International Federation of
Professional and Technical Engineers

E-ACTIVIST NEWS CENTER
Stop NSPS Pay for Performance

The Department of Defense is charging ahead with sweeping changes to the personnel system for its civilian workforce. The new personnel system, the National Security Personnel System (NSPS), will scrap the General Schedule (GS) pay system and replace it with a Pay for Performance plan that leaves all pay increases in the hands of government managers.

While the DOD touts Pay for Performance as a way to reward hard working employees, federal workers’ experiences with Pay for Performance demonstration projects have shown that ‘Pay for Performance’ is an empty promise.

Ask Congress to hold the Pentagon and the Office of Personnel Management accountable for moving forward with such a destructive pay policy. Send the below letter, addressed to the Chair and Ranking Senator of the Senate Governmental Affairs Committee, Senators Susan Collins and Joe Lieberman, urging them to reverse the Pentagon’s authority to institute Pay for Performance on the over 700,000 civil servants employed at DOD.

Sample Letter for Campaign

Subject: Say 'No' to NSPS-Pay for Performance

Dear [ Decision Maker ] ,

I am writing to you regarding the National Security Personnel System (NSPS) and my grave concerns with the Department of Defense's push to dismantle the General Schedule (GS) pay system and replace it with an NSPS 'Pay for Performance' system. Once implemented, I fear the NSPS Pay for Performance system will adversely affect over 700,000 DOD civil servants.

Several federal agencies have cited Pay for Performance as the cornerstone of their management initiatives. Management has pointed to various demonstration projects throughout the federal government, alleging that Pay for Performance has been a raving success with both workers and management.

Rank and file civil servants tell a different story. They cite the many Pay for Performance demonstration projects that have been ongoing for over twenty years. Their experience has shown that Pay for Performance is nothing more than a catchy slogan that results in lower salaries for the overwhelming majority of workers, while rewarding the select few. Meanwhile, those demonstration projects have produced no evidence indicating that Pay for Performance results in greater productivity from the workforce.

The idea behind Pay for Performance sounds fair: pay workers based on the quality, detail and efficiency of their work. This is an idea I support. However, a system based on the DOD's Pay for Performance plans will be doomed to failure. Moreover, the current GS pay system already gives management the flexibility to reward productive and effective workers.

One of the principle problems with the DOD's Pay for Performance system is that a worker's pay hinges on the sole discretion of his or her manager. That manager's decisions are not held accountable under the DOD's plan. There is no neutral third party that can render an impartial accounting of a workers performance, much less a fair determination of compensation. In this environment, cronyism and corruption could go unchecked. I suspect that this is not the type of environment you envisioned for federal workers when the Pentagon asked for the authority to dismantle the GS system and replace it with Pay for Performance.

The GS pay system a successful pay instrument that has stood the test of time. Of course, there are circumstances when changes to the GS system are in order. However, a wholesale shift from the GS system to the NSPS Pay for Performance system is a disservice to the hundreds of thousands of civil servants employed at DOD.

In closing, I ask that you both, in your respective positions as Chairman and Ranking Senator on the Senate Governmental Affairs Committee, to work together in a bipartisan fashion to pull back the Pentagon's authority to implement such a flawed and unfair system. It is clear to me that the voices of rank and file civil servants were silenced during Congress' original debate on this issue and I am hopeful that you will give serious consideration to this request.

Sincerely,

Campaign Launched:
November 05, 2004


Background Information

Rich Rewards or Empty Promises

The Department of Defense is charging ahead with sweeping changes to the personnel systems for its civilian workforce. The new personnel system, the National Security Personnel System (NSPS), will scrap the General Schedule (GS) pay system and replace it with a Pay for Performance plan that leaves all pay increases in the hands of government managers.

While the DOD touts Pay for Performance as a way to reward hard working employees, federal workers’ experiences with Pay for Performance demonstration projects have shown that ‘Pay for Performance’ is an empty promise.

We asked two experienced federal workers–both who have knowledge of Pay for Performance in practice–about their informed opinions and observations.

Jim Winward is an engineer at the Naval Surface Warfare Center – Carderock Division (NSWCCD) in Philadelphia, and a 16-year federal civil servant. While his union, IFPTE Local 3, was able to opt out of Pay for Performance demonstration due to their union contract, he has researched the issue and witnessed Pay for Performance forced onto the nonunion workers in his organization.

Gary Phetteplace is a scientist at the U.S. Army Corps of Engineers’ Cold Regions Research and Engineering Lab (CRREL) in New Hampshire, and a 30-year federal civil servant. His union, IFPTE Local 4, participated in a Pay for Performance demonstration project for four years. With resistance from management, the local exited at the insistence of an overwhelming majority of the union’s members.

Matthew Biggs is the Legislative Director for the International Federation of Professional and Technical Engineers (IFPTE), AFL-CIO, CLC. Biggs, who has represented the union’s concerns before Congress for the last three years, administered the interview of Winward and Phetteplace.

 

Q: The DOD says that Pay for Performance will force federal employees to prove their worth while rewarding workers. As federal workers, what are your experiences with Pay for Performance?

Jim Winward: Local 3 was asked to participate in a five-year Pay for Performance demonstration project in 1998. We were very diligent in researching the subject of demonstration projects and finding out what affected employees had to say.

After much research and careful consideration, we declined to participate, while the non-unionized half of the NSWCCD employees were forced to participate. The two systems have existed side by side within one organization for the past six years. After six years nobody has called us to say how great the demonstration project is within our organization, and nobody has asked us to reconsider entering.

