PROPOSED PAY, PERSONNEL MANAGEMENT, AND COMPENSATION SYSTEM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00530R000701650008-0
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 57
• Document Creation Date: December 27, 2016
• Document Release Date: June 14, 2013
• Sequence Number: 8
• Publication Date: July 1, 1987
• Content Type: REPORT

Declassified and Approved For Release 2013/06/14 : CIA-RDP90-00530R0007016500 080
0a I
Central Intelligence Agency
Human Resource Modernization and
Compensation Task Force
Preliminary Report-July 1987
Proposed Pay, Personnel Management,
and Compensation System
Executive Summary
Proposed System Summary
System Design
Fa, Effhcoal Use On4y-
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
Human Resource Modernization and
Compensation Task Force
EXECUTIVE SUMMARY
In July 1986, then DCI William J. Casey presented to the Senate Select
Committee on Intelligence (SSCI) CIA's strategy for addressing major
personnel issues during the next decade. This strategy included replacing the
General Schedule (GS) system, rethinking incentives, redesigning the career
development structure to allow for expert and management tracks, and
revitalizing our training and personnel planning program. With these person-
nel system improvements, he suggested that the Agency would be better able
to attract and retain the high-caliber career force needed to meet increasingly
difficult and diverse challenges in the years to come.
As a result of the DCI's initiative, the Human Resource Modernization and
Compensation Task Force (HRMCTF) was chartered in November 1986 to
develop the design of an improved personnel and compensation system
without adding more than 2 to 3 percent to the Agency's personal services
budget. In so doing, the Task Force studied some of the most creative and in-
novative approaches being used and tested in private industry and in other
parts of the Federal Government. The purpose of this report is to present a
preliminary draft design to the Directorates for their review and comments.
Some features of the preliminary design would directly affect levels of
compensation. Others focus on additional forms of recognition and incen-
tives to ensure that the CIA remains an attractive place to work. Still others
are aimed at reducing bureaucratic hurdles so that managers will have more
flexibility in organizing their personnel resources to adapt to changing
requirements. Some of these proposals are entirely new to the traditional
Agency culture in the pay and benefits area. Other proposals will be familiar,
representing only a refinement of what is best about the current system. What
is presented here is a fully integrated system, but its many individual features
leave much room for discussion of other options that may be incorporated in
the final design. Many of the features, particularly those relating to banding
and incentive pay, can be implemented within existing DCI authority. Other
features, particularly those in the benefits area, would require additional
authority. All of the changes would require Congressional and Office of
Management and Budget concurrence.
Feedback is a key ingredient in the process of developing an improved
personnel and compensation system. As stated from the beginning of the
project, it is essential that any new Agency system be developed by and have
the broad support of employees. To accomplish this, the Task Force has
arranged for copies of the full report to be available at the Office and DO
Division level throughout the Agency. Directorates are requested to submit
their responses to the Task Force by 1 September 1987. In addition,
individual comments and suggestions may be addressed to the Chairman or
members of the Task Force. A revised report that incorporates views of
individuals and Agency components will be offered for your review once
again before submission to Agency management for approval in December
1987. Implementation of any changes would be phased in over a two-year
period.
i
FOR 0994C-141 INN ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
Proposed Pay and Classification Structure
A key feature of the proposed system is a pay and classification structure
that better relates compensation to performance, is more competitive with
the private sector, and plays a greater role in attracting and retaining high-cal-
iber people:
? Occupationally Defined Bands. The GS system has long shown signs of
strain-witness the numerous "special pay scales" awkwardly superimposed
in order to pay higher rates to certain hard-to-hire occupations. To
facilitate market pricing, the Task Force proposes the Agency develop
occupationally defined pay bands, linked to various levels of expertise-
for example, entry level, journeyman, expert, and manager. Representa-
tives of 28 occupations that account for 75 percent of the Agency's work
force already have met as occupational panels and have shown the
feasibility of such a system, including an initial cut at the standards that
would be used to determine pay and promotion (movement from band to
band).
? Market Pricing. Under the current GS system, occupational market
surveys are conducted to assess Federal pay vis-a-vis the private sector.
These surveys result in governmentwide, across-the-board changes in the
GS pay schedule, without regard to how a given occupation stacks up
against the private sector or how important it is to an organization. This
averaging process often results in pay levels for specific occupations that
are lower than the market commands. The Task Force proposes that the
Agency maintain up-to-date, occupation-specific pay rates by conducting
its own periodic market salary surveys of that portion of the private
sector that is on a par with CIA and competes for the same types of
people. Those Agency occupations with no private-sector counterpart
would be adjusted on the basis of an internal Agency comparison with
occupations that can be market priced.
? Funding Control. Senior managers in government are saddled with,
funding, position ceiling, and promotion headroom constraints that
extend well beyond understandable requirements for accountability.
They often find themselves unable to make personnel adjustments, even
when change will not require additional funds. The Task Force proposes
that position classification authority be delegated to operating officials,
permitting them to reclassify jobs within defined occupational pay levels
and adjust numbers of personnel in their components, so long as they stay
within predefined funding limits.
? Incentive Pay. Under the GS system, employees and managers tend to
view promotion as the primary means to reward performance. Periodic
step increases are associated largely with longevity, and quality step
increases and other cash awards are rare-even for superior performers.
The Task Force proposes separating the rewards for above-average
performance at the current level from the kinds of rewards offered for
substantially increased responsibility. The proposed system of broad
occupational bands would' introduce a pay-for-performance or incentive
pay system that would permit varying combinations of salary increases
and bonuses to reward varying levels of performance. Under the pro-
posed system, all employees performing acceptably would receive an
incentive award comparable with the current step increases, but higher
performing employees-up to 50 percent of the' Agency population-
could receive a combination of salary adjustments and bonuses greater
ii
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
than this. Promotions (movement from one band to another) would be
reserved for those who have clearly demonstrated the capability to take
on the significantly greater responsibilities of a more senior level.
Performance Evaluation and Career Development Systems
An essential ingredient in any pay-for-performance system is an active
performance evaluation and career development system. The Task Force
proposes the following basic elements, allowing necessary Directorate
flexibility:
? Performance Plan. Occupational panels would generate key job responsi-
bilities and performance expectations for each level of the band. These
would be computerized and available to managers as a guide when they
sit down to customize performance plans for individual employees. The
aim here is to ensure that employees know what is expected of them and
to free supervisors from much of the performance plan writing so they
can concentrate on talking with their employees.
? Performance Evaluation. A streamlined PAR system would facilitate
evaluation of recent performance to determine incentive pay and readi-
ness for promotion.
? Career Development. This segment of the preliminary design proposes a
dual track system to permit advancement as either a manager or a
substantive expert. The design also provides for occupational career
handbooks that would spell out the responsibilities for each level in an
occupation and identify the assignments, experiences, skills, and training
that best prepare an employee for entry into and promotion within the
occupation. These handbooks would be used by employees, career service
panels, and managers.
? Training. Employees will have more training available to them. This
training will focus on the specific skills needed by each occupational
grouping to sharpen existing job skills and enhance the skills needed for
career development. In addition, more efficient and creative ways will be
used to get the training to employees at their job site.
Benefits
No Federal agency can hope to match the best of the private sector in total
pay and benefits, but the Agency can improve its posture by taking a more
modern approach. The Task Force offers the following examples:
? Flexible Benefits Program. This system would give employees greater
latitude to direct government money into the particular benefits the employ-
ees need and to use their own pretax dollars to buy enhanced levels of
qualified benefits. This flexibility is increasingly important as the demo-
graphics of the work force change to include more dual career marriages
as well as single workers with and without children.
? Annual Leave. Every year Agency employees forfeit more leave than
employees of any other Federal agency. The Task Force believes that the
work ethic that often results in large losses of annual leave benefits should
be rewarded and has proposed a variety of improvements intended to.
reduce the amount of leave lost. Recommendations include: a proposal to
increase annual leave carryover for midlevel managers and experts who
currently account for most of the lost leave; a provision to allow annual
leave to be cashed in or used as collateral for dependent educational
iii
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
tuition loans; and a proposal to establish an Agency sick leave bank from
annual leave that would have been forfeited to provide additional sick
leave for employees faced with catastrophic illnesses.
? Other Benefits. The Task Force proposes various incentives to help the
Agency maintain and adjust the characteristics of the work force, for
example, to ensure that the best midlevel employees can continue to see
opportunities for advancement. Among these proposals are retention
bonuses and early retirement options.
Additional details on these proposed features are in the System Summary
section. Those desiring even more information on the new system should
consult the System Design section. Each provides a greater level of specificity
geared to meet the needs of various readers for information about the new
system.
iv
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
CONTENTS
Page
EXECUTIVE SUMMARY ................................................................................ i
PROPOSED SYSTEM SUMMARY ................................................................ 1
Design Methodology ............................................................................................ 17
Proposed Pay and Classification Structure ...................................................... 18
Occupationally Defined Bands (Feature 1) .................................................. 18
Incentive Pay (Feature 2) ................................................................................ 20
Proposed Performance Evaluation System ...................................................... 25
Performance Plan (Feature 3) ........................................................................ 25
Performance Evaluation (Feature 4) .............................................................. 26
Proposed Career Development System ............................................................ 27
Occupational Career Handbooks (Feature 5) .............................................. 27
Individual Career Development Plan (Feature 6) ........................................ 27
Occupation-Specific Training (Feature 7) ...................................................... 28
Improved Availability of Training (Feature 8) ............................................ 28
Dual Track (Feature 9) .................................................................................... 29
Promotion (Feature 10) .................................................................................... 31
Proposed Benefits Program ................................................................................ 31
Flexible Benefits Program (Feature 11) ........................................................ 32
Leave Conversion (Feature 12) ...................................................................... 37
Educational Assistance for Dependents (Feature 13) .................................. 42
Staffing Management Tools (Feature 14) ....................................................... 43
Proposed Data-Processing Support .................................................................... 45
System Controls (Feature 15) .......................................................................... 45
Projection Tools (Feature 16) ........................................................................ 46
Proposed Implementation Strategy .................................................................... 46
Proposed System Synopsis .................................................................................. 46
v
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
PROPOSED SYSTEM SUMMARY
CIA faces increasingly difficult and diverse chal-
lenges in the years to come. Ensuring that we will
be able to attract and retain the caliber of person-
nel we need to meet the challenges of the future is
a key.objective of our strategy. Competition with
the private sector for certain key occupations is a
significant problem today, and the demographics
of the country as the baby bust generation reaches
the marketplace ensure us that this problem will
spread to other occupations and that competition
will intensify. In view of the security constraints
associated with our mission and the complexity of
our challenges, we must have a personnel and
compensation system that allows us to compete
effectively for the employees we need.
The proposed design touches on virtually every
aspect of the personnel and compensation system.
Obviously, the design includes features that will
improve compensation. In some of the most mar-
ketable occupations, however, CIA can never
match the private sector; and, in fact, employees
driven primarily by money do not work for CIA.
The target employee of this design is the employee
who thrives on the unique challenges only CIA can
offer. The proposed system is designed to provide
recognition and incentives to this type of employ-
ee, to reinforce a sense of accomplishment, and to
make CIA a more attractive place to work.
The proposed system is also designed to give
managers the tools to compete for the talent they
need and give them the flexibility to restructure the
work force to meet changing mission requirements.
Table 1 is a summary of the proposed improve-
ments to the current personnel and compensation
system, which illustrates the features that will
enhance CIA's ability to continue to attract and
retain high-caliber employees. It describes the pro-
posed new system from three vantage points-that
of the employee, the line manager, and the senior
manager.
The pay and classification features would affect
only General Schedule (GS), secretarial, and
commo-banded employees. Changes recommend-
ed in the performance evaluation, career develop-
ment, and benefits systems would be applicable to
all.
Proposed Pay and Classification Structure
Feature 1-Occupationally Defined Bands
? CIA-specific market pricing of occupations.
? Funding control replacing position ceiling and
average grade.
? Job classification authority delegated, to
Directorates.
One of the most visible features of the current
personnel and compensation system at CIA is the
use of the GS. CIA is not bound by law to follow
this governmentwide pay and classification sys-
tem; but, by virtue of the fact that we have always
employed it and because any changes would in-
volve the expenditure of funds, CIA must coordi-
nate closely with the Office of Management and
Budget (OMB) and Congress and ultimately re-
ceive Congressional concurrence with respect to
significant departures from our current system.
The GS is a position classification and pay
system. To meet our requirements, we have used
our special authorities to modify the administra-
tion of the GS system. We also have created
special pay scales for engineers and scientists that
are different from those in the GS. Despite these
adaptations, continued linkage to the GS system
and the governmentwide salary survey process
constrains our ability to structure and pay our
work force in an optimum manner to execute our
mission. This constraint is inherent in the GS
system and to be removed requires a complete
break from the GS.
Market Linkage
The Office of Personnel Management (OPM)
maintains the GS salary schedule for the Federal
Government, following the premise that the Fed-
eral system is a single employer. Market surveys
conducted by the Department of Labor report
average salary data paid to positions comparable
with the generic government positions for all types
and sizes of employers. This market survey pro-
cess provides the basis of the "comparability"
increase given to all grades governmentwide. Be-
cause these surveys average over a wide spectrum
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
to
lI
rn
0
z
r
0<
Table
Proposed Improvement in Personnel and Compensation System
Relevant System Features
Vantage
Improvements in Ability To
Pay and
Classification Structure
Performance
Career Developments
Benefits
Data Processing
Point
Attract and Retain Employees
Occup-
Plannin
Tools
atio
Incentive
Occupational
Imlividual
o-pat
-
Training
Dual
Fbxibls
levee
Tuition
staff
staffing
g
Defined
Pry
Plan
Evaluation
Handbooks
co Plans
,
Specifc
Accessibility
Track
Promotion
Benefin
Conversion
Aaistance
Management
Bonds
Training
Toots
System
Projection
Control,
Toots
Employee
Better articulated career development
X
X
guidance
More efficiently identify opportunities
X
within CIA
Expanded opportunity to advance as
X
an expert
More relevant and available training
X
X
X
Improved performance and career-
X
X
X
X
related communication with supervisor
Better than average pay for better
X
than average performance
Improved salary potential
X
Benefits better adopted to needs and
X
X
X
better utilizing the tax law
Line
Better recognize performance of
X
X
Manager
employees with pay
Dynamically adjust position structure
X
X
within budget constraints at compo-
nent level
Mechanism to retain experts
X
X
X
Better assist employees to develop their
careers
X
X
X
X
X
More effectively locate viable can-
X
didates within CIA
Senior
Adjust occupational pay by CIA
X
X
X
Managers
market pricing (within cap)
Offer more competitive total compen-
X
X
X
X
X
sation package
Set pay by CIA classification
X
X
standards /priorities
Better project market/talent pool for
X
which CIA competes
Better project/plan for demographic
X
trends within CIA
Tools to deal with changing
X
X
X
X
X
X
demographics
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
of jobs, they often yield pay levels that are lower
than those required to recruit and retain people for
certain key jobs in CIA. Furthermore, these sur-
veys average over all sizes of companies and over
all regions of the country, reducing their relevance
to CIA.
The practice of giving the so-called comparabil-
ity increases to all GS grades governmentwide,
independent of occupation, does not match mar-
ket reality. As demonstrated by the market survey
conducted by our consultant, Towers, Perrin, For-
ster and Crosby (TPF&C), required salary adjust-
ments often differ by occupation. Merely provid-
ing uniform adjustments for all occupations
dilutes the effectiveness of the increases for the
very employees whose occupations are most disad-
vantaged relative to their private-sector counter-
parts. Furthermore, governmentwide adjustments
will never be sensitive to internal CIA demands,
e.g., the need to offer competitive salaries to
specific occupations in CIA that, for one reason or
another, require special attention. The only way to
guarantee sensitivity to internal CIA needs and
focus market comparison on that portion of the
private sector that is actually comparable with
CIA occupations is to break the link to GS and
develop a pay and classification structure that
facilitates occupation-specific adjustments.
The Task Force examined the feasibility of such
an occupationally based pay and classification
system. We did this by gathering representatives of
occupations that constitute about 75 percent of
CIA's employee population; operations officers in
the DO, project management engineers in the
DS&T, budget and finance officers in the DA, and
analysts in the DI were included among these
occupations. The representatives of each of these
occupations were able to define meaningful
bands-as few as four and as many as six. These
occupational bands had definable distinctions
such as entry level, journeyman, and senior man-
ager, which was not the case for the more numer-
ous and arbitrary distinctions required when GS
grades were employed. With fewer levels in a
structure with occupationally defined bands, some
of the occupational representatives cautioned that
a mechanism must be developed to replace the
identity and recognition that GS grades provide
today. Although this issue was not resolved, many
felt that other forms of recognition and identity,
such as institutional titles, would evolve to take
the place of GS grades.
Although considerable effort remains to com-
pletely define the band structure for each occupa-
tion, its feasibility for CIA occupations was dem-
onstrated by the occupational panels, and thus, a
pay and classification system based on such bands
has been included as a central feature of the
proposed design along with the provision that CIA
have control of the market-pricing adjustments to
a basic CIA pay structure within the Congressio-
nally mandated pay cap.
Funding Control With Classification
Delegated to Directorates
The proposed pay and classification system also
contains features that will make it more flexible
than our current system in allowing senior manag-
ers to structure and adjust the work force to meet
changing demands. Personnel resources, unlike
other resources, are provided to senior managers
with funding and position ceiling constraints. Ceil-
ing constraints are manifested to managers in
many forms including the cumbersome process
associated with today's position audits that are
driven by average grade and promotion headroom
constraints.
Even though the issue ultimately is budget, a
manager seeking to adapt to changes in his mission
does not have the freedom to change the number
of employees in his component or the grade level
of positions even if the change does not require
additional funds. There is, of course, a certain
amount of trade-off today between ceiling and
available funding but at a level that is out of the
reach of the typical line manager. Two key features
of the proposed pay and classification system are
the delegation of classification authority to the
Directorates and the use of personal services fund-
ing only (not position ceiling or average grade) to
constrain the structure of the work force. It is
further proposed that the Directorates be permit-
ted to redelegate these authorities. This means that
a manager, using a computerized position descrip-
tion data base, would be able to create or eliminate
positions within his/her component as long as
appropriate position descriptions exist in the data
base. Thus, these managers would have the author-
ity to adjust dynamically position structure and
the number of personnel in their components
provided they meet predefined budget criteria.
The Department of Defense has been granted
relief from civilian personnel ceiling constraints
through the appropriations process, and we should
seek similar relief.
Conversion of our present work force to occupa-
tionally defined bands will require minimal costs,
assuming we initially make no significant adjust-
ments to current occupational pay levels. As CIA
market pricing is exercised in future years, we.can
anticipate additional outyear costs. These costs,
3
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
however, are within our control and can be de-
fended using these market-pricing data.
