Alternative Personnel Management System (APMS) at the National Institute of Standards and Technology

AGENCY:

National Institute of Standards and Technology, Department of Commerce.

ACTION:

Notice of Modifications with Request for Comment.

SUMMARY:

This notice provides for changes to the existing provisions of the National Institute of Standards and Technology's (NIST) Alternative Personnel Management System (APMS) published October 21, 1997, (62 FR 54606), primarily to strengthen the link between pay and performance, to simplify the pay-for-performance system, and to broaden the link between performance and retention service credit for reduction in force.

DATES:

This notice is effective on May 6, 2005. Comments must be received no later than June 6, 2005.

ADDRESSES:

Send or deliver comments to Robert Kirkner, Human Resources Management Division, National Institute of Standards and Technology, Building 101, Room A-133, 100 Bureau Drive, Gaithersburg, MD 20899-3550, FAX: (301) 948-6107, or e-mail comments to robert.kirkner@nist.gov.

FOR FURTHER INFORMATION CONTACT:

Robert Kirkner at the National Institute of Standards and Technology, (301) 975-3005; Joan Jorgenson at the U.S. Department of Commerce, (202) 482-4233; Jill Rajaee at the U.S. Office of Personnel Management, (202) 606-0836.

SUPPLEMENTARY INFORMATION:

Background

In accordance with Public Law 99-574, the NIST Authorization Act for 1987, the Office of Personnel Management (OPM) approved a demonstration project plan, “Alternative Personnel Management System (APMS) at the National Institute of Standards and Technology (NIST),” and published the plan in the Federal Register on October 2, 1987, (52 FR 37082). The project plan has been modified twice to clarify certain NIST authorities (54 FR 21331 of May 17, 1989, and 55 FR 39220 of September 25, 1990). The project plan and subsequent amendments were consolidated in the final APMS plan, which became permanent on October 21, 1997, (62 FR 54604).

The plan provides for modifications to be made as experience is gained, results are analyzed, and conclusions are reached on how the system is working. This notice formally changes the APMS plan to further strengthen the links between pay and performance, and performance and retention service credit. Comments will be considered and any changes deemed necessary will be made.

Table of Contents

I. Executive Summary

II. Basis for APMS Plan Modification

III. Changes to the APMS Plan

I. Executive Summary

The National Institute of Standards and Technology's (NIST) Alternative Personnel Management System (APMS) is designed to (1) improve hiring and allow NIST to compete more effectively for high-quality researchers through direct hiring, selective use of higher entry salaries, and selective use of recruiting allowances; (2) motivate and retain staff through higher pay potential, pay-for-performance, more responsive personnel systems, and selective use of retention allowances; (3) strengthen the manager's role in personnel management through delegation of personnel authorities; and (4) increase the efficiency of personnel systems through installation of a simpler and more flexible classification system based on pay banding through reduction of guidelines, steps, and paperwork in classification, hiring, and other personnel systems, and through automation.

Since implementing the APMS, according to findings in the Office of Personnel Management's “Summative Evaluation Report National Institute of Standards and Technology Demonstration Project: 1988-1995,” NIST is more competitive for talent; NIST retained more top performers than a comparison group; and NIST managers reported significantly more authority to make decisions concerning employee pay. This modification builds on this success by strengthening the link between pay and performance and streamlining the current system.

This amendment replaces the current 100-point rating scale with six performance ratings. Pay increases will be based on an annually determined percentage of the mid-point salary for each pay band in the career path and linked directly to the top three performance ratings, strengthening the pay-for-performance link, increasing transparency, and reducing potential payout variations among employees in the same career path and pay band and with the same performance ratings. This amendment also implements a required bonus for high-performing employees who cannot receive a pay increase because they are at the cap of their pay band, or their adjusted salaries would exceed the maximum rate for their pay band. Finally, the provisions on retention service credit for reduction in force and annual adjustments to basic pay are being modified to correspond with these changes.

NIST will continually monitor the effectiveness of this amendment and provide OPM with its findings.

II. Basis for APMS Plan Modification

The need to modify the current Pay for Performance System (PPS) surfaced in the results of both the 2000 and 2002 NIST Employee Surveys, the NIST Research Advisory Committee 2002 Report to the NIST Director, stakeholder focus group feedback, and in discussions of the NIST Senior Management Board. Generally, feedback indicated a need to clarify and simplify the system and suggested ways that this could be accomplished. The suggestions were found to have merit and are incorporated into this modification.

The NIST system proposed modifications include replacing the current 100-point rating scale with six performance ratings and linking pay increases to the ratings. From highest to lowest, the six performance ratings are: Exceptional Contributor, Superior Contributor, Significant Contributor, Contributor, Marginal Contributor, and Unsatisfactory.

Performance ratings are determined based on the cumulative ratings and relative weights of the critical elements. Critical elements are rated using benchmark standards and any supplemental standards. The ratings for the critical elements are: exceeds expectations (E), fully successful (S), minimally meets expectations (M), or unsatisfactory (U).

