The potential for politicization and the emphasis on reducing the number of executives getting top ratings have raised questions about the SES pay-for-performance system, which was launched in 2004 and is seen as a potential model for linking pay more closely to performance at other levels of the government as well, the Congressional Research Service has said.
The SES system was revised in order to improve both accountability and mission accomplishment. On the carrot side, the former six levels of SES pay were replaced by a single pay band, with agencies having greater discretion to place individuals at higher pay levels due to their qualifications and performance. On the stick side, CRS said, under the prior policy an exec’s pay could be reduced for performance or conduct reasons by no less than 5 percent, while under the current system, a 10 percent reduction is possible.
As that system has gotten established, much of the attention has been focused on the quality of the ratings and the potential for manipulation.
Said CRS: "Whereas some believe the new SES pay system promises to be effective and credible, the judgment of other interested parties, including some senior executives and other federal government employees, will apparently hinge on whether they perceive the system as being equitable, including being free from partisan influence, and transparent. The general acceptance of the new pay system may be contingent, at least in part, upon how it is implemented and how it is perceived."
One troubling early sign, it said, was a 2005 DoD policy, since overridden by law, that would have allowed non-career SES members to receive a higher increase in base pay than certain categories of career SES members,
"Speculation within the SES ranks as to why certain members of the service fared better than others on performance appraisals might be fueled by, or lead to, charges of favoritism. Perhaps such concerns have existed previously, but the perceived increase in latitude afforded supervisors under the new system has led some to suggest that perceived favoritism may be a problem, or a greater problem, under the new system than it was under the previous system," the report said.
Said CRS, "Ultimately, the significance of the differences in how agencies allocate pay increases may be determined by senior executives themselves. Will they view the lack of standardization as inequitable, or desirable, whereby agencies are allowed to exercise discretion? Answers may vary depending upon, perhaps, where a senior executive is employed."