GovernmentExecutive.com

More than 110,000 employees under the Defense Department's new personnel system will receive performance-based payouts in their checks on Thursday, with the average pay increase and bonus amounting to 7.6 percent.

Ninety-eight percent of employees working under the National Security Personnel System's Spiral 1 conversion received performance-based payouts this year, meaning their job performance was rated by their supervisors as a three or above on a five-point scale. The bulk of those employees -- 57 percent -- received a rating of three, defining them as "valued performers."

The average pay raise under NSPS was 5.9 percent plus a bonus that equaled 1.7 percent. The overall increase was larger than the hike that federal employees under the General Schedule received for 2008. Congress approved a 2.5 percent across-the-board pay increase for General Schedule employees, with an additional 1 percent allocated to locality pay. Washington, D.C.-area employees received the highest overall increase in the country, coming in at 4.49 percent.

But the 7.6 percent average payout under NSPS isn't directly comparable to the across-the-board and locality pay increases that General Schedule employees receive. Under NSPS, funds that the GS system directs to within-grade pay boosts, quality step increases and bonuses are factored into the overall performance-based raise. General Schedule employees will have earnings potential beyond just their annual increase.

Still, some high-performing workers at Defense did receive payouts above the 7.6 percent figure. One NSPS employee who requested anonymity said he received a rating of four, resulting in an overall payout of 9 percent. The employee added that employees with ratings of five in his pay pool would get a maximum increase and bonus of 14.6 percent.

"I would personally work just as hard whether or not I am on a pay-for-performance system, since that is simply my work ethic," the employee said. "I am more driven by pride in a job well done than I am by a once-a-year raise."

But, the employee added, "it is nice to have tangible evidence that my work here is valued by management. Being rated a four when so few people get fours or fives tells me that my work here is appreciated."

Compared to the General Schedule, where the best way to progress is to advance to the next grade, NSPS offers fewer opportunities for promotion. With only three major pay bands in NSPS, employees likely will be eligible for only two promotions their entire career.

"We are left with having to rely on the annual pay raise to progress upwards through our careers, and whether or not that will be enough remains to be seen," the employee said. "While the pay raises this year were probably higher than expected, I'm still reserving judgment on whether or not the system will be better or worse for employees over the long haul."

The Defense Department has scheduled a series of town hall meetings over the next few weeks to discuss 2008 performance results, lessons learned and what's ahead for NSPS.

Currently, 128,000 nonbargaining unit employees have come under NSPS, with an additional 57,000 scheduled for conversion in the spring. Eventually, the system is slated to encompass 700,000 civilian employees.

COMMENTS

• As a fairly new federal employee who was hired because of my background in compensation, I can't help but laugh at some of these comments. These folks who are unhappy with their performance evaluations, need to review some basic human behavior research. That research shows that we all over-estimate our own performance. So, the evaluation you receive is probably pretty representative of your actual performance. And I know this will sound crazy to most people, but I think that 5.9 percent average base increase is outrageously high. Federal employees need to get in-tune with differentiating "want" from "need". Sure we all want as much as we can get. But what do our agencies need to actually be competitive? My agency's salaries were within about 1 percent of the external market (on average) at the end of 2007. So, given how overall labor rates are expected to increase in 2008, our agency would have needed a budget of about 4.8 percent. Since I suspect most federal salaries roughly mirror ours, that's why a 5.9 percent seems a little excessive. Jason Posted April 27, 2008 1:15 AM
• I would like to know how the 7% raise comes in as well, as I did not see anything close to that with as a "valued employee". I also noticed that the article stated that supervisor gave the rating, how do you know what the supervisor gave, as it is the paypool that gives the final rating. I actually appealed my rating and that process was simply a waste of my time. I used to be a really dedicated, hardworking employee. Now I'm just a worker with extremely low morale. This system may have worked for those who received higher ratings, but for those of us who did not, it didn't do a lot, especially when we don't know what we can do to make it any better. I worked really hard and way outside of the scope of my job, what am I supposed to do now? Dianne Posted March 26, 2008 12:04 PM
• Once I found out how poorly I did(as a valued employee) relative to everyone else, I was very disapointed. I have been Civil Service for just over ten years, climbed from GS11 step 7 to GS13 step 7 in a little less than 9 years and now it appears that I am dull average. It is time to find another line of work. Roger Posted March 17, 2008 1:59 PM