To be recognized as the best, we must recognize and reward the best in our employees. 

Pay for Performance & Performance Management System

Veterans Health Administration 

February 26, 2008

Base Pay
          - STEP RATE OF PAY ON THE BASE AND LONGEVITY PAY SCHEDULE

Base Pay + Market Pay 
          - =TOTAL ANNUAL PAY AS REFLECTED AS A PAY RANGE ON A PAY TABLE

Three Elements of Pay
        - Base Pay
        - Market Pay
        - Performance Pay

Performance Pay	
        - What is performance pay? 
        - A component of compensation paid to recognize the achievement of specific goals and performance objectives
        - Not an Incentive Award

Base & Longevity Pay Schedule
          -   15 STEPS RANGING FROM $91,530 TO $134,244 IN INCREMENTS OF APPROXIMATELY $3,000
          -   LONGEVITY STEP INCREASE FOR EVERY 2 YEARS OF SERVICE AS A VHA PHYSICIAN OR DENTIST
          -  BASED SOLELY ON YEARS OF VHA SERVICE AS A PHYSICIAN OR DENTIST, INCLUDING NO STATUTE 

  OF LIMITATIONS ON PRIOR VHA SERVICE AS A PHYSICIAN OR DENTIST FOR A REHIRE
          -  STEP RATE MAY NEVER BE REDUCED NOR MAY A PHYSICIAN/DENTIST BE GRANTED A LONGEVITY     STEP INCREASE PRIOR TO COMPLETION OF THE 104 WEEK WAITING PERIOD AS A RESULT OF SUPERIOR     PERFORMANCE
          -  EXISTING CREDITABLE SERVICE RULES APPLY

Annual January Pay Adjustment
          -  RATE INCREASES WILL OCCUR IN CONCERT WITH THE ANNUAL PAY ADJUSTMENT IN JANUARY AND     FOR THE SAME PERCENTAGE INCREASE EXCLUDING THE LOCALITY PORTION

Performance Pay
        - The amount payable may not exceed the lower of
        - $15,000 or
        - The amount equal to 7.5% of the annual pay (base + market) on September 30th of the fiscal year 

Performance Pay
        - Process
        - Objectives communicated 90 days of the beginning of the fiscal
        - Newly hired communicated within 30 days of entrance on duty
        - Physicians & Dentist hired after July 1 are not eligible within that fiscal year

Performance Pay
        - Process
        - Physicians & Dentist that separate prior to September 30 are not eligible
        - Payments disbursed no later than March 31 of the following year

VHA Performance Management
        - Established evidence-based performance measures based on overall strategic goals and hold accountable and reward line senior executives for achievement
        - Developed and implemented the High Performance Development Model & workforce succession programs

        -   Senior Executive Performance System
        -   ECF Performance System
        -   VA 5-level Performance System

VHA Performance Management

VHA Performance Management
        - ECF Performance System
        - ECF members – senior management, mid-management, first line management, senior staff positions 

VHA Performance Management
        - ECF Performance System
        - Cycle begins October 1 & ends September 30
        - Minimum appraisal period is 90 days under performance plan

VHA Performance ManagementAlign Performance

VA Strategic Plan

VHA Strategic Plan

Goals & Performance Measures

Chief Officer Performance Plans

Subordinate Senior Exec. Performance Plans

VHA Performance Management
        - Plan Structure
        - Mission Critical Measures/Business Plan (critical)
        - Transformational Measures (non-critical)
        - High Performance Development Model (HPDM) Core Competencies (critical) 
        - Additional HPDM Core Competencies (non-critical)

VHA Performance Management

Summary Ratings:

		Outstanding = All elements exceptional. 

		Excellent = All critical elements 	exceptional; one other element fully 	successful. 

		Fully Successful = All critical elements fully 	successful; other elements fully successful or 	higher.

Performance Pay
          -  PERFORMANCE PAY GOALS AND PERFORMANCE OBJECTIVES ARE PRESCRIBED ON A FISCAL YEAR BASIS BY AN APPROPRIATE MANAGEMENT OFFICIAL.
          - PERFORMANCE GOALS AND OBJECTIVES ARE GENERALLY DEVELOPED LOCALLY AND WILL DIFFER FROM PERFORMANCE STANDARDS USED FOR THE EXECUTIVE CAREER FIELD (ECF) OR PROFICIENCY RATING SYSTEMS.
          - THE AMOUNT PAID TO ANY INDIVIDUAL MAY VARY BASED ON THE DEGREE OF EXECUTION AND INDIVIDUAL ACHIEVEMENT OF SPECIFIED GOALS AND OBJECTIVES

VHA Performance Management

Summary Ratings Continued:

		Minimally Satisfactory = All critical 	elements fully successful. One or more non-	critical elements less than fully successful.

		Unsatisfactory = One or more critical 	elements less than fully successful.

