OTHER ORGANIZATION EXAMPLES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00530R000100110006-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: December 23, 2016
• Document Release Date: February 22, 2013
• Sequence Number: 6
• Publication Date: December 7, 1988
• Content Type: MISC

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NAPA examined the compensation and personnel systems of a
number of private and public organizations. This appendix describes
the responses of ten non-intelligence private and public
organizations to questions addressing compensation practices
concerning scientists and engineers (S&Es). Specifically covered
are how these firms relate to the market for salary purposes, hiring
and salary administration practices, relocation/transfer policies,
outplacement programs, short-term practices on borrowing staff,
additional compensation for clearances, and premium pay for S&Es for
overtime or hazardous duty.
I. The Methodology:
At an August meeting of NAPA staff and senior Intelligence
Community (IC) representatives, we identified and prioritized a set
of issues (see Attachment 1). Based on this meeting, NAPA developed
a questionnaire (see Attachment 2).
The IC participants asked that a number of specific
organizations be contacted about their compensation systems. NAPA
selected this set of companies because they are similar to the IC
agencies -- they had some flexibility within a constrained
environment. As a group, the firms were very cooperative. The
organizations contacted were:
Brookhaven National Laboratory
Digital Equipment Corporation
Delmarva Power
Federal Reserve Board
Lawrence Livermore Nat'l Laboratory
Mitre Corporation
National Institute of Standards
and Technology
Martin Marrietta, Energy Systems
Oak Ridge, TN
Sandia National Laboratory
Tennessee Valley Authority
DOE laboratory
High tech., private
sector
Public utility
Excepted federal agency
DOE laboratory
High tech., non-profit
Federal agency
DOE laboratory
DOE laboratory
Government corporation
For each organization we conducted either a telephone
interview, or a face-to-face meeting. In two cases, the
questionnaire was sent to the organization for completion after the
initial telephone contact. In most cases, follow-up telephone calls
were made to clarify specific points, or where necessary to contact
other individuals in the organization for specific pieces of
information.
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1. Approach to integrating the market data for Scientists &
Engineers
A. How is market comparability ensured?
All of the non-federal organizations use salary surveys to
determine what is happening in what they view is their segment of the
market.
As a group, the organizations also seem to have varying levels
of sophistication in survey analysis. Because different surveys can
lead to vastly different conclusions when comparing to market, the
non-federal participants are especially interested in having very
good salary surveys and the "-right companies" in those surveys. By
this, they mean companies they believe they have to compete with for
talent. The non-federal participants appear to place a greater
emphasis on market relationships, and use a lot of staff and computer
resources to try to understand what is happening in the market. They
also know about pitfalls in various types of surveys, benchmark and
maturity types, /1 and are mindful of these as they analyze them.
The surveyed organizations seem to integrate the survey data
somewhat differently into their compensation systems. They also
consider other factors such as company profits, the near-term
projected economic environment, and internal employee or labor
relations issues.
Interestingly, some of the organizations feel strongly that they
have to compete in a national market and they survey it. Others
believe they are competing in local or regional markets, and they
survey these. To the extent it could be determined, no organization
believes they are competing nationally and then surveys salaries only
regionally or locally. However, in areas which are locally high
/1 Maturity curve salary surveys correlate salary to years of
experience or to years since first degree, or occasionally to age.
They draw a curve to represent that correlation using time on the
horizontal axis and dollars on the vertical axis. The presumption is
that, as individuals grow in experience, their value and hence their
salary also grows. Maturity salary surveys have been used for many
years, particularly in research environments where, because of the
uniqueness or confidentiality of the job duties, it has been very
difficult to make valid job duty comparisons.
Benchmark salary surveys seek to make the best match of a
company's job duties to the most similar ones in a salary survey.
Pay rates in the benchmark survey are then compared to those of the
company's to build market relationships and pay ranges for salary
administration.
