Does Changing the Rules Really Matter? Assessing Procedural Justice Perceptions under Civil Service Reform

Does Changing the Rules Really Matter? Assessing Procedural Justice Perceptions under Civil Service ReformEllen V. Rubin and Stephen E. WeinbergState University of New York, University at Albany

AbStRACt

Civil service reforms over the last four decades have sought to provide new flexibilities to managers, particularly in relation to performance management. Reforms undertaken by many US states are consistent with this trend. State employees report these managerial flexibilities are decreasing perceptions of fairness. At the federal level, personnel reforms in the US Department of Defense also sought to increase managerial discretion. Defense identified employee perceptions of fairness as key to the successful implementation of the system. This study examines changes in fairness perceptions in response to civil service reforms at Defense in three distinct ways. First, procedural justice perceptions are examined before, during, and after repeal of the personnel reforms. Second, we consider whether the procedural justice perceptions of employees and managers are different over the time periods. Procedural justice research includes few studies controlling for managerial status, despite early arguments that position in the organization is likely to change fairness assess-ments. Third, the use of control groups allows us to consider if changes in procedural justice perceptions are due to the personnel reforms or reflect governmentwide trends. US Office of Personnel Management surveys covering a 10-year period are analyzed using a differ-ence-in-differences-in-differences model. Results indicate that manager and employee per-ceptions of procedural justice are different over the time period, these perceptions change in different ways in response to the reforms, and the observed changes are unique from governmentwide trends.

Civil service system advocates in the United States in the late 1800s originally proposed the merit system as a tool for improving government performance. In more recent times, traditional civil service rules have been portrayed as a hindrance to gov-ernment performance (Condrey and Battaglio 2007). Reforms are taking place at the state and federal level in the United States and across the globe. Individuals advocating these reforms assume that reductions to legal protections, delegation of authority to

Previously presented at the Public Management Research Conference June 2013, in Madison, WI. Address correspondence to the author at [email protected].

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line managers, and increases in individual financial incentives will improve employee motivation. These reform efforts include limited discussion on how the changes in rules may impact employee perceptions of fairness.

US states are implementing what some scholars call “radical reforms” to civil service systems, including moving employees into at-will positions, and granting increased authority to managers to fire employees without the traditional due process protections. Many of these same states have also moved to significantly decentralize public personnel management and implement pay-for-performance with varying suc-cess. Employees under these new systems in multiple states report decreased levels of fairness.

Under the Clinton and George W. Bush administrations, a number of federal agencies significantly redesigned pay, classification, performance management, and hiring procedures, including the Department of Defense, beginning in 2003. The Defense reforms granted more authority to managers in the areas of adverse actions procedures, performance appraisal and recognition systems, and labor relations. However, Defense faced significant obstacles due to union claims of unfairness in multiple areas, especially surrounding pay-for-performance systems.

According to Bowman and West (2006) there is “a paucity of evaluative research in most jurisdictions [on civil service reforms]. Very little systematic data exist…. What are lacking are analyses of the impact of the reforms on staffers of individual departments” (140). This essay seeks to close that gap by examining fairness percep-tions of the Department of Defense reforms, called the National Security Personnel System (NSPS).

For public management researchers, the implementation and repeal of NSPS pro-vides an opportunity for a natural experiment. In studying the natural experiment presented by the NSPS, this essay focuses on the changes in employee perceptions of procedural justice, which can be broadly defined as perceptions about the fair-ness of the decision-making process. Procedural justice is receiving increased attention from public management scholars (Kurland and Egan 1999; Nesbit, Nabatchi, and Bingham 2012; Rubin and Kellough 2012).

To understand how employee perceptions of procedural justice changed over time in response to the NSPS, the analysis specifically focuses on civilian employees of the Navy. Data are drawn from the seven surveys of federal employees collected by the Office of Personnel Management (OPM) between 2002 and 2012. A difference-in-differences-in-differences analysis compares the changes in procedural justice per-ceptions between the Navy and three control agencies and between employees and managers in the Navy and the control agencies. This comparison between employees and managers is unexplored in procedural justice research, despite early justice schol-ars suggesting that organizational role is likely to influence the salience of concerns about fair procedures (Leventhal 1980).

This essay begins with an overview of state experiences with civil service reform. Next, it describes the content and goals of the NSPS. To provide a theoretical frame for the study of fairness, procedural justice is explored next, including a discussion of why managers and employees may hold different views of procedural justice. The methods and data used for this study will be outlined, followed by a review of the

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Rubin and Weinberg Does Changing the Rules Really Matter? 3

analytical evidence. Finally, the essay will conclude with a discussion of the findings and implications for future personnel reforms.

Civil SeRviCe RefoRM in US StAteS

American public administration has a history of experimentation at the state and local level before administrative reforms fully permeate the federal level. Civil service reform follows the same pattern. States such as Georgia, Florida, and Mississippi have implemented major reforms, changing both the social contract and the ways of doing business. Employees in these states have raised concerns about fairness that foreshad-owed problems experienced by Defense.

A 1996 reform in Georgia removes employee protections, decentralizes personnel management, and implements a new performance management system. Employees view the new appraisal systems as less fair than the previous system, especially with respect to the new pay-for-performance scheme (Kellough and Nigro 2002). Fewer than one-third of state Human Resources (HR) professionals believe that employees trust managers’ personnel decisions, and fewer than one-third think that employees believe the organization will treat them fairly (Battaglio and Condrey 2009). Furthermore, the levels of trust in management and trust in the organization decrease when perceptions of job insecurity and perceptions of favoritism increase (Battaglio and Condrey 2009).

Florida’s 2001 reform is similar to Georgia’s and has experienced similar employee skepticism. In interviews with state employees and HR Directors, Bowman and West (2006) report that neither group thinks the reforms have improved service provi-sion. Employees indicate the reforms have had a negative impact on morale and have increased levels of political interference. A later set of interviews raises additional concerns about favoritism (Crowell and Guy 2010).

