OPM cites progress in DOD pay-for-performance system

The Defense Department has built a strong foundation for implementing its performance-based personnel system and provides a consistent approach for supporting the National Security Personnel System across its agencies that have adopted it, the Office of Personnel Management said in a report.

OPM assessed DOD’s progress in putting in place the pay-for-performance system in the report released Feb. 11. NSPS covered 187,000 DOD employees as of May 30, 2008, an increase from 112,000 at the same period in 2007. DOD expects to have converted about 15,000 more employees from the traditional civil service to the performance-based system in early fiscal 2009, the report states.

DOD has said it has been implementing the performance-based system across groups of its civilian employees to make its workforce more accountable, flexible and results oriented.

“However, change of this magnitude requires a significant shift in culture for employees and managers to fully embrace the new flexibilities and benefits of a performance-based compensation system,” said Michael Haeger, OPM's acting director when the agency conducted the evaluation. President Barack Obama appointed Kathie Ann Whipple as OPM acting director Jan. 23.

OPM recommended that DOD continue to emphasize the importance of change management to help smooth the technical and cultural transition, and it should share lessons learned across its agencies. However, OPM report states DOD still did not have a large amount of departmentwide data on employee recruitment, retention and turnover rates related to the performance-based system.

Under NSPS, pay increases and cash awards of employees and their supervisors are based on their performance in meeting their organization’s goals. In its assessment, OPM found DOD has made distinctions in performance and associated pay increases.

The NSPS program manager has established a system with multiple layers of oversight and controls to assure fairness under performance-based system, OPM said.

Supervisors said they are aware of a greater ability to set pay for new hires and change assignments but their responses indicate “little improvement in the hiring process,” the report states.

OPM noted it generally takes employees three to five years to accept alternative personnel systems. Little quantitative data exists on the effect of NSPS on employee retention; however, survey data indicates that employees under NSPS show no greater intention to look for another job than other DOD employees on the traditional civil service pay system, according to the report.

The 2008 assessment of the implementation of DOD's National Security Personnel System is here.