Agencies to launch alternative-pay project

The Office of Personnel Management and the Veterans Affairs Department plan to test a performance-based pay system at the Veterans Health Administration. According to a notice published June 18 in the Federal Register, the five-year demonstration project will modify the General Schedule pay system by eliminating fixed steps in each grade and basing pay adjustments on performance evaluations. The system will cover 150 GS employees in the health systems administrator job series at the GS-14 and GS-15 grade levels. Performance-based pay adjustments are scheduled to begin in January 2010 under the plan. OPM said the purpose of the test is to “provide larger annual pay increases to employees who are better performers based on…a credible, strategically aligned performance appraisal program and thereby improve the results-oriented performance culture” at VA. Employees rated below the fully successful performance level will not receive pay increases under the program, OPM said. Employees, supervisors and managers will receive extensive training before the project is launched and throughout the life of the program, OPM also said . “It is important that employees perceive the performance management program as fair and transparent. Therefore, supervisors and managers will be trained in the effective management of performance.” Written comments on the proposal are due July 18. A public hearing is scheduled for Aug. 5 at VA headquarters in Washington.