9 An HR System That Helped Make an Agency

National Geospatial-Intelligence Agency

The National Geospatial-Intelligence Agency (NGA) plays a key role in our nation’s defense and security by providing critical geospatial data both digitally and through more traditional mapping to the military services, other intelligence community agencies, and civilian agencies in time of need and emergency, such as coping with natural disasters. To meet these ever-expanding needs, NGA has gone through remarkable changes over the past 15 years. Created as the National Intelligence and Mapping Agency (NIMA) in 1996, the agency was renamed the National Geospatial-Intelligence Agency in November 2003. It was initially formed from nine different agencies or elements, each with its own systems, procedures, and culture. The new agency developed a new identity and culture, along with common systems and procedures. One key aspect of this effort was the development of a new and comprehensive human resources system that would address the needs of the new organization and help define the new agency culture.

Over the past 15 years, NGA has received notable recognition for its HR accomplishments, including the President’s Quality Award, Workforce magazine’s Optimus Award, and designation in 2009 as one of the 50 Best Places to Work by Washingtonian magazine. Its recently consolidated campus in the Washington, DC, area reflects the agency’s success in creating an integrated, fully functioning entity. An important component of the agency’s efforts over the past 15 years is a new HR management system that embodies NGA’s core values, business requirements, and critical mission.

This remarkable journey required a high degree of persistence and flexibility—a willingness to apply new ideas, objectively assess their impacts, and in some cases move on and try alternatives. NGA had a clear case for change, but was faced with the challenge of developing a process for detemining the features of the new HR system and processes, deciding who would be involved in the development, and crafting a way to communicate and incorporate the resulting changes into everyday life at NGA.

Making It Real

Late in 1996, while the ink was still drying on the official documents creating NIMA, the leaders of this new agency immediately realized they had been given a once-in-a-career opportunity: Their new legal and regulatory framework gave them the flexibility to completely rethink HR. They could define their own policies for how to pay people within more flexible Title 10 limits. They could design new processes for hiring that were faster and more streamlined, and they could apply more progressive approaches to the employment contract. They could re-evaluate fundamental terms and concepts like “job,” “career,” “performance,” and “rank.” But they also realized that they faced a daunting leadership challenge: They had inherited a culturally fragmented workforce that came with many different biases, assumptions, and comfort levels regarding HR approaches and values. They were perceptive enough to see that the opportunity and the challenge were really one and that by tackling both energetically they could pull this new agency together and give it life.

The new agency’s leadership first focused on coming together to reach agreement on a basic vision and philosophy for HR that could guide the agency as it worked to fill in the details. Through a series of leadership off-site sessions, they outlined the elements they wanted to include: broad pay bands, rank-in-person, performance pay, strategic alignment, manager-owned HR processes, modern HR technology and tools, an occupational structure, and standards derived from their own requirements.

The leaders organized a large, visible effort to put some flesh on the skeleton system they had designed. They formed eight key teams, each focusing on a major HR functional area or requirement: occupational structure, performance management, pay, promotions, assignments, workforce planning, training, and hiring. The teams were staffed primarily with employees and managers from across all segments of the agency, but each team included at least one HR specialist. Union members participated on most of the teams and had input on all aspects of the process. This broad participation required additional development time and costs at the outset, but it provided many valuable perspectives that were incorporated into the design—and it proved to be critical to the eventual acceptance of the system by the workforce.

NGA conducted considerable research into alternative systems and options, and then had to determine which features were the best fit for the new agency. Which approaches best supported the goals and developing culture of the new organization? What was the most logical choice in terms of sustained administration and cost? Could the agency create a system within budget-neutral constraints that would be motivational to employees?

Several key features that NGA initially selected or that evolved to over time led to the success of the program, including:

• One band structure for all occupations

• Clear distinction between performance management and performance pay

• Performance pay algorithm that applies a midpoint principle

• Application of a bonus process that is separate from but related to salary increases

• Realistic budget

• Safety net for developing employees

• Balanced and controlled promotion process.

