The Senior Executive Service: Overview and Current Issues

The Senior Executive Service: Overview and Current Issues

Order Code RS20303
Updated April 9, 2003
CRS Report for Congress
Received through the CRS Web
The Senior Executive Service:
Overview and Current Issues
L. Elaine Halchin
Analyst in American National Government
Government and Finance Division
Summary
The Senior Executive Service (SES) was created in 1979 to provide a government-
wide, systematic program for the recruitment, retention, development, and management
of senior executives in the federal government. This cadre of nearly 7,000 top-level
executives, which is noted for its policymaking and leadership responsibilities, consists
of four types of appointees. Entry into the SES and performance management are
governed by law and regulations that emphasize executive competencies, pay for
performance, and the concept of rank-in-person. Current issues include pay
compression, retirement and succession planning, proliferation, mobility, restructuring,
and performance management.
Background
On October 13, 1978, President Jimmy Carter signed the Civil Service Reform Act
(CSRA) of 1978 (P.L. 95-454, 92 Stat. 1111), which abolished the U.S. Civil Service
Commission and established in its place two organizations, the Office of Personnel
Management (OPM) and the Merit Systems Protection Board (MSPB).1 Major reform of
the civil service system had taken place last in 1883. When the CSRA took effect in July
1979, it established a new component of the civil service system, the Senior Executive
Service (SES).2
1 See CRS Report 98-773, Office of Personnel Management: Background, Strategic and
Performance Plans, and Congressional Oversight, by Barbara L. Schwemle; and CRS Report
RL30194, Merit Systems Protection Board: Background, Strategic and Performance Plans, and
Congressional Oversight, by Barbara L. Schwemle.
2 There are three mainstays of the federal civil service. The Federal Wage system covers trade,
craft, and labor occupations. The General Schedule system consists of classified white-collar
positions: professional, administrative, technical, and clerical. By comparison, members of the
SES are generalists with executive and policymaking responsibilities.
Congressional Research Service ˜ The Library of Congress

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Creation of the SES was undertaken with the goal of remedying problems related to
the recruitment, retention, development, and management of senior-level executives.
Prior to the establishment of the SES, OPM lacked systematic plans for identifying,
recruiting, and developing senior executives, and for determining which executives were
or were not doing a good job.3
Major Features of the SES
Among several main features of the SES, there are two key concepts on which the
SES is based.4 Guided by the notion of pay for performance, the SES offers its members
a trade-off: in return for the opportunity to earn greater financial rewards (i.e., salary,
bonuses, presidential rank awards) through outstanding job performance, executives give
up some of the usual job security associated with the civil service. The second concept
is that rank resides in the person, not the position. This concept facilitates reassignment
of executives to functions or positions where they are needed.
The SES consists of four categories of appointees — career, limited term, limited
emergency, and noncareer — and two types of positions: career reserved and general.5
Career appointees make up the largest group within the SES: 6,118 in FY2001 (compared
to 265 noncareer and 243 limited appointees). The total number of positions authorized
for each fiscal year is determined by the Office of Personnel Management in consultation
with the Office of Management and Budget (OMB).
Entry into the SES is open to both civil service employees and non-civil service
employees, though no more than 30% of SES positions may be filled by individuals who
do not have the requisite experience in the civil service. Each new appointee must have
his/her executive qualifications certified by an independent Qualifications Review Board.
The five Executive Core Qualifications were updated by OPM in September 1997.6
Two major tools of performance management are the annual performance appraisal,
which must be conducted at least annually for each member of the SES, and the
compensation system. Career appointees who receive a rating of fully successful or better
are eligible for a lump-sum performance award equal to an amount not less than 5% or
more than 20% of their rate of basic pay.7 There are six rates of basic pay for members
of the SES, beginning with ES-1 ($116,500) and topping out at ES-6 ($134,000), effective
3 Sally H. Greenberg, “The Senior Executive Service,” The Bureaucrat vol. 7, no. 3 (1978), p.
17.
4 For greater detail, see 5 U.S.C. 2101a, 3131-3136, 3391-3397, 3591-3596, 4311-4315, 5381-
5385, 5752, and 7541-7543.
5 Unless otherwise noted, this report focuses primarily on career appointments and appointees.
6 See “Executive Qualifications,” U.S. Office of Personnel Management, available at web site
[http://www.opm.gov/ses/exqualify.html], visited Feb. 14, 2003.
7 Conversely, a rating of unsatisfactory or minimally satisfactory can lead to reassignment within
or removal from the SES. See 5 U.S.C. 4314 for additional information.

