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- [00:05]
A
Director Scott Kapoor, welcome to Statecraft.
- [00:07]
B
Thank you, Sati. Good to be here.
- [00:09]
A
It's good to have you. And I've been hoping to get the chance to chat for a little while. I know we got roadblocked by the shutdown.
- [00:15]
B
I was gonna say there was this thing called the shutdown, which kind of messed us up. Huh. So hopefully now we're. Now we're back to business, which is good.
- [00:20]
A
We're back on track. For listeners who don't know your background, I'll just flag it. I'm actually. It's funny you can't see it, but my mic is sitting on a copy of Secrets of Sandhill Road to try and get it up to my math level listeners, for context. Scott is a former managing partner, Andreessen Horowitz, maybe better known to some of you as a 16Z. And this book, Secrets of Sandhill Road, I think is widely respected as one of the. Maybe not the OG texts of venture capital, but a really fantastic reference point for it. And I can say that confidently because my wife used to be an investor and she's a big fan of this book as well. Just kind of put a pin there.
- [00:57]
B
I appreciate the plug. Thank you.
- [00:58]
A
Director Kapoor now leads the Office of Personnel Management. Scott, tell me if this is fair. I would describe it in a casual setting as more or less the HR function of the federal government. Would you take that description or amend it?
- [01:11]
B
Yeah, I think that's right. I think HR is the official word. I think of it as like, the talent management organization is kind of the word that I prefer. Because, look, I think of our goal as really a couple of things. One is, yes, there are HR policies and stuff that we promulgate that obviously are relevant across government. But I also think of a huge part of our job is we need to make sure that we have the right talent and the right roles in government and the environment that actually fosters that talent. And so that's a huge part of. Obviously what we're trying to do is to make sure that we have a culture and a set of people that ultimately can deliver on behalf of the American people. So talent, to me, maybe encompasses that a little bit better than hr. But, yes, HR is a great shorthand.
- [01:45]
A
Me too, I guess. And what was it in your background, in your career to kind of educate listeners that made you, as this administration saw it, the right fit for this talent function?
- [01:55]
B
I think it was a couple things. My career has been mostly basically in the tech community. Right. So I was at a startup company for about Nine years, a company called Loudcloud. It ultimately became a company called Opsware. If you're looking for other interesting books to read, my partner Ben Horowitz wrote a book called the Hard Thing about hard things, which kind of details his experiences there. And then I spent the last 16 years, as you mentioned at entries and Horowitz, building up that firm and, you know, investing in companies and sitting on boards. And so to me, what I hope I bring is basically a sense of what does it take to actually ultimately build high functioning organizations? Maybe that's the simplest way to describe it. So kind of having been in a company for a long time and managed a bunch of organizations and then having been an investor and kind of just seen hundreds of companies and thousands of companies, you know, most of which don't ultimately become Facebook's and Pinterest and Airbnbs and others, I think what you learn in that process is you learn kind of the core of the organizational dynamics that are required to ultimately make companies successful. As venture capitalists, we love to spend a lot of time talking about products and strategy and all that stuff, and it's all really important. But in, you know, my experience, the things that ultimately separates great companies from either good companies or companies that fail often comes down to do you have the right people in the right roles? Is the organization set up to be able to deliver the things we need? Is there good communication and alignment with what the CEO wants the company to do and ultimately what people do? Do you have a culture that ultimately enhances kind of performance, all those things which they don't make for, like, great case studies at the end of the day, because they, they tend to be hard things to write about. It's much more, you know, kind of sexy to write about product strategy and, you know, the rollout of the iPhone, but none of those things happen without organizations that ultimately kind of can drive those outcomes. And so to me, you know, that's what at least I hope maybe the president saw. And certainly what I hope to bring here is hopefully a real, just keen appreciation for an understanding of what ultimately makes organizations successful.
- [03:41]
A
Well, let me give you and listeners a roadmap for where I, I want to go today. So you've had like five months in the role, and there's been a lot of work that you've been overseeing and pushing at OPM on hiring and retaining top talent. But before we get to that work, I want to start with firings or with layoffs or riffs, reductions in force, which, you know, is the technical term for a lot of these at the federal level. And I'll jump in in one second. But as a reminder, the full transcript of this conversation with links, the interesting references that Scott may make during the conversation is at www.statecraft pub. Statecraft Pub. Okay, let's get into it. Doge's flurry of activity died down right around the time that you were sworn in as director of OPM in early July. And I'd say there's some parallels that you have with Elon. You're a successful tech figure, making your first foray into public service and then some obvious differences. I think one of them is you're less controversial and you haven't had a public falling out with the President in the Oval Office and then coming back together at a high level. Without making you get into the weeds here, how do you see your approach to your work as compared to Doge's? Do you have the same approach? Are you more similar than different? More different than the same?
- [04:51]
B
To kind of complete your comparison between me and Elon, the biggest difference between me and Elon is like, I have not created like, you know, a set of massively successful companies. So, you know, credit will only go so far.
- [05:01]
A
Sure, exactly.
- [05:02]
B
Credit where credit is due. Like Elon is Elon. There is only one Elon. And I certainly don't even pretend to be able to fill his shoes or kind of do that. I've said this before, but the way I would think about what Elon and. And so much of that team did was they created a catalyst for change in the government. And look, you know, this auntie, you know, you've been, you've been studying this and, and kind of looking at this stuff for a long time. When you're talking about a behemoth as big as the government given $7 trillion budget, two plus million dollar, you know, million people. Sorry, it's very hard to like, incrementally change organizations of that scale. So to me, like, among many of the great things that I think Elon and the Doge team did was they were really kind of a catalyst to say, okay, like, we have to think about things different. We're going to take an outside view on this. And sometimes to make change, you have to do something big and bold. And I think that was a lot of, obviously the energy that that team brought. And they did a great job in that work. As you've probably seen in the news, the work that they're doing continues. Right? There are lots of fraud, waste and abuse and other things that are still very, very actively engaged on with kind of the members of the Doge community. The way I think about though, kind of what we can do now from here on, which is kind of what's exciting to me about the role we have at opm, is how do we, how do we more broadly institutionalize a lot of the concepts that Doge created? Right. How do we institutionalize concepts of making fraud, waste and abuse just day to day part of everything that people do in their government functions? How do we think about efficiency as a top level metric for government? How do we think about, you know, kind of all the talent related things, which I know you want to talk about as well. So to me, like there's no incongruity, you know, it's actually perfectly consistent. Like the work that Elon and the Doge team started, the work that they continue to do, and then also the work that we do at opm. To me, they're all part of this broader heuristic of how do we actually make government function more effectively for the American people. And people may have different views on how to get there. And certainly my views and the views that Elon and Doge have done, not everyone kind of always has the same ideas on those things. But I think the goal is very consistent, which is government ought to function for and on behalf of the American people. And that means we ought to be able to deliver great services, but also do it at cost levels that are reasonable and appropriate, that don't generate two plus trillion dollar deficits every year.
- [07:10]
A
You've been, I think, very public in your work and you talk to a lot of reporters and you've been writing basically a weekly blog on the OPM website, which I've enjoyed. And it's been like another surface area to that I've appreciated. So let me pull a couple of those, a couple things you've said there and ask you kind of reflect on them. One is you're on a podcast called A Federal Drive talking about cuts and headcount and you said you acknowledge there are place areas we need to revisit and there's some places where we've cut, cut deeper than was appropriate. And reflecting on what had happened so far. And in your blog post, right, sizing with purpose, you talked about how, quote, eliminating jobs is not something that should be taken lightly. It's a fundamental breaking of trust between the leader of an organization and the employees, both those leaving and those staying. Now, the admin has fired a lot of civil servants very publicly. Everybody listening is aware of that. And you've cut headcount at the Office of Personnel Management itself. So just curious how you think about striking the right balance.