Occupationally defined bands can be imple-
mented within the current GS without CIA con-
ducting its own market pricing. In fact, all govern-
ment banding experiments to date, with the
exception of the recently approved National Bu-
reau of Standards program, have been implement-
ed within the current GS. The advantage of a
banded pay and classification system is that artifi-
cial grade distinctions are eliminated. Implemen-
tation of occupationally defined bands can be
accomplished within existing authorities in much
the same way as the GS has been modified by CIA
to meet special needs. The structural alternatives
for the classification and pay system are summa-
rized in table 2. It is important to recognize that all
the features of the proposed new personnel and
compensation system, with the exception of CIA-
controlled market pricing, can be implemented
even if GS grades are retained.
Feature 2-Incentive Pay
? Up to 50 percent of employees would receive
incentive pay larger than current in-steps.
? All employees at an acceptable level of perfor-
mance would receive at least the equivalent of
the current in-steps.
The private sector generally makes much more
effective use of permanent salary increases and
bonuses to reward the performance of employees
than we do at CIA, even though provisions exist
within the GS structure to reward performance of
employees in much the same way that the private
sector does. Combinations of budget and bureauc-
racy have made delivery of these rewards within
the GS system much less widespread and effective.
The government annually expends considerable
funds on permanent step increases, yet employees
who receive these increases find little reason to
relate them to performance. Thus, the money CIA
spends for these in-steps has, at best, a neutral
impact on the employee's performance. Moreover,
the mechanisms for delivering bonuses such as
special achievement and exceptional accomplish-
ment awards as well as quality step increases have
proved to be substantial deterrents for their, rou-
tine use. For example, GS-13s through GS-15s in
CIA received only one-tenth the cash value of the
awards for the same grade levels in government
agencies that use Merit Pay, and the Merit Pay
system is not generous by private-sector standards.
In fact, it is misleading to compare government
salaries of CIA employees with those of their
private-sector counterparts without factoring in
the average bonus. The private sector, particularly
for the more senior grades, refers to bonus as
salary-at-risk, and the portion at risk is typically at
least 10 percent and substantially more for more
senior employees.
Incentive pay is another key feature of the
proposed system and is composed of a combina-
tion of permanent salary increase and bonus, both
based on performance. The proposed incentive
pay adjustments guarantee that employees who
perform acceptably will receive an annual incen-
tive pay adjustment equal to what they would have
received under the GS system. Moreover, approxi-
mately 50 percent of our employees would receive
incentive adjustments larger than they would have
received under the GS system. These incentive pay
adjustments could range up to 10 percent or more
of base pay, depending on employee performance.
Although these are not large incentive rewards by
private-sector standards, they do represent mean-
ingful distinctions between levels of performance.
From the vantage point of supervisors and man-
agers, incentive pay provides a mechanism to
reward their employees. Incentive for performance
is more effective if the employee's supervisor is
more directly included in the decision as to the
eligibility for and amount of the reward. The
proposed design is to distribute funding for incen-
tive pay and to delegate the decision for the size of
the reward to the lowest practical level. Preferably,
the decisions would be made through a ranking
process by a panel on which the employee's super-
visor serves. Some Directorates, notably the DO,
with a large overseas contingent, require that pan-
els be convened with a different composition. The
proposed incentive pay system would be no more
difficult to administer than current promotion
panels and could be done concurrently, thus mini-
mizing any increased administrative burden. The
panel would rank and recommend an incentive
pay award for each employee that would be ex-
pressed as a percentage of base pay.
Incentive pay could be implemented using the
GS system; however, its implementation in a
structure with occupationally defined bands has an
advantage. In the current system with GS grades,
promotion is frequently employed to reward per-
formance. Ideally, however, promotion should re-
flect demonstrated ability to assume greater re-
sponsibility at a more senior level. The broad
occupationally defined bands typically encompass
a salary range almost twice that of a GS grade and
provide increased ability to continue rewarding
performance over a long period of time without
4
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
Table 2
Structural Alternatives
for Personnel System
Constraint
Description
Government wide
classification system.
Fixed grade structure
for all occupations.
Salary adjustments
determined by OPM
market survey.
Personnel ceiling.
Personal services
budget.
Salary cap.
Legislative
considerations.
Does not contain
Agency unique
factors or weights.
Grade distinctions not
always meaningful in
each occupation.
Comparability ad-
justments determined
based on a market survey
made across a very
broad segment of the
private sector and are
not occupation specific.
Ceiling combined with
funding are basis that
Congress and OMB
monitor our work force.
If constraints were only
on funding, headroom
could be traded for
number of personnel.
Congressionally impos-
ed maximum salary.
Constraints Associated With Structural Alternatives
CIA
Version
of
GS
Occupationally Defined Bands
Floating Bands
With Staffing / ( With Funding
Ceiling / ` Constraint Only
GS Linked
OPM is develop-
ing significantly
revised structures,
including banding.
If we wait we may
have new structure
imposed.
CIA has made Employed in
modification to several Congres-
GS and adapted sionally approved
it to our needs. experiments, for
example, China
Lake, Naval
System Center in
San Diego.
Congress On experimental
authorized NBS basis, DOD
to perform its civilian pay is
own market constrained only
surveys in its by funding.
banding
experiment.
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
the need to increase the level of responsibility that
promotions should signify. For this reason, the
Task Force has proposed implementation of in-
centive pay within an occupationally defined band
structure.
Proposed Performance Evaluation System
The employee survey conducted at the direction
of the Task Force confirmed that the sense of
accomplishment, motivation, and morale of Agen-
cy employees depends heavily on the performance
evaluation system. It also confirmed that few
employees believe that the current performance
evaluation process is working as well as it should.
The importance of the performance evaluation
system would be further accentuated if incentive
pay is adopted. The employee survey identified a
perceived lack of employee-supervisor communi-
cation to be at the heart of most employees'
problems with the current system. Just as supervi-
sor-employee communication is vital to system
success, so too is the need to keep the administra-
tive workload for supervisors as low as possible
and to train managers and employees in the sys-
tem. Thus, improved communication, without
substantially adding to the administrative work-
load, is emphasized in the proposed performance
evaluation system. The proposed changes are not
radical. They build on the strengths of the current
system and are evolutionary in nature.
Feature 3-Performance Plan
At the beginning of each rating period, the
supervisor, working with the employee, would
prepare a performance plan. This plan would
describe the key responsibilities of the employee
and the expectations of the supervisor for the
specific rating period. Preparation of the perfor-
mance plan is facilitated by information available
in a data base prepared by members of that
occupation. Although the supervisor is free to
customize or entirely disregard this information,
its ready availability can simplify administrative
requirements. With the general description of re-
sponsibilities already prepared, the supervisor can
concentrate on describing specific expectations for
the rating period tailored to the individual em-
ployee. The actual written material in such a plan
can be a few lines. In the proposed system, the
plan would be discussed and updated as necessary
at least once during the rating period. These up
date sessions would be brief with no written mate-
rial if the specific expectations have not changed.
If they have, the sessions can focus on the changes
with only a few lines of written material required.
With an automated performance plan, the eval-
uation process would be less complicated. The
performance evaluation form would be based on
the key responsibilities listed in the performance
plan. The supervisor, using the expectations in the
performance plan, would indicate his or her judg-
ments about the employee's performance on each
responsibility. The proposed evaluation form
would be set up to foster comments specifically on
each job responsibility; and comments should be
more relevant than the lengthy remarks on many
of today's PARs-too often today the comments
on PARs are not tied to the employee's responsi-
bilities. As with the current PARs, the proposed
evaluation form would contain a section for
reviewer's comments and a section for the
employee's comments.
The proposed performance system would entail
two costs. First, each employee and supervisor
must be trained on how to use the plan and
evaluation features of the proposed system. Sec-
ond, a data base must be built and maintained that
provides the automated support for the perfor-
mance system.
Proposed Career Development System
A vigorous Career Development System is vital
to employees and the organization. To the employ-
ee, career development means recognition, profes-
sional growth and satisfaction, and salary in-
creases. To the organization, career development
is the mechanism through which the future is
guaranteed.
Feature 5-Occupational Career Handbooks
In the proposed system, representatives of each
occupation would develop occupation-specific
handbooks that articulate the responsibilities of
each level in that occupation and the assignments,
experiences, skills, and training that best prepare
an employee for each level. Such handbooks exist
today in some Directorates; this feature merely
builds on that concept. These handbooks are at the
heart of the career development improvements in
the proposed system. They would be the key
reference document for employees who are plan-
ning their careers, as well as guides to managers
and promotion panels, ready reference for relevant
training, and source material for employees who
are considering a career change. These handbooks
are to be living documents routinely updated by
members of each occupation.
6
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
Feature 6-Individual Career Development Plan
Each individual is ultimately responsible for his
or her own career, but the occupational career
handbooks would, for the first time in many
occupations, provide a consolidated source of
guidance. In the proposed system, each employee
would have the option of preparing annually an
Individual Career Development Plan. This plan
would be a catalyst for employee-supervisor dis-
cussion on how the employees could most effec-
tively achieve their career objectives. These plans
would include formal and on-the-job training each
year as well as discussion of appropriate assign-
ments for the future. In the proposed system,
supervisors would have added incentive to hold
discussions because they would be evaluated on
how well they assist in the career development of
their subordinates.
Feature 7-Occupation-Specific Training
Under the proposed system, representatives
from each occupation would identify those train-
ing courses that would accelerate skills acquisition.
Occupational representatives would meet with the
Office of Training and Education annually to
review courses, recommend improvements and
changes, and work with OTE to help design,
develop, and deliver training.
Feature 8-Improved Availability of Training
One of the most limiting features of the current
training system is matching the availability of
courses with the availability of the employee.
Under the proposed system, training would be
more readily available to employees through a
variety of training modules that can be played on
home VCRs or computers. In addition, more
material will be put into computer-assisted in-
structional programs, correspondence courses, in-
ternally televised courses as well as courses taught
by traveling teams.
Feature 9-Dual Track
? Expanded expert track opportunities.
? Additional annual leave carryover for non-SIS
managers and experts.
? Increased incentive award potential.
Intelligence disciplines are not learned in school.
Although there are academic degrees that prepare
individuals to begin intelligence careers, for securi-
ty reasons the process of intelligence gathering,
analysis, production, and related support must be
acquired essentially on the job. Individuals who
excel in their intelligence occupations today and
who have demonstrated exceptional substantive
capability are vital to CIA. Yet these are the very
individuals who often are forced into management
roles or join the private sector to realize their
compensation potential. Although there are some
opportunities for experts to progress to higher
levels, there are many more opportunities for an
employee to advance as a manager. In the pro-
posed system, expert tracks will be identified for
each occupation as appropriate. In general, the
level at which the expert track begins is the same
as that for which supervision begins as a responsi-
bility. The expert track retains occupational iden-
tity and the salary potential equivalent to that of
virtually the highest level of the management track
for that occupation. The management track is
occupation specific in the beginning but, at the
executive level (SIS), has a broader Directorate- or
Agency-wide focus.
Under the proposed system, managers would
have more flexibility to shape their work force and
to reward their employees, but along with in-
creased authority would come increased account-
ability. Currently, how well managers handle their
personnel management responsibilities is implicit-
ly covered in their performance evaluations. In the
proposed system, managers would be evaluated,
not only on their substantive responsibilities, but
also explicitly on how well they manage the perfor-
mance evaluation process and develop their em-
ployees. Experts, on the other hand, would be
evaluated on how well they execute their indepen-
dent programs or projects. Members of both man-
agement and expert tracks would be eligible for
two additional benefits. First, the maximum per-
formance bonus award would be higher than for
other employees, that is, up to 15 percent. Second,
non-SIS members would be able to carry over an
additional 20 hours of annual leave for each year
in the program up to a maximum of 120 hours
above existing ceilings of 240 or 360 hours.
Feature 10-Promotion
The distinctions between levels in an occupation
would be articulated in the proposed occupation-
specific Career Handbooks. Panels for each occu-
pation would use these distinctions in skills, as-
signments, experiences, and training as guidelines
in making promotions. These handbooks will as-
sist the panels in maintaining uniformity and
consistency and will assist the employees in pre-
paring themselves for promotion by letting them
know what is required for promotion. Under the
proposed system, promotions would be worth at
least a 10-percent increase in base pay.
Proposed Benefits Program
In competing with the private sector for talent,
total compensation, which includes pay and bene-
7
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
fits, must be considered. As with pay, CIA cannot
match all of the benefits the best of the private
sector has to offer. CIA can improve its competi-
tive posture, however, by making more effective
use of the funds now spent on employee benefits
and by judiciously adding new benefits that in-
volve additional funding in order to provide tools
for dealing with specific, well-focused recruitment
and retention problems.
Feature 11-Flexible Benefits Program
The first nonpay compensation feature in the
proposed system is called a flexible benefits pro-
gram. Under the government's present system,
there are only two sources of money-the govern-
ment and the employee-with which to pay the
cost of benefits. The government's contribution is
limited to a fixed percentage of medical and life
insurance premium costs. Additional benefits are
paid solely through the employee's contribution.
Flexible benefits allow the employee to redirect
some of this government contribution into benefit
plans more tailored to his or her needs. In this type
of program, an employee would be given flexible
credits. These flexible credits are an amount, at the
disposal of the employee with which to buy the
exact benefits package suiting his or her needs at a
given point.
The program has three attractive characteristics.
First, it allows the employee to use more efficient-
ly whatever money is spent on benefits to meet his
or her needs. Second, the program can save the
employee money through the more effective use of
existing tax laws. A flexible benefits program al-
lows the employee to pay certain health and de-
pendent care expenses and other qualified benefits
with pretax dollars. Third, a flexible benefits pro-
gram allows the employee to exchange some annu-
al leave for additional flexible credits or exchange
flexible credits for additional annual leave.
Many of the large private-sector firms with
which we compete for employees have very attrac-
tive flexible benefits programs. In order to com-
pete effectively, we must design and continually
update our benefits program to make effective use
of available funding and provide employees the
flexibility to obtain the benefits they need. This
flexibility will be of increasing importance as the
demographics of the work force change to include
not just the traditional family but also dual career
marriages as well as single workers with and with-
out children. The Task Force assembled 20 groups
of employees (focus groups) to discuss benefits and
react to the possibility of a flexible benefits pro-
gram. The focus groups indicated that a flexible
benefits program would, in fact, allow employees
to tailor benefits more closely to their needs. At
the same time the exercise demonstrated the po-
tential tax advantage for the average employee of a
flexible benefits program.
The proposed system includes the design over
the next year of a flexible benefits program for
submission to Congress and possible implementa-
tion in the FY 1990 budget. Although the private
sector has successfully designed plans that benefit
its employees, what we propose would be a pio-
neering effort in the Federal Government. The
final decision to implement a flexible benefits
program would be made only if we demonstrate
that the plan design would be advantageous to our
employees and if we obtain the necessary authori-
ties and approvals.
Annual leave is an important element in the
overall nonpay compensation of government em-
ployees. The primary approach taken by the Task
Force in maximizing the effectiveness of annual
leave as an employee benefit is to incorporate it
into the flexible benefits program. In this ap-
proach, the employee could buy or sell annual
leave. If implemented in the flexible benefits pro-
gram, the first two features proposed below may
become less significant.
Annual Leave Buy Back
Under the current system, employee dedication
to the work ethic often results in forfeited leave.
To remain competitive, private-sector firms rein-
force and reward such dedication by allowing the
employee to cash in such leave. Under this pro-
posed feature, authority would be sought to allow
non-SIS employees to cash in some of the annual
leave that cannot be taken because of exigencies of
official business. To encourage employees to take
off at least two weeks in the year, only those hours
beyond the first 80 hours earned in a leave year
would be considered in this program.
Although SIS officers can accrue leave indefi-
nitely, these leave balances can only be tapped at
retirement. Under this proposed feature, SIS offi-
cers could elect to cash in their annual leave
balances over 500 hours. This feature is better for
both the employee and the government. The em-
ployee gains access to the funds before retirement,
and the government saves money because the cash
in is at the current salary rate rather than at the
rate in effect at the time the employee retires.
8
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
Optional Conversion to Sick Leave
We also propose to seek authority to allow
forfeited annual leave to be converted to sick
leave. This involves no substantial cost to CIA
because no payment is required to the employee,
but it does provide the employee additional short-
term disability protection. This converted sick
leave would not count in calculating a retirement
annuity, but the employee would be able to use the
converted sick leave before drawing down on
normal sick leave.
The Task Force proposes that we seek authority
to enable employees to donate to a sick leave bank
annual leave that otherwise would be forfeited.
Employees in need could apply to the Director of
Personnel for leave in the bank. All applications
would require validation from the Office of Medi-
cal Services.
As with annual leave, many employees are un-
able to use all their home leave. Under this pro-
posed feature, authority would be sought to allow
employees to use their home leave balance in the
12-month period before retirement to obtain re-
tirement counseling, to make necessary personal
and financial arrangements, and to transition into
retirement.
Feature 13-Educational Assistance for
Dependents
? Loans secured with annual leave.
? Thrift loans.
? Loans subsidized by CIA.
One of the most difficult expenses for many
employees to bear over the course of their careers
is the cost of college for their children. Not only
are the costs of education high, but the average
salary at CIA is too high to qualify for govern-
ment-subsidized student loans. The Credit Union
provides loans for educational expenses without
the income restrictions that apply to the govern-
ment-subsidized loans and with more realistic loan
values-namely, $20,000 per year per dependent
versus the $12,500 total per student for the entire
undergraduate career with the government pro-
gram. Unlike the government program; however,
the Credit Union charges higher interest rates
(currently 10 to 11 percent versus 8 percent for the
government loan) and has a shorter repayment
term (five to seven years versus 10 years after
college is completed). There are three approaches
proposed below that would significantly ease the
burden on the employee of coping with education-
al expenses.
Leave Secured Loans
Leave balances can have considerable cash val-
ue. A proposed system option is to seek authority
to make such. leave balances available to secure
educational loans through the Credit Union. These
loans would be at preferred interest rates.
Thrift Loans
There are provisions in the Federal Employees
Retirement System (FERS)'Thrift Savings Plan for
borrowing money for a number of expenses, in-
cluding education. The Thrift Plan managers have
not yet developed the terms of such loans. Em-
ployees, especially younger employees, have the
potential of building a sizable balance in their
Thrift accounts. Because CIA does not manage
Thrift, a specific system feature cannot be pro-
posed. Rather, CIA would work with the Thrift
Plan managers to see whether favorable terms for
such loans can be incorporated in the Plan. Effec-
tive interest rates for educational expenses as low
as a few percent have been incorporated into such
annuity loan programs elsewhere.
