Federal pay has been a topic of hot debate this year, with some studies concluding government workers are overcompensated compared to their private-sector counterparts and others finding the exact opposite.

The latest and perhaps most credible study from the nonpartisan Congressional Budget Office found that federal workers with less education are paid slightly higher than those in the private-sector while highly educated federal workers tend to be underpaid.

But what do federal workers themselves think of their pay? And how important is pay when it comes to the overall job satisfaction and commitment of federal employees?

According to the latest Best Places to Work in the Federal Government analysis produced by the Partnership for Public Service, federal workers’ satisfaction with their pay slipped 6.1% from 2010 to 2011, with only 59.1% saying they are satisfied with their compensation.

This was the second largest decline among 10 workplace categories that were rated, with only family-friendly culture experiencing a bigger drop.

Workplace Categories
Percentage Change from 2010 to 2011

	2011 Score	2010 Score	% Change
*Skills/Mission Match	78.6	78.9	-0.3
Teamwork	65.3	65.3	0
Training /Development	60.7	61.1	-0.7
Work/Life Balance	60.2	60.7	-0.9
Overall Satisfaction	64.0	65.0	-1.5
*Pay	59.1	63.0	-6.1
Support for Diversity	57.8	56.9	1.5
Strategic Management	56.8	56.4	0.8
*Effective Leadership	54.9	54.5	0.7
Rewards/Advancement	45.9	46.4	-1.1
Family Friendly Culture	33.6	36.2	-7.3

*Key driver of overall satisfaction

The decline in pay satisfaction isn’t altogether surprising considering that the government-wide survey was conducted in 2011 when federal workers were in the midst of a two-year pay freeze imposed by Congress. Additional cuts in pay and benefits also seemed to be on the table and the threat of a government shutdown loomed.

What is surprising, though, was the contrast at the agency level between the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC). Both organizations are financial regulatory agencies, but with vastly different stories.

Employees at the FDIC, the top-ranked Best Places to Work large agency in 2011, also had the highest pay satisfaction, with a score of 83.3 out of 100 – almost nine points higher than the next agency, the Nuclear Regulatory Commission.

One might assume that the high pay satisfaction stems from the fact that most employees at the FDIC were not subjected by the federal pay freeze. It also has the ability to pay slightly higher salaries for some jobs compared to other federal agencies.

But don’t be so fast to discount FDIC’s success. The SEC also has special pay flexibilities as well as the highest average salary of any large federal agency. Yet the SEC had one of the lowest pay satisfaction scores (57.8) in 2011 and recorded the largest decrease on the issue, down 17.6% from 2010.

The differing employee attitudes toward pay comes against the larger backdrop of the FDIC rising from 21^st place in 2007 to first in the 2011 Best Places to Work rankings, while the SEC dropped to 27^th place after having been 3^rd in 2007.

The FDIC is in the midst of a five-year culture change initiative to improve communication with employees, increase the sense of empowerment and make leadership more responsive to employee concerns, while employees at the SEC have repeatedly given negative responses regarding agency leadership, strategic management and other workplace issues.

Fortunately for federal leaders and American taxpayers, pay is not the primary driver of overall satisfaction and commitment for federal workers. This distinction belongs to leadership, followed by the match between an employee’s skills and the organization’s mission. The Best Places to Work government-wide analysis shows leadership is five times more important than pay, while skills/mission match is three times more important.

Leaders may feel that they don’t have much control over federal salaries, but they can take a page from FDIC’s playbook and influence other factors to make sure employees feel valued and are productive. Creating a great workplace, in spite of the current budget constraints, will be the best strategy for retaining top talent and creating a high performing organization.

While it’s encouraging that our federal workforce is motivated by issues other than pay, salary is still a factor in the competition for securing employees with critical skills. Extended pay freezes or benefit reductions could impact employee retention and morale, and the ability of federal agencies to recruit high-quality candidates.