Recent OE IWG Meeting Minutes: a Retrospect

JULY 23, 2015HR/OE Conference Room (Room 368, SA-44), 11 a.m. - noon

Present: Annaliese Pollock (SSA); Chang Lim (SSA); Maggie Crnic (DOE); Daniel Williams (USDA); Juliana Madrid (USDA/FAS); Fabienne Corcoran (DHS-ICE); William Olsen (DHS-ICE); Joseph Jackson (DOC/ITA); James Bedmon (DOD/ICASS); Alison Griffith (DOS/OGAC)

From OE:  Mike Tulley, Jill Perry, Matt Klimow, Debbie Higgins, Richelle Cook, Ramona Payne, Kristin Murray and Pamela Scott (notes).

Additional participants from the Departments of Agriculture (APHIS), Commerce, Energy and Justice; Consumer Product Safety Commission, and other agencies took part by phone.

Introduction                                                            Director Mike Tulley introduced Jill Perry, new Deputy Director, and Senior Advisor Matt Klimow.

HR-OE is moving to 1800 G Street NW in mid-October, (Farragut West metro).

The OPM security breach affects LE Staff minimally; we will keep agencies posted if this changes.  Family member employees may be compromised.  A June 4 message from the Office of the Under Secretary for Management stated that “data on State Department employees (Civil and Foreign Service, active and retiree; and Foreign Service National retirees under the old CSR system) was not on the OPM systems involved.”

2015 Salary Increases Update                                                                                   

         OE first authorized increases to the posts affected by Ebola (Liberia, Sierra Leone, Guinea)         Like last year, we are sending out results to the field in groups of 10 every two weeks.          To date, 80 FYI emails have gone out to posts, informing them of review results;  a further

ten will go out on Monday         50 of 110 increases have been fully authorized.         If necessary, IWG members should email OE to enquire about the status of particular posts.         Regarding authorized increases, payroll generally implements them within three pay periods

of authorization.         The process is going smoothly this year, with good interagency communication.

 

2016 Salary Increases

        Coming out of the Wage Freeze (i.e., in FY 2014), we used the 50% market percentile to establish increases; this year we targeted the 60% percentile, for all posts uniformly.

        Next year we hope to resume our former practice of establishing individual post-specific targets as we did before the freeze.  Job markets vary widely and determining the market percentile involves many variables: attrition, unemployment, Local Compensation Questionnaire (LCQ) input (which incidentally, includes all agency participation and concurrence at post).

        OE will meet soon with Budget and Planning (BP) and Regional Bureau management to begin the process of determining posts’ market positions for 2016.  We expect most posts will fall between the 60-70% percentiles of the local labor market.

  

Voluntary Contribution Plan (VCP) Update                                        Richelle Cook and Ramona Payne

       The VCP is an end-of-service benefit plan.       Every post will be reviewed but not every post will be legally eligible to implement VCP, depending

on local law.         L will determine which countries are eligible, country by country.       VCP was implemented in the first pilot post (Saudi Arabia), on April 5, 2015.       HR/OE selected Guatemala as the second pilot post with a tentative implementation date of

November 29.       Burundi, Qatar, Colombia and Bahrain have been approved by L for implementation. Attached is a one page summary of the VCP.

The next IWG meeting will be in October;   we may have to be flexible with the date due to our move. 

Cuba

The Embassy is opening; there are few agencies there at this time, but this will change.

The address for HR OE documents on the ICASS website has changed to www.icass.gov/hr-oe, effective immediately. 

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MARCH 13, 2015HR/OE Conference Room (Room 368, SA-44), 11 a.m. - noon

Present: Shavon Beans (FAS); Cheryl Boudreau (DOD); Carmen Castro (DOS); Maggie Crnic; Jeremy Duermyer (DOD); Benedict Dichoso (DOD); Brad Doebel (DOS); Patti Hoffman (DOS); Maria Lau (DA); Chang Lim (SSA); Christopher Lynert (DOD); Joy Miller (FAS); Emily Nolte (DOS); Allison Schroeder (DOD); Daniel Williams (USDA); William Wong (Commerce).

From OE: Director Mike Tulley, Deputy Jack Hinden, Policy and Coordination Division Chief Debbie Higgins, Anne Amadou, Richelle Cook, Ramona Payne and Caroline Cole (notes).