CIA-Subsidized Student Loans
In this proposal, we would seek authority to
allow the Agency to guarantee repayment of loans
made through the Credit Union to dependent
student borrowers. The CIA would subsidize the
interest rate by approximately 3 percent. Thus, if
the market rate were 11 percent, the actual rate to
the student would be 8 percent.
Feature 14-Staffing Management Tools
? Early retirement for experts and senior manag-
ers 50 years old with at least 20 years of
Federal service, 10 years with CIA, five of
which were as experts or SIS-level managers.
? Optional/involuntary retirement for employ-
ees 50 years old with 20 years of Federal
service or any age with 25 years of service.
? Retention bonus provided to an employee at
DCI discretion.
An effective personnel and compensation sys-
tem must be equipped with the mechanisms neces-
sary to maintain and adjust the characteristics of
the work force. Early voluntary and involuntary
retirements can be used as retention tools and to
control the composition of the work force. Senior
officers considering leaving CIA may be induced
to stay if there is an attractive early retirement
program, and midlevel officers may be induced to
9
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
stay by the enhanced flowthrough (and increased
opportunities) that such programs offer.
Early Retirement for SIS Managers
Authority would be sought to provide for early
retirement eligibility (50 years old with 20 years of
Federal service) with unreduced benefits to SIS
officers with at least 10 years of Agency service, five
of which were as an SIS officer. This proposal is
intended to provide flowthrough into the senior
management ranks as an incentive to retain our top
midlevel officers aspiring to senior management.
Early Retirement for Experts
Authority would be sought to provide for early
retirement eligibility (50 years old with 20 years of
Federal service) with unreduced benefits to selected
experts who have at least 10 years of Agency
service, five of which were in a designated expert
position. This proposal is intended to make it more
attractive for these experts, who typically work in a
number of organizations during their careers, to
give the Agency 10 to 20 years during the prime of
their career with the understanding that they will be
eligible to take a meaningful retirement annuity
with them to a new career.
Involuntary Retirement
Authority would be sought to provide for invol-
untary retirement eligibility without penalty, during
a reduction in force (RIF) or reorganizations, for
employees who are 50 years old with 20 years of
Federal service or any age with 25 years of service.
The annuity computation for such employees
would increase the rates for the first 20 years of
Federal service for such employees to 1.7 percent
under FERS or 2 percent per year under CSRS.
The private sector employs what can be charac-
terized as a retention bonus as an inducement for
key individuals to remain. The military has long
used reenlistment bonuses to encourage personnel
to sign up for another tour. The retention bonus can
be used as a tool to control the composition of the
work force and is proposed for consideration as a
feature of the system.
Proposed Data-Processing Support
Data processing is an essential tool to limit the
administrative overhead of the personnel and com-
pensation system. Virtually every feature discussed
has data-processing implications. Two data-pro-
cessing tools that will provide support for planning
in the proposed system are discussed below.
Feature 15-System Controls
The Task Force proposes that a budget control
system be developed to allow senior managers to
allocate monies for the personnel and compensa-
tion system. This control system would be hierar-
chical in nature, providing a combination of fore-
casting and reporting tools tailored to the needs of
the individual manager. At the Agency level, the
system would provide a combination of historical
and future trend analysis tools for use in planning
the Agency's future personal services funding
requirements. At the Directorate level, the control
system would provide a combination of tools to
forecast the fiscal impact of major organizational
realignments and shifts in work force structure
projected into the outyears. It also would provide
up-to-date information on the status of personal
service funds at the disposal of the Directorate. At
the operating level, similar tools would be required
to provide the manager with immediate feedback
on the current and outyear organizational changes
that are within its control. Interactive tools to
provide these services are now being developed and
would be available to managers as an integral part
of a new Human Resource System.
Feature 16-Projection Tools
The private sector routinely employs Human
Resource planning tools to identify skills shortages
and excesses and project what recruiting, retention,
and retirement strategies are needed to properly
structure the work force for the future. The pro-
posed system will provide the required projection
tools to serve this function. These tools will be
made available to each component.
System Illustration
The proposed system involves changes to virtual-
ly every aspect of the current personnel and com-
pensation system. The following tables have been
prepared to assist employees in understanding how
the proposed system might actually work for them.
Table 3 contrasts certain features of the current
Agency system with the governmentwide GS sys-
tem and the proposed system. Table 4 shows how
conversion to the proposed system might occur and
illustrates five of its more prominent features-
namely, occupationally defined bands, incentive
pay, performance plans, performance evaluations,
and promotion. The example, which uses the DO
operations officer occupation, is strictly illustrative.
The implementation details in this example were
employed by the Task Force in evaluating feasibil-
ity of the features. These details, as modified by
comments from the Directorates in this review
cycle, would be the starting point for the detailed
design phase. There would be full participation by
the Directorates in this detailed design phase.
10
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Table 3
Salary Administration
Systems Comparisons
GS System
Current CIA System
Proposed CIA System
General Schedule Established under Title V
of the US Code.
CIA Act of 1949 gives Agency broad
personnel and pay authorities.
CIA Pay and Compensation System
based on CIA authority.a
Job Classification Act of 1949:
? Gives OPM classification authority for
common Federal Government jobs.
? FES Classification System used.
? OPM issues GS pay schedules.
CIA Exempt From Classification Act:
? Currently follows OPM's FES system with
minor modifications.
? OP/PMCD has job classification authority
and issues pay schedules.
CIA Job Classification System: a
? Covers all Agency occupations.
? Job classification authority
delegated to manager.
? OP/PMCD advises.
Senior Executive Service (SES) :
? Has six -levels.
? Compressed by pay cap.
? 56 percent eligible for bonuses in 1986; 38
percent actually received bonuses in 1986.
? Unlimited leave accural.
Senior Intelligence Service (SIS) :
? Same.
? Same.
? Same, however, 39 percent actually
received bonuses in 1986.
? Same.
SIS Under New System: a
? Same.
? Same.
? Increased eligibility for bonuses.a
? Option to cash in accrued leave.
General Schedule predominant pay scale for.
Federal employees:
? Fifteen pay grades (30-percent pay range)
and SES.
? Each grade has 10 steps.
? Each pay step increase about 3 percent.
? Rank in Position System.
General Schedule:
? Same.
? Same.
? Rank in Person System.
CIA Pay Schedule:
? Twenty-five pay levels (50-percent pay
range) and SIS.
? No steps; open pay ranges.
? Pay increase is percent of base pay.
? Rank in Person System.a
OPM Special Pay Schedules:
? GSE (engineers) .
? GSM (physicians) .
CIA Special Pay Schedules:
? More competitive than OPM's.
? Also apply to physical scientists.
CIA Pay Schedule:
? Incorporates occupation-specific pay rates.
Pay Adjustments and Awards:
? Promotion-2 steps minimum (6 percent).
? Quality step increases.
? Awards-standard incentive awards and
Presidential awards.
Pay Adjustments and Awards:
? Same.
? Same.
? Awards-standard incentive awards, unit
citations, secretarial awards, employees of
the year, and honor and merit awards.
Pay Adjustments and Awards:
? Promotions-l0-percent minimum pay
increase.
? Incentive pay a (permanent pay increases
and bonuses based on
performance) at least equal to GS
for fully satisfactory; better for
superior and outstanding
performers.
? Awards-honor and merit awards,
unit citations, exceptional
accomplishment awards, and
suggestion awards.
Merit Pay for Managers and Experts:
? PMRS System for supervisors and
managers, GS-13 to 15 level.
? No system for experts.
Merit Pay for Managers and Experts:
? Nothing comparable for either managers or
experts.
Manager Expert Incentive Program:
? Dual career tracks for experts. a
? Higher incentive pay. a
? Increased leave carryover. a
? Option to cash in accrued leave.a
Pay Structure Adjustments:
? PATC market survey recommends.
? President approves.
? Across-the-board comparability increase
received by all GS employees.
Pay Structure Adjustments:
? Same.
? Same.
? Same..
Pay Structure Adjustments:
? CIA-directed market surveys.
? DCI approves comparability increase.
? Funds go into Incentive Pay Pool.
? Awarded to employees after the annual
performance evaluations.
11
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Table 4
How the System Works
Panel of Experts Defines the Occupation
? Operations Officer Occupation, Career Levels:
- Operations Officer I
- Operations Officer-Hq/Field II
- Operations Officer-Hq/Field III
- Ops Off-Manager/Senior Officer IV
- Ops Off-Senior Manager V (SIS)
? Occupational training and development requirements.
Promotion guidelines.
? Responsibilities, guidelines, and performance expectations common to jobs within the occupation.
Occupation Placed Onto Pay Schedule
Occupational levels are evaluated using an occupational job evaluation (position classification)
system and placed on the CIA pay schedule. For example, with a 25-pay level schedule, the
Operations Officer occupation might be assigned to the following pay levels:
Ops Off Level
Pay Level
Salary Range
I
12
($24K-$37K)
II
16
($32K-$48K)
III
18
($37K-$55K)
IV
V (SIS)
22 ?
($48K-$72K)
People Are Converted by Career Service Panels
Operations Officer Conversion:
Current
New Career -
New Salary
GS Grade
Level
Range
GS-11
I
($24K-$37K)
GS-11/12
II
($32K-$48K)
GS-13/14
III
($37K-$55K)
GS-14/15
SIS
IV
V
($48K-$72K)
Example A
The Career Service Panel converts a GS- 12, step 7 Ops Officer, based on the employee's experience
and performance, to a Level II Ops Officer. The employee is converted at current GS-12 salary
($39K per annum) to Level II ($39K per annum).
12
FOR OFFICIAL USE ONLY -
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE, ONLY
Example B
The Career Service Panel converts a GS-14, step 6 Operations Officer to a Level IV Ops
Officer-Manager rather than to Level III because of the officer's experience and performance. The
employee is converted at current GS-14 salary ($53.4K per annum) to Level IV (new salary is still
$53.4K per annum).
GS Step Prorated at Conversion
Time completed toward an employee's next GS step is prorated and paid in a lump sum:
? Example A: The GS- 12, step 7 Ops Officer has completed one of three years toward his step 8.
At time of conversion, employee receives $362 as lump sum for this one year.
? Example B: The GS- 14, step 6 Ops Officer has completed 22 months toward step 7 and receives
eleven-twelfths of the step value, or $1,398 as lump sum at. time of conversion.
Performance Planning
At the beginning of the evaluation period, supervisors communicate their performance expectations
to employees:
? An automated data base for performance planning is available to supervisors. It houses the
occupation-specific key job responsibilities and general expectations developed by the occupa-
tion. This information may be used in conjunction with tasks tailored to the individual's
position that are added by the supervisor, or the supervisor may choose to create an entirely cus-
tomized plan.
? No long narratives or complicated processes like the previous Letter of Instruction (LOI) and
the Advanced Work Plan (AWP).
Performance Review
An ongoing review of performance and supervisory expectations should take place between the
supervisor and the employee throughout evaluation period, but must occur at least once at
midperiod.
Performance Evaluation
A basic assumption of the proposed system is that all employees performing acceptably would do at
least as well under the new system as they did under the GS. Using the information contained in the
performance appraisal report, Performance Evaluation Panels annually rank employees and based
on that ranking, recommend incentive pay. Incentive pay is divided into a permanent salary
increase and a cash bonus. Amounts are determined based on general incentive pay guidelines
provided by the Office of Personnel and the Office of the Comptroller. For example, the guideline
might advise that employees ranked by the panel "Outstanding" could receive 8- to 12-percent
incentive pay; those ranked by the panel "Superior," 4 to 7 percent. Employees ranked "Fully
Satisfactory" could receive an incentive award comparable with that under the GS, namely I- to 3-
percent permanent salary increase based on where their salary falls within their pay level;
additionally, the supervisor has an option of recommending up to a 2-percent bonus. Head of
Subcareer Service approves.
13
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Example
The DO is allocated funds for incentive pay for the Operations Officers. On the basis of the
guidelines, the evaluation panelsconvened at the component level would rank and recommend
incentive pay for Level II Operations Officers:
Performance Group Employee Ranking Percent Incentive Pay
Outstanding K. Jones 1 12
M. Boyd 2 12
Superior G. Hamel 55 7
Y. Wallus 56 7
P. Brown 125 6
A. Deshay 126 6
M. Edwards 45 10
T. Long 46 9
B. Roberts 47 8
10
Fully Satisfactory N. Flowers 150
M. Janus 151
*
*
*
*
*Scheduled increase depends on employee's salary:
3 percent if salary is in first quartile** of pay range.
2 percent if in second quartile.
1 percent if in third or fourth quartile.
Plus optional bonus up to 2 percent.
**Each pay level of the Agency's pay schedule is divided into four sections, called quartiles. For ex-
ample, Level II Ops Officers fall into Pay Level 16 ($32K to $48K). The following shows the
quartiles of that pay level:
// First / Second / Third / Fourth Quartile
$32K $36K $40K $44K $48K
14
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Incentive Pay Processing
Payroll automatically allocates the incentive pay between a bonus and a permanent increase based
on the employee's location in the pay level. Payroll determines the amounts from an Incentive Pay
Grid:
Incentive Pay Grid
13
Quartile Location in Pay Range
Performance
1st
2nd
3rd
4th
Ranking
Outstanding
50% B
60% B
60% B
70% B
50% P
40% P
40% P
30% P a
Superior
50% B
67% B
67% B
83% B
50% P
33% P
33% P
17% P a
Fully satisfactory
100% P
100% P
100%
100% P a
Below fully satisfactory
(Scheduled permanent increase of 3, 2, 1 percent)
Plus optional bonus up to 2 percent
Permanent increase allowed up to 1 percent below midpoint, at
discretion of management
Note: B = bonus; P = permanent increase.
a If an employee is at the top of a pay range, incentive pay is awarded totally as a bonus; no
permanent increase.
Example A
C. Peters, who ranked number 200 in the annual panel evaluation (see block 10) and who was placed
in the "Fully Satisfactory" performance group, is a Level II Ops Officer earning $33K annually.
Because the officer's annual salary ($33K) falls into the first quartile of the employee's pay level, the
Ops Officer receives a 3-percent permanent salary increase. The new salary is $33K + $990 = $34K.
The employee is also awarded a 2-percent bonus during this exercise (.02 x $33K = $660 cash
bonus).
Old New Salary
$33K $34K
----------- / ----------- / ----------- / ----------- // Pay Level
$32K 40K $48K
First / Second / Third / Fourth // Quartile
Example B
P. Smith, who ranked number 44 in the annual panel evaluation (see block 10) and who was placed
in the "Outstanding" performance group, is a Level II Ops Officer earning $39K annually. Because
the officer's annual salary ($39K) falls into the second quartile of the employee's pay level, the
incentive pay is split 60/40 between bonus and permanent increase. The Ops Officer receives a
bonus of $2,340, (.06 x $39K = $2,340) and a permanent salary increase of $1,560, (.04 x $39K =
$1,560). The new salary is $39K + $1,560 = $40.6K.
$32K 40K
Old New Salary
$39K $40.6K
----------- / ----------- / ----------- / ----------- // Pay Level
// First / Second / Third / Fourth // Quartile
15
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
14
15
Career Service evaluates all employees by occupation and level for promotion. Head of the Career
Service approves promotion to the next career level. Promotions are equal to a 10-percent
permanent increase in salary or the minimum of the new level, whichever is higher.
Example
The Level II Ops Officer is evaluated and ranked by the Career Management Staff/Level II
Operations Officer Panel and is recommended for promotion.
The DDO approves. The Level II Ops Officer is promoted to Level III Ops Officer and receives a
10-percent increase in salary (10 x $40.6K = $44.7K):
Old Salary
$40.6K
------------ / ----------- / ----------- / ----------- //
$32K $40K
New Salary
$44.7K
------------ / --------.- / ------------ / ------------ //
$37K $46K
16
Comparability Increases
General Schedule pay increase money is put into the incentive pay pool and becomes the floor
amount for incentive awards. Employees become eligible during the annual performance evaluation
and ranking exercise. For example, if a 5-percent comparability increase for Federal employees is
approved, management may be advised that the incentive pay guidelines could increase like this:
Incentive Pay Guidelines
Performance Group
Old + 5%
= New Incentive Pay
Outstanding
8-12%
13-17%
Superior
4-7%
9-12%
Fully satisfactory -
3, 2, 1%
8, 7, 6% + optional
up to 2% bonus
16
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
SYSTEM DESIGN
In forming the Task Force, the Executive Direc-
tor charged that "the broad outline of the whole
system" be developed before we took the next
step. The System Summary is that "broad outline"
and it describes the new system at the level of
detail at which approval is sought. This part of the
report contains the additional detail used by the
Task Force to evaluate the feasibility and cost of
the system. These details, as modified by com-
ments from the Directorates in the review process,
would be the starting point for the detailed design
phase that would follow approval by the Executive
Committee (EXCOM) with full participation of
the Directorates. This part of the report describes
the design features of the proposed new system in
the same sequence as the System Summary. Each
of the individual features has been developed to
meet the following baseline objectives set by the
Executive Director:
? A pay and classification system that better
relates pay to performance.
? A more competitive total compensation pack-
age that allows employees more choices that
meet their personal needs.
? A career development policy that expands the
concept of dual career tracks for substantive
experts and managers.
? A comprehensive review of the performance
appraisal, automation, and .training required
to implement and support the proposed new
system.
Design Methodology
A key step in the system design proposed by the
Task Force was a job analysis of individual Agency
occupations. The purpose of the job analysis was to:
? Develop job descriptions that would be used
to market price Agency occupations and devel-
op an Agency-unique classification system.
? Explore ways to establish. better links between
pay and performance.
? Examine improvements to the performance
appraisal system that would better support an
incentive pay system.
Table 1
Occupational Panels
1. Attorney
2. Budget and Finance Officer
3. Computer Assistant
4. Computer System Analyst-Programer
5. Contract Procurement Officer
6. Cover Officer
7. Electronic Specialist
8. Imagery Analyst
9. Information Resource Assistant
10. Intelligence Assistant
11. Intelligence Officer-Analyst
12. Intelligence Operations Research Assistant
13. Intelligence Operations Research Officer
14. Language Officer
15. Nurse
16. Operations Officer
17. Operations Support Assistant
18. Personnel Officer
19. Project Management Engineer
20. Psychologist
21. Reports and Requirements Officer
22. Secretary
23. Security Assistant
24. Security Officer
25. Security Protective Officer
26. SIGINT Officer
27. Technical Operations Officer
28. Telecommunications Officer
? Develop better articulated occupation-specif-
ic, career development guidance and expanded
career opportunities for experts.
