Pentagon performance-based payouts average 7.6 percent

More than 110,000 employees under the Defense Department's new personnel system will receive performance-based payouts in their checks on Thursday, with the average pay increase and bonus amounting to 7.6 percent.

Ninety-eight percent of employees working under the National Security Personnel System's Spiral 1 conversion received performance-based payouts this year, meaning their job performance was rated by their supervisors as a three or above on a five-point scale. The bulk of those employees -- 57 percent -- received a rating of three, defining them as "valued performers."

The average pay raise under NSPS was 5.9 percent plus a bonus that equaled 1.7 percent. The overall increase was larger than the hike that federal employees under the General Schedule received for 2008. Congress approved a 2.5 percent across-the-board pay increase for General Schedule employees, with an additional 1 percent allocated to locality pay. Washington, D.C.-area employees received the highest overall increase in the country, coming in at 4.49 percent.

But the 7.6 percent average payout under NSPS isn't directly comparable to the across-the-board and locality pay increases that General Schedule employees receive. Under NSPS, funds that the GS system directs to within-grade pay boosts, quality step increases and bonuses are factored into the overall performance-based raise. General Schedule employees will have earnings potential beyond just their annual increase.

Still, some high-performing workers at Defense did receive payouts above the 7.6 percent figure. One NSPS employee who requested anonymity said he received a rating of four, resulting in an overall payout of 9 percent. The employee added that employees with ratings of five in his pay pool would get a maximum increase and bonus of 14.6 percent.

"I would personally work just as hard whether or not I am on a pay-for-performance system, since that is simply my work ethic," the employee said. "I am more driven by pride in a job well done than I am by a once-a-year raise."

But, the employee added, "it is nice to have tangible evidence that my work here is valued by management. Being rated a four when so few people get fours or fives tells me that my work here is appreciated."

Compared to the General Schedule, where the best way to progress is to advance to the next grade, NSPS offers fewer opportunities for promotion. With only three major pay bands in NSPS, employees likely will be eligible for only two promotions their entire career.

"We are left with having to rely on the annual pay raise to progress upwards through our careers, and whether or not that will be enough remains to be seen," the employee said. "While the pay raises this year were probably higher than expected, I'm still reserving judgment on whether or not the system will be better or worse for employees over the long haul."

The Defense Department has scheduled a series of town hall meetings over the next few weeks to discuss 2008 performance results, lessons learned and what's ahead for NSPS.

Currently, 128,000 nonbargaining unit employees have come under NSPS, with an additional 57,000 scheduled for conversion in the spring. Eventually, the system is slated to encompass 700,000 civilian employees.