A Dip in the Pay Pool

With bravado in the face of recent legal setbacks, Pentagon officials announced Wednesday that 66,000 more employees will enter the National Security Personnel System this fall and that pay for performance, market-sensitive pay and other reforms "aren't going away."

On July 5, the department made a more subtle statement of commitment to the system by posting a new brochure on its Web site -- Pay Pool Process at a Glance.

The brochure is designed "to ensure that people have the right information and the right tools available to them so they can succeed in NSPS," said NSPS program executive officer Mary Lacey.

With the Pentagon's trailblazing system likely to act as a model for any future pay-for-performance systems in the federal government, exactly what information and tools do federal employees need?

To start, pay pools are groups of about 50 to 300 workers who will share a pot of funding for performance-based raises. In Defense, the exact makeup of each pay pool will be determined by the military services and generally will be split along already existing organizational unit lines. Raises will be divided among members of the pay pool based on relative performance ratings.

According to Lacey, employees should not think of their fellow workers in a pay pool as competitors for pay because employees will be rated on concrete, custom-tailored criteria. "This is about the individual performance against performance standards," Lacey said. "The 'who else is in your pay pool' is not a huge driver."

What will certainly be a driver are the members of pay pool panels, who will review employee ratings and dole out raises accordingly. Who sits on these panels? "There's not a good universal answer," Lacey said.

In general, pay pool panelists will be managers or supervisors with direct, intimate knowledge of at least a portion of employees in the pay pool. There will be no front-line employee members, although administrative workers may help with tasks such as mathematical calculations.

For every seven or eight pay pool panels, there will be an assigned "performance review authority" to oversee these decisions. "I can just tell you from experience they are going to get eyeballed pretty tight," Lacey said.

The panelists will balance each other out, she said, so that one strict and one lenient rater will have to meet in the middle. And, she said, employees will benefit from the panelists' new relationships.

"When folks learn more about employees outside [their immediate supervision], there is an opportunity for discussion on employees development needs," Lacey said. "A manager may not have something they could assign to the employee, [but] a different supervisor might."

The money in the pool for panelists to divide up comes from three sources:

• A combination of money previously used for within-grade increases, quality-step increases and promotions.
• Money formerly used for across-the-board raises.
• Funding that was used for annual bonuses.

Unlike under the General Schedule system, the Defense Department will have the authority to shift those funds around based on its needs. For example, officials could decide to funnel money toward an effort to recruit more nuclear engineers in a specific location.

"Under NSPS, we have the authority to walk away from what OPM does governmentwide, what Congress does governmentwide," Lacey said.

But for this year, at least, the Pentagon is sticking with the same across-the-board and locality pay adjustments other federal employees will get.