To conduct job analysis, 28 occupational panels
were convened (table 1), each consisting of five to
seven experts from within that occupation. The
occupations selected for job analysis were chosen
to cover a large proportion of the Agency popula-
tion and to provide a representative sample of our
more unique employment categories. The total
sample provided by the occupational panels repre-
sented approximately 75 percent of the Agency
17
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
work force. To determine what improvements
might be made to our current benefits system, the
Task Force evaluated the benefits programs of
about 30 private-sector firms. A detailed compari-
son was made between our benefits and those of
these firms. The firms surveyed had employee
skills requirements similar to the CIA and business
interests that put them in direct competition with
us for people. A number of these firms have
flexible benefits programs and, in order to deter-
mine the reaction of Agency employees to the
concept of flexible benefits, 20 employee "focus
groups" were organized. Employees were selected
at random on the basis of three demographic
characteristics: years of Agency service, marital
status, and whether or not they have dependents at
home. The focus groups used their own particular
financial circumstances and benefit needs to assist
the Task Force in assessing the potential of flexible
benefits programs to provide CIA employees a
better compensation package. A summary of the
focus groups findings is included in the Proposed
Benefits Program section. A complete report will
be available later this summer.
Proposed Pay and Classification Structure
Feature 1-Occupationally Defined Bands
An important feature of the system proposed by
the Task Force is a shift from the current GS
grades to occupation-specific pay bands. Each oc-
cupational panel came to the conclusion that its
occupation did not line up neatly with existing GS
grades, but each was able to divide its occupation
into a number of work levels that made sense. For
example, the project management engineering oc-
cupation, which currently exists in grades GS-08
through SIS-03, identified six work levels, ranging
from entry level employee through SIS-03 group
chief. In effect, the panel has taken work that is
now spread across 11 GS grades and identified six
levels that reflect the real levels of work in that
occupation. Other panels also identified four to six
levels of work for their occupation.
With a more realistic definition of occupational
work levels, CIA is able to address two problems.
First, the classification of individual jobs is greatly
simplified. Once the levels within the occupation
have been established, classification authority can
be delegated to the Directorates. Senior managers
would be given the flexibility to classify jobs
within the prescribed levels of the occupations in
their organization.
A manager would not have to spend a great deal
of time writing position descriptions in elaborate
detail so that the Position Management and Com-
pensation Division (PMCD) of the Office of Per-
sonnel can evaluate and approve a position up-
grade. The manager would not have to wait for
weeks or months until an audit of the position
could be conducted by PMCD to confirm the level
of the position. No longer would artificial average
grade constraints make it impossible to implement
a new position grade after it had been approved by
PMCD. Instead, within budget constraints, the
manager could establish positions as they are
required. As long as there is component funding
available, the new positions can be established
immediately.
Second, the proposed salary structure is more
flexible because the occupationally defined levels
are broader than the existing GS grades. The wider
pay spread offers greater salary potential for em-
ployees. Not only is there more room for salary
growth before topping out, it is no longer neces-
sary to promote an individual to a higher level of
responsibility merely to reward good performance
at the current level of responsibility.
Linkage to GS
Occupational pay banding could be implement-
ed while still maintaining a linkage to the GS. Two
or three GS grades are combined within a single
pay band, and all of the above advantages can be
achieved. In fact, the OPM-approved experimen-
tal banding that has been put into place at the
Naval Weapons Center in China Lake, California,
and at other Federal organizations is tied directly
to the GS, as is the CIA banding experiment
involving the telecommunications and electronic
specialists. We could band all of our occupations
in similar fashion.
Job Evaluation and Market Linkage
There is, however, another option. We can es-
tablish a new CIA-unique system that is not linked
to the GS, but that relies on our own market-
pricing surveys and, therefore permits us to update
our own pay structure. The process of constructing
occupationally meaningful bands helps to define
our jobs in terms more comparable with the pri-
vate sector, so that market pricing is more relevant
and greatly simplified. An important byproduct of
the work of the occupational panels was the devel-
opment of an Agency-unique job evaluation sys-
tem to support a new pay structure.
18
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
Although a variety of job evaluation systems
exist, we are proposing to use a factor-based sys-
tem because it provides the consistency required
for large organizations, is defensible, and can be
maintained with minimal resources. The occupa-
tional information developed by the occupational
panels provides the basis for defining factors spe-
cific to the CIA. Members of the Task Force and
representatives of the occupations are developing
relative weights for the factors that would allow us
to balance the job alignments that would be indi-
cated by salaries paid in the private sector with the
value senior Agency management places on our
occupations. In this way, the CIA could implement
a job evaluation system that documents the rank-
ing of our occupations and jobs and that provides
an equitable basis for future placement of new
occupations or changes in alignment.
There are two major differences in the way the
proposed job evaluation system would operate in
comparison with the current governmentwide Fac-
tor Evaluation System (FES) that in modified form
is used by the Agency. First, both the individual
factors and factor weights are selected to more
closely reflect the Agency's particular circum-
stances and its position hierarchy without regard
to how an occupation may be graded elsewhere in
the Federal Government. We would continue to
maintain an overall parity with other Federal
agencies through the market process and Congres-
sional oversight, but may not in all cases maintain
parity with the GS on an individual occupation.
Second, we would no longer classify individual
jobs as we do. Rather, we would establish the
initial job evaluations on an occupational basis. At
the component level, managers would be given the
flexibility to classify jobs within the prescribed pay
bands of the occupations in their organization. At
the Agency level, movement of an occupation
from one pay band to another would be made by
the EXCOM, thereby ensuring that internal equity
is maintained in the system.
The market-pricing process we propose is simi-
lar to that used by many private-sector organiza-
tions. As part of the design, we used the position
descriptions developed by the occupational panels
to make salary survey comparisons against similar
jobs in the private sector. The occupational panels
also provided the information necessary to devel-
op the internal job evaluation system. Using this
data, individual occupations are assigned to a
place on a pay schedule based on the internal
evaluation of the occupation and the market sur-
vey. It needs to be stressed that a pure market
system in which individual occupations are priced
and paid based on private-sector rates is not
possible for CIA because we have a large number
of jobs for which no direct market comparison can
be made. For those occupations that cannot be
market priced, the job evaluation system establish-
es a pay relationship to occupations for which
market data are available. Thus, our proposed
system combines an internal job evaluation (posi-
tion classification) system that establishes the in-
ternal relationship of occupations with the market-
pricing process to ensure that our pay bands are
competitive with other organizations competing
for the same type of people.
Although the exact number of pay levels has yet
to be established, we believe that the CIA pay
schedule should have significantly more pay levels
(grades) than the GS to provide us with the
flexibility to adjust the pay level of individual
occupations as the market or internal concerns
dictate. Unlike the GS, however, individual occu-
pations will be placed only at those pay levels
dictated by the market and the evaluated work
levels of the jobs. For example, if Operations
Officers have identified four non-SIS work levels,
they might be placed at pay levels 12, 16, 18, 22,
and SIS on a 25 pay level schedule. (Table 2 shows
an illustrative 25 pay level schedule; figure 1
shows how selected occupations could be placed
on the proposed pay schedule.) Employees would
progress through only those pay levels appropriate
to their jobs, rather than through each pay grade
on the GS. With this type of structure, if there is a
need to increase the entry salary for trainee Opera-
tions Officers to attract the kind of employees we
need, the EXCOM could change the entry pay
level for Level I Operations Officers from pay level
12 to 13 or 14 without affecting other occupations.
To ensure that the pay structure and employee
salaries remain current with the market, the
EXCOM would empower the Director of Person-
nel to conduct periodic market surveys with the
participation of the four Directorates and the DCI
area. An analysis of the market information could
be provided to the EXCOM for consideration as to
whether the entire pay schedule should be adjusted
and whether selected occupations should be fur-
ther adjusted because they have significantly out-
paced the market relative to other occupations.
Adjustments to the pay structure would be influ-
enced by budgetary considerations and they would
be approved by the DCI.
19
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
Table 2 Thousand $
Illustrative Pay Schedule
SIS
64.7 - 77.5 a
Pay Band
25
58.8 - 72.5 b
Pay Band
24
54.9 - 72.5 b
Pay Band
23
51.3 - 72.5 b
Pay Band
22
48.0-72.0
Pay Band
21
44.8-67.3
Pay Band
20
41.9-62.9
Pay Band
19
39.2-58.8
Pay Band
18
36.6-54.9
Pay Band
17
34.2-51.3
Pay Band
16
32.0-48.0
Pay Band
15
29.9-44.8
Pay Band
14
27.9-41.9
Pay Band
13
26.1-39.1
Pay Band
12
24.4-36.6
Pay Band
11
22.8-34.2
Pay Band
10
21.3-31.9
Pay Band
9
19.9-29.8
Pay Band
8
18.6-27.9
Pay Band
7
17.4-26.1
Pay Band
6
16.2-24.4
Pay Band
5
15.2-22.1
Pay Band
4
14.2-21.3
Pay Band
3
13.2-19.9
Pay Band
2
12.4-18.6
Pay Band
1
11.6-17.4
a SES pay cap.
b Legislative pay cap.
Funding Only Control
There are three key systemwide personnel con-
trols. The first is the average grade constraint that
impacts on promotion headroom. This constraint
means that no matter how many positions you
have vacant, if you need additional senior grade
people-but you are at your allotted personnel
average grade-you cannot hire or promote into
the senior levels. Similarly, if you require addi-
tional senior level positions, but are at your posi-
tion average grade, you cannot add new senior
grades to your position structure. Although the
average grade constraints are somewhat reduced
under a banded system to the extent that GS
grades are combined in an occupational band, the
manager is still constrained by his inability to
readjust his personnel or position levels.
The second systemwide personnel constraint is
ceiling. This constraint reduces managerial flexi-
bility and, indeed, reduces the incentive to manage
personnel resources efficiently. For example, if a
manager were willing to relinquish some lower-
ranking slots in order to hire some additional
higher level employees, in the absence of average
grade constraints he or she could do so and still
stay within ceiling. The Agency's failure, however,
to fill all of its slots could lead to a Congressional
determination that fewer people are needed and
that our budget could be cut. Even more difficult
is a managerial determination that additional
lower-ranking employees are required. The manag-
er cannot trade 10 GS-15s for 15 GS-07s because
that would put the unit over ceiling. It should be
noted that, as a result of recent appropriations
legislation, the Department_of__Defense has been
freed from ceiling constraints with respect to its
civilian employees on an experimental basis. We
recommend seeking similar legislation.
The third systemwide constraint, and the one
that would remain, is availability of funding.
Feature 2--Incentive Pay
The GS pay system is structured to slow the
growth of the employee's salary as he or she moves
further into the pay range. Thus, the employee
receives a step a year until reaching step 4, then a
step every two years until reaching step 7, and then
a step every three years until reaching step 10
when no further advance is possible. The steps are
perceived as incentives for longevity rather than
for performance.
In an occupationally banded system and partic-
ularly with our own pay scale, we would have
several options. We could keep the GS construct of
10 steps worth an average of 3-percent each and
give them out at one-, two-, and three-year inter-
vals. We also could change each of these elements.
Instead of 10 steps, we could have 14 like the
Foreign Service, or 20 steps like the Intelligence
Secretarial System, or, for that matter, any number
of steps. If we had steps, the value of the steps
could vary. They could average 3 percent as in the
GS, 2 percent as in the secretarial system, or the
value of the steps could vary along the pay range.
Finally, the pay adjustment cycle for employees
also could vary. We could give a step a year up to
step 10 and then a step every two years as in the
Foreign Service or modify the periodicity anyway
we desired.
For the greatest flexibility, the Task Force rec-
ommends an open pay range instead of steps, and
an annual salary adjustment consisting of both
permanent salary increases and bonuses. Under
20
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FIGURE i
ILLUSTRATIVE PAY SCHEDULE
EXAMPLES OF OCCUPATIONAL PLACEMENT
OPERATIONS
OFFICER
* PROJECT
0 MANAGEMENT
O ENGINEER
171
'i7
aN
17' COMPUTER
SYSTEM
M ANALYST-
0 PROGRAMER
z
SYSTEM SUPPORT
SPECIALIST
OPERATIONS
SUPPORT ASSISTANT
LEVEL II
LEVEL I
12k 15k 18k 21k 24k 27k 30k 33k 36k 39k 42k 45k 48k' 51k 54k 57k 60k 63k 66k 69k 72k
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
this option, employees would do at least as well as
they do under the GS, but, instead of less than 10
percent of our employees annually receiving some
performance recognition (special achievement
awards and quality step increases), we could give
performance recognition to approximately 50 per-
cent of our employees.
With an open pay range, the annual salary
adjustment-the permanent increase and the per-
formance bonus-would be expressed as a per-
centage of base pay instead of the fixed 3-percent
step under GS. Permanent increases to salary
would be included in the base pay, and perfor-
mance bonuses would be paid in a lump sum. The
amount of permanent increase and performance
bonus that an employee receives would be based
on comparative evaluations conducted by panels.
Salary Grids
The mechanism typically used in the private
sector and by quasi-public organizations such as
the Tennessee Valley Authority to determine the
amount of the salary distribution given the em-
ployee in permanent pay increase and bonus is the
salary grid. The salary grid is adjusted annually
based on available budget and projected pay in-
creases. To develop the salary grid contained in
this report, we used a computer model to simulate
the movement of our entire population through
the proposed pay schedule. A variety of simula-
tions were run using varying percents of bonuses,
permanent pay increases, attrition and accession
rates, and population distributions by perfor-
mance and level. A separate set of simulations was
run on the Operations Officer population to simu-
late the effect on a specific occupation. Distribu-
tion options were developed on the basis of as-
sumed performance rankings and an allocation of
money between bonuses and permanent increases.
For the simulations, we used the rule that employ-
ees performing at satisfactory or higher level
would earn at least as much as under the GS.
In the simulations we have completed, we were
able to design an incentive pay planning grid that
recognizes top performers better than the GS
system. In the grid distributions shown in table 3,
outstanding performers (for budget purposes as-
sumed to be 20 percent of the population) could
receive annually a range of salary adjustments of
between 8 and 12 percent divided into permanent
increases and performance bonuses. The superior
performers (assumed to be 30 percent of the
population) could receive a range of salary adjust-
ments of between 4 and 7 percent divided into
permanent increases and performance bonuses.
The average performer could expect to continue to
receive combined permanent increases and bonus-
es that at least equal those under the GS. Addition-
al grids are being modeled to assess the effects of
attrition, accession, population distributions by
performance and place in pay level, and promo-
tion rates on the personal services budget. These
simulations would permit us to refine the initial
design and better project the personal services
monies needed for the incentive pay program.
The actual process of developing the annual
incentive plan begins with the Comptroller's iden-
tifying the amount of money available for the
incentive program. This would include money that
now goes to permanent step increases, to quality
step increases, to special achievement awards, the
normal projected personnel salary growth, and any
additional money allocated to the incentive pro-
gram. Then, using this budgeted amount, the Of-
fice of Personnel (OP) would develop an incentive
pay planning grid based on data showing current
employee salaries and placement within the pay
range, and on the following assumptions:
? A performance distribution, for example, of 20
percent outstanding, 30 percent superior, and
approximately 50 percent fully satisfactory.
? A division of the salary adjustment into per-
manent increase and bonus that would vary as
the employee moves along the pay range.
In the example, we took a dollar amount within
cost guidelines postulated by the Executive Direc-
tor and developed an incentive pay planning grid
shown in table 3.
We determined that the budget for that year
allowed outstanding employees to get an average
10-percent adjustment, superior employees to get
an average 6-percent adjustment, and fully satis-
factory employees to receive at least what they
would under GS. The analysis was refined further
to divide the money into performance bonus and
permanent pay increase. Thus, at the fully satisfac-
tory level, the employee in the first part of the
salary range, the first quartile, would get a 3-
percent permanent increase equivalent to the regu-
lar GS step and could get a 1-percent performance
bonus. The fully satisfactory employee in the top
of the salary range, the fourth quartile, who would
now get only a GS step every three years would get
22
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Table 3
Incentive Pay Planning Grid
Population
Distribution
Quartile Position in Pay Range
Assumed for
Budgeting
1st
2nd
3rd
4th
Outstanding
20
5 B
5P
6 B
4P
6 B
4P
7 B
3P
Superior
30
3 B
3P
4 B
2P
4 B
2P
5 B
IP
Fully satisfactory a
50*
1 B
3P
1 B
2P
1 B
1P
1 B
1P
Note: B = bonus, P = permanent increase
aFor budget purposes we have assumed 50 percent at the fully satisfactory level.
bManagement decides whether increase is awarded.
a 1-percent permanent pay increase each year and
could be eligible for a 1-percent performance
bonus. 4
The employee ranked superior would do even
better than under the GS. In the first quartile, the
Table 4
Salary Distribution Guidelines for
Panels, FY-1990
employee would get a 3-percent performance bo- Total FY 1990 Personal Services $ for Your Organization $....
nus and a 3-percent permanent pay increase equiv-
alent to the GS step; in the fourth quartile, he or Performance Incentive Share of
she would get a 5-percent performance bonus and Total Salaries
a 1-percent permanent pay increase. The employee Outstanding 8 to 12 percent
ranked outstanding would do better still. In the Superior 4 to 7 percent
first quartile, he or she could get a 5-percent Fully satisfactory 0- to 2-percent bonus; scheduled
permanent increase based on posi-
performance bonus and a 5-percent permanent tion in pay range.
pay increase; in the fourth quartile, the employee Below fully satisfactory Up to 1-percent permanent increase
would receive a 7-percent performance bonus and if below the midpoint of the pay
range and management wants to
a 3-percent permanent pay increase. offer some incentive to improve.
Once the incentive pay planning grid has been
developed, reviewed, and approved by the required to provide all employees judged to be
EXCOM, incentive pay money would be allocated performing satisfactorily with the incentive award
to each Directorate based on its population. Salary specified in the incentive pay planning grid; to
distribution guidance would be prepared for the award no more than is provided in the pool; and to
Directorates for use by the Directorate-level, com- limit the maximum award value to that specified
ponent-level, or subcomponent-level panels in in the salary distribution guidelines for panels.
awarding pay adjustments. Once the size of the salary adjustment for an
Panels in the Directorates would then rank the employee is determined, the actual division be-
employees for individual incentive pay awards, tween permanent increase and bonus is predeter-
using current year performance as the basis for mined by a table in the payroll system. For exam-
ranking. The panels could give outstanding per- ple, if the outstanding employee is awarded a 12-
formers 10 percent and superior performers 6 percent adjustment and is in the first quartile, then
percent as assumed for budgeting purposes in table he or she would get 50 percent of the adjustment
3, but would also have the flexibility to distribute in permanent pay increase and 50 percent of the
the available pool of incentive pay using the adjustment in performance bonus. This would
distribution shown in table 4. If a panel elects to mean the employee gets a performance bonus
use the flexibility available to it, it would be equal to 6 percent of base pay and a 6-percent
23
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
increase to base pay. If this same employee were in
the third quartile, he or she would get 60 percent
in performance bonus and 40 percent in perma-
nent increase. This would mean the employee
would get a performance bonus equal to 8 percent
of base pay and a 4-percent increase to base pay.
