Federal Register, Volume 61 Issue 224 (Tuesday, November 19, 1996)

[Federal Register Volume 61, Number 224 (Tuesday, November 19, 1996)]
[Notices]
[Pages 58942-58969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29563]

[[Page 58941]]

_______________________________________________________________________

Part V

Office of Personnel Management

_______________________________________________________________________

Proposed Personnel Management Demonstration Project; Pay for Applied
Skills System, Department of Veterans Affairs (VA); Notice

Federal Register / Vol. 61, No. 224 / Tuesday, November 19, 1996 /
Notices

[[Page 58942]]

OFFICE OF PERSONNEL MANAGEMENT

Proposed Personnel Management Demonstration Project; Pay For
Applied Skills System; Department of Veterans Affairs (VA)

AGENCY: Office of Personnel Management.

ACTION: Notice of Proposed Demonstration Project.

-----------------------------------------------------------------------

SUMMARY: Title VI of the Civil Service Reform Act, 5 U.S.C. 4703,
authorizes the Office of Personnel Management (OPM) to conduct
demonstration projects that experiment with new and different personnel
management concepts to determine whether such changes in personnel
policy or procedures would result in improved Federal personnel
management.
VA is proposing one demonstration project to initially cover two
Veterans Benefits Regional Offices: New York and Detroit. Additional
Regional Offices may be added during the duration of the project.

DATES: To be considered, written comments must be submitted on or
before February 3, 1997; public hearings will be scheduled as follows:
1. Wednesday, January 8, 1997, 10:00 a.m. in New York, New York,
2. Wednesday, January 15, 1997, 10:00 a.m. in Detroit, Michigan. At
the time of the hearings, interested persons or organizations may
present their written or oral comments on the proposed demonstration
project. The hearings will be informal. However, anyone wishing to
testify should contact the person listed under FOR FURTHER INFORMATION
CONTACT, and state the hearing location, so that OPM can plan the
hearings and provide sufficient time for all interested persons and
organizations to be heard. Priority will be given to those on the
schedule, with others speaking in any remaining available time. Each
speaker's presentation will be limited to ten minutes. Written comments
may be submitted to supplement oral testimony during the public comment
period.

ADDRESSES: Comments may be mailed to Joan Jorgenson, U.S. Office of
Personnel Management, 1900 E. Street, NW, Room 7460, Washington, DC
20415; public hearings will be held at the following locations:

1. New York--Department of Veterans Affairs, Veterans Benefits
Administration (VBA), New York Regional Office, Room 321, 245 W.
Houston Street, New York, New York,
2. Detroit--Department of Veterans Affairs, VBA, Detroit Regional
Office, Patrick V. McNamara Federal Building, 477 Michigan Avenue, Room
1194, Detroit, Michigan.

FOR FURTHER INFORMATION CONTACT: (1) On proposed demonstration project:
Rita Kowalski or Veronica Wales, Veterans Benefits Administration
Regional Office, 245 W. Houston Street, New York, New York, 10014, 212-
807-3050; (2) On proposed demonstration project and public hearings:
Joan Jorgenson, U.S. Office of Personnel Management, 1900 E Street, NW,
Room 7460, Washington, DC 20415, 202-606-1315.

SUPPLEMENTARY INFORMATION: The proposed project involves replacement of
the classification and General Schedule pay systems with a compensation
system which includes pay for applied skills and variable pay. It will
also emphasize organizational and team performance instead of
individual performance, and learning.

Dated: November 12, 1996.

Office of Personnel Management.
James B. King,
Director.

Table of Contents

I. Executive Summary
II. Introduction
A. Purpose
B. Problems with the Present System
C. Changes Required/Expected Benefits
D. Participating Organizations
E. Participating Employees
F. Union Involvement
G. Project Design
III. Personnel System Changes
A. The Human Resource Process
B. Entrance Stage
C. Maintenance and Support Stage
D. Exit Stage
IV. Training
V. Conversion
A. Conversion of Employees into the Demonstration Project
B. Conversion of Employees out of the Demonstration Project
C. Skill Block/Grade Conversion Table
VI. Project Duration
VII. Evaluation Plan
A. Introduction
B. General Methodology
C. Three Phase Methodology
VIII. Demonstration Project Costs
A. Budget Strategy
B. Step Buy-ins
C. Cost Controls
IX. Required Waivers to Law and Regulation

I. Executive Summary

The project was designed by the New York Regional Office (NYRO),
Veterans Benefits Administration, with the participation of the
Department of Veterans Affairs (VA), the Office of Personnel Management
(OPM) and the American Federation of Government Employees (AFGE). The
purpose of the project is to continue the organizational transformation
already in progress and fundamentally change the human resource process
so that the systems in the process focus upon the customers. The
project focuses on three stages of the Human Resource Process: (a) the
Entrance Stage that brings employees into the organization and
introduces them to its mission, vision, values, and culture; (b) the
Maintenance and Support Stage that includes everything that sustains,
develops, and focuses employees upon serving veterans and their
families and meeting its organizational outcome measures; and, (c) the
Exit Stage that deals with issues affecting employees leaving the
organization. The project will also test the effectiveness of skills-
based pay on the organization's ability to meet its organizational
goals and as a means of compensating employees for the skills and
competencies that the organization needs and that they acquire,
develop, and use. The demonstration project will be phased in at both
the New York and Detroit Regional Offices. The NYRO will start with its
Veterans Benefits and Services Business Line where most of its
reengineering effort has taken place. The Detroit Regional Office will
also begin in its Veterans Benefits and Services Business Line.
Additional business lines will be added as they are reengineered during
the course of the demonstration project.

II. Introduction

A. Purpose

The purpose of the project is to improve the delivery of benefits
and services provided to VA's unique customers--veterans and their
families; to provide the best value to American taxpayers; and to
create a human resources system that enables employees to develop and
apply the skills and competencies needed to better serve their
customers. This improved service will be provided by self-directed work
teams whose members are compensated based on the skills and
competencies they acquire, develop, and use which support the goals and
mission of the New York and Detroit Veterans Benefits Regional Offices.

B. Problems With the Present System

The Veterans Benefits Administration (VBA), a part of the
Department of Veterans Affairs, provides benefits and services to
veterans and their families. VBA has encouraged its Regional Offices to
actively transform the way they do business and is now requiring them
to use core organizational outcome measures to determine if they are

[[Page 58943]]

successful. The Regional Offices in New York and Detroit are involved
in activities such as Total Quality Management (TQM), reengineering and
organizational system design that focus on improving service to
veterans and their families. Both Regional Offices have reengineered
and streamlined their processes to emphasize the customer and provide
faster turn-around of veterans claims. The new emphasis on customer
service and organizational performance are not fully supported by the
existing human resource systems. The hierarchical nature and physical
structure of the existing General Schedule compensation and
classification systems do not provide the flexibility and adaptability
needed to move the Regional Offices forward in their reengineering
process. The existing structures do not provide managers with the
flexibility they need to structure teams so that they can function most
effectively and they do not encourage employees to acquire a broader
base of skills and competencies needed by the organization in order to
provide one-stop shopping to the veteran customer and family and to
address backlogs in benefit claims processing.

C. Changes Required/Expected Benefits

The VA Pay for Applied Skills Demonstration Project continues the
extensive reengineering of work and structural systems already
accomplished at the NYRO as a National Performance Review (NPR)
reinvention lab and the organizational outcome measures developed and
implemented at the NYRO as a Government Performance and Results Act
(GPRA) pilot site. This project, since it is closely dependent upon the
organizational outcome measures as defined by GPRA, will align human
resource systems to business needs; design and test a human resource
process that will support an organization reengineered around the
customer; assess a human resource system that supports employee
accountability, growth and ownership of organizational outcomes; and,
provide demonstration project participants with the opportunity to test
systems that meet project principles and operating guidelines, overall
outcome measures, and mission requirements and customer needs of the
organizations involved.
In addition to the expected benefits mentioned above, the following
key principles are critical to the VA Pay for Applied Skills
Demonstration Project: (a) It is important for employees to continually
focus upon the needs of veterans and their families; (b) Organizational
goals help employees and the entire organization to recognize what is
important and to know when they are successful; (c) The organizational
outcome measures will define the types of human resource systems put
into place, since they are the touchstone for all Regional Office
systems; (d) The demonstration project will show how the organizational
outcome measures that are envisioned in GPRA can help define human
resource systems; (e) When developing mechanisms for monitoring
organizational outcome measures, it is essential to bring the outcome
measures to the employee's ``line of sight'' and at a level where each
employee knows that he or she will be able to affect these outcomes;
(f) While the Organizational Performance Management System and the
Compensation System are key components of the demonstration project,
these systems cannot be put into place alone. They have a dramatic
effect on other systems within the Regional Office; (g) The Merit
System Principles will be inherent in every aspect of the reengineered
human resource process and systems; (h) Any policies and procedures
developed will be streamlined, customer-focused, and designed so that
authority is at the lowest possible level; (i) Policies and procedures
will be developed with the belief that people want to do the right
thing and that the systems developed will not be designed with the
exception in mind; (j) The demonstration project will use the
organizational outcome measures, as defined by GPRA, to help evaluate
its effectiveness; (k) Policies and procedures developed will maintain
budget discipline, be cost-effective and keep administrative costs
down, since the needs of the American taxpayer must also be considered;
(l) Employees and the union will be involved in developing human
resource systems, since these systems exist because employees exist;
(m) Customers and stakeholders may be involved in the project for ideas
affecting design, operation or assessment; (n) Teams, or organizational
units, do not compete against each other. Each team, or organizational
component, competes against accomplishing the organizational outcome
measures; (o) Employees will be paid based upon the achievement of
organizational goals and the development and application of the skills
needed to meet those goals; and (p) The exploration of new ideas,
creativity, flexibility and continuous improvement is a project norm.
Ideas and options will be tested with the understanding that if
something does not work, the organization will have learned from the
experience and be willing to implement changes based on the experience.

D. Participating Organizations

The two Veterans Affairs offices initially participating in the
project are:

VA Regional Office, New York, New York
VA Regional Office, Detroit, Michigan

E. Participating Employees

The demonstration project in the Department of Veterans Affairs,
Veterans Benefits Administration, will include all General Schedule
employees in the Regional Offices in Detroit and New York. Each
organization will phase in the project to meet its particular needs.
Each organization will have the option of covering their entire
organization and of phasing in the project during the initial three
year period of the five year demonstration project.
For example, since NYRO is both an NPR reinvention lab and a GPRA
pilot site, it is farther along in its planning for demonstration
project implementation. In the NYRO, the demonstration project will
cover the entire office and will incorporate the total human resource
system described in this proposal. The project will be phased in, since
the NYRO plans to continue its reengineering effort to include the
remaining business lines and support activities. The NYRO will start
with the Veterans Benefits and Services Business Line where most of the
reengineering has taken place; however, the NYRO plans to reengineer
its field and support elements and will incorporate this work into the
demonstration project. It will also expand coverage to Veterans Homes
and the Veterans Jobs Lines after the reengineering effort in these
areas are completed and will include leadership positions covered by
the General Schedule under the project. Figure 1 lists the series and
positions currently in the business lines.

Figure 1: Series by Business Lines
----------------------------------------------------------------------------------------------------------------
Series Title Benefits Homes Jobs Support
----------------------------------------------------------------------------------------------------------------
180.... Counseling Psychologist............................ ........... ........... 4 ...........

