[Senate Hearing 111-689]
[From the U.S. Government Printing Office]
S. Hrg. 111-689
THE NATIONAL SECURITY PERSONNEL SYSTEM AND PERFORMANCE MANAGEMENT IN
THE FEDERAL GOVERNMENT
=======================================================================
HEARING
before the
OVERSIGHT OF GOVERNMENT MANAGEMENT,
THE FEDERAL WORKFORCE, AND THE
DISTRICT OF COLUMBIA SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JUNE 9, 2010
__________
Available via http://www.gpoaccess.gov/congress/index.html
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
----------
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58-031 PDF WASHINGTON : 2010
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Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri JOHN ENSIGN, Nevada
JON TESTER, Montana LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware
Michael L. Alexander, Staff Director
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE
DISTRICT OF COLUMBIA SUBCOMMITTEE
DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana SCOTT P. BROWN, Massachusetts
ROLAND W. BURRIS, Illinois LINDSEY GRAHAM, South Carolina
EDWARD E. KAUFMAN, Delaware
Lisa M. Powell, Staff Director
Bryan G. Polisuk, Counsel
Jennifer A. Hemingway, Minority Staff Director
Sean M. Stiff, Minority Professional Staff Member
Aaron H. Woolf, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Akaka................................................ 1
Senator Voinovich............................................ 2
WITNESSES
Wednesday, June 9, 2010
John H. James, Jr., Director, National Security Personnel System
Transition Office, U.S. Department of Defense.................. 4
Charles D. Grimes III, Deputy Associate Director for Employee
Services, U.S. Office of Personnel Management.................. 6
Gregory J. Junemann, President, International Federation of
Professional and Technical Engineers, AFL-CIO, CLC............. 16
Patricia Niehaus, National President, Federal Managers
Association.................................................... 18
Patricia Viers, President, Local 1148, American Federation of
Government Employees, AFL-CIO.................................. 20
Alphabetical List of Witnesses
Grimes, Charles D. III:
Testimony.................................................... 6
Prepared statement........................................... 44
James, John H. Jr.:
Testimony.................................................... 4
Prepared statement........................................... 29
Junemann, Gregory J.:
Testimony.................................................... 16
Prepared statement........................................... 47
Niehaus, Patricia:
Testimony.................................................... 18
Prepared statement........................................... 57
Viers, Patricia:
Testimony.................................................... 20
Prepared statement by John Gage, President................... 70
APPENDIX
Background....................................................... 76
Howard Risher, Ph.D., representative of HRSolutions, Wayne, PA,
prepared statement............................................. 80
Questions and responses for the Record:
Mr. James.................................................... 86
THE NATIONAL SECURITY PERSONNEL
SYSTEM AND PERFORMANCE MANAGEMENT
IN THE FEDERAL GOVERNMENT
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WEDNESDAY, JUNE 9, 2010
U.S. Senate,
Subcommittee on Oversight of Government
Management, the Federal Workforce,
and the District of Columbia,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:30 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Daniel K.
Akaka, Chairman of the Subcommittee, presiding.
Present: Senators Akaka and Voinovich.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. This hearing will come to order.
Good afternoon. Welcome and aloha. I would like to thank
you all for joining us here today for this hearing examining
the repeal of the National Security Personnel System and
Performance Management in the Federal Government.
The Fiscal Year 2010 National Defense Authorization Act
(NDAA) repealed the National Security Personnel System (NSPS)
at the Department of Defense (DOD), our Nation's largest
Federal agency. Since its inception, NSPS was plagued by
employee distrust and a lack of transparency. As one of three
Senators to vote against NSPS in 2003, I was pleased that the
system was repealed. Federal employees, especially those
charged with defending our Nation, are entitled to a personnel
system that is fair and transparent.
As a result of the appeal, approximately 226,000 DOD
employees must be converted out of NSPS by January 1, 2012.
Most of these employees will transition back to the General
Schedule (GS) system. The NDAA also requires that no DOD
employee suffer any loss of pay as a result of this transition
process.
Although DOD has until 2012 to complete this transition,
DOD estimates that the large majority of employees will be
removed from NSPS by the end of 2010. As of today, more than
50,000 DOD employees have already transformed out of NSPS. DOD
should be applauded for establishing a NSPS transition office
and starting the transition quickly.
However, I am concerned with certain issues related to the
transition. For instance, DOD has reported that it plans to
place a large number of employees who received large raises
under NSPS on pay retention. As a result, these employees will
receive half of their annual pay increase until the General
Schedule catches up with their pay. I understand that there is
significant concern about this issue, especially from employees
approaching retirement, and I look forward to hearing from our
witnesses on it.
In addition to repealing NSPS, the NDAA provided DOD, in
coordination with the Office of Personnel Management (OPM),
with authority to create a new performance management system
for DOD employees. OPM has also indicated that it may seek to
implement a new performance management system governmentwide. I
am pleased that DOD is required to involve employees and labor
organizations in the design and implementation of this system.
I am also pleased that the law requires that the new system
be fair, credible and transparent, that both supervisors and
employees be trained on the system, and that supervisors
receive additional training on performance management and
motivating employees, that employees receive formal and on-the-
job training and mentoring to help their performance, and that
other transparency and accountability safeguards be built into
the system.
I believe that NSPS was ultimately unsuccessful because DOD
did not adequately seek employee input or share information
with stakeholders. The success of any large-scale agencywide
change depends largely on acceptance and understanding by
employees and supervisors. We must all keep this in mind as we
consider significant performance management changes for both
DOD and throughout the Federal Government.
I look forward to hearing from DOD on its plans to move
forward as well as other witnesses' input on how performance
management systems at DOD and governmentwide should be
structured.
With that, I will ask my good friend, Senator Voinovich,
for any opening remarks that he may have.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. Thank you, Mr. Chairman, and I am really
pleased that you are having this hearing today because the NSPS
system was something that I worked on for 4 or 5 years. I will
say this, that after looking into what the alternative is, it
is much better than I originally anticipated.
That being said, NSPS was the most ambitious effort yet at
improving the way the Federal Government manages and rewards
its employees. Beginning in 2003, I spent much time and effort
working, along with colleagues Senators Collins, Levin and John
Warner, to get the system right.
I remember going over to the Department of Defense and
saying, you are going too fast. Slow down. Take your time. Make
sure the training is there because you cannot do this unless
you have the proper training.
In many ways, this work required Congress to force the
Department to make course corrections. For instance, in
response to stakeholder concerns about the lack of consultation
by DOD, Congress established a Meet and Confer requirement to
provide for stakeholder input.
Congress also worked to slow down implementation, to
transform the System's rollout into an event-driven process
rather than one that followed arbitrary timelines. A lengthier
implementation period allowed the Department to incorporate
lessons learned for new classes of DOD employees when their
time came to join NSPS. As a matter of fact, Senator Akaka and
I had a hearing out in his wonderful State of Hawaii with some
folks to see how NSPS was being cascaded throughout the
Country.
Unfortunately though, bipartisan good faith efforts in
Congress were not matched by what I consider similar
contributions from important stakeholder groups. For example,
shortly after the Department unveiled the NSPS final rule, I
asked a Federal labor union to provide me with a list of 10
improvements they would like to see made to NSPS. Topping the
list I received in return was a proposal to allow bargaining
over pay in NSPS. As my colleagues well know, pay has never
been subject to bargaining among Executive Branch agencies.
When coupled with similar experiences like the
disappointing participation of various groups during the Meet
and Confer process, I could only conclude that some were never
interested in seeing NSPS succeed. The interesting thing is
that NSPS never did get cascaded to members of the unions. It
was all non-union members that were involved in the System.
Now I do not mean to suggest that NSPS problems can be
attributed solely to early and prolonged opposition from
certain quarters. Very real and important implementation flaws
existed during NSPS's short life including pay disparities
correlated with race, gender and job assignment. It was
imperfect.
But after only a few years of implementation, the solution
to these flaws should not have been the wholesale repeal
pursued by Congressional Democrats and the Obama
Administration. Rather, increased resources should have been
dedicated to training managers and supervisors in properly
completing performance appraisals and in developing oversight
mechanisms to discipline the use of pay pool funds.
I understand the Fiscal Year 2010 National Defense
Authorization Act provides the Department with certain
personnel flexibilities in an effort to retain some of the
positive features of NSPS. Quite frankly, Mr. Chairman, as I
mentioned, I was not aware of those.
Though I look forward to today's discussion about these
authorities, I am not optimistic that this intended capture
will occur because already we see past patterns being repeated.