Additional participants from the Departments of Agriculture, Defense, Energy and Justice; FAA, USAID, CDC, Consumer Product Safety Commission, Secret Service, CPSE and other agencies took part by phone.

W a ge Defrost in 2015 Director Mike Tulley

Agenda items: a. Status and timeline b. Prioritization list update

This time last year, OE began sending out results of compensation reviews to the field. The budget process is going very slowly but the first tranche of analysis is completed and OE

hopes to begin releasing results very soon. OE has sent results to the three posts affected by the Ebola crisis (Liberia, Sierra Leone,

Guinea) Last year, we sent out results to the field in groups of 10. This year, we hope to proceed

similarly. (We will have to coordinate this approach with our payroll offices in Charleston and Bangkok.)

There has been some reprioritization of posts and some change in results from original estimates. E.g. Russia moved higher up, into the first tranche, since they are experiencing very high inflation; due to an error in the data source, there will be a proposed increase for Jakarta; and Kuwait, Jordan, and Brazil have moved higher up on the priority list. A representative from HR/OE will be in Namibia soon to assess the situation there, and Turkey dropped from a 12% increase to 6%.

This year, we’re aiming for the 60th percentile Message for your posts: “We have met with HR/OE and some of our Headquarters budget

officers are still finalizing the numbers internally and with OPM and the Hill. We have no final answers yet but hope to have them soon.”

Merit Based Compensation (MBC) Division Chief Debbie Higgins

Interest in participating is increasing There will be a workshop this summer in Washington DC from July 7-10 It will take place in either Rosslyn or Crystal City Tuesday, July 7 will be open to anyone (employees of outside agencies, bureaus) who

wants a comprehensive overview of the program

Alternate Retirement Plan (ARP) Deputy Director Jack Hinden

Agenda items: a. Reference Manualb. Implementation and Pilotc. Future plans

This initiative has been in development for more than five years The new plan is designed to provide our employees with an end of service benefit. Employees will receive the benefit regardless of why they separate (i.e. not just for

retirement.) We’re finally preparing for implementation The plan is referred to as the VCP Saudi Arabia is the first post piloting the plan OE has sent legal surveys to nine other countries to see whether VCP will be compatible

with host country labor laws Funds will be paid to employee in a lump sum About 1200 US Citizen LE Staff employees will participate Any country with a DCP already in place will not be as high a priority A VCP can replace a current plan when legally acceptable however, the old plan will

close for new hires VCP will be managed in Charleston rather than through a private bank We will onboard one or two posts this fiscal year and about three or four a year

thereafter. We estimate about 30-40 posts in total will use the new plan

Attached is a one page summary of the VCP and a tentative list of posts that are in the second and third tranches. The list is for planning purposes only and is subject to change at a moments notice.

Finally, one representative suggested we establish a regular date and time for IWG meetings. We propose the last Friday of each quarter at 11a.m. Therefore, the next meeting will be Friday June 26, 2015. We may schedule another meeting before then if needed.

For those without access to IntraNet, ICASS enables you to access many of HR OE’s major materials at: https://www.icass.gov/home/Documents/Forms/hroe.aspx

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December 3, 2014 HR/OE Conference Room (Room 368, SA-44), 2-3 p.m.

Present: Nicole Buckey (DOD/DIA); Maria Caisa (DOJ/CRM); Sue Chan (DOJ); Benedict Dichoso (DOD); Sherri Fennell (USAID); Michelle Freeman (DOD); Alison Griffith (DOS/PEPFAR); Cliff Howlett (DOD/DIA); Taisha Jones (USAID); Samuel Kalonji (USAID); Richard Roberts (OSIS); Letitia Smith (USSS); William Plummer (Peace Corps); Pat Wexel (USAID); William Wong (Commerce).

From OE: Director Mike Tulley, Deputy Director Jack Hinden, Compensation Division Chief Kumiah Harrison; Policy and Coordination Division Chief Debbie Higgins, HRO Anne Amadou, HRO Ronnie McCall, Monica Bedi and Pamela Scott (notes).

About 70 participants from the Departments of Agriculture, Defense, Energy and Justice; FAA, USAID, CDC, Consumer Product Safety Commission, the Secret Service, FAS, CPSE, USDA and other agencies attended by phone.

Debbie Vaughn, HRO from Frankfurt Regional Center and MBC expert.

