For the Federal managers and employees among you, here are some links about 
pay for performance.  In my long musings on the sessions on change management 
at SAA, I mentioned that change often occurs in several areas simultaneously 
and in rapid succession and that agencies need to be prepared and plan for 
handling how change in one key area may affect another.  They also need to consider 
how employees react to these changes.  I specifically mentioned the 
reconciliation of projects requiring teamwork and colloboration with processes that may 
lead tinstead to increased competitiveness. 

Pay for performance (PFP) represents a huge change from the way Federal 
agencies have been administering pay and performance measurement.  Also, the budget 
environment for most civil agencies is very tight right now.

See
http://www.governmentleader.com/issues/1_5/features/107-1.html 

Also see the analysis by the U.S. Merit Systems Protection Board at
http://www.mspb.gov/studies/rpt_03_06_pay_for_performance/decision_points.htm
which provides a thoughtful look at Pay for Peformance, organizational 
cultures, etc.  

Regarding funding, the report states:"It is important to note that 
reallocating existing funding sources as discussed so far creates a win-lose situation 
in the organization. A pay for performance system funded by money earmarked for 
the general increases and WGIs typically results in some employees obtaining 
more than they would have otherwise and others receiving less. This may create 
resistance among those who perceive that their incomes are falling behind and 
heighten competition among employees in a negative way. This discrepancy 
appears most problematic for the “good, solid employees” who may no longer 
receive regular, though modest, increases to recognize their contributions. An 
alternative strategy to relying upon the existing salary budget would be for 
agencies to increase the total amount available for performance-based pay increases 
by tapping other sources of funding. For example, the Human Capital 
Performance Fund (HCPF) provides managers with additional funds (not drawn from within 
their agency budgets) for rewarding outstanding performers. However, agencies 
must cover any future increases in personnel costs and benefits resulting from 
such rewards.  It may also be possible for agencies to pursue other funding 
options, such as through a working capital fund or through a supplemental 
appropriation to support the implementation of a pay for performance plan. 

Greater budget creativity and advance planning will most likely be necessary 
to appropriately fund pay for performance systems because such systems 
represent a shift away from the predictable pay increases and salary budgets 
associated with the General Schedule pay plan."

Also of interest in the MSPB analysis is the section on "forced distribution" 
of employee rankings.

For more reading on PFP, see
http://www.govexec.com/features/0204/0204s4.htm
and
www.gao.gov/new.items/d0483.pdf 

Maarja

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