Unlike in Georgia and Florida, Mississippi’s experience with at-will employment has occurred on a more limited basis. In Mississippi, specific agencies may transition their employees to at-will status for a fixed period of time for the purposes of restruc-turing or downsizing. Mississippi HR Directors perceive at-will policies as improv-ing managerial flexibility (Goodman and French 2011). However, the HR Directors also indicate these transition periods make employees feel less secure about their jobs (Goodman and French 2011).

The states broadly designed reforms to provide more flexibility to managers, del-egate authority from central personnel agencies to program agencies, and offer incen-tives and sanctions for performance. In the states, employee fairness perceptions have decreased in response to the expanded flexibilities granted to managers.

DeSCRiPtion of nSPS

The 2003 NSPS reforms did not include at-will employment provisions but were other-wise similar to the state-level reforms. This section details the NSPS reforms, focusing on new power granted to managers. Early evaluations suggested employees working under the new rules experienced a drop in their perceptions of fairness. The criticisms articulated in these evaluations led to the repeal of the NSPS in October 2009.

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In late 2003, the US Department of Defense gained authority to significantly redesign its civilian personnel system (see the time line presented in table 1). Both the legislation and supporting regulations stated that the goal was to provide a “flexible and contemporary system” for personnel management (Department of Defense and the Office of Personnel Management 2005; National Defense Authorization Act 2003) that would facilitate the larger military transformation happening under Defense Secretary Donald Rumsfeld’s leadership. Defense and OPM regulations noted the importance of system fairness:

A key to the success of NSPS is ensuring employees perceive the system as fair. In a human resources management system, fairness is the basis for trust between employees and supervisors…. Employees will exercise personal responsibility… when they perceive that the human resources system and their supervisors are fair (Department of Defense and the Office of Personnel Management 2005, 66118–9).

In the area of pay and performance management, the NSPS collapsed 15 pay grades into 3 broad pay bands, with structure varying by occupation group (Congressional Budget Office 2008; Congressional Research Service 2008). Pay-banding was coupled with a major redesign of the performance appraisal system to support the implemen-tation of pay-for-performance (Department of Defense and the Office of Personnel Management 2005). As part of this change, Defense moved away from a pass/fail performance rating system to a five-tier rating system.

Defense also received authority to revise key components of labor relations and adverse actions and appeals procedures (National Defense Authorization Act 2003). These revisions made it more difficult for employees to challenge management deci-sions. In the area of labor relations, regulations reduced the scope of bargaining. For example, this removed the requirement to negotiate changes to work procedures and technology before implementation; under the regulations, such changes would only be negotiated postimplementation (Department of Defense and the Office of Personnel Management 2005). In addition, regulations raised the evidentiary requirements for filing a labor grievance and reduced management’s obligation to share information with labor representatives. In the area of adverse actions and appeals, Defense made it more difficult for the Merit Systems Protection Board to change managerial deci-sions (Department of Defense and the Office of Personnel Management 2005). For example, the standard of evidence would be higher to overturn management’s deci-sion on an adverse action case, and it would be more difficult to change the penalty imposed. The labor relations and adverse actions and appeals provisions proved to be extremely controversial, with the unions challenging them in court (Congressional Research Service 2008).

The classification, pay, and appraisal provisions were implemented, beginning in April 2006, while the dispute over the labor relations and adverse actions and appeals proposals wound its way through the courts. Defense implemented NSPS in “spirals,” gradually transitioning nonunion, white-collar employees to the systems (Congressional Budget Office 2004; NSPS 2005).1 The plan assumed that unionized,

1 Supervisors, managers, and executives in the federal government are not unionized.

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white-collar employees would be transitioned to NSPS in the third spiral (Government Accountability Office 2008).

A series of critical reports and Congressional hearings in calendar years 2008 and 2009 led Congress to repeal the system. In September 2008, a critical report found that employees who had already been added to NSPS remained skeptical of its effective-ness and fairness (Government Accountability Office 2008). Two later reports docu-mented possible bias in the awarding of performance-related pay (Defense Business Board 2009; SRA International 2009). An increase in equal employment opportunity-related complaints was also reported (SRA International 2009).

linking PRoCeDURAl JUStiCe to Civil SeRviCe RefoRM

After civil service reform efforts in both the US states and the Department of Defense, public employees have consistently raised concerns about fairness. In the states, employees reported concerns about the fairness of appraisal ratings and associated pay-for-performance allocations. The NSPS identified fairness as a key to success of the new system, but multiple sources identified consistent fairness concerns, which led to Congress’ repeal of the authority in October 2009. The significant authority given to managers under the NSPS raises the possibility that employees and managers may have held different fairness perceptions of the system.

Procedural justice theory offers public management scholars a tool for analyzing these fairness claims. Procedural justice is defined as “perceived fairness of decision-making processes and the degree to which they are consistent, accurate, unbiased, and open to voice and input” (Colquitt et al. 2013, 200). When an organization is con-cerned about procedural justice, managers consider both the rules for a particular pro-cess, and how individuals are treated during the process. Scholarly study of procedural justice is focused on perceptions of fairness, as opposed to objective measures of fair-ness. Furthermore, research consistently indicates that individuals can differentiate between procedural justice and outcome fairness (Lind and Tyler 1988). Procedural justice is typically measured using six criteria originally developed by Leventhal (1980) and more recently validated by Colquitt (2001). These six components include voice, consistency, bias avoidance, accuracy, appeal opportunities, and the ethics of the decision maker.

Procedural justice perceptions are important to consider within public adminis-tration and civil service reform more specifically. Personnel rules in the public sector are designed to ensure that merit principles are upheld. Procedures for protecting open competition, hiring and promotion based on ability, and valuing diversity and veter-ans’ service are frequently described as burdensome. Personnel rules are intended to create perceptions of workplace justice and a level playing field, constraining mana-gerial discretion to minimize favoritism and abuse. These procedures matter and are valued because they send signals to employees about fair treatment. Changing or eliminating these rules has the potential to change employee perceptions of workplace fairness.