Status of the Wage Defrost Director Mike Tulley

OE Director Mike Tulley, using an updated spreadsheet similar to the one we saw at previous meetings, discussed the implementation of the wage defrost.  The spreadsheet will be circulated electronically to all shortly; please remember that the information it contains is sensitive, represents estimates and should not be distributed further. There are fourteen new posts at the top of the list: Liberia, Eritrea, Vietnam, Central African Republic, Angola, Togo, Laos, Senegal, Timor-Leste, Gabon, Croatia, Haiti, Cameroon and Cambodia. These could have received increases in 2014 but did not due to a lack of funding and time for analysis, so will be prioritized in 2015.

An additional 30 posts moved up on the list as regional bureau priority selections. OE asked the bureaus to select priorities according to attrition, recruitment issues, interagency considerations and other relevant factors confronting posts. Where this occurred it did not “bump” any posts to a later cycle, so that the present cycle distribution is unevenly spread.

The Compensation team is well on track and aims to complete Cycle 1 reviews by the end of February. Division Chief Kumiah Harrison stressed that the chart provides budget estimates rather than definitive amounts, and that agencies should inform their colleagues to take this into account when planning budgets.

Last year about 70 posts received increases; if all participating agencies (including DOS) are able to fund to the 60th percentile that would mean that about approximately 110 will receive increases in 2015.

When increases are funded depends on Congress. An omnibus bill could be passed for the entire fiscal year before the impending Christmas recess for the best possible scenario, but last year we did not have budget certainty till late April/early May. So the timing of increases depends on the actions of Congress.

In 2015 HR/OE will be able to offer more flexibility than last year for posts to propose different increases by grades. This will be handled on a case-by-case basis and will depend on what the data shows.

Merit Based Compensation (MBC) Division Chief Debbie Higgins

Debbie explained the MBC system, which replaces the Within Grades Increases (WGIs) with a variable increase based on performance. London has been using merit based compensation for the past twenty years. It has several advantages: it allows LE Staff at the top of their grades to be rewarded for good performance; it improves communication between supervisors and employees; staff is evaluated against pre-agreed goals on a point system, and it is more in line with prevailing HR best practice.

Europe is rolling out MBC, and other regional bureaus have expressed an interest; however, it is unlikely that MBC will go global. Posts need a local legal opinion and Front Office support in order to initiate the process.

Debbie explained how present WGIs and MBC are funded by the Department of State (a 3% overall annual budget) and asked agencies to consider how they budget for employee within grade increases. MBC might increase costs for some agencies and decrease it for others. Performance pools will be separate for each agency since they have different funding. Implementing MBC takes about one year; it requires numerous briefings, training, a local legal opinion, and the LCP has to be changed. MBC uses a single evaluation form whereas there are currently three. In conclusion she urged agencies to contact her with any questions about MBC.

Alternate Retirement Plan (ARP) Deputy Director Jack Hinden

Jack outlined the ARP, which OE is finalizing, after major input from the IRS on the impact on US Citizens. We are working to implement a Variable Contribution Plan (VCP) for Locally Employed (LE) Staff overseas, with the intent of supporting their financial security in retirement. The VCP is one component of the Alternate Retirement Plan (ARP), with the other being the existing FSN Defined Contribution Plan (FSN DCP), which is in effect in approximately 30 countries and was established in 2003. The VCP is part of a category of plans referred to as a “defined contribution plan”—a retirement plan in which employer and employee make regular contributions into an account that will become payable to the employee when s/he leaves USG service. The amount of contributions will vary between posts, and is based on prevailing practice.

Once the VCP is finalized, OE’s first priority will be to implement it in posts with supplemental Defined Benefit (DB) plans, which exist in about 15 countries, where post management and/or the Department have concerns about the reliability, trustworthiness, and solvency of the current plan.

The Variable Contribution Plan (VCP) will in most cases consist of three sub-accounts: a) USG contributions; b) Required Employee contributions; and, c) Additional Employee Voluntary Contributions (up to a specified maximum). Determination of the amount of the USG contributions and employee deductions will be based on prevailing practice in each country; in some locations, local conditions will not allow for mandatory employee contributions. Posts will not be required to withdraw from LSSS to participate in this plan, and employees will not have the option to purchase prior service credit. The VCP will not be applicable to all posts due to local laws; it would be part of the Local Compensation Plan (LCP) and involve all agencies at post.