- [08:03]
B
I want to say a couple things. First, I'll take issue a little bit with the administrator has fired a lot of people. So let me just make sure kind of just you have the number. So there's rough. A little more than 300,000 people that will have left the government by the time we get to December 31st, right? A bunch of those obviously left in 9:30 as part of the DRP program. But there's still people obviously who are kind of working their way through for 1231 of those 300,000 people firing. So if you think about that as like there's I would kind of think of two buckets of firings, probationary employees, right? Those are individuals, right, who were either one or two year tenured employees where they're not exactly this, but they're kind of like at will employees in the private sector, which is, you know, that you do have the ability ultimately to terminate them without going through formal like four cause type things. And then the second bucket would be, let's call them riffs, right? Reductions in force. So we decided, whatever, this organization doesn't need to exist anymore. It's not delivering what it needs to do because it's just, you know, we can't be all things to all people. And so we ultimately just eliminate a function. Those two things combined are roughly about 25,000 of those more than 300,000 reductions in headcount. So what that means, if you do the math is 90 plus percent of the reductions in headcount are a function of people either taking the drp, the voluntary deferred resignation program, people electing kind of VERA or vsip, right? Which are the kind of voluntary either early retirement or you know, kind of incentive based programs for leaving government and then natural attrition that occurred over the course of the year. So I say that not to make light of it. It's still, you know, it's a real number obviously, and it's meaningful, right? It's, you know, roughly 300,000 on what started with about a 2.4 million person employee base. So we'll be around 2.1 million roughly at the end of the year. But I do think it's important for your listeners to understand that despite all the press coverage around firings and things of that sort, the actual numbers of firings are a very, very small minority of what actually happened here. My personal interpretation of probably why a Lot of those people chose to leave the government was they probably said, hey, look, this is different from what I signed up for. I get it right. There's, you know, a new leadership team, a new management team, and that's perfectly reasonable. And I think that's perfectly within any employee's prerogative if they decide, hey, the organization is not what I originally thought it was, or the terms on which we're going to do business are different, totally reasonable for people to do that. And I think that was a very effective mechanism. So look, anytime organizations go through change like this, it's obviously, you know, a difficult thing. And certainly, again, I don't want to make light of any of the probationary or RIF related actions. And those are things again, where I do think, as I've said in that blog post, those are the things, I think, where you do break trust with employees. Right? Which is you're saying, hey, look, for no fault of your own. We've decided the organization can no longer support these activities and therefore we're going to make a change. And I think those can and should be done in a way that's respectful to those employees. And it's also, you're being judged by the employees who remain in the organization. Right. They want to see how you treat those individuals and how you kind of realign the organization coming out of that. And so I think those are the opportunities that we want to make sure we're focused on. And you know, to the extent that, you know, any of those things continue on an ongoing basis, sure.
- [10:57]
A
I, I take your point on the firings being in proportion to maybe a small chunk of this year's exits from the federal workforce. Maybe two clarifications there before we move on. And one point is the admin attempted more riffs or reductions in force than it was able to complete this year because some of those were pushed back in court.
- [11:17]
B
Right.
- [11:17]
A
But for these judicial processes, many more people would have been rift, is that right?
- [11:22]
B
I think we don't know the honest answer to that. So if you look at the court history, there's been a ton of court cases, broadly obviously in this first year of the administration. But on the employment related stuff, very few of those actually ended up adversely relative to the administration's position. So, you know, the only one that I can think of which was just a district court opinion that was ultimately adverse was the rifts that basically were attempted to be done during the shutdown period. Those were halted and ultimately, as you know, as part of the kind of CR that came out from Congress to end the shutdown that was kind of effectively put into the CR as saying, hey, look, you know, while we're in a cr, you can't do riff related stuff. And if you noticed a rift during the period that, you know, you have to kind of withdraw that, that's the only one at least. And maybe there's others that I'm not aware. But I would say, like, from a substantive perspective, that was the only one that I think like ultimately was halted. There were lots of, there was a ton of litigation around drp. There was ton of litigation around riffs and probationary stuff generally, to my knowledge, at least, almost all those ultimately were resolved in favor of the administration. Now, I think what happened to your point, which is a fair point, is, look, in the intervening periods on some of those things, it turned out that there were more people who ultimately elected into the DRP programs. And so for many of the organizations, they're like, okay, like, you know, we kind of feel like we've done some of the right sizing through these voluntary mechanisms, so we didn't ultimately need to do those. So I think it's a, it's a fair point. It's, it's speculative in the sense that again, like, we're kind of trying to argue what might have happened had there not been intervention and some of the legal side of things. But the outcomes are the outcomes, which is roughly about 25,000 of the total headcount reductions, about 9% were ultimately through those adverse actions.
- [12:56]
A
Yeah, I don't want to nickel and dime on, on the other percentages. And this, and this is, this is actually valuable because I didn't, I didn't know that that station. The point I am pushing a little bit here is whether firings formally or aggressively encouraging people to take things like the deferred resignation program, the drp, the admin's definitely been trying to cut headcount and signaling to a bunch of civil servants we're going to need to turn the ship.
- [13:19]
B
I agree with that. Look, I have no problem with that. There's no question that the directive that the President brought as part of his leadership to the government was we think we can perform better services for the American people and we also think we can do so at lower cost. Right. And so there's no question that, yes, the idea of kind of reshaping the federal workforce to make sure that it's focused on the right things that are like kind of key to the success of the administration and doing so with Efficiency and cost in mind. I 100% agree with you. There's no question about that. And look, that's a. I think that's something that people may disagree with me. I think that's actually a good thing. Everything we do in the federal government is spending taxpayer dollars. And I think we have a real obligation to make sure that those dollars are spent as wisely as possible. And if we can use technology or we can use automation or we can use organizational restructurings as a way to improve service delivery and also reduce costs, like, personally, I think that's exactly what we should be doing. So. But yes, I totally agree with your broader point, which is there's no question that a mandate that the president brought in, you know, as part of his election. And look, it's not, it was no surprise. I mean, obviously, if you go back, like, you know, Elon was literally campaigning with the government. There was no question that if President Trump was elected that the idea of efficiency and rooting out fraud, waste and abuse was going to be a core central tenet of his administration. So that should not have been a surprise to people to be completely one.
- [14:31]
A
No, I think that's fair. Let me ask a couple more questions in this vein and then I promise we will get to some of the.
- [14:38]
B
This is great.
- [14:38]
A
You know, I think this stuff is really interesting and to be clear, I think we've said on Stingray before, very open to the idea that Elon and you and the president are entirely correct on the kind of broad headcount point. I think there's interesting arguments against that, maybe about do contractors just fill that bloat, which I know you've talked about. But as a general, as a general question, I'm very open to this. I want to just kind of push on how you're thinking about it. You flagged, as we mentioned, that in some cases, maybe the headcount cuts were deeper than was appropriate. And there's a couple cases across different agencies where there's been lots of rehiring over the course of the year. So the IRS rehired thousands of employees. The National Weather Service went out and brought back about a hundred new meteorologists after firing a bunch of meteorologists. The FDA rehired employees. The Forest Service asked staff who took the hard fork to come back because it's fire season. HHS told about 500 laid off employees there on rift at a kind of high level. Why did that happen? Did that need to happen? Should that happen in a functioning organization with a good talent?
