Fed officials see uncertain future for NSPS

DOD must ensure fairness for employees who are covered by the pay and performance management system with safeguards and standard business rules, GAO said.

Federal officials have predicted an uncertain future for the Defense Department’s National Security Personnel System (NSPS) when a review of its operations is completed.

DOD and the Office of Personnel Management have started a review of NSPS’ fairness, transparency, underlying policies and effectiveness. The review, which could take several months, would also evaluate managing a workforce under multiple systems, said Brad Bunn, DOD's program executive officer for NSPS, during a hearing held April 1 by the House Armed Services Committee's Readiness Subcommittee. 

DOD has 205,000 civilian employees under the system, but it has halted further conversions of about 2,000 employees to NSPS pending the results of the review. NSPS consists of a performance management process used to evaluate employees, flexible job classifications and a pay system based on performance.

Bunn said the system can only be successful with the full commitment of civilian and military leaders and managers. The timeout provided by the review gives the Obama administration's DOD executives an opportunity to grapple with the fundamental issues and underlying design principles of NSPS, he said.

“What I think is going to happen is that they will struggle with figuring out what things are implementation issues and what are fundamental design or systemic issues," he said. "Frankly, we’re just far enough along in the implementation to start seeing and discern those things."

When asked if the system would be tweaked or ditched, Bunn said, “Ultimately, it could go either way."

DOD should keep the performance-based component of NSPS but fix its weaknesses, said Brenda Farrell, director of defense capabilities and management issues at the Government Accountability Office. GAO officials advocate tweaking NSPS because the agency strongly believes in performance management systems, she said.

“Performance management has given DOD the opportunity to re-energize and refocus its efforts and look at how they hire, develop and pay employees for their performance,” she said.

Darryl Perkinson, national president of the Federal Managers Association, recommended going back to the General Schedule pay system "only because it would be easier for managers.” For example, in his position as the nuclear training manager for the production training department at the Norfolk Naval Shipyard in Portsmouth, Va., he manages DOD employees under multiple pay systems.

He said many of the association's members have called for a return to the GS system because of its certainty and reliability. However, it is not a sustainable tool for recruitment, he said. Other managers and supervisors support NSPS because they are “finally being rewarded for the job they do and enjoy the flexibility that NSPS offers them,” he added.

“Any pay system — whether it be NSPS, GS or something entirely different — must adhere to certain basic principles,” Perkinson said. "A shift in the culture of any organization cannot come without an interactive training process that brings together the managers responsible for implementing the personnel system and the employees they supervise."

Bunn said surveys of the workforce show positive attitudes among employees covered by NSPS about some aspects of the system. However, some employees question whether supervisors have the skills necessary to fairly assess performance and the appropriateness of the pay pool panels involved in performance ratings.

“Employees and supervisors are struggling with the more stringent performance measures used in the evaluation process, and employees are questioning whether the ratings are fair,” Bunn said.

DOD needs to develop a comprehensive action plan and take specific steps to reduce negative employee perceptions of NSPS, Farrell said. Otherwise, DOD's civilian employees will likely continue to question the fairness of their ratings and express a lack of confidence in the system, she added.

DOD also needs to encourage pay pools to make meaningful distinctions in employee performance, she said. Without that, employees might continue to feel “devalued,” which could influence morale and motivation.

DOD has taken steps to involve employees in NSPS’ implementation. It has also linked employee objectives to the agency’s strategic goals and mission, trained managers and employees in the system’s operation, and better tied individual pay to performance in an equitable manner, Farrell said. However, DOD still lacks a process to determine whether NSPS rating results are non-discriminatory before they are finalized, she said. DOD does not require a third party to analyze the pre-decision rating results for anomalies.

Although it takes several years for employees to accept big organizational changes, “the degree of ultimate success of NSPS is largely dependent upon the extent to which DOD incorporates these internal safeguards and addresses employee perceptions,” Farrell said.