John Klossner

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Pay-for-performance: A modester proposal

"If the [National Security Personnel System] were allowed to operate unfettered by the taint of human interaction, then it might be the "an honest dollar for an honest day's work" operation it aspires to be."

"Hiring and advancement are primarily a function of ‘popularity and favors,’ not job performance."

"...It does not pay to do the extra, let someone else pick up the slack, get certifications, and think ahead. It would be nice if, just once, I was rated on my WORK and not the budget."

"Under that system the big bosses gave each other thousands of dollars in bonuses and the rank and file got a couple hundred dollar salary boost for a YEAR."

"I have found that work performance does not motivate employees at all. the ones who actually do the work do not get rewarded."

These are not lines from characters in a new reality show ("Survivor Fed," this fall on CBS, right after "Dexter.") No, these are taken from various comments sections in articles and columns on the demise of the National Security Personnel System, a program brought to life in 2004 with hopes of creating pay-for-performance compensation in the federal workplace. As you may have heard, it didn't do so well.

I have to admit, on one level, I'm impressed with the knowledge employees have of the inner workings of their offices. Their ability to recite fellow employees' salaries, management spending decisions and co-workers' working habits show a keen awareness of the details within their respective agencies. But, to go back to my earlier thought, put these folks in shared housing with minimal clothing, free alcohol, and a Jacuzzi and you've got an MTV show.

Of course, there are some satisfied employees:

"I must be one of the few that did well under NSPS. I got a good bonus and a nice raise. I'm also divorced and all my kids are grown. What has that got to do with anything? I can focus on work and put in a lot of hours. Many without comp time. I think that NSPS can work, but it takes great writing skills by your supervisor and too many of them lack that skill. I also think that many people don't understand that there are a lot of folks like me in any organization that really do perform a lot more work than the average worker; not just a little more."

See? All you have to do to make the system work for you is terminate your family life and live at the office.

Just what is going on here? And how do so many of these hard-working employees have time to write comments?

Is it possible to create "fair" compensation? For starters, I would contend that a "fair" compensation system is like the holy grail, perfect love, or the Redskins' playoff chances -- it exists more in hope than in reality. I propose the term "fairer" compensation. But how to create a system that motivates employees, rewards excellence in performance, doesn't lead to resentment, and doesn't break budget parameters? I think I have such a system in my workplace, but I'm self-employed. (Even then, some days I just don't get along with myself.)

Or, more accurately, maybe we should be calling this a "compensation system that is closer in scale to the private sector." There are some who think the private sector offers a much better chance of fair compensation. Maybe so, but anyone who has ever worked at a business with "and Sons" in the title can give you a different perspective.

I don't mean to paint a one-sided picture. There are/were fans of the system. As one commenter put it:

"Pay for performance is a great idea and has mostly worked. Is there some cronyism? Of course, It also exists under the GS system in who gets promotions... The human element is always going to be present."

This reader/writer has put a finger on the problem:

I think everyone shares the goal of creating a compensation system that rewards individual employees fairly for the work they've done. And I would think that everyone feels that a pay-for-performance system is created with the best intentions, and not with underlying purposes of redirecting money to a select few. So, if we agree that the system was designed with the best intentions, then we have to focus our attention on the real roadblock: The people.

If there were some way to remove the disgruntled employees, the confused managers, the slacking co-workers and the cronies -- not to mention those with the potential to become disgruntled, confused or crony-esque -- then pay-for performance might work. If the system were allowed to operate unfettered by the taint of human interaction, then it might be the "an honest dollar for an honest day's work" operation it aspires to. If we can let this compensation program do the job it was designed for without having to deal with the ticky-tack foibles that the personnel bring to the table, then it will have a chance.

Somewhere, someway, someone will create that people-free office that offers fair compensation for all. Maybe we'll be allowed to look in the windows.