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paying, organizations surveying nationally express concern about watching
the local market very carefully to insure that they do not start lagging
behind it; they do not want to hire good people, only to have them soon
hired away for better salaries.
Each of the organizations have varying notions of what market parity
means. Some want to be tightly tied to the market, or where they think
the projected market will be. Others are content to reach the current
market level, knowing that their aggregate salaries will fall behind
almost immediately after they have their common date salary review (the
single date on which most employees receive their annual salary
increases).
Some organizations target to be ahead of market because they want
the best, most capable, and most productive talent available. They
believe that these people's effectiveness and productivity yield far
higher gains than the modestly increased salary costs. This approach
seems typical of the highly competitive, high tech firms.
Other organizations target to be on market so they can pay top
contributors well, and pay less productive but still needed employees
consistent with their lower level of contributions. This approach is
representative of many non high tech organizations.
Lastly, some firms find they don't need many of the high paying
disciplines, or are in a low labor/living cost area and do not need to
pay salaries that are as high as market, or so called "below average
employees" meet their needs.
2. Hiring--What Works, the Flexibilities, the Common View
A. Pipeline Talent-Entry vs Senior Recruiting Approach
All of the companies use whatever means they have to try to recruit
the best candidates for their needs, but their needs are not the same.
All of the organizations say the challenge of the work and the
opportunity to work with the top people and facilities in the field are
the most important things in successful recruiting, so long as
salary/benefits are not too low. The four organizations that hired above
market stressed things such as: cutting-edge technology, entrepreneurial
values, a dynamic, caring culture, and the possibility of having an
impact on issues of national importance. Salary was way down on the
list; where salaries were generally competitive, modest differences have
little impact. If salary differences are large, salary becomes a more
important issue.
Starting Salaries
~ ~
Organizations may have different starting rate policies viz-a-vi~'
market, that is they can hire above, at, or below prevailing market.
They may also hire at different levels compared to market for new
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graduates than for senior hires. Five of the ten organizations in the
-NAPA sample have the same starting salary philosophy for entry and senior
level hires. Three are more aggressive for senior than entry hires, but
none of this group is more aggressive for entry than senior hires.
Lastly, two organizations seek to hire new graduates and promote from
within; this means fewer senior level hires.
On starting rates for "baseline" or average recruits, four
organizations tend to hire above market average. They want to hire and
retain the best people, there is more competition for them and they cost
more. Three organizations tend to hire people essentially on market. It
should be noted that one of these is a federal organization, and another
is in a very low cost living area, so that national rates provide a very
good life style. Lastly, three organizations tend to hire below market.
The rationale for one is their overall salary scale is slightly below
market and they don't want to upset their internal alignment. The other
two are federal agencies and simply are not able to or do not need to
compete at full market levels.
B. Exceptional PhD Talent
7
Recruitment Approach 5 ~,
The approach to recru~ing is very different for exceptional and, in
many cases, unique,-e. This is the area where the private sector
firms and to a lesser extent the non-profit/DOE Laboratories can
successfully compete for top talent. For special senior people,
typically the technical experts at the organizations discuss the names of
candidates with high levels in the management chain. Generally, the
initial contact with these candidates is made by high level technical
managers, and they work out the scope and details of the position.
Special accommodations offered besides salary include: special
research assignments, facilities and support staffs; tenure; allowing
part-time work so they can fulfill teaching commitments; and allowing
such staff to continuing consulting within the constraints of the
conflict of interest rules.
One organization does not hire PhDs, so this question was moot for
them. Another said that it has not had to do this type of recruiting and
does not want to. Two federal agencies are interested in recruiting
exeptional and generally expensive people, but noted they do not have the
flexibility from a classification or salary standpoint to effectively
compete.
On the issue of classification flexibility, four organizations have
little flexibility. The others have varying levels of flexibility
ranging from a dual ladder to no classifications structures for their
S&Es -- they use a maturity curve approach.