VCP funds will be managed in Washington and invested directly with the U.S. Treasury securities by the Department. Employees will have no claim to the contributions until actual payout because of the way the VCP has been structured to comply with U.S. tax regulations.

Nine posts are participating in local legal surveys (Albania, Burundi, Colombia, Grenada, Guatemala, Guyana, Norway, Saudi Arabia and Suriname). We aim to implement the VCP at a pilot post by April 1, 2015. Posts without viable retirement plans will be prioritized in the planned rollout; probably only a handful of posts will adopt it during that first year. Existing retirement plans will be phased out. Agencies requested further information as early as possible in order to prepare accordingly.

Other Items: please send best practice information on employee management to Debbie Higgins at HigginsDA@state.gov

Joint OE-ICASS Interagency Working Group MeetingSeptember 10, 2014 10-11:30 a.m.; ICASS Conference Room at SA-1 (Rm. 1504, Columbia Plaza)

Janet Buechel, chair of the ICASS Working Group, led the meeting.

Present from HR/OE: Director Mike Tulley, Policy and Coordination Division Chief Debbie Higgins, Sally Cintron, Anne Amadou and Pamela Scott (Notes).

Present from ICASS: Bill Hoover, Trish Garate and Steven Gibson.

Present: representatives of the Departments of Agriculture, Commerce, Defense, Energy, Homeland Security, Justice, State, USAID, USCIS, Open Source Center, MCC, PEPFAR, Peace Corps, the Consumer Product Safety Commission, CDC, the Secret Service and the Social Security Administration, in person or by phone.

Ms. Buechel opened the meeting with introductions, mentioned that HR/OE had requested to attend this meeting, and then introduced Mike Tulley:

Director Mike Tulley, HR/OE:

FY 2014 in Retrospect:The first year out of the three year wage freeze (that ended on January 1, 2014) has resulted in salary increases for about 70 missions that had fallen below the 50th percentile in their respective labor markets. Payroll in Charleston and Bangkok facilitated the increases smoothly. Mike reminded agency representatives that the wage freeze was an extraordinary event, the first ever, and something that requires more time than one year to recover from. In 2014, HR/OE ranked all 177 posts by a consensual agreement that prioritized need based on attrition data and posts’ labor market position.

Approximately 70 posts received authorization for increases in 2014. Three posts have not yet responded to the HR/OE record e-mails and HR/OE is working with them individually to address pending issues.

HR/OE found that salary increase estimates provided for budgeting purposes pertaining to the top 76 posts were in fact quite close to the final authorized increases. The overall average increase estimate was 18.4% whereas the overall average authorized was 18.9%. When estimates varied significantly from the final authorized increases, we usually found a reason for apparent anomalies on further exploration: a vendor may have been dropped due to a lack of adequate survey data; some outlying positions may have been sported (removed from the

analysis) because their salaries were much higher or lower than the average; or OE may have found a post allowance included in error when estimating the increase, which was then removed in the final analysis. Sometimes, last year and in 2015, our estimates were and will be imperfect due to various factors.

Some posts (8) had no comparator surveys available and HR/OE conducted these surveys. We hope to have the analyses for these posts completed in the next month or two. If any of these countries are below the 50th percentile they should be among the first to be authorized increases in FY 2015.

We will complete full analyses for posts numbered 77 through 103 on the 2014 increase list. We have found that, although the initial estimates indicated these posts are above the 50th percentile, some are warranted increases based on the full review. HR/OE proposes to move these to the top of the 2015 increase list. Once a final determination regarding the labor market percentile target for 2015 is reached, the proposed increases for these countries will be re-calculated using the new percentile.

A participant asked about posts’ reactions to the lack of flexibility regarding the distribution of salary increases and the inability to apply across-the-board increases. Mike acknowledged that many posts did resist this, however OE had the Under Secretary’s approval to recommend posts apply the increases as supported by the survey data and posts were not allowed to negotiate different salary increases. However, next year we are hoping to provide more leeway; the posts and associated Bureaus will have more input.

Moving Forward to 2015: We will probably face the same budgetary constraints that we have seen in past years, and if we are on a continuing resolution increases probably won’t be authorized before January-March 2015. Therefore this year, increases will be divided into three cycles beginning: January, April and July. This process will replace the Fixed Effective Date schedule used in the past, which was tied to the annual review cycle.