Pay range minimum and maximum limitations for specialty/assignment and tier level
          -  IN INSTANCES WHERE THE BIANNUAL REVIEW RESULTS IN AN INCREASE OF THE MINIMUM AMOUNT     OF AN ANNUAL PAY RANGE FOR A SPECIALTY/ASSIGNMENT, THOSE PHYSICIANS/DENTISTS WHOSE     ANNUAL RATES OF PAY FALL BELOW THE NEW MINIMUM WILL AUTOMATICALLY RECEIVE AN INCREASE     IN ANNUAL PAY EQUAL TO THAT OF THE NEW MINIMUM ANNUAL RATE
          - IF THE COMPENSATION PANEL FEELS COMPELLED TO RECOMMEND AN ANNUAL RATE OF PAY ABOVE THE MAXIMUM OF THE TIER THIS ACTION MUST BE APPROVED BY THE USH; EXCEPTIONS TO THE MAXIMUM ANNUAL RATE OF THE RANGE MAY BE GRANTED IN UNUSUAL CIRCUMSTANCES
          - IN INSTANCES WHERE THE ANNUAL RATE OF PAY FOR A PHYSICIAN OR DENTIST EXCEEDS THE   MAXIMUM OF THE ANNUAL PAY RANGE THE PHYSICIAN/DENTIST SHALL STILL RECEIVE THE ANNUAL   ADJUSTMENT TO BASE PAY ALONG WITH THEIR RESPECTIVE LONGEVITY STEP INCREASE UPON   COMPLETION OF THE WAITING PERIOD

 Pay Cap
          -  TOTAL PAY FOR AN INDIVIDUAL PHYSICIAN/DENTIST MAY BE SET AT A RATE HIGHER THAN     $325,000 PER ANNUM WITH APPROVAL FROM THE USH
          -  IN INSTANCES WHERE THE ANNUAL RATE OF PAY FOR A PHYSICIAN OR DENTIST EXCEEDS THE     $325,000 PAY CAP THE PHYSICIAN/DENTIST SHALL STILL RECEIVE THE ANNUAL ADJUSTMENT TO BASE     PAY ALONG WITH THEIR RESPECTIVE LONGEVITY STEP INCREASE UPON COMPLETION OF THE WAITING     PERIOD
          -  DURING THE RECOMMENDATION PROCESS ITS IMPORTANT FOR THE COMPENSATION PANEL TO     CONSIDER AND MAKE NOTE IF THE CAP WILL BE REACHED PRIOR TO THE ALLOCATION OF PERFORMANCE     PAY SO THAT A MEMO FOR AN EXCEPTION MAY BE PREPARED.

Statutory aggregate limitation on pay
          - NO ANNUAL PAY ADJUSTMENT
          - LSI’S CONTINUE TO BE RECEIVED HOWEVER THE CORRESPONDING DOLLARS MAY ONLY BE PROVIDED 

  UP TO THE $400,000 STATUTORY CAP

NOTE: USH/VACO APPROVAL ONLY NEEDED ON 3R’S AND PERFORMANCE PAY WHEN EXCEEDING THE $325,000 PAY CAP NOT WHEN SIMPLY EXCEEDING THE MAXIMUM OF THE TIER. ONLY NEED VACO APPROVAL WHEN EXCEEDING THE TIER AS THE RESULT OF WITH JUST ANNUAL RATE OF PAY (BASE+MARKET)

VHA Performance Management
        - Funding
        - ECF bonus pool is based on the number of ECF members assigned to the organization
        - Funds are distributed based on ECF calculations in the Performance Database

TIER DEFINITIONS:

TIER 1 -  STAFF PHYSICIANS OR DENTISTS

TIER 2 – PROGRAM MANAGER, SUPERVISOR, OR SECTION CHIEF

TIER 3 – SERVICE CHIEF, SERVICE LINE MANAGER OR OTHER ASSIGNMENT WHOSE SCOPE AND COMPLEXITY IS DETERMINED TO EXCEED THE DEFINITION OF TIER 2

TIER 4 – NETWORK PROGRAM MANAGER OR NETWORK PROGRAM RESPONSIBILITES REQUIRING A SPECIALTY WITHIN THE ASSIGNED PAY TABLE.

PAY TABLE  CHANGES.

PAY CAP CHANGES – 275K  TO 325K

VHA Performance Management
        - Bonus Pool Range
        - Senior Executive pool determined by the Secretary
        - Senior Manager - $2,500 to $10,000
        - Mid-manager - $1,500 to $7,500
        - Front-line - $750 to $5,000

Note: Bonuses may not be awarded for a rating below the fully successful level

VHA Performance Management
        - References:
        - Performance Pay – VA Handbook 5007/21, Part IX, section 12
        - Performance Management System – VA Handbook 5013
        - Other Sources: Employee Recognition & Awards – VA Handbook 5017

VHA Performance Management
        - Contacts:
        - Pay for Performance:

Anika Woods – 202-461-7259

George Neureither – 202-461-7396
        - Performance Management System

Elias Hernandez – 202-461-7398

Anika Woods – 202-461-7259

VHA Performance Management

QUESTIONS?