Human Capital
Monitoring of Safeguards and Addressing Employee Perceptions Are Key to Implementing a Civilian Performance Management System in DOD Gao ID: GAO-10-102 October 28, 2009In 2004, the Department of Defense (DOD) began implementing the National Security Personnel System (NSPS)--a human capital system for DOD civilians. NSPS significantly redesigned the way DOD civilians are hired, compensated, and promoted. Pub. L. No. 110-181 mandated that GAO conduct reviews of the NSPS performance management system in calendar years 2008, 2009, and 2010. In this report, GAO assessed (1) the extent to which DOD has implemented certain internal safeguards to ensure the fairness, effectiveness, and credibility of NSPS, and monitored their implementation, and (2) how DOD civilian personnel perceive NSPS, and the actions DOD has taken to address those perceptions. GAO analyzed relevant documents and employee survey results, interviewed DOD officials, and conducted discussion groups with DOD employees at eight locations outside of the continental United States. Toward the end of GAO's review, both Houses of Congress passed proposed legislation that, if enacted, would terminate NSPS and require any future performance management system for DOD civilians to include certain internal safeguards
DOD continues to take steps to implement internal safeguards as part of NSPS, but implementation of some safeguards could still be improved, and continued monitoring of all safeguards' implementation is needed. In general, DOD has taken some steps to meet the intent of each of the safeguards, and it has implemented some of the recommendations from GAO's September 2008 report. However, opportunities exist for DOD to improve implementation of some safeguards. For example, DOD has not yet evaluated the effectiveness of the training employees receive, although doing so could help DOD measure the impact of its training and its progress toward achieving agency goals. In addition, DOD has not specified in its guidance what process the components should follow to investigate and eliminate potential barriers to fair and equitable ratings. Consequently, the components may not follow a consistent approach when investigating potential barriers, which could hinder their efforts to eliminate them. Further, GAO previously noted that continued monitoring of the safeguards was needed to ensure that DOD's actions were effective. While DOD monitors some aspects of the system's implementation, it does not monitor how or the extent to which the safeguards specifically are implemented across the department. As a result, decision makers lack information that could be used to determine whether the department's actions are effective and whether the system is being implemented in a fair, equitable, and credible manner. DOD civilian personnel have mixed perceptions about NSPS, and while the department has taken some steps toward addressing employee concerns, it has not yet developed and implemented an action plan to address areas where employees express negative perceptions of the system, as GAO recommended in 2008. DOD's survey data from 2008 revealed that overall, NSPS employees responded positively about some aspects of performance management, such as connecting pay to performance, and negatively about others, such as the performance appraisal process. According to the most recent survey data, the negative perceptions of employees who worked under NSPS the longest remain largely unchanged from what was reported by GAO in 2008. Further, as GAO reported in 2008, employees and supervisors continue to express negative perceptions in discussion groups about NSPS--for example, voicing concerns about the negative impact of NSPS on employees' motivation and morale, and about the excessive amount of time spent navigating the performance management process. Such negative perceptions are not surprising given that large-scale organizational transformations often require an adjustment period to gain employees' trust and acceptance. DOD has taken some steps to address employees' perceptions of NSPS--for example, by issuing a memorandum with suggested actions the components could take to address employee concerns. However, DOD has not yet developed and implemented an action plan that fully meets the intent of GAO's 2008 recommendation. Specifically, DOD has not yet specified such things as its intended actions, who will be responsible, and the time frames for these actions. GAO continues to believe that implementing such a plan has merit.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-10-102, Human Capital: Monitoring of Safeguards and Addressing Employee Perceptions Are Key to Implementing a Civilian Performance Management System in DOD
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
October 2009:
Human Capital:
Monitoring of Safeguards and Addressing Employee Perceptions Are Key to
Implementing a Civilian Performance Management System in DOD:
Human Capital:
GAO-10-102:
GAO Highlights:
Highlights of [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-10-
102], a report to congressional committees.
Why GAO Did This Study:
In 2004, the Department of Defense (DOD) began implementing the
National Security Personnel System (NSPS)”a human capital system for
DOD civilians. NSPS significantly redesigned the way DOD civilians are
hired, compensated, and promoted. Pub. L. No. 110-181 mandated that GAO
conduct reviews of the NSPS performance management system in calendar
years 2008, 2009, and 2010. In this report, GAO assessed (1) the extent
to which DOD has implemented certain internal safeguards to ensure the
fairness, effectiveness, and credibility of NSPS, and monitored their
implementation, and (2) how DOD civilian personnel perceive NSPS, and
the actions DOD has taken to address those perceptions. GAO analyzed
relevant documents and employee survey results, interviewed DOD
officials, and conducted discussion groups with DOD employees at eight
locations outside of the continental United States. Toward the end of
GAO‘s review, both Houses of Congress passed proposed legislation that,
if enacted, would terminate NSPS and require any future performance
management system for DOD civilians to include certain internal
safeguards.
What GAO Found:
DOD continues to take steps to implement internal safeguards as part of
NSPS, but implementation of some safeguards could still be improved,
and continued monitoring of all safeguards‘ implementation is needed.
In general, DOD has taken some steps to meet the intent of each of the
safeguards, and it has implemented some of the recommendations from GAO‘
s September 2008 report. However, opportunities exist for DOD to
improve implementation of some safeguards. For example, DOD has not yet
evaluated the effectiveness of the training employees receive, although
doing so could help DOD measure the impact of its training and its
progress toward achieving agency goals. In addition, DOD has not
specified in its guidance what process the components should follow to
investigate and eliminate potential barriers to fair and equitable
ratings. Consequently, the components may not follow a consistent
approach when investigating potential barriers, which could hinder
their efforts to eliminate them. Further, GAO previously noted that
continued monitoring of the safeguards was needed to ensure that DOD‘s
actions were effective. While DOD monitors some aspects of the system‘s
implementation, it does not monitor how or the extent to which the
safeguards specifically are implemented across the department. As a
result, decision makers lack information that could be used to
determine whether the department‘s actions are effective and whether
the system is being implemented in a fair, equitable, and credible
manner.
DOD civilian personnel have mixed perceptions about NSPS, and while the
department has taken some steps toward addressing employee concerns, it
has not yet developed and implemented an action plan to address areas
where employees express negative perceptions of the system, as GAO
recommended in 2008. DOD‘s survey data from 2008 revealed that overall,
NSPS employees responded positively about some aspects of performance
management, such as connecting pay to performance, and negatively about
others, such as the performance appraisal process. According to the
most recent survey data, the negative perceptions of employees who
worked under NSPS the longest remain largely unchanged from what was
reported by GAO in 2008. Further, as GAO reported in 2008, employees
and supervisors continue to express negative perceptions in discussion
groups about NSPS”for example, voicing concerns about the negative
impact of NSPS on employees‘ motivation and morale, and about the
excessive amount of time spent navigating the performance management
process. Such negative perceptions are not surprising given that large-
scale organizational transformations often require an adjustment period
to gain employees‘ trust and acceptance. DOD has taken some steps to
address employees‘ perceptions of NSPS”for example, by issuing a
memorandum with suggested actions the components could take to address
employee concerns. However, DOD has not yet developed and implemented
an action plan that fully meets the intent of GAO‘s 2008
recommendation. Specifically, DOD has not yet specified such things as
its intended actions, who will be responsible, and the time frames for
these actions. GAO continues to believe that implementing such a plan
has merit.
What GAO Recommends:
GAO is recommending that DOD evaluate its training, revise its guidance
for analyzing ratings, and monitor the implementation of safeguards for
NSPS or any future performance management system. DOD generally
concurred with GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-10-102] or key
components. For more information, contact Brenda S. Farrell at (202)
512-3604 or farrellb@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOD Continues to Make Progress, but Implementation of Some Safeguards
Could Be Improved, and Continued Monitoring of the System's
Implementation, Including the Safeguards, Is Needed:
Although DOD Civilian Employees under NSPS Have Mixed Views about the
System, DOD Has Not Yet Developed and Implemented a Plan to Address
Employees' Negative Perceptions of Some Aspects of the System:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Reconsideration Process:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Number of DOD Civilian Employees Phased into NSPS, as of
September 2009:
Table 2: Estimated Percentage of Responses from NSPS and Non-NSPS
Employees to Selected Questions about Performance Management in the
2008 Status of Forces Survey of Civilian Employees:
Table 3: Estimated Percentage of Responses from NSPS and Non-NSPS
Employees to Selected Questions about Performance Appraisals in the
2008 Status of Forces Survey of Civilian Employees:
Table 4: Estimated Percentage of Responses from Spiral 1.1 Employees to
Selected Questions about Performance Management from the May 2006,
November 2006, May 2007, and February 2008 Administrations of the
Status of Forces Survey of Civilian Employees:
Table 5: Estimated Percentage of Responses from Spiral 1.1 Employees
about the Overall Impact of the National Security Personnel System from
the May 2006, November 2006, May 2007, and February 2008
Administrations the Status of Forces Survey of Civilian Employees:
Table 6: Composition of Discussion Groups:
Table 7: Composition of Discussion Groups by Demographic Category per
Component:
Figures:
Figure 1: Example of NSPS Pay Pool Organization:
Figure 2: Sample Screen Shots from the NSPS 101 and iSuccess Training
Modules:
Abbreviations:
DMDC: Defense Manpower Data Center:
DOD: Department of Defense:
GS: General Schedule:
NSPS: National Security Personnel System:
OPM: Office of Personnel Management:
PEO: Program Executive Office:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
October 28, 2009:
Congressional Committees:
In 2004, the Department of Defense (DOD) began implementing the
National Security Personnel System (NSPS)--a human capital system for
DOD civilian employees. NSPS significantly redesigned the rules,
regulations, and processes that govern the way in which civilian
employees are hired, compensated, and promoted within the department.
DOD began converting employees to NSPS in 2006 and, according to the
department, by early 2009 had converted more than 200,000 employees to
the system. However, a series of events transpired in 2009 leaving the
system's future uncertain. Specifically, in February 2009, the Chairman
of the House Committee on Armed Services and the Chairman of the
committee's Subcommittee on Readiness urged DOD to halt conversions to
NSPS, highlighting concerns over a lack of transparency and widespread
discontent with the system. Subsequently, in March 2009, DOD and the
Office of Personnel Management (OPM) announced that they would suspend
any further conversions of organizations to NSPS pending the outcome of
a review of the system led by the Defense Business Board.[Footnote 1]
In July 2009, the Defense Business Board presented the Secretary of
Defense with the report of its review of NSPS, which included
recommendations to initiate a reconstruction of the system and to
continue the moratorium on conversions to NSPS until reconstruction is
complete. Most recently, in October 2009, the proposed National Defense
Authorization Act for Fiscal Year 2010, which passed both Houses of
Congress,[Footnote 2] contains provisions that would terminate NSPS and
convert DOD civilian employees currently under the system to previously
existing civilian personnel systems no later than January 1, 2012.
Before the enactment of the legislation that authorized NSPS, we raised
a number of critical issues about the proposed regulations for NSPS in
a series of testimonies in 2003.[Footnote 3] Since then, we have
provided congressional decision makers with insight into DOD's
processes to design and implement NSPS and the most significant
challenges the department faces in implementing the system.[Footnote 4]
While GAO supports human capital reform in the federal government, a
key challenge is ensuring sustained and committed leadership for such a
major transformation effort. Further, moving too quickly or prematurely
to implement such systems, whether at DOD or elsewhere, can
significantly raise the risk of problems implementing them.[Footnote 5]
We have also reported that DOD and other federal agencies must ensure
that their performance management systems contain appropriate
accountability mechanisms and internal safeguards to ensure that the
systems are fair, effective, and credible.[Footnote 6]
To help inform congressional deliberations on the implementation of
NSPS, the National Defense Authorization Act for Fiscal Year 2008
mandated that GAO conduct reviews of NSPS in calendar years 2008, 2009,
and 2010 to determine the extent to which DOD has effectively
incorporated certain accountability mechanisms and internal safeguards
into the system and to assess employee attitudes toward the
system.[Footnote 7] In September 2008, we issued our first review of
NSPS, and in April 2009 we testified on that assessment before the
House Committee on Armed Services' Subcommittee on Readiness.[Footnote
8] We used the following safeguards to assess NSPS:[Footnote 9]
* Involve employees, their representatives, and other stakeholders in
the design of the system, to include employees directly involved in
validating any related implementation of the system.
* Assure that the agency's performance management system links employee
objectives to the agency's strategic plan, related goals, and desired
outcomes.
* Implement a pay-for-performance evaluation system to better link
individual pay to performance, and provide an equitable method for
appraising and compensating employees.
* Provide adequate training and retraining for supervisors, managers,
and employees in the implementation and operation of the performance
management system.
* Institute a process for ensuring ongoing performance feedback and
dialogue between supervisors, managers, and employees throughout the
appraisal period, and setting timetables for review.
* Assure that certain predecisional internal safeguards exist to help
achieve consistency, equity, nondiscrimination, and nonpoliticization
of the performance management process (e.g., independent reasonableness
reviews by a third party or reviews of performance rating decisions,
pay determinations, and promotions before they are finalized to ensure
that they are merit-based, as well as pay panels who consider the
results of the performance appraisal process and other information in
connection with final pay decisions).
* Assure that there are reasonable transparency and appropriate
accountability mechanisms in connection with the results of the
performance management process, including periodic reports on internal
assessments and employee survey results relating to performance
management and individual pay decisions while protecting individual
confidentiality.
* Assure that the agency's performance management system results in
meaningful distinctions in individual employee performance.
* Provide a means for ensuring that adequate agency resources are
allocated for the design, implementation, and administration of the
performance management system.
We initially developed a list of safeguards based on our extensive body
of work looking at the performance management practices used by leading
public sector organizations both in the United States and in other
countries. These safeguards were then merged with the list of
safeguards specified in section 9902(b)(7) of Title 5, U.S. Code, to
develop the aforementioned safeguards. It is important to keep in mind
that the list of safeguards we are using to assess DOD's efforts is not
intended to cover all attributes of a modern, results-oriented
performance management system; therefore, other safeguards may exist.
Rather, as we previously reported, the items on the list cover possible
safeguards that help ensure those systems are fair, effective, and
credible.[Footnote 10]
In responding to the congressional mandate for the 2008 review of NSPS,
we reported, in September 2008, that while DOD has taken some steps to
ensure that NSPS is fair, effective, and credible, implementation of
certain safeguards could be improved. We further reported that although
DOD civilian employees under NSPS responded positively regarding some
aspects of performance management, the department does not have an
action plan to address employees' negative perceptions of NSPS. To
address our findings, we recommended that DOD improve the
implementation of certain safeguards and develop and implement an
action plan to address employees' concerns about NSPS. DOD generally
concurred with our recommendations, with the exception of one--
requiring a predecisional analysis of its rating results. We discuss
the steps DOD has taken to address our previous recommendations later
in this report.
To address the congressional mandate for the 2009 review of NSPS, we
established the following objectives: (1) To what extent has DOD
implemented safeguards to ensure the fairness, effectiveness, and
credibility of the NSPS performance management system and monitored the
implementation of the safeguards? (2) How do DOD civilian personnel
perceive NSPS, and what actions has DOD taken to address these
perceptions?
For our first objective, we reviewed the safeguards specified in
section 9902(b)(7) of Title 5, U.S. Code, for the NSPS performance
management system, as well as other safeguards we have previously
identified as key for performance management systems. We also obtained
and analyzed regulations, guidance, and other documentation provided by
officials in DOD and the NSPS program offices of the four components--
the Army, the Air Force, the Navy, and the Fourth Estate[Footnote 11]-
-and interviewed knowledgeable officials in all of these offices to
obtain a comprehensive understanding of their efforts to implement the
NSPS performance management system and the safeguards as well as the
processes, procedures, and controls used for monitoring and overseeing
implementation of the system. In addition, we visited eight DOD
organizations--two for each component--located outside the continental
United States to assess the extent to which the department has
implemented safeguards for NSPS. Because our 2008 review focused on
assessing implementation of NSPS and the safeguards at locations that
were geographically distributed throughout the United States, we
focused our efforts for this review on visiting locations outside the
continental United States.[Footnote 12] During our site visits we
reviewed documents, such as pay pool business rules,[Footnote 13] and
met with the performance review authority, pay pool managers, pay pool
panel members, rating officials, the NSPS program manager or transition
team, and DOD civilian employees under NSPS to obtain their
perspectives on the extent to which the safeguards had been
implemented. The organizations we visited were selected based on a
number of factors, such as the presence of a large number or
concentrated group of civilian employees under NSPS. For our second
objective, we obtained and analyzed the results of DOD's May 2006,
November 2006, May 2007, and February 2008 Status of Forces Survey of
Civilian Employees, which gauge employee attitudes toward NSPS, among
other things. We used these data to identify indications of movement or
trends in employee perceptions. As we reported in our first assessment
of NSPS, we reviewed the results of prior administrations of DOD's
Status of Forces Survey of Civilian Employees and found the results to
be sufficiently reliable for the purposes of our report. For our
current assessment, we found no substantial changes in the methodology
for the 2008 Status of Forces Survey of Civilian Employees. In
addition, we obtained the perspectives of DOD civilian personnel at the
eight locations we visited by conducting small group discussions with
nonsupervisory and supervisory employees under NSPS and administering a
short questionnaire. Because the locations we visited are not
representative of all DOD locations, the results from our discussions
and the comments provided are not generalizable to the entire NSPS
civilian population. However, the composition of our discussion groups
was designed to ensure that we spoke with employees from each of the
four DOD components at locations outside the continental United States.