Performance pay increases will be based on the annually determined percentage of the mid-point salary for each pay band in the career path. When the percentage is applied to the mid-point salary in each pay band, the resulting dollar amount is the unit of salary increase or “I” for that pay band and career path. The “I” is used to determine salary increases NIST-wide. The Director, however, may authorize an operating unit to use a lower “I” for reasons related to solvency.

Actual salary increases based on multiples of “I” are granted to employees in the top three performance levels as follows: Exceptional Contributor: “I” x 5; Superior Contributor: “I” x 3; and Significant Contributor: “I.” A salary-capped employee with an Exceptional Contributor or Superior Contributor rating must receive a bonus at least equivalent to the salary increase that would have been received if the employee's salary were not capped.

In addition to receiving a performance pay increase, employees with Exceptional Contributor, Superior Contributor, and Significant Contributor ratings receive the full annual basic pay adjustment (general and locality pay increases) and are eligible for a bonus. Employees with a Contributor rating do not receive a performance pay increase but do receive the full annual basic pay adjustment and are eligible for a bonus. Employees rated Marginal Contributor or Unsatisfactory do not receive a performance pay increase, bonus, or annual basic pay adjustment.

The current provision on additional service credit for reduction-in-force purposes is revised to correspond with these changes. For retention purposes, this modification grants 10 additional years of service for a rating of Exceptional Contributor, eight additional years of service for a rating of Superior Contributor, three additional years of service for a rating of Significant Contributor, and one additional year of service for a rating of Contributor.

III. Changes in the APMS Plan

The APMS at the NIST, published in the Federal Register October 21, 1997, (62 FR 54604), is amended as follows:

1. Promotion: The subsection titled “Promotion” (62 FR 54609) is replaced with the following:

Promotion

A promotion is a change of an employee to (1) a higher pay band in the same career path or (2) a pay band in another career path in combination with an increase in pay. An employee must have a current performance rating of Contributor or higher to be eligible for promotion. The time-in-pay-band requirement for promotion eligibility is 52 weeks with two exceptions: (1) An employee may be promoted from pay band I to band II in the Support career path without time restriction; and (2) an employee may be promoted from pay band II to band III in the Support career path without time restriction if the employee was not promoted from a band I to band II position during the previous 52 weeks. (For pay provisions related to promotion, see “Pay Administration.”)

2. Link Between Performance and Retention: The subsection titled “Link Between Performance and Retention” (62 FR 54609) is replaced with the following:

Link Between Performance and Retention

An employee with a performance rating of Exceptional Contributor is credited with 10 additional years of service for retention purposes. An employee with a performance rating of Superior Contributor is credited with eight additional years of service for retention purposes. An employee with a performance rating of Significant Contributor is credited with three additional years of service for retention purposes. An employee with a performance rating of Contributor is credited with one additional year of service for retention purposes. The total credit is based on the employee's three most recent annual performance ratings of record received during the four-year period prior to an established cutoff date, for a potential total credit of 30 years. No reduction-in-force credit converts to this system from any other performance appraisal system.

3. Placement in a Lower Pay Band: The subsection titled “Placement in a Lower Pay Band” (62 FR 54609) is replaced with the following:

Placement in a Lower Pay Band

An employee whose performance rating is Marginal Contributor or Unsatisfactory does not receive the NIST annual adjustment to basic pay. Because the minimum pay rate for each pay band is increased each year by the amount of the NIST annual adjustment to basic pay, it is possible that the new minimum rate of a pay band will exceed the basic pay of an employee in that pay band who does not receive the NIST annual adjustment to basic pay due to a Marginal Contributor or Unsatisfactory performance rating. When this happens, the employee is placed in the next lower pay band. This placement shall not be considered an adverse action under 5 U.S.C. 7512; nor shall grade (i.e., pay band) retention under 5 U.S.C. 5362 be applicable.

4. Effect of General and Locality Pay Increases on Individual Pay: The subsection titled “Effect of General and Locality Pay Increases on Individual Pay” (62 FR 54610) is replaced with the following:

Effect of General and Locality Pay Increases on Individual Pay

Only employees with a current performance rating of Contributor or above may receive the full amount of increase in their basic pay (including locality pay) at the time of pay band adjustments. This increase in basic pay will reflect any applicable general and/or locality pay increase for General Schedule employees. The increase in basic pay for employees with a rating of Contributor or above, whose basic pay is at the ceiling of their pay band, will equal the increase in the ceiling.

The basic pay increase for eligible employees whose basic pay is below the ceiling of their band will be calculated by applying a factor to the employee's rate of pay. The factor is based on the net pay increase for General Schedule employees in the locality, including both the general increase and any applicable locality pay increase. Employees with ratings of Contributor or above will receive the full amount of the net increase, and the factor is equal to 1 plus the net increase percentage (expressed as a decimal). For example, if the net increase for a locality were 3.22 percent, the factor for Contributor or above would be 1.0322. Thus, the new rate of basic pay for an employee with a rating of Contributor or above would be calculated using the following formula:

New pay rate = (1 + net pay increase) x former pay rate

However, a basic pay increase will be applied only to the extent that it does not cause an employee's basic pay to exceed the pay band ceiling.

