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Frequently Asked Questions
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- What is a Demonstration Project?
- What is the purpose of the PHHRS?
- Why do we need to examine different pay systems in the Federal Government?
- What are the benefits of moving towards a pay-for-performance system?
- What is pay banding?
- If pay is banded, will there be any more promotions by grade?
- Under pay-for-performance, can my salary decrease?
- What changes have been made to veteran's preference?
- How many demonstration projects throughout the federal government have actually become permanent alternative pay systems?
1. What is a Demonstration Project?
A Demonstration Project is a test conducted by the Office of Personnel Management (OPM),
or by another agency under OPM supervision, by authority of Chapter 47 of Title 5 U.S.C. to determine
whether a specific change in personnel management policies or procedures would result in improved
Federal personnel management.
Legal Requirements for Demonstration Projects
- that the length of the project be no more than 5 years (any extensions must be approved by the Office of Personnel Management);
- that there be no more than 5,000 employees per project;
- that OPM has no more than 10 active demonstration projects at one time;
- that there be consultation and negotiation with affected employees and unions, (if applicable);
- that the agency submit a formal project plan;
- that Congress and employees be notified; and
- that an evaluation be done.
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2. What is the purpose of the PHHRS?
The purpose of the PHHRS is to strengthen the contribution of human resources
management in helping to achieve the missions of the specific programs areas of FSIS.
The proposed project will test whether a results-based, competency-linked, pay-for-
performance system and related innovations will produce successful results in a Public
Health regulatory environment with distinct working conditions and an ever-present
concern for food defense and security.
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3. Why do we need to examine different pay systems in the Federal Government?
The GS (General Service) system and current classification system were originally established shortly
after World War II, during the beginning of the Cold War. These systems were established so that,
in a national emergency, the Federal government could transfer large numbers of personnel from
one department to another. Jobs needed to be similar enough to ensure that learning curves would
be minimal and employees could "hit the ground running." This met the national concerns of the time.
In the 21st Century, national concerns and challenges are very different. Within the next 10 years,
up to 50% of the Federal workforce is eligible to retire. Personnel challenges vary from mission to
mission within the Federal government, and the need to recruit and retain a stellar workforce is
paramount to Agencies fulfilling those missions so that they may serve and protect the American people.
The current GS system is often too inflexible to achieve these goals, so because of this, Demonstration
Projects, like PHHRS, allow us to test new HR policies, including new pay systems, to better address
the challenges of Civil Service in the 21st Century.
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4. What are the benefits of moving towards a pay-for-performance system?
The use of pay-for-performance provides a stronger link between pay and contribution to the mission
of the organization. An employee can more easily be compensated at a level that reflects his/her
contribution to the goals of the organization.
The demonstration project is designed to provide a personnel management system that increases our ability to
attract, retain, and motivate a highly-qualified workforce by allowing the agency:
- To allow for more competitive recruitment of quality candidates at differing rates within the appropriate pay bands;
- To allow employees to move within their pay band to higher levels of pay; based on their contributions, without going through a competitive promotion process;
- To reduce the number of distinctions between levels of work at the different grade levels, thereby greatly simplifying the process and eliminating substantial paperwork for employees to advance to another level of work and pay.
PHHRS will allow FSIS to stay competitive with other Federal agencies as well as the private sector. Without
PHHRS, FSIS will have more difficulty attracting top talent and retaining our best performers.
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5. What is pay banding?
Pay banding, consolidates several pay grades into a broad pay band. Currently the 15 grades of the
General Schedule are used to classify positions and therefore, to set pay. Under pay banding, several
grades are banded together, thereby creating more flexibility to set and increase pay.
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6. If pay is banded, will there be any more promotions by grade?
Promotions will still exist under pay banding but they will be handled a little differently. Since we are
eliminating grades, promotions to a higher grade will not occur. Rather promotions will be between pay bands.
Specifically, under the Demonstration Project, a promotion will be 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 with a higher maximum rate of
basic pay. A promotion also includes the movement of an employee from another pay system (such as GS) to
a higher level PHHRS position with greater pay potential than the employee's current position.
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7. Under pay-for-performance, can my salary decrease?
All employees with a performance rating of fully successful or higher will receive an increase in their salary.
Employees performing below fully successful will not receive a pay increase.
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8. What changes have been made to veteran's preference?
We have maintained veteran's preference throughout the demonstration project.
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9. How many demonstration projects throughout the federal government have actually become permanent alternative pay systems?
Since 1980, Office of Personnel Management (OPM) has approved 18 demonstration projects (demos). Four were
completed and four were made permanent based on successful evaluation results. In addition, the following
projects remain active:
- Department of Defense Civilian Acquisition Workforce Demo (AcqDemo)
- 8 Department of Defense Laboratory (DoD) Demos
- National Nuclear Security Administration Demo (NNSA)
- U.S. Department of Agriculture Food Safety and Inspection Service (Approved January 28, 2009)
Although OPM initially approved the S&T (DoD) Lab Demonstration Projects, the authority for oversight
was transferred to DoD per the National Defense Authorization Act for 2001(Public Law 106-398), which
removed OPM's responsibility and authority for approving and conducting S&T Lab (DoD) Demonstration
Projects and transferred it to DoD. Therefore, the 8 DoD Labs do not count toward OPM's ten project limit.
Future Demonstration projects are proposed for:
- U.S. Department of Education Office of Federal Student Aid
- U.S. Department of Veterans Affairs Veterans Health Administration
For more information about demonstration projects and other performance-based pay systems in the federal government, visit
http://www.opm.gov/aps/demoproject/index.aspx.
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Last Modified:
September 13, 2010 |
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