- [15:39]
B
Function? So my experience unfortunately, having lived through a lot of these things in the private sector, both personally in companies that I was managing as well as obviously companies that I've been invested in and on the board of is, this is not uncommon, unfortunately. Like, look, in the perfect world, yes, like, you would get all these things right and layoffs would be a one and done thing and the world would move on and hopefully everything would kind of work out. Well, my experience at least, unfortunately, is in almost all these cases, you end up with two potential problems and they're often both present, which is many times you, if you're making changes from a restructuring perspective, you don't end up cutting sufficiently. Right. So I can tell you, unfortunately, many times in the private sector where, you know, kind of you think you needed to do a 5% or 10% reduction, it turns out like, you know, the business was not sustainable at that levels. And so you end up doing kind of death by a thousand cuts, which unfortunately is. Is one of the most difficult and challenging things for a company to survive. So that sometimes happens. I think the other thing again that happens is, look, sometimes there are areas where in the interest of trying to solve the first problem, sometimes you might push people harder and say, like, what you turned in here is not sufficient for the goals and objectives we have. You got to do more. And yes, in those cases, sometimes you do kind of overcut and find there may have been critical areas that you didn't realize either were as critical as you thought and or you just didn't understand the staffing levels appropriately. So in a perfect world, you would have none of that. I totally agree. That would be the optimal outcome. My experience in these things, unfortunately, is that's just not reality. And particularly when you're dealing about, again, I mean, just think about the end we're talking about here, right? We're talking about a starting workforce of 2.4 million people. And all the examples you cite are accurate. If you add all those up, again, I don't know what they all add up to, but you're talking still probably thousands of people. And it's obviously unnerving and unpleasant for people to have to live through that. And you certainly wouldn't wish that on anybody. And again, in the perfect world, you wouldn't do that. But again, my experience is like, unfortunately, the process of reshaping and restructuring organizations unfortunately has that as a byproduct of it in most cases. And so to me, that's not a failure of the process or the system. It's unfortunately just the reality of like these are complex organizations and the honest answer is none of us gets it right all the time.
- [17:42]
A
There's an executive order that OPM is helping to implement on basically asking every agency every year to do strategic workforce planning to put out. Here's how we're thinking about our workforce, here's the right sizing we want to do, where we want to do aggressive hiring or what have you. When I talk to people in D.C. who have been in OPM in the past or in admins in the past and thought about this problem, their sense has been, and I'm not going to put these words in your mouth, but this is what they've said. But agencies are awful at this sort of thing. People who have been on kind of your side of the divide between management and the agencies have said the agencies like don't do a good job of this two part question. One is what can you do to make them better at it? Is there other things opm, if you agree with that kind of critique, that there's room to improve, maybe. And should there have been more of a strategic workforce planning elements to the big rifts and kind of encouragements of reductions in force right at the beginning of the admin, if the admin thinks that would be valuable now, would it have been valuable at the beginning?
- [18:41]
B
A couple of thoughts on that. So like what can we do to fix it? Look, some of this I think is, you know, as with anything, unfortunately you have to kind of exercise your muscles to make them, make them stronger. And so look, this is, my impression is probably not that different from what you hear from other folks, which is this is just a muscle that most people haven't exercised for a long time. And so, you know, my personal view is it's really foundational to the budget process at the end of the day because to me a budget basically is a reflection of what your priorities are at the end of the day. And so once you understand the priorities, then now the question is, okay, are you staffed appropriately to actually fulfill those priorities? And to me that's really the exercise we're asking people to go through. And the good news, I, I believe at least in this administration is we do have a lot of people who come from the private sector and so this concept is not a new concept for them. So yes, I, I can imagine in the broader kind of career milieu of federal employees, maybe this isn't a muscle they've exercised, but I certainly think that many of the leaders of these organizations again have done this in their kind of private sector areas. So I hope it'll be a very effective process. But you know, just to kind of reiterate, like, look, what we're trying to do is we're trying to ask people to say, okay, look, you've, you've submitted a budget, that's great. What are the objectives that align with that budget? Are those objectives the right ones? So like, you know, are you doing things that support the broad priorities of the administration or are we doing things that just because we've been doing them for 20 years and no one actually figured out, are they actually statutory or are they kind of in concert with what the administration wants to accomplish? So that would be an opportunity obviously, to potentially reduce headcount or reprioritize headcount. The second big area. You know, you mentioned contractors, right? Unfortunately, in the past, what has happened is when the government has done headcount restructuring. You're exactly right. Basically what's happened is headcount numbers go down, contractor numbers go up, basically. And to me that's just like an abomination of what the whole purpose of the headcount exercise is, which is to me, at some point, headcount is a vanity metric. The real metric is like, are you actually being efficient? Are you spending money in a thoughtful way? And so one of the things that we've asked, you know, as part of these headcount plans is say, hey, look, you should re look at your contractor headcount. And there's great roles for contractors where you've got plus ups that may be time limited, where you have to bring people in. That's a good use of contractors. And sometimes you do contractors because, like, there's a particular skill set that we just don't think we can actually recruit or retain in government. That's fine too. But essentially, you know, as you well know, Santi, we've created this basically shadow FTE organization of contractors. It's somewhere two to three times what the actual FTE headcount is. It's, we spend, you know, $750 billion a year on it. And so look, I think it's totally reasonable ask for us to ask folks to do that anyway. That's the whole, like, those are the broad objectives. To your earlier question about, okay, like, could you have done anything differently in the doge perspective? Look, as with all things, you know, look, I wasn't here and one of the things I've learned very strongly from being sitting on boards and being part of organizations is if you're not day to day inside the organization, you really don't understand all the ins and outs of what's happening in that organization. And so my general view on that stuff is trying to Monday morning quarterback it and ask, you know, could have, would have, should have. I just don't think I'm the best person to do that. So like maybe your next podcast should be with Elon and he can decide if he wants to critique anything there. But I just don't think I have the context to be able to thoughtfully answer that question.
- [21:38]
A
That's a more humble answer than, you know, in my, in my world, you know, we're pundits with, all we do is Monday morning quarterback. So, you know, point taken there. We are trying to get a couple folks from Doge who I would love to have on and those, those offers are, you know, still on the table. There's lots of, lots of questions I want to ask some people.
- [21:54]
B
If we can help there, let us know. We're happy to try.
- [21:55]
A
Let's talk on that point about contractors. I do want to ask you there. You just mentioned the federal government spends about three quarters of a trillion dollars on contractors every year. That's kind of steady state. And there are about twice as many contractors by headcount employed by federal government as there are full time workers. And we pay them almost three times as much what we pay. So there's like a significant premium that we pay for having contractors do this work. On some level, does that suggest federal full time headcount should just be higher? That we should save a bunch on this premium? That we, that we have these kind of constraints on hiring in the federal government. But an ideal workforce would be, you know, 2.5 or 2.8. I don't know, pick a number, million. And we just massively reduce the amount we spend in those contracts.
- [22:46]
B
The quick answer, which you won't like is maybe, but let me give you the reason for the maybe. So look, as I said to me, the thing that we need to look at on contractors is if contractors are basically substituting for full time employees. Yes, I think that's a bad thing. And that look, I love contractors. Some of my best friends are contractors. So this is not a contractor.
- [23:04]
A
You know, some of them are good people.
- [23:05]
B
Yeah, exactly right. There are some good people, you know, out there. But no, and I mean that very seriously. Look, they perform very vital role. But what's happened, and it's actually interesting I looked this up and you probably know this Santi, because you're a, you know, a much smarter student of this than I. But like, oh, that's not true. A lot of the, A lot of this rise of the contractor thing started. Literally you have to go back to Clinton Gore. So, you know, I forget you would know exactly what year it was. But like, you know, Clinton Gore actually were the first Doge people basically. Right. Like in the sense of, you know, they did actually, you know, to their credit, try to actually do some meaningful work on efficiency and they did a very good job on the top line number of reducing headcount. I think they reduced it like by 200,000 at the time or something and.