Finally, if this employee were at the maximum in
the pay range, then the entire 12 percent would be
Table 5
Salary Distribution
given out as a performance bonus. Additional
detail is provided in table 5. Outstanding
Salary Structure Adjustments
As previously mentioned, if our pay structure is
delinked from the GS, periodic market surveys
would be conducted to ensure that the Agency
salary structure remains current with the market.
For example, if a particular salary range went from
a minimum of $39,000 to a maximum of $59,000
and an EXCOM decision were made to adjust the
overall pay structure 5 percent, this particular
salary range would be adjusted so that it went from
a minimum of $40,950 to a maximum of $61,950.
Adjustment of the structure will not automatically
Superior
50 B
60 B
60 B
70 B
50P
40P
40P
30P
50 B
67 B
67 B
83 B
50P
33P
33P
17P
Fully satisfactory Scheduled permanent increase plus op-
tional bonus up to 2 percent awarded by
management.
Below fully Permanent up to 1 percent below
satisfactory midpoint, at direction of management.
Table 6
Effect of Structure Adjustment
t
adjust individual employee salaries by the amount
of the structure adjustment. However, employees
below the new minimum would be automatically
adjusted to the new minimum, and employees at
the maximum of the range would now have more
permanent salary growth potential. Those employ-
the pay range might move to a lower quartile in
the adjusted pay band that could entitle them to a
larger permanent pay increase at the time of the
annual incentive pay adjustment (see table 6).
Comparability Increases
When a GS comparability increase for Federal
employees is authorized, the amount of that com-
parability increase would be included in the annu-
al pay adjustment exercise for all employees who
are performing at a fully satisfactory level or
above. Thus, if a 3-percent Federal comparability
increase is granted, Agency employees who meet
the performance criteria would, at a minimum,
receive a 3-percent permanent pay increase in that
year as part of their annual incentive pay adjust-
ment. The salary distribution guideline percent-
ages would be increased accordingly.
Manager-Expert Incentives
As will be explained further in the career devel-
opment section, a Manager-Expert Incentive Pro-
gram (MEIP) is recommended as a separate recog-
nition program for non-SIS managers and experts.
Before Structure Adjustment
Employee A Employee B Employee C
at Minimum Quartile 2 at Maximum
39 44.6 59
A B C
Qtr 1 2 3 4
39 44 49 54 59
After Structure Adjustment
Employee A Employee B Employee C
Moved to Quartile 1 Potential
New Minimum Growth
40.9 44.6 59
A B C
Qtr l 2 3 4
40.9 46.2 51.5 56.7 61.9
In addition to being considered for an annual
permanent increase to base pay and performance
bonus like other employees, selection into either of
the two tracks would automatically qualify an
individual to participate in the MEIP.
Under the MEIP, a separate pool of money
would be budgeted and distributed to the Direc-
torates by the Comptroller. Senior management
panels would evaluate MEIP participants and rec-
ommend to the respective Deputy Directors
awards for key managers and experts who, through
the breadth and quality of their performance, had
substantial and sustained impact on the attain-
ment of the organization's goals. These managers
and experts would be eligible for an additional
24
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
bonus that, when combined with the normal merit
bonus, could be as much as 15 percent of base pay.
Within the cost constraints suggested by the
Executive Director for the MEIP awards, we be-
lieve that up to 50 percent of the managers and
experts could be eligible for total bonus awards
averaging 8 to 10 percent.
SIS Bonus
Under the proposed system, the SIS bonus mini-
mums and maximums would be retained (5 to 20
percent), but it is recommended that the bonus
pool be increased from 3 percent of the SIS payroll
to 4 or 5 percent in order that an increased
number of SIS officers who are performing at the
superior and outstanding levels would be able to
receive an award.
Promotion Salary Adjustments
Promotion describes movement from one occu-
pational level to another, not movement to the
next pay grade as in the GS. For example, if a
Level II Operations Officer falls in pay level 16
and a Level III Operations Officer falls in pay level
18, promotion is from Operations Officer II (pay
level 16) to Operations Officer III (pay level 18),
not from pay level 16 to pay level 17.
An individual selected for promotion to any
occupational level not in the SIS would receive a
minimum 10-percent permanent pay increase as a
result of the promotion. For example, a Level II
Operations Officer who earns $35,000 per year
would be promoted into the next level at a salary
of at least $38,500 ($35,000 + $3,500). In all cases,
the promotion would be to at least the minimum
of the next occupational level. So, in the example,
if the minimum pay rate for a Level III Operations
Officer were $39,000, the officer would be placed
at that level, not $38,500.
Promotion into the SIS would continue to follow
current policy under the Task Force's proposal.
It is the belief of the Task Force that promotion
is intended to represent the organization's deter-
mination that an individual is ready to take on the
responsibilities of the next level. This judgment
involves an assessment of more than just current
year performance and is not intended to prevent
an employee's being recognized for current year
performance through the incentive pay program.
Therefore, an individual selected for promotion
would remain eligible for an incentive pay award
during the annual evaluation process.
Proposed Performance Evaluation System
In the proposed system, a clear relationship
between the pay decision and performance during
the rating period is important. For this reason, we
reexamined our current performance appraisal
system. The occupational panels analyzed the pros
and cons of retaining the current system, modify-
ing it, or developing a new one. They agreed that
any change to the employee reward system would
focus heightened attention on the performance
evaluation system, and they concluded that modi-
fications to our existing performance appraisal
system were necessary. Additionally, the recent
employee job satisfaction survey highlighted the
importance of fair assessment of performance,
recognition for good performance, and employee-
supervisor communication.
The goal of the modified performance appraisal
system is to improve employee-supervisor com-
munications. Such communications include not
only the evaluation of performance at the end of
the rating period but, perhaps more important, a
discussion between supervisor and employee
about what is expected during the rating period.
To work, the system must not tie up supervisors or
employees with unnecessary paperwork. In devel-
oping the design, the Task Force sought to elimi-
nate paperwork that did not directly enhance
communications.
Using data provided by the occupational panels,
a data base would be created for each occupation
that includes key job responsibilities and func-
tions, representative tasks, and occupation-specif-
ic performance expectations. The data base would
serve as a reference aid for supervisors to develop
performance plans for employees. We think that
the data base would greatly assist supervisors in
the planning work for employees. Using the data
base, for example, a supervisor may select, modify,
and tailor a performance plan to suit the individ-
ual job and employee.
At the beginning of each rating period, a per-
formance plan would be developed for each em-
ployee. The plan would be developed by a supervi-
sor in consultation with the employee and would
identify job responsibilities and tasks that the
employee would be expected to perform. Addi-
tionally, the plan would define the supervisor's
expectations for accomplishing the work and de-
velopmental activities that would improve the
employee's effectiveness and foster career growth.
25
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
This plan should be viewed as a flexible manage-
ment tool, and it should be reviewed and updated
during the rating period as the need arises. The
plan also would be reviewed by the second-level
supervisor.
To achieve an acceptable degree of precision,
performance appraisal rating scales must have an
adequate number of intervals. When there are few
intervals, there is a good chance that the scale
omits valid measures of performance. When the
scale contains too many intervals, the descriptors
are repetitious and make it very difficult for a
rater to distinguish between interval points. In-
stead of the current Performance Appraisal Report
(PAR) form and the existing seven-point rating
scale, a modified performance evaluation form
and a five-point rating scale is recommended.
Thus, instead of three rating numbers above and
below full performance, there only would be two
descriptors above (superior and outstanding) and
two below (marginal and unsatisfactory). Use of
more than five intervals would not appreciably
increase reliability of ratings. Use of fewer than
five would, at best, be no better than use of five
and, at worst, would reduce the discriminability of
the instrument.
As discussed previously, employees would be
evaluated against job responsibilities and the tasks
defined in the performance plan. A brief explana-
tion will be required for each rating given, and
supervisors would have the opportunity to provide
written comments on overall employee perfor-
mance in a general narrative section of the evalua-
tion form. The second-level supervisor would re-
view each performance evaluation report for
equity and consistency in employee performance
expectations and ratings as well as for timeliness.
Sections of the evaluation form would be reserved
for the reviewing official and employee comments.
A tailored performance appraisal form would be
developed to evaluate supervisors and managers.
In addition to the substantive tasks in their posi-
tions, these employees would be evaluated against
job responsibilities central and common to super-
vision and management. This would include, for
example, developing subordinates, planning and
assigning work, managing production and re-
sources, and quality control.
To encourage employee-supervisor communica-
tion, at least one interim discussion would be
required annually. Any changes in duties and tasks
resulting from the supervisor-employee feedback
discussions would be reflected in the performance
plan.
An appeal mechanism would be established to
address employee problems related to perfor-
mance evaluations. Currently, the appeals process
exists within the grievance system to handle such
problems; however, we propose that performance-
related issues be handled separately for at least the
first two to three years to facilitate their expedi-
tious resolution and to encourage resolution at the
lowest possible level.
Incentive Pay Panels
Incentive pay is designed to reward better-than-
average performance with better-than-average pay.
Of necessity, this is a comparative process among
employees. The proposed system builds on the
ranking approach used extensively today to com-
pare employees. The performance evaluation
serves two purposes. It communicates to the em-
ployee how the supervisor judges his or her per-
formance, and it provides the supervisor (or panel
member) with the necessary data to compare the
employee with all others in the population being
ranked. The more direct knowledge the panels
have of the employee's performance, the better
position they are in to compare employees to
determine those who are above average. Ideally,
pay decisions, under the proposed system, would
be made through a ranking process by a panel on
which the employee's supervisor serves and that is
chaired by a manager who is one level above the
employee's supervisor. This is offered as a guide-
line because we recognize that organizations with
large overseas contingents require that panels be
composed differently. The proposed design allows
each Directorate the flexibility to define the com-
position of performance panels to meet its own
unique needs.
In the case of employees on rotation, the host
component would have the responsibility for the
incentive pay decision, and the home component
would have the responsibility for promotion.
Training
No matter how well designed a performance
evaluation system may be if those who use the
system do not understand it and do not use it as
intended, the system will not work. For this rea-
son, it is important that employees and managers
understand all the parts of the performance evalu-
ation system and how the parts fit together in the
26
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
overall process. To clarify and explain the pro-
posed modifications to the current performance
appraisal process, training courses, work shops,
and briefings would be required for all personnel.
Proposed Career Development System
As an organization, CIA always has needed to
attract the most talented employees for a full
career. These employees are expected to possess
either a broad range of skills or substantial exper-
tise in a specialty area and to maintain a 'high level
of competence throughout a career. Historically,
our employees have served in a wide variety of
Agency jobs, with increasing levels of responsibil-
ity during their careers and often have crossed
both occupational and Directorate lines in the
process. We believe that this has been and will
continue to be an important element in the success
of the CIA. Indeed, in an era of increasing techni-
cal and political complexity, our need for experts
at the peak of their specialty and others who are
versatile enough to handle a wide variety of pro-
fessionally demanding jobs will continue to grow.
To meet the demand, we would require a career
development program that is focused toward help-
ing our employees achieve their fullest potential.
By so doing, we could serve the needs of the CIA
and the needs of the individual employee.
Recommendations by the occupational panels
and the results of the recent employee satisfaction
survey confirm that employees also perceive a
need to put emphasis on career development in
the new system. Along with an interest in some
changes, however, the panels urged retention of
some key features of the current system such as
competitive evaluation for promotion. According-
ly, our proposals for career development introduce
some new concepts and expand and improve on
the strengths of the current system. For example,
new tools would be introduced to the career devel-
opment process to assist individual employees to
achieve their career objectives. Greater availabil-
ity of Agency projections, which forecast those
occupations on the ascendancy and in decline,
along with improved occupation-specific career
handbooks would make it easier for employees to
plan their careers and make supervisor-employee
career development planning more productive.
Feature 5-Occupational Career Handbooks
An important element of any successful career
development program is communication with em-
ployees on the expectations and needs of the
organization, what career development opportuni-
ties are available, and how the employee can
advance within the organization. The better in-
formed the employee is, the more likely the em-
ployee would set achievable career goals that are
consonant with the needs of the organization. One
improvement would be to expand the current use
of career handbooks. We propose that occupation-
specific career handbooks, developed by the occu-
pational panels, be given to each employee. The
handbooks would explain how the new system
works in a specific occupation and how the occu-
pation fits into the career service. The handbooks
would be like a road map and would contain
examples of typical duties and responsibilities at
each level within an occupation. Included would
be career profiles, information on recommended
or required training, typical and developmental
assignments at each level, planning guidance and
discussions of incentive pay, occupation-specific
promotion precepts, and pay and promotion pro-
cedures. Although the handbooks may be useful as
recruitment guides and helpful to new employees,
their principal value would be as a source docu-
ment for all employees.
Feature 6-Individual Career Development Plan
The Individual Career Development Plan
(ICDP) is proposed as an optional tool that em-
ployees can use to take a proactive role in manag-
ing their own careers. Most of the information
needed to write a career development plan would
be found in the occupational handbooks. Using
that information, the employee could conduct a
self-evaluation against the guidelines for advance-
ment and establish some concrete goals that would
help to move them in the direction they wish to go.
The goals might include preparatory steps for a
career change, requesting training that would be
helpful in qualifying for higher levels of responsi-
bility, or putting new duties into the current job
that would be useful in qualifying for another
assignment. Using the handbooks, the career de-
velopment plan could be tailored to the needs of
the individual employee.
In addition to the handbooks, however, some
auxiliary planning tools would be available. Aggre-
gate analysis of supply and demand for specific
skills would be part of the Agency human resource
planning and budgeting process explained in fea-
ture 1.6. This information would be available to
supervisors as well so that they can realistically
counsel employees and provide support as needed.
27
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Supervisors could help employees examine how
their career goals conform to future Agency skills
needs and what concrete steps should be taken to
achieve these goals. From the manager's perspec-
tive, the career development plan and discussions
provide insight into the employee's career ambi-
tions and provide an opportunity to develop mu-
tually satisfying ways to achieve them.
Assignments
The career development plan could also serve to
help the employee and manager plan and prepare
for a next assignment. One type of assignment, for
example, would be career advancing. In this case,
superior performers would be assigned to work at
the next level of responsibility, usually indicative
of pending promotion. Individuals given these
types of assignments already would have demon-
strated the potential to function at a higher level of
responsibility. Another type of assignment could
provide opportunities for new experiences and
challenges at the same level of responsibility.
These would also be career enhancing or enlarging
because they would allow employees to acquire
and demonstrate skills important for career ad-
vancement. A third type of assignment would be
one that permits the employee to explore the
possibility of changing his or her career field to
move to a new job that requires different occupa-
tional skills.
Although the design of the new system places
emphasis on occupation levels of responsibility,
career mobility would continue to be encouraged.
For this reason, an individual could probably
expect to serve in all three types of assignments
described above during the course of a career. In
light of Agency work force demographics, how-
ever-a younger work force hired during a concen-
trated period of growth-most assignments would
probably be career broadening. In the long run,
providing new opportunities and internal mobility
to employees is important in retaining a career
work force, and both the Agency and the employee
benefit.
Today an employee planning for a change in
assignment often must rely on word of mouth or
our current paper-intensive vacancy notice system.
Building on the effort to automate the position
descriptions developed by the occupational panels,
a fully automated subsystem, with appropriate
security features, can be developed that would
help match jobs and people. Using these automat-
ed tools, the supervisors would be able to quickly
advertise vacancies. With a well-defined system
that advertises available jobs, employees would be
able to request a list of positions, identify those of
interest, and then request that his or her automat-
ed biographic profile be compared against the
vacancies for a suitable match.
Feature 7-Occupation-Specific Training
Each of the occupational panels identified spe-
cific internal training courses to match the job
skills and responsibilities defined for their occupa-
tional levels. As a consequence, existing courses
would be tailored to meet particular occupational
requirements and new courses would be devel-
oped. Representatives from the occupations would
work with the Office of Training and Education to
design, implement, and evaluate occupation-spe-
cific training programs. The panels also noted that
efforts should be made to develop a variety of
unclassified, portable self-study training packages
that either supplement or replace classroom
instruction.
Because the purpose of the training would be
skills enhancement, many panels expressed inter-
est in having some measurements of effectiveness
built into the system. Some of the new initiatives
would lend themselves to this type of feedback,
but, in the main, managers would have to take
responsibility for determining and documenting
whether the skills needed for employee advance-
ment exist.
Feature 8-Improved Availability of Training
Training must be made available when it is
needed and at the convenience of the employee.
Too often, employees forgo training because it
cannot be arranged around their pressing work
demands. Training will be brought to the employee.
New training features are being developed that
include:
? Extended and expanded mandatory entry-level
training, particularly the type of training that
would support faster cultural integration with
the organization.
? Expanded use of self-instructional or corre-
spondence courses that allow students to take
unclassified training at home, in a learning
resource center, or on the road.
? Development of TV broadcast programs on
Agency specific topics to move the instructors
to the students instead of vice versa.
28
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
? Contracted TV broadcasts for technical train-
ing via satellite and microwave transmission.
? Increased use of interactive video instruction
to provide Agency-specific training in subject
matter areas that are best learned by requiring
students to solve problems and get immediate
information back on the consequences of their
decisions.
? Computer-based instruction to offer training
that requires practice and feedback in order to
master the skills.
? Audio cassettes, videotapes, and workbooks in
a range of unclassified subject areas such as
languages, area familiarization, and manage-
ment for individual study.
Another alternative to conventional classroom
courses will be the use of special topic institutes.
Such institutes would offer a series of one-day
seminars or workshops on current high=interest
topics in such areas as computer applications,
science and technology, management, as well as
substantive intelligence subjects. These institutes
could be expected to draw on both external and
internal experts as instructors.
Feature 9-Dual Track
An important construct in the proposed system
is that more choice will be available to individuals
to opt to either develop as experts in their occupa-
tion or to develop as managers. Although the
concept of dual tracks is not new to the Agency,
the number of positions that offer opportunities
for experts who do not want to be managers are
limited. Both the DI and the DS&T have programs
that offer opportunities to analytic, scientific, and
engineering experts to advance their careers as
experts. In a less formal way, similar opportunities
for experts exist in other parts of the Agency. The
DO has permitted some of its operations experts
to attain SIS status as nonmanagers. Similarly,
OTS established its TOPS Program to accommo-
date senior Technical Operations Officers who
function beyond full-performance level in more
than one technical and operational discipline.
