Performance-Based Compensation

Alternative to the Standardized Rating Score for FY 2008 PBC

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SRS Alternative - Background

• The SRS has been identified as a pain point.

• GAO’s management improvement priorities action plan is looking at alternative pay-for-performance approaches.

1) Short-Term: Identify an interim alternative that could be implemented for this PBC cycle

2) Longer-Term: PAS study and the planned compensation study will consider fundamental issues associated with GAO’s PBC system

• A working group comprised of managers, ARM specialists—including bargaining unit members—and CAO and HCO representatives collaborated to develop alternatives.

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SRS Alternative - Criteria

1. Apply to all GAO communities - APSS, Analysts and Attorneys

2. Be simpler and easier to understand than the SRS

3. Should not advantage or disadvantage employees in teams with higher or lower rating averages relative to other teams

4. Avoid big differences in PBC for employees with similar performance ratings

5. Remain within the budget established by the agency for PBC

6. Avoid negative messages, e.g. “below average”

7. Recognize the Federal government is a competitor

8. Address the need to more quickly move staff in the lower portion of the pay range to the competitive rate

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SRS Alternative - Current Approach

• The SRS is the number of standard deviations an employee’s appraisal average is from the appraisal average for their comparison group (with 5 added to avoid negative numbers)

Calculation: (appraisal avg. – group appraisal avg.) group standard deviation PBC% = (SRS-5) + Budget Factor

• Dividing by the standard deviation magnifies the difference between the employee’s average and the group average and is problematic in small offices or in units where ratings are more closely clustered

• Staff who are meeting expectations but who have relatively lower ratings may get no PBC

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SRS Alternative – New Approach

• As an interim alternative, eliminate the standard deviation and use the numerical difference between the employee’s average and the group average to calculate PBC

Calculation: appraisal avg. – group appraisal avg. PBC percentage: = (appraisal avg. – group appraisal

avg.) + Budget Factor

• HCO would provide staff with their appraisal average and the comparison group average in lieu of the SRS

• Current rules for determining comparison groups are retained pending longer-term review

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SRS Alternative - Analysis

• Addresses the first 5 criteria listed on slide 3 as requirements for an SRS alternative

• As an interim process, responds to many employee concerns about the SRS

• Longer-term actions will need to address criteria 6, 7 and 8 on slide 3

• Supports view that most staff perform similarly with a relatively small number at the high end, and an even smaller number at the low end

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SRS Alternative – Impact on Payouts

• Reduces payouts for staff above the group rating average and increases them for staff below the group rating average

• Minimizes the potential for staff to receive no PBC

• Developed examples using last year’s PBC data (i.e., FY07 performance data and budget factor of 2.75%)

Slides 8 and 9 compare outcomes using 2 examples of typical group averages and standard deviations

Slides 10 and 11 display PBC percentages for ratings near, above and below these typical group averages

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0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

1.500 1.700 1.900 2.100 2.300 2.500 2.700 2.900 3.100 3.300

PBC %

Rating Average

Current

Proposed

Comparison using FY 07 Data, 2.75% Budget Factor2.411 Group Avg. and .561 Std. Deviation

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0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

1.500 2.000 2.500 3.000 3.500

PBC %

Rating Average

Current

Proposed

Comparison using FY 07 Data, 2.75% Budget Factor2.673 Group Avg. and .319 Std. Deviation

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Percentages for 07 PBC with Budget Factor of 2.75%Group Avg.= 2.411, Std. Dev. = .561

Performance AppraisalAverage

PBC Percentage using SRS

PBC Percentage using Alternative

2.429 2.78% 2.77%

3.125 4.02% 3.46%

1.8 1.66% 2.14%

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Percentages for 07 with Budget Factor of 2.75%Group Avg. = 2.673 & Std. Dev. = .319

Performance AppraisalAverage

PBC Percentage using SRS

PBC Percentage using Alternative

2.6 2.52% 2.68%

3.562 5.54% 3.64%

1.8 .01% 1.88%

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SRS Alternative – Working Group

Margaret Braley-HCO Amanda Miller-ARMCarol Bray-ARM Sara Ann Moessbauer-

ARMBob Dinkelmeyer-ARM Bob Mowbray-CAO Greg Dybalski-ARM Mark Ramage-ARMBrandon Haller-ARM Sid Schwartz-ARMCynthia Heckmann-HCO Shana Wallace-ARM Nancy Kingsbury-ARM Greg Wilmoth-ARMRon La Due Lake-ARM

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SRS Alternative – Questions?

• Margaret Braley – 512-5840Braleym@gao.gov

• Shannon Anderson – 512-5884Andersons@gao.gov