In addition, we are proposing that the Bureaus, in consultation with posts, have the option to move certain posts up on the 2015 increase list into “wild card” slots based on conditions at post. The increased flexibility has the support of the Under Secretary and Bureau Regional Executive Directors (REDs). Some posts may be experiencing difficulties with recruitment and retention based on economic factors, expanding industries, or other employment conditions. In these cases the bureau can request that the country be moved to a higher level in the 2015 increase list. This does not guarantee an increase or a higher market percentile target, but the post will be able to implement any increase sooner. Posts may be moved between cycles. However posts in the third cycle are not warranted increases at the 55th or 60th percentile and it would not be advisable to move these posts higher on the list.

In contrast to last year’s estimates based on an overview of raw compensation data, this year’s projections were based on aged salary data developed from trends. The 2014 vendor salary data was used for the projections and the data was aged to July 2015. For the Birches Group data, the vendor uses historical salary movement and a linear regression formula to provide projected salary increase amounts for 2014 to 2015. The Hay Group and Towers Watson vendors include questions about projected increases in their annual surveys and these projections were used to age their data.

Although last year we brought every post up to the 50th percentile level, some posts with highly volatile markets have already slipped behind again, so we may see some of the same countries at the top of the increase list again. In addition, there are always unforeseen events which alter the labor market dramatically and unexpectedly resulting in higher, or lower, increases than expected. The 2015 projection spreadsheet represents an initial point of discussion for the 2015 wage increases. Mike asked everyone present to keep the content private and to limit distribution; it should not be shared with the field as it not a final document and would cause confusion. The reason for sharing the information with the regional bureaus and interagency representatives is to assist agencies in making reasonable budget projections as early as possible.

Mike noted that there have been morale problems associated with targeting the 50th percentile. Many LE Staff (and American officers) incorrectly interpret this to mean that we are only giving 50% of the increases due, or that LE Staff are only worth half their value. There is a need to educate overseas employees about this benchmark labor market percentile. Mike also mentioned that HR/OE is working with their compensation consultants and survey vendors to create regional trainings that would help bureaus and posts determine what market percentile to target. In general, posts with stable economies and employment environments should target the 50th- 60th percentiles, whereas countries with more volatile conditions may have reason to target the 75th percentile.

There was discussion about the fact that the average increase percentiles are based on local currency salaries. The meeting participants wondered what the budgetary effect is in US dollars. RM/BP will also provide the agencies with the same tool they made available last year, which will allow them to calculate their budgets in US Dollars and to estimate the ICASS costs. The tool should be ready in the next week or so.

The spreadsheet essentially is a guide for everyone to work from. HR/OE will have an updated version in the coming month after input from the bureaus on their “wild card” choices. Mike suggested that everyone should aim for and budget for the 60% percentile. Although some posts may have viable rationale to retarget a higher labor market percentile, higher percentiles will not be considered in 2015, but we may be able to consider them in future years. He said that the first authorizations will happen in January in the best possible scenario.

Questions, Requests and Concerns for OE: LE/LES/FSN nomenclature Some agencies are domestically based, such as DHS, who felt they would encounter great

difficulty getting increases at the higher level financed. How much “negotiation” will be available in 2015? HR/OE should provide guidance for posts to help understand the 2015 process and the

amount of flexibility permissible. Some agencies expressed concern because the projections are being made in the same

calendar year when budgets have already been set. These agencies have to pull funding from other areas to afford the LE Staff increases.

Some agency budgets are limited to the inflation rate and these are not as high as the increase projections.

What is the future plan? What market percentiles will we target in future years? The increases are expressed in local currency – what is the budgetary effect in US dollars?

5/1/2014 Meeting Minutes10-11 a.m., HR/OE Conference Room

Present: Maggie Crnic (DOE); Alison Griffith (DOS/PEPFAR); William Plummer (Peace Corps); Pat Wexel (USAID); William Wong (Commerce).From OE: Mike Tulley, Jack Hinden, Debbie Higgins, Ronnie McCall, Chris Wilks, Wendy Holloway-Brown, Andre Jennings, Pamela Scott (notes), (Sally Cintron and Corrine Appleton by phone).

