| New SES Performance-based Pay System
The new SES Performance-based Pay System, effective on January 11, 2004, gives Federal departments and agencies a rare opportunity, and a powerful tool to transform their cultures, linking executive compensation to the achievement of mission and organizational results.
Changes to Senior Executive Service (SES) pay and performance management derive from provisions of the Homeland Security Act of 2002 and the National Defense Authorization Act for FY-2004. The basic framework of these provisions is:
SES will be paid within a range that begins at the GS-15 step 5 rate (currently $103,700) up to a rate equivalent to executive level III (currently $144,600). Locality pay rates for the SES will be eliminated. Automatic annual increases will not apply to individuals but can be used to increase the broad pay range. Agencies must develop a performance-based process to determine pay within the range. Agencies that have an OPM-certified process that makes meaningful distinctions among executive performance and are linked to the agency's strategic goals will be allowed to increase the top of the SES pay range to executive level II (currently $157,000) and will be able to raise the cap on total SES annual compensation from $174,000 to $201,600 - the rate of pay for the Vice President.
These provisions provide agencies with powerful new tools to manage compensation for their most effective executives. But the real opportunity here is to enhance an agency's ability to achieve its strategic goals through improved planning, objective-setting, and monitoring of performance. In other words, it's an opportunity to change the management culture of the organization. This is more than a change in personnel rules. Consequently, it will be more difficult to implement and will require far more thought and planning. To help agencies begin to think about their approach, agencies may want to consider these steps:
| Step 1: |
Orient Decision-Makers |
| Step 2: |
Assess current system and management environment |
| Step 3: |
Design and develop new system |
| Step 4: |
Obtain system certification |
| Step 5: |
Communicate with stakeholders |
| Step 6: |
Train executives and raters |
| Step 7: |
Define metrics and evaluation plan |
The Executive Performance Consortium can assist agencies in implementing any or all of these steps. The consortium offers expertise in executive compensation and performance management from both the private and public sectors. To learn more about the capabilities of the Executive Performance Consortium, send an email to: Consortium@fmpconsulting.com, or telephone Tim Barnhart or Glenn Sutton on 703-671-6600.
|