Developing these features typically required advanced testing, then actual application in live pay cycles and, in some cases, modification over time after results and surveys were assessed. The teams developed policy for the new agency in these areas and across the full spectrum of HR functions, from hiring policy to reduction-in-force. Their goal was to provide a new and comprehensive approach suitable for the workforce of the 21st century. Each team developed policies in their areas of expertise and all proposed policies were coordinated through the task group, NGA management, the Department of Defense (DoD), and the Office of Personnel Management (OPM).

A review of the primary features of the system, how they were developed, and how they evolved offers insights and lessons learned that can benefit other agencies working to take their HR systems to the next level.

Pay and Performance

Some pay band systems use separate band structures for different occupational groups or labor categories. While the use of multiple pay ranges is intended to apply greater precision in compensation by defining specific salary ranges by occupational groups, it can create issues with employee placement as well as administration and maintenance. When exploring options with its occupational subgroups, NGA found that this approach was controversial and divisive. To avoid the pitfalls and inherent complexity of multiple band structures, the agency decided to focus on creating a common structure for all its occupations.

By reviewing its current jobs with subject matter experts in each occupational field and focusing on where the true breaks in work occurred across all the general schedule (GS) grades, NGA was able to define all work within three very similar band structures. With a few adjustments, the three structures were consolidated into one band structure with five broad bands that reasonably reflected the pay ranges for all occupations, labor categories, and work levels. The criteria for each band could be tailored to the occupation and labor category. The processes of hiring, performance management, assignments, promotions, and career development were all applied in the context of each occupation and work level against the common band structure.

Once the structure was determined and linked to GS grades, basic administration was relatively simple; band range adjustments were made each year to reflect the changes in the GS salary structure. The band pay ranges were linked to GS grades, but were not locked into them. For example, the top salary limit in each band was raised by the equivalent of two steps over the top grade associated with that band.

NGA applied its Title 10 flexibilities to broaden the compensation range, which was supported by labor market analysis. This provided those employees who were at a top grade and step some additional salary ceiling under performance pay. The linkage of bands to grades changed over the years, with minimal complexity in the administration of the structure.

One of the key principles under the new system was to make a clear distinction between performance management and performance pay. Performance management is first and foremost a feedback mechanism to employees. While its function as an input to performance pay is important, that is not its primary purpose. NGA has always emphasized that the two processes are distinct and separate, even though there is significant linkage between them. Performance feedback is provided as soon as possible after the end of the rating period in September, and performance pay results are a separate form of feedback in January.

NGA did not fundamentally change the performance management process over the first nine years, except to refine the schedule and training and to develop a more robust review process to improve rater consistency. The ratings trend over the first five years was typical for a performance-based system. Initially about the same number of successful and excellent ratings were given, but over time most ratings shifted into the excellent score range. NGA has had to consider a fundamental question about this shift. The intent of a performance-based system is to increase performance, but how much of the increase in ratings is due to rating inflation rather than true improvements in performance? Other metrics reflected advancements in agency accomplishments overall, but it was impossible to determine how much of the advancements stemmed from changes in mission and technology and how much could be attributed to the performance-based system.

After the fifth year, ratings leveled off under the more rigorous review process, with the majority of ratings remaining in the excellent range. The conversion to the Defense Civilian Intelligence Personnel System (DCIPS) in FY2008 gave NGA an opportunity to recalibrate its ratings patterns and reinforce the concept that “successful” means the employee has successfully accomplished the assigned task or what is expected—and is not a “mediocre” rating, as some had perceived. As a result, over 40 percent of the overall ratings were in the successful range that year, and there have been only moderate increases in ratings in subsequent years, largely due to the more robust rating review process.