Participants from the Departments of Agriculture, Defense and Justice; USAID, CDC, PEPFAR, the Secret Service, Peace Corps and the Library of Congress attended by phone.

Implementation of the Wage Defrost Director Mike Tulley

OE Director Mike Tulley, using a spreadsheet and world map, demonstrated the progress of the wage defrost.   Seven posts (Muscat, Algiers, Colombo, Cairo, Conakry, Buenos Aires, and Ankara) have now completed the entire process and their wage increases will take effect between now and the end of June. To date, OE has sent forty nine complete analyses to posts via the Regional Bureaus.  Mike is optimistic that all 76 posts will receive their analyses by late May/early June.

About ⅓ of the analyses recommend across the board increases; the majority have grade-specific increases. The variable nature of increases at any one post generated significant discussion; some posts felt this was unfair. However the Under Secretary upheld this OE policy. The top 51 posts are more than 10% below average; the others (52-76) are often only a couple of points behind the local labor market average compensation. Many posts, of course, find the 50% goal an inadequate target.

Commerce remarked that the 50% target had been a useful tool for the initial phase and wondered how agencies could be best informed about future increases for budgetary needs. Mike indicated that OE will sit down with the Regional Bureaus to review the traditional 75% target; it is possible that this may trend downwards towards 60%. New compensation instruments, like the multiple data comparators and Indigo automation, will ensure more consistent results. CDC remarked it would be useful afterwards to see which posts did not accept recommended increases.

PEPFAR requested that agencies receive a running list of country status and OE agreed to send it on.

OE also agreed to send out Talking Points to help explain the increases to field staff who are not all supportive of the increases, despite agency buy-in.

Mission Classification (MClass) Update HRO Ronnie McCall

A cable is in coordination that will address recent revisions to MClass software.  The field will see some of these changes to MClass around the end of May.  MClass replaced CAJE in October 2011, and posts have been responsible until now for position classification. Over the next 12-18 months, the Department of State and the Agency for International Development (USAID) will regionalize this function.  Several posts will continue to perform classification actions.  The idea is to reduce the number of Department of State classifiers from the current approximate 500, (plus approximate 80 in USAID) to around 30 and 10, respectively.  We believe regionalization will develop expertise, standardize the classification process, and save money.   In response to a question on ICASS implications, Mike said that at this time the Regional Bureaus are bearing the initial costs and the final funding mechanism has not yet decided. 

Looking ahead – the expansion of Merit Based Compensation (MBC) Acting Policy and Coordination Division Chief Debbie Higgins

OE will hold a meeting soon on Merit Based Compensation, date TBD. Essentially this system replaces (Within Grade Increases) WGIs at post. WGIs are automatic annual or biennial wage step increases dependent only upon a satisfactory performance level. Locally employed staff at higher grade levels do not benefit from WGIs. Merit Based Compensation replaces the fixed WGIs with a variable increase based on an employee’s performance score. It offers an alternative variable reward system based on actual performance and permits employees at their top grade step to receive rewards for good performance. All employees are reviewed on the same annual cycle; there are no grade steps – only a minimum and maximum, and employees are rewarded on a numerical scoring system.

At present seven posts have opted to follow Merit Based Compensation: UK (19 years), Italy, Geneva, Belgium, Turkey, Latvia and Ireland. LE Staff surveys and informal field reports both indicate a high level of satisfaction with MBC and other bureaus have expressed interest in this system.

Other items

Debbie Higgins mentioned that OE hopes to circulate the Performance Management chapter of the Family Member Employment guidebook for agencies’ review before the next meeting.

HRM Specialist Wendy Holloway-Brown outlined recent work on standardizing job titles for overseas employees: direct hire and PSA LE Staff and family member employees. There are currently in use about 120,000 position titles. For instance there are more than 100 driver titles. OE expects to reduce the number to about 600. Mike emphasized this is part of a greater effort to standardize global practices. The new listing will probably take effect this summer.

Joint OE-ICASS Interagency Working Group MeetingFebruary 19, 2014 10-11:30 a.m.; ICASS Conference Room at SA-1 (Rm. 1504, Columbia Plaza)

The meeting was led by Janet Buechel, chair of the ICASS Working Group.

Present from HR/OE: Director Mike Tulley, Deputy Director Jack Hinden, Compensation Division Chief Kumiah Harrison, Policy Coordination Officer Debbie Higgins and Pamela Scott (Notes).

