SES Performance Pay

Wed., August 24, 2005
12 p.m.-1 p.m. ET

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from Washington, DC

I have a theory that if the current SES "performance pay" system and the proposed DHS and DOD "pay-for-performance" systems were re-thought and re-designed as "pay-for-your-team's-performance" systems, there would be less resistance than there is now from SESers, union leaders and other managers/employees about implementing these systems. Under a "pay-for-your-team's-performance" system, all bonuses and pay increases would be paid, not to individuals, but rather to "teams" of SES/managers/employees who accomplish their pre-determined strategic goals and performance targets. What do you think of my theory? a. Your theory is baloney; b. Your theory has some merit; or, c. Huh?

Carol Bonosaro

Good afternoon, and welcome to the chat, everybody. It's a pleasure to be here.

In response to your question, Washington, how about d. I wish there were a perfect pay system which we could all agree would be fair and equitable in its treatment of employees and which would not be burdensome to manage?

The team concept works well if everyone on the team puts forth their best effort and the team works well together. The team concept doesn't work well when not every member of the team is pulling his or her weight and those who want their team to be rewarded have to work harder to make up for the slacking team member - but that slacking team member will be rewarded, nonetheless. I think I'd also worry about the possibility that the system would encourage some teams within an agency to undercut each other in order to get a larger piece of the pay pie.

from GovExec.com reader

Do you believe pay for performance works within the federal government? I have watched Laboratory Demonstration Projects embrace pay for performance and noticed that only 2 unsatisfactory performances were found among 2300 employees. I have also seen high payouts plus special act awards, when in fact the system is supposed to be budget-neutral. With the National Security Personnel System, an additional burden will be placed on supervisors to rank individuals for pay for performance. Since I am in the human resources community, where there is never enough money for training, awards, etc., the NSPS will limit the ability to reward outstanding workers. In the past the standards established for administrative positions have been vague and are hard to establish exact goals. How will this affect pay for performance?

Carol Bonosaro

For pay for performance to be successful, 1) funds must be available to reward successful performance, 2) managers need the training necessary to establish goals and appraise performance, 3) the system must be transparent (that is, everyone has to understand how it will work - what is expected of employees, how they will be rated and rewarded), 4) everyone (from the very top down) has to be committed to ensuring that the system is fair and equitable and 5) the system must be constantly evaluated and fine tuned. That's a tall order. Clearly, it's easier to set goals in some agencies than in others and for some positions than for others. Clearly, too, we have to be certain that supervisors are well equipped to deal with poor performers - not all understand the process for doing so - and that they will be backed up when they take action. Many managers complain that they can't devote the time necessary to deal with problem employees because they're spread thin and, given a choice, will devote their attention to meeting other responsibilities. I wish I had a better answer, but these reforms require time and commitment over the long haul.

from Oklahoma City

I don't like NSPS but I know it's a go no matter. But how can they take the COLA away? The COLA has do with keep-up, or a least helping out with the the cost of living.

Carol Bonosaro

I'm not an expert on NSPS, but I can say that there has been little consistency when it comes to COLA's. The new SES pay system, for example, has no locality pay and no guarantee of an annual COLA-type pay adjustment, though OPM regulations permit (but don't require) them to be given to executives who are performing at the fully successful level or better. The Administration's proposed Working for America Act - which will cover departments and agencies other than DoD and Homeland Security - would provide both a national increase (which varies by occupation group and pay band) and a locality increase (which varies by occupation group, pay band and location), along with a performance increase. So a portion of any pay increase should represent a COLA. The bottom line is this - both OMB Deputy Director Clay Johnson and Comptroller General David Walker have said that the salaries of federal empployees who are turning in satisfactory performances should keep pace with inflation. They're right - I'm not entirely clear that Senior Executives can expect this outcome, but it appears that GS employees covered by the Administration's proposal (assuming it is enacted) can.

from Washington, DC

What mechanisms will be put in place to ensure that the system is administered fairly and equitably as it relates to performance based increases: 1. Political appointees will receive higher increases than comparable career employees. 2. Within a department there will be large disparaties in the awarding of performance based increases, i.e. some individuals with the highest rating may receive an increase and others with that same rating may not receive an increase while others with a fully satisfactory rating receive an increase.

Carol Bonosaro

With regard to the SES pay for performance system, the recent congressional action which required the Office of the Secretary of Defense to correct its pay policy (which made different pay decisions based on career vs. non-career status) sent a clear message that such unfairness won't be tolerated. Overall, however, the only way we can assure that there is no bias in favor of political appointees is by being able to review data regarding pay decisions, agency by agency and broken out by career/non-career status. The bottom line is - everyone needs to be judged, and awarded, on the basis of their performance. With regard to pay decisions within a department, clearly, there should be careful management to ensure that there is consistency and to avoid such disparities. Having said that, however, I think it's almost inevitable that we're going to see some disparities, as different components either make decisions slightly differently or have more or less funds available. This issue, among others, points to the need to evaluate the SES system carefully and make corrections because, if we can't implement pay for performance well with a relatively small number of executives, that doesn't bode well for implementing it well throughout the General Schedule.

from Buffalo, New York

Carol,

Recently the non-Union employees from the FAA had to file a lawsuit because the ceiling for their P4P was not raised. They experienced pay compression, the same as the SES did before P4P. It is a worthy note that those FAA employees represented by the union have the authority to negotiate higher ceilings for P4P and have successfully raised the ceiling. Does the SEA have the authority to negotiate a binding agreement for its members on P4P? What is the association's opinion regarding the potential for SEA to file a lawsuit in the future, when "management" fails to honor the principles of P4P?

