Pay-for-Performance System Under Heavy Fire

By Joe Davidson
Friday, June 26, 2009

On the surface, at least, the hearing by the Defense Business Board may have seemed as dull as the nondescript hotel conference room where it was held. The meeting had the feel of a cut-rate congressional hearing -- groups of experts read their written statements to a panel of wise men in suits sitting behind microphones on a dais.

But unlike a Capitol Hill hearing, this session had no grandstanding politicians playing to voters back home, no elaborate symbols of power and no huge portraits of committee chairmen adding a sense of grandeur to the occasion.

Yet what flowed from yesterday's meeting ultimately could have a major impact on the 2 million people in the federal workforce.

A "task group" of the board held its first public meeting on the future of the National Security Personnel System at a Hyatt hotel in Arlington. NSPS is the pay-for-performance operation for about 211,000 Defense Department civilians. The NSPS has many vigorous critics among federal workers and few strong defenders.

The Obama administration told the task group to study the system and present its findings by summer's end. That report could play a big role in the White House plan to shape a new way of evaluating and compensating federal employees.

Meanwhile, President Obama probably didn't strengthen his bond with federal employee unions and their congressional supporters with a White House statement released Wednesday. He dumped on legislation that eventually could kill the personnel system. The statement said a section of the Defense Authorization Act that would stop the agency from adding people to the NSPS "will cause significant, undue disruption" during the task group's review.

The session began with three government representatives who, as folks in their positions must be required to do, provided rather bland, on-the-one-hand, on-the-other-hand statements about the Pentagon's pay system. They referred to studies that portrayed the good and the bad about a pay system that in theory rewards excellent performance with better pay, but in reality has generated widespread suspicion and mistrust among workers. They were followed by three presidents of federal employee organizations, two of whom blasted the NSPS with both barrels. The third, Darryl Perkinson, president of the Federal Managers Association, said his members think "pay-for-performance is necessary not only to compete with the private sector for talent but also to encourage and reward high performance," but then he went on to list one problem after another with NSPS implementation.

Union leaders generally don't believe this review is necessary. They see it as a nicety they'll cooperate with, even as they continue to pressure their man in the White House to kill it.

"Defense workers have already made up their minds on NSPS. They want it gone once and for all," said Richard Brown, president of the National Federation of Federal Employees. "I agree with this assessment. I believe that NSPS is unsalvageable and the best possible course of action is full repeal."

American Federation of Government Employees President John Gage attacked the system for being "secretive and completely lacking in transparency."

He cited an Army instruction guide, which he said provides supervisors a script for when employees ask about their ratings. " 'My recommendation is just that, a recommendation that I will not share with you,' " Gage said the script reads.

"This hardly encourages meaningful" communication, Gage complained.

Many federal workers want pay-for-performance to die simply because they don't trust it. The major lesson from the task group session was that a program to assess and compensate employees is doomed if it does not have the confidence of those it's supposed to serve.

Brad Bunn, the NSPS program executive officer, presented a flurry of statistics to illustrate the successes and shortcomings of the program. But one figure he cited from a 2008 survey of NSPS workers stood out: Only 26 percent of them said the rating and pay process in their organization was equitable.

He also noted a Federal Times analysis of the pay-for-performance system in August that indicated an NSPS bias in favor of white workers. Shortly after that analysis was published, Bunn said he told managers to take a "deeper dive into their data" in search of anything that could lead to discrimination. That must be a very deep dive, because yesterday he said the ratings differences still "require further examination."

His overall conclusion was that "the indicators for NSPS are mixed." That was about the best thing said for the program. He found "there is evidence the system is beginning to fulfill the objective of a high-performing workforce and management."

But on the critical question of trust, he said: "We have a ways to go to ensure the system is credible to and trusted by the workforce."

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