The NSPS reforms provided significant new authority to managers and it is worth considering whether employees and managers held different procedural justice per-ceptions of the reforms. Procedural justice theory provides potential explanations for

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why managers and employees may exhibit different perceptions. Concerns about fair procedures are likely to be more salient depending on one’s role in the organization, for example, for those whose roles in the group require them to enforce or monitor fairness (Leventhal 1980). The rules impact individuals at different hierarchical levels differently, and individuals at different levels therefore have different experiences with organizational constraints (Williams and Levy 2000). Likewise, an individual’s role in an organization, such as holding a management position, may provide them with additional voice opportunities and additional information on decision consistency, the level of bias suppression, and the quality of information used during decision making. Giacobbe-Miller (1995) framed this managerial advantage as due to differ-ences in power distribution: “one would expect divergent views of justice depending on whether one is losing control or gaining control over decisionmaking” (118).

In procedural justice scholarship, employee/manager differences have received little empirical attention. The few studies comparing manager and employee percep-tions generally find that managers exhibit higher perceptions of procedural justice. In a broad sample across multiple private sector organizations, managers exhibited higher perceptions of procedural and distributive justice than employees (Schminke, Cropanzano, and Rupp 2002). Similarly, a survey of Midwestern bank employees found managers consistently exhibited higher perceptions of procedural justice of the performance appraisal system (Williams and Levy 2000). A different study on teachers’ unions comparing fairness perceptions of impasse resolution policies found differences between labor and management. Specifically, managers viewed impasse procedures giving them more power over decision making as more procedurally just than labor representatives, whereas labor representatives perceived dispute resolu-tion procedures involving neutral third parties with higher levels of procedural justice compared to management (Giacobbe-Miller 1995).

HyPotHeSeS

The preceding review of the literature established multiple ideas central to the research question. First, civil service reform efforts frequently fall short in terms of meeting fairness goals. Second, the civil service reform examined here, the Defense NSPS, had fairness as an overarching goal of the system. Many of the NSPS changes transferred more power to managers. Third, procedural justice is one component of fairness perceptions, and manag-ers are likely to exhibit higher perceptions of procedural justice than line employees.

This study examines changes in fairness perceptions in response to civil service reforms at Defense in three distinct ways. First, procedural justice perceptions are examined before, during, and after repeal of the NSPS reforms. Second, we consider whether the procedural justice perceptions of employees and managers are different over the time periods. Procedural justice research includes few studies controlling for managerial status, despite early arguments that position in the organization is likely to change fairness assessments. The few research findings available suggest that when managers are given greater discretion over decision making their perceptions of pro-cedural justice increase. Third, the use of comparison groups allows us to distinguish factors affecting only Defense from governmentwide trends. The following hypotheses are proposed:

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H1: Across all time periods, managers will exhibit higher procedural justice perceptions than line employees.

H2: During the implementation period, managers’ perceptions of procedural justice will increase relative to managers in the comparison group, while employees’ perceptions will decrease relative to the comparison group.

H3: During the repeal period, managers’ perceptions of procedural justice will decrease relative to managers in the comparison group, while employees’ perceptions will increase relative to the comparison group.

ReSeARCH DeSign AnD MetHoDS

To study changes in procedural justice perceptions in reaction to the NSPS reforms, we select the US Department of the Navy, including the Marine Corps, as the treat-ment group. Gordon England, the Secretary of the Navy at the time, was designated by Secretary Rumsfeld as the top political appointee overseeing the rollout of NSPS (Congressional Research Service 2008). As head of the effort, England would lead by example and ensure that his home agency, the Navy, implemented the policy to its fullest. To illustrate England’s visibility in the design effort, a quotation from him sup-porting the new system appears at the beginning of an early pamphlet distributed to employees describing the new system (NSPS 2005).

The Navy was also likely to be predisposed toward full implementation due to its significant experience with small-scale alternative personnel systems. Under the 1978 Civil Service Reform Act, agencies could apply to OPM to design demonstration projects to test alternative personnel systems. Navy has decades of experience operating these alternative personnel systems in four different units, the most famous of which is the demonstration project at China Lake (General Accounting Office 2004). The Navy dem-onstration projects included reforms consistent with the NSPS, including broad-banding pay structure, broadened job classifications, and pay-for-performance. Navy’s extensive experience with these systems suggests its personnel infrastructure would understand the complexities associated with implementing the NSPS. As a result, the Navy is chosen as the critical case as the unit within Defense most likely to fully implement the new system.

Three federal agencies outside of Defense were selected as control agencies for comparison using purposive sampling. This purposive sampling allows us to account for the possibility that something else changes between the treatment and comparison agencies at the same time as the policy reform. Two criteria were used to select the control agencies. First, agencies were identified that exhibited similar procedural jus-tice perceptions to the Navy in the 2002 and 2004 preimplementation period; agencies that are more similar before the policy change are more likely to respond similarly to any other governmentwide factors that change at the same time as the NSPS reforms. Perceptions were evaluated both agencywide and by analyzing employee and manager perceptions separately. Second, agencies with alternative personnel systems during the 2002–12 time period were excluded from consideration.2 Excluding agencies with

2 The following sources were consulted to identify agencies operating under traditional civil service rules: Congressional Budget Office (2004), Congressional Research Service (2005, 2008), and Office of Personnel Management (2005, 2007a, 2007b).

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alternative personnel systems allows the researchers to compare the NSPS to the tra-ditional federal personnel systems, reducing potential confusion created by compar-ing one version of reform to another. Using these two rules, three departments were selected as controls: Interior, Treasury (excluding the Internal Revenue Service3), and Agriculture (excluding the Animal and Plant Health Inspection Service4).

