GAO: Defense should address employee concerns with personnel system

The Defense Department does not have a plan in place to address employee concerns over its fledgling pay-for-performance system, an issue that could affect the project's overall success, according to a new report by the Government Accountability Office.

Recent internal surveys show employees under the National Security Personnel System are more positive than their General Schedule counterparts about some aspects of performance management. But GAO pointed to a 2007 internal survey of NSPS employees that found an overall negative trend in perception of the pay-for-performance system among workers who had the most experience with it.

For example, the percentage of NSPS employees who believe the system will have a positive effect on the department's personnel practices declined from 40 percent in 2006 to 23 percent in 2007. The survey also showed that the percentage of employees who agreed that their performance appraisal was fair declined from 67 percent in 2006 to 52 percent in 2007.

The watchdog agency recommended that Defense use employee survey results to provide feedback to workers and implement a plan to enhance the system's poor reputation and to achieve buy-in from employees. "While it is reasonable for DoD to allow employees some time to accept NSPS because organizational changes often require time to adjust, it is prudent to address persistent negative employee perceptions," the report stated. "Without such a plan, DoD is unable to make changes that could result in greater employee acceptance of NSPS."

Although Defense has built in some internal safeguards to ensure NSPS is fair and credible, their implementation could be better, GAO noted. For example, Defense has taken steps to involve employees in the system's design and application, tie employee job objectives with agency goals, train workers on the system's operation, create stronger links between an individual's pay and job performance, and provide meaningful distinctions in job performance. But the department must continue to monitor these safeguards to ensure its personnel actions are effective, especially as more employees come under NSPS, the report said.

Defense has added more than 181,500 nonbargaining unit employees to NSPS since 2006 and plans to bring an additional 20,000 into the system this fall. Eventually, NSPS is slated to encompass more than 500,000 employees.

GAO determined that Defense also could improve operations of three safeguards. For example, the department currently does not require a third party to analyze results for anomalies prior to finalizing employee ratings, and therefore cannot determine whether ratings are fair and credible.

Further, GAO said, the payout process lacks transparency because Defense does not require component agencies to publish final rating distributions, even though doing so is recognized as a best practice. Ratings officials also could be discouraged from making meaningful distinctions in performance because NSPS guidance indicates that the majority of employees should be rated at the 3 level on a scale of 1 to 5, GAO found.

Brad Bunn, program executive officer for NSPS, said in a response to the report that the department agreed that it should monitor the current safeguards of NSPS regularly, but overcoming negative employee perceptions would take time. Bunn noted that it took several years to gain employee support with previous pay demonstration projects.

"As we have implemented NSPS, we have heard many of the same concerns as your auditors and have attempted to differentiate between those that warrant prompt action and those that reflect the uncertainty and skepticism that typically accompany major changes," Bunn said. "We agree with your statement that organizational transformations such as NSPS require an adjustment period to gain employee acceptance and trust."

Matt Biggs, legislative director for the International Federation of Professional and Technical Engineers, said on Thursday that the GAO report was proof that Congress, which last year prevented the implementation of NSPS for wage grade workers, now should take the final step by repealing the entire system.

"You can add today's GAO report to the mountain of growing evidence showing that NSPS has largely been a failure at DoD," Biggs said. "The longer management is permitted to move forward with NSPS, the more unpopular it will continue to be among the rank and file, as stipulated by the GAO findings."