Present from ICASS: Director Richard Boohaker, Janet Buechel (ICASS Working Group Chair), Deputy Director Peter Hogan, Nolan Leavitt and Steven Gibson.

Present: representatives of the Departments of Agriculture, Commerce, Defense, Energy, Homeland Security, ICASS, Justice, State, USAID, USCIS, Open Source Center, MCC, OBO, PEPFAR, Peace Corps, the Consumer Product Safety Commission, CDC and the Social Security Administration met in person or by phone.

Ms. Buechel opened the meeting with introductions, and after the December 2013 IWG Minutes were passed, gave the floor to Mike Tulley:

Director Mike Tulley, HR/OE:Mike referred to the recent cable on the wage defrost, which was restricted to DCMs and Management Officers only and sent to all diplomatic and consular posts worldwide. It outlines the Department’s methodology for prioritization of LE Staff wage increases and the impending processing of the posts needing most immediate assistance. Mike displayed the spreadsheet identifying 76 missions that have been prioritized following consultation with regional bureaus, the Bureau of Budget and Planning (BP) and the interagency community. He clarified that the targeted 50th percentile represents only an average of comparative salaries. Furthermore he cautioned agencies that recommended increases may not be across the board for staff at a particular post; they will be grade specific at some posts. The overall methodology of identifying “critical posts” based on high attrition for salary reasons and comparative lag behind the 50th percentile of the local labor market had received general consensus by the many agencies involved in discussions over recent months. Mike added that talking points are in preparation to enable all agencies to speak with one voice to the field, and stressed the highly sensitive nature of the information being shared. He assured agencies that any big unexpected surprises as the actual increases are finalized will be shared immediately with those present. The Department of State has reviewed affordability for the top 76 posts, and can afford the proposed increases at the 50th percentile level. Using the information that has been provided by HR/OE and is provided today by the IWG, agencies should be able to project their increases relatively accurately for budgeting purposes. Mike reminded everyone that when base pay

increases, other benefits, such as local social insurance contributions and calculations for premium pay, are automatically increased also.

Mike concluded by reminding everyone that full recovery from the wage freeze will take more than just one fiscal year. OE will send the information on final wage increase analyses to the bureaus, who will forward it to the posts concerned, who will then have to decide their new Local Compensation Plans collaboratively with all agencies at post employing LE Staff, and recommend changes to HR/OE. At large posts this can entail as many as 20-40 agencies concurring with the increases. HR/OE will review each new plan, and if approved, send an authorization cable confirming it. In general it will follow the 1-76 order unless unforeseen circumstances change the timing.

Questions, Requests and Concerns for OE: 1. We cannot be said to have agreed by consensus to the prioritization as we did not have

the knowledge to make that decision.Mike clarified that the consensus referred to the methodology used by OE, not necessarily the availability of funds to fully fund at the 50 th percentile .

2. A request was made for the latest list of countries and spreadsheet to be sent to agencies.3. Timeline: can we cover all posts [that are due increases at the 50th percentile] in one fiscal

year? We will try to do so. We intend to start the salary increase implementation in April, although this is subject to Congressional approval of spending plans.

4. Retroactive payments? No retroactive payments are permitted with the rare exceptions mandated by local labor laws, such as Oman and Luxembourg.

5. Agencies need to have the information as soon as it is available.We hope to have real figures over the next three months.

6. Has there been communication with INL (Bureau for International Narcotics and Law Enforcement Affairs) about the wage increases?Mike will look into this.

7. Some agencies expressed frustration with the lateness of the information.Others pointed out that they always typically plan using estimates rather than final numbers.

8. What about awards?There is a cable in draft about lifting the ban on monetary awards and ending the hiring freeze.

ICASS (Deputy Director) Peter Hogan and Nolan Leavitt then co-presented estimated ICASS cost changes which will result from the wage increases, pertinent only to ICASS salaries, not post Program costs. Essentially the amounts of LE Staff wage increases will be borne by agencies in proportion to their ICASS percentage share of the total LE Wage Cost. This was presented in detail by ICASS. Column E of the OE spreadsheet is used to produce the ICASS data. Agencies will be able to look up by region and post and agency their projected numbers. ICASS proposed to send out their numbers later the same day. (The IWG notes will have a more detailed explanation of the information presented by the ICASS service center.)

