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					   DEFCON NSPS Briefing
  Las Vegas, Nevada, Jan 05

Green Slides = DoD Expectations/Limits

Red Slides = Union Analysis/Concerns

January 2005
•   30 days comment period
•   30 days meet and confer
•   30 days Congressional notice
•   July 1 – Labor Relations implementation
•            LR sunsets 2009
•          Spiral 1—Up to 300,000 employees
•   Spiral 1.1, 1.2 & 1.3 - every six months
•   Sec Def must certify Spiral1 before Spiral
           Six Key Parameters

•   High Performing Workforce
•   Agile & Responsive Workforce
•   Credible & Trusted
•   Fiscally Sound
•   Supporting Infrastructure
•   Schedule
    High Performance Workforce
•   Transparent—clear and understandable
•   Credible—trusted
•   Performance and pay linked
•   Ongoing feedback
•   Simplified veterans’ preference
•   Reward system for indiv. & teams
             Agile Workforce
•   Hire faster
•   Easily down-sized –Layoffs
•   Flex to compete and contract out
•   Easily deployable or moveable
•   No unnecessary rules that restrict
    management action
       Credible and Trusted
• Fair & transparent appraisal system
• Dialogue between supervisor & employee
• Due Process assured
• LR that addresses right to bargain while
  meeting DOD mission
• Performance expectations and salary must
  be equitable and understood
           Fiscally Sound
• Conform to OMB fiscal guidance
• Cost Neutral
• 2004-2008 total comp cannot decrease
  below what it would have been
• System provides for cost discipline
• Manage human resources to budget at
  unit level
        Supportive Infrastructure

•   Easy IT software
•   Change & communications training
•   Technical training (pay pools, etc)
•   Processing RIFS thru automated process
•   Personnel data accessible
•   Mass conversions into NSPS
   Other NSPS Requirements
• Collaboration with OPM and DHS

• May be reduced availability of training
  funds which demos indicated was
  necessary—must solved to meet statutory
  requirement for training and retraining on
  performance management system
• Collective Bargaining

• Implementing regulations not negotiable
• Agency regulations not negotiable
• Contract provisions in conflict will be
    DHS Collective Bargaining

• ―Permissive‖ subjects made ―prohibitive‖
   DHS Collective Bargaining
• Management Rights
• No bargaining over procedures or
  arrangements for most management rights
  except for layoffs, discipline, promotion
• No bargaining over ―covered by‖
               DHS LR

• Labor Board appointed by Secretary
• Handles Negotiability and Impasses as
• Handles bargaining related ULP's
• FLRA handles other actions
       DHS Adverse Actions
• Can arbitrate or MSPB
• Mitigation limited-‖wholly unjustified‖
• Performance actions:
  – With PIP-substantial evidence
  – Without PIP-preponderance of evidence
DHS Performance Management
• No requirement for written standards
• Evaluate assignments
• Evaluations could be changed by
  higher levels before you see to ―balance
  out‖, i.e. your manager deemed too easy
  with too many high ratings
• Can grieve & arbitrate ratings using
  current standards
         DHS Pay Systems
• Regulations are very nonspecific
• Compensation Committee with Unions
  – To work out more strategic questions
  – Review annual survey data
  – Secretary makes final decisions
  – Northrup Grumman hired to advise
  – No longer to use BLS salary data—hire
    private company to provide salary data
         DHS Pay System
• Bait and Switch –promise employees
  more money based on ―more market
  sensitive‖ and ―if they perform‖
• 1st Criteria-Budget and Cost (OMB)
• Would not guarantee raises to match
  market. Pay Band would only adjust if
  entry rate of market increases.
• Questions over size of companies to be
         DHS Pay System
• Pay Bands – No grievance over placement
• Payout controlled by budget not
• No guarantees like:
  – Outstanding---4%
  – Above Average—3%
  – Average 1%
  – Pay Pools—move money to favored groups
          DHS Pay System
• Likely effect for most people:

  – Lower salary increases
  – Which will lead to a lower retirement
   Pay for Performance Issues
• Most supporters say if you can’t put more
  money into play—system will not succeed
• FAA Problems—Discrimination Lawsuits
  – Top employees don’t get base salary
    increases---- only cash bonuses
     • One employee calculated loss of $300,000 in lost
       retirement if retired for 25 years
  – Top mgmt said employees should understand
    tight budgets of the agency (Sound Familiar?)
No Pay for Performance Issues
• Remember Merit Pay in 1980’s
  – It was applied to managers only—it was pay
    for performance with no new money—just
    move money around. Created uproar in
    management and after three attempted
    fixes—it failed and was killed in early 90’s.
    If it failed then, why resurrect it for
    everybody now?
No Pay for Performance Issues
• DOD POINTS TO Pay Demo’s as
  evidence of Success

• SO I reviewed DOD’s own report and data

• Here is what I found…….
   DOD Demonstration Report
• PURPOSE: To Improve Effectiveness
• Found: Limited impact on effectiveness
• Wave 1 Survey – only 37% responded
  favorably that demo improved operations
• Wave 2 Survey – only 27% responded
• Wave 1 & 2 were demos’ grouped by start
   DOD Demonstration Report
• 12 demos and no measurable increase in
  effectiveness and only a small minority
  saw any improvement.

• Failed to meet the #1 Objective of
• If no real difference, then why waste the
  time , energy and resources and turmoil?
   DOD Demonstration Report
• 2nd Objective-Lift pay restraints to be more
  competitive in recruitment

• Found: Demos did not see improvement in
  offer/acceptance ratios from pre-
  demonstration levels
   DOD Demonstration Report
• Performance Ratings Fairness –

• Objective to improve with better Training
  and Communication since current systems
  called ―lousy‖ and high quality
  performance system ―key‖ to successful
  pay for performance program
   DOD Demonstration Report
• Performance Rating Fairness Comparison

• GS------68%-73% fair and accurate

• Wave 1-55%-61% fair & accurate

• Wave 2 -55% & 67% fair (but 55% came in
  most recent survey year i.e.., getting
   DOD Demonstration Report
• Rating Fairness Perception by Minorities
  – Worse under new more flexible systems
  – GS-Improved from 64% in 96 to 70% in 2001
  – Wave 1 only 56% in 96 decreased to 49% in
• Does greater latitude lead to increased
  favoritism and discrimination?
   DOD Demonstration Report
• Objective: Improve perception of external
  pay equity

• Perception of pay ―inequality‖ with
  surrounding employers increased between
  96 and 01
• The competitive problem cannot be solved
  by this scheme. It takes $$$!!!
   DOD Demonstration Report
• Objective: Increased Organizational

• Found: No difference between demo and
  non-demo employees
         DOD Demo Report
• Objective: Critical retention would improve

• Found: No discernable difference between
  demo and non-demo groups.
        DOD Demo Report
• DOD actually put more money into these
  demos to make them work to the degree
  some say they worked.

• However DOD has stressed that it will
  NOT have more money, but at best it
  will be budget neutral thereby
  generating far worse results than are
  depicted under the demos.