Posted by John Klossner on Dec 18, 2009 at 12:19 PM

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Reader comments

Tue, Jan 5, 2010

Part 2
So, to sum up, both the old and new systems depend on people “up the chain” to evaluate and reward. Under the old system I have had supervisors who believe all but a few people deserve a 5; I’ve had others who believe all but a few deserve a 3 (average); so rewards were predetermined by the personal beliefs of the raters. Those beliefs still exist in NSPS - but NSPS gives final rating decisions to pay pool boards who seldom know the people being evaluated and have very little information on which to base their decisions. Old or new system, it doesn’t matter – the super stars will still shine – special friends of management will still be treated well - and the rest will land in the murky middle of “average” or “valued employee”. And lest you think I am one of the murky middle, I am in neither the old or new system, I am in a “demo” system and have done very, very well thus far. But I now have a new supervisor who I have never met in person, who has spent more time in the hospital than out, and an upper management chain that has changed monthly in the last year. I don’t believe I have a “champion” who will fight the pay pool board on my behalf – so I have to hope that my writing skills and the blessings of the big guy up above will take care of me this year.
Okay – that was the performance / reward part. The one good thing that NSPS provides is the ability to offer a range of salaries (ie, pay band salaries) to hire new people. Under the old GS system, jobs were classified at a specific GS grade based on specific standards. Many (many, many) times managers modified job descriptions so they would be classified at a higher grade and allow them to hire people that they knew would not accept the lower grade (but read that as lower salary). The NSPS pay bands have allowed managers the flexibility to offer salaries commensurate with the skills and abilities of the one being hired, without having to play with job descriptions/classifications to artificially inflate grade (and thus the salary).
So – we all want a “perfect” system that rewards good and great performers – but there will always be imperfect people making those decisions. So, what is the solution? I have no idea.

Tue, Jan 5, 2010

Part 1
First of all, before NSPS there was already a pay-for-performance system. Supervisors (raters) and 2nd level supervisors (raters) had the opportunity to evaluate and rate the performance of employees, and reward accordingly. Of course, rewards were limited by funds available for bonus payments, but it was possible to receive a within-grade step increase (an actual salary increase) that bypassed the normal waiting period for the next step increase. This system worked IF your supervisor AND your 2nd level rater (1) liked you and (2) liked your work and (3) were willing to reward you accordingly. Your final rating was determined by your supervisor and 2nd level - people who, in most cases, at least knew who you were and were familiar with the quality of your work and its value within the organization. With NSPS, much of this is still the same except the people who determine your final rating and “reward” (bonus / salary increase) generally have no idea who you are and have no idea about the quality of work performed and its value to the organization – their only source of information is the self-assessment written by the employee and the supervisor’s written assessment. The NSPS system allows only very (VERY) short written assessments – in that severely restricted space it is very hard to describe the work that has been performed and its value. Given the fact that very few people (employees AND supervisors) have even average writing skills (and this is NOT limited to the federal government), written performance assessments are often difficult to read, interpret and evaluate. The NSPS pay pool “board” that reviews evaluations and makes final ratings and bonus/increase decisions have only those written assessments as input to their decisions – if you are lucky, one of those “board” members actually knows you (or knows OF you) and, if they LIKE you AND value your work, AND care enough to fight, they will argue on your behalf for a better rating and reward. But those individuals usually have a lot of employees being evaluated in and amongst the larger group of people in that pay pool, and they simply cannot champion everyone – so they will limit their arguments to those they feel are their best and brightest. If you are unlucky, there is no one on the pay pool board who knows you or your work and unless your written assessments really stand out and make you shine above all others, you are pretty much hosed. And just like the old performance system, payouts are still limited by the budget available.

Wed, Dec 23, 2009

Pay for performance is a difficult at best proposition. First off - it doens't work in the private sector either. Management always games the system for themselves, and then pick and chose their favorite subordinates next. the biggest reason is fails is this: the budget is handed from congress to each agency with an expected increase of salaries for the government workforce (which means slicing the pie before personnel assessments are even looked at or thought of) (FAIL), then each agency hands each division X amount based on the number of employees and their pay bands (which means slicing the pie before personnel assessments are even looked at or thought of) (FAIL), then each division hands down X amount to each office based on the number of employees and their pay bands (which means slicing the pie before personnel assessments are even looked at or thought of) (FAIL), meaning it's the biggest Bell Curve system ever!! In our agency our performance scale was 1-5 and the division director made the statement "no one will get a 5 this year" which means the system = FAIL becuase the director didn't even look at any employee performance. Fix that and we'll talk

Tue, Dec 22, 2009

Reward systems are inherently based on an assessment of value. I think that a supervisor is making that subjective decision is not in itself wrong. The problems with the Federal pay system are that people want to know the exact conditions that determine their pay, and then perfom according to that formula. Since the rules do not cover every situation, even the present rule-based system is woefully flawed, and people depend on factors independent of their contribution, their relationships, their personality, anything due to them as a person. Russell Hantz did not win Survivor: Samoa and he feels ripped off - like many employees, he thinks he played best and "deserved" better. He played as the kind of person you *don't* want on your team and then is dismayed his peers did not select him??? It's a multi-factor analysis, and the only thing harder than assessing perfomance on the job is understanding exactly what the the job requirements really are - everybody has that "and other duties as required" clause in their job description in government, right?? And don't even attempt to determine the contribution of an individual versus the synergy of a team, much less "comparative worth".

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