Further details about our scope and methodology can be found in
appendix I.
We conducted this performance audit from November 2008 through
September 2009 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Results in Brief:
DOD continues to take steps to implement safeguards as part of the NSPS
performance management system, but implementation of some safeguards
could be improved, and continued monitoring of the safeguards'
implementation is needed. In general, DOD has taken some steps to meet
the intent of each of the safeguards, and it has implemented some of
the recommendations from our 2008 report, including requiring commands
to publish the final overall rating results and providing guidance to
pay pools encouraging managers to rate employees appropriately.
Nonetheless, DOD's implementation of some of the safeguards could be
improved. First, for example, DOD has not evaluated the effectiveness
of the training that it provides to employees on the system. Under
NSPS, the components are responsible for training their employees,
while DOD's NSPS Program Executive Office (PEO) supports the
components' efforts by offering a variety of departmentwide training
courses and other materials. However, officials[Footnote 14] at each of
the eight organizations we visited expressed concerns over the
effectiveness of the training provided, noting that additional training
was needed, that training was not always helpful, and that some
training was not timely or was outdated. We previously reported that it
is increasingly important for agencies to measure the real impact of
training and thus evaluate the training efforts to ascertain progress
toward achieving agency goals[Footnote 15]. Second, while, in 2008, DOD
did not agree with our recommendation to require a predecisional
analysis of ratings--stating that postdecisional analysis of rating
results is useful to identify barriers and corrective actions--we found
during the course of this review that the department's postdecisional
analyses following the 2007 and 2008 NSPS performance management cycles
lacked consistency and did not generally include demographic
information. However, in May 2009, the PEO issued guidance to promote a
degree of standardization in the components' postdecisional analyses.
While not predecisional, we recognize that DOD's approach represents a
noteworthy step and does provide some benefits, some of which are
similar to those of a predecisional analysis. For example, like
predecisional analysis, postdecisional analysis is a mechanism to
ensure that employees receive fair and equitable treatment in all
aspects of personnel management[Footnote 16]. However, the guidance
does not specify what process the components should follow to
investigate potential barriers to fair and equitable ratings and their
causes, nor a process for eliminating barriers that are found. Because
DOD's guidance does not specify these steps, the components may not
follow a consistent approach when investigating potential barriers,
which could hinder their efforts to eliminate them. In our 2008 report,
we also noted that continued monitoring of the safeguards was needed to
ensure that DOD's actions were effective as implementation of NSPS
proceeded. We found that DOD monitors some aspects of the
implementation of NSPS, such as whether the system is on track to
achieve certain goals it established, but does not monitor how or the
extent to which the safeguards specifically are implemented across the
department. Because DOD does not monitor the implementation of the
safeguards, decision makers in DOD and the Congress lack information
that could be used to determine whether the department's actions are
effective and whether the system is being implemented in a fair,
equitable, and credible manner. Accordingly, until DOD effectively
implements the safeguards and monitors their implementation across the
department, employees will not have assurance that NSPS is a fair,
equitable, and credible system and decision makers in DOD and the
Congress will not have the information that could be used to determine
if the department's actions are effective.
DOD civilian personnel have mixed perceptions about NSPS, and while the
department has taken some steps toward addressing their concerns, it
has not yet developed and implemented an action plan to address areas
where employees express negative perceptions of the system, as we
recommended in 2008. DOD's survey data from 2008 revealed that overall,
NSPS employees responded positively about some aspects of performance
management, such as connecting pay to performance, and negatively about
other aspects, including the performance appraisal process. For
example, DOD's survey data for 2008 indicate that an estimated 42
percent of NSPS employees agree that pay raises depend on how well
employees perform their jobs, as compared with an estimated 25 percent
of non-NSPS employees. However, when asked about their performance
appraisal system, an estimated 29 percent of NSPS employees, as
compared with an estimated 34 percent of non-NSPS employees, agreed
with the statement that their performance appraisal system improves
organizational performance. Additionally, DOD's most recent survey data
indicated that employees who worked under NSPS the longest--spiral 1.1
employees[Footnote 17]--expressed negative perceptions of the system
consistent with those we reported on in 2008. For example, between the
November 2006 and February 2008 administrations of DOD's survey, the
percentage of spiral 1.1 employees that agreed that they understood
what they had to do to be rated at a different performance level
declined from an estimated 59 percent in November 2006 to an estimated
53 percent in May 2007, then remained consistent with an estimated 54
percent responding that they agree in February 2008. Further, the
results of our discussion groups indicated that employees and
supervisors continue to have consistent concerns and negative
perceptions of NSPS. These included the following: (1) NSPS's negative
impact on employee motivation and morale; (2) the excessive amount of
time spent navigating the performance management process; (3)
challenges with job objectives; (4) factors undermining employee
confidence in the system, such as the subjectivity of the pay pool
panel process; and (5) factors unrelated to job performance affecting
employees' final performance ratings, such as supervisors' and
employees' writing skills. As we have previously reported, these
negative perceptions are not surprising given that large-scale
organizational transformations--for example, the adoption of a new
performance management system--often entail fundamental and radical
changes that require an adjustment period to gain employees' trust and
acceptance. With regard to DOD's efforts to address employee
perceptions of the system, DOD issued a memorandum, in June 2009,
highlighting actions the department had taken in this area, as well as
suggested future actions that the components could take to address
identified negative perceptions. While we believe that issuing this
memorandum is an important first step in addressing employee concerns,
it does not fully meet the intent of our 2008 recommendation that DOD
develop and implement a specific action plan to address employee
perceptions of NSPS because it does not specify such things as the
actions DOD intends to take, who will be responsible for taking the
action, and timelines for doing so--items stipulated in OPM guidance on
action planning.[Footnote 18] We continue to believe that implementing
such an action plan is important, and note that doing so would be a
step that DOD could take to involve employees in the system's
implementation--which is one of the safeguards we discuss.
In September 2009, we provided DOD with a draft of this report that
included three recommendations to better address the safeguards and
improve implementation of the NSPS performance management system.
Subsequently, as we were preparing to issue this report, the proposed
National Defense Authorization Act for Fiscal Year 2010 passed both
Houses of Congress.[Footnote 19] That legislation contained provisions
that, if enacted, would terminate NSPS while also requiring that DOD
include certain safeguards as part of any future performance management
system. Citing the uncertainty regarding the system's future, DOD
partially concurred with our three recommendations specific to the NSPS
performance management system. DOD also stated that it would consider
acting on our recommendations to the extent they are relevant as the
department moves forward with any future performance management system.
We believe that this is a reasonable approach. Accordingly, we have
revised our recommendations to apply to any future performance
management system for DOD's civilian employees--whether NSPS or another
system. Specifically, we are recommending that DOD (1) review and
evaluate the effectiveness of the department's performance management
training; (2) ensure that guidance is in place for conducting a
postdecisional analysis that specifies what process the components
should follow to investigate and eliminate potential barriers to fair
and equitable ratings; and (3) include, as part of the department's
monitoring of the implementation of its system, efforts to monitor and
evaluate how the safeguards specifically are being implemented by lower-
level organizations across the department. DOD's comments are reprinted
in appendix III.
Background:
The General Schedule (GS) is the federal government's primary pay and
classification system for white-collar employees. Under this system,
federal employees are paid according to governmentwide rules and
procedures, and federal positions are classified according to the
difficulty and responsibility of the work performed. The GS system was
created in 1949, when most federal positions involved clerical work or
revolved around the execution of established, stable processes--for
example, posting census figures in ledgers or retrieving taxpayer
records from vast file rooms. Over time, however, federal positions
have become increasingly specialized and more highly skilled. In light
of this change, a number of federal agencies have attempted to provide
managers with greater flexibility in hiring and awarding pay raises to
employees by implementing human capital initiatives, such as
performance management systems, that reward employees' performance and
contribution to the agency's mission. The need for human capital reform
regarding these systems has been the subject of a number of previous
GAO reviews.[Footnote 20] These reviews have noted, for example, that
federal agencies must have modern, effective, credible, and validated
performance management systems that are capable of supporting pay and
other personnel decisions, and that pay for performance works only with
adequate safeguards and appropriate accountability mechanisms in place
to ensure that the safeguards are implemented in a fair, effective, and
credible manner.
In November 2003, the Congress included a provision in the National
Defense Authorization Act for Fiscal Year 2004 providing DOD with the
authority to establish a pay-for-performance management system as part
of NSPS.[Footnote 21] In April 2004, the Secretary of Defense appointed
an NSPS Senior Executive to, among other things, design, develop, and
implement NSPS. Under the Senior Executive's authority, the PEO was
established as the central policy and program office for NSPS. The
PEO's responsibilities include designing the human resource/pay-for-
performance systems, developing communication and training strategies,
modifying personnel information technology, and preparing joint
enabling regulations and internal DOD implementing regulations, called
implementing issuances. As the central DOD-wide program office, the PEO
also directs and oversees the four components' NSPS program managers,
who report to their parent components and the PEO. These program
managers serve as their components' NSPS action officers and also
participate in the development, planning, implementation, and
deployment of NSPS.
Beginning in April 2006, DOD began phasing (or spiraling) civilian
employees into NSPS;[Footnote 22] however, in January 2008 the National
Defense Authorization Act for Fiscal Year 2008 prohibited the Secretary
of Defense from converting more than 100,000 employees to NSPS in any
calendar year and excluded Federal Wage System employees from coverage
under NSPS.[Footnote 23] Further, in March 2009, DOD announced that it
would delay the conversion of additional organizations to NSPS pending
the outcome of a joint review of the system by DOD and OPM. According
to DOD, this decision affected roughly 2,000 employees in organizations
scheduled to convert to NSPS during the spring of 2009. As a result of
these and other legislative changes that resulted in revisions to the
NSPS regulations, the PEO has not developed new timelines for phasing
any additional civilian employees into NSPS. As table 1 shows,
according to DOD, almost 220,000 civilian employees have been phased
into NSPS as of September 2009.
Table 1: Number of DOD Civilian Employees Phased into NSPS, as of
September 2009:
Spiral: 1.1;
Army: 2,666;
Air Force: 3,187;
Navy: 4,828;
Fourth Estate: 1,611;
Total number of employees: 12,292.
Spiral: 1.2;
Army: 18,084;
Air Force: 38,693;
Navy: 10,087;
Fourth Estate: 9,239;
Total number of employees: 76,103.
Spiral: 1.3;
Army: 28,582;
Air Force: 1,102;
Navy: 8,559;
Fourth Estate: 391;
Total number of employees: 38,634.
Spiral: 2.1;
Army: 11,103;
Air Force: -;
Navy: 8,194;
Fourth Estate: 85;
Total number of employees: 19,382.
Spiral: 2.2;
Army: 20,175;
Air Force: -;
Navy: 22,487;
Fourth Estate: 15,145;
Total number of employees: 57,807.
Spiral: 2.3;
Army: 483;
Air Force: -;
Navy: 14,128;
Fourth Estate: 38;
Total number of employees: 14,649.
Spiral: 2.4;
Army: -;
Air Force: -;
Navy: 294;
Fourth Estate: 15;
Total number of employees: 309.
Spiral: Total number of employees;
Army: 81,093;
Air Force: 42,982;
Navy: 68,577;
Fourth Estate: 26,524;
Total number of employees: 219,176.
Source: DOD.
Note: In June 2009, we reported that according to DOD, about 212,000
civilian employees were under NSPS. See GAO, Human Capital: Continued
Monitoring of Internal Safeguards and an Action Plan to Address
Employee Concerns Could Improve Implementation of the National Security
Personnel System, GAO-09-840 (Washington, D.C.: June 25, 2009).
According to a PEO official, no additional organizations have converted
to NSPS since March 2009 and the growth of the NSPS workforce is due to
routine hiring, transfer, reassignment, and promotion actions into
organizations already under NSPS.
[End of table]
The NSPS performance management process is ongoing and consists of
several phases that are repeated during each annual performance cycle.
The process begins with a planning phase that involves supervisors (or
rating officials) and employees working together to establish
performance plans. This includes developing job objectives--the
critical work employees perform that is aligned with their
organizational goals and focused on results--and identifying
contributing factors--the attributes and behaviors that identify how
the critical work established in the job objectives is going to be
accomplished (e.g., cooperation and teamwork). After the planning phase
comes the monitoring and developing phase, during which ongoing
communication between supervisors and employees occurs to ensure that
work is accomplished; attention is given to areas that need to be
addressed; and managers, supervisors, and employees have a continued
and shared understanding of expectations and results. In the rating
phase, the supervisor prepares a written assessment that captures the
employee's accomplishments during the appraisal period. In the final--
or reward--phase, employees should be appropriately rewarded or
compensated for their performance with performance payouts. During this
phase, employee assessments are reviewed by multiple parties to
determine employees' ratings and, ultimately, performance payouts.
The performance management process under NSPS is organized by pay
pools. A pay pool is a group of employees who share in the distribution
of a common pay-for-performance fund.[Footnote 24] The key participants
that make up pay pools are the employee, supervisor, higher-level
reviewer, pay pool panel, pay pool manager, performance review
authority, and, in some instances, the sub-pay pool,[Footnote 25] as
shown in figure 1.
Figure 1: Example of NSPS Pay Pool Organization:
[Refer to PDF for image: flowchart of NSPS pay pool organization]
Source: DOD.
[End of figure]
Within a pay pool, each participant has defined responsibilities under
the performance management process:
* Employees are encouraged to be involved throughout the performance
management cycle. This includes initially working with their
supervisors to develop job objectives and identify associated
contributing factors; identifying and recording accomplishments and
results throughout the appraisal period; and participating in interim
reviews and end-of-year assessments, for example, by preparing a self-
assessment of their performance during the annual appraisal period.
* Supervisors (or rating officials) are responsible for effectively
managing the performance of their employees. This includes clearly
communicating performance expectations; aligning performance
expectations and employee development with organization mission and
goals; working with employees to develop written job objectives that
reflect expected accomplishments and contributions for the appraisal
period and identifying applicable contributing factors; providing
employees meaningful, constructive, and candid feedback relative to
performance expectations, including at least one documented interim
review; making meaningful distinctions among employees based on
performance and contribution; and providing recommended ratings of
record, share assignments, and payout distributions to the pay pool.
* The higher-level reviewer, typically the rating official's
supervisor, is responsible for reviewing and approving job objectives
and recommended employee assessments. The higher-level reviewer is the
first step in ensuring consistency of ratings because this individual
looks across multiple ratings.
* The pay pool panel (or, in some cases, the sub-pay pool panel) is a
board of management officials who are usually in positions of line
authority or in senior staff positions with resource oversight for the
organizations, groups, or categories of employees making up the pay
pool membership.[Footnote 26] The primary function of the pay pool
panel is the reconciliation of ratings of record, share distribution,
and payout allocation decisions. For example, the pay pool panel may
adjust a supervisor's recommended rating of record in order to help
ensure the equity and consistency of ratings across the pay pool.
* Each pay pool has a manager who is responsible for providing
oversight of the pay pool panel. The pay pool manager is the final
approving official of the rating of record. Performance payout
determinations may be subject to higher management review by the
performance review authority[Footnote 27] or equivalent review process.
* Finally, the performance review authority provides oversight of
several pay pools and addresses the consistency of performance
management policies within a component, major command, field activity,
or other organization as determined by the component.
DOD Continues to Make Progress, but Implementation of Some Safeguards
Could Be Improved, and Continued Monitoring of the System's
Implementation, Including the Safeguards, Is Needed:
DOD continues to take some steps to implement each of the safeguards we
reported on in September 2008. However, opportunities exist to
continually involve employees in the system's implementation, and
implementation of some safeguards--for example, providing effective
training--could be improved. Also, we previously reported that
continued monitoring of the safeguards was needed to help ensure that
DOD's efforts were effective as implementation of NSPS proceeded.
However, we found that while DOD monitors some aspects of the
implementation of NSPS, it does not monitor how the safeguards
specifically are implemented across the department. Because DOD does
not monitor the safeguards' implementation, decision makers in DOD lack
information that could be used to determine whether the department's
actions are effective and whether the system is being implemented in a
fair, equitable, and credible manner.
Implementation of Some Safeguards Could Be Improved:
Involve Employees in the Design and Implementation of the System:
DOD has taken a number of steps to involve employees and stakeholders
in the design and implementation of NSPS. In our September 2008 report,
we noted that DOD solicited comments from employees and unions
representing DOD employees during the design of NSPS. We also noted
that DOD involved employees during the implementation of the system in
workshops and other efforts aimed at refining the system's performance
factors. DOD continues to take such steps. For example:
* DOD solicited comments from employees and unions on the system's
final rule,[Footnote 28] which was published in the Federal Register in
September 2008. According to the Federal Register, the final
regulations, which became effective in November 2008, include revisions
based on 526 comments submitted during the public comment period and on
comments from 9 of the department's 10 unions with national
consultation rights.
* DOD involved employees in efforts to improve the usability of the
automated tools that support the NSPS performance and pay pool
management processes. Specifically, the PEO and the department's
Civilian Personnel Management Service held a series of meetings with
employees, rating officials, pay pool managers, and human resource
practitioners in early 2008 to address concerns regarding the usability
of the automated tools. These meetings allowed the department to gather
requirements for the next version of the NSPS automated tools based on
lessons learned and user input. Subsequently, DOD established six
separate working groups to develop and evaluate the requirements for
each of its automated tools. In addition, DOD initiated separate
efforts to enhance the usability of the Performance Appraisal
Application--the DOD-wide tool for employee self-assessments and
appraisals. Specifically, the contractor that developed the Performance
Appraisal Application enlisted the assistance of software usability
experts to evaluate the tool and recommend changes that would enhance
users' experience with it. As a part of this effort, the contractor
observed and worked with employees and rating officials to identify
changes that could be made to the Performance Appraisal Application to
make it more user-friendly. DOD also tested the functionality and
usability of the enhancements that were made to the Performance
Appraisal Application with over 300 users.
