Commerce to Try Pay Banding

More than 3,000 employees at the Commerce Department will switch to a new pay and evaluation system that would allow for bigger raises for high-performing employees and bonuses of up to $10,000, under a proposed demonstration project the Office of Personnel Management announced last week.

Under the proposal, pay raises would depend on performance evaluations, not on seniority.

The General Schedule pay scale would be eliminated. Employees would instead be classified in broad pay bands, which would be different for different types of careers. For example, scientists might be classified in bands like entry, developmental, expert and managerial. Administrators, computer specialists, economists and other professions would have different band structures.

Broad banding, its proponents say, gives supervisors more flexibility when giving raises and ties promotion more closely to performance. If a manager decides an employee deserves a raise, he or she is not confined to the step raises laid out in the General Schedule, but can determine what an appropriate raise would be within the pay band. Furthermore, the project would allow supervisors to reward employees for superb performance with bonuses of up to $10,000.

Broad banding allows agencies to offer more competitive starting salaries to prospective employees as well. In professions like information technology, where competition for new hires is high, agencies would be able to increase employees' starting salaries. That kind of flexibility will foster speedier recruitment and higher retention rates, OPM says.

Under the demonstration project, managers would also be able to deny raises to poor performers.

The proposal draws on a demonstration project on alternative compensation and classification systems that has been underway at the National Institute of Standards and Technology (NIST) since 1988. The project would be tested at portions of five Commerce Department organizations: the Office of the Secretary, the Office of Technology Administration, the Economics and Statistics Administration, the National Telecommunications and Information Administration, and the National Oceanic and Atmospheric Administration.

The proposal for the demonstration project was published in the May 2 Federal Register.