Senior executive corps to see base salary increases

Federal agencies will be able to raise the salaries of their Senior Executive Service members Wednesday, provided the agencies set up performance evaluation systems that win approval from the Office of Personnel Management and the Office of Management and Budget.

Successful agencies will be able to increase base salary limits for senior executives from $145,600 to $158,100 under pending regulations from the two agencies. The aggregate pay limit for senior executives at those agencies, when bonuses are considered, will increase to $203,000.

"There is no single 'how,'" in the regulations, said Ronald Sanders, OPM's associate director for strategic human resources policy, during a briefing for reporters on Monday. Sanders explained that OPM intentionally kept its salary regulations broad so that agencies could design pay-for-performance systems that were suited to their own needs. "We expect to see a wide variety of approaches," he said.

But the regulations will require that agencies adopt at least four rating levels with at least one level above that of "fully successful." Previously, agencies were required to rate senior executives on scales that included at least three levels: fully successful, minimally successful and failure. In 2002, 75 percent of SES employees received ratings of at least "fully successful."

At the same time, a majority of senior executives has reached the current pay cap of $145,600. Last year, Congress included a provision in the National Defense Authorization Act that set the new pay cap in an effort to relieve pay compression. Senior technical and other senior-level employees will not be able to benefit from the increase in the base pay cap, but a provision in the 2002 legislation creating the Homeland Security Department will allow agencies to increase the aggregate annual pay of those employees to $203,000, provided the agencies win OPM and OMB certification for their performance evaluation systems.

Sanders said OPM would not set quotas on the number of high rankings that agencies could hand out, and would allow agencies to continue to rate most employees highly as long as the agencies were able to justify the rankings. To do so, agencies will have to set up sophisticated performance measurement systems. SES employees will have to develop an annual performance plan that will detail their goals and describe how superiors can gauge their year-end output. Individual goals should be tied directly to the agency's organizational goals. "We want to establish that link clearly and unequivocally," Sanders said.

Every agency must assign one employee to gather reports released by Congress and OMB that describe the agency's overall performance, and disseminate those reports to senior executive performance evaluators. An agency's overall performance will not be the only factor in determining how well its employees rate, Sanders said, but it will be a factor considered in every grading decision.

As of this year, senior executives will receive annual pay raises only if they earn satisfactory grades in their performance evaluations. They will no longer receive automatic annual cost-of-living adjustments or locality adjustments.

Agencies that can demonstrate that their current performance evaluation systems meet the standards set by OPM can apply for a two-year certification, while agencies that have developed systems but haven't yet implemented them can apply for one-year provisional certifications. They can later apply for full certification.

Agencies may have their certifications suspended if OPM detects serious flaws in their use, but employees will not have to surrender pay increases they were awarded while their agency was certified. Decertified agencies cannot offer additional raises until they convince OPM that the problems have been corrected.

Similarly, an employee who leaves a certified agency for an uncertified one will not sacrifice any pay. But the employee will have to wait for his new employer to win certification before he or she can get another pay increase.