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Starting Salaries
AlI of the organizations said that the challenge of the work itself,
and the opportunity to work with the top people and facilities in the
field are the most important things in successful recruiting for these
people; salary/benefits are much less important so long as they are not
too far out of bounds with other opportunities available. But here is
where differences really show -- the pay cap for federal agencies is a
significant handicap because they cannot get close enough to the salary
offers that some of the non-profit/DOE laboratories ($80-$100,000), or
private sector firms ($100,000 and up, plus stock options and bonuses)
can offer.
From a salary standpoint some of the organizations surveyed really
have much more flexibility than the federal government, but they are very
judicious about its use.
3. How Salaries are Managed--Pay Flexibility
This is another area where organizational differences and priorities
really show. The salary system is a major part of the tangible reward
system; the organization integrates the values, the performance and
behavior it values and wants to reward into this overall reward system.
All of the sample set of organizations have a merit pay system.
However, the differences are vast. At one end of the spectrum, one
organization considers a merit system as being able to give two merit
steps in a structured step pay system; at the other end, four others view
it as managing the increases to target salary levels based on a ladder
ranking of each employee's contribution -- a rigorous performance
management system.
Some utilize rate ranges, others maturity curves in their salary
administration.
Some combine BSs and MSs, in their maturity curves, others do
not.
Some lump non-supervisors and supervisors together in their
management of salaries, others do not.
Some have a general increase plus a small merit increment,
others have all of the increase amount as merit.
Some tie the performance directly to the increase amount, others
have a less direct tie to performance.
Some distribute merit increases on one common effective date,
others use an anniversary date system, typically 12 months after
some prior event such as a promotion or the previous annual
increase.
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Each organization's salary approach has differences which seem to
reflect their needs and cultures.
4. Relocation of Staff
Long-term geographic location policies is an area where a special
survey focused on private sector employee transfer and relocation
policies and practices would be more productive than the NAPA data,
because there were only three private companies in this study.
5. Total Compensation Models
Only one organization, a federal agency working on a demonstration
project, is working with a total compensation model. Perhaps one reason
is that most salary surveys collect base salary data; it is difficult to
get truly comparable benefits data needed for the total compensation
model. While it is relatively easy to gather cost of benefits data, it
is not particularly useful because it does not account for a host of
other factors which must be considered.
When discussing with knowledgeable benefits consultants how to best
compare benefits in the market place, they advocate comparing an
actuarial valuation of an organization's benefits package to those of
comparable companies. This involves a detailed analysis of each
company's benefits plans plus an actuarial valuation of each facet for
sample employees at a number of different salary levels. This is an
expensive proc-ess and there are only few firms which have the capability
to do this type of specialized, in depth analysis.
This approach also presumes that salary dollars and benefits can be
interchanged to make an overall compensation package competitive and
acceptable to employees. NAPA was concerned that a richer benefits
package could be used as a justification for a poorer salary program.
Some analysts believe that no matter how rich the benefits package, if
salary levels fall too far behind market, the employees will react
negatively. While the total compensation approach is intellectually
attractive, it has so far seen very limited acceptance.
6. Workforce Concepts
All ten of the organizations in this sample emphasize a long term
career approach rather than a duration-of-project approach to tenure.
The caveats are that the individual employee continues to perform in a
satisfactory manner or better, and there are not catastrophic budget
problems. One organization involved in periodic major construction
projects does hire construction people for the duration of the specific
project.
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7. Outplacement/Second Career Support
Only three of the ten organizations have used outplacement
consultants, and then only with major layoffs. Two others have used
outplacement consultants for special, high-level terminations. One other
offered an early retirement program during a period of retrenchment.
Only one organization indicated it had used extensive outplacement in the
past. The unamimous approach is to hire people and hope they will make
their career with the organization.
8. Short-Term Borrowing of Staff
Only one of the ten organizations a federal agency, relies on
short-term borrowing of staff. This approach is not commonly used in the
private sector.