* DOD has taken steps to involve the components in the implementation
of NSPS through biweekly conference calls held at key phases of the
performance management process. According to the PEO, during these
calls, PEO and Civilian Personnel Management Service representatives
discuss topics submitted by the components, respond to questions
regarding such things as NSPS policy and the system's automated tools,
and share lessons learned with participants. Further, according to the
PEO, these conference calls allow participants to address systemic
problems through feedback shared between different levels of the
organization.
At the locations we visited outside the continental United States, we
found that some steps were generally being taken to involve employees
in the implementation of NSPS as well. For example, officials at each
of the eight locations reported that organizations identified lessons
learned that were generally based upon employee feedback gathered
following the mock pay pool.[Footnote 29] According to these officials,
lessons learned were used to make changes to, among other things,
training materials, business rules, and the use of job objectives and
contributing factors. For example, two locations limited the number of
contributing factors employees should use in their performance plans
based upon lessons learned, while one location responded to employee
feedback regarding a lack of time to devote to NSPS by mandating that
employees be allowed to take time to complete NSPS training.
While DOD has taken a number of steps to involve employees in the
design and implementation of NSPS thus far, as stated above, we note
that one way the department could continue to involve employees as
implementation of the system proceeds is to develop and implement an
action plan to address employees' perceptions of NSPS, as we
recommended in our first assessment of NSPS. However, DOD has not yet
done so, which we discuss further in the second objective of this
report.
Link Employee Objectives to the Agency's Strategic Goals and Mission:
DOD continues to take steps to link employee job objectives to the
agency's strategic goals, mission, and desired outcomes. As we noted in
our 2008 report, DOD's automated tool for employee self-assessments and
appraisals--the Performance Appraisal Application--provides a
designated area for the mission of the employee's command to be
inserted as a guide while employees compose their job objectives and
self-assessments. In May 2009, DOD published its evaluation of NSPS for
2008, entitled National Security Personnel System (NSPS) - 2008
Evaluation Report, which included an evaluation of employee performance
plans to determine the extent to which employee job objectives are
aligned with higher-level organizational goals and thus ensure that
employee performance contributes to the achievement of organizational
success. The evaluation included 240 employee performance plans
encompassing a range of job series, pay schedules, pay bands, and
organizations within each of the four components. The evaluation found
that 95 percent of the objectives were strongly aligned to higher-level
goals and demonstrated a clear, direct, and strong linkage to the
organizational mission or relevant strategic goals.
During our site visits, we found that the organizations were taking
steps to ensure that employees understood how their job objectives link
to the organization's strategic goals. This was generally accomplished
through documentation requirements in the Performance Appraisal
Application and reinforced during employees' discussions with their
supervisors. Some organizations have taken additional steps to ensure
that employee job objectives link to the organization's strategic
goals. For example, at one location we visited the commanding general
issued a memorandum to managers emphasizing the importance of ensuring
that employee objectives are linked to the command's mission and
objectives and that employees understand their roles in achieving those
objectives. However, officials at five locations also reported that
employees do not always understand this linkage.
Training and Retraining in the System's Implementation and Operation:
DOD continues to take steps to provide employees with required and
other training on the implementation and operation of the NSPS
performance management system, but has not yet evaluated the
effectiveness of the training that it provides. In our September 2008
report, we noted that DOD encouraged employees who were transitioning
to NSPS to receive training that covered skills and behaviors necessary
to implement and sustain NSPS; foster support and confidence in the
system; and facilitate the transition to a performance-based, results-
oriented culture. DOD and each of the components continue to take such
steps to provide employees with required and other training on the
system, including introductory training for employees converting to
NSPS and sustainment training for employees already under the system.
While the components are responsible for providing employees with
training on the NSPS performance management system, the PEO supports
their efforts by offering a variety of departmentwide training courses
and other materials. For example, Web-based training modules that the
PEO has developed, such as its NSPS 101 and iSuccess courses (see fig.
2 for sample screen shots), provide employees with basic knowledge
about NSPS and performance management principles in general, and are
used by employees to develop their job objectives. As another example,
the PEO developed training guides to educate employees on changes to
the NSPS classroom materials resulting from the revised NSPS
regulations and implementing issuances. The PEO also developed a Web
site for accessing NSPS learning materials, resources, and other tools.
In addition, we found that the Air Force has begun incorporating
training on NSPS as a normal part of its operations and is working to
embed NSPS topics in the regular training provided to Air Force
civilians and servicemembers.
Figure 2: Sample Screen Shots from the NSPS 101 and iSuccess Training
Modules:
[Refer to PDF for image: sample computer screenshots]
Source: DOD.
[End of figure]
Although DOD and the components continue to take steps to provide
employees with training on NSPS, the department has not yet evaluated
the effectiveness of the training provided. We previously reported that
it is increasingly important for agencies to measure the real impact of
training and thus evaluate their training--for example, by establishing
clear goals about what the training is expected to achieve along with
agreed-upon measures or performance indicators to ascertain progress
toward achieving those goals.[Footnote 30] DOD has outlined the
fundamental requirements, or goals, of the training that it provides to
employees on NSPS. Specifically, DOD has noted that for NSPS, a
training program must be implemented that enables employees to
understand better how to succeed, and enables supervisors to
communicate performance expectations to their employees, provide
feedback to them on their performance against these expectations, and
tell them what steps they can take to improve their performance and
competencies and manage their careers. However, while DOD has
undertaken efforts to understand employees' perceptions of its
training, the department has not yet evaluated the effectiveness of the
training that it provides. For example, in early 2009 the PEO conducted
what PEO officials describe as an ad hoc study of training needs. The
PEO's study consisted of conducting sensing sessions with 120 human
resource practitioners at 11 locations across the department.[Footnote
31] According to the PEO, the purpose of these sessions included
obtaining feedback on existing NSPS learning products and support and
exploring options for next generation products. While the PEO's study
identified some needed improvements, it does not constitute an
evaluation of the department's training--for example, because it did
not assess the department's progress toward achieving the goals
specified for the training.
As another example, DOD's 2008 evaluation report also highlighted
deficiencies with the department's training on NSPS.[Footnote 32]
Specifically, the report notes that without effective communication and
training, NSPS cannot achieve its goal of being a credible and trusted
system. Further, three of the report's six key recommendations focus on
the need to enhance the effectiveness of the training provided to
employees on NSPS: (1) provide more training on the performance
management system; (2) provide high-level training for employees and
supervisors that explains the pay pool process; and (3) hold mock pay
pool panels, which serve as refreshers for continuing panel members and
as training for new members. However, like the PEO's study, DOD's 2008
evaluation report does not constitute an evaluation of the department's
training--for example, because it did not include an in-depth
assessment of DOD's training and also did not assess the department's
progress toward achieving the goals for the training, per agreed-upon
measures or performance indicators. Of the components, we found that
only the Army has taken some steps to evaluate the training it provides
to employees on the system. Specifically, the Army assesses the
adequacy of NSPS training during on-site reviews that it conducts as
part of its implementation of the system. The Army conducted three such
assessments during 2008 and an additional four such assessments during
2009.
With respect to our site visits, although we found that each of the
eight locations provided training on NSPS to employees, officials at
each location also expressed concerns over the effectiveness of the
training provided. For example, officials at seven locations told us
that additional training was needed on writing job objectives or
employee self-assessments under the system, while other officials noted
that additional training was needed on the pay pool process, use of the
system's automated tools, and how the reconsideration process works.
Similarly, officials at two locations raised concerns that the training
they received did not provide them with the skills they needed to use
the Performance Appraisal Application. For example, officials told us
that they received training too early and had either forgotten it or
the training had become outdated by the time they actually used the
Performance Appraisal Application. Further, some program officials
raised concerns about their organizations' ability to provide employees
with adequate training on the system when the employees are located
outside the continental United States. For example, program officials
at one location in Germany reported challenges providing employees
located in the field with training on NSPS because they lack the
resources to send NSPS trainers to those locations. However, until DOD
evaluates its training, it will not be able to determine whether the
training meets the needs of its employees or the department is making
progress toward achieving the goals it specified for the training.
Ongoing Performance Feedback and Dialogue between Supervisors and
Employees:
DOD continues to take steps to ensure that employees receive timely
performance feedback that is meaningful, constructive, and in
accordance with the department's requirements. In our first assessment
of NSPS we noted that DOD's implementing issuances required at least
one documented interim performance review and an annual performance
appraisal and that the Performance Appraisal Application allowed
supervisors and employees to document these feedback sessions. Since
then, DOD has taken additional steps to enhance the Performance
Appraisal Application by modifying the tool to allow supervisors and
employees to identify where they are in the performance appraisal
process and help them accomplish required actions in a timely manner.
During our site visits, officials at all eight locations told us that
NSPS helps ensure the occurrence of performance feedback between
employees and supervisors. For example, officials noted that use of the
Performance Appraisal Application encourages employee feedback by
allowing employees to document and track feedback sessions, and that
NSPS encourages direct discussions about performance-related issues,
such as developing effective job objectives and establishing
performance expectations.
System to Better Link Individual Pay to Performance in an Equitable
Manner:
DOD continues to take steps to better link individual pay to
performance as well. As we noted in our 2008 report, the NSPS
performance management system uses a multirating system of five rating
categories--of which the lowest rating is "1" (unacceptable
performance) and the highest rating is a "5" (role model performance)-
-that allows distinctions to be made in employee performance and
therefore compensation. Since then, DOD added details to the NSPS
regulations to facilitate uniform, equitable practices across the
department that accord with merit system principles. These include
specifying specific share assignment ranges, rounding rules for
converting raw performance scores to ratings, and formulas for
determining share value and the calculation of performance payouts
under NSPS. DOD also clarified that a common share value should apply
throughout an entire pay pool. According to the PEO, these changes, in
addition to the higher-level review of performance expectations,
recommendations for ratings of record, share assignment, and payout
distribution have helped to promote a more equitable method for
appraising and compensating employees.
However, during our site visits, officials at seven of the eight
locations told us that they saw the potential for factors other than
performance to influence employees' ratings, such as the quality of
employees' and supervisors' writing skills. For example, rating
officials at one location commented that NSPS does not reward employees
based on their performance but rather on how well employees and
supervisors can communicate in writing what the employee achieved
during the performance management cycle. Similarly, at another
location, a pay pool panel member told us that the paperwork submitted
to the panel by both the employee and the supervisor must be of very
high quality because it can be difficult to defend a high rating
recommended for an employee if the assessments are poorly written.
DOD's 2008 evaluation report also highlighted concerns from employees
and managers over the department's success in linking pay to
performance under NSPS. For example, DOD's report noted that while some
employees believed that they saw some level of pay for performance
under NSPS, others were uncertain. Further, DOD's report also noted
that some managers observed that the quality of written assessments
contributed significantly to the way in which ratings were
substantiated.
Means to Ensure That Adequate Agency Resources Are Allocated for System
Design, Implementation, and Administration:
We found that DOD also continues to take steps to ensure that adequate
agency resources are allocated to NSPS. According to 5 U.S.C. §
9902(e)(4), to the maximum extent practicable, for fiscal years 2004
through 2012, the overall amount of money allocated for compensation of
civilian employees in organizations under NSPS shall not be less than
the amount that would have been allocated under the GS system. To meet
the requirements of 5 U.S.C. § 9902(e)(4), DOD's implementing issuances
require that the components certify in writing to the Deputy Secretary
of Defense through the Under Secretary of Defense for Personnel and
Readiness that the amount expended for NSPS performance-based pay
increases is no less than what would have been expended had these
positions not been converted into NSPS. Following the 2008 NSPS
performance management cycle, each of the components certified that it
met this requirement.
DOD also continues to capture NSPS implementation costs, and for fiscal
year 2008, the PEO reported that NSPS implementation costs were about
$61.8 million. According to the PEO, continuing implementation of NSPS
will result in some additional program implementation costs, such as
for training for NSPS, conducting outreach to employees and others, and
improving the system's automated tools. However, the PEO estimates that
once the conversion of all non-bargaining unit employees is complete,
the system's implementation costs will decrease significantly unless
there is a decision to convert bargaining unit employees. Thereafter,
according to the PEO, the cost of administering NSPS will be no
different than that of any other personnel system.
Predecisional Internal Safeguards to Determine if Rating Results Are
Consistent, Equitable, and Nondiscriminatory:
In our 2008 report, we recommended that DOD take steps to better ensure
the consistency and equity of the performance management process by
requiring a third party to perform predecisional demographic and other
analysis of the pay pool results. DOD did not concur with our
recommendation, stating that its postdecisional analysis of the rating
results was useful for identifying barriers and any needed corrective
action. DOD also stated that if the information obtained from a
postdecisional demographic analysis demonstrated that the results were
not fair or equitable, for any reason, the process used to achieve
those results could be examined with the intent to identify and
eliminate barriers to a fair and equitable outcome.
However, our review of the postdecisional analyses that the PEO and
each of the components completed following the 2007 NSPS performance
management cycle and the analyses that each of the eight organizations
we visited for our review completed following the most recent
performance management cycle in 2008 found these analyses were
inconsistent, did not always include an analysis of the rating results
by demographics, and were generally conducted at too high a level to
provide decision makers with sufficient information to identify
potential barriers or corrective actions. For example, we found that
following the 2007 performance management cycle, the PEO analyzed the
rating results for more than 100,000 employees by select demographic
groups, such as race, gender, ethnicity, age, veteran status, and
targeted disability, but limited its analysis to the aggregate data
from its pay pools. That is, the PEO did not analyze the rating results
at the level where decisions are made--in the case of NSPS ratings and
payouts, the pay pool level. Similarly, in analyzing the postdecisional
analyses that the components conducted following the 2007 performance
management cycle, we found inconsistencies in their approaches,
primarily because the components were allowed to develop their own
approaches for conducting this analysis. For example, only the Army and
Fourth Estate included an analysis of the rating results by
demographics as part of their respective postdecisional analyses.
However, we also found that neither the Army's nor the Fourth Estate's
demographic analysis of the ratings provided decision makers with
sufficient information to identify possible barriers or corrective
actions that could be taken to address such barriers. As with the PEO,
this problem results because neither the Army nor the Fourth Estate
conducted its analysis at the pay pool level. Of the eight locations we
visited for our review, we found that only one organization's
postdecisional analysis following the 2008 performance management cycle
included an analysis of its ratings results by demographics.
Since we issued our 2008 report, DOD has taken steps to promote a
degree of consistency in its postdecisional analysis of NSPS ratings
and payout data. Specifically, in December 2008, DOD revised its
implementing issuance to require the heads of DOD components to conduct
an annual analysis of NSPS performance ratings and payouts for
subordinate elements, and issue guidance to lower echelons and
otherwise act to identify, examine, and remove barriers to similar
rating and payout potential for demographic and other groups in the
workforce. Further, in May 2009, the PEO issued guidance, entitled
Guidance for Conducting Annual Analysis of NSPS Performance Ratings and
Payouts, in order to provide the components with a framework and
suggested approaches for conducting their annual analysis and to serve
as a starting point for identifying and examining barriers. For
example, the guidance notes that the NSPS performance management
system's rating and payout process has four main outcomes--the rating
of record, number of shares awarded, payout, and the distribution of
the payout--and that each outcome should be reviewed. The guidance also
notes that analysis is best done at the level where decisions are made-
-in the case of NSPS ratings and payouts, the pay pool level. Further,
the guidance:
* expresses the expectation that as the components conduct their
analyses, changes and improvements to the guidance will be made;
* is careful to ensure that the components understand base parameters
for conducting the analysis so it is conducted in a manner that is
methodologically sound;
* encourages consultation with experts, such as statisticians and human
resources researchers, to assist with determining the most suitable
analytical models to employ, the statistical tools to utilize, and the
standards to adopt in relation to understanding, measuring, and
reporting significant findings; and:
* makes responsibility for conducting the analysis a shared
responsibility between various offices, including the components'
legal, equal employment opportunity, and human resources offices, but
notes that the components should consider tasking their Office of
General Counsel or Office of the Judge Advocate General, whose staff
are well positioned to ensure that the components are in compliance
with applicable statutes, regulations, and policies, with primary
responsibility for conducting the analysis and ensuring that adequate
resources are provided in support of the function.
While issuance of the May 2009 guidance represents a noteworthy step,
the guidance does not address all steps suggested by the Equal
Employment Opportunity Commission for identifying and addressing
potential barriers to fair, consistent, and equitable ratings. The
Equal Employment Opportunity Commission's Instructions to Federal
Agencies for EEO Management Directive 715[Footnote 33] provides
guidance that agencies can use in identifying and addressing potential
barriers.[Footnote 34] The instructions state that "barrier
identification and elimination is the process by which agencies
uncover, examine, and remove barriers to equal participation at all
levels of the workforce." Management Directive 715 further states that
"where it is determined that an identified barrier serves no legitimate
purpose with respect to the operation of an agency, this Directive
requires that agencies take immediate steps to eliminate the barrier."
In conducting their analysis, the components' data may uncover barriers
or other potential problems. However, understanding why the barrier or
problem exists, or what to do to address it, may require that the
components take additional steps. To identify and eliminate potential
barriers, the directive outlines a four-step process: (1) analyzing
workforce data to identify potential barriers; (2) investigating actual
barriers and their causes; (3) eliminating barriers, which includes
devising a plan for improvement and developing overall objectives for
barrier elimination, with corresponding action items, responsible
personnel, and target dates; and (4) assessing the success of the plan.
