Agencies spend more money on personnel flexibilities in 2007

Federal agencies paid more than $200 million in bonuses last year to recruit, retain and relocate employees, according to a new report from the Office of Personnel Management.

The report, released Monday, found that 41 agencies paid $207 million in recruitment, retention and relocation incentives in 2007, with an average incentive payment of $6,394. Most agencies reported using the hiring flexibilities to meet strategic human capital goals.

Retention incentives were the most widely used tool, totaling $127 million and accounting for more than 70 percent of the overall bonuses paid out in 2007. OPM noted that it could not compare those figures to 2006, however, since retention incentives authorized by the 2004 Federal Workforce Flexibility Act did not take full effect until May 2006.

Agency use of recruitment and relocation incentives increased by more than 95 percent between calendar years 2006 and 2007. The total amount paid for recruitment incentives increased by more than 74 percent between 2006 and 2007, while the amount paid for relocation bonuses increased nearly 100 percent during that time, OPM said.

"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 missions," OPM acting Director Michael Hager said in a letter accompanying the report.

Payouts typically were tied to mission-critical occupations such as health care, engineering, security and information technology. Agencies also used the benefits to fill positions at specific grade levels -- 53 percent of recruitment incentives were offered to entry-level employees while employees in intermediate- and upper-level positions received 76 percent of relocation incentives, according to the report.

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

The benefits also extended to pay plans outside the General Schedule. For example, more than 8 percent of recruitment incentives overall were paid to Defense employees in the National Security Personnel System, OPM found.

While most agencies reported no barriers to using the three incentives, some listed funding as a challenge, OPM said. Some agencies also said 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.