Angry tales of unfair ratings dominate the criticism of DoD's pay-for-performance system, spurring fears of the program's long-term impact on employee careers and calls for a massive overhaul before a government-wide rollout. Additional feedback from federal employees converted to the National Security Personnel System (NSPS) recently revealed even broader inherent system problems, such as poor communication, excessive government waste, nepotism, mistrust, and racism.
The NSPS is part of former Defense Secretary Donald Rumsfeld's plan to change the way the Pentagon does business to better meet new challenges, and replaces the 50-year-old General Schedule (GS) personnel ranking system with broad pay bands.
Under the program, supervisors rate the performance of their employees from 1 to 5. Pay pool managers review those ratings and either accept or alter the supervisor's suggestion. Bonuses and salary adjustments are based upon the employee's performance ratings. The higher the rating, the more money the worker receives from the a pool of money (a pay pool) within their division.
Unfortunately, what was designed to be an objective system has shown severe vulnerability to bias, leading many employees under the system to complain about unfair ratings they received, along with a myriad of other problems.
Unfair Ratings
A former DoD agency employee, previously on the general schedule system, recalled under conditions of anonymity that she always received 'oustanding performer' ratings and was quickly promoted during seven years of working for the government. But these excellent assessments quickly turned to a 3 or mediocre rating under the NSPS. Upset, the employee confronted her supervisor, who stated that it was in fact the pay pool managers who overturned his higher evaluation of her.
"I feel like it's a quota system," the former Pentagon agency employee complained on the condition of anonymity. "I've heard this from a couple of people who been involved in the actual pay pool itself."
Disgruntled over her rating, she inquired to senior leaders but found superiors unable to explain what constitutes a rating of "5."
"I often said that, really, to get a 5 rating, you would have to make it rain gold, you'd have to have [U2 singer] Bono come to the office and you'd really have to have world peace," mused the former DoD employee. And, still, an employee would probably not merit the coveted 5 rating, she added. Disillusioned with the NSPS structure, she left the department.
She went on to complain that since only a certain number of staffers may receive the sought-after 5 rating, the new system lowers morale and actually deters initiative, since competent, high performers are relegated to the same camp as their low-performing counterparts.
To combat the atmosphere, DoD instituted their "It's good to be a three" campaign, arguing that a mediocre 3 rating actually meant the employee met all job tasks with a satisfactory performance.
"The emphasis to rate everyone a 3 has severely worsened morale and makes promotion at the higher levels virtually impossible," according to comments made by an employee of the Defense Threat Reduction Agency, which carried out an internal survey last year on NSPS obtained by OhMyGov!
Moreover, NSPS puts supervisors in an "untenable" situation when the pay pool lowers a recommended grade to "fit the curve," expecting the supervisor to explain the rating to the employee, says another DTRA staffer anonymously in the survey.
"NSPS forces pay pools to grade the majority of employees as '3s,' essentially sending the message that they are average performers. This is difficult to square in an agency culture where everyone is told they are doing an outstanding job," added the DTRA employee.
In some cases, supervisors have been instructed to change the ratings of low-performing employees, the survey indicates. "They didn't know about it but I did," a supervisor quoted in the poll explains. "And I believe actions such as this totally degrade the new system and go against what a performance based system should be."
Perhaps one of the most revealing accusations in the DTRA survey is that the pay pool has time only to review the top and bottom employee evaluations. This suggests that employees rated as a 3 are not evaluated at all, charged a DTRA staffer.
After 46 years in the government, one Air Force source intimated, he has never encountered such a "de-motivating situation as this NSPS." Many colleagues and peers at other defense agencies are upset about the subjective nature of the rating system, and that pay pool administrators tend to receive good performance ratings of 4 and 5, he explained. More-junior employees, meanwhile, seem to receive the 'valued performer' rating of 3, which is seen as an average assessment, he said.
The senior Air Force employee went on to slam the NSPS for providing unfair ratings against older workers.
"The problem is that people like myself -- who are at the eighth, ninth and tenth steps of a grade - all the money that would have gone to us for step increases are being used to finance the NSPS payouts," said the source on condition anonymity for fear of potential reprisals for speaking out. "So, invariably, those of us who are senior are not keeping up with the General Schedule, which is inequitable. It's unfair."