- [23:43]
A
They got it down to about 2.1 million, which is where you guys are at right now. It's very similar. Very interesting parallels here.
- [23:49]
B
Yeah, it's really similar. Yeah. The unfortunate thing was, again, I think though, that's where you really start to see, effectively contractors start to substitute for FTEs, basically. And you really. It's not, again, this is not, it's unfair for me to blame everything on, on the Clinton Gore administration because they're not here to defend themselves. But it is a very interesting kind of dichotomy, which is why again, like I worry about. By the way, you see this in companies too. So private companies, right, which is initially when oftentimes companies do restructuring, the HR people or the CFO will say, okay, you need to cut 10% of heads. So we're recording this today, what is it? December 4th. Mark Zuckerberg made an announcement this morning in Meta that, you know, he's kind of cutting the metaverse significantly. And then more generally, he's asked all of his managers to go back and cut 10%. Now the problem often with that is some people will hear 10% and they'll say, great, okay, so I've got 100 people, I'm going to cut 10 people. I've done my job. What Mark really means, I believe is cut 10% of your expenses. Right. And maybe that means cutting 5% of your people and 20% of your contracts or whatever the math may be, basically. So I worry about like using headcount alone as a metric. Right. Because I agree with you. It can. It. It just doesn't tell the story. So, yes, the short answer in my mind is maybe yes, maybe the right answer is we should have more FTEs and we should have fewer contractors and that's a better solution for everybody, which is you retain the knowledge in the organization, it costs you less money and that's fine. And, and we've been very clear again, if you reference kind of that memo that we put out on the strategic hiring. I actually literally, you know, in my blog post I was very clear that like we would look favorably on increases in headcount that actually ultimately generate savings overall from reduction in contractors. So the reason for my maybe is just look like what the right number is. Honestly, I don't know what the right number is. The agencies know that better than I do. Part of this process though, is to hopefully push them a little bit to think about those trade offs and hopefully get to a more optimal mix.
- [25:32]
A
One thing that folks in my corner of the kind of state capacity world have said as a kind of concern about that kind of focusing too much on headcount, and I think you'd agree with this, is if you're reducing headcount at some of these agencies and that's your, your only metric, and you're not reducing what you're asking that agency to perform, or you're not, you know, removing constraints on these kind of, you know, paperwork demands on a bunch of these people. You know, I think you and I have talked about the Paperwork Reduction act, you know, which is inaptly named, it creates more paperwork for federal employees. But the worry is if you just cut the headcount, say at the fda, but you keep the FDA process the same, you reduce government efficiency potentially. If you're asking them to do the same amount of work and you haven't changed, you push Congress to change statute or the executive branch to change what we're asking that agency to do, you run a risk of inefficiency.
- [26:23]
B
Again, I'll give you a, I'm going to give you a yes and no answer to that, but I think that's really true. So look, the no part of that to me is the assumption in that is you presume that the existing headcount actually is the right optimal headcount to start with. And look, my personal view again, and I may be maybe I'm out in Ireland, this is like is, I think it's a little bit of a misnomer to say the government was this like well oiled, like massively efficient machine. And so, so yes, so I agree with you. Yes, like, okay, if we, if we alleviate that assumption, we say, okay, we're starting for an efficient organization, we end up cutting things. And in cutting things we don't also then revisit like what are the actual deliverables for that organization. Then yes, I agree your concern could be valid. And there may be parts by the way. And I'm not trying to be, you Know, argumentative.
- [27:05]
A
I'm, I'm being argumentative. That's.
- [27:07]
B
No, but I mean in all seriousness, like, which is, look, yes, there may be parts of the organization where maybe we cut too many heads and we didn't reset our expectations on what should or should not be done. And so therefore we made a mistake and we got to hire back those heads. So like, this is not a broad statement, but I would say the key assumption in my mind is like the first going in assumption of like, is, is the government optimally maximized for efficiency? Look, I don't think it's that controversial of a statement to say it was not. But I also agree with you, which is, look, the real way you get to efficiency is we have to go say, great, you know what? I'm, I'll make this up. I'm HHS. There's 20 things that I've been doing for the last 20 years. You know, these 10, like, we absolutely have to do, they're either statutory or they add a huge amount of value. Like, don't touch those things. These five, you know what? Like, yes, we need to do them, but like, the organization is not set up right or we have too many people or the metrics are wrong. Like, let's go fix that. And then maybe there are five where it's like, you know what the honest answer is? They're not statutory, they don't add a lot of value and we should consider those as candidates for just reducing them. So I agree with you. Look, in a good financial planning process, all those things are required. Part of your concern could be true in some areas, depending upon obviously what the kind of state of efficiency is on the, you know, going in front end side.
- [28:14]
A
Maybe this gets us to the question about how you engage with Congress, because I think my worry is the areas like you're describing that are statutory. They're not the, in the executives branch branches control. Congress has said shall you shall do X or Y? And they don't add a lot of value. And they're like really low value things. They're things like the Paperwork Reduction act, which is statutory, but sorry, no offense, Congress, like, it's terrible and it makes executive branch performance worse. But you can't kind of unpull that lever. You have to go to Congress in a lot of these cases to do that. And obviously there's creative ways you can try and change implementation. You can, it's not a single lever, but there's, there's parts of that that you can't, can't touch. How are you thinking about working with Congress on this stuff? Because a lot of the stuff that we're going to talk about, I mean the GS, the general service pay scale is something at the end of the day Congress sets and the executive branch.
- [29:03]
B
Has to work with.
- [29:03]
A
So do you have like a legislative agenda that you're shopping to the four corners in Congress?
- [29:09]
B
Look, Congress is clearly important. There has to be a legislative agenda. We do have that. As, you know, kind of the way this process works is we work with ombuds and figure out the priorities and then obviously, you know, we determine kind of what are the right things to go forward. So we're kind of in that process right now. We've submitted in the budget process for 27, I guess we're going through right now as part of that, we have submitted to OMB kind of what are the things, at least from our perspective, we think are the important priorities. And you know, we're in this process where we're waiting for, what do they call it, passback or something. I forget what the actual terms are, but basically we're, we're in the sausage making right now on all those things, budget and priorities. So the short answer is, look, yes, we absolutely want to do that. And there are things unfortunately that we cannot do without legislative authority. So you're exactly right. Which is if we want to say Everybody at a GS15 level should make whatever $300,000 instead of, I don't know, 195,000, whatever the top end of the range is, like, I can't do that on my own. Now what we can do, as you well know, right, which is kind of, you know, part of the opportunity and the challenge in the executive branch is, look, there is a whole regulatory apparatus, right, through which we can go through rulemaking processes. And there are, you know, one of the, one of my positive surprises, you know, coming into government is look, there are quite a few degrees of freedom that you have to, you know, use the rulemaking process as a way to kind of, you know, change a certain amount of things. So we're going to have to do that. This is not a, you know, statement against Congress. But look, we gotta like, we gotta start to kind of crawl before we walk and run on this stuff. So like, we actually like have to get to a budget, for example, before I think we can actually find substantive, you know, pieces of legislation that we can ultimately attach our objectives to. So order of priority, like let's get through like the CR process here in January and hopefully we actually have A budget. And then. But certainly there's things we would want to do that we could not do absent congressional authority.