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January 2003.8 The President establishes SES salaries, subject to the following
restrictions: the basic pay rate must be at least 120% of the basic pay rate for GS-15, step
1, and cannot exceed the basic pay rate for Level IV of the Executive Schedule.9 The
combination of the basic pay rate and locality pay rate for members of the SES cannot
exceed Level III of the Executive Schedule.10
Historically, the cap on total compensation has been Executive Schedule Level I,11
which is $171,900 in 2003. New language was added to 5 U.S.C. 5307 by P.L. 107-29612
Section 1322, which raises the cap and requires that an agency be certified by OPM, with
the concurrence of OMB, for its employees to be eligible for the new cap. The new cap
is the Vice President’s salary, which is $198,600 in 2003. Section 1322 states that an
agency must be “certified ... as having a performance appraisal system which (as
designated and applied) makes meaningful distinctions based on relative performance.”
Certification is for two years, but OPM, with the concurrence of OMB, may terminate an
agency’s certification at any time. The cap for senior executives employed by an agency
that fails to receive or maintain certification remains at Executive Schedule Level I. OPM
and OMB will jointly issue regulations and guidance on the certification process.13
Senior executives who have displayed exceptional performance for a minimum of
three years, and have met other criteria, are eligible to be nominated by their agencies for
one of two presidential rank awards, Meritorious Executive or Distinguished Executive.
Current Issues
The 20th anniversary of the SES in 1998 prompted an examination of the service by
OPM and other interested parties. OPM issued “An Outline of OPM’s Proposed
Framework for Improving the Senior Executive Service” in April 1998, released a status
report in December 1998,14 and announced proposed administrative rule changes.15 The
8 See CRS Report 98-53, Salaries of Federal Officials: A Fact Sheet, by Sharon Gressle. The
six payable rates (base and locality pay) in Washington-Baltimore, DC-MD-VA-WV are: ES-1,
$129,874; ES-2, $132,541; ES-3, $138,516; ES-4, $142,500; ES-5, $142,500; and ES-6,
$142,500.
9 5 U.S.C. 5376(b)(1)(A) and 5382(b).
10 5 U.S.C. 5304(g)(2).
11 5 U.S.C. 5307(a)(1).
12 H.R. 5005; 116 Stat. 2135.
13 Memorandum for Human Resources Directors from Donald J. Winstead, Acting Director,
Workforce Compensation and Performance Service, U.S. Office of Personnel Management,
“Aggregate Pay Limitation for Members of the Senior Executive Service and Employees in
Senior-Level and Scientific or Professional Positions,” CPM 2003-02, Jan. 24, 2003.
14 See “Draft Framework for Improving the SES,” U.S. Office of Personnel Management,
available at web site [http://www.opm.gov/ses/draftframe.html], visited Feb. 14, 2003; and
“Status Report Draft Framework, Status Report as of December 1998,” U.S. Office of Personnel
Management, available at web site [http://www.opm.gov/ses/statusreport.html], visited Feb. 14,
(continued...)

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Senior Executives Association (SEA) responded to the OPM framework in June 1998,16
and an OPM- and Senior Executives Association-sponsored survey of SES members was
completed in 1999.17 The major issues facing the SES are pay compression, retirement
and succession planning, proliferation, and mobility.
Pay Compression
Pay compression is an ongoing problem for members of the SES. As SES pay rates
climb, due to increases determined by the President, and in the absence of significant
increases in Executive Schedule salaries, which, as noted above, are the caps for SES pay,
the base pay rates for the six SES pay levels move closer together. The ES-5 and ES-6
levels have the same base pay rate ($134,000). When locality pay rates are added, the top
three pay levels are the same ($142,500) in all locality pay areas. In 20 localities, the top
four pay levels are the same amount. In Houston, Los Angeles, New York, and San
Francisco, five pay levels are the same amount. There is concern that the pay
compression problem, and the belief that salaries for senior executives are inadequate,
might affect recruitment and retention efforts.
The President’s FY2004 budget contains a proposal to change the SES pay system
which, if enacted, could help to alleviate pay compression. The President’s proposal,
through amendments to Sections 5304, 5382, and 5383(a) and (c) of Title 5, would raise
the cap for base and locality pay to Level II of the Executive Schedule, replace the six
rates of basic pay with a range of rates (i.e., one pay band),18 raise the cap on basic pay to
Level III of the Executive Schedule, and allow for adjusting the pay of a senior executive
more than once in any 12-month period as provided in regulations prescribed by OPM.
The proposal also states that the pay of a senior executive could not be reduced as a result
of these changes during the first year they take effect. The minimum rate of basic pay
would not change.19
14 (...continued)
2003. Also, the director of the Office of Personnel Management remarked on OPM’s draft
framework in July 1999: see “Remarks by Janice Lachance, Director, Office of Personnel
Management, Senior Executives Association Conference,” available at web site
[http://www.opm.gov/speeches/1999/sea2.htm], visited Feb. 14, 2003.
15 See Office of Personnel Management, “Employment in the Senior Executive Service,” Federal
Register, vol. 64, no. 146, July 30, 1999, pp. 41334-41336.
16 Carol A. Bonosaro, President, Senior Executives Association, letter to Janice LaChance,
Director, U.S. Office of Personnel Management, June 30, 1998.
17 Survey results are available on OPM’s web site, [http://www.opm.gov/ses/survey.html], visited
Feb. 14, 2003.
18 This proposal would create one pay band for members of the senior executive service: “The
Administration ... proposed to reform the pay structure of its senior managers by increasing the
limit on pay and replacing the current six-tier system [i.e., six rates of base pay] with a pay band
so that agencies can tie these managers’ compensation more closely to their performance.” (U.S.
Office of Management and Budget, Budget of the United States Government, Fiscal Year 2004,
Analytical Perspectives (Washington: GPO, 1993), p. 287.)
19 U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year
(continued...)

