SES Performance-Based Pay System and FY04 Year End

Activities

Jack Kelly

Office of the Deputy Under Secretary

December 15, 2004

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Outline

• Purpose

• Issue

• Background & Discussion

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Purpose

Information Briefing

• SES Pay/Performance System

• OPM/OMB Provisional Certification

• End-of-Year/PRB Activities and Lessons Learned

• NOAA Bonus and Pay Adjustment Criteria

• STs/SLs Certification

• Next Steps

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Issue

Regulations regarding the SES performance-based pay system, and associated certification criteria, have added new requirements which will continue to impact the performance management as well as the Department’s and NOAA’s End-of-Year SES activities.

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Background and Discussion

President Proposed in FY 2004 Budget

• Passed as part of DOD FY 2004 Authorization

• Coupled with Homeland Security Act

Premise: Higher Performance = Higher Pay

• Greater Pay Range (Base, Aggregate)

• Higher Individual Base Pay Levels

• Locality and Across-the-Board Adjustments Eliminated

The New SES Pay/Performance System

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Background and Discussion

Executive Pay Reform

Base Pay RangeMaximum with bonuses

Senior executives who work at agencies with certified paysystems will be eligible for higher pay and bonuses:

Annual Salary

Noncertified systems

Certified systems

$145,600$104,927

$158,100$104,927 $203,000

$175,700

SES Pay – Minimum and Maximum

$145,600 = EX Level III $158,100 = EX Level II

$203,000 is equivalent to the total annual compensation

payable to the Vice President

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Background and Discussion

Types of Certification

Full• Performance system designed and fully implemented• Documented differentiation for 2 appraisal periods• Meet all 9 certification criteria • Certification granted for 2 calendar years

Provisional• Performance system designed, but not fully implemented or applied• Not fully implemented/applied certification criteria• Certification granted for 1 calendar year

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Background and Discussion

9 Certification Criteria

Alignment – Individual performance expectations must be derived from/linked to the agency’s mission, strategic goals, program/policy objectives, and/or annual performance plan

 Consultation – Individual performance expectations are developed with senior

employee involvement and must be communicated at the beginning of the appraisal cycle

 Results – Individual expectations describe performance that is measurable,

demonstrable, or observable, focusing on organizational outputs and outcomes, policy/program objectives, milestones, etc.

 

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Background and Discussion

9 Certification Criteria (continued)

Balance – Individual performance expectations must include measures of results, employee and customer/stakeholder satisfaction and/or competencies or behaviors that contribute to outstanding performance

Assessments and Guidelines – Agency head/designee provides assessments comparing performance of agency and each major program and functional areas with agency’s GPRA goals and other program performance measures

 Oversight – Agency head/designee must certify (1) appraisal process makes

meaningful distinctions based on relative performance, (2) results take into account, as appropriate, the agency’s performance, and (3) pay adjustments & awards recognize individual/organizational performance

 

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Background and Discussion

9 Certification Criteria (continued)

Accountability- Senior employee ratings (and subordinates, as applicable) appropriately reflect performance expectations, program performance measures, and other factors

Performance Differentiation - Agency must provide for at least one rating level above Fully Successful (must include an Outstanding level), and in the application of those ratings, make meaningful distinctions among executives based on their relative performance

 Pay Differentiation – Agency should be able to demonstrate that the largest

pay adjustments and/or highest pay levels (base and performance awards) are provided to its highest performers, and that overall, the distribution of pay rates in the SES rate range and pay adjustments reflects meaningful distinctions among executives, based on their relative performance

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Background and Discussion

Department-wide request for provisional certification approved by OPM/OMB 11/18/04.

• Appraisal System– Demonstrates strong performance culture and attainment of

agency mission– Rating levels clearly differentiate– Clearly defined process for reviewing ratings– Results that make meaningful distinction

• Pay range - $104,927- $158,100• Aggregate Pay Limitation - $203,000• DOC’s provisional certification expires end of CY2004

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Background and Discussion

OPM/OMB will continue to focus on:

• Pay differentiation between Level II and Level III

• Performance differentiation

• Performance distinctions in the ratings of direct reports of SES and appraisals of their direct reports that reflect individual and organizational performance

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Background and Discussion

NOAA Approach – The number of Outstanding ratings should be no higher than the aggregate number of the other ratings. Exceptions - rare and require compelling justification.