- [30:49]
A
Let me stop being such a pessimist here and ask you about three things that I actually do think are pretty encouraging. Three changes that have happened recently. So one, in 2024, the chance to Compete act passed, bipartisan bill, pushed agencies to hire based on merit as much as possible. That's great. Another is this court victory this summer for the administration overturning something called the Leveno Consent Decree, which barred the use of this particular objective screening test in federal hiring. That's overturned now. You can, you can use these kind of screening tests. And the third is one that I want to ask you that you've championed, which is moving to a two page resume. And I'm going to want you to explain what that move was and why it has to happen. But basically, three things that I think have happened both in Congress and on the executive branch side that seem to be making real changes to the hiring process. Take it from there.
- [31:37]
B
This is a great example of where, like, we can work effectively with Congress and then we can obviously, through our rulemaking process, you know, promulgate rules, provide advisory guidance and stuff like that that's consistent with the rules. And that's essentially what happened here, right? You got Chess, Compete act. And then, you know, the President came into office, like he put an EO out around merit hiring and directed OPM obviously to kind of promulgate the appropriate policies there. So I agree with you. Like, that's awesome. If the world, if everything in the world worked that way, like, the world would be a much better place. So hopefully that's a harbinger of good things to come. So you're exactly right, though, which is like several things had to fall into place. So the first thing was we got, you know, the Janice Compete Act. We got the eo. That's great. The second thing was the Leano decision, right? Which again for your. For listeners really was kind of goes back also to like 1980, 81, to the Carter administration, where we used to use kind of a test called pace, which was essentially like a civil service kind of test for people to qualify. And it was demonstrated that it had a disparate impact, right? The results for minorities were, you know, kind of lower than results for others. And so the government entered into this consent decree. It just kind of sat there for 40 plus years. And then luckily we were able to re engage with actually literally the original plaintiffs on that case and end that consent decree as Part of kind of this broader merit hiring process. So that's all good. So we've done that. Now, the third piece that we have to do is. And we've started this, but we have more work to do is in order to make assessments meaningful, we actually have to make sure we have the appropriate assessments for all the appropriate jobs. So I would kind of bifurcate it into technical assessments. So, like, you're applying for a financial analyst job. Like, we really ought to test. Do you understand, like, what a balance sheet looks like? Right. Do you know what debits and credits are or do you know what discount rates are? You know, whatever the right things are. Like, we should test you on your technical skills. And then there's kind of the social psychological assessments, right? Which are like, okay, are you a good team player? Are you going to, like, be able to work well with others? You know, do you play in the sandbox? Well, those types of things, right? So we are farther ahead today on the psychosocial piece of it than we are on the kind of technical merit side of things. And so one of the big opportunities that we have here at opm, and we have a group called HRS that leads this, is we need to develop, where appropriate, the technical assessments. But we also, and you may have seen this, we literally put an RFI out on the street. I think it was like, two weeks ago, right around Thanksgiving, to ask the private sector, hey, look, like, here's the, like, long list of things that we think we want to do on the technical merit side. Like, are there things that we should consider from the private sector?
- [33:56]
A
And, and just to be clear, if you guys already have a test for financial analyst and it matches.
- [34:01]
B
Yeah, yeah.
- [34:02]
A
Our financial analyst role, can't we just buy that off the shelf?
- [34:05]
B
That's exactly right. Yeah. The directive that, you know, I've given the team is, look, okay, like, let's figure out what are the things that are uniquely government jobs for which we have the only appropriate skill for. So here's a good example. We have, you know, procurement officers, right? There are a lot of procurement officer roles. It's not that those don't exist in the private sector, but my guess is probably, like, the rules of government procurement are pretty, like, specific. And so we probably need to go build that test to figure out, can somebody be a good procurement officer.
- [34:29]
A
Although I'll flag. We're hoping that. We're hoping to do some work to change that. It should not be that specific, you know, And. And I think at the Department of War there's been some, some movement on that. There's incredibly arcane processes, maybe under the existing process.
- [34:40]
B
Unfortunately, we probably have to build that test. But yes, financial analyst, like, can you be a nurse? Right. Can you be a, can you be a software developer? Right. I mean, the honest answer, as we all know, is, look, those tests exist out there. And so, yes, we need to validate those tests. We need to make sure that they don't have inherent biases or other things that might make them, you know, kind of not useful in the government context. But like, my hope will be, and we'll see is that there's a lot of those things that we don't need to create on our own. And then all we need to worry about is, okay, how does that test integrate into our broader, you know, USA job suite and how does it flow through and all that good stuff. So anyways, that's kind of thing number one that we're working on, which is really important. Thing number two is making sure again that we, you know, this whole process of job classification and all this other stuff that has to happen, making sure the job classifications also reflect the use of these merit hiring tests so that we're kind of, you know, able again to kind of pull that through.
- [35:31]
A
This is something I have some uncertainty about. Why the job classification system, why does it matter? I mean, so, and for context, like, there's a bajillion different classifications in the federal government for different roles. And it seems ugly and clunky and, you know, confusing from the outside, but what does it actually fix? If you streamline those down to, you know, like 80 job classifications, what, what good does that do you?
- [35:51]
B
Yeah, so we do need to do that and like, we will work on that. Like a lot of things in government, again, this is not to complain about it, but a lot of these things developed out of very kind of risk averse behavior where, okay, somebody got sued at some point in time over something. And so now we've built this entire apparatus that we've stood up to never have to go through that lawsuit again, basically. And look, I don't like lawsuits, I don't want to be in the business of defending lawsuits, but when you actually like unpack these things, people have in my mind, way overestimated the risk here and way underestimated the upside value of like having a more streamlined classification process.
- [36:25]
A
So I'll just, I'll just butt in and say that's a common theme in a lot of these interviews that people I respect say, yes, lawsuits are bad. But the odds of actually getting sued over this tend to be much lower than the most risk averse actors.
- [36:37]
B
Well, and look, I mean, look, life is messy and complicated and like to me a lawsuit is just like any other risk that a business takes. Right. Which is, okay, let's understand it, let's try to assess the likelihood, let's assess what the economic impact is and all this other stuff. And we shouldn't do things that invite lawsuits. But there are times where we might say, you know, what the upside benefit to your point of having 80 classifications instead of, I think we have like 614 or some crazy number like that. Maybe like, you know, when you balance that against, you know, are we making the hiring process so complicated that we're not therefore able to get really great people to apply for these jobs? Like, you know, that's a real trade off that we should make. So yes, the short answer is like, we have to fix all that stuff. And merit hiring is a big part of that. You started this question which is about the two page resume. The honest answer about the two page resume is like the two page measurement should be a one page resume, not a two page resume.
- [37:24]
A
I've only ever had one page resumes.
- [37:26]
B
Exactly. Right.
- [37:27]
A
I never scrolled onto the second page.
- [37:28]
B
Yes, exactly. Like the only people who have long resumes are like academics and people who work in government basically. Right. And yes, like at some point in time, like to me it's a little bit of a, it's a test of your communication skills which is, you know, can I ultimately convey to you what I think my qualifications are for this job that's relevant and like you probably ought to be able to get that on one page because the resumes were like 10 pages to start with. I don't know, two probably sound, sounded like a better number than one. But you know, my hope would be is like over time people realize that the value of a resume is really just to kind of, you know, give you a recitation of some of the things that are, you know, what you deem relevant for the qualifications you're doing. But if we actually have merit based hiring assessments that then complement the resume and then you do some kind of interviews or other stuff like that. I don't think you need a 10 page resume. You probably don't need a two page resume. And maybe all you need is like, I should just be able to send you my LinkedIn and that should be sufficient, basically.