DAtA

To analyze how perceptions of procedural justice change over time, responses are used from the OPM governmentwide employee satisfaction surveys administered in 2002, 2004, 2006, 2008, 2010, 2011, and 2012.5 Across all years, OPM selected respondents using a stratified random sample based on organizational unit and management sta-tus. OPM intentionally oversampled managers. In the publically available data sets, OPM provides survey weights to account for selection probabilities and response rates for the 2006–12 surveys, but not for the 2002 and 2004 surveys. Because sampling weights are unavailable for every time period, we do not weight the data in our regres-sion analyses. To account for the oversampling of managers, we control for manage-ment status in the regressions.

In 2006 and 2008, OPM significantly changed its sampling process by increas-ing the number of strata. An examination of respondents across the strata reveals a significant drop in the number of respondents in 2006 and 2008. When comparing the weighted demographic information of the survey respondents to population data, it is clear that that the OPM-provided survey weights do not fully correct for gender rep-resentation in these 2 years. According to Fedscope, the population of civilian women in the Navy was approximately 30% in both 2006 and 2008, but women are less than 20% of the Navy survey respondents in these years. As a result, women in the Navy are underrepresented in the survey sample in 2006 and 2008. We control for gender in the regressions.

To measure procedural justice perceptions, we created an additive index (referred to as procedural justice index [PJI] for the remainder of this essay) by selecting survey questions based on their congruence with existing theory and measurement schemes, such as Leventhal’s (1980) original descriptions of the six criteria, Colquitt’s (2001) validated survey items, and previous procedural justice scales used in public manage-ment research (Rubin 2009) (see table 2). The additive index has values ranging from 0 to 24, with a 0 indicating low perceptions of procedural justice. The PJI assesses procedural justice perceptions directed at the organization overall; the survey items are not specific to perceptions of the NSPS or the personnel system.

3 In 1998, the Internal Revenue Service was granted broad authority to redesign pay, classification, and performance management systems (Thompson and Rainey 2003).4 Portions of the Animal and Plant Health Inspection Service were moved into the Department of Homeland Security, beginning in 2002. It took multiple years to finalize the split and created significant turmoil in the unit, particularly over lines of authority, different management styles and training requirements, union representation, etc.5 In 2002, 2004, 2006, and 2008, OPM called this effort the Federal Human Capital Survey. In 2010, OPM changed the name to the Federal Employee Viewpoint Survey.

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Confirmatory factor analysis with varimax orthogonal rotation confirmed the six survey items formed one PJI. Cronbach’s alpha values provide additional support for the one factor structure. Both the confirmatory factor analysis and the Cronbach’s alpha values were assessed for each of the four agencies for each of the years included in the analysis. The Cronbach’s alpha values for the Navy are presented in table 3; across all four agencies and all years, the alpha values ranged from a low of 0.837 in Agriculture in 2004 to a high of 0.886 in Treasury in 2012.

The hypotheses require dividing the survey data into different blocks representing the preimplementation, implementation, and repeal periods. As noted in table 1, the first group of civilian, nonunionized Navy employees was moved into the new person-nel system in April 2006, the legislation was repealed in October 2009, and employees were moved back to the traditional personnel system beginning in November 2009. Survey data from 2002 and 2004 are used in the analysis to represent the preimple-mentation period, data from 2006 and 2008 represent the implementation period, and data from 2010, 2011, and 2012 represent the repeal period. To study policy impact, the timing of the survey response period in 2006 is particularly important to clarify. In 2006, the OPM survey was administered from May through August, immediately after the first group of Navy employees was moved into the first NSPS spiral.

DiffeRenCe in MeAnS MetHoD

To test hypothesis H1, we estimate

PJI = + Navy+ Implm+ Repeal+ Mgr

+ Mgr Implm+ Mgr Rep2 3δ δ δ δ δ

δ δ0 1 4

5 * *6 eeal+ +Xβ ε (1)

Navy is a treatment group indicator taking the value 1 if the individual works in the Navy and 0 otherwise. Implm is a dummy variable for the implementation period (2006–08). Repeal is a dummy variable equal to 1 for the period after NSPS is ended

table 2Survey Items Used for PJI

Leventhal Criteria OPM Survey Questions

Voice How satisfied are you with your involvement in decisions that effect your work?

Consistency Selections for promotions in my work unit are based on merit.

Bias avoidance My supervisor/team leader is committed to a workforce representative of all segments of

society.Accuracy My performance appraisal is a fair representation

of my performance.Appeal I can disclose a suspected violation of law, rule, or

regulation without fear of reprisal.Ethics My organization’s leaders maintain high standards

of honesty and integrity.

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(2010, 2011, and 2012). Mgr indicates whether a respondent self-identifies as a front-line supervisor, manager, or executive. X is a vector of control variables including gender and minority status.6 We then use the regression results to report estimated PJI values for employees and managers in each time period, adjusted for agency (Navy versus the comparison agencies), gender, and minority status. For each time period, we test the difference in the estimated PJI scores for the employees and managers.

DiffeRenCe-in-DiffeRenCeS-in-DiffeRenCeS MetHoD

To investigate hypotheses H2 and H3, one potential research method might be to com-pare perceptions of procedural justice in the Navy before, during, and after the civil service reforms without any comparison agencies as a benchmark. However, employee perceptions were being influenced by more factors than just the NSPS reforms, such as homeland security concerns, Presidential reform agendas, other changes in federal law, demographic trends, etc. To control for potential confounds affecting the federal govern-ment as a whole, we compare the Navy to other federal agencies, using a difference-in-differences-in-differences approach (Meyer 1995; Wooldridge 2010). This method treats the NSPS as a natural experiment, in which one population (Navy) receives the treatment and the other populations (Interior, Treasury, and Agriculture) do not. The method also allows for different impacts on two subpopulations: employees and managers.

