March 10, 2009

Department of Defense

NSPS UpdatePresented to:

APEX 28 DoD SES Orientation

Mr. Brad BunnProgram Executive Officer, NSPS

March 2009 2

What Is NSPS?

A new civilian personnel management system

Among the Department’s top transformational priorities, NSPS is designed to:

Retain and attract talented and motivated employees committed to excellence

Help DoD respond swiftly and decisively in national security environment

Accelerate the Department’s efforts to create a Total Force of military and civilian personnel

A significant cultural shift to “pay for performance”

Entering third year of phased rollout based on event-driven design and implementation approach.

March 2009 3

System Features

NSPS HUMAN RESOURCES SYSTEM

Classification Jobs in broad “pay bands” based on work nature and competencies (eliminates “GS grades and steps”)

Simple and flexible; short, concise job descriptions

Compensation

Market-sensitive Annual pay increases and bonuses directly linked to

performance

Performance Management

Results-oriented, measurable job objectives linked to mission

Evaluation using standard, validated performance benchmarks

Meaningful distinctions in performance Robust pay pool process to review/validate ratings and

pay decisions for consistency, fairness Employee development with ongoing feedback and

dialogue

Staffing & Employment

Direct hire authority for critical need or shortage occupations

Streamlined hiring process Alternative promotion procedures

March 2009 4

Culture Change

From … To …

Rigid classification system based on 15 grade levels

Broad pay bands encompassing wide range of work

Rules-oriented pay system focused on administration

Market-oriented system that enables compensation approach tailored to organizational mission requirements

Inconsistent, often inconsequential rating systems (i.e., 50% of DoD under Pass/Fail system)

Rigorous 5-level rating system designed to make meaningful distinctions in employee performance

Activities-based management Results-based organization

Automatic pay increases based on passage of time

Pay increases and bonuses based on performance

Administratively challenging processes for assigning/reassigning workforce to meet mission requirements

Enhanced flexibility to shift assignments and workforce to respond to mission

March 2009 5

NSPS Today

Over 200,000 employees currently under NSPS

Training – ongoing Over 600,000 training instances completed

Evaluation & external reviews - ongoing Formal program evaluation part of spiral

development process External reviews continue (GAO, OPM, etc.)

Informing new leadership on NSPS

March 2009 6

NSPS Workforce Demographics

United States

U.S. Territories

Foreign Areas Total

184,983 605 19,245 204,833

Covered (204,833)• White Collar Non-Bargaining Unit Employees*

* 306 employees are now covered in 14 bargaining units established after conversion to NSPS

Not Covered • White Collar Bargaining Unit Employees (245,400)**• Wage Grade Employees (Statutorily Excluded) (120,300)• Others Excluded:

• Defense Labs (excluded until 2011)• Intel• Faculty• PFPA (Police)• SES/SL/ST, HQE

ArmyNavy/Marine Corps

Air ForceDoD 4th Estate Total

74,920 64,017 40,518 25,378 204,833

**Eligible, but no plans to convert to NSPS

Scheduled Coverage (Approx 3,600)• White Collar Non-Bargaining Unit

Employees• Spring - Fall 2009

March 2009 7

Performance Linked to Pay

Employees eligible to receive…

Performance rating Share range Pay adjustments

5 - Role Model 5 – 6 Performance-based pay increase and/or bonus General salary increase (at least 60% of the GS increase) Local market supplement increases (same as GS)

4 - Exceeds Expectations 3 – 4

3 - Valued Performer 1- 2

2 - Fair N/A Ineligible for performance based increase/bonus General salary increase Local market supplement increases

1 - Unacceptable N/A No increases

March 2009 8

January 2009 Payout Results

*Actual Local Market Supplement increase varied by locality area. Averages are weighted.

Data source: Compensation Workbench upload files as of 1/20/09.

Does not include adjustments to ratings based on reconsideration requests.

0.30% 1.30%

55.40%

38.30%

4.70%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1 2 3 4 5

Rating Distribution

Unacceptable

Fair

Valued

Perfo

rmer

Excee

ds

Expec

tatio

ns

Role

Mod

el

March 2009 9

January 2009 Payout Results

Rating of

Record

% of Total Rated(170,149)

Salary IncreaseAverage

Performance Bonus

TotalGeneral

Base Salary

Increase

Avg Locality

Incr

Avg Performance Salary Incr

AvgTotal

SalaryIncr

1 0.3% 0.00% 0.0% 0.00% 0.00% 0.00% 0.00%

2 1.3% 1.74% 1.0% 0.00% 2.74% 0.00% 2.74%

3 55.4%

1.74% 1.0% 2.73% 5.47% 1.36% 6.83%

4 38.3%

1.74% 1.0% 4.59% 7.33% 2.44% 9.77%

5 4.7% 1.74% 1.0% 6.33% 9.07% 4.09% 13.16%

Overall

100%

1.74% 1.0% 3.67%6.41

%1.94%

8.35 %

Employees rated at Level 1 (Unacceptable) do not receive general base salary or local market supplement increases.Actual local market increases vary by location.

