Top Dollar Talent

Agencies are increasingly using the incentives attached to the three R's that spell out the potential for extra earnings for federal employees -- recruitment, retention and relocation.

Last year, 47 agencies paid more than $140 million in bonuses to recruit, retain and relocate employees, according to a new report by the Office of Personnel Management. Breaking this sum down, the agencies made 3,952 recruitment payments averaging $8,325 each, 1,009 relocation incentives averaging $11,530 each and 17,830 retention payments averaging $5,388 each.

"In light of the upcoming retirement wave and the increasing competition for talent we face, it is crucial for agencies to have the necessary human capital flexibilities to attract and retain the talent they need to meet their specific agency mission," OPM Director Linda Springer said in a letter accompanying the report.

Payouts were typically tied to mission-critical occupations, such as health care, engineering, security and information technology. But agencies also used the incentives to fill positions at specific grade levels -- 53 percent were offered to entry level employees, and 80 percent of relocation incentives were paid to employees in intermediate and upper level positions, the report stated.

The Defense Department made the most extensive use of the three incentives, largely for hard-to-fill occupations and to help bridge gaps between federal and private sector salaries. The Veterans Affairs, Health and Human Services, State and Homeland Security departments followed, all citing the use of bonuses to fill mission-critical occupations and to retain employees with critical skills.

The incentives extended to pay plans beyond the General Schedule. More than 12 percent of recruitment incentives overall were paid to Defense employees in the National Security Personnel System, OPM found. NSPS employees also received more than 13 percent of relocation incentives and 11 percent of retention bonuses, the report stated.

In 2004, Congress passed a law raising the limits on how much agencies can offer individual employees in incentives. Recruitment, retention and relocation bonuses, for example, are now capped at 25 percent of an employee's annual salary multiplied by the number of years the employee pledges to serve in a position. The law also allows agencies to ask that OPM waive the cap to allow retention bonus payments of up to 50 percent of salary, if the agency cites a critical need.

Last year's payments mark a strong increase from 2005, when 34 agencies paid recruitment, retention and relocation incentives totaling more than $51 million. But OPM noted in the report that a comparison between 2006 and 2005 should not be made, largely because the new incentive authorities did not go into effect until May 2005.

While most agencies reported no barriers to using the three incentives, some listed funding as a challenge, OPM said. Some agencies also reported it would be helpful to have the flexibility to pay recruitment incentives to current federal employees from other agencies and retention incentives to employees likely to leave for other federal jobs.

2008 Health Open Season

The Office of Personnel Management announced late last month that the open season for the Federal Employee Health Benefits Program and related benefits programs will take place from Nov. 12 through Dec. 10.

OPM Director Linda Springer and program experts will discuss premium changes, benefits and innovations for 2008 at a news conference on Thursday, and Government Executive will be there to report on what she has to say. Employees can expect updated information about the programs in early November.