The PEO's guidance aims to promote a degree of uniformity and
standardization in conducting postdecisional analyses. However, the
PEO's guidance does not specify what process the components should
follow to investigate potential barriers and their causes, nor does it
specify a process for eliminating barriers that are found. By not
specifying such steps in its guidance, the components may not follow a
consistent approach when investigating barriers, which could hinder
their efforts to eliminate them.
While not predecisional, we recognize that DOD's approach does provide
some benefits, some of which are similar to those of a predecisional
analysis. For example, DOD's approach lays out a method of analyzing
ratings that would address some of the merit principles in 5 U.S.C. §
2301--for example, that employees should receive fair and equitable
treatment in all aspects of personnel management and that employees
should be protected against arbitrary action, personal favoritism, or
coercion for partisan political purposes.[Footnote 35] However, as
stated previously, because DOD does not specify what process the
components should follow to investigate and eliminate potential
barriers, the components may not follow a consistent approach, which
could hinder their efforts to ensure fair, consistent, and equitable
ratings.
Reasonable Transparency of the System and Its Operation:
While DOD continues to take steps to ensure a reasonable amount of
transparency in its implementation of NSPS, concerns about the overall
transparency of the system continue to exist. To improve the
transparency of the NSPS performance management system, our September
2008 report recommended that DOD require commands to publish the final
rating results to employees. DOD concurred with our recommendation and,
in November 2008, amended its NSPS regulations and implementing
issuances to require commands to publish the final rating results to
employees. Under DOD's revised guidance, performance review authorities
are required to communicate the general pay pool results to the NSPS
workforce in writing. At a minimum, this includes the number of pay
pools (if aggregate pay pool results are necessary), the number of
employees rated, the rating and share distributions, the average
rating, the average share assignment, the share value (or average share
value), and the average payout expressed as a percentage of base
salary. At the eight locations we visited, we found that each of pay
pools shared this information with employees following the 2008 NSPS
performance management cycle.
DOD continues to take other steps to ensure a reasonable amount of
transparency of the NSPS performance management system. In May 2009,
the PEO launched "NSPS Connect," a centralized Web portal for
employees, managers, and others to access NSPS products, such as online
training courses, fact sheets, tips sheets, and information on the
system's automated tools. The PEO also continues to take steps to
collect and share lessons learned on the department's experiences
implementing NSPS and facilitate lessons learned briefings with the
components following each performance management cycle. Further, the
PEO continues to report periodically on internal assessments and
employee survey results relating to the NSPS performance management
system. For example, in May 2009, the PEO published the results of its
2008 evaluation of NSPS. Similarly, as we previously reported, DOD
posts the results of its survey of civilian employees on a Web site
that is accessible to DOD employees, supervisors, and managers.
Officials at each of the eight locations we visited told us that
efforts were being made to help ensure transparency of the NSPS
performance management system and the rating process. According to
officials, among the steps being taken to help ensure transparency, for
example, were establishing multiple communities of practice,
disseminating business rules and other guidance on NSPS to employees
and managers under the system, and publishing monthly newsletters on
NSPS. At seven of the locations, officials told us that town hall
meetings were held to keep employees informed of NSPS-related
developments, and officials at six locations told us that mock pay pool
panels were held to show employees how the pay pool process works.
However, our site visits revealed some concerns about the overall
transparency of the system. For example, at three locations officials
expressed concerns over a lack of transparency with regard to their pay
pools' business rules, indicating that their business rules either had
not been published or were published well after the performance
management cycle had begun. At one location, pay pool panel members
told us that though it was 6 months into the current performance
management cycle, they did not yet have copies of their business rules.
Similarly, rating officials at four locations told us that they did not
understand what constituted a rating of "4" because neither their pay
pools nor business rules provided clear criteria.
Meaningful Distinctions in Individual Employee Performance:
Although our site visits revealed concerns over the extent to which
meaningful distinctions in individual employee performance are being
made under NSPS, DOD has taken some steps that include addressing a
recommendation we made in our 2008 report aimed at encouraging the use
of all available rating categories. Specifically, at all eight
locations we visited, officials told us that they did not believe NSPS
was being implemented in a manner that encouraged meaningful
distinctions in individual employee performance. For example, officials
at four locations told us that they were hesitant to give ratings lower
than a "3," and officials at six locations told us that they believed
that there was a forced distribution of the ratings or manipulation of
the ratings in order to achieve a predetermined quota. Further, at one
location we found that management stressed the importance of
maintaining employee share value at above 2.0, which would result in a
higher payout, regardless of the employee's rating. According to the
PEO, any effort to limit share value is a roundabout way to establish
preset limits on ratings and would constitute forced distribution,
which the NSPS regulations prohibit.[Footnote 36] However, in response
to concerns about the potential for the forced distribution of
performance ratings under NSPS, in April 2009 the department posted to
its NSPS Web site a fact sheet emphasizing that the forced distribution
of ratings is prohibited under NSPS and describing how meaningful
distinctions in performance are made under the system. DOD's fact sheet
provides guidance specifying what constitutes the forced distribution
of ratings, why the forced distribution of ratings is prohibited, how
use of standard performance indicators minimizes the potential for
individual bias or favoritism, and how organizations can best apply
this information when rating and rewarding employee performance under
NSPS. DOD has also noted that if employees believe their rating did not
result from meaningful distinctions or are unfair, the system affords
them the opportunity to challenge their ratings through a formal
process known as reconsideration. See appendix II for further
information on the NSPS reconsideration process.
Although DOD Monitors Some Aspects of the Implementation of NSPS, It
Does Not Monitor How the Safeguards Specifically Are Implemented across
the Department:
Within DOD, both the PEO and the components are responsible for
monitoring the implementation of NSPS. As part of its efforts to
monitor the implementation of NSPS, the PEO conducts broad, annual
evaluations of NSPS to determine whether the system is on track to
achieve certain goals, or key performance parameters,[Footnote 37] by,
among other things, monitoring employee perceptions of the system using
DOD's survey of civilian employees. In May 2009, the PEO published its
first evaluation of NSPS, which focused on determining whether NSPS, as
implemented in spiral 1 organizations, was on track to achieve some of
the goals specified by DOD and if any improvements were
needed.[Footnote 38] While some of DOD's goals for the system lend
themselves to comparisons to the safeguards--for example, one of its
goals is ensuring a credible and trusted system (which could align with
the transparency safeguard)--PEO officials stated that to date, their
focus has been limited to understanding how the components have
generally implemented NSPS and not on monitoring or assessing the
components' implementation of the safeguards.
With respect to the components, DOD's implementing issuances state that
the heads of DOD components are accountable for the manner in which
management in their organizations carries out NSPS policy, procedures,
and guidance. However, we found that only the Army has taken steps
similar to the PEO to assess whether it is on track to achieve DOD's
goals for the system--the other components have not done so.
Furthermore, none of the components monitors how the safeguards
specifically are implemented within their organizations because there
is no requirement to do so.
We have previously reported that transitioning to a more performance-
oriented pay system is a huge undertaking that requires constant
monitoring.[Footnote 39] Further, in our 2008 assessment of NSPS, we
noted that continued monitoring of the safeguards was needed to ensure
that DOD's actions were effective as implementation of NSPS proceeded.
While DOD's efforts to date have helped provide decision makers with
some information on how the department is implementing NSPS, including
potential areas for changes or improvements, they do not provide
decision makers in DOD and the Congress with information to determine
whether the safeguards specifically have been implemented effectively.
Without monitoring the safeguards' implementation, decision makers in
DOD and the Congress lack information that could be used to determine
whether the department's actions are effective and whether the system
is being implemented in a fair, equitable, and credible manner. For
example, in conducting our review, we identified some issues related to
the implementation of the safeguards that illustrate the need to
monitor their implementation. These include the following:
* Ensuring that adequate agency resources are allocated for the
system's design, implementation, and administration. We found that each
of the components generally lacks visibility over the reasons why
organizations have supplemented their pay pool funds. For example, Air
Force NSPS program officials told us that for the 2009 payout, while
they knew that 8 of the Air Force's 18 major commands supplemented
their pay pool funds, they did not know the specific reasons why.
According to PEO officials, organizations might elect to supplement
their pay pool funds for a variety of reasons--for example, to recruit
or retain employees or to compete with other organizations for talent.
However, because they do not understand the reasons why pay pools
supplement their pay pool funding--which could help DOD and the
components understand the extent to which adequate resources have been
allocated to the system--decision makers cannot identify or assess any
trends in these practices. Indeed, DOD's 2008 evaluation report notes
that some employees in organizations that supplemented their pay pools'
funding questioned whether the higher funding levels could be sustained
over the long term.
* Ensuring reasonable transparency of the system and its operation. We
found evidence that three of the pay pools we visited deviated from
their business rules during the last performance management cycle,
indicating a lack of transparency of the performance management process
in some instances. DOD's guidance states that a pay pool's business
rules are the guiding principles or ground rules that are used
throughout the pay pool process, that pay pool panels should establish
these principles and hold one another accountable for following them,
and that a pay pool's policies--which would include its business rules-
-will be made available to employees before the end of the performance
cycle. However, at three of the locations we visited, we found evidence
that the pay pool had deviated from its business rules during the
course of the last performance management cycle. For example, at one
location the pay pool's business rules required all recommended ratings
be reviewed, noting that the pay pool panel will ensure that all
employees receive appropriate consideration and that ratings are fair
and consistent. However, officials we spoke with at that location told
us that they did not review all recommended ratings in accordance with
their business rules. Rather, only the recommended ratings of "4" or
"5" were reviewed. As another example, we found evidence that a pay
pool at another location used different criteria than what was
specified in its business rules for allocating the number of shares to
employees. According to component-level NSPS program officials, in
order to ensure transparency of the system, pay pools should not
deviate from their business rules once those rules are published.
However, none of the components requires its pay pools to notify it
when such an event occurs, or of the reasons why, though doing so could
help provide decision makers with information on the extent to which
pay pools are implementing the system in a manner that is transparent
to employees.
Although DOD Civilian Employees under NSPS Have Mixed Views about the
System, DOD Has Not Yet Developed and Implemented a Plan to Address
Employees' Negative Perceptions of Some Aspects of the System:
DOD civilian personnel have mixed perceptions about NSPS, and although
DOD has taken some steps toward addressing employees' concerns, it has
not yet developed and implemented an action plan to address areas where
employees express negative perceptions of the system. DOD's most recent
survey of civilian employees reveals that NSPS employees have mixed
perceptions about NSPS. The responses to questions specifically asking
about NSPS show positive perceptions about some aspects of performance
management under NSPS, including connecting pay to performance, but
show negative perceptions about other aspects of performance
management, such as the appraisal process. Further, the most recent
data indicate that the perceptions of those employees who have worked
under NSPS the longest appear to have remained largely unchanged from
the negative perceptions we reported in 2008. Moreover, during
discussion groups we held at eight locations outside the continental
United States, civilian employees and supervisors expressed consistent
concerns and negative perceptions of NSPS that are similar to those
identified in our 2008 report, although they also identified positive
aspects of the system. DOD has taken some steps to address employees'
negative perceptions of the system; however, the department has yet to
develop and implement an action plan that meets the intent of our prior
recommendation because it does not specify such things as the actions
DOD intends to take, who will be responsible for taking the action, and
the timelines for doing so. We continue to believe that implementing
such an action plan is important and note that doing so would be a step
that DOD could take to involve employees in the system's
implementation--which is one of the safeguards we previously discussed.
NSPS Employees Express Mixed Perceptions about the System:
NSPS Employees in All Spirals Have Positive Views of Some Aspects of
Performance Management but Negative Views of Other Aspects:
According to DOD's most recent survey data, some NSPS employees
recognize that positive aspects of performance management, such as
connecting pay to performance, exist under the system. For example, as
shown in table 2, DOD's survey data for 2008 indicate that an estimated
38 percent of NSPS employees agree that differences in their
performance are recognized in meaningful ways, as compared with an
estimated 33 percent of non-NSPS employees. Further, an estimated 42
percent of NSPS employees agree that pay raises depend on how well
employees perform their jobs, as compared with an estimated 25 percent
of non-NSPS employees. When asked about how poor performers are dealt
with, an estimated 34 percent of NSPS employees, versus an estimated 27
percent of non-NSPS employees, agreed that steps are taken to deal with
poor performers.
Table 2: Estimated Percentage of Responses from NSPS and Non-NSPS
Employees to Selected Questions about Performance Management in the
2008 Status of Forces Survey of Civilian Employees:
Performance management questions: Differences in performance are
recognized in meaningful ways;
Employee description: NSPS;
Percentage responding: "Agree" 38;
Percentage responding: "Neither/nor" 31;
Percentage responding: "Disagree" 28.
Performance management questions: Differences in performance are
recognized in meaningful ways;
Employee description: Non-NSPS;
Percentage responding: "Agree" 33;
Percentage responding: "Neither/nor" 32;
Percentage responding: "Disagree" 31.
Performance management questions: Pay raises depend on how well
employees perform their jobs;
Employee description: NSPS;
Percentage responding: "Agree" 42;
Percentage responding: "Neither/nor" 26;
Percentage responding: "Disagree" 30.
Performance management questions: Pay raises depend on how well
employees perform their jobs;
Employee description: Non-NSPS;
Percentage responding: "Agree" 25;
Percentage responding: "Neither/nor" 29;
Percentage responding: "Disagree" 42.
Performance management questions: Performance standards/expectations
are directly related to the organization's mission;
Employee description: NSPS;
Percentage responding: "Agree" 70;
Percentage responding: "Neither/nor" 21;
Percentage responding: "Disagree" 9.
Performance management questions: Performance standards/expectations
are directly related to the organization's mission;
Employee description: Non-NSPS;
Percentage responding: "Agree" 65;
Percentage responding: "Neither/nor" 25;
Percentage responding: "Disagree" 10.
Performance management questions: In my work unit, steps are taken to
deal with a poor performer who cannot or will not improve;
Employee description: NSPS;
Percentage responding: "Agree" 34;
Percentage responding: "Neither/nor" 31;
Percentage responding: "Disagree" 30.
Performance management questions: In my work unit, steps are taken to
deal with a poor performer who cannot or will not improve;
Employee description: Non-NSPS;
Percentage responding: "Agree" 27;
Percentage responding: "Neither/nor" 30;
Percentage responding: "Disagree" 38.
Performance management questions: My bonus and cash awards depend on
how well I perform my job;
Employee description: NSPS;
Percentage responding: "Agree" 61;
Percentage responding: "Neither/nor" 17;
Percentage responding: "Disagree" 23.
Performance management questions: My bonus and cash awards depend on
how well I perform my job;
Employee description: Non-NSPS;
Percentage responding: "Agree" 55;
Percentage responding: "Neither/nor" 20;
Percentage responding: "Disagree" 25.
Source: Defense Manpower Data Center.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-1 percent. The response
categories are collapsed for positive ("agree") and negative
("disagree") responses. That is, "agree" is the estimated percentage of
employees who responded either "agree" or "strongly agree," while
"disagree" is the estimated percentage of employees who responded
either "disagree" or "strongly disagree." Totals may sum to less than
or more than 100 percent as a result of collapsing the positive and
negative response categories.
[End of table]
In comparison, an estimated 47 percent of non-NSPS employees, as
compared with an estimated 44 percent of NSPS employees, agreed that
their current performance appraisal system motivates them to perform
well. Further, an estimated 34 percent of non-NSPS employees, as
compared with an estimated 29 percent of NSPS employees, agreed that
their performance appraisal system improves organizational performance.
Table 3 shows additional comparisons between NSPS and non- NSPS
employee responses to questions about performance appraisals.
Table 3: Estimated Percentage of Responses from NSPS and Non-NSPS
Employees to Selected Questions about Performance Appraisals in the
2008 Status of Forces Survey of Civilian Employees:
Performance appraisal questions: Performance appraisal is a fair
reflection of performance;
Employee description: NSPS;
Percentage responding: "Agree" : 62;
Percentage responding: "Neither/nor" 18;
Percentage responding: "Disagree" 19.
Performance appraisal questions: Performance appraisal is a fair
reflection of performance;
Employee description: Non-NSPS;
Percentage responding: "Agree" : 65;
Percentage responding: "Neither/nor" 19;
Percentage responding: "Disagree" 14.
Performance appraisal questions: In my most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Employee description: NSPS;
Percentage responding: "Agree" : 59;
Percentage responding: "Neither/nor" 16;
Percentage responding: "Disagree" 22.
Performance appraisal questions: In my most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Employee description: Non-NSPS;
Percentage responding: "Agree" : 65;
Percentage responding: "Neither/nor" 17;
Percentage responding: "Disagree" 14.
Performance appraisal questions: My current performance appraisal
system motivates me to perform well;
Employee description: NSPS;
Percentage responding: "Agree" : 44;
Percentage responding: "Neither/ nor" 28;
Percentage responding: "Disagree" 28.
Performance appraisal questions: My current performance appraisal
system motivates me to perform well;
Employee description: Non-NSPS;
Percentage responding: "Agree" : 47;
Percentage responding: "Neither/nor" 31;
Percentage responding: "Disagree" 22.
Performance appraisal questions: The performance appraisal system I am
under improves organizational performance;
Employee description: NSPS;
Percentage responding: "Agree" : 29;
Percentage responding: "Neither/nor" 36;
Percentage responding: "Disagree" 36.