March 2009 10

Key Challenges - Change Management

Employee concerns and perceptions Uncertainty and skepticism over pay for performance Perception of fairness & transparency in performance management and

pay pool process Difficulty in recalibrating expectations

Managers’ and Supervisors’ concerns Lack sufficient skills in goal setting, performance measurement &

assessment, and communicating with employees Perceived administrative burden associated with robust performance

management process

•Typical of major personnel system changes

•Experience with alternative personnel systems indicates it takes 3-5 years for employees to fully understand and accept such changes (as noted by OPM & GAO)

•Addressing concerns via robust training, communication, and transparency – leadership engagement

•NSPS implementation accompanied by unprecedented training effort, focused on performance management skills, particularly for supervisors

March 2009 11

Positive Changes

Employees agree they have a better understanding of expected performance

Meaningful differentiation in performance and rewards

Better communication between employees and supervisors

Stronger connection between individual performance and organization’s mission, goals, and objectives

Pay flexibilities help recruitment

March 2009 12

Employee and Manager Feedback

Performance Employees struggling with “valued performer”

rating Effective job objectives, assessments and

evaluations are difficult to write

Pay Pools Concern with fairness – perceptions

Employee – Pay Pool Manager not my supervisor; doesn’t know what I do; OR, I have a poor supervisor; lack of trust

Rating Official – Pay pool process hard to understand; common understanding of different performance levels

Lack of shared understanding within the pay pool panel

March 2009 13

OPM Assessment

On February 11, 2009, OPM released its second report DoD’s progress with NSPS implementation

OPM officials found improvements in five areas evaluated: Mission alignment Results-oriented performance culture Workforce quality Equitable treatment Plan execution

OPM noted that NSPS encourages better coordination of performance objectives and organizational goals and holds employees more accountable for meeting those goals

NSPS resulted in more positive correlations between performance ratings, pay increases and cash awards

Ensures fairness and high level of transparency in implementing issuances, training availability, performance evaluation, and lessons learned

March 2009 14

Performance Management

70

65

44

48

28

34

35

28

21

25

28

31

36

40

31

30

9

10

28

21

36

26

31

38

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NSPS

My performance standards/expectations are directly related Non-NSPS

NSPS

My current performance appraisal system motivates me to Non-NSPS

NSPS

The performance appraisal system I am under improves Non-NSPS

NSPS

In my work unit, steps are taken to deal with a poor performer Non-NSPS

Positive Neutral Negative

Note: Some questions also allow for ‘do not know’ or a similar response; not reflected in graphic.

2008 STATUS OF FORCES SURVEY OF DOD CIVILIANS

March 2009 15

Appraisal and Recognition

Note: Some questions also allow for ‘do not know’ or a similar response; not reflected in graphic .

52

47

38

33

59

57

59

65

61

65

24

26

31

32

24

26

16

17

18

19

24

27

28

31

16

16

22

14

19

14

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NSPS

How satisfied are you with the recognition you receive for doing Non-NSPSa good job?

NSPS

In my work unit, differences in performance are recognized in Non-NSPSa meaningful way

NSPS

Discussions with my supervisor/team leader about my Non-NSPSperformance are worthwhile

NSPS

In my most recent appraisal, I understood what I had to do to be Non-NSPSrated at different performance levels

NSPS

My performance appraisal is a fair reflection of my performance Non-NSPS

Positive Neutral Negative

2008 STATUS OF FORCES SURVEY OF DOD CIVILIANS

March 2009 16

Pay Aspects

55

49

65

62

60

55

42

25

22

25

16

18

17

20

26

29

23

26

20

20

23

25

30

42

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NSPS

Overall, how satisfied are you with management at your organization? Non-NSPS

NSPS

Considering everything, how satisfied are you with your pay? Non-NSPS

NSPS

My bonus and cash awards depend on how well I perform my job Non-NSPS

NSPS

Pay raises depend on how well employees perform their jobs Non-NSPS

Positive Neutral Negative

Note: Some questions also allow for ‘do not know’ or a similar response; not reflected in graphic.

2008 STATUS OF FORCES SURVEY OF DOD CIVILIANS

March 2009 17

General Matters

Note: Some questions also allow for ‘do not know’ or a similar response; not reflected in graphic.

26

21

34

36

79

73

47

44

31

38

20

21

14

17

26

29

43

40

46

45

7

10

25

24

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NSPS

Overall, what type of impact do you think NSPS will have on Non-NSPS

NSPS

How likely is it you will leave at the next available opportunity Non-NSPS

NSPS

The people I work with cooperate to get the job done Non-NSPS

NSPS

My work unit is able to recruit people with the right skills Non-NSPS

Positive Neutral Negative

Likely to leave

2008 STATUS OF FORCES SURVEY OF DOD CIVILIANS

March 2009 18

Keys for Leaders

NSPS success at the organizational level depends on senior leader engagement, commitment and leadership

Alignment and outcomes, better job objectives

Commitment and communication

Make resources available – Train your way to success Emphasize accountability at all levels

Earn employee trust, buy-in and confidence in the system by being inclusive at all levels

Engage first-level supervisors

Own it

March 2009 19

What’s Ahead for NSPS?

Inform new leadership on NSPS

Address stakeholder concerns

Continue to monitor, analyze, and evaluate NSPS implementation; make system adjustments and training enhancements where necessary