In early March, the Department of Defense NSPS Transition
Office invited 81 stakeholders to a conference intended to be
held in my hometown, Cleveland, Ohio in mid-April. That meeting
was promptly canceled though after certain stakeholder groups
objected to the ``short notice'' provided for this conference
and because of other alleged concerns about the meeting's
agenda. The forum has yet to be rescheduled.
If the Department of Defense cannot even assemble a
discussion group on possible uses for these new personnel
flexibilities, I hold little hope that the Department will
receive the level of constructive dialogue and cooperation
necessary to craft a reasonable system for submission to
Congress by the October deadline.
Mr. James, you have a difficult task ahead of you. I wish
you luck.
There is one positive note on the performance management
horizon though. I am hopeful that Director Berry, who
unfortunately cannot join us today, will continue to work
toward his goal of overhauling the way the Federal Government
improves employee performance. I, for one, think Director Berry
gets it. Remarks delivered by Director Berry last November at
the Maxwell School of Syracuse University accurately capture
the plight of an ambitious Federal employee under the present
performance management system and, more importantly, what is at
stake in this discussion.
According to the Director, and this is a quote--I will be
finishing up, Mr. Chairman--``Too often you will run into an HR
system and culture that favors red tape inertia over
initiative. You will find a lot of extra effort may get you a
little more reward, but not that much. So you will be
disheartened. You will either settle for a slower pace or you
will get restless and leave. If that happens, everyone loses.''
So, Mr. Chairman, I am looking forward to this hearing
today. Thank you very much for holding it.
Senator Akaka. Thank you very much, Senator Voinovich.
I would like to now introduce our first panel, and again it
is my pleasure to welcome you to this hearing: John James, Jr.,
Director of the NSPS Transition Office at the Department of
Defense and Chuck Grimes, Deputy Associate Director of Employee
Services at the Office of Personnel Management.
As you know it is the custom of this Subcommittee to swear
in the witnesses, and I will ask you both to stand and raise
your right hands.
Do you solemnly swear that this testimony you are about to
give this Subcommittee is the truth, the whole truth and
nothing but the truth, so help you, God?
Mr. James. I do.
Mr. Grimes. I do.
Senator Akaka. Thank you very much. Let the record show
that the witnesses answered in the affirmative.
I want you both to know that although your remarks are
limited to 5 minutes, your full statements will be included in
the record.
Mr. James, please proceed with your statement.
TESTIMONY OF JOHN H. JAMES, JR.,\1\ DIRECTOR, NATIONAL SECURITY
PERSONNEL SYSTEM TRANSITION OFFICE, U.S. DEPARTMENT OF DEFENSE
Mr. James. Thank you, Mr. Chairman.
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\1\ The prepared statement of Mr. James appears in the Appendix on
page 29.
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Mr. Chairman, Senator Voinovich, thank you for the
opportunity to speak to you today about implementing the repeal
of the National Security Personnel System and acting on the
personnel authorities provided to DOD in the National Defense
Authorization Act of 2010.
Transitioning employees from NSPS to the appropriate
statutory non-NSPS pay and personnel system is a high priority
for the Department. I will talk about that first.
When we began the transition process, there were
approximately 226,000 employees converted by NSPS.
Approximately 75 percent of our NSPS workforce will transition
to the General Schedule (GS) system by September 30, 2010.
Currently, more than 53,000 employees have been
transitioned from NSPS to the GS system. Of that number,
approximately 71 percent received a pay increase with an
average salary increase of close to $1,400 per year. Another 8
percent remained at the same rate of pay. The remaining 21
percent of transition employees were placed on pay retention,
which I will discuss in a few moments.
The Department did not convert bargaining unit employees
into NSPS. However, some employees under NSPS exercised their
rights and organized into bargaining units represented by labor
unions. As a result, 27 bargaining units were formed, covering
913 NSPS bargaining unit employees.
In some cases, unions, after receiving notice of pending
transition, simply requested some information on transition
issues and did not seek negotiations. In other cases, requests
to bargain were received, and management is honoring its
collective bargaining obligations. As of this date, half of the
bargaining unit employees have transitioned from NSPS.
Reclassifying NSPS positions to the General Schedule is
critical to a successful transition. NSPS is fundamentally
different from the General Schedule system as each pay band is
wide and encompasses a broad range of duties and
responsibilities found in several grades of the General
Schedule system. Under the governmentwide GS classification
system, duties and responsibilities are tightly defined in 15
discrete grades. Each DOD component has put in place a process
to ensure that position descriptions identify the major duties
and responsibilities of positions, and are accurately
classified.
With roughly 170,000 NSPS employees rejoining 320,000
General Schedule employees whose jobs were not under NSPS, we
are mindful that governmentwide General Schedule pay and
personnel system rules and standards must be applied equitably.
NDAA 2010 requires that employees suffer no loss of, or
decrease in, pay due to termination of NSPS or their transition
to the statutory pay and personnel system that last applied or
that would have applied if NSPS were never put in place. To
accomplish this, many employees are being placed on pay
retention.
Pay retention is a valuable safeguard for NSPS transition
and for many other situations like reductions in force due to
base realignments and closures. In addition, the NDAA language
gives added protection to transitioning NSPS employees whose
salaries may be higher than what a GS employee can earn.
Because employees on pay retention are being paid at a
higher rate than is applicable to the duties of the position
they hold, the pay retention law and regulation are designed to
normalize their salaries over time by aligning their pay with
the grade of the duties performed. By law, the employee on pay
retention receives 50 percent of the annual governmentwide pay
increase. Each time a GS annual adjustment occurs, the
employee's pay comes closer to being appropriate for the grade
level of the work that he or she performs.
Pay retention allows the Department to be in conformance
with the law and to protect the employee's pay.
We have set up a NSPS transition Website to publicize up-
to-date information on the training and transition to the GS
system and performance management basics. The Website is
available to everyone including the general public.
In addition, DOD components all have robust communications
campaigns in preparation for transition from NSPS to GS,
including town hall meetings, leadership and workforce
briefings, and video teleconferences. I have personally
accepted invitations to speak on NSPS transition at several
workforce functions around the Country over the past 3 months.
Some organizations are providing individual counseling to
employees with concerns, and all report that employees are
being told about available training, and encouraged to ask
questions of their supervisors and local human resource
offices.
Fulfilling the NDAA's provisions for developing and
implementing a new DOD-wide performance management system and
hiring process requires full engagement amongst management, the
workforce, unions, and others with vested interest like OPM.
The Department is meeting with labor organizations to discuss a
way forward on designing a new performance management system
and hiring process. One significant result of these meetings is
our work with the labor unions in designing a conference where
management and labor attendees will come together and begin a
series of open and structured discussions to gather different
views regarding options for the new authorities.
While this may take a little longer, it is my intent that
the design process is transparent and that employees and other
interested parties participate in, and be kept informed about,
the development and deployment of new programs. Training will
be developed concurrently with the design of the new
authorities and made available to all.
In closing, let me assure you that the Department is
committed to an open and transparent process for both the NSPS
transition and the development of the DOD-unique performance
management and hiring authorities provided in NDAA 2010.
Thank you for your ongoing support of our DOD civilian
workforce and providing me the opportunity to share with you
our experiences as we implement the repeal of NSPS and
undertake the design of the NDAA 2010 personnel authorities.
I welcome your questions. Thank you.
Senator Akaka. Thank you very much, Mr. James, for your
testimony. Mr. Grimes, please proceed.
TESTIMONY OF CHARLES D. GRIMES III,\1\ DEPUTY ASSOCIATE
DIRECTOR FOR EMPLOYEE SERVICES, U.S. OFFICE OF PERSONNEL
MANAGEMENT
Mr. Grimes. Chairman Akaka and Ranking Member Voinovich, on
behalf of the Office of Personnel Management, thank you for the
opportunity to participate in this hearing to examine the
transitioning of employees from the National Security Personnel
System back to the General Schedule classification and pay
system, as well as performance management in the Federal
Government.
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\1\ The prepared statement of Mr. Grimes appears in the Appendix on
page 44.
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As you know, the National Defense Authorization Act for
Fiscal Year 2010 repealed NSPS and required that employees
covered by the system be moved back to their former personnel
systems by January 1, 2012. For most employees, this means they
will be returned to the General Schedule classification and pay
system. This transition is proceeding on schedule. The
Department of Defense has said it expects around 75 percent of
NSPS employees to be back under the General Schedule by the end
of the first year.
You asked me specifically to discuss pay retention and
position classification after the transition. When employees
are moved back to the General Schedule from NSPS, DOD will
classify all positions in accordance with classification
standards and guidance issued by OPM. The Department will apply
the same criteria in classifying the positions of transitioning
NSPS employees that agencies use when classifying any Federal
job.