[[Page 58944]]

201.... Personnel Management Specialist/Officer............ ........... ........... ........... 4
203.... Personnel Assistant................................ ........... ........... ........... 4
303.... Program Assistant.................................. 4 4 4 4
303.... Program Support Clerk.............................. 4n 4 4 ...........
305.... File Clerk......................................... ........... 4 ........... 4
305.... Mail Clerk......................................... ........... ........... ........... 4
318.... Secretary (OA) (Stenography/OA).................... 4n 4 4 4
322.... Clerk-Typist....................................... 4n ........... ........... 4
326.... Office Automation Clerk............................ ........... ........... 4 ...........
334.... Computer Specialist................................ ........... ........... ........... 4
340.... Director/Assistant Director........................ ........... ........... ........... 4
341.... Administrative Officer............................. ........... ........... ........... 4
342.... Support Services Specialist/Supervisor............. ........... ........... ........... 4
343.... Program Analyst.................................... 4n 4 ........... 4
344.... Management Assistant (Analysis).................... ........... ........... ........... 4
350.... Copier/Duplicator Equipment Operator............... ........... ........... ........... 4
392.... Telecommunications Assistant....................... ........... ........... ........... 4
503.... Accounts Receivable Assistant...................... ........... ........... ........... 4
503.... Fiscal Accounts Clerk/Supervisor................... ........... ........... ........... 4
510.... Accountant......................................... ........... ........... ........... 4
511.... Auditor............................................ ........... ........... ........... 4
525.... Accounting Technician.............................. ........... ........... ........... 4
530.... Cashier............................................ ........... ........... ........... 4
540.... Voucher Examiner................................... ........... ........... ........... 4
561.... Budget Assistant................................... ........... ........... ........... 4
602.... Medical Officer (GS--Disability. Evaluation)....... 4 ........... ........... ...........
930.... Hearing Officer.................................... 4n ........... ........... ...........
962.... Contact Representative............................. 4nH
963.... Legal Instruments Examiner (Fiduciary Accounts).... 4s ........... ........... ...........
996.... Veterans Claims Examiner (Case Manager)............ 4 ........... ........... ...........
998.... Claims Clerk (Case Technician)..................... 4 ........... ........... ...........
1105... Purchasing Agent................................... ........... ........... ........... 4
1165... Loan Assistant (Realty)/Specialist................. ........... 4 ........... ...........
1170... Realty Specialist.................................. ........... 4 ........... ...........
1171... Appraiser.......................................... ........... 4 ........... ...........
1715... Vocational Rehabilitation Specialist............... ........... ........... 4 ...........
1801... Education Compliance Survey Specialist............. 4s ........... ........... ...........
1801... Education Liaison Representative................... 4s ........... ........... ...........
1801... Field Section Supervisor........................... 4s ........... ........... ...........
2005... Supply Clerk....................................... ........... ........... ........... ...........
----------------------------------------------------------------------------------------------------------------
LEGEND
4=Found in Business Line.
5=Field Position in VBSD.
H=Medical Center/Outreach Field position in VBSD.
n=Front office position in VBSD.
The NYRO is part of the Veterans Benefits Administration and has
four business lines--Veterans Benefits, Veterans Homes, Veterans Jobs,
and Support. It serves 1.2 million veterans in 31 counties and
distributes over $52 million in benefits every month. Its operating
budget is $17 million.
As of September 30, 1995, the NYRO employed 340 people in 36
occupational series. Their grades ranged from GS-3 to GS-15 while one
position was in the Senior Executive Service (SES) (See Figure 1). Of
these employees, 33.5% were veterans. Disabled veterans accounted for
10% of the veterans employed; Vietnam veterans accounted for 20.4% of
the veterans employed.
In the NYRO, 48.7% of the employees were women, 12.8% were people
with disabilities and 53.7% were minorities. The minority
representation was: 36.5% African Americans; 14.6% Hispanics; 2.3%
Asian Pacific Islanders; and .3% Native Americans. The minority
representation is significant, since it reflects the veteran population
in New York City. The following chart depicts the number of employees
in each series at the VA New York Regional Office as of September 30,
1995.

Figure 2: NYRO Series Distribution 9/30/95
------------------------------------------------------------------------
Number Series Title
------------------------------------------------------------------------
9...... 180 COUNSELING PSYCHOLOGIST
4...... 201 PERSONNEL MANAGEMENT SPEC./OFFICER
1...... 203 PERSONNEL ASSISTANT
12..... 303 PROGRAM SUPPORT CLERK/ASSISTANT
10..... 305 FILE CLERK/MAIL CLERK
318 SECRETARY (OA) (STENOGRAPHY/OA)
322 CLERK-TYPIST
326 OFFICE AUTOMATION CLERK
7...... 334 COMPUTER SPECIALIST
2...... 340 DIRECTOR/ASSISTANT DIRECTOR
1...... 341 ADMINISTRATIVE OFFICER
2...... 342 SUPPORT SERVICES SPECIALIST/SUPERVISOR
4...... 343 PROGRAM ANALYST

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3...... 344 MANAGEMENT ASSISTANT (ANALYSIS)
1...... 350 COPIER/DUPLICATOR EQUIPMENT OPERATOR
1...... 392 TELECOMMUNICATIONS ASSISTANT
3...... 503 ACCOUNTS RECEIVABLE ASSISTANT
3...... 503 FISCAL ACCOUNTS CLERK/SUPERVISOR
2...... 510 ACCOUNTANT
1...... 511 AUDITOR
1...... 525 ACCOUNTING TECHNICIAN
1...... 530 CASHIER
1...... 540 VOUCHER EXAMINER
1...... 561 BUDGET ASSISTANT
2...... 602 MED OFFICER (GS-DIS EVAL)
6...... 930 HEARING OFFICER
9...... 962 CONTACT REPRESENTATIVE
5...... 963 LEGAL INST EXAMINER (FID ACCTS)
143.... 996 VETERANS CLAIMS EXAMINER
58..... 998 CLAIMS CLERK
1...... 1105 PURCHASING AGENT
9...... 1165 LOAN ASSISTANT/SPECIALIST (REALTY)
3...... 1170 REALTY SPECIALIST
4...... 1171 APPRAISER
3...... 1715 VOCATIONAL REHABILITATION SPECIALIST
2...... 1801 ED COMPLIANCE SURVEY SPECIALIST
1...... 1801 EDUCATION LIAISON REPRESENTATIVE
------------------------------------------------------------------------

The Detroit Regional Office is also part of the Veterans Benefits
Administration and has three primary business lines--veterans benefits,
home loans and job rehabilitations--as well as a support activity. The
Detroit Regional Office serves over .95 million veterans in the State
of Michigan and distributes over $38.6 billion in benefits every month.
The operating budget is $11.8 billion.
As of September 30, 1995, the Detroit Regional Office employed 269
people in 35 occupational series. Their grades ranged from GS-3 to GS-
15 with one position in the Senior Executive Service. Of these 269
employees, 34.8% were veterans. Disabled veterans accounted for 10.6%
of all employees or 30.5% of all veteran employees; Vietnam veterans
accounted for 28.2% of all employees and 81.1% of the veterans
employed.
In the Detroit Regional Office, 54.7% of employees are women.
Eleven percent are people with disabilities and 50.3% are minorities.
The following ethnic distribution existed: African Americans--48.7%;
Hispanics--.08%; Asian Pacific Islanders--.04%; Native Americans--.04%.
The minority representation reflects the population in the Detroit
metropolitan area. The following chart depicts the number of employees
in each series at the VA Detroit Regional Office as of September 30,
1995.

Figure 3: VA Detroit Regional Office Series Distribution 9/30/95
------------------------------------------------------------------------
Number Series Title
------------------------------------------------------------------------
5...... 180 COUNSELING PSYCHOLOGIST.
1...... 201 PERSONNEL OFFICER.
1...... 235 EMPLOYEE DEVELOPMENT SPECIALISTS.
1...... 301 OFFICE SYSTEMS MANAGER.
8...... 303 CLERK/PROG SPT CLK/PROG SPT ASSISTANT.
3...... 303 PROG SPT CLK (OA)/PROG SPT ASSIST (OA).
12..... 305 FILE CLERK/MAIL CLERK.
7...... 318 SECRETARY (OA).
13..... 326 OFFICE AUTOMATION CLERK/ASSISTANT.
2...... 334 COMPUTER SPECIALIST.
2...... 340 DIRECTOR/ASSISTANT DIRECTOR.
3...... 343 MANAGEMENT ANALYST.
2...... 357 CODING CLERK.
2...... 501 FINANCE OFFICER/ASSIST FINANCE OFFICER.
3...... 503 ACCOUNTS RECEIVABLE ASSISTANT.
3...... 503 FISCAL ACCOUNTS CLERK.
2...... 510 ACCOUNTANT.
6...... 525 ACCOUNTING TECHNICIAN.
1...... 530 TELLER.
1...... 561 BUDGET ASSISTANT (OA).
1...... 602 MED OFFICER (GS-DIS EVAL).
9...... 905 GENERAL ATTY (VETERANS).
2...... 930 HEARING OFFICER.
1...... 950 PARALEGAL SPECIALIST.
34..... 962 CONTACT REPRESENTATIVE.
5...... 963 LEGAL INST EXAMINER (FID ACCTS).
2...... 986 LEGAL CLERK/ASSISTANT (OA).
1...... 990 CLAIMS EXAMINER.
74..... 996 VETERANS CLAIMS EXAMINER.
16..... 998 CLAIMS CLERK.
19..... 1165 LOAN ASSISTANT/SPECIALIST (REALTY).
1...... 1170 REALTY OFFICER.
5...... 1170 REALTY SPECIALIST.
4...... 1171 APPRAISER.
6...... 1715 VOCATIONAL REHABILITATION SPECIALIST.
2...... 1801 ED COMPLIANCE SURVEY SPECIALIST.
9...... 1801 FIELD EXAMINER.
2...... 2005 SUPPLY TECHNICIAN.
------------------------------------------------------------------------

(F) Union Involvement

The American Federation of Government Employees (AFGE) Local 138
represents employees at the Detroit Regional Office, while AFGE Local
1151 represents employees at the New York Regional Office. The Regional
Offices are continuing to fulfill their obligations to consult and/or
negotiate with the AFGE Locals in accordance with 5 U.S.C. 4703(f) and
7117. The participation with the Locals is within the spirit and intent
of Executive Order 12871.
AFGE Local 1151 in the New York Regional Office has been involved
with and has participated in the development of the project since its
inception. As the Detroit Regional Office has become part of the
project, Local 138 has also played an active role. The unions are an
integral part of the demonstration project and will be full partners in
the project.
The demonstration project will have a steering committee. In line
with the Partnership Agreement, the unions will be represented on the
Policy Board, local steering committees and any standing committees
involved in the demonstration project.

G. Project Design

The demonstration project request is the result of a change process
that the NYRO began 5 years ago. The NYRO is an example of the type of
transformation process that VBA has encouraged. Furthermore, since it
has been designated as a NPR reinvention lab and as a GPRA pilot site,
VBA has used the NYRO to develop and test new ways of doing work and
providing service to veterans and their families. Five distinct phases
mark the NYRO's change process: Total Quality Management, the White
House Study, NPR, GPRA, and the Interim Compensation Committee. Each
phase is described below.
(a) Total Quality Management (TQM) (1990-92)
The following excerpt from ``REINVENTION: History and

[[Page 58946]]

Guidebook'' explains what the quality efforts had done for the NYRO by
1992.
They had trained over 83% of their workforce in the principles and
mechanics of quality improvement and had established over 27 quality
improvement teams to study and enhance their services. A cultural shift
moved prevailing attitudes from ``It's always done this way.'' to ``Why
do we do things this way?'' Moreover, supervisors and managers had
begun to change their leadership behavior from a ``command and control
style'' to a more facilitating and coaching approach.* * * Employees
kept up with a 23% increase in workload caused by a rise in the number
of rules and procedures due to recent Court of Veterans Appeals (COVA)
decisions and the results of the Omnibus Budget and Reconciliation Act.
While the NYRO saw improvements, COVA and the Omnibus
Reconciliation Act had complicated the claims process. It now took
almost twice the time to process claims. Something more than
incremental improvement was needed if the NYRO wanted to continue to
improve service to its customers--veterans and their families.
(b) The White House Study (1992-1993)
When the White House in conjunction with the Office of Management
and Budget (OMB) began a special, three-year study to see how well
quality improvement efforts could improve customer service, the
Department of Veterans Affairs selected the NYRO as one of the
participants. For this study, the NYRO decided to reengineer claims
processing. The NYRO used an Organizational Systems Design (OSD) Model
for its redesign effort. This model (Figure 4) was a ``framework'' that
helped organize the NYRO's thinking about how its organization
functioned. The model helped the NYRO:

--Focus upon desired outcomes, or results;
--Recognize the impact of the external environment upon the
organization;
--Understand the choices it could make about its mission, guiding
principles, influence strategies, goals and objectives and
organizational systems.

