Employees in the private sector continued to be more satisfied with their jobs, the way their organizations work and their supervisors than their counterparts in the federal government, according to data released this week by the Partnership for Public Service.

According to an analysis by Hay Group contained in the 2011 Best Places to Work in the Federal Government, the index of overall job satisfaction among employees at large private sector companies was 70 out of 100, a slight drop from 70.6 in 2010. For employees at federal agencies, the score was 64 out of 100, a drop from 65 in 2010. (Graph above.)

The Best Places to Work analysis shows that the federal government outperforms the private sector in only one of about dozen criteria for job satisfaction, scoring two points higher when it comes to having an opportunity to improve skills. (See table below).

While worker satisfaction declined in 2011 for both federal employees and for workers in large private companies, the drop off was slightly greater for federal employees, many of whom are facing the type of budget cutbacks that have already impacted the private sector.

Jodi Simco, principal at the Hay Group, cites leadership and employee engagement as focal points for government agencies to improve job satisfaction ratings.

“Federal government (job satisfaction ratings) didn’t drop significantly given all the changes going on,” she said during a panel discussion at the Human Capital Management Forum this week. “Employee engagement is critical. People want to be part of something bigger than themselves and want to do something important.”

However, when it comes to recognition for doing a good job and satisfaction with involvement in decision-making, the government lost significant ground. In 2010, there was only a three-point gap on each of these questions; the new ratings show a six-point gap. In addition, a large divide remains on satisfaction with communication from management, with federal employees substantially less satisfied (by 14 points).

The table below compares positive responses from federal government employees against a cohort of private sector workers involved in a range of jobs at large companies. The federal government outperforms the private sector in only one area – the opportunity to improve skills. Of the remaining 12 questions, nine show government trailing private employers by more than five points.

Of the 13 questions that were commonly asked of government and private sectr, government registered modest improvement in only one area since the last survey-satisfaction with supervisors. However, the number for the private sector also went up slightly, maintaining the gap of six points in both 2010 and 2011.

Perhaps most notable are two questions where the federal government went down and the private sector went up.

On recognition for doing a good job and satisfaction with involvement in decision-making, the gap between government and private sector doubled. In 2010, there was only a three-point gap on each question, and now there is a six-point gap.

Clearly more has to be done to close these gaps if government is to attract and retain the highly-skilled workforce that it needs to meet the critical challenges facing the country.

Simco said it’s important for federal leadership to remember financial compensation isn’t the only means by which their employees will be satisfied.

“Pay is not the biggest driver,” she said. “The mission is the reason people in government do their work.”