☆ Expert: Mahan's pay-for-results idea is good in principle, but might not go far enough
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SJ Mayor Mahan wants to give pay raises to city leadership if they deliver key outcomes in four major areas. But why just city leadership? And will the proposal work if it only focuses on incentives? We caught up with Mark Moses, author of The Municipal Financial Crisis, for an Opp Now exclusive Q&A.
Opportunity Now: Do you support Mayor Mahan’s proposal to tie pay raises for San Jose city leadership to performance metrics?
Mark Moses: The principle of tying pay raises to performance is a good one, but it is awkward to implement that kind of plan for only a portion of the organization.
ON: Is it realistic to offer performance-based raises to all city staff?
MM: I don't think it is. You’d get a lot of pushback. Most public agency unions have a strong desire to treat everyone equally, and that means employees just put in time to earn their guaranteed step increases and COLA pay raises.
ON: The SJ Merc reports that Mahan “likened the approach to performance evaluations in the private sector, which he noted do not have the type of job security as in government.”
MM: Well, in high tech, you can pivot on a dime, and you can fire people too. The management of the workforce is very different.
ON: In a previous conversation, you said that saving a city’s finances should be a 10- or 15-year project that involves overhauling labor agreements. Does that apply here? Do you think Mahan’s plan would work better if it were part of a bigger course correction?
MM: Yes. Just tweaking incentives is not going to solve your problems if the organization's goals are misplaced or if labor contracts anchor city management to legacy service delivery methods.
ON: Mahan’s plan is big on dashboards. The metrics for the four key areas—community safety, homelessness, neighborhood blight, and investment in jobs and housing—are already online on the city’s website.
Do you think a dashboard like this can help keep people focused on the right kinds of long-term goals and avoid the mission creep you’ve talked about? Could tangible metrics and tracking serve in some way as a check on ideology and politicking and emerging priorities?
MM: In order to help prevent mission creep, the dashboard would have to represent the full array of city activities. What about fire, capital projects, traffic, the airport, parks, sewer, water, library, and a positive resolution to the $46 million general fund deficit projected for the 2025–2026 operating budget? Isn’t the performance of the city in these areas critical to its success?
Aside from the lack of dashboard comprehensiveness, there is still a serious question of how these metrics translate into reliable inputs for performance-based compensation. In local government, there are many interdependencies.
ON: So you’re saying one agency might have control over some aspects of a homelessness program, but has no law enforcement capacity, so their metrics are interdependent on a whole different department?
MM: Exactly. It's very difficult to take a complex, multi-purpose government organization and cram it into a dashboard.
ON: In an SF Standard op-ed, Mahan writes, “Our Public Works director’s performance-based raise would be proportional to the number of interim housing units delivered on time and on budget.”
MM: But does it make sense to link the Public Works director’s performance evaluation to one metric? The premise of this performance-based pay is to create better incentives, but the use of one metric to determine one’s performance creates a perverse incentive to focus solely on that metric.
ON: Even if these metrics are isolated and don’t take into account the bigger picture, could a 10% improvement in these metrics make a difference?
MM: When we talk about a 10% improvement in a given metric, by what standard are we judging “improvement,” and where are the costs considered? The fallacy of most city metrics is that they fully ignore the inputs, the costs (borne by taxpayers) of producing the results.
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