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The design process required the NYRO to align all its
organizational choices to its outcomes. The NYRO began with its work
processes.
After one year of looking at technical and structural systems, it
fundamentally redesigned the way it did its work with a case manager
approach to claims processing that used self-directed work teams. It
took 25% of its workload and established the Prototype Unit in 1993.
(c) National Performance Review (1993 to the present)
In 1993, Vice President Al Gore began his work with the NPR. The
Department of Veterans Affairs nominated and the NYRO was designated an
NPR reinvention lab.
The NYRO had begun its work by reviewing its technical and
structural systems. On the basis of its analysis, it redesigned its
workflow and its structure and decided to use self-directed work teams
and a case manager approach to claims processing. On March 11, 1994,
Vice President Al Gore presented the first National Performance Review
Hammer Award to the New York Regional Office. The NYRO Reinvention Lab
received the award for its efforts in improving customer service. The
Hammer Award recognized a measurable improvement in customer service.
The national standard for customer service required Regional Offices to
see veterans in 30 minutes; the waiting time had dropped to under 3
minutes.
(d) Government Performance and Results Act (GPRA)
The OSD model focused the NYRO upon outcomes and measures. As a
result when VA began looking for a pilot site, the NYRO was a logical
choice. The NYRO was committed to the OSD model and wanted its outcome
measures to tell the organization how well it was serving veterans.
Becoming a GPRA pilot site enabled the NYRO to focus upon its
information and measurement systems. As a result, as soon as the NYRO
had completed reengineering its technical and structural systems, it
began a one year effort to develop new organizational performance
measures. The old information and measurement systems had VA Central
Office, OMB, Congress and the General Accounting Office (GAO) among its
stakeholders. The new information and measurement system added
customers (veterans and their families), employees, and taxpayers to
the list of stakeholders. The new core measures are:
Speed, a modification of the old Timeliness standard,
Accuracy, a modification of the old Quality measure,
Customer-based measures, a new measure supporting the Secretary's
Putting
``Veterans First'' initiative and the National Performance Review,
Employee development measures, a new measure supporting
organizational learning, and
``Cost-per-claim,'' a unit cost measure that replaced Productivity.
The NYRO considers all measures in its ``Balanced Scorecard''
approach and will use them to drive Regional Office planning. (See
Appendix A for a detailed description of the measures.) The ``Balanced
Scorecard'' has become the focal point of assessing how well the NYRO
is serving veterans and their families. The core measures found in the
scorecard drive the station's performance. Furthermore, VBA has adopted
the core measures for nationwide use.
The core measures help define the business and clearly explain what
the NYRO feels is important. This new way of doing business emphasized
for the NYRO why the human resource systems needed to be aligned with
the organization's new measurement system. The lessons learned in the
NYRO GPRA Pilot Program showed that the current pay system had no
relationship to organizational performance. The current compensation
system was position-based and did not fit an organization where
teamwork, learning new skills and collaboration were essential.
(e) The Interim Compensation Committee
As part of the reengineering effort, the NYRO had combined numerous
positions into two: Case Manager and Case Technician. While this change
was made, issues involving advancement, growth and development in the
new work environment had not been addressed. The NYRO formed the
Interim Compensation Committee (ICC) that included representatives from
the teams and the union to look at this problem. The Committee
developed an Interim Compensation System that established core skills,
skill blocks and the combination of skill blocks that the team members
would need to demonstrate before being promoted. They also had
developed a certification procedure for promotion.
The ICC's work was recognized in May 1995 when the committee
received a National Performance Review Hammer Award. What is most
significant about this effort is that it was driven by the
organization's needs and is so clearly tied to the NYRO's
organizational outcome measures.
The ICC results also made it very clear that the NYRO needed to
request demonstration status from OPM to align its human resource
system with its organizational goals and culture.

III. Personnel System Changes

A. The Human Resource Process

``Ultimately, the results HRM processes achieve must be synonymous
with organizational success. Recent studies in the private sector have
established a linkage between progressive HRM practices and the firm's
financial performance. These findings make a strong case for HR to
concentrate its efforts on those activities that add value to
organizational performance.''
The above quotation from the study, Innovative Approaches to Human
Resources Management: Implementing Real Change in Human Resources
Management, published by the National Academy of Public Administration,
July 1995, clearly explains why it is essential to align human resource
systems to organizational outcome measures. Human resource systems
exist because customers and employees, who deliver service to
customers, exist. The human resource systems must support the
organizational outcome measures and add value to the benefits and
services VBA provides veterans and their families. The project proposal
identifies basic principles and operating guidelines as well as options
the Regional Offices may use. The demonstration project process will be
evolutionary and flexible so it will be able to support changing
organizational, employee and customer needs and expectations. The
demonstration project will refer to team and team members, but to add
flexibility to the offices involved in the project these terms can also
be applied to work unit and work unit members.
The human resource process has three stages: The Entrance Stage
that brings employees into the organization and introduces them to its
mission, vision, values and culture; the Maintenance and Support Stage
that includes everything that sustains, develops, and focuses employees
upon serving veterans and their families and meeting its organizational
outcome measures; and, the Exit Stage that deals with issues affecting
employees leaving the organization.
The following chart provides another explanation of the human
resource process and a more complete

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explanation of each step of the process follows:

Demonstration Project Human Resource Innovations

Entrance Stage

Selection and Placement
Orientation and Assimilation

Maintenance and Support Stage

Role Description
The Compensation System
Skill-Based Pay
Variable Pay
Organizational Performance Management
Learning
Performance Feedback
Learning Contract
Recognition

Exit Stage

Reduction-in-Force
Exit Interviews

B. Entrance Stage

Selection System
The Regional Offices will use a selection process for both external
and internal candidates that is aligned to the organization's measures
and values and that will include core competencies needed to
successfully function in a customer service environment. The basic
principles and the operating guidelines for the selection system are:
(a) The selection process will focus on hiring individuals
committed to serving veterans and their families; (b) The selection
process will use organizational values in establishing competencies for
its business lines; (c) The selection process will follow Merit System
Principles and apply veterans' preference; (d) Team, or work unit,
members will be fully involved in selecting future members; and (e) All
procedures developed will be streamlined, customer-focused and cost
effective, keeping administrative costs at a minimum.
Instead of the traditional occupational series, the selection
system will place people in business lines which are Veterans Benefits,
Veterans Homes, Veterans Jobs and Support. Selections for the business
lines will be based on the core competencies and the knowledge, skills
and abilities needed for those business lines. All applicant sources
will be used to ensure that the Regional Offices find the best
qualified candidates who are able to serve veterans in a team
environment.
The process will use a rating mechanism that will assess the
experiences and ability of the applicants to provide veterans and their
families with excellent service. The process will identify the
necessary and desirable job-related knowledge, skills and abilities
which support the organization's goals and values. The process will
then assess how well candidates meet those requirements, using a review
of individual applications and one or more of the following tools: (a)
A structured interview process involving members that will use
organizational measures and values as the anchors for the interview
process; (b) An interview or assessment process that will focus on core
competencies, such as communications, customer service, flexibility and
innovation, which are the people and business skills critical for
quality customer service; (c) An assessment process to determine the
applicant's ability to work on a team providing service to veterans and
their families; (d) Teamwork and partnership involvement in the
selection process; and (e) A pre-appointment visit to a team for
external applicants to help them understand what it is like to work on
a team.
This assessment process would serve several purposes: (a) The
applicants would get an idea of what it is like to work on a team; (b)
It would provide a way to rate applicants based on concrete situations;
and (c) Team members would own the process and have a stake in the
quality of the candidates selected.
The assessment process would be used for all external hires to the
team. The Regional Offices will have the option of having examining
authority delegated to them.
Selection for coach and leadership will require a special,
competitive selection process. All coach and leadership positions will
require the use of an assessment process that will evaluate the
individual's ability to provide leadership in a team environment and
will assess the applicants on how well they can serve in the leadership
role. The leadership roles include: coach, facilitator, process
champion, and organizational strategist.
Orientation and Assimilation
Veterans and their families are the reason VA exists. Working in a
team environment that is customer-focused requires a special degree of
commitment and caring from the employees involved. For this reason, an
orientation to the organization's unique mission, vision, values and
organizational outcome measures and goals is essential.
Upon joining the Regional Office and one of its business lines, the
new team or work unit member will be required to undergo an orientation
and assimilation program that will include: (a) The Mission and Vision
of the Department of Veterans Affairs and the partnerships existing
within organizational components of VA; (b) The Mission and Vision and
Values of VBA and the Regional Offices; (c) The History of VA and
Veterans Benefits; (d) Veterans Awareness--An Overview of the Concerns
and Needs of Veterans; (e) The Balanced Scorecard or a Similar
Organizational Tool--The Core Measures and How to Contribute to the
Success of the Organization; (f) The Team, or Work Unit, Member's Role
in the Organization; (g) An Overview of the Human Resource Process
Supporting the Team or Work Unit Member; (h) The Compensation System--
Pay for Applied Skills and Variable Pay; (i) Learning Contracts and
Skills Acquisition; (j) Diversity, Sexual Harassment and Other Required
Training; (k) The Union and Partnership; and (l) Team Skills.
The new team member will have a learning contract developed that
will identify the training he or she will receive and will have a peer
trainer, or mentor who will help the new person with the transition
into the organization and the team environment.

C. Maintenance and Support Stage

Role Description
Every team member should understand how he or she works on a team
that is customer focused and how he or she contributes to
organizational outcome goals, to service delivery and to the
organization and the team. The purpose of a role description is to
focus on the customer rather than upon control and authority. Teams
will develop the role descriptions and review them during their renewal
meetings that are held semi-annually to assess progress and establish
organizational, team and self-development goals for the year. The role
description will include: (a) the customer--veterans and their
families; (b) the process used to provide service; and (c) the measures
and values of the organization.
The following chart identifies questions to be answered by the role
description:

Questions the Role Description Will Answer

Customer Profile

Who are your customers?
What do they need or want?

Capability Profile

What is necessary for you to perform these functions at an optimal
level (primary capabilities)?

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Resource Profile

From whom do you receive resources (e.g., Materials, information,
money, etc.)?
What do they provide you?

Value-Added Profile

How do you utilize these resources to serve your customers (i.e.,
Primary accountabilities)

Team Profile

How do you know if you are supporting your team?
What do you have to do to serve your customers?

Performance and Capability Profile

How do you know if you are performing your services well (i.e.,
primary performance measures)?

Skill Block Profile

What skill blocks are needed for this role?
The role description will help the team member understand how he or
she supports organizational performance.
Compensation System
``If you develop skills we need, apply them in ways that help the
organization succeed and behave in accordance with organizational
values, the organization will provide a challenging work environment,
support worker development toward employability and reward
contribution.'' Peter Drucker, Post-Capitalist Society.
The total compensation or pay system is an important indicator of
what an organization believes is important to its success. A well-
designed compensation system provides a battery of tools to support
organizational goals and outcomes. The design should be strategic,
flexible, nimble and customer-focused. The current compensation system,
because it was implemented in a piecemeal fashion for a hierarchical,
functional organization, does not relate to emerging business needs and
is static, cumbersome and hidebound. The demonstration project will
test a compensation system that is able to change based on the needs of
the entire organization, of the taxpayer and of the customer being
served.
Parts of a Compensation System
A compensation system consists of base pay, variable pay and
indirect pay. Since indirect pay covers employee benefits such as
retirement and insurance which statute excludes from demonstration
projects, indirect pay will not be included in the demonstration
project. The demonstration project will cover only base pay and
variable pay as defined below:
(a) Base pay is a set salary and focuses on the strategic value of
the skills an individual learns and applies in support of the
organizational outcome measures.
(b) Base pay initially will only include a Pay for Applied Skills
System.
(c) If the demonstration project develops the necessary
organizational maturity and ability to work in an environment where
organizational outcome measures are the focus of every member, the
project will design and implement a phase that will be a ``Pay at
Risk'' option for handling annual pay adjustments. This addition will
provide employees an opportunity to increase their base pay by all or
part of the annual adjustment only if the organization is successful.
Base Pay at Risk will be another tool considered for the organization
to use. It will help the entire organization develop and practice the
behaviors needed to be successful and strategically focused. Until this
innovation is adopted, employees will be entitled to the full general
increase.
(d) Variable pay which includes incentives, bonuses, gainsharing
plans and goal sharing plans ``* * * is any form of direct pay that is
not folded into base pay and that varies according to performance.''
(Schuster & Zingheim, 1992). Funding will come from the traditional
awards funding process, but a later phase of the project may use funds
following a gainsharing formula based on savings that may be used to
support payouts based on meeting projections identified through a
goalsharing plan.
Both base pay and variable pay will focus upon the organizational
outcome measures. The proposal includes options for both base pay and
variable pay which the Regional Offices may use during the project.
Overview of Base Pay
For the demonstration project, base pay will include the following:
(a) Pay for Applied Skills is the foundation of the compensation
system. It is a skill-based pay system that will pay employees for the
skills they learn and use to support the mission of providing benefits
and services to veterans and their families. It will set a value on the
skills based on their strategic use and impact upon providing benefits
and services to veterans.
(b) Base Pay at Risk is base pay that varies based on
organizational performance. The project includes an option to implement
Base Pay at Risk. It is not part of the project's initial
implementation but may be considered for use later in the project. This
could involve using the annual pay adjustment under 5 U.S.C. 5303, or
part of this increase, as part of an incentive strategy tied to
accomplishment of organizational goals. It is another tool that a
mature organization can use to help shape its strategic organizational
behavior.
Overview of Pay for Applied Skills
Pay should reflect and support what is important to the
organization. In a skills-based pay system, skills and competencies a
person learns determines that person's pay. In a Pay for Applied Skills
System, the skills and competencies a person learns and uses become the
basis for pay. A Pay for Applied Skills System aligns very well with
VBA's organizational outcome measures and, in particular, those
measures dealing with employee development. In addition, since a Pay
for Applied Skills System works well in a high employee involvement
organization, the structural and organizational systems adopted or
being adopted in the Regional Offices also will fit this type of
change.
Pay for Applied Skills--General Features
Pay for Applied Skills will be base pay. The following are its
basic principles and operating guidelines. When implemented, it will:
(a) Pay employees for the skills that they have acquired and used, and
that have been certified; (b) The number of employees that may be
certified (concurrently) for each skill block and groups of skill
blocks will be based on employees' ability to learn and apply the
skills and on mission requirements (e.g., organizational goals,
workload) and may change over time as conditions warrant; (c) Include a
certification process to verify acquisition and application of skills;
(d) Be tied to organizational planning through the employee development
measures; (e) Provide flexibility to respond to changing work
requirements at the Regional Offices; (f) Provide leadership skill
blocks that will emphasize the importance of leadership in a flattened
organization and that will provide a bridge between these skills and
the skills found in the business lines; (g) Involve employees in the
development of the compensation system; (h) Provide the options of a
temporary payment (differential pay) for skill blocks when the
organization knows the use of a skill is not permanent (e.g., a team
member could receive differential pay for instructing); (i) Allow
employees to understand how learning and applying the skills they learn
can affect their pay; (j) Focus upon