Alternative systems vary widely in how salary increases are determined. Some projects create a pay line that links greater total pay to higher performance or contribution. Salary increases are allocated based on this fundamental correlation within the available budget. Other systems create a more direct computation that simply applies higher salary increases for higher ratings, regardless of how high the employee’s salary already is in the band. While this approach may seem logical to the employee (higher performance has a direct linear relationship to higher salary increases), it ignores the idea of a midpoint principle, where the midpoint salary range generally reflects the labor-market value of the work in the band and salary increases are moderated as employees move into higher salary levels in the band. Performance is still the primary driver for higher salary increases, but increases for any given level of performance are modified by the employee’s total pay in relation to the midpoint and salary range of the band.

NGA recognized at the outset the importance of applying a midpoint principle in the salary-increase algorithm. It applies the same principle as pay-line systems, and also reflects the moderated pay progression inherent in the GS grade and step structure, where step increases within the grades are awarded at a decreasing rate over time (every year for the first three step increases, every two years for the next three step increases, and every third year for the last three step increases). It recognizes that the middle salary range of the band generally reflects labor-market rates and that the top of the band is not the target. Paying higher total salary in the band is recognition—and also an expectation—of higher performance.

Putting this theory into practice required an innovative approach. It became obvious in early pay-pool simulations that the midpoint principle could not be applied manually in a consistent way while considering all the other variables. To address this, NGA built a salary increase algorithm into a performance pay spreadsheet that allocated the available salary increase budget to employees within the pay pool based on the unique arrays of performance and position in a band for all employees, within the available budget. This provided a consistent and defensible starting point, and further adjustments could be made with documented justification for the changes.

The next major hurdle was effective communication of this principle and process to managers and employees. Their focus needed to be on the total pay of the employee, not simply the latest salary increase. Employees paid high in the band were already being paid for high levels of performance. Performance still makes a difference in the salary-increase outcome, but salary level and the available budget are also factors. The unique array of factors in any given pay pool—the budget based on the salaries of the employees, the ratings, and the salary levels in the band—all combine to create a unique array of salary decisions. These factors and characteristics of the process were continually communicated through training, websites, and reports out to the workforce at the end of each annual cycle. After General James Clapper became the Director of NGA, he took this one step further and renamed the process “total pay compensation” (TPC) to reinforce the central concept of the process.

Salary patterns established over the past 14 years at NGA bear out the validity of this approach. Unlike systems that simply focus on the salary increases and not total pay, and tend to rapidly “top out” employees at the top of the band, only about 6 percent of NGA’s total workforce are topped out in the bands (with most in band 5, which does not have any further headroom with promotion within the banded structure). Attrition and new hires tend to balance out the average salary near a midpoint level in the band, and the performance pay salary computation also plays a role in that balance.

Bonuses are one-time payments that are in addition to base salary. The pay philosophy behind bonuses impacts how they are applied in different systems. Some systems treat bonuses as a form of variable pay and split a total payout to the employee between salary and bonus. The rationale for the split under this approach can be ambiguous because panels can consider performance, the salary levels within the band of the employees, and related factors as they apply the two forms of pay within specific budget limits. It is often difficult for pay pool panels to apply the funding in a logical or consistent way that can readily be explained; as a result, there is less perceived transparency in the process. In addition, many employees view the bonus portion as less valuable because it does not add on to the total salary portion that carries into future years. Another common approach is to apply bonuses only for extraordinary accomplishment or for “sustained superior performance;” they can be considered a form of annual award. This approach has a stronger link to performance and therefore a much clearer rationale.

NGA opted for this latter approach and made it the second step in the performance-pay process after the panel determined salary increases. Bonuses had a separate budget from salary increases, and the two budgets were allocated to each pay pool. In the early pay cycles, bonuses were distributed to approximately 75 percent of the population each year, which generally resulted in relatively low bonuses that were simply considered a less desirable form of payment by employees. The Director of NGA questioned the motivational value of bonuses and whether they were money well spent by the agency. He limited bonus distribution to 45 percent of the workforce in subsequent cycles, which resulted in higher, more meaningful bonuses for the workforce.

