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2. Payout Distribution . Effects of using a
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1. Performance Payout Distribution Salary Split Based on Range Penetration
2.
2 Payout Distribution
Effects of using a default split approach
Example of a range penetration approach
Applying a range penetration approach
3.
3 Payout Distribution Effects of using a default split
Default Split drives pay at the extremes even farther apart
Impedes ability to achieve pay equity
Rewards longevity even more than the General Schedule
Payout distribution decisions should also consider:
Current base salary in relation to appropriate rate range
Current base salary, level of responsibility and complexity of work performed in comparison with others in similar work assignments;
Performance-based compensation received during the rating cycle associated with promotions, reassignments, or awards;
Salary levels of occupations in comparable labor markets;
Attrition and retention rates of critical shortage skill personnel;
Expectation of continued performance at that level;
Overall contribution to the mission of the organization; and
Composition of the pay pool fund.
Default split was intended to be a starting point.
Should also consider other factors.
Default split was intended to be a starting point.
Should also consider other factors.
4.
4 Payout Distribution Comparison Average share value impact at 2 shares This is not an attempt to simply mimic the general schedule, rather it is a demonstration that the default split approach does not follow conventional wisdom regarding pay progression. Pay increases should be accelerated at the lower end of the range and decelerated at upper end of the range. Pay Pools at or near the DLA average share value would see results similar to those depicted here
The top section compares employees at the same grade, but at different points within the pay range that we have established for GS-12 equivalent positions.
Valued performers at the lower end of the pay range receive less than they would have under the general schedule, while valued performers at the higher end of the pay range receive significantly more.
The bottom section demonstrates that this is not an issue with GS equivalent grades. The issue concerns the employees range penetration. In other words, current salary in relation to the minimum and maximum of whichever range he or she is in.
As you can see, regardless of the grade range, employees at the lower end of the pay range would receive less than they would have under the general schedule, while employees at the upper end of the pay range receive significantly more.
Now lets look at what happens if the share value is just a little bit lower than the average. (next slide)
This is not an attempt to simply mimic the general schedule, rather it is a demonstration that the default split approach does not follow conventional wisdom regarding pay progression. Pay increases should be accelerated at the lower end of the range and decelerated at upper end of the range. Pay Pools at or near the DLA average share value would see results similar to those depicted here
The top section compares employees at the same grade, but at different points within the pay range that we have established for GS-12 equivalent positions.
Valued performers at the lower end of the pay range receive less than they would have under the general schedule, while valued performers at the higher end of the pay range receive significantly more.
The bottom section demonstrates that this is not an issue with GS equivalent grades. The issue concerns the employees range penetration. In other words, current salary in relation to the minimum and maximum of whichever range he or she is in.
As you can see, regardless of the grade range, employees at the lower end of the pay range would receive less than they would have under the general schedule, while employees at the upper end of the pay range receive significantly more.
Now lets look at what happens if the share value is just a little bit lower than the average. (next slide)
5.
5 Payout Distribution Comparison Below average share value impact at 3 shares Weve talked about the impact the default split has on valued performers, which only gets worse as the share value goes lower. Now lets talk about the impact a default split can have on employees who exceed expectations if the share value is even slightly less than our average.
An employee at the lower end of the pay range with 3 shares would still receive less than he or she would have under the general schedule. This is someone who exceeds expectations, yet we would give him or her a salary increase that is less than what everyone else gets just for showing up.
At the same time, an employee near the top of the range would receive more than double what he or she would have received as a GS employee.
This affects far more than a few employees. Nearly one quarter of our NSPS workforce is in the lower third of their pay range. Many of those would become employees that we value so much that we will pay them less than they can earn almost anywhere else.Weve talked about the impact the default split has on valued performers, which only gets worse as the share value goes lower. Now lets talk about the impact a default split can have on employees who exceed expectations if the share value is even slightly less than our average.
An employee at the lower end of the pay range with 3 shares would still receive less than he or she would have under the general schedule. This is someone who exceeds expectations, yet we would give him or her a salary increase that is less than what everyone else gets just for showing up.
At the same time, an employee near the top of the range would receive more than double what he or she would have received as a GS employee.
This affects far more than a few employees. Nearly one quarter of our NSPS workforce is in the lower third of their pay range. Many of those would become employees that we value so much that we will pay them less than they can earn almost anywhere else.
6.