Performance appraisal questions: The performance appraisal system I am
under improves organizational performance;
Employee description: Non-NSPS;
Percentage responding: "Agree" : 34;
Percentage responding: "Neither/nor" 40;
Percentage responding: "Disagree" 26.
Performance appraisal questions: Procedures for reconsidering
performance appraisal ratings are fair;
Employee description: NSPS;
Percentage responding: "Agree" : 37;
Percentage responding: "Neither/ nor" 45;
Percentage responding: "Disagree" 19.
Performance appraisal questions: Procedures for reconsidering
performance appraisal ratings are fair;
Employee description: Non-NSPS;
Percentage responding: "Agree" : 38;
Percentage responding: "Neither/nor" 45;
Percentage responding: "Disagree" 17.
Source: Defense Manpower Data Center.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-1 percent. The response
categories are collapsed for positive ("agree") and negative
("disagree") responses. That is, "agree" is the estimated percentage of
employees who responded either "agree" or "strongly agree," while
"disagree" is the estimated percentage of employees who responded
either "disagree" or "strongly disagree." Totals may sum to less than
or more than 100 percent as a result of collapsing the positive and
negative response categories.
[End of table]
Perceptions of Employees under NSPS the Longest Remain Largely
Unchanged since GAO's 2008 Report:
In our first assessment of NSPS, we reported that the results of DOD's
Status of Forces Survey of Civilian Employees indicated that the
perceptions of employees who had been under the system the longest had
become more negative on questions related to performance management.
However, the results of DOD's most recent administration of the survey
in 2008 indicate that spiral 1.1 employee perceptions are about the
same as the May 2007 survey, as shown in table 4. For example, from the
November 2006 through February 2008 administrations of DOD's survey,
the percentage of spiral 1.1 employees that agreed that they understood
what they had to do to be rated at a different performance level
declined from an estimated 59 percent in November 2006 to an estimated
53 percent in May 2007, then remained largely unchanged in February
2008 at an estimated 54 percent.[Footnote 40]
Table 4: Estimated Percentage of Responses from Spiral 1.1 Employees to
Selected Questions about Performance Management from the May 2006,
November 2006, May 2007, and February 2008 Administrations of the
Status of Forces Survey of Civilian Employees:
Performance management questions: Performance appraisal is a fair
reflection of performance;
Survey administration: May 2006;
Percentage of spiral 1.1 employees responding: "Agree" 67;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 20;
Percentage of spiral 1.1 employees responding: "Disagree" 12.
Performance management questions: Performance appraisal is a fair
reflection of performance;
Survey administration: November 2006;
Percentage of spiral 1.1 employees responding: "Agree" 59;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 22;
Percentage of spiral 1.1 employees responding: "Disagree" 16.
Performance management questions: Performance appraisal is a fair
reflection of performance;
Survey administration: May 2007;
Percentage of spiral 1.1 employees responding: "Agree" 52;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 21;
Percentage of spiral 1.1 employees responding: "Disagree" 25.
Performance management questions: Performance appraisal is a fair
reflection of performance;
Survey administration: February 2008;
Percentage of spiral 1.1 employees responding: "Agree" 54;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 20;
Percentage of spiral 1.1 employees responding: "Disagree" 25.
Performance management questions: Differences in performance are
recognized in meaningful ways;
Survey administration: May 2006;
Percentage of spiral 1.1 employees responding: "Agree" 37;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 33;
Percentage of spiral 1.1 employees responding: "Disagree" 28.
Performance management questions: Differences in performance are
recognized in meaningful ways;
Survey administration: November 2006;
Percentage of spiral 1.1 employees responding: "Agree" 35;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 31;
Percentage of spiral 1.1 employees responding: "Disagree" 31.
Performance management questions: Differences in performance are
recognized in meaningful ways;
Survey administration: May 2007;
Percentage of spiral 1.1 employees responding: "Agree" 32;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 31;
Percentage of spiral 1.1 employees responding: "Disagree" 34.
Performance management questions: Differences in performance are
recognized in meaningful ways;
Survey administration: February 2008;
Percentage of spiral 1.1 employees responding: "Agree" 35;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 30;
Percentage of spiral 1.1 employees responding: "Disagree" 32.
Performance management questions: In most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Survey administration: May 2006[A];
Percentage of spiral 1.1 employees responding: "Agree" n/a;
Percentage of spiral 1.1 employees responding: "Neither/ nor" n/a;
Percentage of spiral 1.1 employees responding: "Disagree" n/a.
Performance management questions: In most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Survey administration: November 2006;
Percentage of spiral 1.1 employees responding: "Agree" 59;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 17;
Percentage of spiral 1.1 employees responding: "Disagree" 22.
Performance management questions: In most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Survey administration: May 2007;
Percentage of spiral 1.1 employees responding: "Agree" 53;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 17;
Percentage of spiral 1.1 employees responding: "Disagree" 29.
Performance management questions: In most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Survey administration: February 2008;
Percentage of spiral 1.1 employees responding: "Agree" 54;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 17;
Percentage of spiral 1.1 employees responding: "Disagree" 27.
Source: Defense Manpower Data Center.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent. The response
categories are collapsed for positive ("agree") and negative
("disagree") responses. That is, "agree" is the estimated percentage of
employees who responded either "agree" or "strongly agree," while
"disagree" is the estimated percentage of employees who responded
either "disagree" or "strongly disagree." Totals may sum to less than
or more than 100 percent as a result of collapsing the positive and
negative response categories.
[A] This question was not asked on the May 2006 administration of the
Status of Forces Survey of Civilian Employees.
[End of table]
In addition, when asked about the overall impact that NSPS will have on
personnel practices in DOD, spiral 1.1 employees' perceptions have
become significantly more negative since first converting to NSPS in
2006, but showed little change between the May 2007 and February 2008
surveys. Specifically, the results of the 2008 survey indicate that an
estimated 22 percent of spiral 1.1 employees responded that the overall
impact of NSPS on the department's personnel practices would be
positive, as compared to an estimated 23 percent in May 2007 and an
estimated 25 percent in November 2006. Table 5 shows a comparison of
spiral 1.1 employee responses over time about the overall impact of
NSPS on personnel practices in DOD.
Table 5: Estimated Percentage of Responses from Spiral 1.1 Employees
about the Overall Impact of the National Security Personnel System from
the May 2006, November 2006, May 2007, and February 2008
Administrations the Status of Forces Survey of Civilian Employees:
Overall Impact question: Overall, what type of impact will NSPS have on
personnel practices in the DOD?;
Survey administration: May 2006;
Percentage of spiral 1.1 employees responding: "Positive" 40;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 35;
Percentage of spiral 1.1 employees responding: "Negative" 25.
Overall Impact question: Overall, what type of impact will NSPS have on
personnel practices in the DOD?;
Survey administration: November 2006;
Percentage of spiral 1.1 employees responding: "Positive" 25;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 32;
Percentage of spiral 1.1 employees responding: "Negative" 42.
Overall Impact question: Overall, what type of impact will NSPS have on
personnel practices in the DOD?;
Survey administration: May 2007;
Percentage of spiral 1.1 employees responding: "Positive" 23;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 30;
Percentage of spiral 1.1 employees responding: "Negative" 48.
Overall Impact question: Overall, what type of impact will NSPS have on
personnel practices in the DOD?;
Survey administration: February 2008;
Percentage of spiral 1.1 employees responding: "Positive" 22;
Percentage of spiral 1.1 employees responding: "Neither/ nor" 28;
Percentage of spiral 1.1 employees responding: "Negative" 50.
Source: Defense Manpower Data Center.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-3 percent. The response
categories are collapsed for positive and negative responses. That is,
"positive" is the estimated percentage of employees who responded
either "positive" or "very positive," while "negative" is the estimated
percentage of employees who responded either "negative" or "very
negative." Totals may sum to less than or more than 100 as a result of
collapsing the positive and negative response categories.
[End of table]
NSPS Employees and Supervisors in Our Discussion Groups Expressed
Consistent Concerns:
As with our first review of NSPS, DOD civilians in our discussion
groups at locations outside the continental United States continue to
express wide-ranging but consistent concerns about the NSPS performance
management system. Although the results of our discussion groups are
not generalizable to the entire population of DOD civilian employees,
the themes that emerged provide valuable insight into employees'
perceptions about the implementation of NSPS thus far.
Specifically, during these discussion groups, participants at six
locations told us that they were initially optimistic about the intent
of NSPS and the concept of pay for performance. Further, some
participants indicated that they remain positive about the amount of
performance pay and flexibilities afforded to supervisors to rate their
employees under the system. However, as with our first review,
discussion group participants at all eight locations we visited
primarily expressed frustration with and concern about certain aspects
of NSPS implementation and the system. The prevalent themes that
emerged during our discussion groups include concerns over (1) the
negative impact of NSPS on employee motivation and morale, (2) the
excessive amount of time spent navigating the performance management
process, (3) challenges with job objectives, (4) factors undermining
employee confidence in the system, and (5) factors unrelated to job
performance affecting employees' final performance ratings. As we noted
in 2008, the themes that emerged during our discussion group sessions
are not surprising. Our prior work, as well as that of OPM,[Footnote
41] has recognized that organizational transformations, such as the
adoption of a new performance management system, often entail
fundamental and radical changes that require an adjustment period to
gain employees' trust and acceptance. As a result, we expect major
change management initiatives in large-scale organizations to take
several years to be fully successful.
Concerns about a Negative Impact on Motivation and Morale:
A prevalent theme from our discussions with both employees and
supervisors was that several aspects of NSPS have had a negative impact
on employee motivation and morale--consistent with our first assessment
of NSPS. Specifically, discussion group participants at all eight
locations discussed how various aspects of NSPS--for example, their
perception that a rating of "3" is only average--have negatively
affected their motivation and morale. Discussion group participants at
six of the eight locations also told us they have negative perceptions
of what a rating of "3" means. At five of those locations, discussion
group participants told us that they continue to believe that a rating
of "3" means only "average," in contrast to "valued performer," as it
was initially defined to the workforce by DOD.
Discussion group participants at five locations also discussed how
achieving a rating higher than a "3" seemed to be an unattainable goal.
For example, employees at four locations told us that they felt NSPS
either does not provide incentives for high performance or encourages
only mediocre performance from employees under the system because of
the high number of employees receiving "3"-level ratings each year. As
another example, supervisors at one location noted that across the
installation there is a general feeling that everyone receives a rating
of "3," and therefore such a rating is considered average, no matter
how DOD defines it. Similarly, discussion group participants at seven
locations told us that they felt it was difficult for employees in
certain positions to receive a rating of "5" because of the nature of
their work or the perceived value their management placed on those
positions. At one of those locations, supervisors told us that they
felt such things as how the pay pool's business rules were structured
affected whether an employee could receive a high rating. At that
location, the pay pool's business rules specified that an employee must
receive a higher-level award, such as a command or agencywide award, to
receive a rating of "5." However, discussion group participants told us
that they felt some employees were not in a position to receive such
awards because of their positions or the type of work they did.
In addition, discussion group participants at all eight locations we
visited expressed frustration over the amount of the annual performance
payout provided under NSPS. For example, discussion group participants
noted that they felt the payout was not significant enough to encourage
anything other than average performance. Discussion group participants
at six of the eight locations also told us that they felt NSPS
discourages employees from seeking additional responsibilities and
opportunities that fall outside the scope of their objectives because
their payout may not reflect their additional work. In addition,
discussion group participants at six locations told us that because
supervisory positions under NSPS require such a significant increase in
responsibility and effort, and because the maximum allowable pay
increase for reassignments is capped at 5 percent,[Footnote 42] some
employees may not seek promotion opportunities. Similarly, a discussion
group participant at another location expressed frustration that some
employees only received their payout in the form of a bonus and not an
increase in salary. Discussion group participants at three of the eight
locations also expressed concerns that they felt performance payouts
under NSPS tended to benefit higher-paid employees at the expense of
lower-paid employees. For example, employees at one location expressed
concerns that in their pay pool, the higher payouts under NSPS seemed
to go to employees at the top of the pay bands.
Concerns about an Excessive Amount of Time Spent Navigating the NSPS
Performance Management Process:
Another prevalent theme at seven of the eight locations and also
highlighted in our first assessment was that employees spend an
excessive amount of time navigating the performance management process.
While the discussion group participants' complaints about the time-and
labor-intensive nature of the system were not limited to any one part
of the process, discussion group participants at seven locations
pointed out that the time and effort required to complete the steps of
the NSPS performance management process were significantly greater than
what was required of them under previous systems. For example, one
supervisor we spoke with speculated that his supervisory duties under
NSPS took him six times as long to perform as they had under the GS
system, while another supervisor told us that he may have spent from 45
to 50 hours assessing the performance of three employees, a task he
could have completed in 10 hours under the GS system.
At five of the locations we visited, employees expressed concerns about
NSPS potentially affecting their ability to complete their jobs or
affecting the mission because of what they perceived as an excessive
amount of time required of employees and supervisors in navigating the
NSPS performance management process. In some instances, employees spoke
of impacts NSPS was having on their supervisors, while others spoke of
their own experiences navigating the NSPS performance management
process. At three locations, discussion group participants described
how what they perceived as an excessive amount of time navigating the
NSPS performance management process affected their ability to complete
their job-related duties, requiring completion of some NSPS tasks, such
as self-assessments and employee ratings, after work hours or on
weekends. One employee described feeling inundated with information on
NSPS and that it was difficult to stay on top of things while
simultaneously performing his job, while another employee estimated
that she spent about 2 hours per week on NSPS-related tasks. In some
instances, discussion group participants told us that they saw the
potential for the excessive time commitment required by NSPS to affect
the missions of their organizations. According to one supervisor, any
task that takes employees away from their daily work affects the
mission, and any task that takes the time and patience of the command's
leadership detracts from the mission. Further, in discussing during a
site visit the potential for NSPS to impact the organization's mission,
one general officer we spoke with described NSPS as "mission
ineffective."
Concerns about Challenges with Job Objectives under NSPS:
Another prevalent theme that emerged from our discussions with both
supervisors and employees at all eight locations was that there are
challenges with employee job objectives under NSPS. According to DOD,
the NSPS performance management system is designed to provide a fair
and equitable method for appraising and evaluating performance. As part
of the system, DOD established the concept of "job objectives," which
are the required tasks of a given job as determined by managers and
supervisors, and directed that job objectives be developed and used as
the standards for evaluating employee performance. However, supervisors
and employees at each of the eight locations discussed challenges they
experienced developing their job objectives under NSPS. Specifically:
* Although DOD guidance encourages employees to develop job objectives
that are specific, measurable, aligned, realistic, and timed--an
approach summarized by the acronym S.M.A.R.T.--employees and
supervisors we met at six of eight locations discussed how they found
it challenging to develop job objectives that are measurable or that
follow the S.M.A.R.T. approach. Supervisors at one location objected to
the S.M.A.R.T. approach, particularly the "specific" portion, because
they felt that job objectives needed to be broad enough to allow
employees to discuss any accomplishments they make if they complete
additional job activities or other tasks that might arise during the
year. Supervisors at two locations discussed how the work they did was
nebulous and unpredictable, which made it challenging to develop job
objectives that not only reflected the nature of their work but that
they could exceed. Similarly, supervisors at another location expressed
concerns that employees' job objectives may not reflect the work they
do by the end of the performance management cycle because of constant
changes within their organization.
* According to discussion group participants at four locations,
guidance for developing job objectives is either limited or
nonexistent, which may result in different approaches to developing job
objectives across an organization. At one of these locations, employees
told us that their management had not established consistent ground
rules for developing job objectives and that as a result some
employees' job objectives were based on out-of-date position
descriptions. One organization we visited used a mixture of mandatory
and employee-specific job objectives; but, according to one employee,
little guidance exists to help employees and supervisors when they need
to develop personalized job objectives. Employees at another location
told us that there were significant differences in the amount of
involvement they had in developing their job objectives. For example,
one individual told us that employees in her office develop their own
objectives, while another said employees in her office are assigned
mandatory objectives and were thus unable to provide input into their
objectives.
* Discussion group participants at six locations expressed concerns
that it can be difficult to achieve a high rating for some job
objectives. Some locations we visited used mandatory job objectives,
which left employees concerned that their job objectives did not
accurately capture the full responsibilities of the work they
performed. For example, at one location, a uniform, mandatory
supervisory objective accounted for half of supervisors' ratings,
which, according to one supervisor, diminished the value of the other
responsibilities they had. The supervisor expressed further concern
that some mandatory job objectives, such as those assigned to
government purchase card holders, require a pass-fail evaluation,
making it difficult, if not impossible, for the employee to receive a
high rating. In one instance, a location we visited required all
employees to be rated against a mandatory safety objective. However,
according to some supervisors, it did not make sense for everyone to
have the mandatory safety objective because for many employees, safety
issues were out of their control.
Concerns about Factors That Undermine Employee Confidence in the
System:
During our discussion groups, participants at all eight locations also
discussed how various factors undermine employees' confidence in the
system and its implementation thus far. For example, discussion group
participants at six locations commented that they do not believe that
the NSPS performance management system has the ability to rate
employees fairly. At the locations we visited, discussion of these
concerns centered on such things as the perception of subjectivity and
the potential for favoritism under NSPS; a lack of transparency
surrounding the pay pool panel process, including a lack of
understanding of what employees needed to do to receive higher ratings;
and the perception of inconsistencies in interpretations of the
standards used to determine employee ratings.
