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FY 2016 Performance-Based Compensation Guidance for Senior Executive Service, Senior Level and Scientific and Professional Executives

Memorandum

TO:

Operating and Staff Division Heads

Operating and Staff Division Executive Officers

Human Resource Directors

FROM:

Christine M. Major

Principal Deputy Assistant Secretary for Administration

Acting Deputy Assistant Secretary for Human Resources

DATE:

September 30, 2016

SUBJECT:

Senior Executive Service, Senior Level and Scientific and Professional Executives Fiscal Year (FY) 2016 Performance-Based Compensation Guidance - INFORMATION

As stated in the Department’s Fiscal Year (FY) 2016 Senior Executive Service (SES) and Senior Level (SL) and Scientific and Professional (ST) closeout guidance, the bonus pools will be funded at 7.5 percent of aggregate career salaries. The greater flexibility in recognizing and rewarding performance allows Operating Divisions/Staff Divisions (OpDivs/StaffDivs) to improve differentiation in performance-based compensation within and between rating levels.

Based on guidance from the Office of Personnel Management (OPM), there are several key concepts OpDivs and StaffDivs must keep in mind when making performance-based compensation decisions for their senior executive level employees:

  1. Effective application of an agency’s SES and SL/ST performance management systems means recognizing successful performance at all levels (Achieved Expected Results and above);
  2. Performance-based compensation decisions for bonuses are separate and apart from compensation decisions for performance-based pay adjustments. There is no total compensation model in the federal executive pay-for-performance system;
  3. Compensation given to the highest rated SES and SL/ST employees should provide meaningfully greater rewards to top performers; and
  4. While Executive Order 13714 tasked agencies to remedy the issue of executives paid less than their subordinates, all compensation decisions must be based on performance.

The Department has developed the FY 2016 SES and SL/ST compensation guidance in an effort to address the above stated concepts.

While the percentage of change in the executive schedule (if any is granted) has not yet been announced, the Department is presenting the guidelines for both bonus and pay adjustments at this time. When deriving pay adjustment decisions, OpDivs and StaffDivs should also calculate what they would provide their executives at the executive level II pay cap ($185,100) if the range were to increase one percent. The Department will provide additional information on pay rates if warranted.

Performance Bonuses

The Department’s guidance on performance bonus percentage payouts to career SES and SL/ST employees is provided below:

 

Career SES

Rating Level Score Range SES Percentage
Performance Bonus*
Level 5: Achieved Outstanding Results 475-500 8% or higher
Level 4: Achieved More than Expected Results 400-474 6.1% – 7.99%
Level 3: Achieved Expected Results 300-399 0% or 5% – 6%
Level 2: Partially Achieved Expected Results 200-299 No Performance Bonus
Level 1: Achieved Unsatisfactory Results If any CE is Rated level 1 No Performance Bonus

*In accordance with 5 CFR 534.405 (c), SES performance-based bonuses can be no less than 5% and no more than 20% of the executive’s rate of basic pay.

SL/ST

Rating Level Score Range SL/ST Percentage
Performance Bonus**
Level 5: Achieved Outstanding Results 475-500 1% - 6.5%
Level 4: Achieved More than Expected Results 400-474 1% - 6%
Level 3: Achieved Expected Results 300-399 0% or 1% -5.5%
Level 2: Partially Achieved Expected Results 200-299 No Performance Bonus
Level 1: Achieved Unsatisfactory Results If any CE is Rated level 1 No Performance Bonus

**In accordance with 5 CFR 451.106 (b), the Department is capping SL/ST rating-based awards at $10,000 so that they may be processed without OPM approval.

StaffDivs must limit total spending on individual performance awards for career SES and SL/STs to separate funding pools of no more than 7.5 percent of their aggregate salaries. OpDivs and StaffDivs should also carefully examine the relationship between their proposed rating distribution and their ability to remain within the stated ranges.

Pay Adjustments

In order for a career SES or SL/ST member to receive consideration for a performance-based pay adjustment in FY 2016, the following factors should be taken into account or met:

  1. All SES or SL/ST employees have consistently performed at Achieved Expected Results (AE) level or higher;
  2. In addition to an individual’s performance, when granting larger performance-based pay adjustments OpDivs and StaffDivs should consider:
    1. Any changes in accountability and responsibility levels of the senior executive.
    2. Scarcity of qualified personnel in the line of work or profession.
    3. Level of contribution or impact relative to organizational performance goals.
  3. Aggregate pay increase percentages must show differentiation between rating levels in order to reinforce the pay-for-performance principle; and
  4. OpDivs and StaffDivs must stay within their FY budget authority on total pay adjustment expenditures and not exceed three (3) percent of aggregate career executive salaries.
  5. Executive Order 13714 requires agencies to address the issue of SES and SL/STs paid less than their subordinates. The Department is examining these instances using the benchmark of senior employees making less than executive level IV ($160,300). OpDivs and StaffDivs need to examine any instance within their organization.
  6. While OpDivs and StaffDivs may not be able to rectify the issue during one performance cycle, the Department is authorizing an additional performance-based pay adjustment that can be granted to begin to alleviate the disparity.

The table below shows the minimum and maximum pay adjustment guidance by rating level:

Rating Level Score Range Percentage Pay Adjustment Possible Additional
Pay Adjustment to
Address Executives
paid less than
subordinates
Level 5: Achieved Outstanding Results 475-500 *5% - 6% 1% - 5%
Level 4: Achieved More than Expected Results 400-474 *3% - 4% 1% - 3%
Level 3: Achieved Expected Results 300-399 *1% - 2% 1%
Level 2: Partially Achieved Expected Results 200-299 No Performance-based Pay Adjustment  
Level 1: Achieved Unsatisfactory Results If any CE is Rated level 1 No Performance-based Pay Adjustment  

*Regardless of rating, pay adjustments can only be granted up to the SES Level II pay cap. SL/ST pay adjustments in 2016 can only be granted up to $170,400.

For questions or additional information, please contact Charlie McEnerney, Director of Executive and Scientific Resources at (202) 690-7578.

Content created by Assistant Secretary for Administration (ASA)
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