While OPM's classification standards are designed to
provide consistency in the way work is classified across the
government, individual contributions within a job may affect
its classification over time. It is possible, for example, that
some transitioning employees will return to GS positions that
will be classified at a higher grade level than the positions
they held before becoming covered by NSPS. These positions may
now require more knowledge, more complex work or less
supervision. These factors are routinely taken into account in
classifying Federal jobs.
At the same time, we recognize that there are many
employees who earn salaries under NSPS that substantially
exceed what they would be receiving had they remained under the
General Schedule. Under the law, when NSPS employees are placed
in positions for which the maximum rate of pay is lower than
their NSPS salary, they will continue to receive their NSPS
salary as a retained pay rate.
However, when GS pay rates are adjusted each January, these
employees will receive 50 percent of the pay increase,
including locality pay. This 50 percent increase will continue
until the maximum pay for the employees' grade meets or exceeds
their retained pay rate. At that point, they will be placed in
the highest step of their grade and will begin receiving 100
percent of the annual pay increase.
The entitlement to retained pay eases these employees'
transition back to the General Schedule and ensures that they
will not experience a precipitous drop in pay when they return
to the General Schedule system. This is a significant benefit.
As of December 2009, about 5,100 GS employees were on
retained pay rates. Their average salaries were about $6,600
over the maximum rate of the grade they would have otherwise
been in.
Meanwhile, Mr. Chairman, as you noted in your invitation to
this hearing, the NDAA also provided the Department of Defense
with certain personnel flexibilities. In particular, you asked
us to comment on the implementation of the authority for the
Secretary, in coordination with the Director of OPM, to develop
new performance appraisal and hiring systems for the
Department. Although DOD has not yet approached OPM about a
proposal for how this authority might be exercised, we have
worked with DOD, among other agencies, in developing our
governmentwide hiring reform initiative which was recently
launched by the President. We at OPM are very grateful for
DOD's participation in helping identify and implement needed
changes in the hiring process.
Finally, Mr. Chairman, you asked us about our plans for
changes to the Government's Performance Management System.
Director Berry has been talking with various stakeholders and
gathering their feedback on different approaches to
governmentwide performance management reform. However, we have
not yet formulated any specific plans in this regard, so it
would be premature for me to discuss a particular proposal at
this time.
Thank you again for the opportunity to discuss these
matters with you. I would be happy to respond to any questions
you may have.
Senator Akaka. Thank you very much, Mr. Grimes.
I have questions for both of you on the panel. As you know,
the NDAA requires DOD to coordinate with OPM in designing any
new performance management system. I believe that OPM's human
resource expertise will be helpful to DOD in establishing a
fair and credible system.
I would like to hear from both of you about your agency's
respective role in this process and how well the coordination
is working. So let me first call on Mr. James.
Mr. James. Thank you, Mr. Chairman. I have a number of
committees where OPM has a sitting member with the committees.
Every move that we make, OPM works with us hand in hand.
We have had the opportunity during the transition to ask
OPM for waivers: One, a time and grade waiver, another was a
waiver for employees that are on term appointments. The
response has been very rapid, very quick from OPM, and we got
an affirmative on both waivers. That allowed us to address
employees' concerns and to ease the process of the transition.
For performance management, we have been working very
closely with OPM. I have met with Director Berry twice, and
working with his staff.
Any process that we put in place, including our design
teams, using the authorities, it is our intent that OPM would
be a sitting member on all design subcommittees. Thank you.
Senator Akaka. Thank you. Mr. Grimes.
Mr. Grimes. Thank you. As Mr. James noted, we have been
working with DOD whenever possible. In fact, Senator Voinovich,
we were invited to that meeting out in Cleveland that did not
take place. So I have every confidence that as these
authorities begin to be developed that we will be working hand
in hand with DOD.
Senator Akaka. Thank you.
Mr. James, as you know, the establishment and
implementation of NSPS at DOD was a polarizing issue. Please
tell us what you believe the successes and failures of NSPS to
be and what lessons can be applied as DOD considers the
establishment of a new performance management system.
Mr. James. Thank you, Mr. Chairman. Prior to this job, I
was a career civil servant, and I held a line job where I
implemented NSPS. Prior to that, I grew up under the General
Schedule system. I understand the challenges and the advantages
of both systems.
I think one of the advantages of NSPS is that it provided a
clear line of sight from the employees and employees'
objectives to the priorities of the organization. I believe
that the employees understood how they fit into the mission of
the organization, which was critical to setting objectives and
to establishing their performance objectives.
I think one of the challenges as we move forward really is
engaging all of the stakeholders that have a concern about a
new performance management system and hiring flexibilities. To
that end, it is my intent to have an open and transparent
process, inviting all stakeholders, including our labor
partners, in developing the new authorities.
Senator Akaka. Thank you. Mr. Grimes, in your testimony,
you state that OPM has not yet formulated specific plans with
respect to governmentwide performance management reform. What
steps has OPM taken thus far in considering this issue, and do
you believe OPM will release a proposal in the near term or
wait until after DOD designs its new system?
Mr. Grimes. Thank you, Mr. Chairman. We have taken a number
of steps in terms of talking to stakeholders. We have talked to
various employee groups. We have talked to unions. In fact, we
have talked to you all about some possibilities. So I think it
is fair to say that we are in the information gathering stage,
looking at all the options that are out there before we develop
a proposal.
I guess I would be hard pressed to say if I think that we
will have a proposal ready this term or next, but we are moving
forward. Thank you.
Senator Akaka. Thank you.
Mr. Grimes, what are the key elements of a fair,
transparent and effective performance management system, and
what lessons can OPM learn from NSPS as it refines its
performance management agenda?
Mr. Grimes. I think one of the lessons that we can carry
away from NSPS is that they had a terrific performance
management system. It was quite transparent. It had an
efficient automated appraisal system that drove alignment
between the goals of the employees and the goals of the
organizations.
The performance plans are focused on achieving results. DOD
was able to track whether employees received progress reviews.
Routine progress reviews are an essential part of a good
performance management system.
Supervisors were held accountable for appraising employees
and, again, that was tracked.
Extensive training on the performance management system was
given.
The plans had a good balance between results and
competencies--not only what you got done, but how you got your
work done.
And the agency addressed organizational performance in
relation to individual performance.
All of those are essential to a transparent and good
performance appraisal system, and DOD did all those things
under NSPS.
Senator Akaka. Thank you very much.
Mr. James, one of the lessons we learned from the
implementation of NSPS is that communication between
supervisors and employees is essential to the success of any
new performance management system. As DOD develops its new
system, what is DOD doing to ensure that supervisors have the
skills to effectively seek input and communicate changes to
employees?
Mr. James. Mr. Chairman, we would agree that one of the
advantages under NSPS is that we forced communications between
the employees and supervisors, especially the first-line
supervisor which really is the transition between leadership
and the rank and file.
Our plan is to continue with that and to train first-line
supervisors in the areas of supervisor responsibilities, how to
engage employees, how to measure performance for the entire
organization and the opportunities that are available for
supervisors to reward employees for superior performance. We
believe that is critical to moving our organization forward.
Senator Akaka. Thank you very much. Senator Voinovich, your
questions please.
Senator Voinovich. I would like to comment that we are
talking about 225,000 people in the process that started in
March and get it all done by October 1 of this year, I do not
know how you can do it and do it right. So that is my first
comment. I just cannot believe it.
It is the same thing as when I got a hold of the Department
of Defense and said you guys are going too fast, when I talked
to Secretary Rumsfeld about it. I said you cannot do this.
So I would like your comment on how are you doing and how
many classification appeals have you had from people that have
been shifted back to the General Schedule.
In the second panel we are going to hear that the General
Schedule system is sufficient for proper performance
management. I would like you to comment on that issue.
So let's start out with the first question, Mr. James.
Mr. James. Thank you, Senator Voinovich. It is the
Department's intent to transition approximately 75 percent of
the 226,000 employees that are presently in NSPS primarily to
the General Schedule system by September 30, 2010.
We will accomplish this by engaging all the components--
Navy, Air Force, Army Marine Corps, and the Fourth Estate which
are DOD activities--and making sure that:
One, that the information technology (IT) capability is in
place to accomplish the transition. I have visited the Human
Resources Business, Information, and Technology Solutions
Office in San Antonio, Texas where the performance management
system redesign took plae. They are on schedule. The
information technology process capability was in place on April
25.
Also to ensure that they have the classification capability
in place, they do.
And that there is minimal impact to the mission of the
organization and employees.
