Online extra | SES pay for performance is "lost in translation"

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September/October 2006; Vol. 1 No. 9

Online extra | SES pay for performance is "lost in translation"

By Trudy Walsh
Government Leader Staff

The Senior Executive Service’s pay-for-performance system is causing a host of problems, ranging from lowered morale to a hastening of the retirement wave, according to survey released yesterday.

Senior Executive Association president Carol Bonosaro presented the results of the survey of the SES pay and performance management system in a report titled Lost in Translation. SES is the first governmentwide group to work under a pay-for-performance system similar to the one proposed by the Bush administration’s Working for America Act.

The survey is based on responses to a questionnaire answered by 850 career senior executives, both SEA members and nonmembers, about their experiences with the new pay system. The survey was administered by Avue Technologies Corp. of Tacoma, Wash.

According to the survey, the SES pay system has been troubled from the start, plagued with problems such as:

Pressure to reduce the number of high ratings because of quotas
A disconnect between ratings and rewards
A negative effect on morale and motivation
A lack of communication and system transparency.

Most of the survey participants also had a dim view of the system’s abolition of SES ranks and locality pay.

Federal executives are concerned that pay for performance will have a negative effect on peer-to-peer relationships, which is a serious problem in groups that rely on teamwork, said Linda Brooks Rix, co-CEO of Avue Technologies.

These pay-for-performance issues pose a serious threat of increasing the negative impact of the oncoming executive “retirement tsunami,” Bonosaro said. Almost half of those surveyed said the new system is discouraging GS-14s and GS-15s from joining SES. Making service in SES less attractive will only make the retirement tsunami worse, she said.

The SES system, in effect since January 2004, has been held up as a model for a larger, governmentwide merit-based pay system. If SES—an elite subset of the federal government—has had such a struggle with pay for performance, the ramifications for a larger system extended throughout the levels of government do not bode well.

OPM’s intention to implement a pay-for-performance system for the SES was “laudable,” Bonosaro said. “Yet the survey results demonstrate that something has been ‘lost in translation’ as the system has been implemented.”

SEA urged Congress to consider and act on nine recommendations for the system:

Mandatory minimum market salary adjustment for all senior executives rated at the “fully successful” or higher level
An assured 5 percent increase for new senior executives
Pay adjustments for career appointees without supervisory officials. A methodology should be provided to allow for annual pay adjustments for senior executives and equivalent positions who do not have a supervising official (such as inspectors general and executives who are heads of agencies).
Assured funding of SES pay
Inclusion of executive performance awards in “high-3” average salary calculations for retirement. Performance awards given to career senior executives should be included in “high 3” average salary calculations, which are based on the average basic pay for the highest 36 months of an individual’s career.
Prohibition of quotas and forced distribution of ratings
Agency performance management system certification on a calendar year basis with a five-year term
Transparency of ratings for senior executives, including a biennial survey
Action by OPM to improve SES pay and performance management systems.

The full survey results are available at the Senior Executives Association Web site.