4 approaches to pay for performance

Experts suggest various ways the Obama administration could move toward pay for performance without repeating the mistakes made with NSPS.

Management experts say there are various ways that the Obama administration could move toward a governmentwide pay-for-performance system without repeating the mistakes of the National Security Personnel System. Here are four basic ideas they have suggested.

Begin with performance management.

The Obama administration should not repeat the Defense Department’s mistake of implementing a pay-for-performance system before its performance management system was ready, said Matthew Biggs, legislative director at the International Federation of Professional and Technical Engineers.

“You can’t come in and put in place a system when people don’t know what they are being measured by,” Biggs said. “Work out all the problems with that first, then move forward with linking pay to it.”

Take a hybrid approach.

Some experts believe the federal government should create a system that combines features of pay for performance and the General Schedule system. For example, the administration could replace the GS grades with a smaller number of pay bands. As with the GS system, employees would move through the pay bands based on seniority, plus receive annual raises. However, the size of the raise would be tied directly to performance ratings.

Adopt a market-aligned pay policy.

The typical company policy is to pay their full-performance employees at market levels, said consultant Howard Risher. Newly hired or recently promoted employees are paid low in their range, but they can expect larger increases as they learn the job.  Only above-average performers can expect to be paid above market, and only the best performers progress to the range of maximum pay. Companies rely on a 'merit matrix to manage increases.

Build a template and allow tailoring.

Some experts say numerous agencies have had success with pay-for-performance demonstration projects because they developed the systems with their particular workforces in mind. Creating one system that could be applied governmentwide is another matter altogether.

However, the Obama administration could take a cue from the Office of the Director of National Intelligence and the intelligence community, said James Thompson, an associate professor of public administration at the University of Illinois at Chicago. ODNI designed a basic pay-for-performance system that each intelligence agency can use a model for its own system, within a certain set of parameters.

“That is probably the way the government has to go,” Thompson said. “It almost has to be done agency by agency.”

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