We have all those things in place. I have approved the
components' transition plans, and they are proceeding
accordingly. As of May 23, we have transitioned 53,000
employees out of NSPS primarily to the General Schedule system.
We have had great success in that process.
At the end of June, we will transition likely another
15,000 employees out of NSPS.
Senator Voinovich. Have you had any appeals at all during
that period?
Mr. James. Sir, there is an appeals process for employees.
I will tell you that my office has received e-mail from
employees. We direct those inquisitions, inquiries to the
components, and the employees are answered personally. We have
communicated to employees that there is a process to appeal
their classification.
Senator Voinovich. OK. How about the other question? We got
into NSPS in the beginning because it was decided that
Department's additional flexibilities were justified as being
necessary to confront a new security environment that required
the civilian workforce to become more agile, adaptable, and
responsive. So, obviously, DOD felt that the General Schedule
was not as good as it ought to be in terms of getting the kind
of performance that you would like to get from people,
including not letting a lot of them know exactly where they
stood in terms of their job performance.
I guess the real answer to this is do you both think that
the additional flexibilities that were included in the FY 2010
NDAA are necessary for you to have a situation where you have a
system that will inspire your people to the kind of performance
that you would like to see?
Mr. Grimes. The General Schedule has some performance
friendly features. The difficulty is that it tends to recognize
and reward experience at the expense of performance. I think
the flexibilities that you have given in NDAA, I think, will go
a long ways towards helping adjust the balance between
experience and performance.
But the General Schedule is not immune from recognizing
performance. We can give quality step increases. The problem
there is that those are fairly large ``3 percent'' increases.
In the economic environment that we are in, they dwarf even the
General Schedule increases in January. So there is an awful lot
of emphasis on experience, when you get those within-grades
every year or every 2 or 3 years.
Quality step increases are not given all that often, and
they are fairly inflexible. You either get one or you do not,
and in fact they are not used very much.
So it is probably a combination of structure and
implementation that causes the problem with recognizing
performance under the General Schedule system.
Senator Voinovich. Thank you.
It is my understanding that supposedly the new system is to
be standing up by October 28 of this year, and it is my
understanding that no specific discussions have taken place on
use of the Department's new personnel flexibilities. The
question I have is will the Department be able to meet this
October deadline or will an extension be necessary?
Mr. James. Sir, the Department intends to make a report to
Congress by October. We will not have a system designed, and
the regulations written and in place, by October.
We have engaged some stakeholders, and we are beginning the
discussion. I put together an organization to address the
individual authorities that have been authorized in NDAA 2010.
So we are working hard to do that.
I believe the job that I am charged to do is to look at the
General Schedule system and to determine if there are
flexibilities that I need or I think that I need in conjunction
with our stakeholders, to provide the flexibilities to
incentivize today's workforce.
Senator Voinovich. Well, I would say that I would take your
time and do it right.
Mr. James. Yes, sir.
Senator Voinovich. Mr. Chairman.
Senator Akaka. Thank you very much, Senator Voinovich.
Mr. James, I understand that research suggests that NSPS
had a discriminatory impact on racial minorities with respect
to performance ratings and payouts. I know that you have
focused on fostering diversity and equal opportunity throughout
your career in the Navy. I would like to know what steps you
will take to ensure that any new performance management system
at DOD is fair to all employees.
Mr. James. Mr. Chairman, I have not had a chance to review
all of the data out of NSPS. I am in the process of doing that
as the data comes in.
Senator Akaka. Thank you.
Mr. James. My sense of what has occurred is we need to go
develop a process in conjunction with many stakeholders that
allows us to view this from many points. The team that develops
the new process using the new authorities needs to be diverse.
The diversity of that organization will help us address the
concerns that you mentioned.
But I also believe that the deeper concern really fosters
around mentoring where employees, especially new employees, are
positioned in the organization, the opportunities that new
employees have, how they are mentored and the opportunities
that they see for promotion. In conjunction with the new
authorities, it is important that we, as leaders and
supervisors, meet with employees and get them to understand
that there are opportunities in the Department of Defense and
that we will reward superior performance.
Senator Akaka. Mr. James, your testimony states that so far
21 percent of DOD employees transitioned from NSPS have been
placed on pay retention. Do you know how many NSPS employees
are expected to be placed on pay retention overall and the GS
levels of these employees?
Mr. James. Sir, we have not made a projection of the number
of employees that will be on retained pay. I can tell you as of
today--data I have as of May 23, 2010--there have been
approximately 53,000 employees transitioned out of NSPS. Of
those 53,000, approximately 11,000 employees are on retained
pay for various reasons.
Senator Akaka. Thank you.
Mr. Grimes, in your testimony, you note that employees
placed on pay retention benefited from a pay increase under
NSPS and will receive higher pay than if they had remained
under the GS system. However, there may be morale and retention
concerns at DOD if a large number of employees who were
receiving large raises yearly will receive only half raises in
future years. How do you respond to these concerns?
Mr. Grimes. Mr. Chairman, I agree that it is a possible
concern for many employees who are transitioning out of NSPS
into the General Schedule. They have got kind of a double
whammy, if you will. They are not getting those large
performance-based increases that they might have been used to.
And now January comes around, and they will receive half the
increase everybody else does.
However, they are bright employees, and if they think about
it for a second, they will realize they are keeping that money
that they earned under NSPS. It counts towards their high-3
average salary for retirement purposes. They are able to use it
to contribute to the Thrift Savings Plan (TSP). It would count
for their life insurance. It has enormous benefits that they
have earned, and they get to keep that. So I think that if
given a choice between getting half of the pay increase in
January and keeping their salaries, they would make a good
choice.
Pay retention is a very substantial benefit, and 11,000
people are already benefiting from it.
Senator Akaka. Thank you.
Mr. James, I understand that approximately 25 percent of
NSPS employees will transition to pay and personnel systems
other than the GS system beginning next year. Can you please
discuss how these personnel systems differ from the GS system
and the challenges to moving to these systems?
Mr. James. Thank you, Mr. Chairman. The 25 percent of
employees that will not be transitioning out of NSPS by
September 30, 2010 really revolves around categories of
employees that the NDAA specifically makes allocations for. One
of them is Science and Technology Reinvention Laboratory. The
law calls out specific organizations that will transition to
that personnel management system.
Prior to transitioning into the General Schedule system,
there were employees who were in the Acquisition Demonstration
Project. They transitioned from the Acquisition Demonstration
Project into NSPS. The law dictates that they have to
transition back to the personnel management system that they
transitioned out of prior to NSPS.
Also, there is an allocation that is not in the NDAA but we
have talked about in my office, which is the health care
professionals. Physicians, dentists and other health care
professionals will develop a new personnel management system
under Title 38. When NSPS came along, they were subsumed by
NSPS, and NSPS had the authorities that allowed us to properly
compensate physicians and dentists. As they transition out of
NSPS, they are now reviewing the Title 38 authorities and will
develop a system under Title 38.
Also, there are employees that are affected by Base
Realignment and Closure (BRAC), and there are employees that
will transition back to an alternative personnel system in the
Department of the Navy.
Senator Akaka. Thank you.
Mr. Grimes, your testimony mentions that the NSPS
Transition Office's Website has been helpful to employees in
understanding the transition process. Has OPM participated in
the effort to inform employees about the transition process,
particularly regarding how GS classifications are done and the
right to appeal position classifications?
Mr. Grimes. Mr. Chairman, I understand that DOD developed a
GS 101 learning tool because some of these folks in NSPS, while
they are going back to the General Schedule, never were in the
General Schedule to begin with. They came in under NSPS. I am
certain that we helped them with that.
I do not know that there is something specific on our
Website about NSPS to GS conversions, but I can check and let
you know.
Senator Akaka. Thank you very much.
Mr. Grimes. Thank you.
Senator Akaka. Senator Voinovich.
Senator Voinovich. I really appreciated both of your
descriptions of NSPS. Mr. James, you experienced it. Mr.
Grimes, you are very familiar with it. Thank you for your
comments in regard to it.
It is interesting that with 225,000 people, I think that
about 913 wanted to create labor organizations after joining
NSPS. That would indicate to me that a lot of people in the
Department felt that the system that was put in place was
relatively fair, understanding that any time you have a new
system there are things that need to be worked out in the
systems, as contrasted from the Government Accountability
Office (GAO) where they went to a performance evaluation
system, and there were so many people that were upset about it
that they formed a labor union because of the fact they were
unhappy with the system.
So I think that the people in the Department of Defense
that were responsible for administering NSPS should be given a
real pat on the back for a job well done.
