SES Performance Award Spending Cap Will Increase to 7.5 Percent in October

The Office of Personnel Management is reminding agencies to raise the spending cap on senior executive bonuses beginning in October, and said it would issue additional guidance soon on how to better reward top performers.

The aggregate spending cap on agency performance awards for those in the Senior Executive Service as well as other senior-level career positions will go from 4.8 percent to 7.5 percent in fiscal 2017 to reflect job performance during this fiscal year. The increase is part of President Obama’s December 2015 executive order aimed at streamlining SES hiring, improving the corps’ development and making adjustments to pay to help recruit and retain talented leaders.

OPM also reminded agencies that when determining a senior executive’s salary they could take into consideration the pay of that leader’s direct reports in the General Schedule. One long-standing criticism of the SES and the GS pay scale is that some senior executives are paid less than their subordinates despite the greater responsibility that comes along with government’s top career jobs, commonly referred to as pay compression.

Pay adjustments for members of the SES “must generally be performance (i.e., rating) based” under Title 5, according to the guidance OPM sent this week to agencies. But “it may be appropriate for the agency to take into consideration subordinate GS pay (e.g., in determining complexity and scope of responsibilities) to determine if a pay adjustment is warranted” for incoming senior executives or those being reassigned or transferred. However, “OPM would not expect to see a pay increase for any career SES member reassigned or transferred due to poor performance,” the document said.

Aside from compensation, agencies also are expected to comply with the executive order’s directives on improving the hiring, onboarding, and development of senior executives. For instance, OPM is encouraging federal agencies to use a resume-based application process for senior executive candidates to attract the best applicant pool, which also would save candidates the aggravation associated with the lengthy ECQ [Executive Core Qualifications] narrative statement. The ECQ statement isn’t going anywhere, but OPM is looking into modifying it, and “intends to identify new or alternative types of materials” that agencies can send to the Qualifications Review Board to demonstrate a candidate’s competency, according to the June 28 document. In March, OPM sent specific guidance on the topic aimed at improving the SES application and selection process, with an eye toward increasing diversity among the top career ranks.

OPM directed agencies to “share their draft streamlining plans by July 1 so that best practices may be identified and shared with others” at the July 15 meeting of the President’s Management Council.

The executive order also wants senior executives to be more mobile, working in different departments and jobs in government and elsewhere, aiming to have 15 percent of senior executives governmentwide rotate each year, for a minimum of 120 days. The June 28 guidance notes that “not every executive in an agency is required to rotate” and that some agencies will rotate more than 15 percent each year, and others less than that, depending on their needs. “Since the average tenure of an executive is about six years, this assumes that most executives will rotate on average once during their tenure,” OPM said.

Agencies have to begin implementing their SES rotation plans by Oct. 1.

Agencies will implement some other aspects of the executive order, including changes to SES onboarding and professional development requirements, in phases over the next few years, with several agencies already in the midst of modifying their processes. OPM emphasized that agencies will have flexibility in carrying out the SES reforms since they “cannot be implemented uniformly across all agencies and departments given the different missions, authorities and funding requirements.”

The June 28 guidance also noted that agencies won’t receive any additional funding to support the reforms “although OPM is seeking funding to support the development of IT systems that could support talent succession and management processes if approved.”