One prevalent theme at all eight locations involved perceptions of
subjectivity, such as the potential for favoritism under NSPS during
the rating and pay pool panel processes. At five locations,
participants discussed their frustration with how NSPS takes the
responsibility for rating employees out of the hands of supervisors and
places it in the hands of the pay pool panel members, who may or may
not have any direct knowledge of individual employees' performance. One
supervisor told us that NSPS may inadvertently favor employees who work
closely or are in direct contact with members of the pay pool panel
because those individuals have direct knowledge of the employees and,
sometimes, their performance. Similarly, supervisors at another
location told us that they did not feel that their pay pool panel
understood their jobs and what they do and expressed frustration that
the pay pool panel did not seem to be reaching out to their supervisors
and higher-level reviewers for additional input on their performance.
At five of the eight locations, discussion group participants also told
us that they saw the potential for the employee-supervisor relationship
to affect an employee's rating--either to the benefit or detriment of
the employee.
Another prevalent theme at six of the eight locations--a theme also
highlighted in our first assessment of NSPS--was a lack of transparency
and understanding of the pay pool panel process. Specifically,
supervisors at two locations commented that their organizations' pay
pool panel processes were not transparent. A supervisor at one location
commented that everything "goes into a black vacuum," while another
likened the process to a "black box." Employees at that same location
referred to the organization's pay pool panel process as a "star
chamber," where decisions are made but are not explained to employees.
Employees and supervisors at five locations expressed concerns about
the amount of information they received from their pay pools and about
the process itself; some desired further information to help them
better understand the pay pool panel process. In addition, at six of
the eight locations, discussion group participants told us that they
did not understand what they needed to do to receive a higher rating.
For example, an employee at one location told us that she was told by
her supervisor that all employees had to receive a rating of "3"
because they would have had to "walk on water" to receive a higher
rating. Discussion group participants at two other locations also
discussed how "walking on water" was a perceived standard for receiving
a high rating under NSPS. At three locations, supervisors commented
that they were unclear about what they could do to help their employees
receive better ratings, while employees at four locations were unclear
about what they could do to achieve higher ratings.
Discussion group participants at six locations also raised concerns
about inconsistent interpretation of the standards used when evaluating
civilian employees under NSPS. Discussion group participants reported
concerns that military supervisors may rate employees using more
stringent standards than their civilian counterparts. Discussion group
participants also reported concerns that some military supervisors may
not value the NSPS performance management process and sometimes devote
less time and effort to the process, which could affect employees'
ratings. One civilian supervisor told us that some military supervisors
with whom he attended NSPS training had a much harsher perspective of
employee performance than their civilian counterparts. For example, he
noted that the military supervisors indicated that giving a rating of
"1" or "2" was acceptable, whereas he believed civilian supervisors
would be more inclined to give an employee a rating of "3." Employees
also told us that they do not believe some military supervisors value
the work of employees who perform certain job functions, such as
providing child care on an installation.
Concerns about Factors Unrelated to Performance Affecting Final
Ratings:
A prevalent theme expressed by discussion group participants at all
eight locations we visited is that factors unrelated to performance may
affect employees' final performance ratings. Such factors include the
existence of a forced distribution or quota of ratings, the writing
ability of employees and supervisors, and pay pool panel members'
knowledge of employees. For example:
* Discussion group participants at all eight locations expressed
concerns that their pay pool panels used a forced distribution or quota
for ratings, which dictated the number of ratings in each category that
could be awarded.[Footnote 43] Employees at one location told us that
they were aware of their management's attempts to artificially preserve
a higher share value for employees by primarily awarding ratings of
"3," regardless of the employees' performance. Further, at three
locations discussion group participants told us that their management
told them that all employees should expect to receive a rating of "3."
Moreover, some discussion group participants told us that they doubted
that their actual performance had the bearing it was supposed to have
on their final ratings, while others felt the use of a forced
distribution or quotas was in direct conflict with the principles of
pay for performance under NSPS. While no discussion group participants
we met with were aware of any explicit guidance provided to pay pool
panels or supervisors that limited the number of certain ratings they
assigned employees, employees and supervisors from at least three
locations believed that informal guidelines existed or that pay pool
panels or supervisors were encouraged to limit the number of certain
ratings they could assign.
* Discussion group participants at all eight locations also expressed
concerns that the writing ability of employees and supervisors may
affect ratings--a theme also highlighted in our first assessment of
NSPS. Supervisors at one location likened the process of developing
employees' assessments under NSPS to a writing contest. Moreover,
supervisors told us that they felt their writing ability could
unintentionally affect their employees' ratings, noting, for example,
that a supervisor's ability to articulate an employee's achievements in
writing plays a significant role in supporting a higher rating for that
employee. Employees shared the supervisors' concerns, noting that they
believed that succeeding under NSPS depended on the quality of their
written assessments, rather than their job performance, and that their
ratings could suffer if their supervisors did not provide the pay pool
panel with well-written assessments. In discussing the potential
influence that employees' and supervisors' writing skills may have on a
pay pool panel's assessment of an employee, officials at seven of the
eight locations acknowledged that in some instances writing skills had
affected employees' ratings and could overshadow employees'
performance.
* Discussion group participants at seven locations also expressed
frustration that employee ratings were potentially affected by the
extent to which pay pool panel members have personal knowledge of
employees or understand the nature of their work in general. Some
discussion group participants felt that pay pool panel members'
personal knowledge of employees helped some employees receive higher
ratings, while others told us that they felt that members of the pay
pool panel were too far removed from them and lacked direct knowledge
of the work they performed. One employee believed that individuals who
were involved in implementing NSPS worked closely with pay pool panel
members, or were senior managers who were more likely to receive higher
ratings under NSPS than others. Other employees told us that they were
concerned about the potential for pay pool panel members to advocate in
some way for employees they personally know--for example, by
encouraging the pay pool panel to contact a specific employee's
supervisor to seek additional information or justification for a
rating. As a result, they felt that pay pool panel members' personal
knowledge of employees could benefit some employees, but not others.
DOD Has Not Yet Developed a Comprehensive Action Plan to Address
Employees' Perceptions of the System:
In our first assessment of NSPS, we recommended that DOD develop and
implement a specific action plan to address employees' perceptions of
NSPS, based on guidance published by OPM for conducting annual employee
surveys and providing feedback to employees on the results.[Footnote
44] The guidance suggests that after an agency's survey results have
been reviewed, the agency has a responsibility to provide feedback to
employees on the results of the survey, as well as to let employees
know the intended actions to address the results and the progress made
on these actions. Further, the guidance suggests that agencies consider
the following when developing action plans:
* the resources required;
* who will be responsible for taking action;
* who will be responsible for providing oversight;
* if the individuals taking the action have the necessary authority to
make things happen;
* what coordination, if any, is required, and how it will be
accomplished; and:
* how agencies will adjust given any changes or delays in their
actions.
Since then, in June 2009, the PEO issued a departmentwide memorandum
entitled "Addressing Key NSPS Workforce Concerns"; however, issuance of
this memorandum does not fully meet the intent of our 2008
recommendation. Specifically, the PEO's June 2009 memorandum summarizes
key concerns from the department's 2008 evaluation of NSPS, summarizes
departmentwide actions that had been taken to date to address
employees' concerns about the system, and suggests approaches to
enhance local efforts to address workforce concerns. The PEO identified
five key areas of concern, which are similar to those identified in our
own discussion group sessions with DOD employees and supervisors: (1)
performance communication and feedback, (2) understanding of
performance management and the pay pool process, (3) trust in the
system and its processes, (4) training and information, and (5) the
amount of time needed to fulfill performance management
responsibilities. The PEO's memorandum urged the components to leverage
information from the department's 2008 evaluation of NSPS and focus on
the five areas discussed above as they plan their own actions. Further,
the PEO's memorandum noted that DOD has taken some steps to address
employees' concerns about NSPS--for example, developing and fielding a
pay pool training course for employees and rating officials, modifying
its implementing issuances to require all performance review
authorities to review pay pool panel results on an annual basis, and
providing guidance to employees on the prohibition against the forced
distribution of ratings. Issuance of the PEO's memorandum represents an
important first step. However, because the memorandum does not specify
actions the department intends to take, who will be responsible for
taking the action, and timelines for addressing areas where employees
express negative perceptions of the system, it does not fully meet the
intent of our 2008 recommendation. In developing an action plan, we
note that OPM recently issued guidance that agencies can use in
developing action plans for improving employee satisfaction.[Footnote
45] According to OPM, action plans should clearly (1) state the
objectives, (2) identify actions to be taken, (3) provide outcome
measures and improvement targets, and (4) describe how progress will be
tracked. In addition to identifying the specific actions that will be
taken to achieve improvements, OPM's guidance also suggests that
agencies specify:
* time frames for accomplishing the actions,
* who will be responsible for implementing the actions,
* who will be affected by the actions,
* the resources required, and:
* a plan to communicate these actions to managers and employees.
We continue to believe that developing and implementing a plan to
address employees' perceptions of NSPS could help DOD make changes to
the system that could lead to greater employee acceptance and,
ultimately, the system's successful implementation. Further, we note
that having such a plan is an approach that DOD could take to involve
employees in the system's implementation--which is one of the
safeguards we previously discussed.
Conclusions:
As we noted in our first assessment, DOD's implementation of NSPS
placed the department at the forefront of a significant transition
facing the federal government. However, toward the end of this review,
the future of NSPS became uncertain, given the proposed legislation
that, if enacted, would terminate the system and require any future
system created by DOD to use safeguards similar to those discussed in
our report, including ensuring employee involvement in the system and
providing adequate training and retraining. In light of the contingent
nature surrounding NSPS and the possibility of implementing a different
system, sustained and committed leadership will be imperative to
provide focused attention necessary to implement any pay-for-
performance system within DOD. Key to implementing a fair, effective,
and credible system is including safeguards early on in the design of
the system. Since we issued our first assessment of NSPS in 2008, we
note that DOD has continued to take steps to meet the intent of each of
the safeguards. However, with this latest assessment, we note that the
department has not implemented the safeguards systematically; for
example, it has not ensured that the training provided to employees on
the system's operations is effective. Further, DOD has not monitored
how the safeguards specifically are implemented by lower-level
organizations across the department. As a result, decision makers in
DOD lack information that could be used to determine whether the
department's actions are effective and whether the system is being
implemented in a fair, equitable, and credible manner. Additionally,
while DOD has gained experience operating under NSPS, at the time of
our review it had not yet developed an action plan for addressing
employees' perceptions of the system, as we recommended in 2008. As DOD
moves forward with implementing a pay-for-performance system--whether
NSPS or another--we believe that it is important for the department to
improve upon its implementation of the safeguards and address
employees' concerns. Left unchecked, these issues could undermine any
future human capital reform efforts within DOD.
Recommendations for Executive Action:
To help implement a fair, effective, and credible performance
management system for its civilian employees--whether NSPS or another-
-we recommend that the Secretary of Defense take the following three
actions:
* Review and evaluate the effectiveness of the department's training.
* Ensure that guidance is in place for conducting a postdecisional
analysis that specifies what process the components should follow to
investigate and eliminate potential barriers to fair and equitable
ratings.
* Include, as part of the department's monitoring of the implementation
of its system, efforts to monitor and evaluate how the safeguards
specifically are implemented by lower-level organizations across the
department.
Agency Comments and Our Evaluation:
In September 2009, we provided DOD with a draft of this report that
included three recommendations to better address the safeguards and
improve implementation of the NSPS performance management system.
Specifically, we recommended that DOD (1) evaluate NSPS training, (2)
review and revise its guidance for conducting postdecisional analysis
of NSPS ratings, and (3) monitor how the safeguards specifically are
implemented. In commenting on a draft of our report, DOD partially
concurred with our three recommendations. DOD's comments are reprinted
in appendix III.
DOD partially concurred with our recommendations, noting the
expectation that the Congress would require the department to terminate
NSPS by January 1, 2012, and this action, in turn, would require the
department to focus on drawing down NSPS in an orderly manner. DOD
further stated that it would consider acting on our recommendations to
the extent they are relevant as the department moves forward with any
future performance management system. We believe that this is a
reasonable approach. As discussed above, we recognize the contingent
nature surrounding NSPS as a result of provisions in the proposed
National Defense Authorization Act for Fiscal Year 2010, which recently
passed both Houses of Congress. Accordingly, we revised our
recommendations to apply to any future performance management system
for the department's civilian employees--whether NSPS or another
system. However, we also note that provisions of the proposed
legislation would require DOD to implement certain safeguards and issue
regulations for that system to provide a fair, credible and transparent
performance appraisal system. We therefore continue to believe that our
recommendations have merit.
We are sending copies of this report to the appropriate congressional
committees. We will make copies available to others upon request. The
report also is available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3604 or farrellb@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to the report are listed in appendix IV.
Brenda S. Farrell Director, Defense Capabilities and Management:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Howard P. McKeon:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Edolphus Towns:
Chairman:
The Honorable Darrell Issa:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
As with our first assessment of the National Security Personnel System
(NSPS) in 2008,[Footnote 46] we limited our scope in conducting this
review to the performance management aspect of NSPS. Therefore, we
addressed neither performance management of the Senior Executive
Service at the Department of Defense (DOD) nor other aspects of NSPS,
such as classification and pay.
Determining Implementation of Safeguards and Monitoring Their
Implementation:
To determine the extent to which DOD has implemented safeguards as part
of the NSPS performance management system and monitored the
implementation of the safeguards, we used the following safeguards,
which we also reported on in our 2008 review:
* Involve employees, their representatives, and other stakeholders in
the design of the system, to include employees directly involved in
validating any related implementation of the system.
* Assure that the agency's performance management systems link employee
objectives to the agency's strategic plan, related goals, and desired
outcomes.
* Provide adequate training and retraining for supervisors, managers,
and employees in the implementation and operation of the performance
management system.
* Provide a process for ensuring ongoing performance feedback and
dialogue between supervisors, managers, and employees throughout the
appraisal period, and for setting timetables for review.
* Implement a pay-for-performance evaluation system to better link
individual pay to performance, and provide an equitable method for
appraising and compensating employees.
* Assure that certain predecisional internal safeguards exist to help
achieve consistency, equity, nondiscrimination, and nonpoliticization
of the performance management process (e.g., independent reasonableness
reviews by a third party or reviews of performance rating decisions,
pay determinations, and promotions before they are finalized to ensure
that they are merit-based, as well as pay panels who consider the
results of the performance appraisal process and other information in
connection with final pay decisions).
* Assure that there are reasonable transparency and appropriate
accountability mechanisms in connection with the results of the
performance management process, to include reporting periodically on
internal assessments and employee survey results relating to
performance management and individual pay decisions while protecting
individual confidentiality.
* Assure that performance management results in meaningful distinctions
in individual employee performance.
* Provide a means for ensuring that adequate agency resources are
allocated for the design, implementation, and administration of the
performance management system.
To assess implementation of the safeguards, we reviewed the legislative
requirements and obtained and analyzed regulations and other guidance
for implementing the NSPS performance management system. We also
obtained and analyzed other documents, such as DOD's rating results and
reconsideration statistics, for the 2007 and 2008 NSPS performance
management cycles.[Footnote 47] We also interviewed knowledgeable
officials in DOD's NSPS Program Executive Office and the NSPS program
offices of the four components--the Army, the Air Force, the Navy, and
the Fourth Estate[Footnote 48]--to obtain a comprehensive understanding
of their efforts to implement NSPS and each of the safeguards, as well
as the processes, procedures, and controls used for monitoring and
overseeing implementation of the system. In addition, we conducted site
visits to select organizations located outside the continental United
States to assess implementation of the safeguards. To allow for
appropriate representation by each component, we visited two
organizations per component, or eight organizations in total. The
organizations we visited were selected based on a number of factors,
such as the presence of a large number or concentrated group of
civilian employees under NSPS and, when possible, the presence of
employees who had converted to NSPS under both spirals 1 and 2. We
focused our efforts for this review on visiting organizations located
outside the continental United States because our 2008 review focused
on assessing implementation of NSPS and the safeguards at locations
that were geographically distributed throughout the United States. We
elected to focus our site visits in Germany and Hawaii because of the
civilian employees located outside the continental United States who
had converted to NSPS at the time we initiated our review, more than
half were located in either Germany or Hawaii.[Footnote 49] Also, we
wanted to determine whether civilian employees located outside the
continental United States were experiencing any unique problems or
challenges with the system. In Germany, the organizations we visited
were the 5th Signal Command; the 435th Air Base Wing; the Defense
Finance and Accounting Service; and the George C. Marshall European
Center for Security Studies, part of the Defense Security Cooperation
Agency. In Hawaii, the organizations we visited were the Commander,
Navy Region Hawaii; Headquarters, Pacific Air Force; the Naval
Facilities Engineering Command, Hawaii; and the U.S. Army Corps of
Engineers, Honolulu District. For each of the organizations we visited,
we met with or interviewed the performance review authority, pay pool
managers, pay pool panel members, rating officials, and the NSPS
program manager or transition team, among others, to discuss the steps
they have taken to implement the safeguards or otherwise ensure the
fairness, effectiveness, and credibility of NSPS. To assess the
organizations' implementation of the safeguards, we compared and
contrasted the information obtained during our interviews and
supplemented this testimonial evidence with the other relevant
documentation we obtained, such as the organizations' pay pool business
rules,[Footnote 50] lessons learned, and training materials.
Determining DOD Civilian Employees' Perceptions of NSPS:
To determine how DOD civilian employees perceive NSPS, we analyzed two
sources of employee perceptions or attitudes. First, we analyzed the
results of DOD's survey of civilian employees to identify employee
perceptions of NSPS and examine whether and how these perceptions may
be changing over time. Second, we conducted small group discussions
with civilian employees who had converted to NSPS and administered a
short questionnaire to the participants at each of the eight
organizations we visited. As with our first assessment of NSPS, our
overall objective in using the discussion group approach was to obtain
employees' perceptions about NSPS and its implementation thus far.
