The new SES pay system will be important not only for SES members but also for other employees, particularly managers.

The SES, being a relatively small group of around 6,000, is seen as a testing ground for pay-for-performance in general and for linking individual performance to agency goals in particular. A series of laws enacted in the 1990s attempted to create such links, but agencies have found it difficult to recast their performance evaluation systems in those terms.

The Defense Department budget act containing the SES pay changes also authorizes the creation of a government-wide “human capital performance fund” similarly designed to reward good performers, while requiring that agencies show “a link between the pay-for-performance system, the employee performance appraisal system, and the agency’s strategic plan.”

Officials working out what that provision and other language specifically require indicate that it will be some time before guidance on the performance fund is issued. It appears likely that guidance on the SES system will come first – and thus set a precedent for employees at other levels.