Pay for performance helps agencies win new talent

Pay for performance needed to recruit and retain talent in next-generation federal workforce, say senior officials.

Agencies can use pay for performance as a recruitment tool, one benefit of the progress they have made in implementing the alternative pay system, said Linda Springer, administrator of the Office of Personnel Management. Springer has released a report showing that agencies are rewarding their top-performing senior career executive with higher performance awards and pay adjustments under pay for performance. She testified last week on Capitol Hill about the approach.

“Successful implementation of performance-based pay has come only after substantial effort but has resulted in transformed performance cultures that are much more results oriented than previously,” she said July 22 at a hearing of the Senate Homeland Security and Governmental Affairs Committee’s Oversight of Government Management, the Federal Workforce and the District of Columbia Subcommittee.

Senior agency officials say pay for performance is critical to recruiting talent and retaining the next-generation federal workforce. For example, the National Intelligence Civilian Compensation Program is more sensitive to the market than the traditional General Schedule, said Ronald Sanders, chief human capital officer in the Office of the Director of National Intelligence.

“They’re not going to have the patience to stay with us to get to that pay in the General Schedule [pay scale]”, he said. “Pay for performance is important if we want to win the war for talent.”

The pay-for-performance systems at some agencies, however, are inconsistent and unclear, leading to low morale, said employee groups and unions. For example, Transportation Security Administration employees, who earn an average $30,000 annually, are often evaluated and tested by managers who use inconsistent standards as part of the agency’s Performance Accountability and Standards System, said John Gage, national president of the American Federation of Government Employees.

Sen. George Voinovich (R-Ohio), ranking member of the subcommittee, said he would question agencies about some of the high-profile inconsistencies of pay for performance.

Springer said the inconsistencies have more to do with implementation of individual programs. “It’s important to draw the distinction between the execution of specific programs and the notion of performance-based pay,” she said.

Sen. Daniel Akaka (D-Hawaii), subcommittee chairman, said that agencies must invest enough in the pay systems to provide a real performance incentive and make sure that employees are involved in its development.

“If employees do not understand their pay system or think that it is unfair, it will not work,” Akaka said.

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