20 percent and have limited the size of bonuses that could be awarded. Cost-of-living pay increases have been denied also. Because of these restrictions, the turnover rate among career executives has increased dramatically; experienced executives at the peak of their managerial career are retiring early at alarmingly high rates; and the morale of the remaining Federal executives and senior managers is low. Pay compression also adversely affects the recruitment of senior executives and managers and creates incentives for agencies to use Senior Executive Service rank and performance awards as a secondary compensation system to reflect factors which should be reflected in basic salary levels. GAO strongly urges Congress to discontinue the appropriation restriction on payment of the scheduled salaries of top Federal officials and to allow cost-of-living adjustments to take place in at least the executive and judicial branches.