Each of these programs has come about as a
compromise between management, which has re-
quested more senior level jobs into which they can
promote their people, and PMCD, which has had
to grapple with a restrictive position classification
system that has made evaluation of positions in-
fluenced largely by individual qualifications diffi-
cult. To date, the most important element that has
been missing is a clear statement by senior man-
agement that we are willing to pay those able to fill
the need for experts the same way we reward those
who meet our needs for managers. Also missing to
date has been the involvement of those affected by
the dual track program-our experts, in defining
the requirements for entry into the program; and
our managers, in defining the organizational re-
quirements that the program will satisfy.
We believe that it is important to fill in these
missing elements and develop a meaningful expert
program in the CIA. The need in CIA for highly
skilled experts in many occupations is on the
increase, and can be satisfied only if we aggressive-
ly seek to develop and retain the type of people we
need in these areas. In many cases, moving an
expert into a management position deprives the
CIA of critically needed expertise and the very
special skills that could support our organization
more effectively in an expert role. Also to be
considered is the fact that demographics indicate
that many of our brightest employees will be faced
with "plateauing" if they are forced into a narrow
management track blocked by members of their
own "baby boom" generation. Establishment of an
alternative in the form of expert tracks may influ-
ence these people to remain with the CIA rather
than seek employment elsewhere.
Levels of Experts
Experts are individuals who, by virtue of their
personal qualifications and accomplishments and
well-established reputations in their field, function
with a high degree of freedom. As a general rule,
the first level of an expert track should represent
more demanding and complex work than that of
the full-performance level. On the basis of this
convention, not all occupations will have an expert
track, and, for many others, the expert track will
extend only one pay level above full performance.
In some occupations, experts would be coequals to
managers and at the same pay level, and some will
reach SIS status. The Operations Officer, Comput-
er Systems Analyst-Programer, Contracts Officer,
and Intelligence Analyst occupations, for example,
have identified expert levels that are coequal to
managers in the same pay band. Although the
exact hierarchy of experts and managers would
vary according to organizational needs, all experts
would eventually report to some level of manage-
ment. Criteria for selection as an expert would
certainly be no less stringent than the criteria for
selection as a manager, and attainment of expert
rank in an occupation would certainly carry signif-
icant prestige on a par with managers.
29
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
Some occupations with an expert track are com-
ponent specific and others are Directorate-wide or
Agency-wide. Selection criteria for occupations
that cross component lines would be developed
that reflect the commonalities within the occupa-
tion, but that preserve Directorate prerogatives
with regard to the management of people and jobs
within their organization. In the occupations that
identified an expert track, senior managers would
validate qualification and performance require-
ments for experts in their occupation and develop
selection criteria. After these occupation-specific
criteria have been developed, employees would be
given the opportunity to petition for entry. Selec-
tion into the expert track would not mean an
automatic promotion to the next higher level, and
individuals selected could be promoted at the
discretion of the Directorate when all require-
ments have been satisfied. Reinforcing the fact
that the expert track is based on the precept of
recognizing and matching the unique talents and
skills of individuals with the needs of an organiza-
tion, it would not be necessary for the Directorates
to identify a predetermined number of expert
positions. Within budgetary constraints, senior
managers would have the flexibility to designate
and assign individuals who qualify as experts as
they are needed.
The Manager Track
Traditionally first-line supervisors are consid-
ered more as experts or work leaders than manag-
ers. Although they guide and evaluate the work of
subordinates, first-line supervisors, for the most
part, are only peripherally involved in resource
planning and employee administration. The first-
line supervisor is a viable candidate for either the
expert or the manager track. For those individuals
more inclined toward management, we would rec-
ommend that they be given the opportunity to
more actively participate in planning and
administration.
In the private sector, there are generic managers,
people without substantive expertise in a field
other than management. This' is not and will not
become part of the CIA culture where managers
are selected in the first instance for their expertise.
However, in the proposed system, the role of
managers would change significantly. Along with
the increased managerial flexibility that would
come with the proposed improvements-such as
delegation of classification authority, incentive
pay for employees, and new planning tools-also
will come increased accountability and responsi-
bility for developing subordinates. The need for
substantive achievement would not diminish in
importance, but, as in the private sector, managers
would be judged to a greater extent on how well
they manage and develop their human resources.
Like the expert track, selection to the manage-
ment track would be competitive, and movement
into the track would not mean an automatic pro-
motion into the next pay level. Individuals selected
for the management track could be promoted at the
discretion of the Directorate when all requirements
have been satisfied. This would allow both the
employee and the organization an on-the-job evalu-
ation of aptitude and willingness to pursue the
management track. Individuals entering the man-
agement track would be given special direction and
encouragement to succeed and to acquire necessary
substantive and managerial skills.
Manager-Expert Incentives
As discussed previously, a Manager-Expert In-
centive Program (MEIP) would be established in
the new system as a separate recognition program
for non-SIS managers and experts. Selection into
either of the two tracks automatically would pro-
vide an employee with the opportunity to compete
for an additional MEIP bonus. MEIP bonuses
would be awarded to those managers and experts
who, through the scope or quality of their perfor-
mance, have substantial and sustained impact on
the work and products of the organization. Senior
management panels would evaluate MEIP partici-
pants and would recommend award distributions
to their respective DDs.
Managers and experts also would have the op-
portunity for an increased leave carryover. Inter-
nal studies have shown that, with SIS officers'
being able to accrue unlimited annual leave bal-
ances, over 90 percent of all forfeited annual leave
comes from our GS- 13 through 15 employees, that
is, our midlevel managers and substantive experts.
These are the very levels that we will continue to
demand more of as we refine our management and
expert track development programs. To reduce the
annual leave forfeiture problem among this group,
we propose to increase the annual leave carryover
ceilings by 20, hours for every year a non-SIS
employee is in the manager or expert track up to a
new carryover ceiling of 360 hours (480 hours for
our overseas cadre who currently are in 360 carry-
over status). If an employee is no longer in the
30
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
MEIP, the maximum leave carryover would be
reduced if and when accrued annual leave dropped
below the previously approved carryover limit of
360 hours. Because employees are entitled to pay-
ment for all annual leave credited to their ac-
counts, including the carryover balance, the CIA
will incur a slight additional cost when an employ-
ee resigns or retires. An example of this proposal is
provided below:
Years of Service in Management or Expert Track
1
2
3
4
5
6
7/up
Increased carry-
over limit
0
+20
+40
+60
+80
+100
+120
In determining the appropriate occupationally
defined levels of responsibility, the panels recog-
nized that current performance above expectations
would be financially rewarded but would not nec-
essarily result in promotion to a new salary level.
Nevertheless, promotion or movement to a higher
level of responsibility would continue to be an
important part of the reward system.
Today employees at each grade level are com-
paratively evaluated against a set of Agency-wide
precepts. Although uniform, these precepts are
open to wide interpretation in their use. Defini-
tions and weighting of precepts, such as initiative
and mobility, change markedly between occupa-
tions. Often the precepts have required consider-
able occupational fine-tuning to make them rele-
vant. In the new system, each panel identified a set
of occupation- and level-specific precepts to be
considered in lieu of those now used Agency-wide.
These occupation-specific precepts, found in the
handbooks, would provide the employee with a
better picture of what characteristics lead to strong
performance in a level and what factors indicate
potential to be successful at the next higher one.
Supervisors will have the precepts available in a
computerized data base to assist in employee
counseling and to provide the panels with infor-
mation needed to rank employees comparatively.
Promotion evaluation will continue to be con-
ducted annually by occupation and by level, and
career service panels would be central to decisions
on promotions between levels. As is the case
today, all employees with satisfactory or above
performance evaluations would be considered for
promotion once they have met certain other crite-
ria established by the career services such as time
or experience in a salary level or have served a
designated period in the field.
Proposed Benefits Program
Current Programs
Employee benefits are made available to em-
ployees to provide financial protection in case of
health-related problems and for income replace-
ment at some future date or event. The benefits
provided by an organization have come to repre-
sent an important employer commitment to the
welfare of the employee and his or her dependents,
as well as an important part of the employee's total
compensation. Of employees responding to a re-
cent national survey, 50 percent said that their
benefit package was at least as important to them
as their pay. One-third said that benefits were
more important than cash. At the present time,
employee benefits average over 35 percent of the
payroll costs in most private-sector organizations.
In a study conducted for the House Committee on
Post Office and Civil Service in 1984, the consult-
ing firm of Hay/Huggins concluded that, although
Federal benefits, in the aggregate, were about 3
percent ahead of the private sector as a percent of
payroll, most of the difference was found to be in
the retirement system and annual leave policies.
Other benefits that are considered important by
employees, particularly health, death, and disabil-
ity benefits, were behind the private sector.
The requirement to attract and retain quality
workers means greater attention must be given to
all parts of,our benefits program to ensure that the
Agency's compensation package is competitive
and that our programs meet the needs of the
diversified work force of the 1990s. In spite of the
additional efforts CIA has put into developing a
program that is advantageous to its employees, our
existing benefits program, when retirement and
annual leave are factored out, is not competitive
with those offered by many private-sector firms.
For example, a recent General Accounting Office
(GAO) report comparing health insurance cover-
age of Federal and private-sector employees shows
Federal enrollees pay more of their health costs in
premiums, deductibles, and coinsurance than do
their counterparts in the private sector. In fact, in
1985, approximately 60 percent of full-time pri-
vate-sector employees paid none of their individ-
ual health insurance premiums, and 40 percent
31
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
paid none of their family coverage costs. In addi-
tion, many private-sector firms offer noncontribu-
tory life insurance.
As currently structured, existing programs have
not adapted to demographic changes that have
occurred and are continuing to occur in the Agency
work force. Today's younger work force, with large
numbers of two-income and single-parent families,
has more diverse needs than did previous employee
populations. Even though the current programs
offer several medical and life insurance options,
choices are restricted to defined coverages within
each program. Furthermore, for certain employ-
ees, there may be no choice in medical coverage
other than to take it or leave it.
With the introduction of FERS, which now
gives employees a portable retirement system, the
major retention tool in the Federal benefits system
is seriously weakened, putting even greater pres-
sure on us to develop more creative ways to
deliver benefits that serve the individual needs of
our employees. One of the more effective means of
using benefits as an attraction and retention tool is
to offer employees greater choice in the way their
benefits dollars are spent through the introduction
of a flexible benefits program.
Feature 11-Flexible Benefits Program
Preliminary findings indicate that a flexible
benefits plan, along with some new benefit offer-
ings, would more effectively meet employee needs
and yield a better return on the benefit dollars that
both the Agency and the employee spend. A flexi-
ble plan also could save the employee money by
enabling him or her to pay certain health and
dependent care expenses with tax-free dollars.
In a flexible plan, employees will be given flexi-
ble credits. These credits are an amount at the
disposal of the employee, with which to buy bene-
fits. These flexible credits can be thought of as
dollars. Each benefit option available has a price
tag associated with it. Employees will be able to
take flexible credits and use them to purchase the
benefits they want. If employees spend all of their
flexible credits and still want to buy more benefits,
they will be able to do so. The Agency would
deduct enough out of their paycheck to cover the
extra benefits selected. In rare cases where credits
are left over, employees would be able to convert
the credits to cash.
plans and those considered most viable for the
Agency are core plus options, mix or match, and
modular. All typically utilize a mechanism known
as the Flexible Spending Account to increase em-
ployee latitude in meeting specific needs. The rest
of this section will summarize the features of each
of these types of plans and very briefly outline one
possible flexible benefits design the Agency might
adopt.
Core Plus Options
One of the flexible benefit options available is
the core plus plan. Under this plan, coverage levels
begin with a core of benefits provided to all
employees at little or no cost, but this core cover-
age may not include all previously covered items.
Because the core represents reduced insurance
coverage, the cost to the employee would be less
than that for present levels of coverage. The differ-
ence in employer cost between the old coverage
and the new typically is prorated among employ-
ees in the form of credits. These credits could be
applied toward the purchase of optional medical
or dental benefits, life insurance, child care, or
even converted to cash (see comments on Flexible
Spending Accounts).
Under the core plus plan, the Agency, with
participation of the employees, would design a
program with the options best fitting the needs of
our employee population. Employees would then
make their choices among the options in order to
tailor the program to their own needs. This makes
the employee an active participant; that is, he or
she is required to make decisions for every elected
benefit. The employee allocates his credits among
the options and may elect to make additional
contributions to select added options and in-
creased coverage. Table 7 illustrates the core-plus-
options approach.
A core plus options is one of the easier plans to
administer because benefit pricing is simplified. A
variation of the core-plus-options approach is a
true "flex plan." True flex is similar to core plus
options except the core plan is replaced with a
pool of flexible credits. The employee then uses his
other credits to purchase the benefits he wants.
Where the core is a minimum level of benefits, the
employee is in a buy-only situation. Figure 2
illustrates the true flex approach.
Although there are many types of flexible bene-
fits programs in use today, the most common
A second flexible benefits program using a core
level of coverage is a mix-or-match plan. This plan
32
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
FIGURE 2
ILLUSTRATION OF TRUE FLEX APPROACH
OPTIONS
DEPENDENT
LIFE INSURANCE,
VOLUNTARY ACCIDENTAL
DEATH & DISABILITY
SHORT-TERM
DISABILITY
LONG-TERM
DISABILITY
VACATION.
33
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Table 7
Core-Plus-Options Approach
Life insurance of lx salary Life Insurance (2x, 3x, 4x)
dependent life insurance vol-
untary, accidental death, and
disability
Vacation (annual leave) Additional vacation (annual
leave)
Sick leave Additional long-term disabil-
Long-term disability insurance ity
Medical insurance Additional medical insurance
(lower deductible-higher cov-
erage)
Dental care
Vision care
Prescriptions
uses the previous level of coverage as a core, and
places it in the middle of a multiple-level struc-
ture. This core is usually offered at no additional
cost to the employee, and optional selections of
greater or lesser coverage result in additional
charges or credits. Under this plan, the employee
has the same flexibility of coverage as the core plus
plan, but, because it does not reduce benefits to a
core, it does not create the misperception of cut-
backs in benefits. However, because the employee
can buy up and buy down, administering and also
communicating a mix-or-match plan can be more
complex than a core-plus-options approach. Com-
plications also arise in determining what, if any,
benefit credits to provide workers who decline to
take certain offerings such as health or life insur-
ance. In some situations, it is possible to offer a
hybrid of the core-plus-options and the mix-or-
match plans. For example, in cases where the
Agency considers a benefit so important it cannot
be reduced to some core level, it could be excluded
from the core and offered as a separate program.
Another type of plan that appears feasible is the
modular plan. Under this option, medical and
other benefits are combined in a series of packaged
modules. Each module is designed to meet the
needs of a category of employees, for example,
single, married with or without dependents, and so
forth, and no substitutions between modules are
permitted. Each module is priced to reflect the
coverage its components provide and the narrower
requirements of the type of individual expected to
choose that module. Once constructed, the modu-
lar plan is simple to administer, easy to explain,
and offers the flexibility to reconfigure the benefits
offered as employee needs change. For ease of
administration, no more than seven modules are
recommended. The process of constructing a small
number of modules, each aimed at a different
group of workers, results in some compromises
being made in the coverage offered. Nevertheless,
a modular plan remains more responsive to vary-
ing employee needs than the present program.
Table 8 and figure 3 are examples of a modular
plan concept.
Flexible. Spending Accounts
The flexible spending account (FSA) is a simple
and versatile approach to providing benefits that
also carries a tax advantage to the employee. FSAs
are individual employee accounts that may be
funded through a contribution by the employer
(seeding), by employee pretax contributions, and
through the credits generated in core-plus-options,
mix-or-match, or modular plans. The employee
annually designates how much of his or her salary
will be set aside to help fund the FSA account.
Taxable salary is reduced by that amount (table 9).
As expenses occur during the year, the employee
presents the receipts for qualified benefits and can
withdraw the funds from the account. Spending
accounts may be set up to pay employment-related
dependent care expenses for both the young and
elderly at home, and health care expenses not
covered by the employee's medical plan.
The amounts of income set aside in an FSA
have limits imposed by the IRS, and it should be
noted that regulations mandate a use-it-or-lose-it
feature for all contributions to the account. FSA
dollars are not transferable between the different
components of the account. There are, however,
many predictable medical and dependent care
expenses that the employee can accurately esti-
mate in advance that lessen the impact of these
rules. In addition, the typical plan allows the
employee to change his or her election where there
have been changes in personal circumstances.
It is recommended that an FSA be a major
element of any flexible benefit program adopted
by CIA. The FSA concept is inexpensive to install,
especially if totally based on employee contribu-
tions and is a very popular feature of flexible
programs in the private sector. Eighty-eight per-
cent of the firms with flexible benefits had FSAs in
1985. Participants in the employee focus group
34
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Table 8
Example of Modular Plan
(With Theoretical Values)
Medical insurance
(0, low, medium, high)
Medium
Low
High
Medium
High
0
0
Dental insurance
(basic, high)
High
Basic
High
Basic
High
High
Basic
Accidental, death, and
disability
Yes
No
Yes
Yes
No
Yes
No
The above modules might be associated with the following employee groups:
A-Single or married with working spouse with dependents.
B-Single or married with working spouse without dependents.
C-Single or married with nonworking spouse with dependents.
D-Single or married with nonworking spouse without dependents.
E-Older marrieds.
F-Married with working spouse with dependents, no medical.
G-Single or married with working spouse without dependents, no medical.
HMOs with similar coverage may be substituted.
Table 9
Example of Flexible Spending Account
Tax Benefit
Contribution
Contribution
After Taxes
Before Taxes
Annual salary
$35,000
$35,000
FSA
0
-1,000
Taxable income
35,000
34,000
Income tax
-9,800
-9,520
FICA/RET
-2,450
-2,380
22,750
22,100
Less covered expense
-1,000
0
Net pay
Difference
$21,750
$22,100
sessions conducted in early June completed a
simple FSA exercise. Out of a sample of 134
employees, the average estimated annual savings
was $782.
Preliminary Design
In order to illustrate how a flexible benefits plan
might work in the Agency, an example preliminary
design is shown in figure 4 and table 10. This
design has retained the FEGLI life insurance pro-
gram and replaced the FEHB medical plans with
four options to the present Association Benefit
Plan. New benefits include a vision-care plan, an
improved dental plan, a prescription drug plan,
the ability to buy and sell annual leave, and Health
Care and Dependent Care Flexible Spending
Accounts.
