Performance pay: We know it works

NGA, among others, has demonstrated that pay for performance works in government

It’s almost ironic. On Oct. 28, President Barack Obama signed legislation that effectively killed the National Security Personnel System, the Defense Department’s pay-for-performance system. The next day, the new Senate Task Force on Government Performance held its first hearing. Jeff Zients, deputy director for management at the Office of Management Budget, testified about a plan to create a new performance system for federal agencies.

Zients told the task force he has “found that leadership, measurement and a motivated workforce create the foundation for good performance.” He did not refer to pay in his testimony, perhaps because it is a sensitive issue.

In a speech the following Monday, John Berry, director of the Office of Personnel Management, outlined his ideas for replacing the General Schedule system. One of his themes was financial rewards for outstanding performers. He is clearly on the same page as Obama and OMB Director Peter Orszag, who in a letter to a group of congressional leaders said, “The administration strongly endorses the concept of rewarding excellence with additional pay.”

The decision to end NSPS was fully justified. The system had design flaws and lacked the support to make it successful. Terminating the Homeland Security Department’s MaxHR also was the correct decision. OPM now has a clean slate to plan a governmentwide replacement system.

The interest in performance pay is consistent with workforce management practices across the United States. In the private sector, pay for performance is effectively universal. In state and local government, it’s more prevalent today than it was a decade or so ago. It is deeply entrenched in the history and cultural values of our country.

We know how to plan, implement and manage a successful performance pay system. The National Geospatial-Intelligence Agency has had a highly successful pay-for-performance program for a decade. Lawmakers recognized NGA’s pay system as a success by specifically allowing it to continue in the legislation that ended NSPS. Regular employee feedback confirms the acceptance of the program.

Looking back over the experience with pay for performance, the threads that run through the successful programs are clear. Employees need to know:

  • What they can expect and what’s expected of them.
  • Opportunities for rewards are consistent across the organization.
  • There is a review process to identify any problems that arise.

The NGA program was chosen as the model for the intelligence community’s new performance-based pay system, which could be a model for the rest of government. The Office of the Director of National Intelligence authorized an overall program framework with each intelligence agency expected to develop and manage its own pay system based on a set of common principles.

It would be useful at this stage for the government to spell out its workforce goals and priorities. Berry made it clear in his speech that he sees the replacement of the GS system as central to civil service reform.

About the Author

Howard Risher is a private consultant who specializes in pay and performance.

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Reader comments

Wed, Dec 2, 2009

Anyone who knows and works in the system realizes that the breakdown with pay for performance (with NSPS) lies in the fact that the immediate supervisor does not determine the pay for performance. The decisions are made two or three levels above where the performance of the employee is not know. The "pay pool process" breaks down the value intended with the NSPS pay for performance. These same upper level pay pool managers dictate the number of objectives and their weights, so flexibility is taken from the immediate supervisor and employee to taylor their performance plan.

Tue, Nov 24, 2009

The whole reason the GS schedule was put in place was the abusive hiring, firing and promotion activities going on by managers. Cronyism and nepotism and any other acts that rewarded friends and relatives were widespread and the General Schedule was a way to stop that. This is all a result of the political climate of the past administration wanting a more "private business-like" run operation that just does not work with government. Government is not here to make a profit, but to provide services, some essential.

Mon, Nov 23, 2009 HR, DOD

I find it naive and bordering ridiculous, the posters who think that mgmt should not have the power to determine an employee's pay. Sweethearts, who then? The employees? A committee? Get REAL. EVERY private company and every Federal organization employ mgrs whose job it is to recognize and determine what your output is worth. Yeah, sometimes it doesn't work very well, because human beings screw up. Or they like someone better than you. Or they don't understand the process. Or... But guess what? The concept of bosses determining your pay isn't going away. If you don't like it, there is self-employment. The rest of you should quit complaining and get back to work. Be happy you have a job right now.

Fri, Nov 20, 2009 Corporation for National Service

I have found that work performance does not motivate employees at all. the ones who actually do the work do not get rewarded. I worked under a new management for 4.5 years and never received pay for performance, I was graded fully successful on purpose but my performance was over and above. Finally, this year in 2009 with the new administration, I received pay for performance. Of course, that manager is no longer employeed.

Fri, Nov 20, 2009

Who is going to check the honesty of the people awarding the performance pay?. You people act as if this country and the actions of the powerful in it are always just and honest. I worked for DOD. I might as well have been an american slave during the 1700's. The people in power openly awarded the workers they were friends with and this is exactly how performance for pay will work. If we were honest it would be a great idea, however, just as the private sector is not ready for the pay for performance system, neither is the government.

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