| Comment Number: | OL-10509709 |
| Received: | 3/15/2005 5:14:04 PM |
| Subject: | Notice of Proposed Rulemaking, Request for Comment |
| Title: | National Security Personnel System |
| CFR Citation: | 5 CFR Chapter XCIX and Part 9901 |
| No Attachments |
Comments:
(From the Merit Systems Protection Board web site): From Theory to Practice: Can Pay for Performance Work? The critical success factors may be different than you think. Calls to better manage "human capital" have led many agencies to take a hard look at their human resources practices. That look includes pay, and many agencies are examining the effectiveness of their pay practices in recruiting and retaining top performers and eyeing pay for performance as a means to influence employee behavior and focus activities on agency goals. Is pay an effective tool? Of course pay matters—few people are willing to work for free. However, research has not consistently linked pay policies to desirable staffing and productivity outcomes, as discussed in our front page article. In some cases, pay for performance improved recruitment and retention of high performing employees; in other cases, it did not. Clearly, good theory and good intentions are not enough. Is pay for performance worth the effort? Pay for performance is not a panacea for organizational ills. However, if done properly, it may help agencies better realize the merit system ideal of equal pay for work of equal value. The value of an employee's work is not determined solely by the nature of the job and time on the job. Through pay for performance, an organization can acknowledge that "value" includes quality of work, quantity of work, and results, and that value can be recognized through awards and pay increases. What is needed to make pay for performance work? Quite a bit, as it turns out. Several factors are critical to the success of pay for performance. As shown below, those factors are not purely—or even primarily—financial. Although funding matters, agencies cannot expect to spend their way to success. Critical success factors include: Organizational Culture Leadership commitment. Open communication. Employee trust of supervisors and leaders. Effective Supervision Fair treatment of employees when assigning work, providing training opportunities, evaluating performance, and allocating awards and pay increases. Continuous monitoring and documentation of performance. Timely, accurate, and constructive performance feedback. Fairness A system of checks and balances. Pay and awards distributed according to performance. Training Education on how the pay system works. Education on the values underlying the pay system. Funding An organizational commitment to paying for performance. Sufficient funding to provide rewards commensurate with employee contributions and organizational results. Effective Measurement Performance measures that capture the most important critical behaviors and outcomes. Evaluation of performance at the appropriate level(s), e.g., individual, team, and organizational. Reliably distinguish among levels of performance. Evaluation and Improvement Systematic assessment of the effects of the pay for performance system, including effects on recruitment and retention, employee attitudes and behaviors, the distribution of pay and awards, and organizational finances and performance. Pay for performance has many organizational benefits, and attending to these critical success factors will help agencies achieve those benefits.