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keeping administrative costs at a minimum, since cost is one of the
organizational outcome measures and will be included in the project's
evaluation plan; (k) Include a pay back period during which the
employee will normally not receive training for the next skill block so
that they can concentrate on fully mastering the new skill for which
they have just been certified to pay back the organization for the
investment it has made in their training. This does not apply to lump
sum skill blocks. The length of time will be determined by the skill
block's complexity; (l) Provide that the employee will, whenever
possible, be given every opportunity to acquire, apply and be certified
for a new skill block if the organization loses the need for an
existing skill block due to such things as new legislation, a
reorganization, loss of a function, or new technology. The situation
described is a reduction-in-force (RIF) and the RIF procedures in Part
III-D of this plan will apply.
Skills and Competencies. The definition of skills and competencies
for this demonstration project are as follows: (a) Skills are the
technical, work, or process skills needed for the specific business
line. In the Regional Offices, the four business lines are Veterans
Benefits, Veterans Homes, Veterans Jobs, and Support. (b) Competencies
are the people and business skills which are just as critical as the
technical skills to quality customer service. These focus upon personal
characteristics which an employee can develop and will need if the
organization will be successful. These include such things as
communications, flexibility, customer focus and team orientation.
Skill Levels. Pay for Applied Skills will have three skill levels.
Because of the nature of the skills involved, it may be possible for
skills to be at only one level: (a) Fundamental Level--This level
consists of skills that are used for the most basic, continuing
assignments, or are those needed to progress to the proficient and
expert levels, to begin moving towards self-management, and to develop
as a team member; (b) Proficient Level--This level consists of skills
that are essential for the business process and allow the employee to
independently complete with speed and accuracy the full range of tasks
and assignments needed for the business process involved and to
function as a full team member; and (c) Expert Level--This level
consists of skills needed for the most complex business processes and
assignments and that demonstrate the ability to perform in a manner
showing a complete knowledge of their concepts, principles, and
applications. It also includes those skills needed for providing
guidance, instruction and advice to others in all skill and competency
areas.
Skill Blocks. Skill blocks consist of skills: (a) Each block will
focus on specific areas of expertise/knowledge needed to perform
assignments; (b) Blocks (when appropriate) may fall into one of three
skill levels (Fundamental, Proficient, and Expert) based on the
complexity and scope of the skills involved; and (c) The value of the
skill blocks will be set by the organization and tied to the
Organizational Measures dealing with employee development, (for
example, in the NYRO, the Technical Skills Matrix will form the basis
for the technical or work skill blocks). (d) The value of a skill will
depend upon the organization's future need for the skill that such
things as customer needs, stakeholder requirements, and changes in
technology will help determine; and (e) An employee will receive Pay
for Applied Skills when he or she has learned and applied all of the
skills found in one or more skill blocks.
Competency Block. Competency blocks consist of the people or
business skills needed at each skill level. While the competency blocks
have no monetary values assigned to them, employees must demonstrate
the potential to acquire and use competencies before moving into each
skill level. In New York, the Team Development Matrix and the
Individual Needs Analysis Survey will help define competencies. In
addition, employees must demonstrate the people or business skill
identified for each competency skill block before advancing to the next
skill level. For example, before advancing into the proficient skill
level, an employee must have demonstrated the competencies listed under
competency block C1.
Skill Paths. Pay for Applied Skills may use skill paths to show
progression and movement through the system. Skill Paths: (a) Show the
options for acquiring skill blocks in the organization that will be
based on the organization's needs and the employee's developmental
needs, and as defined by its outcome measures; (b) Emphasize horizontal
and lateral movement rather than the traditional hierarchical
progression of career ladders; (c) Encourage flexibility in the ways
employees acquire and learn new skills; and (d) Emphasize the
importance of investing in the development of employees to help support
the organization's performance and outcome measures.
Leadership Skill Blocks. The leadership skill blocks will
supplement the Business Line Skill-Based Pay Model by including
positions formerly covered by the GS 14, Step 1 to GS 15, Step 10 pay
range. They will provide a bridge to the Business Line Skill-Based Pay
Model by linking with the coach skill blocks. Competitive procedures
will be followed for movement into these skill blocks, since the
organization will limit the number of individuals applying these skill
blocks. As in the case of the coach skill blocks, a formal assessment
process will be required also for the leadership skill blocks. The
leadership skill blocks will continue to be critical to organizational
success even as the organization becomes flatter and team members
broaden their capabilities. The leadership skill blocks are based upon
the Office of Personnel Management's Leadership Framework that covers
traditional supervisory, managerial, and executive jobs.
The leadership skill blocks provide the leadership skills that
support the business lines. These skills are critical to the coach,
facilitator, process champion and organizational strategist roles. The
leadership skill blocks will include coaching, facilitation, change
management, business management and organizational systems management.
As with the skill blocks found in the Business Line Skill-Based Pay
Model, the leadership skill blocks will be flexible and will change
with organizational needs. However, movement into these skill blocks
will be competitive, since the organization will limit the number of
individuals applying these skill blocks.
The Business Line Skill-Based Pay Model
The Business Line Skill-Based Pay Model is the basic model for the
business lines. The model, shown in Figure 5, is a template that the
New York Regional Office developed and will be applied to all the
business lines, although the number of skill blocks may vary by
business line. While the skills, competencies, and levels presently
reflect those required to process and pay veterans claims, the same
basic model with perhaps a different number of skill blocks will also
be used to reflect the skills required for the Veterans Benefits,
Veterans Home, Veterans Jobs, and Support Business Lines. The model is
not static, but will change as skill blocks are added, deleted, or
modified. In addition, the model may vary from Regional Office to
Regional Office depending upon organizational needs.

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The model also provides a bridge to the leadership skill blocks
that replace the traditional supervisory and management functions. The
pay range for the leadership skill blocks will be from GS 14, Step 1 to
GS 15, Step 10, only to accommodate the few remaining managerial
positions that still exist within the organization and to recognize
that organizational needs may dictate the need for additional
leadership skills.

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Skill Blocks. Currently, the New York Regional Office's Business
Line Skill-Based Pay Model consists of twenty-two skill blocks and
three competency blocks: (a) Seventeen blocks are used for setting
continuing base salary; (b) Fourteen of these skill blocks consist of
technical skills. An employee's pay may increase as he or she acquires
and demonstrates the technical skill blocks, assuming the skills are
needed by the organization; (c) Three are competency blocks, which are
people skills; and (d) The remaining eight skill blocks represent
opportunities for lump-sum payments.
As necessary, the number and the composition of the skill blocks
may change to respond to organizational requirements or to reflect
refinements in the Pay for Applied Skills System.
The Levels. The seventeen blocks, used to set continuing base pay,
are divided into three levels: (a) The Fundamental level. This first
level consists of four blocks: one competency block and three technical
skill blocks. Technical skills at this level enable employees to
process mail, obtain evidence and maintain files. All four of these
blocks must be mastered before advancement to the proficient level; (b)
The Proficient level. This middle level consists of five blocks: one
competency block and four technical skill blocks. Technical skill
blocks include those skills essential to processing compensation and
pension claims, making and documenting administrative decisions, and
counseling veterans. Again, an employee must master all the blocks at
this level before advancement to the next or expert level, and (3) The
Expert level. This top level includes nine blocks: one competency
block; and five skill blocks relating to the most complex functions of
the claims adjudication process, (e.g., authorization or quality
assessment and ratings or medical decisions).
There will be a bridge from the coach skill blocks at the expert
level to the leadership skill blocks. The leadership skill blocks will
require competitive selection, and the use of these skill blocks will
be restricted.
Lump-Sum Blocks. The eight lump-sum blocks consist of skills
required to perform tasks or functions which may last for a limited
period of time or tasks which only one or two members of the team need
perform in support of the team. The teams may rotate these functions or
tasks periodically. This rotation will give all team members the
opportunity to both gain the skills within the block and receive a one-
time payment for utilization of those skills. The one-time payment
would be based on the monetary value of the block and the length of
time the skills are applied.
Pricing of Competency or Skill Blocks. The following guidelines
will be followed for pricing competency and skill blocks: (a) The
competency blocks will have no dollar values placed on them; however,
acquisition of all the necessary competencies at any level will be
required for advancement to the next higher level. For example, to
advance to proficiency level, an employee must acquire all competencies
at fundamental level, and (b) A monetary value will be assigned to each
of the twenty-two skill blocks, based on its importance to the
organization and its complexity. The value of skill blocks will be
determined by several factors, including the demand for the skills, the
difficulty of obtaining them, and the complexity of the tasks.
Generally, the higher the level, the more valuable the skill block. For
example, the expert level skills represent the most complex functions
within the claims adjudication process.
Pay Model Pricing. Excluding the leadership skill blocks, the pay
range selected for the Business Line Skill-Based Pay Model as applied
to the Benefits Line is GS-3, Step 1 to GS-13, Step 10. This range
reflects the grades of those employees who will initially be covered by
the demo (i.e., GS-3 to GS-13). The GS-3, Step 1 pay rate will serve as
the floor of the model and GS-13, Step 10 will serve as the ceiling.
The skill-based pay range (GS-3/1 to GS-13/10) for the business
lines will be divided between the three levels and dollar values will
be assigned to the various skill blocks based on organizational need at
the time of conversion. The system will be modeled using one or two
teams and assessing the skills of every team member and then applying
the dollar values of the skill blocks to each team member to evaluate
potential impact of the skill-based pay model on the employees and the
organization. The skill block dollar values will be adjusted based on
the results of the model and in consideration of the value of the skill
block to organizational need.
Skill Block Progression (General). As is mentioned in the previous
paragraph, an employee must have mastered all the technical skill
blocks and the competency block in one level before progressing to the
next level. (NOTE: In very unusual circumstances to meet organizational
needs, an employee who has not acquired all the skill blocks at a
particular level may be asked to acquire a block at a higher level.)
Additionally, certain skill blocks within the fundamental and
proficient levels are prerequisites for other blocks at the same
levels; however, both the proficient and expert levels permit more than
one career path for progression among the blocks. Certification of
skill possession in a block an employee is currently utilizing would
result in a compensation increase equal to the dollar value of the
skill block.
Examples of Progression Through Skill Blocks. In Figure 6, the
Progression or Skill Path Model, shows various options for skill
acquisition and progression through the skill and competency blocks.
The following are examples of how an employee will progress through the
model.
(a) New Recruit. Newly hired case managers would begin their
progression at the fundamental level that includes three skill blocks
B1, B2, and B3 and one competency block C1. While an individual
organization may, based on its need, require the acquisition of the
skills in one block before another, this is not a requirement at the
fundamental level.