And I do not think Gordon England will ever get any credit
for it, but he was the one that was the quarterback on it, and
I think the man really knew what he was doing. He really cared
about employees, and he really wanted to try and get the job
done the best way that it could possibly be done.
Mr. James, I recently met with a senior civilian leader who
was concerned that the use of the retained pay status could
result in his top performers leaving the Department to work for
another organization that recognizes and rewards their
performance.
Now Mr. Grimes did a pretty nice job when he answered
Senator Akaka's question, that a lot of them can say, well, you
got it.
I mean I went through this when I was mayor. I said you are
overpaid, and they did not like it.
That means I am not going to get a pay increase?
No, you are not. But I said enjoy the fact that you have
been overpaid.
So I think maybe that is right, and with the labor market
right now maybe the fact of the matter is that a lot of people
will stick around. But I cannot help but think that continued
attention should be given to this situation because you have
got some really outstanding people, and I would hate like heck
to lose them.
The other thing where we are at right now that is of
concern to me--and Senator Akaka and I just sent a letter off
to Mr. Zients--is that we have this wonderful opportunity to
hire some people for the Federal Government that we really
need, that under ordinary circumstances we might not be able to
get. I just wonder, as we go after these people, if they have a
system that does not recognize their performance that they may
decide: I do not want to stay; I want to go to an organization
that rewards my performance.
Most private organizations have pay-for-performance. They
go through the performance evaluation process and so forth. So
what we do in the Federal Government, to a degree, is unlike
what they do in the private sector.
So I guess the only suggestion I have is that these new
flexibilities that you were given under the law, which frankly
I was not familiar enough with, could be very important at this
time in terms of the Federal Government's competitiveness. Even
though I say take your time, I think we ought to move on it
because we ought to be able to say to people: Yes, it is not
exactly like you have in the private sector, but we do have
some flexibilities here. Or you do have performance evaluation,
and if you are a top performer that can be recognized.
Anyone want to comment?
Mr. James. Sir, we recognize that in the Department of
Defense that we have a very highly trained workforce, that for
the most part you cannot just walk out on the street and pick
up the kind of folks that we need to execute our business.
Because of that, we need to constantly bring in new employees
to adjust for the attrition, but in addition to that we need to
make sure that they are properly trained, they continue to be
trained and that we reward superior performance.
The General Schedule system does have mechanisms in it to
reward superior performance, but I believe with the new
authorities there is a possibility that we could come up with
new ways, or more efficient ways, to reward employees for
superior performance and incentivize employees that take on
more responsibility and more accountability within the
Department of Defense.
Senator Voinovich. Mr. Grimes.
Mr. Grimes. Thank you, Senator. We hear anecdotal, as well
as other, evidence that young people today want to be a part of
organizations where performance is rewarded. They are part of
the video game generation, if you will, where they get instant
feedback. They like that. They like to know when they are doing
a good job. They want to know what they need to do and get down
to it.
There was a WorldatWork Conference last year in which most
of the participants said that they wanted differentiated
performance assessment, that was key to improving customer
satisfaction and organizational performance.
So I think at some point, whether this term or next,
something is going to have to be done.
Senator Voinovich. Thank you. Thank you, Senator.
Senator Akaka. Thank you very much, Senator Voinovich.
I want to thank you both on the first panel for your
testimonies and your responses. We are glad to hear of your
progress. We are concerned that it be done fairly as you
continue to work and that the employees will work it out as
well with you.
All of this is because we want to try to work together, and
legislation is needed to improve the system, we may need to
consider that. But in the meantime, we will continue to keep in
contact with you to see how it is moving.
Senator Voinovich and I, of course, are looking for the
best solutions. As he always says, the right person for the
right job at the right time, and this is an opportunity for us
to do that.
So thank you very much again for being here today.
Mr. Grimes. Thank you.
Mr. James. Thank you, Mr. Chairman. Thank you, Senator
Voinovich.
Senator Akaka. Now I would like to call up our second
panel. On our second panel this afternoon, I want to welcome
Greg Junemann, President of the International Federation of
Professional and Technical Engineers, Patricia Niehaus,
President of the Federal Managers Association, and Patricia
Viers, President of American Federation of Government Employees
Local 1148.
It is the custom, as you know, to swear in the witnesses,
and I will ask you to please stand and raise your right hands.
Do you solemnly swear that the testimony you are about to
give this Subcommittee is the truth, the whole truth and
nothing but the truth, so help you, God?
Mr. Junemann. I do.
Ms. Niehaus. I do.
Ms. Viers. I do.
Senator Akaka. Thank you. For the record, the witnesses did
respond in the affirmative.
I want all of you to know that although your remarks are
limited to 5 minutes your full statements will be included in
the record.
Mr. Junemann, will you please proceed with your statement?
TESTIMONY OF GREGORY J. JUNEMANN,\1\ PRESIDENT, INTERNATIONAL
FEDERATION OF PROFESSIONAL AND TECHNICAL ENGINEERS, AFL-CIO,
CLC
Mr. Junemann. Thank you, Mr. Chairman. Good afternoon. I
would like to thank Chairman Akaka, Ranking Member Voinovich
and Members of the Subcommittee for inviting me to testify
today.
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\1\ The prepared statement of Mr. Junemann appears in the Appendix
on page 47.
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I would like to offer a special note of appreciation to
Chairman Akaka and his Subcommittee staff. As a union
representing tens of thousands of Federal workers, including
Federal workers represented by International Federation of
Professional and Technical Engineers (IFPTE) Local 121, at the
Pearl Harbor Naval Shipyard, IFPTE commends the Chairman for
his longstanding support to the members of IFPTE Local 121.
My testimony will first take a look at the transition from
NSPS back to the GS system, followed by IFPTE's views on
performance management and hiring retention.
We applaud the workforce provisions included in Fiscal Year
2010 National Defense Authorization Act, including those
provisions allowing Federal workers to allocate unused sick
leave toward their thrift savings plans. However, the highlight
of the bill for IFPTE was the repeal of NSPS. The saga of NSPS
is key to today's broader message because we believe it is a
reflection of lessons learned as we consider the question of
moving forward with comprehensive performance management in the
Federal Government.
Setting aside the major flaws of NSPS and focusing on just
the pay and performance evaluation part of the failed personnel
system, data and studies have shown NSPS to be, among other
things, a discriminatory pay system. White workers overall got
higher raises than did racial and ethnic minorities. Workers at
the higher end of the pay scale, or those with plum
assignments, benefited under NSPS while others lost out. For
example, those working in higher commands or at the Pentagon
received higher ratings and pay than their counterparts in less
visible locations.
To lead this transition and in an effort to change from the
controversial culture with respect to NSPS, this past January,
the Department announced the appointment of John James to head
the transition from NSPS to GS. IFPTE believes that Mr. James's
appointment is a step in the right direction. While we continue
to be vigilant and aggressive in working on behalf of our
membership, we believe that Mr. James's presence in leading
this effort will prove to be a huge improvement.
Along with the repeal of NSPS come the requirements that no
worker suffers a loss in pay through this transition. We
certainly agree with this requirement, but it does present a
different task of figuring out how to accomplish this. While we
support pay retention, there still remains a glaring flaw that
must be resolved. Workers put under retained pay have the
potential of receiving lower raises indefinitely. There will
likely be some circumstances where the top level of a GS salary
of a particular grade may never catch up.
Given this, IFPTE would recommend that another approach be
considered. Instead of retained pay, IFPTE seeks a proposal to
create two additional steps within grades, Steps 11 and 12,
with corresponding pay raises for each GS grade. DOD could make
the length in time to reach these steps 5 years, with a
sustained performance required in each of those years, to
achieve Step 11 and consequently Step 12.
In discussing a sensible replacement for NSPS, IFPTE
believes that in addition to creating a system with labor as a
fully participating partner the expectation is that any new
performance system makes full use of the flexibilities already
inherent within the GS system.
Along with what DOD is doing, OPM and the Office of
Management and Budget (OMB) have indicated that they intend to
move forward on performance management systems that will impact
just about every Executive Branch agency in the Federal
Government. While there are few details of the potential OPM/
OMB proposal that IFPTE has been made privy to, we have
received assurances from OPM Director John Berry that labor,
including IFPTE, will be an equal partner in any attempt to
develop any new government management system impacting Federal
workers. Our union applauds Director Berry for his interest in
involving labor.
Admittedly, IFPTE remains eager to learn the logistics of
how all this will play out. Will DOD simply defer to OPM and
OMB, or will they move forward on their own? Regardless of how
this takes shape, our future success will depend on how equal
are the equal partners, how fair is fair and how good is the
good faith between the parties.
