Improving Pay

Over 3,000 employees at the Commerce Department will switch to a new pay and evaluation system that would allow for bigger raises for good workers and bonuses of up to $10,000, under a proposed demonstration project OPM announced last week.

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

The general schedule would be eliminated. Employees would instead be classified in broad bands that would swallow up GS grades. The bands would be different for different types of careers. For example, scientists may be classified in bands like entry, developmental, expert and managerial. Administrators, computer specialists, economists and other professions would have different band structures.

This "broad banding" gives supervisors more flexibility when giving raises and ties strong performance to promotion. If a supervisor decides an employee deserves a raise, he is not confined to the step raises laid out in the general schedule. The supervisor has the power to 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 in the private sector, agencies would be able to increase employees' starting salaries. That kind of flexibility will foster faster recruitment and higher retention rates, OPM says.

Under the demonstration project, managers would also be able to punish poor performers by denying them raises.

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

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