As a result of switching ranking systems, "my salary is going to be $2,893 less under NSPS than it would have been under [the] General Schedule" system, according to the Air Force source. By his calculation, he will lose $50,000 to $75,000 over a 20-plus-year life expectancy upon retirement under the NSPS.
The source's complaints were backed by many in the DTRA survey. The agency was one of the first DoD components to convert its employees over to NSPS. Following the implementation, DTRA surveyed its employees to determine satisfaction and to obtain comments on the system. As reported previously by OhMyGov!, satisfaction with the system was extremely low overall, particularly in the areas of communication with supervisors, understanding the NSPS process, ease of use of the system, the time required to complete appraisals and a perception of pay pool fairness.
Racism?
The Federal Times uncovered other examples of unfairness in the system, including the treatment of employees, which data shows varied by ethnic background.
"White employees received higher average performance ratings, salary increases and bonuses in January than employees of other races and ethnicities. In fact, when compared to Asians and Native Hawaiians and Pacific Islanders, whites received on average almost a full percentage point more in their total payout of raises and bonuses," according to the Federal Times.
The analysis also indicated Asian-American employees received slightly higher performance ratings overall than did blacks but were given significantly smaller pay raises and bonuses. Women received larger total payouts overall than did their male counterparts even though both were rated similarly.
NSPS program executive officer Brad Bunn told the Federal Times the department does not yet know what caused the inequalities in ratings and compensation but promised to investigate further.
Favoritism
Accusations about favoritism within the system have also surfaced.
Since the pay pool panels are subjective in nature, the rating process has become "a popularity contest," notes one DTRA staffer in the survey. Two employees who have successfully contributed to the agency may be awarded shares based "solely on who has more recognition with pay pool panel members," explains the employee. "It's an unfair system."
Underscoring the need for more oversight, one agency employee accuses some supervisors of using NSPS to their advantage and spotlighting only individuals they want to succeed.
In fact, favoritism and retaliation are "worse than ever within the organization," according to survey comments. Others denigrate NSPS as just a "good old boys network."
Moreover, they maintain, the rating system benefits primarily senior management and management personnel who have already "capped out salary increases" under the former GS system. This results in "comparatively lower bonuses and raise opportunities for everyone else."
Although some surveyed employees have talked about leaving the Pentagon for government agencies untouched by NSPS, this is not always easy, conceded a former DoD agency employee. The source said a co-worker looking for a job at another government agency submitted performance appraisals to the prospective employer that showed a decline from outstanding to average ratings, spurring questions during the interview.
Other government agencies have no understanding of NSPS and its contentious rating system, she said.
"I think it's a very bad system and I very much hope it doesn't get expanded across the government, because I think it can lead to some very, very serious short-term and long-term ramifications...[It] can ruin people's careers, to be honest," said the source.
Secrecy
Survey comments obtained by OhMyGov! also show a perception among NSPS covered employees that the system is far too secretive.
Government activities must be above-board and withstand scrutiny, one Air Force employee argued. In contrast, the Navy shares "an awful lot" of information about its system with employees, ending up with "a de facto General Schedule system," he said.
"This 'TOP SECRET' pay pool stuff needs to change," one DTRA staffer declared in the survey. "Employees don't trust a system that is not done openly and honestly...Under NSPS I have no idea how to get a better rating or more money - and my supervisor can't seem to tell me."
As one DTRA employee laments, even less is known about the NSPS process than the system it replaced.
Another describes the pay pool as "a very foggy institution" that operates according to its own rules behind closed doors. The system has apparently supplanted a supervisor's best judgment of an employee's performance, the staffer complained. Why bother with self-assessments and supervisor consultations when "all of that can be changed by an anonymous "pay pool?"
Loss of Identity
Another criticism of the NSPS system is that it causes a loss of identity due to the merging of what were formerly 15 GS grades into three broad pay bans. Those who previously identified themselves as a higher ranking GS-15 now often sit in the same pay bans as GS 11-14s.
