Trial Run Complete for Defense Employee-Rating System

It's good to be a 3.

That seems to be the message from three trial runs of a pay-for-performance system for Defense Department civil service employees.

The days when most employees were rated as "outstanding" or given the highest marks will end if the department's National Security Personnel System takes hold. Officials hope the new system will produce more rigorous ratings that have some consequence because they will be linked to salary decisions.

The NSPS uses a five-level rating system, and most employees covered by the test scored in the middle of the scale. The trial runs were held at Tinker Air Force Base in Oklahoma City, the Naval Sea Systems Command in the District, and the Defense Threat Reduction Agency at Fort Belvoir.

Of 2,500 employees at Tinker, 69 percent were rated a 3. At NavSea, of 2,164 employees, 61 percent got a 3. At the DTRA, of 931 employees, 71 percent were deemed 3s.

In the parlance of the NSPS, employees rated 3 are "valued performers": people who deliver on the job with normal or minimal supervision and display high standards of professional conduct.

Defense employees covered by the NSPS receive the maximum annual pay raise in their agencies when they earn a 3 or higher. The pay raise comes in three parts: the general increase authorized by Congress, a locality adjustment to reflect wage competition in their area and a performance payment.

The performance payment can come in the form of a base salary increase, a bonus or a combination of the two.

Bush administration officials have pushed to shake up federal pay policies, contending that current practices reward longevity rather than performance. Too much of the federal payroll goes to across-the-board, mostly automatic pay raises instead of being tilted toward the best workers, the officials contend.

The changes at Defense may turn out to represent some of the biggest in federal employee compensation since 1978, when Congress last authorized an overhaul of the civil service.

The first phase of the NSPS began in late April and covers 11,000 civil service employees. The second wave of conversions, involving more than 66,000 employees, began last month. The NSPS start-up involves only nonunion employees at Defense because of litigation pending before a federal appeals court. Unions, which sued over Defense efforts to curb union rights as part of the NSPS, could win a voice in shaping the new pay policies if they prevail in court.

Defense agencies in the first phase have run drills to train managers and educate employees about how pay rules are changing. Employees rated 1, or unacceptable, get no pay raises, a change made possible by the law that created the NSPS, and those who are rated 2, or fair, do not receive performance raises or bonuses.

At Tinker Air Force Base, three employees -- less than 1 percent of the test group -- were deemed unacceptable and 6 percent were rated as fair, said Dejuana Howie , the Tinker NSPS program director. About 94 percent were rated at 3 or higher, making them eligible for their regular raise and a performance increase, she said.

The practice run, she said, showed that the performance increase provided to the average employees would have amounted to a 2.2 percent increase in salary. The performance raise would have come on top of the annual general salary increase, indicating that in most years, an employee could get a total raise of more than 4 percent.

For the next round, when Tinker uses the ratings to actually make pay raise decisions, Howie said she expected that "probably the results will be fairly close to our mock," based on feedback she has received from the base managers.

"The mock provided some valuable experiences," she said. "We realized the value of job objectives. We've realized that those objectives must be measured, specific, realistic and aligned to our goals and mission. And we also realized the importance of looking across our different functions and career fields to ensure equity, parity and consistency."

Many Defense employees are skeptical that their managers will be able to link job performance to pay decisions in a fair manner. But Defense officials think training is the key to winning acceptance of the NSPS, which will hand out its first performance-based raises in January.

Tinker plans to share information about job ratings and other NSPS data with employees so they can see how they stack up against co-workers. "If 69 percent were 3s, and you were a 3, then you feel a little bit better about it," Howie said.

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