- [38:23]
A
Sure. Well, let me just push a little more there on the history, which is I guess I'm curious for your reading, why are federal government resumes typically 10, 15 pages? And while we're at it, why regular listeners will know that many job applications in the federal government historically have relied on, quote, self attestation, where you just say like, I'm a master level JavaScript coder. You just kind of check all these boxes, you say like, I'm the best in the world at these things. And that's taken or has historically been taken at face value formally in the process. Like, both those things seem wild. Where do they come from?
- [39:00]
B
They are wild. My presumption is a lot of those came from, you know, going back to the Luvano case basically in 8081, which is, look, if you go back to the history of federal employment prior to Livano, the concept of testing and you know, kind of civil service exams and other stuff like that was like part and parcel of how like, things worked, right? So the vast majority of like jobs were hired based upon some like, actual test that was, that was given to people. Then you get to this point where we enter this consent decree and for 45 years, essentially, I believe what's happened and maybe I'm wrong is again, it goes back to the same kind of litigation risk, risk averse culture and government, which is, okay, we have to let people do self attestation because we worry if we introduce a test, maybe that test will also show disparate impact. And, or maybe that test, you know, maybe the Livano consent decree is so broad that we immediately kind of create a legal claim for somebody saying, you guys are violating this consent decree. And look, those may have been very like well thought out and well reasoned ideas, but they go to the same cultural question, which is are we really balancing kind of the value of merit based assessment relative to kind of self attestation. Right? And look, you know, Santa, you and I have talked about, it's like the self attestation thing to me is crazy, right? I mean, like, it can't be the case that you can represent that you have certain skills when, you know you may not. And then some of it may just not be bad actors. Some it just may be. Well, like, yeah, like I think I'm an expert at Excel, but you know, like, compared to my buddies from Private Equity, like, I'm a, you know, I'm, I'm basically a kindergartner on Excel, right? Like, so it's all relative to. So short answer is, look, I don't know. My assumption is all those things built up the 10 page resume. The self attestations were all built up stemming from the fact that we were looking for substitutes for actual merit based functional tests. My hope is, and look, we have to deliver on this, is that we now have turned a new page where we can say, great, okay, like we are now ready to go back to a more rational process of like skills assessment and hiring that would include assessments as a really key part of that.
- [41:00]
A
I mean, to your point about lots of it not being even necessarily bad actors, but differences in perception of whether I'm an expert or not, my instinct on this stuff is once the system allows bad actors to game it by, you know, you check the box like this, it creates this enormous pressure on people who don't want to be lying on these things. It turns out, you know, in this kind of low trust or this broken system, the only way that you could get hired is if you fudged a little bit, you know, and, and so it doesn't even require bad action on the part of a vast majority of people who are lying on the test. It just means that, you know, somebody's trying to hire you and they say, yep, just check, just check those boxes. That's the only way I'll, the hiring manager will even see you.
- [41:36]
B
Look, I totally agree with that. And look, yeah, my, my general view is like, I'm willing to start with the assumption that most people are good and well, intentional, well intended in everything they do. And so I think you're right. When people see that the playing field is not level, they don't want to disadvantage themselves. And so, yeah, sometimes they'll do things that may be, you know, not 100% truthful. So yeah, look, I think this is the but, and this is the, this is the fundamental problem with non merit based hiring systems is exactly that, which is they will, they can be and will be gamed by anything else. And look, even in the merit based system, right, it's not gonna be perfect. We know in a world of AI, right, people may have an AI bot, you know, doing the kind of software development test for them. So like it's not, you can't just like blindly also go by did they get 100% or not on the SAT as a, you know, answer to determine are they qualified for this job, you do need to combine that. And so even in the merit hiring principles, as you know, like an assessment is one tool, but then there have to be other things that you're doing. And so look, at some point there's probably no substitute for an actual interview. Or for some other form of determining kind of people's qualifications for jobs.
- [42:33]
A
And maybe to argue against myself here, there's plenty of these systems where, where I don't think there is malicious intent, but there's some of these cases, I'm thinking in particular of the FA hiring scandal that played out over the last 10 years. It was this big class action lawsuit where there was like explicitly we designed, that the test was designed to fail a bunch of people and privilege a specific racial group. So they're, they're having both, I think cases where the system is just incorrectly coordinated and some just horrifying.
- [42:58]
B
No, look, I think that's a very fair point. Yeah, look, there's no question that, yes, like, you know, as I like to joke, look, like organizations would be really, would be really easy if you didn't have actually people running organizations. Right? Because like the reality is like we're all flawed. We've all got all kinds of problems. And so yes, like there's no question that people can use their skills for evil as well as they can use them for good, hopefully on net. Right. We have systems and kind of, we design, you know, kind of ways to check those systems that hopefully roots that out. But yeah, look, I totally agree with you. Like would be, it'd be crazy to think that there aren't bad people out there who are either cheating on things and, or trying to disenfranchise certain groups, you know, through the way they develop the test. So I think that's totally fair point.
- [43:35]
A
For sure to go back to firing, but on a kind of different angle here. So last year in 2024, fewer than 6,000 government employees were removed from their jobs for poor performance or bad behavior as, as informally, you know, they, they, they, they went through, you know, the.
- [43:50]
B
Equivalent of a PIT MSPB process. Right. Yeah.
- [43:52]
A
Right. So the, the Merit Service Service Protections Board. Am I getting that acronym right?
- [43:57]
B
Yeah, mspb Merit Services Protection Board. Yes, that's correct.
- [44:00]
A
Great. So that's, you know that, that less than 6,000 is 0.2% of the federal workforce.
- [44:06]
B
Yes.
- [44:07]
A
Earlier you didn't want to give me a number on what should the total workforce be, but maybe kind of based on the private sector churn, what should the percentage of people who are removed for not being good at their jobs be in a given year?
- [44:19]
B
Obviously this will vary by organizations because look, there's clearly organizations where everyone is truly world class. And so maybe the answer could be zero. But look, I think if you look broadly across the private sector, other Stuff like Probably somewhere between 5 to 10% turnover of employees that is involuntary would be probably where. That'd probably be where the 90th percentile of almost companies would fit. So yeah, like, look, the 0.2% is way, way outside that. And I think, look, as you know, Santi, it's a function of a number of issues, right? So one is that we have a performance management system in my mind that is, is not well run. So to your point, right, that.02% is exactly identical to the percentage of people that were ranked below, you know, kind of meeting expectations that year. Now, I don't know if it's literally, I don't know if those were the literally the same 6,000 people, but I can at least tell you this. Mathematically it's about the same. So like 99.7 or 0.8% of federal employees in government receive a fully successful, which is kind of in a five point scale that'd be a three or higher, right? And a four or five, like something like, you know, whatever, you know, 70% are fours and fives and then the rest are threes and then this 0.2% are below that. So part of that is, you know, again, we have performance management problem, you know, system that doesn't work. Part of it in my mind is, and you know, I know this is, you know, not always a popular opinion, but I think the protections that we have put in place for civil services can be very onerous and burdensome and make it difficult for, even for people who truly are not performing their jobs and, or who commit acts that are like, truly not deserving of a federal employee. Like, it's very difficult and time consuming, expensive because of this whole appeal process to get done. So like, we have to, we have to kind of approach both sides of the aisle, which is like, we've got to like have a performance management system that works. And we also have to figure out again, are there ways in which to kind of try to streamline that process without compromising civil service reforms and patronage concerns and all that other stuff, but also getting to a system that actually allows this to happen. Now look, I don't want to be cavalier about any of this stuff, but I guarantee you, everybody, everybody in every organization knows who the few people are who aren't actually performing their jobs, right? It's not, it's not, it's not like it's a surprise, right? It's pretty obvious. If you sampled people in any organization, they could probably tell you, yeah, here's the two or three people who we really don't think are actually carrying their weight. So this is not like none of this is a secret. And you know, you know the Santi, if you look at the kind of prior FEVs, you know, the kind of employment viewpoint surveys that have been done in government, one of the consistent things we always see is people saying, I don't feel like poor performers are actually well managed out in government. So these are like endemic, ongoing challenges. And I don't think there's anything evil about trying to have an organization where if people are given feedback and they can't conform to the standards that are required for them to ultimately decide, like, look, you can't stay in this organization. I think that's actually a well functioning and a fair organization, quite frankly.