"We've been told under the new system there's no longer rank per se for employees, which means loss of identity," according to the Air Force employee.
Equally unfavorable comments emerged in the DTRA study.
"Watching the loss of identities with what my folks had accomplished in their careers with sterilization of being lumped into meaningless pay pools was extremely difficult," said one supervisor.
Similarly, an agency employee describes the personnel management system as having reduced "face-to-face interaction as collaboration becomes more like a video game than a proper human interaction."
For all practical purposes, NSPS takes the supervisor out of the real assessment loop, according to the survey. "Thus, individuals are graded by people who really don't know them or marginally know them."
Government Waste
Frustration, too, has mounted over the time-consuming process involved in grading employees. The hastily implemented system takes about 10 times longer and costs 10 times more to administer, an Air Force employee told OhMyGov!
"The mandatory training that I attended prior to NSPS was a waste of man hours, my time, and depreciated the mission," charges a DTRA staffer in the survey.
"The system wastes enormous amounts [of] time and causes much more anxiety and frustration on the part of both supervisors and employees," according to another complaint.
Instead, this energy should have been used to accomplish the agency's real mission, not some "pie-in-the-sky quest to deliver a 'new' performance based personnel rating system - what a waste!" declares another DTRA employee in the survey.
Yet another charge is that the system is far too "activity-intensive" to offset any benefits.
Indeed, taxpayers would be appalled at the "absolutely ridiculous amount of time" it takes to complete assessments, states an employee in the survey. "I have work to do, and yet I must spend an inappropriate amount of time writing objectives and filling out forms and discussing how to write objectives. . . "
Opposition to the NSPS system, one of Rumsfeld's key initiatives, has brewed for years.
Rumsfeld referred to the new civilian personnel system as an illustration of widespread changes at the department upsetting people resistant to change, according to an April 28, 2006, Pentagon press release.
"The idea of paying for performance is stunning for some people," he said at the time, adding the General Schedule system "rewarded employees for length of service rather than performance."
The American Federation of Government Employees and 12 other labor unions, including the National Federation of Federal Employees and the International Brotherhood of Teamsters, filed a lawsuit in November 2005 challenging certain aspects of the proposed system. But DoD, the Office of Personnel Management (OPM), the Justice Department and the unions involved in the lawsuit announced an agreement later that month.
OPM Director Linda Springer offered a positive appraisal of pay-for-performance systems in the federal government before a Senate panel in July.
"Successful implementation of performance-based pay has come only after substantial effort, but has resulted in transformed performance cultures that are much more results-oriented than previously," she told lawmakers. About 350,000 employees work under such systems, she said.
A report issued last year by OPM, moreover, shows it takes at least five years for the majority of employees to be supportive of the change -- but the support inevitably emerges. "Even where the explicit support is more temperate, the largest proportion of employees is undecided rather than opposed. In those settings where employees are still uncertain, other data suggest that agencies need to monitor and focus more closely on their implementation efforts," states the report.
The government personnel who spoke to OhMyGov! acknowledged the good aspects of the NSPS system - such as streamlining government personnel actions, providing incentives to employees and conducting online appraisals - but urged more finetuning of the system.
DoD needs to involve focus groups, suggested the senior Air Force source, and consider peer reviews in the ratings.
And the department must give employees "the proper resources" allowing them to appeal a rating decision, added a former DoD staffer.
The former staffer advocated for a massive overhaul of the quota system, as well as changes to supervisor training. The "supervisor's supervisor" needs to go over every rating, she said, "and I don't know if that's realistically possible." Reforms must also include adding appropriate checks and balances that prevent discrimination, stop supervisors from abusing their authority and disallow people from being subjective, maintained the source.
But not everyone faulted the new system. One supervisor instead shot back at employees, urging them to take the training more seriously.
"For the average employee it's still a joke. They don't understand the system, the requirements, or the ratings."
Roughly 180,000 of DoD's 650,000 employees have been converted to NSPS, with all but union employees gradually expected to make the switch in the future.
By Fawzia Sheikh
To see all 59 pages of comments from the DTRA employees surveyed, click here.
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