A difference-in-differences-in-differences strategy requires dividing the data three sep-arate ways: by agency (Navy or non-Navy), by time period (before each change in the rules or afterward), and by supervisory status (employee or manager). To estimate a triple-differ-encing model, the specification includes dummy variables for each of these three divisions, two-way interactions of each of the dummy variables with each of the other dummies, and a three-way interaction term for all of the dummy variables. We therefore examine hypoth-esis H2 by running the following regression for the PJI, over data for the preimplementation period (2002 and 2004) and the implementation period (2006 and 2008):

PJI Navy Implm Mgr Navy Implm

Navy Mgr Impl6

= + + + ++ +δ δ δ δ δ

δ δ0 1 2 3 4

5

*

* mm Mgr

Navy Implm Mgr7

*

* *+ + +δ β εX (2)

6 Other relevant demographic controls were not used due to inconsistency in coding, wording, and availability across the seven iterations of the OPM survey.

table 3Factor Loadings and Cronbach’s Alphas, by Year, for the Navy

Variable 2002 2004 2006 2008 2010 2011 2012

DecisionInvolv 0.769 0.786 0.784 0.801 0.793 0.782 0.793MeritPromo 0.788 0.769 0.777 0.800 0.776 0.773 0.775RepWkplc 0.749 0.733 0.746 0.758 0.753 0.760 0.771PerfFair 0.699 0.692 0.688 0.729 0.699 0.714 0.721Disclosure 0.806 0.796 0.798 0.815 0.767 0.784 0.784MgrHonest 0.832 0.802 0.815 0.828 0.811 0.813 0.818Cronbach’s alpha 0.862 0.853 0.857 0.874 0.855 0.860 0.865

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To investigate hypothesis H3, we then use the same approach to evaluate changes in procedural justice perceptions comparing the 2006–08 implementation period to the 2010, 2011, and 2012 repeal period. We estimate equation (3) over data for the imple-mentation period and the repeal period:

PJI Navy Repeal Mgr Navy Repeal

Navy Mgr Re

= + + + ++ +δ 0 1 2 3 4

5 6

δ δ δ δδ δ

*

* ppeal Mgr

Navy Repeal Mgr

*

* *+ + +δ β ε7 X (3)

To illustrate the effects of these variables on the PJI, we report our results in terms of the predicted PJI values. First, we use the regression results to compute the predicted values of the PJI for every survey respondent in the relevant sample, for every permu-tation of the key dummy variables (Navy employee PJI scores before implementation, Control agency employee PJI scores before implementation, Navy manager scores before and after implementation, etc.). This approach estimates what the PJI would be if every agency had the same mix of gender and minority employees. We report each of these predicted values. We then compute how much the PJI scores changed in going from the prereform period to the implementation period, compared to the other three federal agencies. This gives a difference-in-differences estimator of the effect of the reform for employees:

DDNavy Implm Emp Navy Implm Emp Navy Before Emp

Othe

, , , , , ,[ ]

[

= −−Y Y

Y rr Implm Emp Other Before Emp, , , , ]−Y (4)

We then aim to understand the differential effects of the reform on managers and employees. To run a triple-differencing strategy (DDD), we compute equation (4) for both managers and employees and subtract them:

DDD DD DDNavy Implm Mgr Navy Implm Mgr Navy Implm Empl, , , , , ,= − (5)

The DDD estimate gives us the relative impact of the NSPS for managers compared to line employees, adjusting for any changes occurring at the same time in the com-parison agencies and controlling for gender and minority status.

finDingS

Descriptive statistics for the Navy, including the average PJI score and proportions of various subgroups, are presented in table 4. Generally, they present a workforce that is more than two-thirds male and white across the survey years. Navy managers’ percep-tions of procedural justice are statistically higher than the perceptions of employees across all time periods (figure 1). After implementation, PJI drops only slightly for employees and managers in the Navy, compared to the preimplementation period. Both employee and manager PJI increases once the system is repealed. Furthermore, the average PJI is generally increasing over the 10-year period in the Navy, for both employees and managers.

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Examining the Navy PJI scores alongside of the control agency scores provides additional context. Specifically, when moving from 2004 to 2006, when the NSPS is being implemented in Defense, PJI scores for employees in three of the four agencies decrease slightly (table 5). From 2008 to 2010, when NSPS was repealed, average PJI scores for employees in all four agencies increased. Navy exhibited the largest increase, whereas Agriculture exhibited the smallest increase.

Managers across the treatment and control agencies exhibit similar patterns in their perceptions of procedural justice. First, managers’ perceptions are consistently higher than employee perceptions of fairness. Manager perceptions experience a slight decrease over the 2004–06 period and then increase over the 2008–10 period (table 6). Over the entire period, managers in the Navy and Treasury experience an overall increase in PJI. The PJI perceptions of managers in Interior only slightly decline over

table 4Navy Descriptive Statistics

2002a 2004a 2006 2008 2010 2011 2012

Avg. PJI score Empl, Team Lead 13.766 14.228 14.099 14.217 15.162 15.167 14.964Superv, Mgr, Exec 15.986 16.251 16.033 16.212 16.538 16.667 16.562

Superv. status Superv, Mgr, Exec 47.34 44.17 18.27% 18.83% 17.90% 18.21% 18.21%Gender Female 33.72 33.36 16.64% 13.88% 29.39% 29.71% 27.82%Minority status Minority 23.6 23.69 27.53% 28.67% 33.16% 33.48% 31.43%Note: PJI ranges from 0 to 24, with 0 indicating low PJ perceptions.aStatistics not weighted; survey weights not available in OPM data sets.

figure 1Navy Average PJI for Employees and Managers, 2002–12. Source: Author computations from the OPM employee satisfaction surveys.

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the time period, whereas PJI perceptions of managers in Agriculture decrease by nearly one full point.

Difference in Means findings

Managers across all the agencies have substantially higher perceptions of procedural justice than employees, as seen in tables 4 and 5, providing support for hypothesis H1. To account for demographic compositional effects that might explain these differences, we estimate PJI scores after controlling for gender, minority status, time period, and being employed by the Navy. Controlling for those factors, we estimate that employees have a PJI of 14.367 (standard error [SE] 0.012), compared to managers’ PJI of 16.075 (SE 0.017); this 12% difference is significant at the 0.001 level. Comparable differences can be seen if we predict values for each time period (before NSPS, during implemen-tation, and during repeal).