Outside of bargaining a new performance management system
across every locality, IFPTE believes that a fair and
comprehensive performance management system can be achieved
through the existing flexibilities provided in the current GS
system. GS has all of the elements to achieve a system that can
reward good performers, penalize poor performers and provide
flexibility necessary to hire and fire.
IFPTE also believes that in order to address the hiring and
retention problems facing the Federal Government that Congress
must act on legislation that creates an environment where
people look forward to spending a career as a public servant.
This concludes my testimony. Thank you again for the
opportunity to be here today. I look forward to any questions
the Members of the Subcommittee might have.
Senator Akaka. Thank you very much, Mr. Junemann. Now we
will hear from Ms. Niehaus.
TESTIMONY OF PATRICIA NIEHAUS,\1\ NATIONAL PRESIDENT, FEDERAL
MANAGERS ASSOCIATION
Ms. Niehaus. Chairman Akaka and Ranking Member Voinovich,
thank you for the opportunity to present the Federal Managers
Association's (FMA) views before you today. As stakeholders in
the successful transition out of the National Security
Personnel System, we appreciate the opportunity to appear
before you.
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\1\ The prepared statement of Ms. Niehaus appears in the Appendix
on page 57.
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The face of America's workforce is changing. A model once
attractive for employing the most talented members of the
workforce, the Federal civil service now appears unreflective
of new job seekers' expectations by today's standards. The
current General Schedule pay system and performance review
methods are antiquated. We at FMA support any changes that
establish increased flexibilities, accountability and
performance results. NSPS promised to deliver on these
personnel components but ultimately failed to live up to its
billing.
In my written statement, I detailed FMA's position on a
wide range of topics including performance management and
managerial training. I would like to focus my oral statement on
one aspect of the NSPS transition, mainly the repeal and its
impact on employees.
The Fiscal Year 2010 National Defense Authorization Act
stated that all employees must transition out of NSPS by
January 1, 2012 and provided DOD 6 months to report to Congress
on its plans for conversion. Enactment of the law signified the
end of the controversial pay-for-performance system, but it
marked only the beginning of a long, tenuous process of
determining how to manage the 226,000 Federal employees who
served under NSPS.
Under GS pay retention rules, those NSPS employees whose
pay exceeds Step 10 of their corresponding GS grade will
receive only half the annual pay raise until the GS system
catches up with them, if it ever does. To date, of the 53,000
employees who have transitioned out of NSPS, 21 percent--or
over 11,000 employees--are currently under pay retention. If
this formula holds true for all NSPS employees returning to the
General Schedule, nearly 37,000 employees could be negatively
impacted.
DOD is taking strides to reclassify all NSPS employees
regardless of pay status as prescribed under the law. The onus
is on senior DOD leadership to properly classify these
employees prior to their slated transition dates. We remain
concerned that the expediency with which DOD is returning NSPS
employees to the General Schedule will impede leadership from
taking the time to classify these positions adequately.
The Department stated that it expects employees will be
concerned about pay and that it intends to study this issue
after classifications are finalized. We caution that by waiting
until the classifications are over the employees will, at the
very least, be subject to pay retention for 1 year. We also
worry that this problem will be ignored once the transition is
complete.
We regret the Transition Office is unable to provide
concrete numbers on how many people will be affected by pay
retention as we believe the numbers will have a direct impact
on any possible solutions. If we are in fact faced with a
situation where tens of thousands of employees are placed on
retained pay, we believe you will be dealing with a disgruntled
and demoralized workforce which has now been shifted in and out
of different pay systems within 3 years.
Many of these dedicated employees, myself included, have
crunched the numbers and determined that the General Schedule
will not catch up with them by the time they are eligible to
retire. As such, pay retention not only affects the current pay
received by these employees but could also negatively impact
their high-3 average salaries, which is used to calculate
retirement benefits. Many of these employees feel they are
being punished for performing above average work under a system
in which they did not ask to participate. We believe, and will
continue to stress, that no employee should lose current,
future or retirement pay when converting back to the General
Schedule.
Language included in the House version of the Fiscal Year
2011 NDAA requests that DOD report to Congress by November 15,
the agency's plans for a nationwide January 2011, pay
adjustment, including information on employees under pay
retention. We believe this is a step forward but lends little
time for congressional action before the January 2011 pay
cycle.
We at FMA believe there are many options the Pentagon and
Congress could pursue to mitigate the effects of retained pay.
While pay retention may be inevitable in certain situations, we
lay out several avenues DOD and Congress should consider in our
written testimony.
Many FMA members were pleased with Congress' decision to
end the National Security Personnel System. It is not our
desire to delay or halt the rollback of the controversial
system. However, more attention must be paid to the impact the
transition has on employees who keep DOD functioning.
We appreciate the attention the Subcommittee is placing on
this issue, and we hope this hearing will be the jumping-off
point for further discussions on pay retention.
Thank you again for the opportunity to express our views,
and I am happy to answer any questions you may have.
Senator Akaka. Thank you very much, Ms. Niehaus.
Ms. Viers, will you please proceed with your testimony?
TESTIMONY OF PATRICIA VIERS,\1\ PRESIDENT, LOCAL 1148, AMERICAN
FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO
Ms. Viers. Thank you, Mr. Chairman and Senator Voinovich.
Greetings from Columbus, Ohio. On behalf of the American
Federation of Government Employees (AFGE), which represents
600,000 Federal workers including 260,000 in the Department of
Defense, I appreciate the opportunity to testify today on the
National Security Personnel System and performance management
in the Federal Government.
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\1\ The prepared statement of John Gage, submitted by Ms. Viers
appears in the Appendix on page 70.
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During the lifetime of NSPS, DOD did not convert bargaining
unit employees to the system, first because of litigation over
the regulations and then, after the Congress required DOD to
operate within 5 U.S.C. Chapter 71, the Department chose to
avoid negotiations over NSPS by continuing not to convert
bargaining unit employees. As a result, AFGE has very few
employees we represent who are under NSPS, and therefore we
have little direct experience with the system.
The only reason we do have some bargaining unit employees
in NSPS is because its lack of fairness and transparency made
the employees understand they needed a union, and they
organized after being converted to the system.
We understand there are some complaints by employees who
converted back to the GS system and are in a pay retention
status that will temporarily limit future pay increases.
Although we do not wish to see any employee disadvantaged by
their conversion out of NSPS, I think it is important to put
this situation into perspective. Employees have made enough
additional money under NSPS that they have to be on pay
retention when they are put back into the appropriate GS grade
already got what could be considered an early raise and have
benefited from being at these higher pay levels for some length
of time. Fortunately, they will continue to benefit because
their pay will not be lowered; it just may not rise as quickly
as it did under NSPS.
AFGE was greatly concerned, as you know, Mr. Chairman, with
whether the NSPS pay system was being fairly administered to
all employees. DOD's own internal evaluation of NSPS showed the
disparate impact of NSPS raises based on factors having nothing
to do with performance. The report, done by SRA International
and released last June, show inequities based on race, salary,
position and where in the DOD hierarchy one worked.
Perhaps the most damning statistic was that the percentage
salary increases and the percentage value of bonuses were more
correlated with income level than with performance level.
Higher level, higher paid employees got higher performance
ratings and payouts than lower level, lower paid employees. The
disparity was especially great between employees earning
$100,000 or more and employees earning $60,000 or less.
Further, in general, being a racial minority had a negative
effect on one's rating and payout, and being black had a more
negative effect than membership in other racial groups.
So we know that a significant number of good employees lost
money under NSPS.
I am pleased to note that AFGE and the unions from the
United Defense Workers Coalition have met several times
recently with Mr. James to discuss the authorities granted in
the NDAA 2010. We have jointly agreed to convene a conference
to develop ideas for the new systems authorized by the law. The
unions are presently developing our ideas for a joint design
for the conference to share with DOD. We are optimistic that
this better process will result in a far superior product than
was ever a possibility under NSPS.
Specifically, AFGE believes that performance management
need not be as complicated as many systems are. First,
employees must be told what is expected of them and what they
need to do to meet those expectations. What does the employee
need to do to be in good standing and avoid being not in good
standing? And, of course this should not just be a one-way
lecture but a real discussion about the job, the mission, the
tools, the assignments, the employee's strengths and weakness,
and how he or she can expand the former and improve the latter.
There also needs to be a recognition and award system for
exceptional performance, as well as for smaller but also
valuable contributions. AFGE has negotiated such systems with
many other agencies which meets the needs of the Agency and the
worker, to create workforce incentives that are meaningful,
evolving and up to the minute. We are eager to establish
similar, successful recognition and awards programs through our
negotiations with DOD.