Employees would be given flexible credits with
which to buy various benefits. Based on several
assumptions, the amount of these credits were
generated through actuarial methods that took
into account the cost of each benefit and the most
likely choices employees will make. For this pre-
liminary design, two major assumptions were con-'
sidered. First, there should be no additional cost to
the employee to keep the level of health and life
insurance coverage he or she had before flexible
benefits were offered. Second, except for startup
costs, there should be no significant additional
costs to the Agency for benefits.
To test employee reactions to the current Agen-
cy benefits program and to the proposed introduc-
tion of a flexible benefits approach, the Task Force
conducted a series of employee focus groups. A
total of 134 employees representing a variety of
demographic segments of the Agency participated
in the groups.
In general, participants responded that they felt
the current benefits program, although providing
comprehensive and relatively generous coverage,
did not offer sufficient opportunity to tailor the
benefits package to individual needs, required a
35
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
ILLUSTRATION OF MODULAR APPROACH
EMPLOYEE
CONTRIBUTIONS
EMPLOYER
CONTRIBUTIONS
EMPLOYEE
CREDIT
II
36
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
higher employee contribution than is perceived to
be the case in the private sector, and offered only
high-cost, limited option coverage for covert em-
ployees. The overall response of the employee
groups to a flexible benefit program was favorable,
with the primary advantages perceived to be in-
creased choice, the ability to tailor coverage, and
tax benefits to the employees. The groups also
expressed concern that there would need to be a
minimum benefit threshold, that special proce-
dures would have to be developed to enable cer-
tain employees to enjoy the flexibility offered by a
flexible program, and that the Agency would have
to undertake an extensive education and commu-
nications program to prepare employees to make
the best choices for themselves.
Implementation Considerations
During the development of the proposed flexible
benefits program, several important tasks would
get under way. First, an employee benefits survey
would be designed and administered to all employ-
ees. This survey would be of vital importance in
determining what choices the employees would be
making in a flexible benefits plan. These results
are also necessary in order to determine accurately
the underwriting costs of the program. Second,
detailed program design, communications, and
administration strategies would be developed. Tax
and legislative implications would be addressed
with the Internal Revenue Service, Office of Man-
agement and Budget, Office of Personnel Manage-
ment, and the Congressional oversight commit-
tees. Finally, after the results of the benefits survey
are analyzed, the preliminary design could be fine-
tuned, priced, and test marketed with employees.
In view of the assumptions previously discussed,
there would be no significant additional cost to the
Agency for a flexible benefits program compared
with the present program. In fact, it is characteris-
tic of flexible benefits programs that they can be
customized to respond to specific budgetary needs.
However, in 1986 about one-fifth of our employ-
ees did not take medical insurance. Because they
are covered under their spouse's insurance, the
Agency had no medical benefits costs for these
people. When the employee benefits survey and
mock enrollment is completed, we will have a
better idea as to whether these employees would
choose to participate in the medical portion of our
flexible plan; and, depending on their choice, the
Agency may incur additional cost.
In addition, there are fixed and recurring costs
for developing and implementing a flexible bene-
fits program. The fixed costs are estimated to be
about $1 million, primarily for modifications to
payroll, claims, personnel data-processing systems,
and for employee communications. Recurring
costs are estimated to be roughly $100,000 to
$200,000 per year for software maintenance. Two
to five additional staff employees may be needed
to support the program.
After final approval, implementation could be-
gin. There are three main segments to this phase;
all occur simultaneously. The design segment
fleshes out all the details of the proposed program
such as underwriting rules, open season, condi-
tions for enrollment, and so forth. The communi-
cations segment, which is extremely important to
the success of the program, prepares for the enroll-
ment process. This includes producing videos,
enrollment notebooks, the election form, posters,
and summary and reinforcement pieces. In addi-
tion, enrollment leaders are trained, enrollment
meetings held, and employee election support pro-
vided. The administrative segment is responsible
for the various system interfaces between payroll,
claims, and other personnel systems that are devel-
oped, tested, and put into place to support the
flexible benefits program.
On an annual basis, Agency employees forfeit
more annual leave than any other group of Federal
employees. In 1986, our employees forfeited al-
most 117,000 hours. This total does not begin to
capture the amount of uncompensated work pro-
vided by our employees, who willingly adopt a
work ethic not expected nor found in most organi-
zations. Unlike uncompensated overtime, howev-
er, which generally involves an individual decision
that additional work is necessary to get the job
done and often shows up in employee performance
that is rewarded by the organization, forfeited
annual leave provides just the opposite message.
When the same employee opts in favor of the job
over annual leave, the organization gives a clear
message: use it or lose it.
Annual Leave Buy Back
Even with the increased carryover limits we
have proposed for those in the MEIP, we expect
that many employees will continue to be faced
with annual forfeiture of leave. If we wish to
37
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
FOR ILLUSTRATION PURPOSES ONLY
Employee Election Worksheet
Example Based on Employee With $25,000 Salary
Agency Provided Benefit Credits 365 (1)
Employee Life Insurance (FEGLI) (Choose one or more)
Benefit
Credits
Medical Care (Choose only one)
Benefit
Credits Required
Amount Required
Employee
Family
Total FEGLI Basic* $ 54,000 $ 194
Plan 200/ 700
$ 698
$ 1,226
Standard Option* 10,000 10
Plan 200/1,000
593
991
Additional Option 1 x pay 25,000 26
Plan 500/2,500
493
931
Additional Option 2x pay 50,000 52
Plan 1,500/4,500
443
861
Additional Option 3x pay 75,000 78
No Coverage
0
0
Additional Option 4x pay 100,000 104
Additional Option 5x pay 125,000 131
Dental Care (Choose only one)
No Coverage
Preventive Plan
$ 35
$ 60
Family Life Insurance (FEGLI) (Choose only one)
Comprehensive Plan
80
200
$5,000 Spouse, $2,500 Ea. Child
No Coverage
Vision Care (Choose only one)
Business Travel Accident Insurance (Choose only one)
Vision Care Plan
$ 50
$ 150
$300,000, $ 100
No Coverage 0
Prescription Drug Plan (Choose only one)
Income Replacement Plan (Choose, only one)
Rx: Drug 5 Plan $ 86
$ 225
No Coverage
0
0
$ 100/month
$ 9
200/month
18
Specified Dread Disease (Choose only one)
300/month
26
Plan
$ 4
$ 10
400/month
35
500/month
44
600/month
53
Total Benefit Credits Required
800/month
70
1
000
h
(Sum of all credits circled)
,
/mont
88
No Coverage.
0
Annual Leave Buy/Sell
To Sell Annual Leave
-
Record Current Vacation Entitlement (Days)
(Do not include any carryover amounts)
-
Subtract 10 days
-
Days Available for Sale
-
Value of Each Day Sold
$ 100 (A)
-
Enter Number of Days You Wish to Sell
x (B)
-
Multiply (A) times (B) for Value of Sale
$
(Leave Credits Gained)
To Buy Annual Leave
-
Enter Number of Days (Up to 10) You
Wish to Purchase
(C)
-
Cost of Each Day Purchased
x
100 (D)
-
Multiply (C) times (D) for Cost of Purchase
(Circle if Selected)
38
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
Table 10 (Continued)
FOR ILLUSTRATION PURPOSES ONLY
Employee Election Worksheet
Calculating the Cost
Total Benefit Credits Required from (2) on
page 1 $
(2)
If buying leave, credits required $
(3)
Total Credits Required (2) + (3) $
(4)
Agency Provided Benefit Credits from (1)
on page 1 $
(1)
If selling leave, credits gained $
(5)
Total Credits Available (1) + (5) $
(6)
Total Credits Required $
(4)
Total Credits Available $
(6)
Difference (4 - 6) $
(7)
A. If line (7) is a positive number, this is your level of required employee
contributions per year. To compute the difference between this and your
current level of contributions per pay period:
(1) Divide line (7) by 26 (8)
(2) Enter you current biweekly contributions to FEHBP and FEGLI from your
payroll slip (9)
(3) Difference (8-9); if result is a positive number, you will owe this much more
per pay period. If it is negative, you will save this much.
NOTE: This extra cost or savings does not reflect any tax savings that will
result from pre-tax contributions.
B. If line (7) is a negative number, you may allocate these remaining credits to
your pre-tax health or dependent care accounts, or receive cash. Please indicate
how you would use any remaining credits:
Allocation of
Remaining Credits
Flexible Account
Health Care
Dependent Care
Cash
C. Whether you have remaining credits or required contributions, you may elect to
deposit additional pre-tax dollars into either the health care or dependent care
spending accounts or both. The maximum amount which can be contributed
into each account is $5,000 including any remaining credits. Please indicate
any additional amounts you wish to allocate to these accounts.
Health Care
Dependent Care
39
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
FIGURE 4
GRAPHIC OUTLINE OF FLEXIBLE BENEFITS PROGRAM
FEGLI
Other Menu Choices
Annual Leave Buy and Sell
Flexible Spending Account
Health Care
Dependent Care
Cash
40
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
FOR OFFICIAL USE ONLY
reward and encourage further the very strong work
ethic demonstrated by CIA employees, we could
provide for conversion of such annual leave to
cash. At the end of the leave year, any remaining
leave, over the employee's individual carryover
limit, that would be forfeited because of the needs
of the service would be assigned a cash value,
based on the employee's current salary, and paid
in a lump sum. To encourage all employees to take
at least two weeks off in the year, only those hours
beyond the first 80 earned in a leave year would be
considered under this program.
Although SIS officers are not subject to leave
forfeiture, we believe that there are advantages to
extending this option to these officers also. Under
this proposal, SIS officers might be allowed to
convert annual leave over 500 hours to cash at any
time during the year. Adoption of this proposal is
attractive from the perspective of both the CIA
and the employee. For the CIA, a future unfunded
liability is eliminated by paying out the money at
the current salary, rather than the end-of-career
salary that is invariably higher. From the em-
ployee's perspective, annual leave becomes anoth-
er form of savings program that may provide
needed cash for putting children through college or
investing for postretirement income. An example
of this win-win situation is shown in table 11.
To illustrate this option, assume that an SIS
officer who will retire in five years entered the
program in 1986 at a salary of $63.8K, with an
annual leave balance of 607 hours and will take 80
hours of leave each year. During the five-year
period, the officer receives regular pay increases as
shown in the illustration until he reaches his final
salary of $79.4K, in 1990, the year in which he will
retire.
Table 11
Conversion of Annual Leave to Cash
A/L balance if 607 735 863 991 1,119
allowed to accrue
A/L balance if 500 500 500 500 500
cashed out each year
Salary (thousand 63.8 70.5 75.6 77.9 79.4
dollars)
Value of A/L 3,280 4,340 4,650 4,790 23,970
cashed in annually
(dollars)
Five-year net
Annual cash in total $41,030
leave. From the employee's point of view, this
appears to be a desirable option because it trades
forfeited annual leave for additional short-term
disability protection. At the end of each leave year,
all the forfeited annual leave of a non-SIS employ-
ee could be converted into sick leave on an hour-
for-hour basis. This sick leave would be retained in
a separate account. For CSRS, CIARDS, and
FERS transferees, where accrued sick leave counts
toward the calculation of retirement annuity, sick
leave in this separate account would not be used to
obtain additional time credit toward retirement.
The employee may use this sick leave before any
earned sick leave until the separate account is
exhausted.
Under current SIS leave policy, this officer
would collect $42,716 in a lump sum at retire-
ment. If this officer cashed in any annual leave in
excess of 500 hours each year, the government
would have paid out $41,030. Thus, the govern-
ment would save $1,686, and the employee has
been able to have the use of about $17,000 over
the previous four years. If the employee had
invested the cash received at a conservative rate of
6 percent (tax-free municipal fund), the cash value
at the end of five years would be $43,582.
Optional Conversion to Sick Leave
We propose that authority be sought to enable
employees to convert forfeited annual leave to sick
The Task Force also proposes that we seek
authority to enable employees to donate annual
leave that might otherwise be forfeited to a sick
leave bank. The purpose of the bank would be to
provide protection for employees who experience
major medical problems. Because our proposal
provides an alternative use of leave that otherwise
would be forfeited, it differs slightly from the pilot
leave bank programs implemented by the Office of
Personnel Management (OPM) and the Internal
Revenue Service (IRS). The IRS program in Flori-
da was created by special legislation in order to
allow fellow IRS employees to donate annual and
sick leave on behalf of a husband and wife who
both work for the IRS. The OPM pilot program,
41
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
also created by legislation, allows similar dona-
tions for three individual test cases throughout the
entire government.
If this proposal is adopted, any employee with
more than one year of service might be eligible to
apply for a withdrawal of hours from the bank.
Any sick leave not used would be returned to the
sick leave bank; however, the employee would not
be required to repay any withdrawals from the
bank. It probably would be necessary to require
that the employee use all accrued sick leave and all
except 80 hours of accrued annual leave before
having a withdrawal from the sick leave bank
credited to the employee's sick leave account.
Limits on the use of the bank would have to be
established, with six months probably a reasonable
limit for a single illness, and 18 months lifetime
use.
Although most of this section has focused on
annual and sick leave, we also believe that we
should look at the loss of home leave that our
employees have worked hard to earn. Despite
liberalization in the use of our home leave, a
considerable number of employees have accrued
substantial amounts of home leave that they have
been unable to take because of the demands of
their jobs. We recommend that authority be
sought to allow employees who have been unable
to use these accrued balances to use their remain-
ing home leave balance in the year before their
retirement date.
Feature 13-Educational Assistance for
Dependents
There is an increasing concern that certain of
the experienced employees who voluntarily leave
the Agency do so for the larger salaries offered by
the private sector in order to support their chil-
dren's college education. We are concerned that, as
educational expenses increase, this will become an
even more serious problem in the future. We
believe that there are at least four options avail-
able to address this growing problem.
Agency-Funded Tuition Assistance
The first option is a direct Agency-funded de-
pendent tuition-assistance plan. This option,
which has already been studied by the Office of
Personnel, would allow a direct payment of up to
$30,000 per eligible dependent (two students per
family maximum) in return for six years of Agency
service. It breaks new ground and, like the reten-
tion bonus, could be an effective retention tool for
employees with college-age or near-college-age
children. However, unless implemented on an
extremely restrictive basis, this proposal could be
prohibitively expensive, and, because it focuses on
one segment of the population, those with college-
age children, it also poses serious equity problems.
Leave Secured Loans
A second alternative is to seek approval for the
use of annual leave balances as a source of educa-
tional loan collateral. This option would allow
employees to borrow the cash value of their annual
leave balance. If adopted, we would propose that
these loans be administered through the Credit
Union. The loan could be administered the same---
as collateral-secured loans that the Credit Union
presently offers, with the employee eligible to
borrow the cash value of accrued annual leave,
calculated at the time of the loan, at a preferred
interest rate. The employee would be prohibited
from using any of the annual leave securing the
loan, and, in case of default, that amount of leave
will be removed from the employee's account. The
CIA would then reimburse the Credit Union for
the defaulted principal. The Credit Union's loan
experience is that the default rater would be ex-
tremely low, less than 1 percent. This should
reduce the CIA's risk to almost $100,000 annually.
If our other proposals concerning annual leave are
approved, however, this proposal would be less
attractive. For example, if the CIA adopts a flexi-
ble benefits program that allows the purchase and
sale of annual leave, this option would not be
attractive to employees.
There are provisions in the Thrift Savings Plan
for borrowing money for a number of expenses,
including education. The Thrift Plan managers
have not yet developed the terms of such loans.
Employees, especially younger employees, have
the potential of building a sizable balance in their
Thrift accounts. As CIA does not manage Thrift, a
specific system feature cannot be proposed. Rath-
er, CIA would work with the Thrift Plan managers
to see whether favorable terms for such loans can
be incorporated in the plan. Effective interest rates
for educational expenses as low as a few percent
have been incorporated into such annuity loan
programs elsewhere.
42
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
CIA-Subsidized Student Loans ? Repayment would begin six months after bor-
Another option, and the one supported by most rower leaves school.
Task Force members, is an Agency-sponsored ? The repayment period would be 10 years.
Guaranteed Student Loan Program. In this pro- . Origination fees are paid by the student.
gram, the Agency would act as the guarantor for
student borrower loans made through the Credit ? The Agency pays loan insurance premiums.
Union. Such a proposal would fill the gap between
the current Federal Guaranteed Student Loan Pro-
gram, which has an income test, and the Credit
Union's education loan program that is available
at market rates to the employee-parent, not the
student. To make this proposal attractive and
competitive, the CIA would guarantee the loans
and pay interest subsidies to make up the differ-
ence between the loan rate and market rate and
might also pay the interest that accrues while the
student is in school.
In a typical Guaranteed Student Loan Program,
the government would "buy down" the interest
rate from the prevailing market rate to a value
nominally 3 percent lower. Currently, the Credit
Union is making loans at about 11 percent, so
that, if the Agency were subsidizing the loan by 3
percent, the rate to the student would be 8 percent.
The Agency would pay the difference between the
8-percent and the 11-percent rates. The Credit
Union estimates that the cost of the subsidy pro-
gram would be approximately $495 per loan per
year over the 14.5-year life of a loan for a student
who borrowed $3,000 per year for four years, the
size of a typical Credit Union student loan now.
For a student borrowing $10,000 per year for four
years, the cost to the Agency would be about
$1,650 per year over the 14.5-year life of the loan.
Currently, the Credit Union cannot make loans
to the dependents of its members. Thus, there are
a number of legislative and administrative hurdles
that would have to be overcome to implement this
option. As currently envisioned, we would expect
the program to be as follows:
? Educational loans would be made to the stu-
dent, not the employee-parent.
? No-needs test would be required.
? The interest rate of the Guaranteed Student
Loan Program would apply.
? The maximum amount that could be bor-
rowed per year would be $10,000, which
should be sufficient to cover tuition, room,
Feature 14-Staffing Management Tools
The objective of the Task Force has been to
provide a systematic approach to building and
maintaining an attractive and motivating environ-
ment that will encourage our employees to want to
spend a career with the CIA. There are certain
issues that are unique functions of demographics or
market forces, however, that are better addressed
through special approaches focused on solving spe-
cific problems that contribute to organizational
turnover and dissatisfaction. Among these are:
? The varying market demands for selected oc-
cupations that fluctuate with demands of the
private and public sectors for scarce skills.
? The Agency's need to attract and retain ex-
perts in these technical fields through their
prime productive periods when these people
typically expect to change jobs and organiza-
tions several times during a career.
? The movement of the baby boom generation
into the middle and senior level of organiza-
tions at the same time that management op-
portunities at the more senior levels are dwin-
dling, creating a generation of employees who
are faced with potentially plateauing careers.