Carol Bonosaro

SEA is a professional association, not a labor union, and has no authority to negotiate binding agreements. We are working carefully to assess the implementation of pay for performance in the SES and, as we identify problems, we will pursue their resolution with the administration and, when legislation is necessary, with the Congress. I would not rule out a lawsuit if one were needed, but we would have to believe that that route was the most appropriate one and one with a chance of success.

from Arlington, Va

My position is being abolished; however, understandably my agency does not plan to run a RIF, so they would have to place me in another SES position. Instead, there is some pressure to retire. I am concerned that if I do not retire, they will attempt to make staying not worth the while by cutting my pay when it comes time for pay adjustments at the end of they year. Under what circumstances can they reduce my pay and what are my grievance options if they do.

Carol Bonosaro

Your question deserves more attention - and substantial information - than I can give you here. Your situation, unfortunately, is not as uncommon as one would expect. The Senior Executives Association offers information and advice in cases like yours, however, because of limited staff resources, we must limit that benefit to members. If you wish to join, please visit www.seniorexecs.org, where you can complete an application on line, and you will receive immediate attention from a retired SES attorney on our staff. I wish you well in what is a very difficult - and unhappy way to be treated toward the end of your career.

from Arlington, VA

I understand that the DHS roll-out is stopping at the manager level and will not affect those in the union. Can you explain more about this, and why unions may not be affected?

Carol Bonosaro

Obviously I can't respond for the department, but it's clear that the recent court decision in the case brought by the unions has raised substantial issues about the proposed system, at least with regard to employees in the bargaining unit and their right to negotiate certain areas. Therefore, DHS can't implement the system as designed - unless an appeal would be decided in its favor - with regard to those in the bargaining unit. I'm not aware whether DHS plans to go ahead and implement the system with regard to non-bargaining unit employees, but, if the decision in the case didn't affect them, then DHS clearly could do so.

from d.c.

Has your organization expressed an opinion yet on the recent decision by a U.S. District Court judge that certain portions of the Homeland Security legislation pertaining to collective bargaining are illegal? Obviously, senior executives are not only employees in their own right, but managers of large groups of rank-and-file employees.

Carol Bonosaro

We're reading the opinion now, and we are concerned about the DHS system. We weighed in on the DHS legislation and made several proposals as Congress was considering the bill because we're concerned that executives have the tools to succeed and turn in the performance expected of them. We're also concerned that the workforce be treated fairly if we expect to attract and retain good people. Unfortunately, we don't have the resources we'd need to get as deeply involved in some of these issues as we'd like.

from Rockville, Md.

I read an article by Professor Behn of the Kennedy School that said that governments and companies generally think that only about 25% of workers are truly outstanding. Is there any evidence that SES executives who were rated under the new system last year were affected by such a conception -- and,if so, isn't that in effect a quota or bell curve system, that is supposed to be prohibited?

Carol Bonosaro

I've always thought that the SES was an exception to the bell curve theory. Those selected for the SES have demonstrated exceptional capability, therefore, we should expect that many of them will turn in outstanding performance. The regulations prohibit the use of quotas, and SEA is concerned that every executive be rated on the basis of his or her performance and not on a bell curve. Nonetheless, there is some concern that agencies may skew their ratings downward in an effort to ensure that their SES performance management systems will be recertified by OPM. This is another example of the need for data which will enable us to see exactly what results the system has produced.

from washington, d.c.

1) Do you agree with the administration that the General Schedule personnel system should be reformed as soon as possible, or do you think it would be better to wait to see how the new SES system is working? 2) I read that SEA is in favor of giving every successful senior executive a yearly inflation adjustment. Isn't that the same as what we have now, and contrary to pay for performance?

Carol Bonosaro

Given our experience with the SES system, the association believes that it would be wise to assess how well that system has been implemented, what problems have arisen, and how they could be avoided or resolved before implementing this for the full work force. In other words, let's use the lessons we've learned to do a better job with the General Schedule. The system proposed by the administration in the Working for America Act, however, has a number of features which differ from the SES pay system. Further, it would be rolled out over a period of time, so it's possible that it would provide a better experience than we've had with the SES system.

Yes, SEA is in favor of giving every senior executive rated fully successful or better an annual inflation adjustment. I don't think that ensuring that your pay keeps pace with inflation - provided you're doing a good job - is contrary to pay for performance. Remember, senior executives are permitted no pay adjustments of any kind other than those which result from their performance appraisals. So a modest annual inflation adjustment, based on performance, seems fair.

What the General Schedule has now, as you know, is an annual national comparability adjustment and an annual locality adjustment, as well as within-grade increases.

from GovExec Moderator

Thanks, Carol, for taking the time to be with us today and for your thoughtful replies to all of the questions. Our apologies, as always, to those whose questions we couldn't get to during the chat.

See you next time!

Thanks from GovExec.com team

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