November 17, 2003

November 17, 2003

Selling the System

By Richard Haney and Glenn Sutton

As the Defense Department prepares to transform its existing personnel system, which covers more than 700,000 employees, to the new National Security Personnel System (NSPS) approved by Congress, the workforce is voicing - sometimes loudly - understandable concerns through union representatives, letters to newspapers, and other forums.

Fortunately, the experiences of the Acquisition Workforce Civilian Personnel Demonstration Project (AcqDemo) and other demonstration projects illustrate some important lessons that could ease the inevitable friction of implementing major HR reform:

Employee acceptance must be earned. Pay-for-performance systems are always controversial, and few employees will welcome this kind of change initially. It took four years for AcqDemo to reach an overall employee acceptance level of more than 50 percent - similar to other demonstration projects. Why? Because change is always stressful, and trust must be earned. Even with a vigorous outreach effort, employees will not quickly embrace a system as revolutionary as NSPS.

Training and communications are critical. A well-planned and resourced training program is essential to getting buy-in from employees, managers and HR specialists. Each target audience has its own unique set of learning objectives: personnelists must learn how to implement the flexibilities inherent in the new system; managers and supervisors must be trained to fairly and effectively exercise their new responsibilities; and employees must learn how to participate successfully in the process.

Managers and supervisors in pay-for-performance demonstration projects typically express shock at how much of their time is required for performance assessment, payout determination and feedback to employees, especially in the first few years. Effective training and software support can help to shorten this learning curve and maximize returns for the time invested.

In government, as in the private sector, most supervisors learn how to supervise by trial and error on the job; little formal training is provided. In the General Schedule system, where annual pay raises are all but automatic, lack of supervisory skills is unfortunate, but not disastrous. But in pay-for-performance systems - as attitude surveys clearly show - supervisory competencies such as employee assessment and feedback are critical because pay is directly affected. Employees must know that supervisors are knowledgeable in NSPS procedures and fair in applying them, and supervisors must know how to coach employees on their performance in order to help them improve.

A pay-for-performance system that includes effective supervisor communication is very powerful. Of those AcqDemo employees assessed as poor performers in the first ratings cycle, less than 6 percent remained in that low zone three years later.

Transition planning reduces risk. Moving to a modern performance-based approach is highly complex, and organizations risk failure if they do not adequately plan and prepare for the transition. Defense leaders must develop a master transition plan that provides overall guidance, implementing procedures and a schedule. In parallel, the armed services must develop implementation plans to integrate NSPS execution with other human capital strategic planning, and considerations such as budgetary factors and internal reorganizations.

Evaluation pays off. Demonstration projects must conduct formal evaluations of their effectiveness. The AcqDemo experience argues strongly that such evaluations will be a key factor leading to successful implementation and employee acceptance of the new system.

As NSPS rolls out, senior leaders at Defense will need some measures of which features are working as designed and which require fine-tuning before adoption by the total workforce. Although many of the NSPS features have been tested in previous demonstration projects, none of these projects approaches the scale of a departmentwide implementation.

As the AcqDemo experience shows, there will be challenges ranging from software incompatibilities to procedural misunderstandings and organizational differences in implementation. Evaluation techniques - including attitude surveys, focus groups, exit surveys, and analyses of performance assessment, payout, and personnel office data - provide a wealth of useful information for decision-makers and reassurance for participants that the department is concerned about fairness and equity.

Pentagon leaders would do well to base the planning and management of NSPS transition on the experiences of its successful demonstration projects. After all, if you're trying to change a culture, you need all the help you can get.