This section of the report offers four specific
proposals for addressing these growing problems,
but are not intended to be all inclusive. Three of
these proposals are retirement initiatives intended
to ensure flowthrough in management ranks, or
make Agency employment more attractive to cer-
tain mobile employees not generally expecting to
spend a career with a single organization. The
fourth is a proposal to use retention bonuses to
encourage certain key individuals to remain with
the Agency. These are examples of the types of
approaches that will be required to address the
future, and we will continue to examine other
approaches that may facilitate future retention and
development of our employees.
and board at most colleges and universities. Early Retirement for SIS Managers
? The maximum amount that could be bor- Although other elements of the proposed Hu-
rowed by a student would be $50,000. man Resource System are designed to minimize
43
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
FOR OFFICIAL USE ONLY
the effect of career plateauing, we believe that it is
also critical to provide a continuing throughput in
senior management ranks to avoid stagnation.
Under current law, employees under CSRS or
FERS can retire without unreduced benefits only
if they are 55 or over, and those under CIARDS
and Special Category FERS can retire at 50. Al-
though there are sound reasons for the current
differences, we believe it is important that there be
a steady influx of new talent into the management
ranks. We also believe it is important that our top
employees at the peak of their careers continue to
perceive that there is potential to get to the top
through planned turnover in the management
ranks. This objective will be even more difficult to
achieve as the "baby bust" generation, which will
be covered by the portable FERS system, begins to
fill midlevel management jobs and see the path up
blocked by relatively young managers who must
remain until they are 55 or older. For many of
them, movement to another organization may
seem more attractive than spending their careers
plateaued at their current levels.
To provide the CIA with the needed flexibility
in this area, we propose that the DCI be granted
authority to designate certain key SIS officers as
eligible for early retirement, with unreduced bene-
fits. The requirements for eligibility would be 50
years old with at least 20 years Federal service, 10
years of Agency service, and at least 60 months in
the SIS. This provision would be available for
limited use at the discretion of the DCI as a means
to maintain a dynamic management corps and to
encourage those aspiring to senior management
positions to remain with the Agency.
Early Retirement for Experts
At the same time the CIA is faced with the need
to maintain a flowthrough in management ranks,
we are also faced with the need to recruit and
retain key experts in occupations critical to the
Agency and to be able to retain them through the
prime years of their career. These same people
typically expect to change careers a number of
times during their life, seeking new challenges
rather than advancement within the organization.
The CIA can offer the challenges they seek, but
needs other tools. One of these may be the reten-
tion bonus. We also believe that, if we would offer
an abbreviated career, with eligibility for a mean-
ingful retirement income at 50 after only 20 years
of Federal service with at least 10 years of Agency
service, we could retain more of these people.
Therefore, we suggest that the same early
retirement option proposed for managers be avail-
able for key experts at the discretion of the DCI.
Involuntary Retirement
The third proposal would provide an unreduced
annuity for employees who take an involuntary
retirement as a result of a reduction in force (RIF)
or reorganization.
Employees under CSRS take a 2-percent reduc-
tion in annuity for every year they are under 55,
and both those under CSRS and FERS receive
annuities less than they would have received had
they been allowed to work until their planned 55
years old retirement age. These employees are
further disadvantaged relative to other Federal
employees because they have no placement rights
in other agencies. The proposal would allow invol-
untary retirement, without penalty, for employees
affected by RIF or reorganization who are 50 years
old and have 20 years Federal service, or any age
with 25 years Federal service. The annuity compu-
tation rate for such employees would be 1.7 per-
cent under FERS and 2 percent under CSRS.
These changes would place our CSRS and FERS
employees who qualify on par with our CIARDS
and Special Category FERS employees.
Bonuses have been used by the military for
many years as a tool to retain key personnel. These
bonuses have been used across the board and are
particularly generous in the combat arms to en-
courage experienced noncommissioned officers to
remain on active duty. They also have been used
to retain officers in key occupations like naval
aviator, nuclear engineer or physicist, and medical
doctor. Authority to pay these bonuses is included
in the military legislation and regulations and is
administered at the departmental level.
Because of the success with which these pro-
grams have been used, we believe a similar mecha-
nism should be established as a tool available for
the CIA to use to induce key individuals in critical
high-turnover occupations to remain. Specific trig-
ger guidelines would have to be worked out, but
we believe that there are certain occupations that
from time to time will be critical to the accom-
plishment of the CIA mission and will be staffed
with individuals who possess highly marketable
skills that are in great demand outside the Agency.
We believe the individuals in the best position
to identify those occupations in which turnover is
44
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
having a harmful effect on the ability of the
Agency to accomplish its mission are the operating
officials. These officials would submit their recom-
mendations through their Deputy Directors to the
Director of Personnel, where an assessment of the
Agency-wide needs and problems could be con-
ducted. On the basis of the recommendation of the
Director of Personnel, the Executive Committee
and the DCI could rule on the case and designate
an occupation, individual, or group key to the
Agency to establish a retention bonus that would
be tied to their experience with the Agency and
their commitment to remain. Once the occupation
is determined to be critical to Agency needs,
individual Deputy Directors could be granted au-
thority to designate eligible individuals and certify
awards.
Proposed Data-Processing Support
Feature 15-System Controls
Concurrent with the implementation of the new
system will be the introduction of a budget control
system that would allow senior managers to sys-
tematically plan, allocate, and track monies for the
personnel and compensation system. The Agency
program review and budget process will continue
to be the primary control and monitoring mecha-
nism for the new system, but the focus could shift
from position ceiling and average grade con-
straints to personal services dollars only.
The control process would begin with the Comp-
troller in the annual program call as it does now,
with guidance being provided to senior manage-
ment on the projected growth in Agency personal
services funds. At the operating and Directorate
levels, this control system would be translated into
personnel requirements to support new programs
by occupation, levels, and projected salaries. In
addition, managers would be expected to project
their overtime, other premium pay, and allow-
ances requirements on the basis of anticipated
workloads for current and projected programs. In
turn, the Comptroller would process Directorate
requests through the budget cycle until the current
year operating budget is approved and provided to
the Directorates.
To support this process, a variety of new auto-
mated planning tools will be required throughout
the management chain. At the Agency or Comp-
troller level, a statistically based budget model
would be required that provides a combination of
trends analysis tools to support planning for future
personal services funding requirements. This mod-
el would compare demographic data concerning
future work force trends with projected Agency
attrition and accession. This system would require
up-to-date projections on separation and hiring by
salary level, as well as information on projected
promotion rates derived from the difference be-
tween current position requirements and current
employee salaries and levels. The Comptroller
would develop the budget using statistical projec-
tions over a five-year period. As an interactive
tool, the budget model would simplify the process
of projecting future personal services needs.
The Comptroller would include projected costs
of incentive pay into the budget to account for any
changes in total Agency personal services costs.
From this analysis, an incentive pay planning grid
would be derived for the Agency by the Comptrol-
ler and the Office of Personnel and would be
reviewed and approved by the EXCOM and DCI.
After the approval, guidelines would be provided
to the Directorates along with their allocation of
money for the incentive program as discussed
earlier in the report. Within the guidelines and
limits set by the Agency, Directorates or their
subordinate operating organizations could adjust
percentage amounts as they provide internal guid-
ance to their panels and disseminate the guidelines
to their Directorates.
At the Directorate level, a similar model would
be used to assist management in assessing personal
services requirements over the three-year program
cycle. To support planning for organizational
changes, a more focused trend analysis would be
needed on separation and EOD projections by
occupation as well as promotion projections to
determine the recruiting requirements, personal
services funds requirements, and occupational mix
problems that may be facing the Directorate.
At the operating level, managers would need
access to an up-to-date staffing system that accu-
rately reflects salary and other data that may be
helpful in planning the current and next year
personnel requirements. At this level, the support
systems should offer two separate services. The
first should allow the manager to input projected
changes to his organizational staffing, assign peo-
ple into the new organizational structure, and
assess projected personal services costs associated
with the reorganization. If the manager controls
the promotion process at this level, the support
system should allow projections of the impact of
45
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
these promotions on personal services costs and
should allow future promotion rates to be project-
ed against guidelines provided by the Comptroller
for growth in Agency average salaries and personal
services funds for the planning period.
The second support system required at the oper-
ating level is a mechanism that would allow man-
agers to simulate incentive payments to assigned
personnel to ensure that projected payouts are
consistent with guidelines provided. The primary
requirement for this system would be a current
listing of employees and their salaries so that
computations of total cost could be fed back to the
manager, and any necessary adjustments made
before announcement of the final award amounts.
Feature 16-Projection Tools
At the operating levels, senior managers would
be responsible for both short- and long-term Hu-
man Resource planning. The Task Force proposes
that they be provided with new automated tools to
assist in this planning process. Managers would
require current demographic information on their
work force to project retirements and separation
trends. They will require support systems that help
plan for changes in occupational mixes by index-
ing projected skills needs throughout the Agency
to facilitate placement of skills no longer needed
by one part of the organization, and identifying
retraining opportunities for obsolete skills. Infor-
mation would be required at the operating level on
the currency of education, particularly in technical
occupations where knowledge is perishable, to
plan for additional refresher training in the spe-
cialty areas. Data would be required on recruiting
projections to help identify those areas where
special recruiting attention would be required to
meet our demands for scarce skills.
These and other types of HR planning tools are
being examined by the Task Force to determine
which could be satisfied by upgrades of current
data base systems and which would require addi-
tional development. Tools that will meet the man-
agers information and planning needs will be
made available at the component level.
Proposed Implementation Strategy
The proposed system has been designed in a
modular fashion so that some of its individual
parts, such as the revised performance appraisal
system or the various benefits options, could be
implemented concurrently or incrementally. The
pay and classification features would affect only
GS, secretarial, and commo-banded employees;
the changes in the performance evaluation, career
development, and benefits systems would be appli-
cable to all.employees.
If banding and incentive pay are approved, this
would be phased in, occupation by occupation to
ease the administrative impact and to provide an
opportunity to make such system adjustments as
may be required. It has been proposed that the
first two occupations to be placed into the new
system would be Operations Officers and Comput-
er Systems Analyst-Programers, to be followed by
the remaining occupations in the Agency over a
two-year period. During this two-year period, all
Agency occupations on the GS-plus secretaries
and Office of Communications employees who are
in alternative pay systems-would be brought into
the new system.
Before placement of an occupation into the new
system, occupational panels would be reconvened
to complete work on performance expectations
and career development guidelines and to produce
occupational career handbooks so employees
clearly understand the new system as it applies to
their occupation. Next, each occupation would
convene a panel to assess individual employees
against placement guidelines to determine the ini-
tial occupational level in which the employee will
be placed, with the understanding that all employ-
ees will be converted into the new system at their
current salary level. At the same time, the organi-
zations that have these occupations would convert
positions to the new system on the basis of the
requirements of the organization and in accor-
dance with occupational-level definitions.
One issue that we may wish to address on an
Agency basis during this two-year phasein period
is the differences between the career opportunities
that exist among our various occupations. Many
occupations have clear career paths to manage-
ment levels, and many others have considerable
lateral and upward opportunities based on em-
ployee skills and desires and the needs of the
Agency. However, we also continue to have many
occupations that have only limited career ad-
vancement opportunities and that offer little op-
portunity to develop new skills or take on more
challenging responsibilities. An examination of
such narrowly defined occupations could be un-
dertaken as part of the implementation process to
define and develop additional career opportuni-
ties, to look at new ways to structure Agency
occupations to expand the challenges and opportu-
nities for these employees, and thus, to provide
more flexibility to managers to make optimum use
of their personnel.
Proposed System Synopsis
Following is an end-to-end synopsis of the main
features of the proposed system.
Feature 1-Occupationally Defined Bands
A. There could be a varying number of banded
pay levels-from four to six-for each Agency
occupation.
46
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
B. There would be a broader spread between the
minimum and maximum of a banded pay level
than exists for GS grades. Instead of discrete steps,
the internal range of an individual banded pay
level would be open, and permanent salary in-
creases would represent a percentage of base pay.
C. The relationship between our occupations
would be maintained by an Agency-specific job
evaluation system. This system would replace all
OPM-related classification tools being used by the
Agency.
D. An Agency-unique pay schedule would be
developed using the banded job levels identified
by the panels. The new pay schedule would have
25 pay levels based in part on salary data that
compares Agency jobs against equivalent ones in
the marketplace. Each band within an occupation
would be placed on the new pay structure at the
appropriate level. The top of the pay structure
would be constrained by the legislative pay cap.
E. To keep the pay schedule current, contractor
support would be used to compile and assess
salary survey data for periodic review by the
Office of Personnel with direct participation by
the Directorates. Salary schedule adjustments peri-
odically would be authorized by the DCI.
Feature 2-Incentive Pay
A. The Agency would budget directly for its
incentive pay and promotion funds. Legislative
pay increases would increase the amount of per-
sonal services monies available for distribution to
employees as part of the incentive pay system.
B. Using budget amounts specified by the
Comptroller, an Agency-wide incentive pay plan-
ning grid would be developed annually and ap-
proved by the EXCOM. The grid would specify
the ratio of amounts available for permanent sala-
ry increases and performance bonuses.
C. Above satisfactory performance would be
rewarded more substantially than under the GS,
and satisfactory employees would receive pay in-
creases comparable with those now possible.
D. Pay would be in two parts, a permanent
increase and a performance bonus; both will be a
percentage of base salary. Permanent increases to
salary would be paid biweekly, and performance
bonuses paid in a single lump sum.
E. Pay adjustments would be on the basis of
competitive evaluations conducted by panels. Of-
fice directors, DO division chiefs and heads of
independent offices would approve all pay adjust-
ments below the SIS level.
F. Individuals who serve outside of their home
office would be evaluated for and paid a perma-
nent increase and a performance bonus by the
component in which they are working. Promotion
for these individuals would be the responsibility of
the parent career service.
G. Salary schedule adjustments would not auto-
matically result in an increase to each employee's
personal salary. Rather, an employee's salary in-
crease would be determined during the annual
pay-for-performance evaluation.
H. A Manager-Expert Incentive Program would
be established as a recognition program for non-
SIS managers and experts. There would be an
increased annual leave carryover limit for manag-
ers and experts and a bonus program that would
allow an additional bonus, which, when combined
with the normal merit bonus, could be as much as
15 percent of base pay.
1. The minimum and maximum for SIS bonuses
would remain as they are today, but the bonus
pool would be increased somewhat to allow a
larger percentage of the SIS population to receive
an award. -
Feature 3-Performance Plan
A. A modified performance appraisal system
would be developed that includes: performance
plan formulated by the supervisor and employee at
the beginning of the rating period and required
interim feedback discussions between supervisor
and employee.
B. An automated data base of key tasks for each
job identified by the occupational panels would be
developed and made available to supervisors and
employees to aid performance planning.
C. Supervisors would have the flexibility to
modify a performance plan on the basis of interim
feedback discussions with the employee.
A. The current PAR format could be changed
and a five-point scale adopted in place of the
current seven-point scale. Additionally, a perfor-
mance appraisal form tailored for the evaluation
of managers would be developed.
B. Employees would be evaluated against job
tasks identified by the occupational panels or
against specific job tasks developed with the
supervisor.
C. The performance appraisal by the first- and
second-line supervisors would be used by panels to
evaluate and rank employees for pay adjustments.
47
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
Feature 5-Occupational Career Handbooks
Career handbooks would be written for each
Agency occupation. The handbooks would outline
the career management process for each occupa-
tion including career maps, training and assign-
ment opportunities, and pay administration pro-
cedures.
Feature 6-Individual Career Development Plans
Employees would have the option, tools, and
incentives to prepare detailed and realistic career
development plans. Information regarding project-
ed Agency needs would be available to assist
employees in their individual planning.
Third, it would allow the employee to exchange
some annual leave for additional flexible credits or
exchange flexible credits for additional leave.
Feature 12-Leave Conversion
Several annual leave modifications are being
proposed as alternatives to those offered under
flexible benefits. These include: increasing the
annual leave carryover limits for non-SIS manag-
ers and experts; cash payment for SIS leave bal-
ances in excess of 500 hours; conversion of annual
leave to sick leave or deposit into a sick leave
bank; and use of home leave balances as paid time
off in the year before retirement.
Feature 7-Occupation-Specific Training
Occupation-specific training would be devel-
oped that is keyed to the particular skill require-
ments of the various levels within individual occu-
pations. Representatives of the occupations would
work with OTE to tailor courses to meet specific
occupational requirements.
Feature 8-Improved Availability of Training
Training would be made available when it is
needed and at the convenience of the employee.
Several new training features such as self-instruc-
tional correspondence courses, computer-based in-
struction, and workbooks on a range of unclassi-
fied subject areas would be developed.
Feature 9-Dual Track
With more positions established for experts at the
higher levels, employees in a number of occupation-
al fields would have an alternative to the manage-
ment track that offers appropriate reward and status.
Feature 10-Promotion
A. Career management would continue to be the
responsibility of the parent organization/career
service, and panels would evaluate employees an-
nually for promotion to the next higher level.
B. All employees who have a satisfactory perfor-
mance appraisal rating would be considered for
promotion.
C. Promotions would result in a permanent
increase to base pay of at least 10 percent.
Feature 11-Flexible Benefits
A flexible benefits program would be developed
with three attractive characteristics. First, it would
allow the employee more choice in selecting bene-
fit options. Second, it would allow the employee to
pay certain health and dependent care expenses
and other qualified benefits with pretax dollars.
Feature 13-Educational Assistance for
Dependents
A CIA-guaranteed and -subsidized student loan
program administered through the Credit Union is
proposed. In addition, leave secured loans and
Thrift loans are considered.
Feature 14-Staffing Management Tools
A. Establishment of a retention bonus program
is proposed to provide managers with extra flexi-
bility to reduce turnover of key individuals or
groups of employees.
B. An early retirement provision is proposed
that would allow certain SIS officers retirement
with unreduced benefits to maintain a flowthrough
into the management ranks.
C. An early retirement provision is proposed
that will allow certain key experts to retire with
unreduced benefits as a means of encouraging
them to spend a full career with CIA.
D. An involuntary retirement option is being
proposed to allow certain individuals effected by
reorganization or reduction in force to retire early
with unreduced benefits.
Feature 15-System Controls
Computer-based models of the personnel struc-
ture at CIA would be developed to formulate
salary planning grids for the Agency incentive pay
program, to allocate incentive and promotion
monies to the Directorates, and to assist compo-
nents in adjusting occupational levels and num-
bers of personnel.
Feature 16-Projection Tools
Automated support would be available at the
component level to assist managers with projec-
tions on future human resource requirements.
48
FOR OFFICIAL USE ONLY
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
NOTES
Declassified and Approved For Release 2013/06/14: CIA-RDP90-00530R000701650008-0
 Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
NOTES
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
 -abv, V,
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0
Declassified and Approved For Release 2013/06/14: CIA-RDP90-0053OR000701650008-0