Pay for performance

  • Published
  • By Col. Jennifer Graham
  • 71st Mission Support Group commander
According to Wikipedia, pay for performance is a motivation concept in human resources in which employees receive increased compensation for their work if their team, department or company reaches certain targets. 

For the last eight years both public and private companies, as many as 75 percent in the U. S., have been migrating their compensation systems to connect at least part of an employee's pay to measures of performance. 

Pay for performance is designed to counter the traditional compensation systems where pay was seen as an entitlement and was based upon time on the job or job level achieved in the organization -- not based upon actual performance. 

It is designed to increase the compensation fairness and justice within the organization. Its degree of success is largely contingent upon a clear understanding by the employee and the supervisor of what the motivational targets are. 

As you know, the Department of Defense has been implementing its version of pay for performance, called the National Security Personnel System, through a spiral deployment plan since 2004. 

The key to NSPS's success is the degree of communication and negotiation between the employee and their supervisor to define and evaluate objectives, the DOD name for motivational targets. 

Here at Vance we began planning for NSPS implementation in 2006. Calendar year 2007 was our first full NSPS cycle. While overall Wing leadership was pleased with our 2007 outcomes, there are many growing pains associated with the conversion to NSPS. 

The cycle from start to finish requires a great deal more time and attention from both the employees and their supervisors. The information technology tool, MyBiz, is cumbersome and not exactly intuitive. The compensation formula is complicated and seemingly less than straightforward. The rating scale demands a range of ratings versus a flat pass or fail system. And some employees still doubt the fairness of the pay pool process. 

I recently attended a DOD level conference on NSPS where I was able to learn more about the utility and flexibility of pay for performance. I was also able to compare Vance's program to programs in other services and defense agencies, most of whom have been using NSPS for several years. 

The significant take away from the conference -- NSPS is an evolving system. It will require continuous learning and adapting from both employees and supervisors. If we thought we all would need a onetime shot of NSPS training and be done with it, we were wrong. 

Within DOD there are 184,000 employees and 974 pay pools currently using the NSPS system. The total number of employees will likely grow to 200,000 by the end of 2008. This is to say, our one pay pool and 141 employees at Vance represents a very small percent of the total. 

With each cycle, DOD is leaning and making improvements. By the end of this month, we will be able to use a new version of MyBiz which will make our 2008 close out easier and faster. As a result of what I learned at the conference, our pay pool has made several changes to our business rules which we expect will further increase our transparency and leverage inherent flexibilities in the system. 

Visit for more details. 

One of the major changes will be Team Vance's challenge to move further away from pay administration and move to deliberate compensation. Pay administration is a traditional one-dimensional approach to the end of year payout that says if this rating then that payout. 

Deliberate compensation asks supervisors and pay pool panel members to consider a whole range of factors like market analysis, direct and in direct benefits, impact to mission and like job comparisons when determining payout. 

This will require more sophistication, a deeper understanding of the system and time commitment by both employees and supervisors. However, it will result in increased fairness and clarity in the payout process. 

Over the next several years as we increase training and awareness you will continue to see local changes and modifications to how NSPS is administrated. 

Yes, the system is time consuming. As supervisors, setting our employees up for success should take time. We should be committed to writing clear objectives, communicating them with our employees and assessing performance in an accurate and explainable way. 

As employees we should feel empowered by NSPS and embrace the opportunity to have a voice in negotiating objectives and rating performance with supervisors. 

I'm proud of Team Vance's performance to date with NSPS implementation. However, I challenge all of us not to be content with status quo. Let's make the commitment to invest more time in training, learn how to maximize flexibilities and communicate, communicate, communicate.