NOAA’s SES performance ratings and recommendations to DOC evidenced meaningful distinctions in:

• Ratings

• Pay Adjustments

• Bonuses

Executives’ performance appraisals, ratings and award recommendations were based on individual and organizational performance.

DOC’s organizational assessment of NOAA’s performance was positive.

End-of-Year SES Activities

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Background and Discussion

End-of-Year SES Activities

SES Accomplishment Summaries were to:

• Address each performance element

• Incorporate individual and organizational performance

• Be at least 1, but not longer than 2, pages in length

• Be in a font no smaller than 12 pitch

• Focus on results and tangible outcomes, objectives, targets, measures and metrics met

• Use numbers to reflect results to the extent you can

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Background and Discussion

End-of-Year SES Activities

NOAA’s Performance Review Board reviewed 129 SES/ST/SL performance appraisals, narrative summaries and ratings. The PRB is responsible for ensuring:

• Consistency of ratings/performance distinctions across organizational lines• Narrative justifications support ratings and award recommendations• Performance expectations are linked to or derived from organizational goals• Narrative justifications reflect both individual and organizational performance• Appropriate format and content

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Background and Discussion

PRB Shares Lessons Learned

Clearer guidance is needed to ensure: • Consistency across the Line and Staff Offices• Uniform format• Content that supports alignment with DOC/NOAA Strategic Plan• Narrative justifications support the ratings• Accomplishments distinguish between individual and organizational performance – organizational accountability vs. individual achievements Individual Accomplishment Examples: * Serves as Goal Team lead. * Served on Council which produced NOAA-wide implementation plan. Organizational Accomplishment Example: * The Office developed the communications plan.• Mid-term performance guidance will incorporate information needed for the end-of-year close out activities.

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Background and Discussion

Format and Content Guidance for Writing Self-Assessments

• 12-pitch font – Times New Roman - 2 pages or less• List and bold each element – include percentage/weight• Margins – 1 inch top and bottom/left and right• Allow for space between elements (no long, multi-sentence paragraphs)• Limit Acronyms - spell out the first time• List accomplishments not activities• Focus on individual accomplishments and clarify your contribution to organizational achievements• Include context of accomplishments• Use numbers to reflect results

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Background and Discussion

Guidance for Writing Supervisory Narratives

• Ensure write up is consistent with assigned rating• Ensure accomplishments are aligned with individual as well as organizational performance• Identify the employee’s individual achievements within the context of the organization’s accomplishments• Not enough to say a goal has been met, need to provide context• End each element with a rating

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DOC increased the bonus pool from 6% to 7% of salaries – nearly a 17% increase.

For the first time DOC gave NOAA the discretion to allocate the DOC bonus hold back.

NOAA Bonus Criteria – Executives with both Outstanding and Commendable ratings were eligible to receive bonuses. Not all executives with Commendable ratings will receive a bonus.

DOC Pay Adjustment Criteria – Executives were eligible as follows to receive a pay adjustment increase:

•Up to 2 percent for Fully Successful•Up to 4 percent for Commendable •Up to 6 percent for Outstanding

Every eligible Senior Executive received a Performance Based Pay Adjustment.

Background and Discussion

NOAA Bonus and Pay Adjustment Criteria

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Background and Discussion

STs/SLs Certification

NOAA has 14 Senior Professionals

DOC preparing ST/SL provisional certification package

Working group consisting of HR representatives from NOAA, NIST, and NASA reviewing ST/SL performance plans. The goal is to recommend improvements in performance appraisal forms/format as well as consistency of elements.

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Next Steps

• PRB to propose revisions to Support of Corporate NOAA performance element to distinguish from DOC’s Leadership and Management element.

• Open Discussion