Budget is always a challenge in a federal performance pay system. Because there is no profit margin in government that can be reallocated through performance pay, some argue that performance pay is not a suitable system for government. The process has to be budget-neutral or at least budget-sensitive, which greatly limits funding options. In this context, NGA applied the funds that had been used for within-grade increases, grade-to-grade promotions that were now within the broader bands, and quality step increases to establish a salary increase budget of just under 2.4 percent of all banded employees’ base pay. The bonus budget was carved out of the portion of the awards budget that was used for sustained superior performance awards. The bonus budget started out at less than 1 percent of base pay and over several years was increased to a peak of 1.9 percent in 2010; it was then reduced back to 1 percent (for bonuses and awards) with the federal pay freeze restrictions applied in 2011 and 2012.

Overall, NGA has maximized its use of available funding for salary increases and bonuses while keeping in line with other defense intelligence agencies’ compensation expenditures. The fact that the average salary has remained within prescribed limits at NGA over the years validates both the salary-increase funding levels and the application of the midpoint-principle salary algorithm.

Because performance pay is awarded within a budget, it could be viewed that employees within a pay pool compete with each other to some extent for performance pay. Some critics point to this as a fundamental shortcoming, asserting that performance pay will inhibit or even destroy teamwork. Why would an employee cooperate with others if it could mean a greater share of performance pay for others? This is a dubious argument that implies that it is preferable to continue with a longevity-based system rather than risk teamwork. The reality is that several factors still encourage teamwork by individuals in a performance-pay system. Quite often the work itself requires coordinated teamwork and collaboration for the individual to succeed, which builds upon the reciprocal nature of teamwork. In addition, the success of the organization overall can enhance the ratings of the individual. For most employees, the mission is their primary goal. All these aspects of mutual benefit encourage teamwork.

NGA took steps in the design to mitigate the potentially negative impacts on teamwork. Effective teamwork has always been a part of the performance assessment, which addresses not only what you accomplish but how you accomplish tasks. Reviewers consider the impacts on overall results and the organization when approving ratings. Panels discuss the “how” as well as the “what” in pay-pool deliberations. While the perceived conflict of performance pay and teamwork will remain an ongoing academic debate, from all indications the focus on performance has not degraded teamwork in the NGA experience.

Of more concern with budget limitations is the impact on newer, developing employees, who typically cannot compete with experienced employees in the same pool for the same funds. In theory a few aspects can work to the developing employee’s advantage: (1) lower performance expectations and standards at lower bands are factored into their ratings; (2) their relatively low salary position in the band salary range tends to leverage a higher salary increase in the performance-pay process when the midpoint principle is applied; and (3) eventual promotion to the full-performance band 3 represents a significant increase in salary. Nevertheless, initial pay-pool simulations indicated that developing employees generally received lower average ratings and could not keep up or catch up with more experienced employees in the same pool. Promotions to band 3 could take years to achieve, and then those employees were still relatively inexperienced at the next band work level.

Adding to this disparity was the fact that employees in comparable graded positions at other agencies had regular step increases and could rapidly advance with more promotions through several grades. Many even had regular noncompetitive career ladder advancements scheduled through a set of grades until they reached the full-performance grade.

NGA wanted to avoid a career-ladder process and culture, which typically means virtually automatic advancements on a regular schedule regardless of performance beyond a minimal level. That approach is at odds with a true performance-based system, but developing employees clearly needed some kind of safety net for advancement.

To address this dilemma, NGA developed a limited career ladder process called the occupational advancement (OA) process, which applied the salary equivalent of grade-to-grade promotions within the developmental band 2 in an annual review process. Occupations set specific expectations for advancement in terms of performance and development of proficiencies, and employees were advanced if they met the criteria. The OA employees were also eligible for performance-pay salary increases, to instill the performance culture from the outset. Once they advanced to the target-salary level in the full performance band 3, future advancement was only though performance pay and the competitive promotion process. The OA process was converted to the developmental program (DP) under the Defense Civilian Intelligence Personnel System (DCIPS) in October 2008, and the current target advancement is to the bottom of the full-performance band 3.