6 Payout Distribution Range Penetration Approach New business rule follows conventional wisdom for compensation
Range penetration becomes the basis for initial salary split
Employees at the lower end of the range get more toward salary
Those near the top of the range get more toward bonus
Range penetration indicates current salary in relation to appropriate rate range
(salary-minimum) / (maximum-minimum)=Range Penetration
($75,841 - $68,625) / ($89,217 - $68,625) = 35.04%
Additional consideration limited to:
Current base salary, level of responsibility and complexity of work performed in comparison with others in similar work assignments;
Performance-based compensation received during the rating cycle associated with promotions, reassignments, or awards;
Salary levels of occupations in comparable labor markets;
Attrition and retention rates of critical shortage skill personnel;
Expectation of continued performance at that level;
Overall contribution to the mission of the organization; and
Composition of the pay pool fund.
As with the default split approach, the math represents a starting point.
Other factors must be considered.
As with the default split approach, the math represents a starting point.
Other factors must be considered.
7.
7 Payout Distribution Comparison Average share value impact at 2 shares This is not an attempt to simply mimic the general schedule, rather it is a demonstration that the default split approach does not follow conventional wisdom regarding pay progression. Pay increases should be accelerated at the lower end of the range and decelerated at upper end of the range. Pay Pools at or near the DLA average share value would see results similar to those depicted here
The top section compares employees at the same grade, but at different points within the pay range that we have established for GS-12 equivalent positions.
Valued performers at the lower end of the pay range receive less than they would have under the general schedule, while valued performers at the higher end of the pay range receive significantly more.
The bottom section demonstrates that this is not an issue with GS equivalent grades. The issue concerns the employees range penetration. In other words, current salary in relation to the minimum and maximum of whichever range he or she is in.
As you can see, regardless of the grade range, employees at the lower end of the pay range would receive less than they would have under the general schedule, while employees at the upper end of the pay range receive significantly more.
Now lets look at what happens if the share value is just a little bit lower than the average. (next slide)
This is not an attempt to simply mimic the general schedule, rather it is a demonstration that the default split approach does not follow conventional wisdom regarding pay progression. Pay increases should be accelerated at the lower end of the range and decelerated at upper end of the range. Pay Pools at or near the DLA average share value would see results similar to those depicted here
The top section compares employees at the same grade, but at different points within the pay range that we have established for GS-12 equivalent positions.
Valued performers at the lower end of the pay range receive less than they would have under the general schedule, while valued performers at the higher end of the pay range receive significantly more.
The bottom section demonstrates that this is not an issue with GS equivalent grades. The issue concerns the employees range penetration. In other words, current salary in relation to the minimum and maximum of whichever range he or she is in.
As you can see, regardless of the grade range, employees at the lower end of the pay range would receive less than they would have under the general schedule, while employees at the upper end of the pay range receive significantly more.
Now lets look at what happens if the share value is just a little bit lower than the average. (next slide)
8.
8 Payout Distribution Comparison Below average share value impact at 3 shares Weve talked about the impact the default split has on valued performers, which only gets worse as the share value goes lower. Now lets talk about the impact a default split can have on employees who exceed expectations if the share value is even slightly less than our average.
An employee at the lower end of the pay range with 3 shares would still receive less than he or she would have under the general schedule. This is someone who exceeds expectations, yet we would give him or her a salary increase that is less than what everyone else gets just for showing up.
At the same time, an employee near the top of the range would receive more than double what he or she would have received as a GS employee.
This affects far more than a few employees. Nearly one quarter of our NSPS workforce is in the lower third of their pay range. Many of those would become employees that we value so much that we will pay them less than they can earn almost anywhere else.Weve talked about the impact the default split has on valued performers, which only gets worse as the share value goes lower. Now lets talk about the impact a default split can have on employees who exceed expectations if the share value is even slightly less than our average.
An employee at the lower end of the pay range with 3 shares would still receive less than he or she would have under the general schedule. This is someone who exceeds expectations, yet we would give him or her a salary increase that is less than what everyone else gets just for showing up.
At the same time, an employee near the top of the range would receive more than double what he or she would have received as a GS employee.
This affects far more than a few employees. Nearly one quarter of our NSPS workforce is in the lower third of their pay range. Many of those would become employees that we value so much that we will pay them less than they can earn almost anywhere else.
9.
9 Range Penetration Approach What it is not
10.
10 Range Penetration Approach What it really does
11.
11 Range Penetration Approach Is it really new? This table displays the actual salary increase percent for each of the within grade increases under the General Schedule.This table displays the actual salary increase percent for each of the within grade increases under the General Schedule.
12.
12 Applying Range Penetration Converting to salary split %