Difference-in-Differences-in-Differences findings

Table 7 shows estimates of employee and manager perceptions of procedural justice both before implementation of the NSPS (2002–04) and during its implementation

table 6Manager PJI Mean, by Year

Year Navy Agriculture Interior Treasury

Mean SE Mean SE Mean SE Mean SE

2002a 15.986 0.080 15.807 0.076 16.268 0.096 16.302 0.1102004a 16.251 0.072 15.591 0.077 15.439 0.104 17.068 0.1512006 15.939 0.101 14.829 0.174 15.034 0.069 16.571 0.1672008 16.092 0.101 14.816 0.127 15.312 0.059 16.907 0.1752010 16.490 0.096 15.062 0.128 16.146 0.059 17.507 0.1432011 16.471 0.103 15.490 0.122 16.105 0.133 17.943 0.1312012 16.562 0.046 14.988 0.050 16.137 0.064 17.895 0.137aStatistics not weighted; survey weights not available in OPM data sets.

table 5Employee PJI Mean, by Year

Year Navy Agriculture Interior Treasury

Mean SE Mean SE Mean SE Mean SE

2002a 13.766 0.085 13.784 0.069 13.931 0.103 13.976 0.0872004a 14.228 0.072 13.802 0.070 13.630 0.106 14.401 0.1012006 13.864 0.086 13.887 0.112 13.061 0.054 14.206 0.2122008 14.210 0.097 13.705 0.098 13.224 0.044 14.382 0.0922010 15.051 0.088 14.164 0.099 14.092 0.043 15.177 0.0832011 14.983 0.084 14.246 0.099 14.115 0.120 15.383 0.0762012 14.964 0.026 14.088 0.034 14.045 0.045 15.149 0.078aStatistics not weighted; survey weights not available in OPM data sets.

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tabl

e 7

Estim

ated

Effe

ct o

f Mov

ing

from

the

Prei

mpl

emen

tatio

n Pe

riod

to th

e Im

plem

enta

tion

Perio

d

Em

ploy

ee T

ype

Age

ncy

Est

imat

ed P

JI, P

reim

plem

enta

tion

Est

imat

ed P

JI, I

mpl

emen

tati

onD

iffer

ence

Non

supe

rvis

orN

avy

14.0

98 [0

.054

]13

.824

[0.1

24]

0.27

5**

[0.1

35]

Con

trol

age

ncie

s13

.976

[0.0

47]

13.3

33 [0

.032

]0.

643*

** [0

.057

]D

iffer

ence

-in-

diff

eren

ces

−0.

369*

* [0

.146

]

Supe

rvis

orN

avy

16.1

65 [0

.055

]16

.128

[0.0

89]

0.03

7 [0

.105

]C

ontr

ol a

genc

ies

16.0

66 [0

.057

]15

.230

[0.0

47]

0.83

6***

[0.0

74]

Diff

eren

ce-i

n-di

ffer

ence

s−

0.79

9***

[0.1

28]

Diff

eren

ce-i

n-di

ffer

ence

s-in

-diff

eren

ces:

−0.

37 t

o −

0.80

=0.

430*

* [0

.194

]

N73

,351

Not

e: C

ompu

tati

ons

usin

g da

ta f

rom

200

2, 2

004,

200

6, a

nd 2

008

OP

M f

eder

al e

mpl

oyee

sur

veys

. The

cel

ls r

epor

t th

e av

erag

e of

the

pre

dict

ed P

JI v

alue

s if

eve

ryon

e in

the

sam

ple

is a

ssum

ed t

o be

in e

ach

cell,

ret

aini

ng e

ach

obse

rvat

ion’

s ow

n va

lues

for

the

cont

rol v

aria

bles

(ge

nder

and

min

orit

y st

atus

). S

ampl

ing

wei

ghts

are

not

use

d be

caus

e th

ey a

re u

nava

ilabl

e fo

r th

e 20

02 a

nd 2

004

peri

ods.

SE

s ar

e pr

esen

ted

in b

rack

ets.

Sign

ifica

nce

leve

l: *p

< 0

.1, *

*p <

0.0

5, *

**p

< 0

.01.

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(2006–08). Navy managers show a trivial and nonstatistically significant decrease of 0.037 index points, compared to a statistically significant drop of 0.836 points in the comparison agencies. We therefore estimate that Navy managers’ perceptions of pro-cedural justice increase, relative to managers in the comparison agencies, by 0.799 index points, or 5% of the managers’ initial PJI of 16.165 index points. At the same time, Navy employees’ PJI drops by 0.275 index points, much less than the contempo-raneous drop of 0.643 points in comparison agencies. Navy employee PJI increases by 0.369 index points relative to comparison agencies, or 3%. These differences are highly statistically significant. These results affirm hypothesis H2 with respect to managers but not with respect to employees. A naïve before-and-after comparison without the control agencies would suggest that Navy employee perceptions of procedural justice do indeed decline with the implementation of the reforms, but this decline reflects a larger governmentwide drop. However, the difference-in-differences-in-differences estimator shows that the managers’ PJI increased more than twice as much as the employees and that the difference is statistically significant. Navy managers respond more favorably to the new rules than Navy employees.

Moving from the implementation period (2006–08) into the repeal period (2010, 2011, 2012), Navy managers exhibit smaller PJI increases than their counterparts in other agencies, whereas Navy employees exhibit higher growth in their PJI compared to the control agencies (table 8). As the reforms are repealed, Navy managers show a 0.275 index point drop in PJI relative to comparison agencies or a 2% drop from the initial PJI of 16.103. Navy employees show a 0.254 index point increase relative to the comparison agencies, for a gain of 2%. We estimate that the repeal leads Navy manag-ers’ PJI to decline by 0.529 points compared to employees or 4% of the employees’ initial PJI of 13.808. These results affirm hypothesis H3.