Analysis of DOD Survey Results:
We analyzed the results of the Defense Manpower Data Center's (DMDC)
Status of Forces Survey[Footnote 51] of Civilian Employees--including
the May 2006, November 2006, May 2007, and February 2008
administrations--to gauge employee attitudes toward NSPS and
performance management in general and identify indications of movement
or trends in employee perceptions.[Footnote 52] As we reported in
September 2008, we have reviewed the results of prior administrations
of DMDC surveys and found the survey results, including the results of
the Status of Forces Survey of Civilian Employees, sufficiently
reliable to use for several GAO engagements. However, to understand the
nature of any changes that were made to its survey methods for
administering the survey for 2008 as compared with previous
administrations, we also received responses to written questions from
and discussed these data with officials at DMDC. Based on these
responses and discussions, we determined that DMDC's survey data remain
sufficiently reliable for the purpose of our reports on DOD civilian
employees' perceptions of NSPS.[Footnote 53]
GAO's Discussion Groups with DOD Civilian Employees under NSPS:
We also conducted small group discussions with DOD civilian employees
and administered a short questionnaire during site visits in February
and March 2009. Specifically, we conducted two discussion groups--one
with nonsupervisory employees and another with supervisory employees--
at each of the eight locations we visited, for a total of 16 discussion
groups. As with our first assessment of NSPS in 2008, our objective in
using this approach was to obtain employees' perceptions about NSPS and
its implementation thus far because discussion groups are intended to
provide in-depth information about participants' reasons for holding
certain attitudes about specific topics and to offer insights into the
range of concerns about and support for an issue. Further, in
conducting our discussion groups, our intent was to achieve saturation-
-the point at which we were no longer hearing new information.
As we previously reported, our discussion groups were not designed to
(1) demonstrate the extent of a problem or to generalize the results to
a larger population, (2) develop a consensus to arrive at an agreed-
upon plan or make decisions about what actions to take, or (3) provide
statistically representative samples or reliable quantitative
estimates. Instead, our discussion groups provide in-depth information
about participants' reasons for holding certain attitudes about
specific topics and offer insights into the range of concerns about and
support for an issue. Although the results of our discussion sessions
are not generalizable to the entire NSPS civilian population, the
composition of our discussion groups was designed to ensure that we
spoke with employees from each of the four components at locations
outside the continental United States. Because supervisory and
nonsupervisory employees have distinct roles with respect to NSPS, we
held separate discussion sessions for these groups.
To select the discussion group participants, we requested that the
organizations we visited provide us with lists of employees who had
converted to NSPS. From the lists provided, we selected participants
based on their supervisory and nonsupervisory status. To ensure maximum
participation of the selected employees, we randomly selected up to 20
participants from each group with the goal of meeting with 8 to 12
individuals in each discussion group and provided the employee names
and a standard invitation to GAO's points of contact to disseminate to
the employees. At the majority of locations, we reached our goal of
meeting with 8 to 12 individuals in each discussion group; however,
since participation was not compulsory, in two instances we did not
reach our goal of 8 participants per discussion group. Table 6 provides
information on the composition of our discussion groups.
Table 6: Composition of Discussion Groups:
Organization: Army: 5th Signal Command, Funari Barracks, Germany;
Discussion group participants: Nonsupervisory employees: 11;
Discussion group participants: Supervisory employees: 10;
Total discussion group participants: 21;
Total NSPS employees assigned to the pay pool visited[A]: 557.
Organization: Army: U.S. Army Corps of Engineers, Honolulu District,
Fort Shafter, Hawaii;
Discussion group participants: Nonsupervisory employees: 7;
Discussion group participants: Supervisory employees: 9;
Total discussion group participants: 16;
Total NSPS employees assigned to the pay pool visited[A]: 246.
Organization: Air Force: 435th Air Base Wing, Ramstein Air Base,
Germany;
Discussion group participants: Nonsupervisory employees: 13;
Discussion group participants: Supervisory employees: 9;
Total discussion group participants: 22;
Total NSPS employees assigned to the pay pool visited[A]: 314.
Organization: Air Force: Headquarters, Pacific Air Force, Hickam Air
Force Base, Hawaii;
Discussion group participants: Nonsupervisory employees: 9;
Discussion group participants: Supervisory employees: 9;
Total discussion group participants: 18;
Total NSPS employees assigned to the pay pool visited[A]: 100.
Organization: Navy: Commander, Navy Region Hawaii, Pearl Harbor,
Hawaii;
Discussion group participants: Nonsupervisory employees: 12;
Discussion group participants: Supervisory employees: 15;
Total discussion group participants: 27;
Total NSPS employees assigned to the pay pool visited[A]: 320.
Organization: Navy: Naval Facilities Engineering Command, Hawaii, Pearl
Harbor, Hawaii;
Discussion group participants: Nonsupervisory employees: 11;
Discussion group participants: Supervisory employees: 10;
Total discussion group participants: 21;
Total NSPS employees assigned to the pay pool visited[A]: 97.
Organization: Fourth Estate: Defense Finance and Accounting Service,
Kaiserslautern, Germany;
Discussion group participants: Nonsupervisory employees: 12;
Discussion group participants: Supervisory employees: 4;
Total discussion group participants: 16;
Total NSPS employees assigned to the pay pool visited[A]: 1,497.
Organization: Fourth Estate: George C. Marshall European Center for
Security Studies, Garmisch-Partenkirchen, Germany;
Discussion group participants: Nonsupervisory employees: 10;
Discussion group participants: Supervisory employees: 13;
Total discussion group participants: 23;
Total NSPS employees assigned to the pay pool visited[A]: 434.
Organization: Total;
Discussion group participants: Nonsupervisory employees: 85;
Discussion group participants: Supervisory employees: 79;
Total discussion group participants: 164;
Total NSPS employees assigned to the pay pool visited[A]: 3,565.
Source: GAO (analysis) and DOD (number of employees assigned to the
respective pay pool).
[A] The totals listed include the number of civilian employees each
organization rated during the 2008 NSPS performance management cycle.
[End of table]
To facilitate our discussion groups, we developed a discussion guide to
help the moderator in addressing several topics related to employees'
perceptions of the NSPS performance management system. These topics
include employees' overall perception of NSPS and the rating process,
the training they received on NSPS, the communication they have had
with their supervisors, positive aspects they perceive of NSPS, and any
changes they would make to the system, among others. Each discussion
group was scheduled for a 2-hour period and began with the GAO
moderator greeting the participants, describing the purpose of the
study, and explaining the procedures for the discussion group.
Participants were assured that all of their comments would be discussed
in the aggregate or as part of larger themes that emerged. The GAO
moderator asked participants open-ended questions related to NSPS,
while at least one other GAO analyst observed the discussion group and
took notes. Following the conclusion of all our discussion group
sessions, we performed content analysis of the sessions in order to
identify the themes that emerged and to summarize the participants'
perceptions of NSPS. We reviewed responses from several of the
discussion groups and created a list of themes and subtheme categories.
We then reviewed the comments from each of the 16 discussion groups and
assigned each comment to the appropriate category, which was agreed
upon by two analysts. If agreement was not reached on a comment's
placement in a category, another analyst reconciled the issue by
placing the comment in either one or more of the categories. The
responses in each category were then used in our evaluation and
discussion of how civilian employees perceive NSPS.
Following each discussion group we administered a questionnaire to the
participants to obtain further information on their background, tenure
with the federal government and DOD, and attitudes toward NSPS. We
received questionnaires from 164 discussion group participants. In
addition to collecting demographic data from participants for the
purpose of reporting with whom we spoke (see table 7), the purpose of
our questionnaire was to (1) collect information from participants that
could not easily be obtained through discussion, for example,
information participants may have been uncomfortable sharing in a group
setting, and (2) collect some of the same data found in past DOD
surveys. Specifically, the questionnaire included questions designed to
obtain employees' perceptions of NSPS as compared to their previous
personnel system, the accuracy with which they felt their ratings
reflected their performance, and management's methods for conveying
overall rating information. Since the questionnaire was used to collect
supplemental information and was administered solely to the
participants of our discussion groups, the results represent the
opinions of only those employees and cannot be projected across DOD, a
component, or any single pay pool we visited.
Table 7: Composition of Discussion Groups by Demographic Category per
Component:
Category: Male;
Component: Army: 22;
Component: Air Force: 25;
Component: Navy: 21;
Component: Fourth Estate: 17;
Component: Total: 85.
Category: Female;
Component: Army: 15;
Component: Air Force: 15;
Component: Navy: 27;
Component: Fourth Estate: 22;
Component: Total: 79.
Category: Total;
Component: Army: 37;
Component: Air Force: 40;
Component: Navy: 48;
Component: Fourth Estate: 39;
Component: Total: 164.
Category: American Indian or Alaskan Native;
Component: Army: 0;
Component: Air Force: 1;
Component: Navy: 0;
Component: Fourth Estate: 0;
Component: Total: 1.
Category: Asian;
Component: Army: 14;
Component: Air Force: 4;
Component: Navy: 21;
Component: Fourth Estate: 1;
Component: Total: 40.
Category: Black/African American;
Component: Army: 4;
Component: Air Force: 2;
Component: Navy: 1;
Component: Fourth Estate: 4;
Component: Total: 11.
Category: Hispanic;
Component: Army: 0;
Component: Air Force: 1;
Component: Navy: 2;
Component: Fourth Estate: 3;
Component: Total: 6.
Category: Native Hawaiian or other Pacific Islander;
Component: Army: 0;
Component: Air Force: 0;
Component: Navy: 7;
Component: Fourth Estate: 0;
Component: Total: 7.
Category: White;
Component: Army: 16;
Component: Air Force: 28;
Component: Navy: 14;
Component: Fourth Estate: 31;
Component: Total: 89.
Category: Other;
Component: Army: 3;
Component: Air Force: 4;
Component: Navy: 3;
Component: Fourth Estate: 0;
Component: Total: 10.
Category: Total;
Component: Army: 37;
Component: Air Force: 40;
Component: Navy: 48;
Component: Fourth Estate: 39;
Component: Total: 164.
Source: GAO.
Note: Participants voluntarily self-reported demographic information in
our questionnaire.
[End of table]
We visited or contacted the following organizations during our review:
Department of Defense:
* Defense Finance and Accounting Service, Indianapolis, Indiana; Rome,
New York; Columbus, Ohio; and Kaiserslautern, Germany:
* Defense Manpower Data Center, Arlington, Virginia:
* Defense Security Cooperation Agency, Arlington, Virginia:
- George C. Marshall European Center for Security Studies, Garmisch-
Partenkirchen, Germany:
* Equal Employment Opportunity Office, Arlington, Virginia:
* Fourth Estate NSPS Program Management Office, Arlington, Virginia:
* NSPS Program Executive Office, Arlington, Virginia:
Department of the Army:
* 5th Signal Command, Funari Barracks, Germany:
* Civilian Personnel Evaluation Agency, Alexandria, Virginia:
* NSPS Program Management Office, Alexandria, Virginia:
* U.S. Army Corps of Engineers:
- Headquarters, Washington, D.C.
- Honolulu District, Fort Shafter, Hawaii:
- Pacific Ocean Division, Fort Shafter, Hawaii:
Department of the Air Force:
* 435th Air Base Wing, Ramstein Air Base, Germany:
* Headquarters, Pacific Air Force, Hickam Air Force Base, Hawaii:
* NSPS Program Office, Arlington, Virginia:
Department of the Navy:
* Commander, Navy Region Hawaii, Pearl Harbor, Hawaii:
* Naval Facilities Engineering Command, Hawaii, Pearl Harbor, Hawaii:
* NSPS Program Office, Navy Yard, Washington, D.C.
* Office of Civilian Human Resources, Navy Yard, Washington, D.C.
We conducted this performance audit from November 2008 through
September 2009 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient and appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Reconsideration Process:
Department of Defense (DOD) civilian employees who receive performance
ratings under the National Security Personnel System (NSPS) have the
option of challenging their ratings through a formal process known as
reconsideration. The reconsideration process is the sole and exclusive
agency administrative process for nonbargaining unit employees to
challenge their ratings.[Footnote 54] However, DOD's NSPS regulations
also allow for alternative dispute resolution techniques, such as
mediation or interest-based problem solving, to be pursued at any time
during the reconsideration process consistent with component policies
and procedures. Under the reconsideration process, employees may
challenge their ratings of record or individual job objective ratings;
employees cannot challenge their performance payout, the number of
shares assigned, the share value, or the distribution of their
performance payout between salary increase and bonus, nor can they
challenge their recommended ratings of record, interim reviews, or
applicable closeout assessments. In addition, employees who allege that
their performance ratings are based on prohibited discrimination or
reprisal may not use the reconsideration process; rather, such
allegations are to be processed through the department's equal
employment opportunity discrimination complaint procedure.
Employees who wish to challenge their rating have 10 calendar days from
the receipt of their ratings of record to submit written requests for
reconsideration to their pay pool managers. Within 15 calendar days of
the pay pool manager's receipt of an employee's request for
reconsideration, the pay pool manager must render a written decision
that includes a brief explanation of the basis of the decision. The pay
pool manager's decision is final, unless the employee seeks further
reconsideration from the performance review authority. Specifically, if
the employee is dissatisfied with the pay pool manager's decision, or
if none is provided within the prescribed time frames, the employee may
submit a written request for final review by the performance review
authority or his or her designee. This request must be submitted within
5 calendar days of receipt of the pay pool manager's decision or within
5 calendar days of the date the decision should have been rendered. The
performance review authority then is allotted 15 calendar days from
receipt of the written request from the employee to make a decision,
which is final. If the final decision is to change the rating of record
or job objective rating, the revised rating takes the place of the
original one, and a revised performance appraisal is prepared for the
employee.
According to DOD's 2008 evaluation report, for the 2007 NSPS
performance management cycle,[Footnote 55] 2,302 civilian employees out
of the 100,465 employees who were rated under NSPS elected to file a
request for reconsideration of their ratings, and of these, about 33
percent of the requests were granted. For the 2008 NSPS performance
management cycle,[Footnote 56] according to the NSPS Program Executive
Office, as of June 2009, 4,296 civilian employees out of the 170,149
employees who were rated under NSPS elected to file requests for
reconsideration of their ratings, and of these, about 52 percent of the
requests were granted.[Footnote 57]
[End of section]
Appendix III: Comments from the Department of Defense:
Department Of Defense:
NSPS:
National Security Personnel System:
Program Executive Office:
1400 Key Boulevard Suite B200:
Arlington, VA 22209-5144:
October 23, 2009:
Ms. Brenda S. Farrell:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.:
Washington, DC 20548:
Dear Ms. Farrell:
This is the Department of Defense (DoD) response to the GAO draft
report, "Human Capital: Continued Monitoring of Safeguards Is Needed
and Opportunities Exist to Address Employee Concerns about the National
Security Personnel System" dated September 21, 2009 (GAO Code
351277/GA0-10-102). We thank you for the opportunity to review and
comment.
Our own internal program evaluation work and other feedback have
pointed us to many of the same issues that your report cites. But for
our expectation that Congress will require the Department to terminate
the National Security Personnel System (NSPS) by January 1, 2012, we
would concur in your basic recommendations. They align with actions we
have said we would take as NSPS becomes a more fully mature human
resources system.
As you report, the Department has listened to the workforce and made
adjustments since first implementing Spiral 1.1. For example, we
modified system rules to increase accountability at senior levels,
added NSPS training and reference material that individuals could
access for themselves on line, and improved appraisal tools. Now that
most organizations have had at least two years of experience with NSPS,
this year would have been the time to see if the fundamental safeguards
for fair, objective, rigorous ratings (e.g., the multiple levels of
review and standard rating criteria) were sound or created their own,
undesirable complications for us to correct.
Congress' mandate will require that we focus on drawing down NSPS in an
orderly way. We therefore will consider acting on your three
recommendations to the extent they are relevant as the Department moves
forward with any new systems. We appreciate your staff's efforts to
review and report on NSPS safeguards, with sensitivity to the cultural
change involved and the time and evolutionary actions needed to
complete such a transformation. As we noted last year, it is an
enormous challenge to ensure a performance management system is
rigorous and consequential as well as fair, transparent, and well
accepted.
Sincerely,
Signed by:
Brad Bunn:
Program Executive Officer:
Enclosure:
GAO Draft Report Dated September 21, 2009:
GAO CODE 351277/GA0-10-102
"Human Capital: Continued Monitoring of Safeguards Is Needed and
Opportunities Exist to Address Employee Concerns about the National
Security Personnel System"
Department Of Defense Responses To Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the National Security Personnel System (NSPS) Senior Executive
to review and evaluate the Department's NSPS training to enhance the
effectiveness of the training. DOD RESPONSE: Partially concur. If NSPS
were not expected to be terminated, we agree that it would be timely to
assess NSPS training in terms of outcomes as well as ongoing needs. The
DOD training evaluation strategy included this mid-term step.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the NSPS Senior Executive to review and revise the Department's
guidance for conducting a postdecisional analysis to specify what
process the components should follow to investigate and eliminate
potential barriers to fair and equitable ratings.
DOD Response: Partially concur.
If NSPS, a pay for performance system, were not expected to be
terminated, the Department would add process suggestions to help
Components adapt their experience with annual barrier analysis methods
for the Equal Employment Opportunity program, to rating and payout
results.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the NSPS Senior Executive to include, as a part of the
Department's monitoring of the implementation of the NSPS performance
management system, efforts to monitor and evaluate how the safeguards
specifically are implemented by lower-level organizations across the
Department.