- [47:05]
A
I completely agree. In past conversations on this podcast, people have described as lumped this problem into this kind of broader problem of broadbanding, which is pay scales are kind of compressed in both directions. You can't pay top performers what they are earning and people at the low end of the distribution actually get like way higher salaries just because there's this kind of compressions.
- [47:27]
B
Yeah. The general way I would describe it is, you're right, which is we have a system where the bottom of the pay scale to the top pay scale, quite frankly, in my mind should be wider. Right. So I think there should be a broader distribution in my view. And we put out this guidance, as you know, for the SES crew, this effective for FY26. Not only are we limiting the number of kind of people who can be rated above fully successful, so again, a four and a five in a five point system to 30%. But we've also given guidance that we think 60% of the bonus pools should go disproportionately to that 30% of the population. So I think you're right though. We need to kind of address both things. Like one is, in my mind, like there should be way greater distinction for people who are truly like knocking the COVID off the ball and doing a great job. And that should be rewards and recognition and paid time off, whatever, all the things that we can do. Right. You know, look, we're never going to pay people half a million dollars and that's, that's fine and I'm not advocating for that. But like we could have a wider band and we could have a much more disproportionate bonus pool. And then to your point also, I think on the other end we do need to have a system where there's greater differentiation between a 1 or a 2 or a 3 and you know, the full GS scale so that you can actually reward behavior. And then I think the third thing is, in my mind, you need to eliminate things like tenure requirements that ultimately kind of drive the kind of step functions in the GS schedule. So in my perfect world, like if I want to hire somebody and they can perform at a GS15 level actually, but they haven't worked the 10 years or whatever the job, whatever the tenant requirement, like, to me, like, that's silly, like we should hire that person and let's hold them accountable to a GS15. And you know, I don't care if they've worked one year, if they worked 50 years. Like, those are, those are proxies for success, but they're not actual real success metrics. And at the same time, like, if somebody's doing a great job, like, we should be able to promote them. Like, we shouldn't have to wait every 12 months to promote them, for example. Or you know, I forget what all the rules are, but, you know, you can only get step functions in certain time periods. You need waiting period. Like we shouldn't make people sit on this plateau if they're truly outperforming. So there's a lot of those things that we need to work on. It goes back to your earlier point. Some of those things, unfortunately, are things that will require congressional help on. And so hopefully we can get things like that done. But obviously I recognize the challenge of those things. And so we need to at least do all the things we can do within our own, you know, authority at OPM here to try to kind of create a proxy for a system that in my mind fundamentally needs to be re looked at.
- [49:45]
A
Right. Let me ask you a little further on what you guys can do without Congress acting. Because to my untrained outside eye, it seems to me like if I was in your role, this would be my biggest problem. Which is like the pay scale is capped formally and there's like, creative things you can do, you know, to try and get around it or to bring people in and other, other authorities. There's lots of tools, but like, the fundamental basic civil service pay scale is capped by Congress. Like, how much of a constraint does that pose for you?
- [50:09]
B
Okay, so that's a real constraint, right? You're exactly right. Which is like, I cannot change today what the, like, top end of the GS15 scale says it is without Congress, right? So like, I need Congress for that stuff. And obviously you asked about legislative priorities. To me, that's a legislative priority, whether it sees the light of day, your guess is good as mine. But what can we do? So, okay, so there's a couple things we do. One is, quite frankly, it's just like basic education, which we do at opm. But I think we can do a better job on, like, we got to help people understand all the things that are available, all the tools that are available to managers. Right. So it turns out I didn't know this, but like OPM has the ability to. In limited. For limited numbers of total headcount across government for critical skills areas, we can kind of approve higher compensation, you know, up to a certain cap, but above the traditional like GS levels, for example. So if a, you know, a manager at another agency comes to us and says, like, we really need this technical person in this area, but like, I've got to be able to pay them more than I can pay them at a GS15, like, we actually have authority to be able to do that. Now it's capped at like 800 people. But there is a process by which we could go to the president and say, hey, like, this is a really important area and the president could waive that cap or give us like authority to do stuff. So number one, there's just, there are a bunch of tools that I would say, like, are in the toolbox that are imperfect, but at least in limited circumstances for critical areas I think we can address. You know, there's things, as you know, look, there's special ACT awards, there's retention bonuses. There are other things, again, that very, very well educated like Chico's in the HR departments, some of them understand, but don't always filter to the managers and stuff like that. So I think again, some of this is just awareness on those things.
- [51:38]
A
Sorry, Chico's. I'm not familiar with that.
- [51:40]
B
Chief Human Capital Officer, the HR heads in the organization. Sorry. Wow, I stumped you. I stumped you on an acronym in government. That's good. I never.
- [51:47]
A
I know, it happens all the time.
- [51:48]
B
I never suspected that would be a benefit of this podcast.
- [51:51]
A
Okay, I've got my ANKI flashcards of various horrifying acronyms that add on to the rotation.
- [51:57]
B
So anyways, the short answer is, look, I think there's a bunch of authorities we have that we need to educate people on and make sure they're used appropriately. Like, like we should not just arbitrarily, like hand out candy to everybody, but like, you know, there are policies and procedures for this stuff. So the second thing we can do, which goes to Kind of the classification and the job description side of things is we can, through reclassification, which we're working on, my understanding is look, we can eliminate tenure and for example degree requirements from all job requirements. Right. Which in my mind will be helpful. Right? Because again, I think that there is some artificial barriers there that are function of that I believe and my team is working on it right now. Like I think that's something we can do without congressional. We don't need Congress to pass a law to do that. And so that's great. As part of merit hiring. That would be great. I think that would help because I think some of this is if we can't change the pay schedule, somebody's making sure we can hire people at a level that is commensurate with their actual demonstrated skill instead of saying, hey, you know what, like you're great, but we got to hire you at a GS7 or GS8 because you failed the tenure requirement. So like we can do those things and we will do those things. And then look, I think, you know, the, the last thing we can do, which again is, look, we got to use our bully pulpit with Congress and hopefully with the President's support just to say hey, look, like there are again particular things from a legislative perspective that, that could make sense and should make sense here. The final thing we can do which I mentioned is look, we can provide regulatory authority around force distributions of like rankings for people from performance management's perspective and then correspondingly how that drives bonus based compensation so that even if we can't change someone's pay grade from a salary perspective, if they're doing great, we can, you know, disproportionately reward them from a bonus perspective. So those are all the things I think we can do. So like I'm not like nihilistic about like we're just totally at the mercy of convincing Congress to do these things that would make our lives easier. But like I think there's a lot of things we can do even in the absence of congressional action.
- [53:48]
A
I'll just make a plug. Recently I've been working with some of my new colleagues were the inaugural leadership of the CHIPS program office. And we've got an interview with them that I don't know if it'll come out before or after this one, you know, but, but it'll be, you know, right, right around the same time they'll be out. And that project is basically like the lessons learned, like what worked, what didn't. And one of the biggest things they talk about is hiring. The CHiPs program office got a lot of authority. They got direct hire authority and executive service, which to listeners might be pretty arcane, but it's basically two ways you can do end runs around the GS scale. And that enabled them to hire a huge amount of private sector talent from these kinds of Wall street institutions. It's hard to see where those folks would have come in otherwise absent that authority. But that took the kind of like going to the White House and saying, hey, these 25 spots, these.