The OA/DP process has had mixed results. On the plus side, developing employees’ pay has progressed at about 10 percent per year and they have kept pace reasonably well with graded-system salary advancement. However, over 99 percent of the OA/DP employees are advanced each year, which brings into question whether the criteria are being applied with adequate rigor or if the process is being treated like an entitlement similar to step increases and some career-ladder advancements under a graded system. This process needs to be reviewed periodically to ensure that meaningful standards for advancement are set and followed, but in the final analysis, a safety net is required until employees have reached the full performance band; the OA/DP process achieves that intent.

Promotions

The promotion process proved to be the most controversial and challenging aspect of the new system and has consequently undergone considerable transformation at NGA. The initial intent was to establish a system similar to that used by the Central Intelligence Agency (CIA). The CIA system is considered a rank-in-person process, where employees can be assigned to higher level work and then be promoted at a later date, once they have demonstrated their performance and proficiencies at the higher work level. Promotions are considered by occupational boards in an annual process. However, in DoD that flexible-assignment approach potentially runs afoul of the merit principle of equal pay for equal work, unless the organization can moderate the job expectations to the lower grade level and add oversight. Even with those modifications, several significant issues arose with the annual promotion process for NGA.

Grade inflation was considerable over the first few years as occupations received a limit on the number of promotions, and then the selected employees were upgraded in place rather than moved to higher graded vacancies. Because occupational boards determined the promotions, the resulting structure and assignments often did not sync with operational requirements. Perhaps the most critical issue was that NGA employees felt distinctly disadvantaged when outside hires could be brought on board with a promotion, but current employees had to wait for the annual promotion process to be considered. General Clapper suspended promotions for 18 months while the agency regrouped and developed a more workable alternative. The hiatus in promotions prompted organizations to realign their positions and work more effectively; with normal attrition, some of the high band numbers fell more into line with requirements.

NGA then developed a hybrid promotion approach that included competitive promotions throughout the year and an optional annual promotion process. Organizations determined how they would promote, but both approaches required that the organization have a valid vacant position at the appropriate band level in place before they could promote. This controlled the grade-inflation issue and provided reasonable flexibility. Not surprisingly, most managers and employees preferred promotions throughout the year, so employees got promotions sooner and managers could fill positions when needed. With this change, less than 5 percent of the promotions now occur through the annual process.

Through this evolution, NGA tried the rank-in-person approach and migrated toward a more traditional DoD system that allowed visible competition for most jobs, filled them when required, and used position management to provide more effective controls on grade inflation. Employees considered the new process more transparent and thought it put them on an even playing field with outside candidates.

The more general issue is that there are fewer promotions across broad bands than under a graded structure. The broad bands provide greater salary potential with performance pay, but promotions in a graded structure provide significant salary increases along with the increased status that comes with each higher grade designation. For many employees, the higher grade status with each promotion in the graded structure is just as important as the higher pay. Some employees feel that their career paths lose some clarity with the broad band structure when they are designated a band 4 rather than specifically a GS-13 or GS-14. NGA recognizes that this is an issue for some employees, especially those who have been under a graded system, but believes the benefits and flexibilities of broad bands far outweigh those concerns. With other DCIPS organizations converting to or remaining in grades, this may continue to be an issue.

Other Changes

NGA implemented several other initiatives as part of this overall effort. The occupation structure was simplified from more than 600 position descriptions into 25 occupations that align to the new band structure. Occupational councils were created for each occupation or group of occupations to oversee occupational guidelines and functions. Occupation councils provided more specific context for the occupations within the general band structure and ensured that they aligned properly with band descriptions, performance standards, and promotion criteria. NGA revised its hiring and recruiting processes to support the new band and occupation structure and NGA’s strategic workforce plan.