Gary Phetteplace: The Pay for Performance demonstration project we participated in for four years did nothing to force federal employees to prove their worth due to the fact that it had no performance metrics, something that we had under the GS pay system. The appraisals by the supervisors were entirely subjective and the employee is left with no specifics upon which to appeal and the taxpayers are left with no assurances of performance for the same reason: No metrics!

We unionized largely because we saw this coming and very soon afterwards the union was tasked to explore options for getting out of the Pay for Performance demonstration. The result of the first vote [on whether to exit from the demo] was 74% and the second vote of the Union membership was 76% favored getting out. Our bargaining unit represents professionals; roughly half of the members hold PhD degrees. The features of the Pay for Performance demonstration and the results it had achieved were carefully studied by many members before their decision was made.

 

Q. Pay for Performance is being pitched to federal workers as a chance for them to get a pay increase. Do federal workers fare better under Pay for Performance?

Gary Phetteplace: As is required by law I believe, our Pay for Performance demonstration was designed to keep the salary pool neutral in growth, so it became a zero sum game where the lower level employees helped finance the big raises of those earning higher salaries.

Our demonstration project required the performance of junior employees to be judged using the same criteria as the highest-level employees, with nothing other than subjective allowances for reasonable performance expectations based on level and no written expectations.

Not even with a Pay for Performance demonstration score of 5, the highest possible in our system, could those under our demonstration keep pace with early career advancement under the GS system. In our agency, for example, fewer than 1% of employees got a score of 5 in a given year. Average scores were about 3.2%. At that rate, it would have taken about 20 to 25 years for the demo system to catch up to the GS system, and for that entire time the employee would have been underpaid.

Worse yet, under the demonstration project the employees had no recourse. Under the GS system they can file a classification appeal with the agency or the Office of Personnel Management (OPM).

Jim Winward: I would like to add that putting money intended for annual cost of living increases into a DOD-wide performance pay pool [as the NSPS Pay for Performance plan does] is just plain cruel, especially since DOD refused to set limits on management’s share [of the pool].

Most importantly, the GS pay scale is adjusted across-the-board annually in response to inflation. This is something that DOD wants to take away with NSPS Pay for Performance.

 

Q. How do you respond to the OPM and the DOD’s claim that Pay for Performance is geared to create incentives for productivity and the current GS pay system is not?

Jim Winward: If money is the only incentive for increased productivity, then the GS pay system offers salaries ranging from about $18K to $130K per year. Salary advancement can be expedited via promotions and annual QSI’s [quality step increases]. Bonuses can be given annually via performance reviews, or anytime via special act awards.

Promotions beyond the employee’s full performance level are generally advertised within the employee’s working group, at minimum, and are competitive. Pay advancement is contingent upon successful performance ratings.

Gary Phetteplace: The GS system contains all the means necessary for the supervisors to ensure employee performance. It simply requires that the supervisor be able to document any adverse actions. This requires some effort on the supervisor’s behalf, but it would not seem to be an undue requirement before taking adverse action against an employee. In fact in any personnel action public or private, it would seem that management should exercise such due diligence to avoid exposing the employer to potential legal actions.

 

Q. Under the Pay for Performance managers get paid out of the same pool as workers. How did the managers fair at the Cold Regions Research and Engineering Lab?

Gary Phetteplace: What happened was that the managers in each of the four years we participated voted themselves a bigger raise than the "rank and file." It’s not clear how any organization that has unchecked growth in it’s overhead can be competitive with the private sector, which will naturally tend to reduce overhead as it’s a non-productive expense.

 

Q. Does Pay for Performance create the potential for managers to allow personal friendships, or differences, to influence their decisions when determining the raises of workers?

Gary Phetteplace: With the reduced control of and accountability for managers fundamental to the Pay for Performance programs, this is destined to occur. Pay for Performance systems without metrics, controls, and meaningful appeal avenues are ripe for abuse by the federal manager who has little or nothing at risk.

 

Q. How do you respond to the idea that the federal workforce policies need to reflect the private sector’s workforce policies?

Gary Phetteplace: My years in the federal government have led me to just the opposite conclusion. There is a fundamental flaw in assuming that the private sector model of Pay for Performance may be applied in the federal sector: The federal sector manager has nothing at risk. There is no board of directors to which the agency head is accountable and political agendas are often driving the agency from above.

In addition, missions and functions which are inherently governmental are not typically those in which success would be measured by short-term gain, as is the driving force behind much of the private sector.

 

Q. Why would the GS system work better than a pay plan that emulates private sector employment practices?

Jim Winward: The existing GS pay system is more predictable than Pay for Performance and attracts employees who are career-oriented and looking for more stability in their occupation. This is what is best for the taxpayer – a workforce encouraged to stay during worker supply and demand fluctuations.

For the DOD, the civil service is the only stable element of the workforce. The other elements are temporary: contractors, military, and political appointees. Pay for Performance will create more of a revolving door system in the federal government, as well as a ‘spoils’ system, neither of which is in the public interest.

 

Q. How do the federal workers you work with feel about the Bush Administration’s rush to implement the NSPS Pay for Performance plan?

Jim Winward: The mood within the civil service has changed for the negative under this Administration and we are expecting nothing great out of Pay for Performance.

Even though many employees might not know how bad things could become under NSPS, because they have not followed the legislative process, most people are smart enough to realize that when their employer says that they are going to restructure the pay system, it does not mean more pay.

Mid-career employees with young children like myself who had hoped for a full career in government are worried. Those approaching retirement eligibility are talking more about retirement and are hoping that this new pay system is not implemented in the meantime.