Pay for Performance


President's Perspective, October 2008: The recent national merit pay arbitration settlement between NTEU and the SEC is the latest milestone in the union’s continuing efforts to resolve fundamental problems with the agency’s pay for performance system. While we still have considerable ground left to cover, it is important to recognize the positive changes that have occurred at the agency as a result of the union’s efforts.

The settlement provides salary increases and $2.7 million in monetary relief to all employees aged 40 and over and to all African-American employees in grades 8 and above – the two groups that an arbitrator determined had been harmed under the merit pay system. But the monetary payments are not the only thing that was accomplished by this settlement.

The agreement also contains provisions intended to begin the process of addressing diversity issues at the agency – issues that were in part revealed by the flaws in the merit pay system. For example, the SEC’s new performance management system will include a “360 degree” review mechanism, to ensure that employees will have an opportunity to communicate up the management chain about their managers’ performance, including discriminatory conduct. Furthermore, the president of NTEU Chapter 293 will now participate on each of the SEC’s four diversity committees, and those committees will be required to regularly report who is on the committees and what they are doing. Managers will receive mandatory annual diversity training. Annual reports will be produced identifying allegations of discrimination across the agency to identify patterns and address problems. Hiring committees will be required to have diverse membership. A barrier analysis will be performed to identify significant barriers to promotion. The increased transparency afforded by these provisions will benefit us all.

The settlement agreement also will benefit everyone at the agency because it represents a further recognition by SEC management that its approach to pay for performance was fundamentally flawed and needed to change. In addition to this settlement, the union’s efforts in the past couple of years have led to the suspension of the merit pay system. The agency is now working with NTEU to create a new one. The union has also succeeded in increasing transparency by requiring annual merit pay distribution reports from the SEC, which it has published on the chapter website.

But we still have work ahead of us. We need to continue to develop new, more objective performance standards for each position at the agency. And it will also be necessary to secure adequate funding for the merit pay system.

It made little sense for the agency to continue to fight the national merit pay arbitrations while it was simultaneously seeking to work with the employees’ union representatives on these issues. The SEC should be commended for finally recognizing this fact.

Thank you for your continued support.

by Chapter 293 President Greg Gilman