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For example, an employee could begin with B1 (Mail, File and
Control), B2 (Development), B3 (Transition), or C1 (Competencies). As
indicated by the arrows, the new case manager could tackle the skills
blocks in the order of his or her choice. The case manager would have
to demonstrate all of the skills and competencies at the fundamental
level before progressing to the proficient level.
For entry into the proficient level, the employee must demonstrate
the potential to perform all of the competencies listed under C2. At
the proficient level, the employee could first undertake B4
(Compensation and Pension) or B6 (Counseling). The skills described in
B5 (Adjudication) would likely be more easily acquired after
acquisition of the skills in B4. B7 (Counseling) requires a breadth of
counseling skills not required by B6. B6 would, therefore, serve as a
prerequisite for B7. The case manager would have to acquire and
demonstrate the skills and competencies (C2) of the proficient level
before progressing to the expert level.
Again, Figure 6 shows the options for movement at the expert level.
B8 (Quality Assessment) is a prerequisite for B9 (Advanced Quality
Assessment). B10 (Medical Decisions) is a prerequisite for B11 (Medical
Decisions) and B12 (Medical Decisions). While an employee could move
into B13 after completing the proficient level, the move into B13
(Coaching) would require an organizational need for someone to assume a
coaching role, competition and a formal assessment. B13 is a
prerequisite for B14 (Advanced Coaching). Movement into the leadership
skill blocks would require competitive selection.
(b) Current Employee. Placement for existing employees into the Pay
for Applied Skills System will require an assessment of each employee's
skill level. Credit for the skill block will only be granted when the
employee possesses all of the skills listed for that skill block.
For example, an employee worked as a Veterans Benefits Counselor
for 3 years prior to 1993. In 1993, she was placed on a team and became
a Case Manager. The employee previously possessed the skills described
in B6 and B7. In the last three years, as a Case Manager, the employee
acquired the skills in B1, B2, B3, B4, B5 and a portion of B8. The
employee has demonstrated the competencies at the C1 fundamental level,
but has not yet demonstrated them at the C2 proficient level. The
employee is currently a GS-9.
Upon transition into the Pay for Applied Skills System, the
employee would receive compensation based on the value of B1 through
B7. The employee would not be compensated for B8 until he or she
possesses and demonstrates the competencies described by C2 at the
proficient level and all of the skills for B8.
(c) Transferred Employee. Employees transferring into the Pay for
Applied Skills System would be assessed in the same manner as existing
NYRO employees. The employee transferring into the NYRO would be paid
for the skill blocks when all of the skills in the block are possessed
and demonstrated, subject to organizational need. Sources of
information could include in-depth team interviews, work samples and
detailed input from previous supervisors.
Certification and Recertification Process
The Pay for Applied Skill System will include a certification/
recertification process that will determine whether or not the employee
has the skills required for a particular skill set.
The certification process may include a variety of techniques that
will take into consideration the growing complexity of skills needed.
The certification process will reflect the skills identified in the
employee development measures.
General Principles and Operating Guidelines for Certification and
Recertification: (a) The process will be developed with employee
involvement and input in line with the Partnership Agreement; (b) The
process will be linked to the learning plans developed by the teams and
the organization; (c) Partnership principles will be key to the success
of this process; (d) The process will adjust to changing organizational
requirements as well as to the need of team members for development and
advancement in terms of the breadth, depth, and lateral growth of
skills; (e) The process will provide a systematic way to identify
skills that are needed or no longer needed in the organization; (f) The
process will provide a way to know whether or not the employee
continues to use and maintain a skill or competency for which he or she
had previously been certified; (g) Certification will be systematic and
will use consistent and objective measures; (h) The process will make
clear to employees the skills for which they are being paid; (i)
Accountability and oversight will be at the team level; (j) Team review
of performance could include determination of which skills are no
longer needed; (k) The process will reflect the learning needs
identified by the employee development outcome measures; (l) The
certification process will be evolutionary and will move towards a mix
of work samples, and peer reviews geared to the level of performance.
An exploration of options is an important part of the project; (m) The
certification process may use levels of difficulty or development to
select assessment tools. These could be defined as follows:
Expert--Peer reviews, work samples, joint work or interviews;
Proficient--Peer review process using work samples, joint work, testing
or interviews; and Fundamental--Self-Certification with peer
concurrence; (n) Pay will increase only after the employee has
acquired, used and demonstrated performance of the skills through the
certification process; (o) An employee will not be able to undergo
certification for the skill immediately after training. Pay for Applied
Skills will establish specific time frames for certification based on
the complexity of the skills involved and upon input from team members;
(p) Organizational needs will help identify the need for skill block
acquisition; (q) The opportunity to be certified for a skill block will
be managed based on organizational need; and (r) Team members will help
determine who within the team will receive training for new skills.
Special Circumstances in the Certification and Recertification Process
(a) The situation where the organization no longer needs a skill
and decides to discontinue a skill block, i.e., discontinue as no
longer needed, is a Reduction-in-Force. The process found in Part III-D
pertaining to Reduction-in-Force will be followed.
(b) If the organizational performance review leads to the
determination that an individual team member may have a performance
problem, the certification process may be used to help determine
whether or not the employee has maintained the skills he or she needs.
The certification process will not replace the organization's
responsibility to resolve a performance problem.
(c) The certification process will help ensure that employees
maintain the skills needed to provide benefits and services to veterans
and their families. The certification process could be triggered by the
peer assessment process or result from a coach review. If the employee
is unable to be recertified for a skill for which he or she was
previously certified and for which the organization has a need, the
process described in the Organizational Performance Review Process
under Part

[[Page 58957]]

III. Personnel System Changes will be followed.

Base Pay at Risk

Base Pay at Risk will provide a tool to use organizational success
as a way to increase base pay. This will occur only if the organization
has shown success and has developed confidence in using variable pay
incentives based on organizational outcome measures. It will include:
(a) Using part of the annual adjustment under 5 U.S.C. 5303; (b)
Involving all members in developing the formula used for the addition
to base pay, and (c) No reductions in base pay.

Note: Base Pay at Risk is an option that may be considered in
the future, but is not part of the demonstration project's initial
implementation.
Variable Pay
Overview of Variable Pay. Variable pay will provide not only an
organizational reward structure, but it will provide the organization
with a way to compensate members for special skills needed to meet work
and customer requirements. Variable pay is not base pay. It provides a
one-time, lump-sum payment to an employee that is not included in base
pay. For the demonstration project, variable pay will not only be used
for incentives, but as a way to deal with special workload
requirements, and as a bonus when appropriate for the acquisition of
critical skills or competencies, or to meet other special
organizational needs that may develop during the project.
Variable Pay as an Incentive. As an incentive, variable pay will
base awards on how well organizational goals are met and will include a
form of goal sharing as an important component.
Phase One will use team awards based on how well the core teams, or
comparable group of work units, and the Regional Office achieve goals.
This type of award is similar to the group awards currently authorized
under existing law; however, the award structure will provide a way to
provide greater payouts if the entire organization meets its
organizational outcome goals.
Phase Two will involve goalsharing. Goalsharing evolved from
gainsharing. Goalsharing includes not only efficiency as seen in the
speed measure, but effectiveness as seen in the customer service,
employee development and cost measures. Unlike Phase One, goalsharing
would be funded from savings, using a set formula and based on the
``unit cost'' core measure. It would differ from Base Pay at Risk,
since it would be a one-time payment and not be part of the employee's
regular salary.
Features of Incentive Variable Pay. Variable pay will provide an
organizationally focused incentive structure tied to organizational
measures and the ``Balanced Scorecard.'' Variable pay as an incentive
will meet the following general principles and operating guidelines:
(a) It will be Pay at Risk since payment will depend upon how well the
organization meets its goals; (b) It will not reinforce competition
between individual teams, but will use the core teams as the minimum
unit for incentives. The payouts will occur at the core team level and
up to the whole organization; (c) It could evolve from a group
incentive system to a full goalsharing plan based on the accomplishment
of organizational goals using a pre-determined formula. Team members
will be involved in the development of the goalsharing plan as will the
union partners; (d) Payments will be made for results related to the
following organizational measures: Speed, Cost, Customer Based
Measures, and Employee Measures; and (e) Accuracy is not used, since
the organization wants to encourage employees to find errors. However,
accuracy measures will be included as part of the Organizational
Performance Review Process described in Section III of this plan.
Variable Pay for Workload Flexibility. This option will provide the
Regional Office with a way to use ``one-time'' lump-sum payments or a
continuing differential pay to meet special organizational needs. These
payments will not become part of base pay and will not become long-term
costs. The following are examples of variable pay used to provide
workload flexibility.
(a) As a lump-sum payment, variable pay will provide a way to pay
team members for rare skills not generally needed throughout the
organization or needed infrequently. Employees could bid for work that
the organization needs for short periods of time in order to meet
special workload or customer requirements. This might include special
projects or special field assignments.
(b) As a lump-sum payment, variable pay could also be used to pay
employees for new or developing skills identified by the organization
until the continuing need for the skill is determined, and
(c) Variable pay will provide a way to pay team members for work an
organization needs to meet special work or customer requirements which
are expected to last for a significant period but not become permanent
work of the organization. An example would be a team member who
functions as a coach during the absence of the regularly assigned coach
because of long-term illness. It could also be used to compensate
employees who serve as instructors on a major training effort.
Organizational Performance Management
In October 1990, the General Accounting Office (GAO) issued the
report, PERFORMANCE MANAGEMENT: How Well Is the Government Dealing with
Poor Performers. GAO concluded that under the performance management
system ``identifying and dealing with poor performers * * *'' was often
``* * * a difficult and time-consuming task * * *'' and that it was ``*
* * unfair to expect managers and supervisors to operate in an
environment where identifying and dealing with poor performers tends to
be much more difficult than it needs to be.''
This GAO report dealt with performance appraisals in a traditional
organization where each employee received an individual performance
rating from his or her supervisor. While it was always assumed that the
employee's performance standards were clearly tied to the
organization's mission, the employee's ``line of sight'' between his or
her work outcomes and those of the organization was often too great or
too nebulous.
GPRA provides an opportunity to improve the employee's ``line of
sight'' to the organization's outcome measures. In an environment where
teamwork is encouraged, valued and expected, the team, or work unit,
sets goals based on the organizational outcome measures. Because each
team member's ``line of sight'' is initially limited to his or her
team, the team member will be able to understand more readily how his
or her work affects the work of the entire organization.
The demonstration project will test organizational performance
management's link to individual performance and contribution by using
data collected for the ``Balanced Scorecard,'' or similar
organizational tool, and the continuous improvement process inherent in
an environment where teamwork is encouraged. Organizational Performance
Management is directly linked to and literally supports the
compensation system. The basic principles and operating guidelines of
organizational performance management are: (a) If the Regional Office
does well, employees do well; (b) The organizational outcome measures
are the focus of every member; (c) Every member of the organization is

[[Page 58958]]

responsible for contributing to the success of the organization; (d)
Every member must understand and be able to explain how his or her
performance contributes to the organization's success; and (e) Teams
and coaches, or other organizational equivalents, will assess
individual members in terms of contribution to the organizational
outcome goals.
Organizational Performance Review Process
Organizational performance management is a continuous process that
goes on throughout the organization. In a traditional setting,
information concerning an organization's performance and the process
involved in setting and reviewing goal accomplishment is generally
considered to be in management's purview. The demonstration project
will utilize the process of ``Open Book'' management that was developed
by the NYRO GPRA pilot site following its organizational system design
model. This is a high involvement strategy that includes every employee
in some aspect of collecting, reviewing, and assessing information
about performance at all organizational levels. This process involves
reviews at three levels, focuses upon the ``Balanced Scorecard,'' or
its equivalent, and is data-driven. Since employee involvement is
critical to the success of any organizational performance system, the
Detroit Regional Offices will develop a system that will meet
organizational needs and the general guidelines and operating
principles of the project. The system developed by the NYRO that may be
used as a model is outlined below.
Regional Office Level Review. The Regional Office's progress is
reviewed at weekly team goal meetings, at bi-weekly Director staff
meetings, at quarterly reviews of the organization's Quality Plan, and
at semi-annual renewal sessions. The ``Balanced Scorecard'' and the
goals set in the Quality Plan support each other and focus everyone on
improving service to veterans and their families.
Team Level Review. The team will evaluate its own performance
against the measures reflected in the ``Balanced Scorecard'' and will
assess how well it is contributing to the success of the organization.
The team not only works towards its own goals, but also works towards
improving the success of other teams as well as the success of the
entire organization.
Team Review Process. Each team conducts weekly goal meetings during
which the team assesses how well it met the weekly goals it had set for
itself. Since the goals relate to the ``Balanced Scorecard,'' the
organizational outcome measures, the team members understand how their
work fits into the work of the entire organization at the Regional
Office, division, and core team levels.
The team review process provides each team member with specific,
concrete data for the organizational outcome measures and the weekly
goals the team sets to support the organizational goals. Since the
discussion looks at the causes for meeting or failing to meet the
weekly team goals, each team member develops a real sense of how he or
she contributed to the outcomes the teams produced during the week. The
process is designed to develop individual accountability and ownership
for the outcomes being achieved with feedback from both the coach and
the team members. The assessment requires specific responses that
include corrective action or additional help. There is a consequence
for every action that does not support organizational performance. In
addition, each team member is expected to learn to prepare and present
data at the team goal meeting. Each team member also has a role in
determining the team's goal for the next week. Because organizational
outcome data is reviewed and discussed weekly, the employee never loses
sight of the organization's goals and mission and of the team's
contribution to the core group, the division and the Regional Office.
Following this process, performance management becomes organizational
rather than individual.
Team Member Level Review. The teams will also assess how each team
member contributes to the achievement of the organizational measures.
The assessment helps to determine the individual performance rating.
Team Member Review Process. The team members will assess each other
to determine how well each person is contributing to the achievement of
organizational goals. The team will evaluate team members twice a year
on such categories as: Output, Customer Service, Reliability, Team
Support, and Accuracy.
In offices with highly developed teams, team members will help
define the behaviors for each rating level. An initial option will be
to define the levels as follows:
GREEN ZONE = Contributes to Achieving Organizational Goals
AMBER ZONE = Needs to Improve Efforts to Meet Organizational Goals
RED ZONE = Does Not Contribute to Organizational Goals
Action Options Based on Team Member Ratings. Based on the ratings,
these are the options for taking action ( See Figure 7--Peer Assessment
Options).

GREEN ZONE

The team member and coach will prepare a Learning Contract for the
year. The Learning Contract will include developmental activities
selected to strengthen the employee's skills and to increase the
organization's ability to meet its goals.

