After NSPS

Since President Obama signed the repeal of the Defense Department's National Security Personnel System into law last fall, federal employees and managers have posed several questions. What does the repeal mean for the future of pay-for-performance systems in government? What will happen to employees who came into NSPS from pay systems other than the General Schedule? Who returns to their old pay system first? What grade and step will an employee occupy when she returns to the GS system?

For many NSPS employees, that last question is particularly complicated. Under NSPS, top performers earned substantial pay raises. Their salaries have increased rapidly so that they now earn more than they would be paid under the 10th (and highest) step of the grade they're assigned under the GS system. They can't just be bumped up a grade to make their salaries fit the General Schedule, but the law that repealed NSPS says no one can lose pay during the transition back to the GS system. That leaves those employees in an uncomfortable limbo.

The Pentagon's solution thus far has been to place affected employees on pay retention. In the simplest terms, that means they will retain the salaries they earned under NSPS. But until the General Schedule's pay scale increases enough so their salaries fall within the system's grades and steps, they will receive 50 cents in pay increases for every dollar their colleagues receive when Congress appropriates base salary raises, locality pay and special pay rates for federal employees. The compromise means employees will retain the pay earned for performance under NSPS, but their salaries will grow more slowly.

In a guide for Defense human resource officers, the NSPS transition office acknowledged that employees could be operating under a system of lower raises "indefinitely," because it is impossible to know when the GS system will rise to meet them. Individual employees could fit back into the system more quickly than others, depending on how much higher their salaries are than those at the top step of their grade.

The salaries of employees who are placed on pay retention also cannot exceed Level IV of the Executive Schedule, plus 5 percent. In 2010, that threshold is $163,275 ($155,500, plus 5 percent). But there is an exception for physicians and dentists, which allows their salaries to rise above that level. In addition, workers whose pay hasn't hit that threshold will receive their incremental raises until their salaries reach the pay ceiling.

The dilemma faced by top performers under NSPS illustrates the larger challenge of a systematic approach to a transition affecting hundreds of thousands of employees. In the guide for HR officers, the transition office explained that even though it was creating an automated system for handling the data for the transition, "mass automation capability will require manual intervention" to determine where NSPS employees will fall on the GS pay scale, and to update their personnel files.

Even employees who fit neatly back into the GS system still will need help and reassurance as they make the transition. Establishing broad parameters for the wind-down of NSPS is absolutely necessary, but it's not enough to handle both the technical problems of classification and employees' questions about what happens next.