Designing and Implementing Performance-Oriented Payband Systems

According to Professor Thompson, there is widespread agreement among those who have examined compensation practices in the federal government that the approach embodied by the traditional General Schedule is obsolete. A common complaint is that the system is too rigid and that the 15-grade structure induces excessive attention to minor distinctions in duties and responsibilities. Another concern is that pay increases are granted largely on the basis of longevity rather than performance.

Paybanding is not a new concept to the public sector. The essential concept is that for the purpose of salary determination, positions are placed within broad bands instead of narrow grades. The cumulative number of federal employees working within payband systems as of late 2006 was under 250,000. According to Thompson, the preponderance of data shows that these systems have achieved high levels of employee acceptance. However, the degree of success seems to vary, depending on how the systems were designed and implemented.

Thompson's report describes nine different performance-oriented payband systems that have been in operation in the federal government- in some cases, for more than two decades. He makes the case that successful designs are those that (1) achieve a balance between efficiency, equity, and employee acceptance; (2) acknowledge the importance of soft as well as hard design features; and (3) fit the organization's context. Human Capital Management