Pentagon's New Pay Plan Emphasizes Goals, Results

Linking pay raises to job ratings requires a management system that is easy to grasp and perceived as fair by employees. It's hard work, especially when your goal is to create a more rigorous pay system for about 650,000 workers in dozens upon dozens of occupations around the world.

The Defense Department has been at the drawing boards for much of the past two years, trying to design such a system for its civil service employees. The National Security Personnel System will feature broad salary ranges tied to occupations and will replace the General Schedule pay system that most agencies, including Defense, have used for decades.

The Bush administration wants to shake up federal pay, and the Pentagon's plan and a similar effort underway at the Department of Homeland Security might turn out to become the biggest changes in the civil service since Congress overhauled the system in 1978.

"Right now, 85 percent of an employee's pay increases are on cruise control. They are simply longevity-based," said Mary E. Lacey , the program executive for the NSPS. "While most people learn as they work longer and make a greater contribution, the current system is not focused on results . . . and we think that is important.

"People ought to get paid for getting jobs done . . . and getting them done better," Lacey said. "We want to recognize people when they get them done better."

The Pentagon released an initial plan for rating employees last year, but Lacey pulled it back after feedback raised concerns that it was too focused on evaluating how work got done rather than what got done.

A revised plan, released Friday, emphasizes the importance of what employees do at work and what they accomplish. At the start of a rating cycle, employees and supervisors would agree on job objectives, and in a way that would allow the employee to see how his or her work contributed to the success of the workplace and the Defense Department as a whole.

Employee performance ratings also would be determined by what the Pentagon calls "contributing factors," such as technical proficiency, critical thinking, teamwork, communication and leadership.

The Pentagon plans to use a five-level scale for rating employees. Defense workers would have to be rated at least "fair" to receive an annual raise in their pay band or a locality pay adjustment. Higher ratings, such as meeting or exceeding expectations, would make an employee eligible for more money -- a performance-based raise. An "unacceptable" worker would get no raise of any kind.

As a general rule, Defense officials anticipate that the bulk of employee raises each year will come through pay band and market-based adjustments. Because most Defense employees are solid performers, officials believe they will be able to garner performance raises, too.

For the performance-based raise, the Pentagon's proposal would convert an employee's rating into a numerical score, with points assigned to each job objective. For example, an employee rated as a "valued performer" would get three points.

Supervisors, however, could consider contributing factors, such as technical proficiency, to adjust the score upward or downward by a point or leave it alone. The points would be totaled and turned into an average score, which would become the employee's rating of record. Supervisors would use that rating to award "shares" -- how much each employee could receive from his organization's salary account.

For example, a valued performer who got three points for doing a great job in meeting objectives and who picked up another point for showing exceptional skill in executing work would have a total of four points.

Under the proposal, an employee with a rating of four could receive either three or four shares from the pay pot -- which would give supervisors a way to sweeten the paychecks of their top workers.

Supervisors also would have the discretion to award the shares as bonuses or as a combination of pay raise and bonus.

Pentagon officials are moving to turn the pay proposal into a department-wide directive, which will be given to 43 unions for comment and recommendations. The Pentagon hopes to have a final performance management directive in place before April 30, when the first 11,000 Defense employees are scheduled to test the new methods for setting pay.

E-mail:barrs@washpost.com