Human Capital:

DOD Needs to Improve Implementation of and Address Employee Concerns about Its National Security Personnel System

GAO-08-773: Published: Sep 10, 2008. Publicly Released: Sep 10, 2008.

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The Department of Defense (DOD) has begun implementing the National Security Personnel System (NSPS), its new human capital system for managing civilian personnel performance. As of May 2008, about 182,000 civilian employees were under NSPS. DOD's implementation of NSPS will have far-reaching implications for DOD and civil service reform across the federal government. Based on our prior work looking at performance management in the public sector and DOD's challenges in implementing NSPS, GAO developed an initial list of safeguards that NSPS should include to ensure it is fair, effective, and credible. Congress required GAO to determine (1) the extent to which DOD has implemented internal safeguards to ensure the fairness, effectiveness, and credibility of NSPS; and (2) how DOD civilian personnel perceive NSPS and what actions DOD has taken to address these perceptions. To conduct this work, GAO analyzed relevant documents and employee survey results; interviewed appropriate officials; and conducted discussion groups with employees and supervisors at 12 selected installations.

While DOD has taken some steps to implement internal safeguards to ensure that NSPS is fair, effective, and credible, the implementation of some safeguards could be improved. Specifically, DOD has taken steps to (1) involve employees in the system's design and implementation, (2) link employee objectives and agency goals, (3) train employees on the system's operation, (4) require ongoing performance feedback between supervisors and employees, (5) better link individual pay to performance, (6) allocate agency resources for the system, (7) include predecisional safeguards to determine if rating results are fair and nondiscriminatory, (8) provide reasonable transparency, and (9) provide meaningful distinctions in employee performance. GAO believes continued monitoring of all of these safeguards is needed to ensure that DOD's actions are effective as more employees become covered by NSPS. GAO also determined that DOD could immediately improve its implementation of three safeguards. First, DOD does not require a third party to analyze rating results for anomalies prior to finalizing employee ratings, and therefore it is unable to determine whether ratings are fair and nondiscriminatory before they are finalized. Second, the process lacks transparency because DOD does not require commands to publish final rating distributions, though doing so is recognized as a best practice by DOD and GAO. Third, NSPS guidance may discourage rating officials from making meaningful distinctions in employee ratings because it indicated that the majority of employees should be rated at the "3" level, on a scale of 1 to 5, resulting in a hesitancy to award ratings in other categories. Without steps to improve implementation of these safeguards, employee confidence in the system will ultimately be undermined. Although DOD employees under NSPS are positive regarding some aspects of performance management, DOD does not have an action plan to address the generally negative employee perceptions of NSPS. According to DOD's survey of civilian employees, employees under NSPS are positive about some aspects of performance management, such as connecting pay to performance. However, employees who had the most experience under NSPS showed a negative movement in their perceptions. For example, the percent of NSPS employees who believe that NSPS will have a positive effect on DOD's personnel practices declined from 40 percent in 2006 to 23 percent in 2007. Negative perceptions also emerged during discussion groups that GAO held. For example, employees and supervisors were concerned about the excessive amount of time required to navigate the process. Although the Office of Personnel Management issued guidance recommending that agencies use employee survey results to provide feedback to employees and implement an action plan to guide their efforts to address employee assessments, DOD has not developed an action plan to address employee perceptions. While it is reasonable for DOD to allow employees some time to accept NSPS because organizational changes often require time to adjust, it is prudent to address persistent negative employee perceptions. Without such a plan, DOD is unable to make changes that could result in greater employee acceptance of NSPS.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To better address the internal safeguards and improve employee trust in the NSPS performance management system, the Secretary of Defense should direct the National Security Personnel System Senior Executive to provide guidance to pay pools and supervisors that encourages them to rate employees appropriately, including using all categories of ratings as warranted by comparing employees' individual performance against the standards.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD partially concurred with our recommendation and, in April 2009, posted to its NSPS Web site a "fact sheet" emphasizing that the forced distribution of ratings is prohibited under NSPS and describing how meaningful distinctions in performance are made under the system. DOD's fact sheet provided guidance specifying what constitutes the forced distribution of ratings, why the forced distribution of ratings was prohibited, how use of standard performance indicators minimizes the potential for individual bias or favoritism, and how organizations could best apply this information when rating and rewarding employee performance under NSPS. By issuing this guidance, we believe that DOD has addressed our recommendation and has taken an important step towards helping ensure that NSPS is a fair, effective, and credible system.