During this period NGA also implemented a new HR information management system, PeopleSoft. This system provided an opportunity to incorporate the newly reengineered business processes (including pay bands, performance management, performance pay, and promotions) into the new IT system.

Persistent Improvement

NGA has maintained its focus on process improvement throughout the evolution of the new processes. The promotion process provides the most dramatic example: NGA pushed forward with an entirely new approach, assessed the results, listened to feedback from all levels, and demonstrated the fortitude to suspend and radically change the approach when doing so made sense. Changes to performance management, performance pay salary increases and bonuses, and the occupational advancement process reflect more typical incremental adjustments that were implemented over time. NGA continually assessed results and solicited input from all levels of the organization.

One of the recurring inputs from employees after a few years into the process was that NGA had a good process and needed to stop implementing so many changes—employees wanted a stable process! NGA complied and pursued further changes only when there was a compelling reason. Organizations need to be careful not to be overly reactive to input, and process improvements have to be weighed against the continuity and stability of the process.

The development and implementation of the National Intelligence Civilian Compensation Program (NICCP) for the entire intelligence community and the DCIPS for the DoD intelligence community (IC) reflect the positive results of NGA’s efforts. Both initiatives considered a wide variety of options for pay-band and performance-pay systems, but they eventually adopted all the key features of NGA’s TPC process. The band structure, separation of performance management and performance pay, pay philosophy and salary algorithm, applying limits on bonus distribution, and including a developmental program as a safety net for new employees were all adopted in full or with minor modifications to meet the needs of the wider range of organizations. In the process, NGA incorporated a few modifications from DCIPS. The most significant change was the new performance-management system, which could be readily integrated into existing processes and allowed NGA to recalibrate its application of ratings.

The initial intent under DCIPS was to convert all DoD IC organizations to a common system, including pay bands and performance pay. Restrictions imposed by Congress did not allow that to happen completely, and while all the organizations share the same performance management process and many other policies, only NGA has maintained the pay-band structure and has performance-pay salary increases. Grades are grouped by work levels that parallel NGA’s pay bands, but it could be a challenge to maintain a fully cohesive DCIPS process and interface in the future with the structural differences that currently exist.

Success Factors

NGA’s long-term success can be attributed to the following key factors:

• Management support and involvement. Management persistence and sustained support were critical to this effort; “failure to launch” was simply not an option. NGA was fortunate to have directors who demonstrated the vision and leadership to initiate and fully support the undertaking. Top and mid-level managers were involved in the initial formulation of the NIMA organization, and they set out the framework for further development.

• Involvement at all levels. An HR team spearheaded the development and implementation effort, but this was by no means simply an HR action or process. More than 100 employees and managers worked on one of eight teams for over a year to develop the key aspects of the new systems, including occupation structure, performance management, performance pay, and related functions such as communications. The participants gained ownership and became champions for the new system. Union members participated fully.

• Continual but smart communication. NGA found that effective communication requires not only continual updates, but good judgment on how much to communicate. Some employees felt inundated with information and started ignoring the updates. The communications team quickly realized that “firehosing” information to the workforce was not as effective as providing focused, concise communication on key areas of interest, with links to more detailed information for those who needed it. Posted questions and answers proved to be another effective method of communication.

• Concise, relevant, and timely training. NGA developed a suite of training options for employees and managers on the key features of the processes. Performancemanagement training outlined the steps in the process and the roles that both employees and managers played in the process, from collaborative planning sessions at the outset to employee self-reporting of accomplishments at the end of the rating period. Pay-pool panels received training on performance-pay principles and procedures as well as on use of the performance-pay spreadsheet. Optional pay-spread sheet demonstrations sessions are also available to employees. A mix of computer-based training and actual classroom training is available on most topics. One of the keys to effective training is timing: Classes are provided just before required actions in the cycle, which makes the training much more relevant and effective.

