SES bonus caps going up in 2017 by nearly 3 percent

The Office of Personnel Management and the Office of Management and Budget released guidance on raising the bonus award caps for senior executives, senior level...

Senior executives have reason to celebrate the new guidance from the Office of Personnel Management and the Office of Management and Budget.

OPM and OMB directed agencies to raise their limits on Senior Executive Service bonus spending  to 7.5 percent of employees’ aggregate salaries from 4.8 percent, and tacked on two more recommendations for using awards to increase retention and recruitment of top performers.

First, agencies should provide “substantial monetary awards for the very best SES and [senior level and senior professional and scientific] SL/ST performers.” Second, they should allow “more variance of award amounts among rating levels.”

In addition, OPM and OMB recommended that agencies use “all authorized categories of awards, as appropriate, to recognize the accomplishments of their executives throughout the year, including … individual contribution awards.”

These individual contribution awards are limited to 1 percent of employees’ aggregate salaries from the previous year. OPM and OMB suggested using these awards throughout the year to encourage special acts, successful suggestions, inventions and other significant contributions, and noted that they can be used whether or not the employee is at the highest rating levels.

OPM and OMB suggested that agencies should begin having conversations about how best to apply and use these new limits on awards.

“Agencies are encouraged to use these awards to recognize those senior leaders who take on the most challenging assignments, use exemplary innovative and collaborative methods, take on challenging rotational assignments, and/or have the greatest impact on agency priorities and mission imperatives in a given performance period,” the memo said.

In addition, OPM and OMB said that the amounts of the bonuses should clearly reflect performance, and that the two agencies would oversee through the appraisal system certification process.

These new raised caps will not apply to political appointees subject to the 2010 freeze on discretionary spending.

President Barack Obama’s executive order from December 2015 first announced the intentions to heighten bonus caps in 2017. The response  generally was positive.

“That was one of our key and most emphasized recommendations,” said Tim Dirks, then president of the Senior Executives Association. “We are pleased that the cap has been increased from [roughly] 5 percent to 7.5.”

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This comes as agencies and organizations notice a significant lack of interest in joining SES among senior general schedule employees. With 85 percent of SES eligible to retire within 10 years, only 55 percent of employees at GS-14 or GS-15 expressed interest in joining the SES, according to a June report from the Partnership for Public Service and McKinsey & Company.

Low morale among the current cadre of senior executives is one of the biggest detractors for potential candidates to the SES, the report said.

In addition, human capital experts have warned that the upcoming presidential transition may finally trigger the retirement tsunami that’s been promised since the late 1990s.

“My sense is, in just talking to career execs, that either before, during or after transition, now is the time,” Sanders, former chief human capital officer at the Office of the Director of National Intelligence, told the Federal Drive with Tom Temin. “They’re not willing to commit another two, three or four years to a new administration, regardless of who wins. So I think we’re looking at a fairly substantial turnover both at the political level and at the career level.”

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