By Stephen Barr
Tuesday, October 10, 2006; D04

The Pentagon has rolled out the first phase of a new pay and personnel system to a dozen agencies in the Defense Department, and Donna Vaughn , a budget officer at Fort Belvoir, likes what she sees.

A year ago, she found it difficult to recruit employees for her staff at the Defense Threat Reduction Agency and had lost younger employees to consulting firms and contractors that paid more. But the new personnel system, which gives managers more discretion to set starting salaries, has made her office more attractive and more competitive in the job market, she said.

"We have been recruiting in the last six to nine months, and the quality of the individuals we are getting is much higher than a year ago because they are willing to apply to an agency that is pay banding," Vaughn said.

As part of its move to the new National Security Personnel System, Vaughn's agency adopted pay bands -- typically three broad salary scales for most occupations -- and tossed out the 15-grade, 10-step General Schedule, the decades-old system used across the government.

The shift to the NSPS, however, is about more than the mechanics of setting salaries.

The new system has emerged as the Bush administration's most promising effort to overhaul how civil service employees are paid, promoted and held accountable for their work. Rather than reward an employee's length of service, a feature of the General Schedule, the NSPS will reward superior job performance, according to Defense Department officials.

The NSPS calls on supervisors and employees to link their work to their agency's mission. At the DTRA, the goal is to safeguard the country from weapons of mass destruction. Employees and supervisors write up job objectives tied to the strategic plan of their agency, and employees are evaluated on how well they meet those objectives. The evaluations are turned into job ratings used to determine pay raises and bonuses.

Shari Durand , in charge of personnel policies and business-related activities at the DTRA, said the NSPS will help employees "get even more focused on specific outcomes. In the past, there wasn't a disciplined process to make that happen."

The first phase of the NSPS began in late April and covers 11,000 civil service employees in the Defense Department. The second wave of conversions, involving more than 66,000 employees, began this month and runs through January. Over time, the Pentagon hopes to move about 700,000 employees into the NSPS.

The new system has created some anxiety in the Defense workforce. The American Federation of Government Employees and other unions have questioned whether performance-based pay can be administered fairly and whether Congress will provide adequate funding for the NSPS.

The unions filed suit to stop implementation of some parts of the NSPS, including a provision that would limit contract negotiations, and won a court injunction. The Pentagon has filed an appeal and is converting only non-union employees to the NSPS until labor-management issues are clarified.

Like other agencies in the first wave, the DTRA held a practice run to help supervisors and employees understand the personnel system.

At the start of the dry run, supervisors and employees spent time together defining job objectives and expectations, Durand said. At the end, employees received information showing how they stacked up against co-workers for the rating cycle, she said.

"The mock has produced, I think, more realistic evaluations of employees and you see a better equity across the board," Durand said. "Dollar-wise for some folks, there could be a significant increase for them from what they got under the GS system."

The switch to a new system also has required several hours of training for supervisors and employees.

Mirna Flowers , a management analyst and aide to Vaughn, said the training was "overwhelming," adding that "I have to pull out my little reference book to make sense of it." She continued: "Just a lot of new language and terminology that we all have to get used to."

Still, Flowers called the NSPS "a good tool" and predicted that poor-performing employees will be held more accountable under the NSPS. "As harsh as it may sound, you have seen people get pay increases for just being in the system," she said. "And I think this system is going to allow us to be able to separate the performers from the non-performers."

Stephen Barr's e-mail address isbarrs@washpost.com.