A series of robustness checks evaluate the stability of our findings. The first check assesses the impact of the survey weights, which are available for the analysis of the NSPS repeal. Including the weights increases the magnitude of the repeal impacts but does not change sign or significance. Second, women are underrepresented in the Navy sample during the implementation time period. If we run the regressions sepa-rately for men and for women, the results contain similar signs and significance levels, but men show a statistically insignificantly greater magnitude. A third test evaluates the degree to which the selection of the control agencies may change our results by systematically dropping each of the comparison agencies, comparing Navy against only two other agencies. The sign and significance of the difference-in-differences-in-differences findings are robust to removing each of the comparison agencies.

DiSCUSSion

This essay examines how procedural justice perceptions among civilian employees of the Navy changed from 2002 through 2012, as Defense implemented and then repealed the NSPS. When moving from the traditional personnel rules into NSPS implementa-tion, Navy employee perceptions of procedural justice declined, but the magnitude of that decline is less than the decline happening in the control agencies during the same time period. The implementation of NSPS did not change procedural justice perceptions of managers in the Navy, compared to declines in justice perceptions of

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tabl

e 8

Estim

ated

Effe

ct o

f Mov

ing

from

the

Impl

emen

tatio

n Pe

riod

to th

e Re

peal

Per

iod

Em

ploy

ee T

ype

Age

ncy

Est

imat

ed P

JI, I

mpl

emen

tati

onE

stim

ated

PJI

, Rep

eal

Diff

eren

ce

Non

supe

rvis

orN

avy

13.8

08 [0

.128

]15

.101

[0.0

22]

−1.

293*

** [0

.130

]C

ontr

ol a

genc

ies

13.3

14 [0

.033

]14

.354

[0.0

18]

−1.

039*

** [0

.038

]D

iffer

ence

-in-

diff

eren

ces

−0.

254*

[0.1

35]

Supe

rvis

orN

avy

16.1

03 [0

.092

]16

.620

[0.0

35]

−0.

516*

** [0

.098

]C

ontr

ol a

genc

ies

15.2

09 [0

.049

]16

.001

[0.0

27]

−0.

791*

** [0

.055

]D

iffer

ence

-in-

diff

eren

ces

0.27

5**

[0.1

12]

Diff

eren

ce-i

n-di

ffer

ence

s-in

-diff

eren

ces:

−0.

254

to 0

.275

=−

0.52

9***

[0.1

76]

N23

0,70

7N

ote:

Com

puta

tion

s us

ing

data

from

200

6, 2

008,

201

0, 2

011,

and

201

2 O

PM

fede

ral e

mpl

oyee

sur

veys

. The

cel

ls r

epor

t the

ave

rage

of

the

pred

icte

d P

JI v

alue

s if

eve

ryon

e in

the

sam

ple

is a

ssum

ed

to b

e in

eac

h ce

ll, r

etai

ning

eac

h ob

serv

atio

n’s

own

valu

es fo

r th

e co

ntro

l var

iabl

es (

gend

er a

nd m

inor

ity

stat

us).

Sam

plin

g w

eigh

ts a

re n

ot u

sed

to b

e co

nsis

tent

wit

h th

e an

alys

is in

tab

le 7

. SE

s ar

e pr

esen

ted

in b

rack

ets.

Sign

ifica

nce

leve

l: *p

< 0

.1, *

*p <

0.0

5, *

**p

< 0

.01.

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managers in the control agencies. This finding is not consistent with assumptions that the NSPS damaged employee perceptions of fairness, compared to governmentwide trends. When the manager and employee changes are considered jointly, the findings provide partial support for hypothesis H2.

Later, the transition after NSPS repeal also coincided with changes to procedural justice perceptions. Specifically, Navy employee perceptions increased after repeal, and the increase in perceived fairness was greater than perceptions among control agency employees. Fairness perceptions of managers in the Navy also increased after repeal, but the amount of this increase was less than for managers in the control agen-cies. Compared to the benchmark agencies, the repeal accompanied heightened fair-ness perceptions for employees and reduced fairness perceptions for managers. The changes in perceptions after repeal of NSPS are consistent with hypothesis H3.

The findings here provide insights on reactions to civil service reforms not previ-ously available. Proponents of increasing managerial discretion assume the changes are entirely beneficial to management and do not discuss potential costs. The flat jus-tice perceptions of Navy managers, compared to a downward trend governmentwide, suggest this assumption is short-sighted. The flexibilities provided managers with better procedural justice perceptions than the other federal managers in the control agencies, but the flexibilities did not dramatically increase justice perceptions either. Nonunionized white-collar staff, a significant portion of whom are managers, were the first to be included under the NSPS. Navy managers were in a unique position in that they were both responsible for implementing NSPS for employees, and they were the first cohort subject to the new system. On the implementation side, it is pos-sible that the significant administrative and counseling burden of the performance management system crowded out potential benefits. Furthermore, as managers, they were probably also more aware of the shortcomings of the infrastructure put in place to watch for consistency and bias. The reactions of Navy managers suggest that we cannot assume personnel reforms granting more discretion to managers will actually benefit managers and particularly their perceptions of fairness.

Additionally, the “sky did not fall” on employee perceptions of procedural jus-tice under the NSPS, despite what opponents may claim. Navy employee perceptions of procedural justice did decrease during implementation but not as much as in the control agencies. However, after repeal, Navy employees were glad to be back under the legacy system. Why did Navy employee perceptions of justice fall less than in the control agencies during implementation? It is possible that employees were willing to see if things would be better under a more flexible system designed to improved performance. For Naval employees, the perceived positive benefits of new flexibilities may have initially outweighed concerns about fairness. Alternatively, the differences could be unrelated to the personnel reforms. During this period, the Navy, and all of Defense, were fighting wars in Iraq and Afghanistan, focusing employees intently on the organization’s mission and likely increasing esprit de corps. This heightened sense of mission might have been strong enough to resist the governmentwide down-ward trends in procedural justice perceptions. Combined, this informs civil service reform research by reminding scholars that these sorts of policy changes are not viewed entirely negatively by employees, so we should not assume the worst. However, employees, after experiencing a more flexible system for 3 years, were clearly pleased with the move back under the traditional system.

