VA plans pay-for-performance effort in ’07

By TIM KAUFFMAN
Source: FederalTimes.com

The Bush administration’s attempt to win congressional authority to expand pay reforms beyond the Defense and Homeland Security departments has stalled, but that hasn’t deterred some agencies from moving forward on their own.
Several agencies, including the Veterans Affairs Department, are developing plans to move some of their employees into performance-based pay systems using an existing authority that allows agencies to test alternative personnel approaches, said Doris Hausser, senior policy adviser to Office of Personnel Management Director Linda Springer.
VA hopes to move about 750 employees into a pay-for-performance system under a so-called demonstration project in 2007 and pay them performance-based raises beginning in 2008. Money ordinarily spent on annual pay raises, within-grade increases and quality step increases would be pooled to reward employees in the demo based on their performance ratings.
Hausser declined to name the other agencies that are working on demo projects, but said in the past year OPM has fielded an increasing number of queries from agencies interested in testing alternative pay systems for their workers.

Interest in the demonstration projects has surged and waned over the years, Hausser said. “Relatively speaking, right now we’re in a period where there’s a little higher level of interest,” she said.
Demonstration projects are a proven way of trying out different methods of paying and evaluating workers that can lead to permanent changes. The Defense Department parlayed its years of experience operating various demonstration projects into the National Security Personnel System, which ultimately could cover 650,000 civilian workers.
Congress has shown little interest in approving similar reforms for other agencies, however. That’s left proponents of performance-based pay systems searching for other ways to move forward with reforms, and demonstration projects fit the bill.
“It’s actually a scenario that some champions of change in the government actually describe as a good way to proceed,” Hausser said.
One of those proponents is Allen Pittman, VA’s assistant secretary for human resources and administration and chief human capital officer. Pittman spent 35 years in the private sector before joining VA two years ago.
He said moving to a performance-based pay system will be critical if the government expects to compete with the private sector for new hires.
“The merit system within the government is absolutely wonderful, needs to be supported and need not be changed. However, we have to move to the point where we have an environment that’s conducive to the recruiting of private-sector employees,” Pittman said. “Part of that is recognizing performance.”
VA’s project is patterned on the performance system already used for VA’s 300 senior executives. The project initially will cover nonbargaining unit GS employees in more than 35 occupations, mostly located in the Washington area, although Pittman said he hopes and expects some union workers to participate. About 80 percent of VA’s 240,000 employees are unionized.
VA intends to publish details of the demo project in the Federal Register by April 1, he said.
OPM has authority to approve demonstration projects for up to 10 agencies at a time. Currently, there are only two active demo projects: one at the Commerce Department that involves about 4,300 employees, and another covering more than 8,500 acquisition and support workers at Defense.
Hausser said interest in demonstration projects picked up after OPM released a report in October 2005 detailing ongoing demonstration projects and other alternative personnel systems. Higher interest won’t necessarily translate into more projects taking effect anytime soon, however. She said agencies frequently discover demonstration projects are more complex than they assumed.
“What often becomes clear is that they entail a level of effort that people don’t quite understand when they’re starting,” she said.
VA already has laid the groundwork for moving all employees to a performance-based personnel system. This year, for the first time, all employees will be evaluated under a five-tier appraisal system instead of the old pass-fail system. The new system will allow managers to differentiate between employees performing at different levels, rewarding high achievers with larger bonuses and more training and advancement opportunities, Pittman said.
VA has spent a lot of time preparing brochures, videos and training sessions to explain the new appraisal system to employees and supervisors. Employees are being instructed in how to appraise their own performance, how to establish measurable goals and how to communicate with their supervisors during their annual appraisals.
“It requires a tremendous amount of training and understanding, but that has to happen,” he said.