I want to emphasize a point that you, Mr. Chairman, and
Senator Voinovich have made many times before. Supervisors have
not been adequately trained to develop and motivate employees
nor are they supported when they do take the time to discuss
performance with employees, document performance, or fight for
the rewards or remedial actions they believe their employees
need and deserve.
There never seems to be enough money allocated to develop
employee skills or to reward them for their high performance.
Training money is one of the first victims of budget cuts, and
award money is close behind. Developing employees through
career ladder programs, training programs, recognition and
enhancement of their talents, and career mobility must
emphasized. But if this is to be zero-sum budget game where
some employees are rewarded only because other good employees
are losing, we will never succeed in improving performance
management in the delivery of government services.
Through collective bargaining and labor management forums,
we can create better systems to evaluate performance, reward it
and develop employees for the future needs of the organization.
We will continue to work closely with DOD and OPM, so that our
bargaining units can bring their ideas and interests into
achieving our agencies' missions and serving the American
public.
This concludes my statement. I will be happy to respond to
any questions.
Senator Akaka. Thank you very much, Ms. Viers.
Mr. Junemann, in the past, you repeatedly criticized NSPS
for its lack of transparency. As DOD considers a new
performance management system and OPM contemplates a possible
governmentwide reform, I would like to know what features you
believe any new system must include to make it as transparent
and understandable as possible.
Mr. Junemann. Thank you, Senator. As we discussed before
with your Subcommittee, training is essential--training not
only among the employees but of the supervisors. I have a lot
of experience with pay-for-performance systems in the private
sector as well, and when they succeed is because the employees
have belief in them, that they have belief that their
performance will be fairly evaluated. So they know that. Part
of that is that they have to know that their supervisor has
been properly trained to evaluate them.
What happens in too many cases is that the supervisor
ignores his or her obligation to do the evaluation until the
day before. So, if my evaluation is due on July 1, my
supervisor starts thinking about it on June 30. And if that
happens, then the system will not work.
So what has to happen is the employee has to be assured
that his or her performance is being evaluated all the way
through, so that they know again that when they get evaluated
they will be comfortable, that they know what is expected of
them, that their supervisor will be monitoring their work, the
projects that they have worked on, all the way through until
finally the evaluation comes, and there should be no surprises.
Senator Akaka. Thank you very much.
Mr. Junemann. If that is in the system, it should work.
Training, and that is part of the transparency, the training
and the acceptance by the employees involved, that the training
has been done, not only of them to do the work better but of
their supervisors to evaluate them. That is essential.
Senator Akaka. Thank you very much, Mr. Junemann.
Ms. Niehaus, I believe that one reason that NSPS was not
successful was that it was not easily understood by employees
or supervisors. The NDAA included some safeguards for any new
performance management system at DOD, including requiring
training and transparency measures. What should be done to
ensure that employees and supervisors truly understand and
accept any new performance management system?
Ms. Niehaus. I believe training is key, sir, in the
understanding and acceptance of any personnel system. I believe
that initial training is necessary for any new system, and I
believe follow-up training is also necessary.
I was one of the trainers at Travis Air Force Base for both
performance management under NSPS and for other provisions
under NSPS. One of the things that we found was that employees
who were engaged during the training fared much better under
the system because they understood it better. So I believe that
if employees participate in the training, they will do better.
We also had training for employees under NSPS in how to
write their self-assessments, and we have reports from
employees. I did not track it as far as checking the ratings of
the employees, but I did track it by anecdotal evidence from
the individuals who attended that training, and they felt more
comfortable that their supervisors received better self-
assessments which enabled the supervisors to perform better
assessments of their performance.
So I think that training on all aspects and more than just
once is necessary for any new personnel system to succeed.
Senator Akaka. Thank you.
Earlier, we heard what steps DOD has taken to comply with
the NDAA's requirement that employees and their representatives
be involved in the design of any new performance management
system at DOD. I would like to hear from both of you on this
issue as well. Thus far, do you believe DOD has sufficiently
included you in this process?
And I am asking this of Mr. Junemann and Ms. Viers.
Mr. Junemann. Sure. Thank you, Mr. Chairman.
Yes, where we represent DOD people, and we represent all
four Navy shipyards, I think 19 Army Corps facilities, we have
been engaged pretty much with supervision on reevaluation again
at local levels.
Some of it, I mean this is sort of the bad part, is that
supervision had a requirement to do performance evaluations
under GS before NSPS was enacted. They simply were not doing
it.
Then when we saw NSPS come along, that one of the failings
of it was they had a requirement to do it before, and it was
being done.
So now here is a new requirement under a different law,
almost as if Congress was being asked to legislate good
management. So now that they are under the GS system again the
locals are working with their separate human resources (HRs) to
make sure that it is done right this time.
That is looking at the failings that happened, not because
of the GS system but because of the employees working in it--
management, supervisors and the employees themselves. Like,
collectively, we were not doing this. We all knew we were not
doing it, regardless what the statute said. So now we have a
real bite at the apple. Let's make it work this time.
So there are programs going on at the local level.
Specifically, if you wanted to ask me what is happening at
Portsmouth Naval Shipyard or what is happening at Pearl Harbor
or what is happening at, say, an Army Corps facility in
Portland, I would have to get back with you on that.
Senator Akaka. Thank you. Ms. Viers, your comments.
Ms. Viers. Thank you, Mr. Chairman. AFGE feels strongly
that we are being engaged in this process. We also strongly
supported granting DOD the flexibilities in performance
management and hiring in the NDAA 2010.
We believe that Mr. Grimes is correct when he says NSPS
performance management system improved communications between
supervisors and employees. We hope to build on that in this
process, and we hope it will lay a foundation for developing a
new performance management system that is accountable to
employees, the Department and the warfighters that we are so
proud to support.
Senator Akaka. Yes.
Ms. Niehaus, you testified that FMA has not yet had the
opportunity to provide feedback on any future personnel system.
I would like to hear your views on this issue as well.
Ms. Niehaus. We have met with Mr. Berry and Mr. James on
the potential for FMA's involvement in the development of the
new personnel system under DOD.
We were invited to participate in the Future Search
Conference that was cancelled almost immediately after being
scheduled, and it has not yet been rescheduled, but we have
been assured that we will be invited to participate in it at
that time.
Senator Akaka. Well, thank you very much.
Senator Voinovich, your questions.
Senator Voinovich. I am interested in the observations
about the NSPS system. When we got involved in it, I knew that
labor unions had a real concern about the impact on their
members. In fact, I echoed some of your concerns in comments
that I submitted during that formal notice and comment period
for the NSPS rule.
Ms. Viers, thank you. Nice to have you here from Columbus,
and I think you and I talked about this at one time. But at the
time, we thought your members would be involved, and then they
ultimately were not.
But, as you know, the Department decided to exclude
bargaining units, and this development left a pay-for-
performance system that would ultimately affect only 913
unionized employees who elected to organize after joining NSPS,
or less than one-half of 1 percent of the 225,000 employees
covered by NSPS.
And I have already mentioned the fact that I think if
people were really unhappy with the NSPS they would have done
the same thing they did at GAO and said, look, we do not like
this. We are going to form a union. But, in general, they did
not.
Even before the problematic pay disparities correlated with
race, gender and job assignment were revealed, your
organizations continued to oppose NSPS and called for its
repeal.
And we now see similar opposition to the Defense Civilian
Intelligence Personnel System despite a recent report by the
National Academy of Public Administration that found
implementation flaws in an otherwise ``fundamentally sound
system, conforms to accepted principles for designing
performance-based compensation systems.''
So a skeptic might argue that the unions are opposed to
NSPS or any kind of performance--I know you are opposed to
NSPS, but any kind of flexibilities or performance evaluation.
So, Ms. Viers, I am really pleased to hear that you think that
a system can be put in place.
And I am hopeful that in the dialogue--Ms. Niehaus, you
mentioned you met with Mr. Barry and Mr. Grimes--that there be
a robust discussion of this and some consensus about how we go
forward with the NDAA authorities because I think it is not
only going to be important to your members, but it is also
going to be important to our national security and to the
future of our Country.
I was interested, Ms. Niehaus, when you were saying that
you are really concerned that even with retained pay status,
that a lot of your folks are never going to get caught up. And
you heard some people out there say they got too much; they
ought to be happy with it.
But what impact do you think that is going to have on some
of your people, that this will be their three highest years? Do
you think some of them are going to tip their hat and say I am
out of here?
I mean you talked about 11,000 so far. If you follow the
numbers, it could be 37,000 people----
Ms. Niehaus. Yes, sir.