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An additional goal of this research was to examine manager and employee dif-ferences in procedural justice perceptions. Across all agencies and all time periods, manager perceptions of procedural justice were higher than employees, providing sup-port for hypothesis H1. This finding held for managers working under both the tra-ditional federal personnel system and the NSPS in which managers are granted more discretion.

Although the magnitude of the changes in procedural justice perceptions was small, the impact was substantive. Concerns about fairness led employee unions to challenge the adverse actions and labor relations provisions in court; Congress repealed these provisions before repealing the entire system because of fairness concerns. Even before Congress fully repealed NSPS, a significant redesign was recommended; incre-mental revisions to the system “could not address the depth of the systemic prob-lems discovered” (Defense Business Board 2009, 4). Reports documented possible bias in the awarding of performance-related pay (Defense Business Board 2009; SRA International 2009) and a growing perception among NSPS employees that competi-tion for bonuses was crowding out incentives for collaboration (SRA International 2009).

Understanding changes to procedural justice perceptions in response to civil service reforms is important because these perceptions influence other important workplace attitudes and behaviors. For example, procedural justice perceptions influ-ence multiple types of intrinsic motivation, which in turn influence task performance (Zapata-Phelan et al. 2009). Additionally, procedural justice perceptions influence turnover, satisfaction, and organizational citizenship behavior (Cohen-Charash and Spector 2001; Colquitt et al. 2001). Conversely, low perceptions of procedural justice can prompt employees to engage in behaviors that are detrimental to the workforce. For example, if HR policies are implemented in a manner viewed as unfair or incon-sistent, discontent with work tasks increases, as does deviant behavior such as theft or late arrival to work (Zoghbi 2010). Furthermore, if employees expect they will be treated unfairly, they are more likely to resist changes to the organization of work (Shapiro and Kirkman 1999). Even more importantly, perceptions of injustice may decrease workplace performance (Cohen-Charash and Spector 2001; Colquitt et al. 2001; Devonish and Greenidge 2010).

ConClUSion

Navy employee and manager perceptions of procedural justice changed from before the reforms, during implementation, and repeal. Employee and manager perceptions of procedural justice were different over this period, and changes in these perceptions were unique compared to the three control agencies. These findings inform both pro-cedural justice scholarship and research on civil service reform.

This study presents significant evidence that employee and manager perceptions of procedural justice are different and that these two groups perceive changes differently. Although this may not seem like “rocket science” to public management scholars, this difference receives little attention from organizational justice scholars. The findings lend credence to early intuition that role in the organization may impact perceptions of fairness (Leventhal 1980). The evidence that managerial perceptions of procedural

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justice were higher than employees’ perceptions is consistent with the limited number of studies evaluating this difference (Giacobbe-Miller 1995; Schminke, Cropanzano, and Rupp 2002; Williams and Levy 2000). The results here provide additional evi-dence that controlling for manager/employee differences is important and interesting.

These findings also advance our understanding of reactions to civil service reforms. State civil service reform efforts, especially those examined here, were more sweeping in their content compared to the NSPS. Under those significant reforms, existing research suggests employee perceptions of fairness decreased (Battaglio and Condrey 2009; Bowman and West 2006; Crowell and Guy 2010; Goodman and French 2011; Kellough and Nigro 2002). The NSPS reforms were less dramatic than efforts at the state level. As we would expect, the changes in fairness perceptions were also less dramatic than those at the state level. In fact, the research design here enabled us to study fairness perceptions over time, and in comparison to control agencies. Little civil service reform research considers perceptions before and after reforms. Key exceptions to this include Pearce and Perry (1983), Kellough and Nigro (2002), and DeLeon and Ewen (1997).

The quasi-experiment presented by NSPS and the multiple years of available sur-vey data make these findings particularly robust. However, it is important to acknowl-edge three limitations of the study. First, the measure of procedural justice used here focuses on the organization overall and not exclusively on personnel management. This is due to using existing survey data instead of developing our own survey instru-ment. Second, during the implementation period, two-thirds of the Navy had not yet been transitioned into the NSPS. This likely biases procedural justice perceptions upward if we assume that personal experience with NSPS would have reduced proce-dural justice perceptions even further. Third, the OPM data appear to undersample Navy women during the implementation period. Our statistical methods control for the direct impact of gender on PJI scores (such as the general tendency of women to have lower PJI values than men). However, our methods are not robust to more intri-cate potential biases; for example, if women react differently to NSPS-style reforms than men do, then our results would not represent the actual population.

The repeal of the NSPS does not mean we can ignore these findings. The content of the reforms are not new and this is not an isolated event. Different pieces of the reform are currently in place in other federal agencies operating under unique personnel author-ity. State governments retain many of the key features of the NSPS reforms and, in fact, have been more ambitious in their efforts to provide more flexibility to public managers. This effort to reduce red tape associated with personnel management, empower manag-ers, and move to a more performance-driven system is a global movement (Pollitt and Bouckaert 2011). Although employees in the US Department of Defense may be resting easy, this is not the last time we are likely to see these sorts of reforms. The results here suggest we can do a better job of preparing for and responding to the different ways in which employees and managers are likely to perceive these reforms.

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http://www.dhra.mil/webfiles/docs/NSPS/communication /Understanding%20the%20Basic%20NSPS%20Elements%20-%20Overview.pdf



http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA503182


Documents

Does Changing the Rules Really Matter? Assessing Procedural Justice Perceptions under Civil Service Reform