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[[Page 58960]]

AMBER ZONE--First Time in Amber Zone

The coach, whose role is to move the team to self-direction, will
discuss the ratings with the employee and counsel him or her on areas
for improvement. This is important, since the Amber Zone is
unacceptable. The coach will give the team member assistance to
improve. The coach and the team member will develop a Learning Contract
that will include developmental activities designed to help improve his
or her contribution to the organization as well as to help his or her
individual growth. The areas for improvement may include technical
skills, or competencies. The following are possible activities: (a)
Reading, (b) Special Team Assignment or Project, (c) Output Goals, (d)
Formal Training, (e) Peer Training, (f) Specific Behaviors to model and
practice; and (g) Assignment to a Mentor, or Peer Advisor.
The team member and coach will determine the specific days they
will meet to discuss how well he or she is meeting the goals set in the
Learning Contract. This will help the team member set improvement goals
for himself or herself.

AMBER ZONE--Second Time in Amber Zone

If the team member goes into the Amber Zone for a second time in a
calendar year, the team member automatically moves into the Red Zone.

RED ZONE

If an employee is in the Red Zone, the coach will become more
actively involved with the team member. As the flowchart, ``Review
Process for `Red Zone' Assessments'' (Figure 8) shows, the action taken
will vary with the category involved.

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[[Page 58962]]

(a) If output, accuracy or customer service are involved, the coach
will place the team member under a 90 day review using individual
performance standards;
(b) If team support is involved, the coach will help the team
member identify improvement actions; or
(c) If reliability is involved, the coach will discuss how the team
member's behavior needs to improve and will closely monitor the team
member's behavior.
While a performance improvement plan will be used to document how
the team member has to improve in the areas of output, accuracy and
customer service, a learning contract could be used to document the
actions the team member will take or the behavior the team member will
practice to eliminate the problem. The Red Zone Action Chart (Figure 9)
identifies the action to be taken, the documentation needed, and the
possible consequences for these situations.

Figure 9: Red Zone Action Chart
----------------------------------------------------------------------------------------------------------------
90 Day review and
standards and Action if there is
Category Counseling performance Learning contract no improvement
improvement plan
----------------------------------------------------------------------------------------------------------------
Output.......................... Yes............... Yes............... No................ Decertification or
Removal.
Customer Service................ Yes............... Yes............... No................ Decertification or
Removal.
Reliability..................... Yes............... No................ Yes............... Discipline or
Adverse Action.
Team Support.................... Yes............... No................ Yes............... Reduced Variable
Pay Amount.
Accuracy........................ Yes............... Yes............... No................ Decertification or
Removal.
----------------------------------------------------------------------------------------------------------------

Out-of-Cycle Assessment. If at any time based on observation or
team feedback a team member's performance or behavior does not meet
team or organizational expectations, an out-of-cycle assessment may be
done. Based on this assessment, corrective action, if required, will be
taken.
Appeal Process. Existing appeal rights to the Merit Systems
Protection Board, the negotiated grievance procedure, or the
administrative grievance procedure will continue for adverse actions.
Decertification due to the inability to do a particular skill block may
be appealable through an internal certification appeals process that
will be established in line with the Partnership Agreement. In
addition, the employee would have the right to appeal a decertification
action to the Merit Systems Protection Board as a reduction in pay as
provided for in 5 CFR Sec. 1201.3(a)(2).
Individual Performance Ratings
All employees will receive an annual performance rating in terms of
how well they contribute to and support organizational goals. The
ratings will be pass or fail. Employees will receive a rating of pass,
unless through the Organizational Performance Management System they
receive a rating of fail or are unable to be recertified in the
appropriate skills.
Learning
Since employee development is one of the organizational outcome
measures, learning is an important organizational activity. Learning is
more than just classroom training; it involves feedback, goal setting,
self-development activities as well as classroom and peer training. The
general principles and operating guidelines for learning are: (a) Every
person is accountable for his or her own development and growth; (b)
Learning is tied to organizational goals and needs; (c) The 360 deg.
feedback system will provide honest feedback from co-workers and will
help define areas for improvement;
(d) The organizational employee development measures form the basis
of the organization's training plan; (e) Learning supports the
certification and recertification process; and (f) To develop and
implement a career development, education and training strategy that
supports the organizational measures and values, the Learning process
will include performance feedback and Learning Contracts.
Performance Feedback. Performance feedback will provide all
employees with information on their contribution to the organization's
performance. It will also help them identify their training and
developmental needs by pinpointing areas to strengthen and improve that
they could include in their Learning Contracts. The system will use 360
degree feedback from: (a) The Coach, (b) Peers, and (c) Customers.
The feedback mechanism will help team members to identify learning
objectives and could provide information on where to focus skill
acquisition. It would also help focus the team members on team
development. The performance feedback system is tied to learning.
In addition, team members will participate in group feedback
exercises during periodic training. The training will allow team
members to practice and develop face-to-face feedback skills. It will
include providing constructive feedback, reacting to feedback and
improving listening skills.
Learning Contract. Every team member will have a Learning Contract
that will consider needs identified by the employee development
measures, the performance feedback system and the Certification/
Recertification System. There will be learning activities identified
for each skill block and each developmental level in the organization.
Activities could include: (a) On-the-job assignments and reading
assignments to support growth; (b) Formal training sessions that would
support learning specific skills needed for development and growth; (c)
Feedback and evaluation mechanisms to measure learning as it relates to
the organization's goals and measures; (d) Mentoring to help support
developmental efforts and to provide support and feedback as needed;
(e) Individual learning plans that identify activities for which the
individual team member will be accountable to meet learning objectives;
(f) Team learning plans to identify the things a team will follow to
foster team development; (g) Methods to reinforce personal
accountability for learning; (h) Special Projects (HRM, Planning,
Instructing, ADP, Public Relations, etc.); (i) Sabbaticals; (j)
Exploring recognition/variable pay incentives that would supplement
special learning activities; and (k) Team members will be accountable
for learning and the organization will be accountable for fostering a
learning environment.
Recognition. Recognition activities provide team members and the
organization with the opportunity to celebrate the successes of team
members, teams and the organization. These efforts are often non-
monetary. The teams will help to determine the types of recognition
efforts that will be used. The recognition efforts will support the
organization's outcome measures. Based on the need and

[[Page 58963]]

purpose, this could consist of the following: (a) Organization wide
celebrations; (b) Honorary Awards; (c) Special Group Awards; (d) Team
Specific Individual Awards; (e) Core Team Specific Awards; (f)
Suggestion Awards; (g) On-the-Spot Awards; (h) Special Developmental
Opportunities; and (i) Time-Off Awards.

D. Exit Stage

Reduction-in-Force
Reduction-in-Force (RIF) will be strategic and closely tied to
organizational needs. While the current RIF process will remain
essentially the same, the demonstration project will require
adjustments to reflect skills, since positions will no longer exist.
The basic principles and operating guidelines to be used for an RIF
are: (a) Veterans preference will remain an important factor in the RIF
procedure developed; (b) Employees will be assigned a role code
relating to the role they play in the organization. For example, the
roles in the NYRO's Veterans Services and Benefits Division are Case
Technician, Case Manager and Coach. Role levels will replace the
current competitive levels; (c) Keeping in mind that service to
veterans is paramount, any RIF will be a strategic RIF focusing on
organizational outcome measures. For this reason, the organization will
use certified skills and competencies as key factors in establishing
any retention register. The organization will identify the skills
having the greatest value and assign to them greater points when
establishing a retention register. For example, the Regional Office may
need to retain individuals who are certified as having medical decision
skills or development skills. The points designating the value the
skills have in the organization will be published annually; (d) In an
RIF, retention will be determined as follows:

--Tenure of Employment. Groups will be established for career, career-
conditional and all other employees.
--Veterans Preference. (Military preference subject to section 3501(a)
of Title 5.) Sub-groups will be established for veterans having a
compensable service-connected disability of 30% or more, all other
preference eligibles, and all others.
--Performance Ratings, Core Group Rating, Skills and Competencies, and
Length of Service will be used to establish the retention register
scores. Credit for military service subject to section 352(a) (A) and
(B) of title 5. The Retention Register Point Chart (Figure 10) provides
information on the point system.

Figure 10.--Retention Register Point Chart
--------------------------------------------------------------------------------------------------------------------------------------------------------
Factor Point system
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual performance rating Pass--10 points; Fail--0 points
--------------------------------------------------------------------------------------------------------------------------------------------------------
Core group (as concept matures) Number of core groups One Two Three Four
--------------------------------------------------------------------------------------------------------------------------------------------------------
Met stretch goal....................................... 4 8 12 16
Met station goal....................................... 2 4 6 8
Did not meet goal...................................... 0 0 0 0
Skill block certification
(4) Points Set Annually and Published
Length of service
(4) 1 Point for Each Year Based on Service
Computation Date
--------------------------------------------------------------------------------------------------------------------------------------------------------

(e) To determine assignment rights between positions covered by the
demonstration project and positions not covered by the demonstration
project, grade level equivalents for groups of skills blocks will be
used; (f) In an RIF, which could be either a reduction in the number of
employees needed in a particular skill block or a reduction in the
number of skill blocks needed by the organization, an employee will be
offered when possible the opportunity to be trained in a new skill
block that is equal to the skill block being lost. The employee would
receive retained pay including the full amount of any general pay
increase during the period of training. When the training is completed,
the employee would have to go through the certification process to
demonstrate he or she is able to apply the skill. If he or she is
certified, he or she would be paid for the equivalent skill block and
retained pay would end. If the employee fails to obtain certification,
the employee will be placed on indefinite pay retention and will
receive one-half of any general pay increase until such time as the
``true'' rate equals or exceeds the retained rate of pay. (g) If an
employee cannot be offered a skill block that is equal to the skill
block being lost, but can only be offered a new skill block that is of
lesser value, the employee would be given the opportunity to learn the
new skill and to be certified for the application of the new skill
block. During the period of training necessary to be eligible for
certification in the new skill block, the employee will retain his or
her existing rate of pay and the full amount of any general pay
increase. If the employee passes certification, the employee will
receive pay for that skill block. In addition, the employee will be
placed on indefinite pay retention and will receive one-half of any
general pay increase. If the employee fails to obtain certification,
the employee will be placed on indefinite pay retention and will
receive one-half of any general pay increase until such time as the
``true'' rate equals or exceeds the retained rate of pay. (h) If an
employee cannot be offered any skill block to replace the skill block
lost, but is certified in skill blocks the organization still needs,
the employee is entitled to indefinite pay retention and will receive
one-half of any general pay increase until such time as the ``true''
rate equals or exceeds the retained rate of pay.
In determining an involuntarily separated employee's entitlement to
severance pay, the definition of ``reasonable offer'' applicable to
employees covered by the demonstration project will be included in this
section of the final plan that will be published in the Federal
Register notice and provided for in VA's operating procedures for the
demonstration project.
Employees involved in an RIF would have appeal rights to the Merit
Systems Protection Board. Employees would use the internal
Certification Appeal process for all certification actions; this appeal
process will be developed in line with the Partnership Agreement.
Exit Interviews
Exit interviews are an evaluation tool that: (a) Will provide for
the organization and the teams, feedback from individuals who are
leaving the organization or the teams, and (b) Will help evaluate
systems the Regional Office has put into place that affect customer
service and employees.

[[Page 58964]]

The process could include a survey that will ask employees who are
leaving the organization or a team with feedback tied into
organizational measures, team development, and individual development.
Exit interviews could also provide assessments of the compensation
system and the other supporting human resources systems in use in the
organization.

IV. Training

As part of the implementation process, all employees will attend an
orientation session on the new Human Resource Process that will include
demonstration project requirements, timeframes for phasing in segments
of the project, an explanation of how the project will affect them, and
future training requirements.
To understand how the systems will affect them, employees will
receive in-depth training on: (a) Pay for Applied Skills; (b) Variable
Pay; (c) The Certification and Recertification Process; (d)
Organizational Performance Management; (e) Learning Contracts; and (f)
Performance Feedback.
Employees involved in the certification process, peer training,
mentoring or in the selection system will also receive in-depth
training to help them understand their responsibilities.
Coaches will receive training in mentoring and their
responsibilities under the new systems.