Senator Voinovich [continuing]. That are going to be on
retained pay status. I would suspect they may be some of the
best performers in the Federal Government. What are they going
to do?
Ms. Niehaus. The indication we have had from many of our
members is that they are already seeking employment outside the
Department of Defense, which we find very discouraging.
I believe that some will do just exactly what you said.
They will retire rather than remain on pay retention.
It is disheartening that they will not continue because I
do believe, as you said, they are the best employees in the
Department of Defense because they were required to perform at
successively higher levels in order to maintain those high
ratings after the first year.
Senator Voinovich. Mr. Junemann, you had how many members
in NSPS?
Mr. Junemann. We had 94 in NSPS.
Senator Voinovich. OK. So that is 94 that you can identify.
Did any of your members benefit from NSPS, i.e., take
advantage of their high performance and got a better pay
increase?
Mr. Junemann. Yes, to my knowledge, the workers at Omaha. I
think there is about 40 at an Army Corps facility at Omaha,
Nebraska, who actually joined the union to get out of NSPS, but
they received higher than, I guess expected raises. I do not
have the numbers right in front of me.
Senator Voinovich. Well, the thing is that they were part
of the NSPS system, but they also joined the union.
Mr. Junemann. Yes, sir.
Senator Voinovich. Just for the record, that is 94 people.
I would be really interested in the statistics in terms of your
94 members, how many of them got an increase in pay because of
the system. And I am sure some of them are unhappy because they
did not think they got as much as they were entitled to.
But it would be very interesting, I think, because you have
94 people to look at, and I would ask the chairman if you would
respond to me in writing about just what happened to your 94
members in terms of this system.
I guess all I can say at this stage of the game is this: I
am leaving the Senate. As Senator Akaka says, we have spent 10
years trying to improve conditions for Federal workers. We have
passed more Federal workforce legislation than any similar
period. We have tried to make the Federal Government as
competitive as we can, even for people coming in at the mid-
level.
Under the old regime, if you are here a year you got 1 week
of annual leave, you are here 3 years you get 3 weeks, and then
you had to be here for 15 years before you got a month. And we
thought that was not competitive, that you are not going to be
able to draw people, and so we changed how leave is accrued.
Or the student loan repayment program that was capped at
$40,000 and $6,000 a year, and we bumped the program up to a
$60,000 cap, and $10,000 a year to try to make the Federal
Government as competitive as we can possibly be.
So I just hope that you all work together and come up with
something that you are happy with, that is fair, but that the
folks, they ought to know if they really work their butt off
and do a great job, that it is going to be recognized because
we have had too many people that have left the Federal
Government. They just finally throw up their hands and say: I
am leaving. Everybody has got to get treated the same, and that
is not a place for me.
Maybe some of them interpret things differently, but I know
too many people that have left the system because of the fact
that they felt that it did not reward them for the work that
they were doing and that the system really ground itself down
to the lowest common denominator. Let's come to work, put in
your time and go home.
Not to take anything away from our Federal workers. I know,
Ms. Viers, you work at DOD. I know you work hard. I am not
taking anything away from them, but I just think that there is
that feeling of, I would like to be recognized, I would like to
be rewarded.
And I think a performance management system is good. I
think you laid that out--I think you did, Ms. Viers. People
ought to know where they stand. They want to know they are not
performing poorly. They want to know, what do you expect of me?
Am I doing good? Am I doing bad? And if I am doing bad, what
can I do to correct my situation, so I can do better?
We all want to be recognized for doing a good job. Some
just want to be recognized. So I think that is what this is all
about here--to try and come up with a system that will get that
done and where people will feel good about coming to work every
day and do everything that they can with the talent God gave
them, to make a contribution to our Country.
Senator Akaka. Thank you, Senator Voinovich.
Senator Voinovich. Do you want to comment, Mr. Junemann?
Mr. Junemann. Yes, Senator, I will be happy to provide you
with that. We actually have talked to a good share of the 94
people about what do you feel about retention, what do you feel
about what is going to happen here.
And I should tell you from my end, again we have even
outside of the Federal Government, we represent like 25,000
engineers, technicians and scientists at Boeing that are all
under a pay-for-performance system. We represent about 1,000
workers at General Electric that are under pay-for-performance.
I helped, and it works.
I helped to organize a group of engineers at United
Airlines where I had to write a letter to every employee
guaranteeing them that, or assuring them that the union would
work hard to put a pay-for-performance into the contract if we
ended up getting a union there. So we are not opposed to it. We
are in favor of something that works.
At Boeing, we do not even have seniority, at least until I
think it is like 10 years. But the evaluation is what
determines retention and transfer rights and promotion rights.
So it is not like we are not in favor of it at all, but it has
to be open.
I had members come to me while we were going through the
Meet and Confer process and all the other stuff that was going
on in the mid part of this decade, and they retired. They were
deathly afraid of what was going to happen to them and their
rights under NSPS if that was implemented, and it is not
because they were poor performers and thought they might get
caught. They just had no idea what this wave was going to do to
them once it washed over.
Senator Voinovich. Thank you.
Senator Akaka. Thank you.
Let me ask a few more questions. Ms. Viers, I was glad to
see in your testimony that you are at least cautiously
optimistic that labor organizations and DOD can work together
to create a more effective performance management system than
under NSPS. I hope labor and management will be able to work
together to accomplish this goal.
What specific steps will your union take to educate your
members about the new performance management system once it is
developed, so it can be implemented smoothly?
Ms. Viers. Senator, thank you for the opportunity to
respond to that question. I can tell you that we will, as long
as the employees know they have a voice in designing the
system, which they will, we will get that message out to them.
It is their input that we are bringing to the table, to DOD, so
they obviously have ownership. When they have ownership in a
system, specifically a performance management system, that is a
positive thing. So we will do everything we can to get the
message out to our constituents.
Senator Akaka. Thank you.
Mr. Junemann, I would like to hear from you on this
question as well.
Mr. Junemann. Yes, Mr. Chairman. Thank you. So we are
currently working with the Federal Mediation and Conciliation
Service (FMCS) and the Federal Labor Relations Authority (FLRA)
who have training programs that are going on, not only with
labor but with supervisors and managers as well, and this is
going on throughout the Country. We are participating in those.
Additionally, especially within the Navy Sea System Command
(NAVSEA), we are doing a lot of work, partnership ventures with
management on a national, as well as on a local, level. Part of
that, I mean really a lot of it is just bringing success to the
mission of each organization.
So we are heavily engaged in that. We believe in that very
strongly, and the mission of the organization is also lifting
up the people who work there. So it is going to be part of the
overall effort to do that.
Senator Akaka. Thank you.
Ms. Niehaus, you state in your testimony that many
supervisors reported that NSPS was too burdensome and they did
not have the time to provide employees with written job
objectives or performance ratings as required. What suggestions
do you have to establish an efficient and practical system for
appraising employee performance that would have better buy-in
from supervisors?
Ms. Niehaus. I think that a system that enables a
supervisor to structure an employee's position and their goals
for that employee without having to work through a long process
to get there. Many of the supervisors that I have personally
been contacted by were concerned that the performance appraisal
application tool, the automated system that was used under
NSPS, appeared very cumbersome and not user friendly to them.
Some of those supervisors had never had to work with automated
systems for performance management. So I think perhaps more
intensive training on whatever system is going to be used would
be better for supervisors.
I think the basic premise of writing an individual's
objectives each year is a good one.
I think meeting with employees and giving them feedback is
absolutely necessary, and I think that is part of a
supervisor's position. I do think that in some areas under the
GS system, supervisors were not doing that, and I think that it
was a detriment to the employee and to the supervisor because
there was no way to track whether they were doing it or not.
So I think in some respects, and I have to say some of our
members felt that because they did not have to do it under the
GS system they should not have to under the NSPS system, which
I have to admit I disagree with.
Senator Akaka. Well, thank you, and I want to thank our
witnesses for attending this hearing and providing thoughtful
testimony and answers to our questions.
As the largest Federal agency, the Department of Defense
should serve as a model for the other agencies. I am pleased
with the steps DOD has taken to transition employees out of
NSPS, both quickly and thoughtfully. I am also glad to hear
that DOD and OPM are working with employees and supervisors as
performance management changes are considered at DOD and
governmentwide.
I look forward to working with DOD and OPM in the coming
months on these very important matters.
Again, thank you for being here. The hearing record will be
open for 2 weeks for additional statements or questions other
members may have pertaining to the hearing.
And I want to take this time to say thank you very much to
Senator Voinovich's staff and my staff, and the hard work that
they have put into these hearings, I really appreciate it.
This hearing is adjourned.
[Whereupon, at 4:09 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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