Government Already Has a Blueprint for Implementing Pay For Performance

Current plans to reorganize agencies and switch to pay for performance have a historical parallel: the National Geospatial-Intelligence Agency instituted such a policy change two decades ago. The initiative was a solid success—a direct contrast to the failure to implement the National Security Personnel System under President George W. Bush. The key difference was the decision to rely on employee involvement throughout the transition.

The history goes back to 1996 when what is now NGA was created by merging four offices and parts of several others involved in imagery, mapping and associated intelligence operations (the NGA name wasn’t adopted until 2004). The offices had different cultures and management styles. As an HR manager stated at the time, “They weren’t even speaking the same language.”

In 2008, when the intelligence community announced its plan to transition to the National Intelligence Community Compensation Program (NICCP), it chose the NGA as it’s model for managing salaries for the staffs of the Office of the Director of National Intelligence and the 16 IC agencies. Around the same time, critics were being to question the implementation of the National Security Personnel System. It was terminated in 2011 (during the Obama administration) following court challenges by federal unions. The NICCP was also terminated, although that was a political decision.

It’s important to consider this history in the context of those years, which coincided with the start of the Great Recession. Federal pay increases have never recovered.

When planning for the NICCP started, the NGA pay program was already in its second decade. The agency had already won the president’s award for management excellence, the President’s Quality Award, and Workforce magazine’s Optimas Award, which recognizes initiatives shown to contribute to positive business results. NGA was also named as an employer of choice in St. Louis.

From its creation, NGA’s management decided to develop totally new HR systems to manage its people. A contractor was hired to conduct a study of best practices. The HR office conducted a series of focus groups to understand the concerns of managers and employees. The agency also created a steering committee of 20 employees from across the agency to develop program recommendations.

One product of this effort was a statement of values considered to be important to the success of the agency. From the start, agency leaders made high performance a priority. That prompted the team to focus on policies and practices known to contribute to high performance and to support the ongoing development of employee capabilities. They made an early decision to transition to a new salary system based on salary bands and pay for performance.

The focus groups and steering committee were the starting point for continuing employee involvement.  When the framework for the new systems was agreed upon, the HR team asked one hundred additional managers and lower-level staff members to participate on eight teams to flesh out new HR practices.  Feedback was solicited at several points from the various stakeholders, including union representatives.

Their involvement from the beginning helped win employee buy-in across the different groups. Individuals who played a role often became champions of the new system. An additional benefit of engaging the workforce early was that employees developed an understanding of issues and hurdles, along with the linkage to agency goals and the reasons for management decisions, making them a trusted resource for information among co-workers.

The agency also created a project management office to guide planning and decisions related to other HR and management systems. All of this was prompted by the problems bringing together the several units and their operations. A senior steering committee that included three agency leaders provided guidance to the PMO staff.

The structure of the pay system and associated policies is not appreciably different than in the several demonstration projects that preceded the formation of NGA. The framework and policies for managing salaries were simple and reflective of many banded systems.   

They also decided to rely on a legacy performance management system, with an important innovation: They created as many as 30 professional advisory boards—working groups that consider issues related to an occupation—which identify the critical performance elements along with the knowledge and skills associated with a job family. Managers use that information to develop a job-specific basis for evaluating an employee’s performance.

Critical performance elements are more readily accepted when they are defined in the context of the immediate work situation and intuitively related to the goals of the work group.

NGA supervisors made rating decisions, subject to approval by reviewing officials, but they relied on panels, composed of supervisors and managers, to determine salary increases and bonuses. Increases were based on pre-established rules published in advance and a spreadsheet uses a mathematical algorithm. The algorithm takes into account the budget, an employee’s rating and ratings of co-workers.  The distribution of ratings and financial rewards are analyzed by HR and approved by agency director before any payments are made. The annual results are communicated to the workforce.

Keys to Success

• Leaders as champions. The senior steering committee sent an important message.
• Establishment of the Program Management Office. The PMO provided focus and reinforced the importance of the program.
• Aggressive communications. Frequent town halls, internal communications and the many task forces kept employees informed.
• Use of professional advisory boards to develop performance criteria. The subject matter experts involved in these groups established a credible basis for evaluating performance.
• Reliance on pay panels. The groups minimized possible bias and discrimination and reduced rating inflation.
• Commitment to continuous improvement. The agency conducted an annual survey and focus groups to assess employee attitudes toward the system and the resulting payouts.
• Employee involvement. In late 2009, the Government Accountability Office published a review of the Intelligence Personnel System that concluded, “. . . employee acceptance of the system . . . is dependent on those employees’ involvement in the system’s design and implementation. Ultimately, the success of the system is dependent on this acceptance.” [Italics added]

That is central to the failure of the Bush administration’s National Security Personnel System. It was a top-down mandate that was never accepted by the workforce. The problems could have been avoided.

This column highlights key points from an article the author co-wrote with Andrew Smallwood, "Performance-Based Pay at NGA," published in The Public Manager in 2009.