V. Conversion

A. Conversion of Employees Into the Demonstration Project

The following procedures are used for converting existing employees
from the General Schedule (GS) system to the demonstration project's
Pay for Applied Skills System. They address employees who are converted
in place at the beginning of the demonstration project and also GS
employees from other organizations who enter the project through
lateral transfer or reassignment after the project is underway. No such
employee will suffer a reduction in pay at the time of conversion into
the project. If conversion into the demonstration project is
accompanied by a geographic move, the employee's GS pay entitlement in
the new geographic area will be determined prior to converting the
employee into the project.
Skill Assessment
Before being covered by the Pay for Applied Skills System, affected
employees will undergo a skills assessment to determine which skill
blocks and competencies they possess. On-board employees converting in
place at the beginning of the project will be assessed 30 to 60 days
prior to conversion as part of their pre-conversion training. The
employee's base pay will be set based on this assessment. Employees who
enter the project after initial conversion through transfer or
reassignment either from within the demonstration project sites or from
outside will have their skills assessed to determine their base pay
when entering the project, subject to organizational need.
Pay Protection
If the base pay of an on-board employee under the GS system
immediately before conversion exceeds the base pay set by the skills
assessment, the employee will be allowed two years to become certified
in additional skills in order to justify his or her pay level at the
time of conversion. The employee will continue to receive their
existing base pay (pay continuation) and receive the full general
increase during this two-year period. If at the end of the two-year
period, the employee's rate of pay exceeds the base pay justified by
the certification process, the employee will be placed on indefinite
pay retention and will receive one-half of any future general pay
increases until such time as the ``true'' rate equals or exceeds the
retained rate.
Employees who either lateral into the Pay for Applied Skills System
or transfer from another organization after the initial conversion to
the system will also undergo a skills assessment in order to determine
their base pay. For those employees who lateral into the demonstration
project from within Veterans Affairs, if the existing rate of basic pay
exceeds the base pay rate set by the skills assessment process, the
employee will be allowed two years to become certified in additional
skills in order to justify his or her pay level at the time of
conversion. The employee will continue to receive their existing base
pay (pay continuation) and receive the full general increase during
this two-year period. If at the end of the two-year period the
employee's rate of pay exceeds the base pay justified by the
certification process, the employee's pay will be reduced to the level
that reflects the actual skills attainment. For those employees who
transfer from another organization outside of the Department of
Veterans Affairs, the organization will have the flexibility to provide
pay continuation at its option.
Locality Pay
Locality pay will be an add-on payment that will remain separate
and distinct from the Pay for Applied Skills System. This will be
consistent with the way in which locality pay is handled for employees
under the General Schedule. As with GS employees, locality pay will be
considered base pay for certain purposes but not for others as
indicated in 5 CFR 531.606 (b).
Special Salary Rates
Special salary rates will no longer be applicable to demonstration
project employees. Upon entering the project -by conversion in place or
by lateral reassignment or transfer-special salary rate employees will
undergo a skills assessment, as provided above. To set a special rate
employee's base pay (including pay continuation, if applicable), his or
her GS pay must first be converted. The employee's initial base rate
under the demonstration project is derived by dividing the employee's
highest GS adjusted rate of pay (i.e., special rate or locality rate)
by the applicable locality pay factor for the employee's official duty
station. A full locality adjustment will then be added to the
employee's new demonstration base rate. Thus, the employee's locality-
adjusted rate under the demonstration project will equal the employee's
former highest GS adjusted rate of pay. Adverse action and pay
retention provisions will not apply to the conversion process because
there is no change in total salary. If the employee's converted rate of
base pay exceeds the base rate set by the skills assessment, the
employee will be allowed two years to become certified in additional
skills in order to justify his or her pay level at the time of
conversion. Any pay continuation or pay retention (as described in the
preceding section) will apply to the converted base rate.
Step Buy-Ins
For employees who are converted in place at the beginning of the
demonstration project-- at the time of conversion, each converted
employee will be given a lump-sum cash payment for the time credited to
the employee toward what would have been the employee's next within-
grade (step) increase under 5 U.S.C. 5335. (See section VIII.B. for
additional details.)

B. Conversion of Employees Out of the Demonstration Project

If a demonstration project employee is moving to a GS position not
under the demonstration project, or if the project ends and each
project employee must be converted in place back to the GS

[[Page 58965]]

system, the following procedures will be used (prior to movement or
conversion out of the demonstration project and any accompanying
geographic movement, promotion, or other simultaneous action) to
determine the GS grade and converted GS rates of pay (including any
locality rate or special rate).

Grade Conversion

When an employee is converting back to the GS system, the
employee's GS-equivalent grade under the demonstration project at the
time of conversion must be determined. The Pay for Applied Skills level
and the skill blocks and competencies possessed by the employee will be
used to determine the GS-equivalent grade. (See the Skill Block/Grade
Conversion Table in section V.C.)
For employees leaving the demonstration project for a position at
another organization, the gaining organization may request a statement
of comparison between demonstration project levels and corresponding GS
grades to attach to their application. Eligibility for outside
positions will be determined by the outside organization based on the
information in the employee's application as is true in the GS system.
The GS converted grade will be used in applying GS pay administration
rules (e.g., promotion rules); it is not necessarily the grade the
employee will have at the gaining organization.
For conversions upon termination of the project and for lateral
reassignments, the converted GS grade will automatically become the
employee's GS grade.

Pay Conversion

An employee's pay within the converted GS grade is derived by
converting the project rates to GS pay rates (including locality rates
and special rates, as applicable) before any geographic movement or
other pay-related action that coincides with the employee's movement or
conversion out of the demonstration project.
To derive an employee's converted GS rates of pay--(a) If possible,
the employee's demonstration project locality-adjusted rate will be
slotted into the highest applicable GS locality rate range or special
rate range for the employee's converted grade. If the employee's rate
falls between step rates for the applicable range, it will be raised to
the next higher step rate. The employee's GS unadjusted basic rate of
pay (i.e., excluding locality payments or special rates) will be
derived based on the grade and step associated with the converted rate.
(b) If the employee's locality-adjusted rate under the project cannot
be slotted into the range because it exceeds the maximum rate of the
converted grade, it will be converted into a locality-adjusted GS
retained rate, from which the base retained rate will be derived.
After conversion, the employee's converted GS rate is used in
applying GS pay administration rules, as necessary--e.g., promotion,
maximum payable rate determinations, pay retention. For conversions
upon termination of the project and for lateral reassignments, the
converted GS rates will automatically become the employee's GS rates.

C. Skill Block/Grade Conversion Table

Skill Based Pay places emphasis on the skills and abilities of the
individual rather than the duties of a position. However, the skills
described in the skill blocks in combination with the tasks which would
typically be assigned, given the skill level of the employee, may be
assigned a grade in the traditional sense. This will be of particular
importance when an employee leaves a site which compensates based on
skills and moves to a site that continues to compensate based on the
grade assigned to a position description. The Conversion Chart (Figure
11) was developed to provide a reference point between skill blocks and
GS grade equivalents.

Figure 11--Skill Block Conversion Chart
----------------------------------------------------------------------------------------------------------------
Skill Block Grade Associated competencies Description of work
----------------------------------------------------------------------------------------------------------------
B-1 GS-3 C1 The employee establishes
that the applicant is a
member of a class of
beneficiaries by either
comparing the
information in the
application with
official records
submitted or requesting
verification of the
information from
official records at a
records center.
B2 GS-4 C1 The employee determines
what supporting
``proofs'' or evidence
are required by the
case. As the ``proof''
material is received, it
is analyzed to establish
accuracy, validity and
acceptability under
governing legal
requirements. Also
provides straight-
forward factual
information on
preparation of forms.
B3 GS-5 C1 The employee is typically
assigned cases involving
confused or missing
records, cases involving
duplicate claimants or
cases which contain an
excessive amount of
detail. Also develops
and makes final
determination of award
for certain one-payment
awards with fixed
monetary limits.
Provides counseling on
questions covered by
guidelines or by clear-
cut procedures.
B4 GS-7 C1 and some C2 The employee makes
determinations
pertaining to such
matters as entitlement
to medical treatment,
funeral expense,
compensation and
pension. Adjudication of
such claims normally
requires determinations
relating to the
application of
appropriate regulations.
Counsels individuals
regarding a variety of
benefits or obligations
that are closely
related.
B5 GS-9 C1 and some C2 The employee prepares
decisions on basic
eligibility for
claimants to various
benefits provided by
law. He/she must analyze
and evaluate numerous
types of documents and
consider the many
variables which may
affect the amount of the
award granted. Counsels
individuals regarding a
wide variety of
comprehensive programs
of benefits and
services, each with a
different set of
regulations.
B6 GS-7 C1 and some C2 The employee makes
determinations
pertaining to such
matters as entitlement
to medical treatment,
funeral expense,
compensation and
pension. Adjudication of
such claims normally
requires determinations
relating to the
application of
appropriate regulations.
Counsels individuals
regarding a variety of
benefits or obligations
that are closely
related.

[[Page 58966]]

B7 GS-9 C1 and C2 The employee prepares
decisions on basic
eligibility for
claimants to various
benefits provided by
law. He/she must analyze
and evaluate numerous
types of documents and
consider the many
variables which may
affect the amount of the
award granted. Counsels
individuals regarding a
wide variety of
comprehensive programs
of benefits and
services, each with a
different set of
regulations.
B8 GS-11 C1 and C2 and some C3 Facilitates the
development of and
provides technical
guidance to less
experienced Case
Managers. Adjudicates
claims involving
unusually complex or
novel issues. Reviews
consideration and appeal
cases. Issues often
point up need for new
rulings. Develops facts
and evidence; defines
legal and factual
issues, researches
precedent decisions,
applies law,
regulations, policies
and procedures; and
drafts letters,
decisions and
notifications. Counsels
individuals regarding a
wide variety of distinct
types of benefits, each
with a different set of
regulations.
B9 GS-11 C1 and C2 and some C3 Facilitates the
development of and
provides technical
guidance to less
experienced Case
Managers. Adjudicates
claims involving
unusually complex or
novel issues. Reviews
consideration and appeal
cases. Issues often
point up need for new
rulings. Develops facts
and evidence; defines
legal and factual
issues, researches
precedent decisions,
applies law,
regulations, policies
and procedures; and
drafts letters,
decisions and
notifications. Counsels
individuals regarding a
wide variety of distinct
types of benefits, each
with a different set of
regulations.
B10 GS-12 C1 and C2 and some C3 Facilitates the
development of and
provides technical
guidance to less
experienced Case
Managers. Adjudicates
claims involving
unusually complex or
novel issues. Reviews
consideration and appeal
cases. Issues often
point up need for new
rulings. Develops facts
and evidence; defines
legal and factual
issues, researches
precedent decisions,
applies law,
regulations, policies
and procedures; and
drafts letters,
decisions and
notifications. Counsels
individuals regarding a
wide variety of distinct
types of benefits, each
with a different set of
regulations.
B11 GS-12 C1 and C2 and some C3 Facilitates the
development of and
provides technical
guidance to less
experienced Case
Managers. The employee
has final signatory
authority for allowing
or disallowing the novel
or unusually complex
claims. He/she is
responsible for the
propriety and technical
sufficiency of
authorization actions,
coordination with Rating
Board personnel,
identification of those
cases requiring legal
precedence decisions and
certification of appeal
actions. Serves as
Chairperson of Boards
convened to conduct
personal hearings in
cases involving
reconsiderations.
B12 GS-12 C1 and C2 and some C3 Facilitates the
development of and
provides technical
guidance to less
experienced Case
Managers. The employee
has final signatory
authority for allowing
or disallowing the novel
or unusually complex
claims. He/she is
responsible for the
propriety and technical
sufficiency of
authorization actions,
coordination with Rating
Board personnel,
identification of those
cases requiring legal
precedence decisions and
certification of appeal
actions. Serves as
Chairperson of Boards
convened to conduct
personal hearings in
cases involving
reconsiderations.
B13 GS-13 C1 and C2 and some C3 Guides team in short and
long term planning.
Resolves conflicts,
provides feedback,
counsels, rewards and
disciplines team members
as appropriate.
Facilitates and assesses
team and team members'
development. Serves as
liaison with other teams/
cores management, the
union and external
stakeholders.
B14 GS-13 C1 and C2 and some C3 Guides team in short and
long term planning.
Resolves conflicts,
provides feedback,
counsels, rewards and
disciplines team members
as appropriate.
Facilitates and assesses
team and team members'
development. Serves as
liaison with other teams/
cores management, the
union and external
stakeholders. Models
organizational values,
communicates
organizational vision,
and demonstrates
commitment to
organizational mission.
Promotes consensus and a
results oriented
approach to business.
Educates and mentors to
enhance team's
understanding of
organizational measures,
performance goals, and
achievement of stretch
goals. Encourages and
rewards innovation which
enhances customer
service.
----------------------------------------------------------------------------------------------------------------

VI. Project Duration

In accordance with section 4703 of title 5, United States Code, the
project shall terminate at the end of the 5-year period beginning on
the date on which the project takes effect. The project may continue
beyond that period to the extent necessary to validate the results of
the project or be terminated at any time during the 5-year period if
deemed unsuccessful.

VII. Evaluation Plan

A. Introduction

The demonstration project authority requires that each
demonstration project be evaluated to determine the demonstration
project's ``impact on improving public management'' (5 U.S.C. 4703).
The results from this demonstration project evaluation will serve two
primary purposes. First, the results allow us to know when we have been
successful in meeting the objectives of the project. Second, the
results serve as the basis for mid-course correction decisions. A mid-
course correction is a fine-tuning of the project based on early
feedback and knowledge gained through the evaluation.
The demonstration project evaluation will be a results oriented
evaluation focusing on the innovations' impact on organizational
outcomes, mission accomplishments, and management in general. Rather
than test each change in personnel rule and regulation

[[Page 58967]]

separately, this evaluation will consider the innovation as a whole and
treat it as a single intervention. This will allow the participants to
determine the extent to which the new skill-based pay, with a variable
pay component, in a team environment effects organizational performance
by aligning the human resources systems with business needs. In effect,
the evaluation attempts to gauge the link between human resources
management (HRM) and agency mission. In the attempt to link HRM to
outcomes, some of the more detailed process questions will be less of
an emphasis than has been in the past.
A results-oriented evaluation will allow the agency to tie the
demonstration project to other reinvention efforts and to comply with
GPRA.