    Recommendation: To better address the internal safeguards and improve employee trust in the NSPS performance management system, the Secretary of Defense should direct the National Security Personnel System Senior Executive to require commands to publish the final overall rating results.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with our recommendation and, in November 2008, amended its NSPS regulations and implementing issuances to require commands to publish the final rating results to employees. Under DOD's revised guidance, commands are required to communicate the general pay pool results to the NSPS workforce in writing. At a minimum, this includes the number of pay pools (if aggregate pay pool results are necessary), the number of employees rated, the rating and share distributions, the average rating, the average share assignment, the share value (or average share value), and the average payout expressed as a percentage of base salary. Further, during the course of GAO's audit work for our 2009 review of NSPS, we found that at the eight locations we visited, this information was shared with employees, in accordance with DOD's amended guidance. Having taken these steps, we believe that DOD has addressed our recommendation and has taken an important step towards helping ensure that NSPS is a fair, effective, and credible system.

    Recommendation: To better address the internal safeguards and improve employee trust in the NSPS performance management system, the Secretary of Defense should direct the National Security Personnel System Senior Executive to require a third party to perform predecisional demographic and other analysis as appropriate for pay pools.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD did not concur with our 2008 recommendation to require a third party to perform an independent, predecisional demographic and other analysis as appropriate for pay pools. The department did not feel that integrating such analyses as part of the predecisional pay pool deliberation process was warranted. The National Defense Authorization Act for Fiscal Year 2010 subsequently repealed DOD's authority for the National Security Personnel System (NSPS) and required that NSPS be terminated and all employees be transitioned to the pay and personnel system that last applied or would have applied if NSPS had not existed. Thus, given the termination of NSPS, coupled with DOD's nonconcur, this recommendation is no longer valid and is closed as not implemented.

    Recommendation: To better address the internal safeguards and improve employee trust in the NSPS performance management system, the Secretary of Defense should direct the National Security Personnel System Senior Executive to develop and implement a specific action plan to address employee perceptions of NSPS ascertained from feedback avenues such as, but not limited to, DOD's survey and DOD's and GAO's employee focus groups. For example, the plan should include actions to mitigate employee concerns about the potential influence that employees' and supervisors' writing skills have on the panels' assessment of employee ratings and the lack transparency and understanding of the pay pool panel process.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD partially concurred with our recommendation and believes the department has been transparent about NSPS implementation and workforce concerns. While the department has taken several actions based on issues and concerns raised in our report, we do not feel that these actions address the intent of our recommendation. Specifically, actions taken by the department since our 2008 report include (1) the issuance of a memorandum on June 24, 2009 from the PEO to the components which described actions that should be taken at the component and unit levels to address key workforce concerns about NSPS; (2) the publication of the 2008 evaluation report on the NSPS website, which identifies other actions taken, for example, the release of an improved automated performance appraisal tool; (3) the addition of requirements, such as the communication of annual pay pool results to members, in the NSPS regulations and implementing issuances for organizations; and (4) the development and operation of ?NSPS Connect? to address concerns about insufficient training and provide employees by providing additional topical, instructive, and informational material to facilitate the assessment writing, rating, and pay pool panel processes. The department also underwent a comprehensive review of NSPS conducted by the Defense Business Board which provided recommendations related to such things as the fairness, transparency, and effectiveness of NSPS. As noted, these actions do not meet the intent of our recommendation to develop and implement a specific action plan to address employee perceptions of NSPS, as ascertained from various feedback avenues. Given that the aforementioned actions do not meet the intent of our recommendation and that NSPS was subsequently repealed and all employees were returned to their legacy personnel and performance management systems, this recommendation has been overtaken by events and should, therefore, be closed as not implemented.

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