9. Added Compensation for Passing Security Clearances
Only six of the ten organizations use security clearances, and none
of them grant any special monetary recognition for passing security
clearance requirements.
10. Premium Pay for Overtime or Hazardous Duty for Professionals
Only two organizations indicated they used overtime pay for
professionals. One utilizes it only for supervisors in specific grades
where it is necessary to provide supervisory coverage over hourly and
weekly salaried employees. The other organization allows vice presidents
to approve overtime pay for exempt employees as they deem necessary.
None of the organizations, including the DOE laboratories, use
hazardous duty pay for any of their employees. Instead they note there
are extensive safety policies, procedures and standards which, if
followed as required, eliminate the hazards. Thus, there is no basis for
hazardous duty pay.
III . K y Issues to be Learned ' ~ ~~ ~`~'"`" ~ S~"~I >1 ~ ~ -
`~ A. The(~M~e.~~ ~ A ~n ?~~
C~~ " 1. Being competitive in the arket "a`"s'"'t,h.ey define it, is a high
priority . ~--_._----'
2. The high tech firms place a lot of emphasis and resources on
keeping track of the high tech S&E market, generally .using separate,
specialized surveys.
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3. On average, non supervisory S&E positions are better paid than
non supervisory administrative exempt positions.
B. Recruiting World Class Talent
1. Non profit/DOE laboratories and private firms have flexibility
and will use it when recruiting for world class talent. Base pay levels
of $80,000 to $100,000 for non-profit/DOE laboratories and $100,000 plus
perks, bonuses and stock options are not uncommon. In addition,
universities have the good salaries and perks to aggressively compete in
this arena.
2. The federal government, with its pay cap and lack of
flexibilities, is not even close to these organizations.
Pay System Flexibilities
1. Most non profit and private sector firms have a lot of
flexibility built into their pay systems to accommodate special
situations, or with special management approval will bend the rules for
the right person.
2. The policies, procedures and systems are often implemented with
the idea that they should not get in the way of doing the "right thing"
when appropriate. There may be a price to be paid, and the managers
assess that before proceeding.
3. It is not uncommon to be able to hire anywhere within the pay
range or perhaps above the normal range, or in more limited situations to
redefine the job for the right person.
IV. Merit System Caveats
If merit salary management is to be implemented, management must be
willing to:
a. differentiate individual performance/contribution,
b, distribute salary adjustments and pay based on performance _
differentiations, ~_~,,
c. strongly support the system, and
d. hold their subordinate managers accountable for results.
In addition:
A. Compensation/Salary management is more art than science and
there is no single set of RIGHT answers -- but there are a lot of wrong
answers. For each organization there are a large variety of options,
each with some pluses and minuses that have to be explored. NAPA's
survey showed a lot of variations in applying the merit theme.
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B. All of the organizations in the sample profess to have some sort
of a merit system -- there are a variety of ways of defining a merit
system.
C. Implementing a merit pay system, especially where there has not
been one before, will force a culture change on supervisors, managers and
ernployees.
V. Summary Comments
1. Workforce demographics are changing and this will further
disadvantage the IC agencies in their quest for S&Es in the 1990s and
2000s unless there is a dramatic improvement in their ability to compete.
2. The IC agencies do not have the flexibility within the current
system to be able to deal with unusual situations.
3. The current pay system environment places the IC agencies at a
disadvantage ranging from significant to insurmoutable.
4. If the IC agencies want to implement a true merit system they
must work to become more competitive in the market.
5. It would be helpful for the IC agencies to develop a network
from the non-profit/private sector for compensation practice.