B. General Methodology

The evaluation will measure the impact of a skill-based pay/
variable-based pay system in a team environment on the projects three
objectives: improve customer satisfaction, increase value to the
taxpayer, and increase opportunities for employee development. The
evaluation model shown in Figure 12 represents the consensus of the
Department of Veterans Affairs, the New York Regional Office, the
Detroit Regional Office, and the Office of Personnel Management
regarding project constraints, objectives and expectations.
The project objectives are theoretical constructs which will be
measured by other directly observable variables. As shown in Figure 12,
it is hypothesized that the personnel interventions, taken together,
will cause an increase in value to the taxpayer; an improvement in
customer satisfaction; and increased opportunities for employees to
develop and apply skills and competencies. The impact of the
intervention on these three objectives will be tracked using the five
measures of the Balanced Scorecard: cost per claim (including payroll
costs), accuracy, speed, customer satisfaction, and employee
development.

C. Three Phase Methodology

The evaluation will be conducted in three stages. Stage one will
involve collecting baseline data prior to implementation of the
demonstration project at each experimental and control site. Stage two
will provide information for mid-course correction. The third summative
stage will assess the overall impact of the project.
The evaluation will focus primarily on the overall impact of the
interventions based on before and after comparisons of the data, using
both quantitative and qualitative data. This will be accomplished using
a longitudinal design, baseline data, and control groups along with the
following three phase methodology:
(a) Interrupted Time-Series Comparison Group Design--A time series
design will be used to track cost, speed, accuracy, customer
satisfaction over time. Comparisons will be made between experimental
groups and between experimental and control groups;
(b) Case Study--A case study approach will be used to understand
the implementation, process, and dynamics of team management and their
effects on other organizational measures. Quantitative data will be
combined with focus group, interview, documentary information, and
other qualitative data sources; and
(c) Survey Analysis--An employee attitude survey will be used to
garner information on job satisfaction, organizational climate, and
employee development.
Control groups will be established that are similar to the
experimental groups. The VA will make an effort to collect the same
type of data from the control groups and experimental groups whenever
possible.
To make the evaluation cost effective and to ensure the evaluation
dovetails with on-going GPRA efforts, the evaluation will rely on data
collected for other purposes. This includes the balanced scorecard and
the employee attitude survey. Also, workforce data from CPDF and ILDRS
will be tracked to ensure that Veterans Preference, along with Merit
System Principles, are observed.
VA will enter into an agreement with an evaluator to conduct the
evaluation of this project. However, in accordance with its statutory
responsibilities, OPM will monitor the evaluation and provide oversight
throughout the project's life cycle.

Figure 12.--Evaluation Outcome Model--VA Demonstration Project
----------------------------------------------------------------------------------------------------------------
Intervention Expected effects Observable measures Data source
----------------------------------------------------------------------------------------------------------------

Skill-Based Pay, with a variable Increase value to Cost per claim.......... Balanced Scorecard.
pay component, in a team taxpayer.
environment.
Improve customer service. Accuracy................ Balanced Scorecard.
Speed................... Balanced Scorecard.
Customer satisfaction... Customer satisfaction
survey.
Improve employee pay Employee attitudes Employee attitude
satisfaction. toward pay. survey.
Improve employee Employee satisfaction... Employee attitude
development. survey.
Increase opportunities Balanced Scorecard.
for developing and
applying skills and
competencies.
Case study.
Maintain workforce Workforce composition... Workforce data.
diversity.
----------------------------------------------------------------------------------------------------------------

VIII. Demonstration Project Costs

A. Budget Strategy

The demonstration project budget strategy focuses upon: (a)
Reducing costs while continually improving service to veterans in line
with organizational outcome measures; (b) Utilizing savings to pay
employees for learning and applying skills; and (c) Rewarding employees
who contribute to the organization's success, improve service to the
customers, and ensure the taxpayer's best interests are served.

B. Step Buy-Ins

Under the GS pay system, employees progress through their assigned
grade by means of within-grade increases (WGIs) which are based on time
in step and an acceptable level of competence. Since WGIs will not be a
part of the Pay for

[[Page 58968]]

Applied Skills System, employees will receive a one time lump-sum
payment at the time of conversion to the new system.
At the time of conversion, each converted employee performing at an
acceptable level of competence will receive a lump-sum cash payment
based on the number of full weeks of the waiting period he or she has
completed towards the next within-grade increase at the time of
conversion. For example, an employee in a one-year waiting period who
has completed 8 weeks towards his or her next within-grade increase
would receive 8/52nds (.1538) of the applicable within-grade increase.

C. Cost Controls

The following cost control principles will be adhered to throughout
the demonstration project: (a) The number of skill slots established
for each skill block and groups of skill blocks will be based on
employees' ability to learn and apply the skills and on mission
requirements (e.g. organizational goals, work load) and may change over
time as conditions warrant. Changes in the subject group's skill mix
over time will be explainable based on reassessment or changes in
mission requirements; (b) The dollar adjustment amounts assigned to
skill blocks will be based on mission requirements; and (c) Increases
in average base pay under the project that exceed the increases at the
control sites will be justified by the enhanced skill level of the
subject employee group and by the improvements in organizational
outcome measures that can be attributed to those enhanced skill levels.
Cost control will further be ensured by the following specific
means: (a) Setting a maximum rate linked to the General Schedule. The
maximum rate for the Business Line Skill-Based Pay Model is GS-13, Step
10; (b) Limiting new skill block assignments to no more than 2 per
year; (c) Requiring a pay-back period for the demonstration of the new
skills; (d) Managing the opportunity to attain skill blocks based only
on organizational need; and (e) Tracking base pay increases, i.e.,
skill block attainment, and comparing them to equivalent base pay
(promotions, WGI's and QSI's) increases at the control sites on an
annual basis. Variations will be analyzed factoring in adjustments to
staffing levels, changes in skill mix, and most importantly, increases
in overall organizational productivity and other positive outcomes. The
leadership skill blocks will add the GS 14, Step 1 to GS 15, Step 10
pay ranges to the model; however, the use of these skill blocks will be
limited since competitive selection will be required for entry into
these skill blocks.
Should the need arise to add a skill block, increase the number of
slots for skill blocks or increase the value (adjustment amount) of a
skill block, VA will internally document the rationale for the change
in order to conduct proper cost analysis.
It is anticipated that, in any given year, base pay costs may vary
as compared to the control sites from time to time. Variances in base
pay costs between the demonstration project sites and the control sites
will be analyzed and explained to facilitate project evaluation. The
goal is to maintain cost neutrality over the life of the project while
still testing the merits of the new pay system. Adjustments in project
goals/processes may be required as evaluation results are analyzed.

IX. Required Waivers to Law and Regulation

The following table lists the Civil Service laws and regulations
that must be waived to implement this demonstration project. The
project is in accordance with 5 U.S.C. 4703(c) and is consistent with
all merit principles. All waivers are made only to the extent that
project provisions as outlined in this plan conflict with existing law.

Provisions of Laws or Regulations That Require Waivers--Title 5, United
States Code
------------------------------------------------------------------------

------------------------------------------------------------------------
Section 5107................. Classification of positions.
Section 5110................. Review of classification of positions.
Section 5111................. Revocations and restoration of authority
to classify positions.
Section 5112(b).............. Employee and agency requests for
classification appeals.
Chapter 53:
Secs. 5301; 5302 (1), Pay Comparability System (This waiver
(8), and (9); 5303; and applies only to the extent necessary to
5304. allow demonstration project employees to
be treated as General Schedule employees
and to allow rates of basic pay under
the demonstration project to be treated
as scheduled rates of basic pay.)
Sec. 5305............... Special Pay Authority.
Secs. 5331-5336......... General Schedule Pay Rates.
Sec. 5362............... Grade Retention.
Sec. 5363............... Pay Retention.
Chapter 55:
Sec. 5545(d)............ Hazardous Duty Differential (This waiver
applies only to the extent necessary to
allow demonstration project employees to
be treated as General Schedule
employees.)
Chapter 57:
Secs. 5753, 5754, and Recruitment and Relocation Bonuses;
5755. Retention Allowances; and Supervisory
Differentials (This waiver applies only
to the extent necessary to allow
employees and positions under the
demonstration project to be treated as
employees positions under General
Schedule.)
Chapter 75:
Sec. 7512(4)............ Adverse Action (This waiver applies only
to the extent necessary to provide that
adverse action provisions do not apply
to conversions from a General Schedule
special rate to a demonstration project
pay rate that do not result in a
reduction in the employee's total rate
of pay.)
------------------------------------------------------------------------

Code of Federal Regulations (CFR)
------------------------------------------------------------------------

------------------------------------------------------------------------
Section 300.601.............. Time in grade restrictions,
applicability.
Section 351.401.............. Determination of retention standing.
Section 351.403(a)........... Reduction-in-Force, Competitive Level.
Section 351.404(a)........... Reduction-in-Force, Retention Register.
Section 351.504.............. Performance Ratings.
Part 511, Subpart B.......... Coverage of General Schedule.

[[Page 58969]]

Part 511, Subpart F.......... Classification Appeals.
Part 511, Subpart G.......... Effective Dates of Positions
Classification Actions or Decisions.
Part 550:
Subpart G Sec. 550.703.. Severance Pay [This waiver applies only
to paragraph(c)(4) under the definition
of ``reasonable offer'' that will be
defined in Section III-D of the final
plan that will be published in the
Federal Register.]
Subpart I, Sec. 550.902, Hazardous Duty Pay (This waiver applies
definition of only to the extent necessary to treat
``employee''. demonstration project employees as
General Schedule employees.)
Part 575:
Subparts A, B, C, and D.. Recruitment Bonuses, Relocation Bonuses,
Retention Allowances, and Supervisory
Differentials (This waiver applies only
to the extent necessary to allow
employees and positions under the
demonstration project to be treated as
employees and positions under the
General Schedule).
Part 752:
Sec. 752.401(a)(4)...... Adverse Action (This provision is waived
only to the extent necessary to provide
that adverse action provisions do not
apply to conversions from a General
Schedule special rate to a demonstration
project pay rate that do not result in a
reduction in the employee's total rate
of pay.)
------------------------------------------------------------------------

Appendix A--Organizational Outcome Measures

The NYRO uses a ``BALANCED SCORECARD'' for its organizational
outcome measures. The scorecard displays outcomes for each team,
each core group (cluster of 4 teams) and total organization. There
are five types of measures: Customer Measures, Speed, Accuracy,
Cost, and Employee Development Measures.
The scorecard lists GOALS for each measure. Goals are the ideal
state for each data element. Goals must be acceptable that is
reasonable, understandable, measurable, believable and achievable.
For example, if veteran surveys show that veterans think their
compensation claims should be processed in 70 days, then this is
``acceptable.'' The following chart describes the measures.

------------------------------------------------------------------------
Measures Definition
------------------------------------------------------------------------
CUSTOMER MEASURES............ Based on monthly SERVQUAL survey results
for each team.
SPEED Ranges/Miscellaneous/ Each area is measured by the average days
Simple Authorizations. it takes to complete a claim (ADTC) and
the average number of days unprocessed
claims are pending (DAYS PD).
SPEED Phone Time/Personal The average amount of time a customer
Interview Time. waits to speak to a team member on the
phone or in person.
SPEED Lost Call.............. The percent of callers who receive our
initial phone message but hang up before
speaking to a team member.
SPEED--Backlogs.............. The total number of unprocessed (TOTAL
PDG) and unprocessed claims over six
months old (+180 days). Measures will be
taken on a predetermined date each
month.
ACCURACY--State Change I..... Measures the accuracy of information
requests (telephone/personal).
ACCURACY--State Change II.... Measures the accuracy of how well cases
were controlled and how successfully
evidence was requested (CNTRL and DEV);
how well benefits applications were
completed with VA help (INTRNAL); and
without VA help (EXTRNL).
ACCURACY--State Change III... Measures the accuracy of the
determinations made on the claim.
ACCURACY--State Change IV.... Measures how well we notified the
claimant of our decision.
ACCURACY--State Change V..... Measures how long it took for the
claimant to receive payments from VA
once they've been ``released'' by the
regional office. Not currently measured.
Will probably be done by phone surveys.
COST......................... Measures the gains/losses of each team,
each month. Calculated by comparing team
costs (salaries, overtime, etc.) with
claims produced with each claim being
given a value-based on established work
rate and local salary rates.
EMPLOYEE MEASURES--Climate... Measures how a team develops from initial
startup to total self-management.
EMPLOYEE MEASURES--Team Survey feelings of employees throughout
Development. the organization to determine areas of
strength and weakness.
EMPLOYEE MEASURES--Technical Measures how individual team members are
Development. progressing in their individual skill
development program.
------------------------------------------------------------------------

[FR Doc. 96-29563 Filed 11-18-96; 8:45 am]
BILLING CODE 6325-01-P