DEFCON NSPS Briefing Las Vegas, Nevada, Jan 05 Green Slides = DoD Expectations/Limits Red Slides = Union Analysis/Concerns

DOD--NSPS January 2005

TIMEFRAME 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 & every six months Sec Def must certify Spiral1 before Spiral 2

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 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

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

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 one 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” 1 st 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 surveyed.

DHS Pay System Pay Bands – No grievance over placement Payout controlled by budget not performance. 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 favorably 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 Overhaul If no real difference, then why waste the time, energy and resources and turmoil?

DOD Demonstration Report 2 nd 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 %-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 worse)

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 2001 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 Commitment 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.