GovernmentExecutive.com

Federal agencies are using performance-based pay systems to create a results-driven culture, the Office of Personnel Management concluded in a report released this week.

The report analyzes various demonstration projects and other pay-for-performance systems that collectively cover more than 298,000 federal employees.

"This report shows performance-based pay systems drive improvements in managing performance, recruiting and retaining quality employees and achieving results-oriented performance cultures," said OPM Director Linda Springer.

The report covered three categories of performance-based pay systems -- demonstration projects, executive pay systems and independent agency systems established under legislative authority. The latter covers more than 246,000 employees -- with more than half of them working under the Pentagon's National Security Personnel System.

The report said that while achieving success with pay for performance entails significant effort on the part of agencies, the new systems are providing a stronger link between compensation and performance, and are improving government's ability to recruit and retain a high-quality workforce.

Payroll costs also are being controlled, the report added, but cost discipline must be maintained as systems expand and mature.

The report gives an agency-by-agency rundown of pay-for-performance efforts, with varying degrees of analysis of their implementation.

At the Government Accountability Office and the Transportation Security Administration, for example, OPM simply gives an overview of new systems, without addressing their impact. But the description of the one at the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau notes that the vast majority of the organization's 131 employees operating under pay-for-performance principles have indicated that performance ratings are fair and that supervisors provide adequate feedback.

A pay-for-performance system at the Federal Aviation Administration appears to have increased the job satisfaction of employees since 2003, the report noted, though employee pay satisfaction has shown a small decrease since that time .

The report said the new systems send a different message to employees than the traditional General Schedule pay scale.

"For the GS, time is the overwhelming basis for distributing increases, so the message to employees is 'longevity is what matters,' " the report stated. "The message to employees is shifting to 'performance is what matters.' "

The report said the results of a 2006 federal workforce survey provided evidence that managers and supervisors are being trained to manage performance more effectively. Employees under pay for performance generally rated their agencies equally or more positive than the governmentwide average in terms of performance discussions with supervisors and fairness of performance appraisals.

Colleen Kelley, president of the National Treasury Employees Union, challenged the report's findings, noting that evidence indicates that pay-for-performance systems lead to increases in employee grievances, more litigation, high attrition rates and low morale.

"The problems may differ from agency to agency," Kelley said, "but the reality is that each of these programs is terribly flawed."

Kelley noted that a recent survey found that only 12 percent of employees at the Federal Deposit Insurance Corporation believed that its pay-for-performance system accurately reflected their actual performance. And an arbitrator recently ruled that a system at the Securities and Exchange Commission was discriminatory in its implementation.

"The key to these kinds of compensation systems rests on a trilogy of ideas," Kelley said. "They must not only be fair -- they must be seen by the employees as being fair; they must be credible; and they must be transparent, particularly in communicating why various decisions have been made."

COMMENTS

• The systems, both Pay for performance, and GS are okay systems. It is the managers that make or break the system. Yes you can even go from a GS-5 to GS-12 in 5 years. It is your Job title that gets the big raises. Start out as a CI at the GS-5 level, and in 5 years you will be a GS-12. Also, in the GS system, your supervisors can put you in for a qualtiy step increase, so you can in essence get an extra raise in addition to your yearly raise. Unlike the pay for performance, there is no guarantee of a yearly raise. Also, you are still under the mercy of your supervisor. He can give you an average rating, and give a suck up a good review, and they get a raise and you do not. No one will ever get rid of the good ol boy or suck up system. If you know the right people, you will always get ahead alot faster. Not to mention, that your job title and description will limit your maximum pay. A assistant, secretary, etc. will never make as much money as a specalized occupation such as Criminal Investigator, U.S. Marshal, or any high grade occupation. Plain and simple. Its all word manipulation. Now this new Pay for performance system, does not think that putting many years in service counts. Imagine getting a raise only onece every five years in this economy. Ha, ha. the propaganda continues. Just like homeland security. It all started with the FBI, CIA, and Immigration not communicating. What happened to the FBI and CIA, being part of Homeland Security. They are too powerful. But Immigration, FEMA, TSA are all in the dept. and they all have many problems seen in the media. Wait put all the bad press agencies in one department...Wait what about the Coast Guard, they are in Homeland Security, but the have military type guidelines, and are not under the same scruitny as the other agencies. eddie Posted August 13, 2008 8:02 AM
• Understand that a raise is great even if it is a dollar but last year I worked harder than I have ever worked even in private industry. Recently I found out that we all received the same amount of shares, my boss went to batt for me but that didn't help. When we first implemented NSPS I was almost laid off due to someone coming home with return rights the NSPS rankings were not taken into consideration only time and grade, if it were not for the Deputy I would be on the un employment line. Also, a close friend from over seas found out that he should have stayed one more month to get his well earned pay out otherwise he basically got the shaft, due to the fine print in NSPS. I've worked for over 15 years in private industry before coming the the US government - I love my job, but NSPS is about the biggest waste of time and money that the american tax payer has ever seen. Sad it almost makes me want to go back to private industry! Joseph Armstrong Posted March 7, 2008 9:51 AM
• Pay comparability between the Federal government and the private sector has never really been a problem - for those that work for the Feds that are well connected. At DoD, I've seen many people that would be unemployable anywhere else reach GS-12 and above simply because they knew or were related to someone in management. Their job titles and grade levels were simply exagerated by our talented science fiction writers (AKA personnelists). Where else could someone who barely finished high school make 80K a year (I observed this back in 2004 - my last year with the feds). For years, especially in high cost areas like D.C, the grades simply get inflated. Yes, Management has s****ed up for years - and now we are asking everyone to embrace "pay for performance" thereby giving the same criminals more discretion. JC Posted March 5, 2008 8:41 AM