• Application of required resources. Significant resources were required to develop and implement the new systems, but NGA recognized that they could not shortchange the process and hope for success. The following were the chief cost areas:

  The time and effort that management devoted to this initiative was a significant and invaluable resource, but that was only the start of the labor requirements. NGA devoted a significant number of employees and resources to the teams in the developmental phase. This resulted in initiatives that were fully vetted and created a general sense of ownership among the workforce.

  Performance management can impact almost every other process, and NGA soon realized that adequate resources and time had to be provided to administer the process. This includes the time supervisors need to devote to the planning, continual feedback, and final evaluations in the process, as well as the effort that employees need to put into the process, from participation in the planning stage through the input of their employee accomplishments.

  NGA had to maintain a delicate balance between providing meaningful incentives through pay and remaining essentially budget-neutral. Conventional wisdom at the time indicated that salary budgets had to be at least 2.5 percent of total base pay to motivate the workforce, and some references claimed that 5 percent or more in funding was required. NGA found that it could pay almost 2.4 percent in salary increases each year and remain budget-neutral. From all indications, this level provided sufficient critical mass to motivate NGA employees under performance pay. A separate bonus budget applied through the same annual process helped reinforce pay-for-performance principles. That budget was primarily funded from awards funding.

  IT support requirements are typically underestimated at the outset in terms of both cost and time required to implement. NGA had a skilled and dedicated staff and contractor support who met seemingly impossible requirements and deadlines. One key reason for success in this area is that IT specialists participated as members of the design team from the outset, and IT concerns and limitations were factored into the initial design and implementation schedule.

• Willingness to take reasonable risks and make adjustments. While the key principles initially implemented in the NGA processes remain intact, some aspects have been tried, assessed, and changed. This has actually proven to be a strength of the process, because it allowed NGA to experiment with a variety of approaches and ultimately develop a more effective system. It proved to be selection of the fittest applied in the government sector. One example is the evolution of the NGA promotion process. NGA took the initiative to implement an entirely new process, and then took an even bolder move to stand down on the promotion process for over a year to regroup and make necessary changes.

• Safeguards in the processes. Several safeguards were incorporated into the processes to protect individuals and enforce consistency. The performance-management process has at least three levels of assessment and review: the rater, a reviewer, and a performance management performance review authority (?M PRA) to review ratings across a broader group to ensure that standards are applied consistently and the narratives justify the ratings. Pay decisions are made by panels rather than individual managers, and those decisions are subject to higher level reviews by performance pay performance review authorities (PP PRAs). The pay pools are established at the lowest level practical to help ensure that the panel members are familiar with the employees’ work accomplishments. Grievance and appeal procedures are established and clearly communicated, and they are administered on a timely basis within well-defined timeframes.

• Continual process improvement. NGA regularly reviews all of its processes to determine if any improvements are required. Performance management, performance pay, and promotion results are assessed each year and input is obtained from managers, boards, panels, HR personnel, and employees through questionnaires, focus sessions, and the website. NGA has found that balance and deliberation are necessary in making changes, and that change has to be weighed against stability

Results and Key Lessons

Pay bands were initially implemented at NGA in November 1998, and the agency entered its 14th pay cycle in fiscal year 2012. At this point, well over half of NGA’s employees have never been under a graded structure at NGA, and pay bands and performance pay are an established way of life. Even though the performance culture is mature, NGA continues to assess the effectiveness of pay bands and performance pay in relation to continual changes to missions, budgets, workforce, labor markets, and related processes. Effective performance management continues to be the key area of focus for process improvements.

The NGA experience highlights some important lessons learned that may be applicable to other organizations:

• Making a compelling case for change can be half the battle. NGA was fortunate to have a clear and imminent need that had to be addressed.

• Full engagement by all levels at the outset helps establish a sense of ownership by all, which is critical to the ultimate success of the system.

• There is no perfect system. Even good systems need to be reviewed for logical process improvements, but reasonable stability is also an important factor.

• Change will result in some missteps. No one can expect to get it right 100 percent of the time. The more critical issue is how organizations respond to challenges and if they are able to leverage those challenges into opportunities to improve.