- [54:39]
B
That's totally reasonable, right? And I think as you know, like there are places I forget, but there's other agencies. Like my understanding is like at the SEC, for example, they're on a totally different pay scale because they've just determined look like we cannot recruit and retain people. And so like they're not on the GS scale. I think the Defense Department has some, you know, kind of also authorities around stuff. So yeah, like there are piecemeal things we can do in the absence of like wholesale review of the GS schedule. And look, the answer may be just in this political environment, just given obviously kind of the narrow margins that exist in Congress, it may just be that that's the way to do it, is you just need targeted things. But again, as I said, the good news is like, even in the absence of that, like we actually have our own targeted stuff that we can do on our own authority that we probably just need to better manage and better articulate the opportunities for kind of hiring managers in critical roles.
- [55:23]
A
Scott, you've been doing, among other things, a big kind of media tour or a big push at least in your public appearances on trying to get young folks into the federal government. And I think for, for some of the reasons you mentioned, the tenure requirements, the fact that to get into a lot of these roles you have to really already know how the system is played and what kind of resume you have to have as well as potentially the, the pay scale and maybe the, the boringness of D.C. the perceived boringness, it's quite hard. And so the, the, the median, I can't remember actually we, we did something on this. But the median federal employee is much, much older than the median employee in, in, in the private sector.
- [56:00]
B
Yeah, I mean here's I'll very quick data like so the under 30 population in the government is 7% of the federal workforce is under the age of 30 versus 22 or 23% in the non federal workforce. And then 42% of the federal workforce is over the age of 50 compared to about 33% in the non federal workforce. So yes, like we definitely have an age demographic and you know, skew for sure in the federal government.
- [56:25]
A
What tools do you have at your disposal, Scott, to fix that?
- [56:28]
B
Just so people understand. Like again, what we talked about, like we have two kind of, I think fundamental challenges in the, in the government. One is just as you mentioned, and this is not an age ageist comment, but like we have an aging demographic in the federal workforce. And so look, as you look at normal retirement patterns and stuff, you're going to have a significant portion presumably if people stick on normal retirement timeframes of like, lots of people will be probably retiring over the next five or ten years. And then on the other end, as I mentioned, we're doing a really, really bad job of replenishing that with a pipeline of people who are early career. So that's kind of problem number one that I just think like, you know, we all need to think about. Problem number two is it's particularly acute in areas where the pace of change probably requires people who have very, very modern and recent training. So like again, tech and AI would be a great example where I can say this because I'm in the over 50 crowd, like my ability to adopt new technology probably is less good than my 25 year oldest daughter because like, you know, she's just at a different stage in life and she's grown up around these tools and stuff like that. And so like we have a dearth of people, I would say, who are kind of modern in their thinking around some critical areas, you know, tech and AI being an obvious one. So the short answer is, look, I think we have to solve both these problems. So as we've talked about on this whole podcast, right, there's endemic problems that make this hard, right? So there are tenure requirements or college degree requirements. I think we can solve those problems. There are, you know, the hiring process is clunky, right? It's really hard to like, you know, get through the whole process. We can solve that. We can do a lot more centralization of hiring recruitment through OPM and make it easier for people. And again, we're not going to solve the pay gap problem, but if we can solve the leveling problem, I think that reduces the pay gap problem quite a bit. And again, we do have special authorities where needed for particular roles. So that is all important. We can do the other piece though, that I think is most important and this is what I'm very excited about and we're going to have some more news on this. Hopefully Shortly is we've got to change the narrative and tell people the exciting narrative about coming to work for government. So I think I told you the story when we were at that dinner together. You know, one of my first meetings. The story I heard from one of the managers here was like, generally people have joined the government because of lifetime employment. That's kind of been the pitch basically. And I was like, okay, like, sorry to tell you, but number one, like that doesn't exist. People have been lying to you if they've been telling you that. And then to like, that's just a terrible like marketing message for a, you know, under 30 person who's early in their career. Like they don't want to feel like they have to make a, you know, they're not making a decision for 40 years when they decide to like take a job. They're making a decision for like two or three years basically. Right? Because. And so we gotta like not message that. And we need to message, like, look, here's all the cool stuff you can do. Like there are critical problems. You can do it at a scale that you can't even see in the private sector. We can eliminate a lot of these bureaucratic and other things that prohibit you from being able to progress through the organization as you demonstrate your skills in the job. And then, oh, by the way, like to me, which, you know, I believe strongly in this and maybe other people don't, like, it's totally fine for you to go back and forth between the government and the private sector. And so, you know what, if you want to come to government and you think it's awesome for two or three years and then, you know, God bless you, you want to go like work for Zuckerberg at Facebook, like that's awesome. Like go do that. And like, let's not like expect people, let's not build an entire system that is based around a 10 year based kind of promotion and kind of career path that just isn't consistent with how people in the early career stage think about the world anymore. Like that was probably true in the 50s and 60s and maybe even in my generation. Like we thought about, you know, more, you know, kind of salarymen kind of lifetime employment type things. But that's just not how the world works anymore. And so anyways, those are, those are all the things I think we have to do. And like, I'm super excited about it. It's going to be a huge challenge. And yes, like, we got all kinds of problems that we have to navigate through. But to me this is critical. Like if we don't solve this problem, like we certainly won't solve the tech and AI needs that the government has. And as I said, we've also got this just major, you know, pending kind of retirement problem that's going to happen in federal government which you know, we've got to replenish kind of the pipeline of people who are coming into government as well.
- [60:21]
A
Totally. I think I agree with all that. Although are you familiar with the Revolving Door project?
- [60:25]
B
I'm not more about that one.
- [60:27]
A
Oh, oh, they're, they're, they're like a.
- [60:29]
B
Kind of, that's the anti public and.
- [60:32]
A
Private sector organization and they've really been really critical of a lot of the other work we're doing at ifp. But they, they'll have a fit when they hear you say this. But I entirely agree.
- [60:41]
B
Yeah, look, there's bad actors, right? Okay. So there's no question like there are like we live in a world there are some bad actors. And yes, I'm sure some people will take advantage of it and they will, you know, violate the conflict of interest rules and all that stuff. But you know what, like, okay, I don't want to make light of it but like, I don't think that means that we should then therefore like you know, force people into like 40 years of indentured servitude working for the government because like we're worried that like there are some bad actors out there who might actually.
- [61:04]
A
That can't be the only alternative. Yeah, yeah.
- [61:06]
B
So yeah, maybe, maybe there's a happy medium somewhere in there.
- [61:10]
A
I hope so. Do you have like a list now of places that young listeners of statecraft should be thinking of throwing the resumes in in the federal government? What would be the top of the list right now?
- [61:20]
B
Yeah, so we are going to very shortly you will see this, but we're going to start with a focus around kind of, you know, kind of tech related jobs because we think that's a critical gap and we're, we're a little bit premature to give you the full details today but, but you're going to see something shortly and once that happens we'll make it very, very clear for where people should focus. So we'll give your listeners a teaser of it today and then ask them to kind of stay tuned if they want to follow me on X. I'm always looking for more followers. So they will hear the news, they will hear the news real time.
- [61:51]
A
You and I both are metrics motivated.
- [61:54]
B
Exactly right. Yeah.
- [61:55]
A
Yeah. Well, Scott, it's been a real pleasure. Thank you for joining, and I hope we can chat in the future.
- [62:00]
B
Awesome. Thank you, Santi. Appreciate it.
- [62:06]
A
Sam.