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A Status Report on Demonstration Projects and Other Performance-based Pay Systems provides an overview of Performance-based Pay Systems (PPSs), profiles current PPS projects, and presents trends and observations regarding PPSs that currently support over 298,000 Federal employees. This report covers three categories of PPSs. The first category is demonstration projects authorized under chapter 47 of title 5, United States Code. Under this authority, OPM establishes and evaluates demonstration projects designed to test whether certain changes in personnel management practices, such as a change to performance-based pay from a longevity-based system, would improve Federal personnel management. The total number of employees in this category is 42,606. The second category includes agency-specific, independent systems established under specific legislative authority. These systems cover almost 247,000 employees. The final category is Governmentwide executive pay systems, comprising the Senior Executive Service and the Senior Foreign Service, covering 8,643 executives. Several trends and observations emerge from our experience with performance-based pay systems in all three categories: * Performance-based pay systems continue to be successful, as evidenced by many evaluations and a stronger link between pay and performance than under longevity-based pay systems. * Achieving success entails significant effort, but pays off by achieving a results-oriented performance culture. * Under PPSs, managers and supervisors manage performance more * The ability to recruit and retain a high-quality workforce increases under * Payroll costs are being controlled, but cost discipline must be maintained as these systems expand and mature.

Alternative Personnel Systems

United States. Congress. Senate. Committee on Homeland Security and Governmental Affairs. Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia

Published: 2006

Total Pages: 204


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In 2003, the Volcker Commission recommended that explicit pay-for-performance (PFP) systems be adopted more broadly throughout the federal government. In this occasional paper, the authors compare several proposals aimed at enhancing the role of such PFP schemes for federal civil servants, and examine the pros and cons of PFP schemes compared with seniority-based salary systems, as well as the proposals to change the General Schedule system.
Pursuant to a congressional request, GAO provided current information on private sector and federal white-collar employee compensation packages. By law, federal employees' salaries are set at a level equitable and comparable with similar levels of work in the private sector, unless the President proposes alternative federal pay rates. There is no such requirement for benefits comparability. GAO analyzed several pay and benefits comparability studies conducted by private and federal organizations, but did not independently validate the data contained in the studies. GAO noted that an independent study found that: (1) as of 1984, federal employees' total compensation averaged 7.2 percent less than that for private sector employees; and (2) in 1985, the difference increased to 9 percent or more because the federal pay increase for 1985 was limited to less than the average pay increase in the private sector. GAO found that: (1) frequent presidential use of alternative pay rates caused pay for federal employees to lag significantly behind that for private sector employees; (2) an 18.28 percent federal pay increase would be necessary to achieve federal pay comparability in 1985; (3) the federal retirement system is better than the average private sector system because it is worth more as a percentage of the average employee's pay, and federal retirement benefits are adjusted annually to offset consumer price increases; (4) private studies indicated that private sector employers generally pay a higher share of employee health insurance premiums than does the government; (5) private sector employee life insurance programs provide more basic coverage than the federal employee program, usually at no cost to the employee; (6) while federal employees generally receive one less holiday than private sector employees, this is offset by more generous federal annual leave benefits; and (7) federal sick leave lags behind the average private sector illness and disability income plan by 0.7 percent of pay.