Pay for Performance: A New Reality for the SES

By on December 17, 2003 in Current Events with 0 Comments

There has been a lot of publicity and disagreement about the wisdom of a pay for performance system for the federal civil service. And, while the pros and cons are being lobbed from one side of the street to the other, a pay-for-performance system has passed Congress for the Senior Executive Service (SES) and plans are well underway to implement the system.

Even if you are not in the SES, you may want to learn a little more about the new system since it may provide a blueprint for any pay-for-performance system that is applied to the rest of government service.

OPM has issued a memo to agency department heads outlining the requirements of the new pay system. (See the link on the left hand side of the page to read the OPM memo.)

First, the new pay system will not pay SES members automatic locality pay adjustments or an automatic, across-the-board pay increase when General Schedule (GS) employees and Executive Schedule officials may get them. Instead, the new system requires all SES pay increases (beginning in January 2004) to be based on individual and organizational performance.

For some, that will obviously not be a good thing. But, for those who perform at the highest level, it will pay them more money than they would get under the previous system.

The new system establishes level III of the Executive Schedule (currently $142,500) as the base salary limit for all SES members. That is actually the starting point though. An agency can set its base pay at a much higher level. Agencies that can demonstrate that their executive appraisal systems make “meaningful distinctions based on relative performance,” may grant base pay increases to their highest performing executives up to level II of the Executive Schedule (currently $154,700). In practice, this means the agency wanting to do this must have a performance appraisal system certified by OPM and with the concurrence of the Office of Management and Budget.

The new pay system also eliminates the six executive service (ES) pay levels. Instead, there will be a payband quivalent to 120 percent of the rate for grade 15, step 1, of the General Schedule (currently $102,168). The maximum rate will be either the rate for level III or the rate for level II of the Executive Schedule, depending on whether the agency’s executive performance appraisal system has been approved.

And, more good news for those executives that are rated as being the highest performers: their aggregate pay can equal that of the Vice President (currently $198,600).

Most SES members will be converted to the new system on January 11, 2004.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.