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Retirement and Succession Planning
A 2000 GAO report on the Senior Executive Service calculated retirement trends for
members of the SES through fiscal year 2005 and delved into the related issue of
succession planning by executive agencies.20 Seventy-one percent of the approximately
6,000 career SES members on board presently will be eligible for regular retirement by
the end of fiscal year 2005. OPM estimates that 45% of those eligible will retire in the
six-year period between fiscal years 1999 and 2005. The impact on agencies and
occupation series will vary. For example, 82% of the career SES members in the
Department of Veteran Affairs will be eligible to retire by the end of FY2005, while the
figure is 65% each for the Environmental Protection Agency and the Nuclear Regulatory
Commission. The projected loss of senior executives to retirement suggests, according
to the GAO report, that succession planning should be a priority among executive
agencies. However, responses by SES members to the 1999 survey suggest that a number
of agencies have not instituted formal succession planning programs.
Proliferation

Numerous agencies, government corporations, intelligence activities, administrative
law judges, and foreign service positions are excluded from the SES. Agencies that have
their own cadres of senior executives include the Federal Bureau of Investigation, the
Drug Enforcement Administration, the Central Intelligence Agency, the Federal Election
Commission, and the Office of the Comptroller of the Currency.21 Statutory exclusions
acknowledge that some positions do not meet the criteria for a “Senior Executive”; that
some agencies do not meet the definition of “executive agency”; or that, in the case of
intelligence activities, the nature of the work precludes membership in a government-wide
executive corps. Other agencies or agency components may be excluded from the SES
if they have applied for and received a waiver that allows them to establish and maintain
their own group of senior executives.22 For example, the National Security Council,
having received a statutory waiver pursuant to 5 U.S.C. 3132(c), has established its own
cadre of senior executives separate from the Senior Executive Service. Segmenting the
executive corps in this manner gives agencies latitude in managing their top-level
executives. As the pay compression problem has worsened, establishment of an
independent executive cadre appears to have allowed affected agencies to increase the
salaries of their senior executives regardless of the base pay rate of Level IV of the
Executive Schedule. For example, the maximum salary for senior executives at the
Federal Aviation Administration is $154,700. The maximum salary for individuals
19 (...continued)
2004, Appendix, (Washington: GPO, 2003), p. 13.
20 See U.S. General Accounting Office, Senior Executive Service: Retirement Trends Underscore
the Importance of Succession Planning, GAO report GCD-00-113BR (Washington: May 12,
2000).
21 See 5 U.S.C. 3132(a)(1)(A)-(D) for a list of agencies and positions excluded from the SES by
statute. See also 5 U.S.C. 3151-3152 for FBI and DEA SES systems.
22 According to 5 U.S.C. 3132(d), any agency or agency component whose waiver is approved
“shall make a sustained effort to bring its personnel system into conformity with the Senior
Executive Service to the extent practicable.”

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employed by the Internal Revenue Service (IRS) under its streamlined critical pay
authority23 is the Vice President’s salary ($198,600). It is unclear how this trend toward
compartmentalization of senior executives might affect recruitment and retention, job
performance, mobility, or the status of the SES.
Mobility
Prior to the creation of the SES, movement of top-level executives (GS-16 through
GS-18) within and between agencies was hampered by procedural and organizational
obstacles. Consequently, one of the major features and strengths of the SES was to be
executive mobility. The expectation was that intra-agency (i.e., reassignment) and,
particularly, inter-agency (i.e., transfer) mobility, in helping executives gain a broad base
of experience and knowledge, would benefit members of the SES and the agencies that
employ them. The number of local and geographic reassignments was highest in FY1982,
when 1,399 executives were reassigned; in FY2002, the most recent year for which
figures are available, only 657 executives were reassigned.24 The number of geographic
and local transfers to another agency is even smaller: the highest number of transfers in
any one year was 149 (in 1980); in FY2002, 38.25 Financial burdens associated with
relocation constitute a set of obstacles peculiar to geographic reassignments and transfers.
Whereas SES stakeholders rejected an OPM-proposed mobility requirement, there is
support for voluntary mobility. Consequently, OPM is focusing on ways to encourage and
facilitate mobility, especially inter-agency transfers, among SES appointees. One of
OPM’s initiatives is the Senior Opportunity and Resume System (SOARS) website.26
SOARS is an on-line job center where SES members and OPM-certified Candidate
Development Program (CDP) Graduates may post resumes and view opportunities.
Federal departments and agencies may use SOARS to post job openings and view
resumes.
23 5 U.S.C. 9503; P.L. 105-206, Sec. 9503.
24 This category (reassignments) also includes job changes resulting from reorganizations,
revisions of job descriptions, and changes in job and organization titles.
25 Reassignment and transfer information provided by the Office of Personnel management.
26 SOARS is found at [http://sesmobility.opm.gov/ses.asp], visited Feb. 14, 2003. The
introductory page is available to the public, but access to resumes and opportunities is restricted
to members of the SES, CDP graduates, departments and agencies.