5. Performance Plans: The subsection titled “Performance Plans” (62 FR 54611) is replaced with the following:

Performance Plans

At the beginning of each rating period, supervisors develop and issue performance plans with input from employees. The plans contain from three to six critical performance elements for each position. For performance planning and appraisal purposes, only critical elements are used. The supervisor assigns a weight of 1, 2, 3, or 4 to each element indicating its relative level of importance to the position, so that the total weight of all elements is 10. Benchmark performance standards define the range of performance required to exceed expectations, be fully successful, minimally meet expectations, and be unsatisfactory. A supervisor may supplement the standards to add specificity or clarify expectations.

6. Performance Appraisal: The subsection titled “Performance Appraisal” (62 FR 54611) is replaced with the following:

Performance Appraisal

The performance appraisal brings supervisors and employees together to discuss performance and accomplishments during the performance rating cycle. The appraisal leads to decisions affecting performance ratings, performance pay increases, and bonuses. Performance appraisals normally occur at the end of the rating period. However, a supervisor should issue a performance improvement plan and take appropriate follow-up action any time an employee's performance is unsatisfactory.

7. Performance Ratings: The subsection titled “Performance Ratings” (62 FR 54612) is replaced with the following:

Performance Ratings

The NIST APMS performance ratings are Exceptional Contributor, Superior Contributor, Significant Contributor, Contributor, Marginal Contributor, and Unsatisfactory. Performance ratings are determined based on the cumulative ratings and weights of the critical elements in the performance plan. Performance in each critical element is evaluated using the benchmark standards and any supplemental standards, and the element is assigned a rating that exceeds expectations (E), fully successful (S), minimally meets expectations (M), or unsatisfactory (U).

The rating of the element is then matched with the weighted value of that critical element to produce a value for the element. For example, if an element is weighted 4 and the element is assigned a rating that exceeds expectations (E), then that element has a value of 4E.

Once this matching is completed and the elements are totaled, performance ratings are assigned using the following table.

An employee with unsatisfactory performance in one or more critical elements is considered unsatisfactory overall and is given a performance improvement plan and an opportunity to improve. If the employee's performance remains unsatisfactory at the end of an opportunity to improve, the supervisor initiates appropriate follow-up action; i.e., reassignment, proposed change to a lower pay band, or proposed removal.

8. Performance Scores: The subsection titled “Performance Scores” (62 FR 54612) is deleted.

9. Performance Ranking: The subsection titled “Performance Ranking” (62 FR 54612) is replaced with the following:

Performance Ranking

Performance ranking has been tested and found to be not appropriate for most positions covered by this modification. The Director may authorize the use of ranking where it is found to be appropriate.

10. Performance Pay Decisions: The subsection titled “Performance Pay Decisions” (62 FR 54612) is replaced with the following:

Performance Pay Decisions

Annually, the NIST Director determines the amount of a unit of increase, or “I,” based on a percentage of the mid-point salary for each pay band of each career path. The percentage may vary by career path but must be the same for all pay bands within a career path. Performance pay increases are linked directly to performance ratings. An employee with an overall performance rating of Exceptional Contributor receives a performance pay increase equal to five units of increase, or 5 x “I.” A Superior Contributor receives a performance pay increase equal to 3 x “I.” A Significant Contributor receives a performance pay increase equal to “I.” The actual dollar amount of a performance pay increase depends upon an employee's career path and pay band. Employees may not receive an increase that causes their salary to exceed the maximum rate for their pay band.

Employees with Contributor, Marginal Contributor, or Unsatisfactory ratings do not receive performance pay increases.

11. Performance Bonuses: The subsection titled “Performance Bonuses” (62 FR 54612) is replaced with the following:

Performance Bonuses

Bonuses are the only cash awards linked to the NIST APMS pay-for-performance system. They are awarded at the end of the performance rating period and may be granted in conjunction with performance pay increases. A pay pool manager may award a bonus to any employee with a performance rating of Contributor or higher. A pay pool manager is a line manager who manages his or her organization's pay increase and bonus fund and has final decision authority over the performance ratings and bonuses of subordinate employees. An employee with an Exceptional Contributor or Superior Contributor rating whose adjusted salary would exceed the maximum rate for the pay band must receive a bonus at least equivalent to the amount of the performance pay increase over the maximum rate but may receive more.

12. Employee Development: The subsection titled “Employee Development” (62 FR 54612) is replaced with the following:

Employee Development

The objective of the NIST Employee Development Program is to develop the competence of employees for maximum achievement of NIST mission and goals. The NIST APMS legislation mandates the continuance of an employee development program including, in appropriate circumstances, a sabbatical program. The NIST APMS sabbatical program is consistent with the terms and conditions of the Senior Executive Service sabbatical program. It covers all career appointees under the NIST APMS who have at least seven years of Federal service and a current performance rating of Contributor or higher.