DOD Response: Partially concur. If NSPS were not expected to be
terminated, the Department would expand on the attention given to how
organizations implement and carry out NSPS performance management
safeguards, in the DoD human capital accountability program. The nature
of future performance management systems will guide how the Department
monitors them.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov:
Acknowledgments:
In addition to the contact named above, Ron Fecso, Chief Statistician;
Marion Gatling, Assistant Director; Margaret G. Braley; Virginia A.
Chanley; William Colwell; Emily Gruenwald; K. Nicole Harms; Cynthia
Heckmann; Wesley A. Johnson; Lonnie McAllister; Carolyn Taylor; John W.
Van Schaik; Jennifer L. Weber; Cheryl A. Weissman; and Gregory H.
Wilmoth made key contributions to the report.
[End of section]
Related GAO Products:
Human Capital: Continued Monitoring of Internal Safeguards and an
Action Plan to Address Employee Concerns Could Improve Implementation
of the National Security Personnel System. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-09-840]. Washington, D.C.: June
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18, 2009.
Human Capital: Improved Implementation of Safeguards and an Action Plan
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bin/getrpt?GAO-09-464T]. Washington, D.C.: April 1, 2009.
Human Capital: Opportunities Exist to Build on Recent Progress to
Strengthen DOD's Civilian Human Capital Strategic Plan. [hyperlink,
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High-Risk Series: An Update. [hyperlink, http://www.gao.gov/cgi-
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[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-773]. Washington,
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The Department of Defense's Civilian Human Capital Strategic Plan Does
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Human Capital: DOD Needs Better Internal Controls and Visibility over
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[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-851]. Washington,
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Oriented Pay Systems. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
05-1048T]. Washington, D.C.: September 27, 2005.
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528T]. Washington, D.C.: March 18, 2002.
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http://www.gao.gov/cgi-bin/getrpt?GAO-02-373SP]. Washington, D.C.:
March 15, 2002.
Human Capital: Taking Steps to Meet Current and Emerging Human Capital
Challenges. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-965T].
Washington, D.C.: July 17, 2001.
Human Capital: Major Human Capital Challenges at the Departments of
Defense and State. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-
565T]. Washington, D.C.: March 29, 2001.
High-Risk Series: An Update. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-01-263]. Washington, D.C.: January 2001.
[End of section]
FOOTNOTES:
[1] On May 14, 2009, the Deputy Secretary of Defense requested that the
Defense Business Board form a task group to review NSPS to determine
(1) if the underlying design principles and methodology for
implementation are reflected in the NSPS program objectives; (2)
whether the program objectives are being met; and (3) whether NSPS is
operating in a fair, transparent, and effective manner.
[2] H.R. 2647 and H.R. Conf. Rep. No. 111-288, §1113 (2009).
[3] See GAO, Defense Transformation: Preliminary Observations on DOD's
Proposed Civilian Personnel Reforms, GAO-03-717T (Washington, D.C.:
Apr. 29, 2003); Defense Transformation: DOD's Proposed Civilian
Personnel System and Governmentwide Human Capital Reform, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-741T] (Washington, D.C.: May
1, 2003); and Human Capital: Building on DOD's Reform Effort to Foster
Governmentwide Improvements, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-851T] (Washington, D.C.: June 4, 2003).
[4] See GAO, Human Capital: DOD Needs to Improve Implementation of and
Address Employee Concerns about Its National Security Personnel System,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-773] (Washington,
D.C.: Sept. 10, 2008); Human Capital: DOD Needs Better Internal
Controls and Visibility over Costs for Implementing Its National
Security Personnel System, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-851] (Washington, D.C.: July 16, 2007); and Human
Capital: Observations on Final Regulations for DOD's National Security
Personnel System, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-
227T] (Washington, D.C.: Nov. 17, 2005).
[5] GAO, Questions for the Record Related to the Implementation of the
Department of Defense's National Security Personnel System, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-09-669R] (Washington, D.C.: May
18, 2009).
[6] See Related GAO Products at the end of this report for additional
reports we have issued related to NSPS and performance management in
the federal government.
[7] Pub. L. No. 110-181, § 1106(c) (2008). Specifically, section
1106(c)(1)(B) directs GAO to conduct reviews in calendar years 2008
through 2010 to evaluate the extent to which DOD has effectively
implemented accountability mechanisms, including those established in 5
U.S.C. § 9902(b)(7) and other internal safeguards, and to evaluate, as
well, the extent that DOD undertakes internal assessments or employee
surveys to assess employee satisfaction with NSPS. The accountability
mechanisms specified in 5 U.S.C. § 9902(b)(7) include those that GAO
previously identified as internal safeguards key to successful
implementation of performance management systems. For example see GAO,
Post-Hearing Questions for the Record Related to the Department of
Defense‘s National Security Personnel System (NSPS), GAO-06-582R
(Washington, D.C.: Mar. 24, 2006). GAO has emphasized the need for
internal safeguards since DOD first proposed NSPS. For example see GAO,
Posthearing Questions Related to Strategic Human Capital Management,
GAO-03-779R (Washington, D.C.: May 22, 2003). Additionally, our review
covered merit system principles that pertain to performance management
systems”specifically those stipulated in 5 U.S.C. § 2301(b)(2),(3),(7),
and (8a).
[8] See [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-773] and
GAO, Human Capital: Improved Implementation of Safeguards and an Action
Plan to Address Employee Concerns Could Increase Employee Acceptance of
the National Security Personnel System, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-09-464T] (Washington, D.C.: Apr.
1, 2009).
[9] For the purpose of this report, we define safeguards to include
accountability mechanisms. We note that we previously identified an
independent and credible employee appeals mechanism as a safeguard. For
example, see [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-
582R]. However, although the National Defense Authorization Act for
Fiscal Year 2004 (Pub. L. No. 108-136, § 1101(a), (2003)) gave DOD the
authority to establish a different process for employees to appeal
adverse actions than the appeals process available to employees under
Title 5, that DOD authority was rescinded by the National Defense
Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 1106(a),
(2008). This rescission of authority gave civilian employees under NSPS
the same right to appeal adverse actions to the Merit Systems
Protection Board that they had under Title 5. 5 U.S.C. §§ 7513(d),
7701.
[10] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-741T].
[11] The Department of the Navy's NSPS policies encompass Marine Corps
civilians. The Fourth Estate includes all organizational entities in
DOD that are not in the military departments or the combatant commands.
Examples of Fourth Estate entities are the Office of the Secretary of
Defense, the Joint Staff, the Office of the DOD Inspector General, the
defense agencies, and DOD field activities.
[12] According to the Program Executive Office, as of September 2008,
about 85 percent of the civilian employees under NSPS were located in
the continental United States, whereas about 15 percent were located
outside the continental United States. Of the civilian employees under
NSPS located outside the continental United States, about 54 percent
were in either Germany or Hawaii.
[13] Business rules are the policies that govern a pay pool's
operations. They may specify, for example, the pay pool panel's
structure, roles and responsibilities, standards of conduct, and the
processes used for reconciling employee ratings and allocating shares
under NSPS.
[14] For the purpose of this report, we use the term officials to refer
to the management officials we met with during our site visits,
including the performance review authority, pay pool manager, pay pool
panel members, rating officials, and NSPS transition manager or members
of the NSPS transition team.
[15] GAO, Human Capital: A Guide for Assessing Strategic Training and
Development Efforts in the Federal Government, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-546G] (Washington, D.C.: March
2004).
[16] Specifically, 5 U.S.C. § 2301(b)(2) provides that "all employees
and applicants for employment should receive fair and equitable
treatment in all aspects of personnel management without regard to
political affiliation, race, color, religion, national origin, sex,
marital status, age, or handicapping condition, and with proper regard
for their privacy and constitutional rights."
[17] DOD used a phased approach to converting civilian employees to
NSPS. Each phase is called a spiral and each spiral has an identifying
number associated with it--for example, spiral 1.1.
[18] Office of Personnel Management Memorandum, "Guidance on Employee
Satisfaction Action Planning" (Aug. 19, 2009).
[19] H.R. Conf. Rep. No. 111-288, §1113 (Oct. 7, 2009) to accompany
H.R. 2647, the proposed National Defense Authorization Act for 2010.
[20] See GAO, Results-Oriented Management: Opportunities Exist for
Refining the Oversight and Implementation of the Senior Executive
Performance-Based Pay System, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-09-82] (Washington, D.C.: Nov. 21, 2008); Office of
Personnel Management: Key Lessons Learned to Date for Strengthening
Capacity to Lead and Implement Human Capital Reforms, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-90] (Washington, D.C.: Jan.
19, 2007); Results-Oriented Cultures: Modern Performance Management
Systems Are Needed to Effectively Support Pay for Performance,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-612T] (Washington,
D.C.: Apr. 1, 2003); and [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-741T].
[21] Pub. L. No. 108-136, § 1101 (2003) (codified at 5 U.S.C. §§ 9901-
9904). The National Defense Authorization Act for Fiscal Year 2008
amended 5 U.S.C. § 9902. Pub. L. No. 110-181, § 1106 (2008).
[22] According to PEO officials, DOD originally planned to convert
approximately 700,000 civilian employees to NSPS; however, legislative
changes have decreased the number of civilian employees eligible to
convert to the system.
[23] Pub. L. No. 110-181, § 1106(a) (2008). The Federal Wage System is
a uniform pay-setting system that covers federal appropriated fund and
nonappropriated fund blue-collar employees who are paid by the hour.
[24] Criteria to distinguish pay pools may include, but are not limited
to, organization structure, employee job function, location, and
organization mission.
[25] Where determined appropriate because of the size of the pay pool
population, the complexity of the mission, the need to prevent
conflicts of interest, or other similar criteria, sub-pay pool panels
may be organized in a structure subordinate to the pay pool panel. Sub-
pay pool panels normally operate under the same requirements and
guidelines provided to the pay pool panels to which they belong.
[26] Pay pool panel members may not participate in payout deliberations
or decisions that directly affect their own performance assessments or
pay.
[27] The senior organization official, usually a member of the Senior
Executive Service or a General/Flag officer, serves as the performance
review authority. DOD components may provide additional guidance for
the establishment of performance review authorities. The
responsibilities of the performance review authority may be assigned to
an individual management official or organizational unit or group.
[28] 5. C.F.R. § 9901 (2008).
[29] The mock pay pool is a way for organizations to understand the pay
pool process. During the exercise, organizations identify ways to
improve their pay pool process to achieve greater consistency and
ensure fairness in ratings and payouts. Rating officials review their
employees and assign mock ratings, numbers of shares, and payout
distributions. The panel then practices advocating for employees and
reconciling results.
[30] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-546G].
[31] Of these 120 human resource practitioners, only 1 was located
outside the continental United States.
[32] DOD's 2008 evaluation focused on determining whether NSPS, as
implemented in spiral 1 organizations, was on track to achieve certain
goals specified by DOD and if any improvements were needed. These goals
include whether a supporting infrastructure is in place for the system.
[33] Management Directive 715 is the policy guidance which the Equal
Employment Opportunity Commission provides to federal agencies for
their use in establishing and maintaining effective affirmative
programs of equal employment opportunity under Section 717 of Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000(e) et
seq., and effective affirmative action programs under Section 501 of
the Rehabilitation Act of 1973, as amended by Pub. L. No. 99-506, § 103
(1986).
[34] Management Directive 715 defines a barrier as "an agency policy,
principle, practice or condition that limits or tends to limit
employment opportunities for members of a particular gender, race or
ethnic background or for an individual (or individuals) based on
disability status."
[35] 5 U.S.C. § 2301(b)(2) and (b)(8)(A).
[36] 5 C.F.R. § 9901.412(a).
[37] DOD has established certain goals for the NSPS performance
management system, known as key performance parameters. DOD defines a
key performance parameter as "a capability or characteristic that is so
significant that failure to meet a minimum 'threshold' can be cause for
that element, concept or system to be reevaluated, or the program to be
reassessed or terminated." DOD originally identified six key
performance parameters for NSPS: (1) High Performing Workforce and
Management--whether employees and supervisors are compensated and
retained based on their performance and contribution to mission; (2)
Agile and Responsive Workforce and Management--whether the workforce
can be easily sized, shaped, and deployed to meet changing mission
requirements; (3) Credible and Trusted System--whether the system
assures openness, clarity, accountability and adherence to the public
employment principles of merit and fitness; (4) Fiscally Sound System-
-whether aggregate increases in civilian payroll, at the appropriations
level, will conform to Office of Management and Budget fiscal guidance,
and whether managers will have flexibility to manage to budget at the
unit level; (5) Supporting Infrastructure--whether information
technology support, training, and change management plans are available
and funded; and (6) Schedule--whether NSPS will be operational and
stable before November 2009.
[38] DOD's 2008 evaluation focused only on spiral 1 organizations under
NSPS--which included a total of 108,758 employees. Also, according to
the PEO, externally driven delays to converting employees to NSPS
subsequently resulted in the department's elimination of the sixth key
performance parameter, Schedule. Therefore, DOD's 2008 evaluation did
not assess the extent to which the department was on track to achieve
this particular goal.
[39] GAO, Human Capital: Symposium on Designing and Managing Market-
Based and More Performance-Oriented Pay Systems, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-832SP] (Washington, D.C.: July
27, 2005).
[40] The first Web-based Status of Forces Survey was conducted in
October 2003. Regular administrations of the Status of Forces Survey of
Civilian Employees occurred every 6 months from October 2004 through
November 2006, and annual administrations commenced in 2007.
[41] Office of Personnel Management, Working for America: Alternative
Personnel Systems in Practice and a Guide to the Future (Washington,
D.C., October 2005).
[42] The NSPS regulations (5 C.F.R § 9901.353) state that an employee
may only receive up to a total of a 5 percent cumulative increase to
his or her base salary in any 12-month period as the result of an
employee-initiated action, unless an exception is approved by an
authorized management official. There are no limits to the number of
times an employee may be reassigned by management, however.
[43] The NSPS regulations (5 C.F.R. § 9901.412(a)) state that the
forced distribution of ratings (setting preestablished limits for the
percentage or number of ratings that may be assigned at any level) is
prohibited.
[44] Office of Personnel Management, Annual Employee Survey Guidance
(Washington, D.C., November 2006).
[45] Office of Personnel Management Memorandum, "Guidance on Employee
Satisfaction Action Planning" (Aug. 19, 2009).
[46] GAO, Human Capital: DOD Needs to Improve Implementation of and
Address Employee Concerns about Its National Security Personnel System,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-773] (Washington,
D.C.: Sept. 10, 2008).
[47] GAO has not independently verified the reliability of DOD's
reported reconsideration statistics.
[48] The Department of the Navy's NSPS policies encompass Marine Corps
civilians. The Fourth Estate includes all organizational entities in
DOD that are not in the military departments or the combatant commands.
Examples of Fourth Estate entities are the Office of the Secretary of
Defense, the Joint Staff, the Office of the DOD Inspector General, the
defense agencies, and DOD field activities.
[49] According to the Program Executive Office, as of September 2008,
about 85 percent of the civilian employees under NSPS were located in
the continental United States, whereas about 15 percent were located
outside the continental United States. Of the civilian employees under
NSPS located outside the continental United States, about 54 percent
were in either Germany or Hawaii.
[50] Business rules are the policies that govern a pay pool's
operations. They may specify, for example, the pay pool panel's
structure, roles and responsibilities, standards of conduct, and the
processes used for reconciling employee ratings and allocating shares
under NSPS.
[51] The Status of Forces Survey is a series of Web-based surveys of
the total force that allows DOD to (1) evaluate existing programs/
policies, (2) establish baselines before implementing new programs/
policies, and (3) monitor progress of programs/policies and their
effects on the total force.
[52] DMDC has conducted large-scale, departmentwide surveys of active
military personnel since 2002, called the Status of Forces Active Duty
Survey. DMDC has also conducted surveys of reserve military personnel
for DOD called the Status of Forces Reserve Survey. Since 2003, DMDC
has administered its Status of Forces Survey of Civilian Employees,
which includes questions about compensation, performance, and personnel
processes. All surveys include outcome or "leading indicator" measures
such as overall satisfaction, retention intention, and perceived
readiness, as well as demographic items needed to classify individuals
into various subpopulations. Regular administrations of the Status of
Forces Survey of Civilian Employees occurred every 6 months from
October 2004 through November 2006, while annual administrations
commenced in 2007.
[53] In our September 2008 report, we identified areas for improvement
with regard to DOD's survey results--for example, use of nonresponse
analysis, which is a good survey research practice, to clarify whether
those employees who did not respond to DOD's surveys may provide
substantively different answers than those who did respond.
[54] In contrast, negotiated grievance procedures are the exclusive
administrative procedures for bargaining unit employees. However, if a
negotiated grievance procedure is not available to a bargaining unit
employee or challenging a rating of record or job objective rating is
outside the scope of the employee's negotiated grievance procedure, a
bargaining unit employee may challenge his or her rating of record or
job objective rating in accordance with the DOD's NSPS regulations and
implementing issuances. As of May 2009, DOD reported that there were
approximately 685 bargaining unit employees and 18 certified bargaining
units representing NSPS employees.
[55] DOD civilian employees under NSPS received their payout for the
2007 NSPS performance management cycle in January 2008.
[56] DOD civilian employees under NSPS received their payout for the
2008 NSPS performance management cycle in January 2009.
[57] GAO has not independently verified the reliability of DOD's
reported reconsideration statistics.
[End of section]
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