#446 - November 14, 1988
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At L 1.:11Y L 1 !1 L
1. Break cap for high quality staff
Market Pricing - i.e. comparability
Flexibility of compensation policies within agency
2. Pay flexibility
3. Private industry packages on relocating staff
X Consideration of tax implications of compensation
,-w~" "~
SECOND ORDER PRIORITIES OF IC REPRESENTATIVES
4. Total compensation models
5. Second career support
6. High skill college graduate recruitment
7. Short term borrowing of staff
- Conflict of interest
- Compensation packages
8. Added compensation for meeting clearance requirements
- Incentives for conditions of employment
9. Premium pay - overtime practices
10. Intangible compensation - including working conditions
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r~rr~tvlit~ L
Attachment 2
COMPENSATION QUESTIONNAIRE
I. Compensation System
What is your organization's compensation approach? (How
organization manages and why)
A. Hire at, above, or below market salary rates? Use
recruitment bonuses?
1. Entry vs. senior level Hires
B. Geographic vs. national pay schedules and why
C. What are special compensation programs for supervisors and
non-managerial staff?
D. Pay adjustments - based on market, profitability or?
1. Increase or salary management?
2. Frequency
3. Merit increase distributions (common date or
anniversary exceptions or mid-years) based on
individual's performance?
4. Amount of increase tied to performance?
5. Can non-supervisory pay equal or exceed executive
pay? Do you have a dual ladder, and what do you think
of the concept?
6. Lead, lead/lag or lag; market target at X$ +/- market?
E. How important is uniformity of pay across different
business-lines and organizations?
1. Uniformity
2. Flexibility
3. Problems/issues
F. Roughly what portion of total compensation is bonuses or
other forms of at-risK pay?
G. What is the purpose of at-risk pay?
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H. Who can rnake exception to your starting salary rules?
What can they change?
1. National office only? (What can they waive?)
2. Division VP?
3. Manager/supervisor?
I. Added compensation for passing clearance (lifestyle
restrictions - cannot publish, etc.)?
J. Premium pay (overtime, hazardous duty pay) for professional
1. Do you have it?
2. Wno is eligible and under what circumstances?
K. What do you disclose about your pay system to employees?
1. Classification description
2. Rate ranges
3. Policies/procedures
4. Individual pay rates
5. Other
II. Recruiting Approach
What do you emphasize to recruit new graduates?
What do you emphasize to recruit experienced people?
A. Salary
B. Benefits including deferred compensation
C. Career with firm
D. Opportunity to work with latest technology
E. Importance of projects
F. Profit sharing
G. Work environment
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H. Ability to work with first class organization (yours)
1. best minds
2, at cutting edge
3. anything else?
I. New grauuate training program?
J. Any other thoughts/concepts?
III. Special Recruiting - New PhD or experienced?
What would you do to attract a world class talent (Phd in
mathematics from MIT)? These questions refer to exceptional
talent, not baseline or average talent.
A. Would you make an exception to your normal
classification/compensation rules?
B. If so, on what basis?
1. Work environment
1. How much flexibility to retain them?
3. Conflict of interest issues? Competition?
C. .How do you pay top people?
1. Pros/cons or problems in your system
IV. Workforce Concept
What kind of workforce concept are you operating under?
A. Lifetime career, no layoff?
B. Only for duration of project
C. Hire cutting edge recruits from school; edge out with slow
raises after a few years, or something else?
D. Fully experienced, proven talent from other organizations?
E. Government/military as a source
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F. Revitalize burned-out-people? If so what, what conditions?
V. Employee Mobility
Do you require your professional staff to make geographic
moves? What levels? (e.g. management only? technical)?
A. What problems, if any, are you having?
B. What solutions are you using that work best?
C. How do you protect transferees from financial loss?
1. Family
2. Spouse
3. Second wage earner
4. Schools
5. Other
6. Additional Services
VI. General Support
A. Second career support - outplacement activity/consultant
B. Do you rely on short term "borrowing" of staff from
research organizations/universities, etc., for 18-24
months, then person goes back to prior job? Do you
consider conflict-of-interest or give sabbaticals?
C. Do you have flexible benefits (upper mid-level to just
below the top echelon?)
#426- November 15, 1988
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