In Conclusion: Both OE and ICASS numbers are not final; they represent estimates and are subject to change. For instance, some posts / agencies may be unable to afford the proposed increases. The timing of the increases, which will vary from post to post, will also affect the total amount needed this fiscal year. HR/OE urged the Agency representatives to adhere to the Draft Talking Points that were distributed at the meeting. Both HR/OE and the IWG stressed that the information (including the estimated salary increases) shared is highly sensitive and should be restricted to the group and reiterated that those estimates were likely to change slightly and could vary from grade to grade within an LCP.

January 24, 2014 2-3 p.m., HR/OE Conference RoomOE personnel and representatives of the Departments of Agriculture, Commerce, Defense, Energy, Homeland Security, USAID, USCIS, Open Source Center, MCC, PEPFAR, Peace Corps, the Consumer Product Safety Commission, CDC and the Social Security Administration met in person at HR/OE’s office or by phone.

DATA ANALYSISOE Director Mike Tulley welcomed participants and presented recent OE actions regarding the lifting of the wage freeze. For the first time, OE has conducted a data analysis of all 177 posts at the same time with a view to identifying posts in greatest need in order to prioritize implementation of the lifting of the wage freeze. He stressed that the data provided to the (20) agency representatives present at the OE location was preliminary, subject to further reviews and changes, highly sensitive, and should not leave their headquarters.

The analysis looked at compensation data for each post, based on 1-3 vendor surveys. Eight posts were recommended for highest priority implementation based on a staff turnover for a better job or salary ranging from 5.26-10.77%. A further 75 were identified as a high priority, based on their positions in the local labor market being below the 50th percentile. In practice it is likely that OE will target the top 50 of these first.

Compensation Specialist Sally Cintron reiterated the preliminary nature of these results and warned that further changes could happen. She also explained that increases may differ at one post within grades: an increase might not be the same across all grades. She mentioned that local labor laws in general have little impact on the prioritization process.

TIMINGDespite our best efforts, HR/OE will not be able to make posts whole in one year. In the best case scenario, given the way money is allocated to agencies by Congress and the Office of Management and Budget, we can expect money to get to posts in late April, or May. A new Local Compensation Plan must be agreed to by all agencies at post before changes can be implemented, and some of these agencies cannot support the same degree of increase as others can. Many variables are involved in realizing the changes. The effective date of change implementation will be two pay periods after Charleston receives the new LCP. Payroll anticipates changing approximately 15 posts per pay period.

AGENCY CONCERNSThe major concern expressed by agencies was the need for earliest possible information sharing by OE, in order for them to know what increases to expect. Past practice has been that post agency representatives would inform their agency headquarters, however it would be more helpful if agency headquarters could have the information directly from OE to eliminate the time this practice takes.

CONSENSUS REACHEDHR/OE explained that the prioritized list had already been reviewed and cleared by the Department’s regional bureaus and various budgeting offices and asked the assembled interagency group if, based on these discussions, we could consider we had a consensus to proceed forward using the presented prioritized list. There were no objections, so with this meeting we have an agreed to prioritized list to work with.

IN CONCLUSIONAn ALDAC detailing this process is in the pipeline which will address what this meeting covered. It will be sent in an email to IWG members. We will meet again as a group in 4-5 weeks to update the group again.

May 1, 2014 10-11 a.m. HR/OE Conference Room

Present: Maggie Crnic (DOE); Alison Griffith (DOS/PEPFAR); William Plummer (Peace Corps); Pat Wexel (USAID); William Wong (Commerce).From OE: Mike Tulley, Jack Hinden, Debbie Higgins, Ronnie McCall, Chris Wilks, Wendy Holloway-Brown, Andre Jennings, Pamela Scott (notes), (Sally Cintron and Corrine Appleton by phone).

Participants from the Departments of Agriculture, Defense and Justice; USAID, CDC, PEPFAR, the Secret Service, Peace Corps and the Library of Congress attended by phone.

Implementation of the Wage Defrost Director Mike Tulley

OE Director Mike Tulley, using a spreadsheet and world map, demonstrated the progress of the wage defrost.   Seven posts (Muscat, Algiers, Colombo, Cairo, Conakry, Buenos Aires, and Ankara) have now completed the entire process and their wage increases will take effect between now and the end of June. To date, OE has sent forty nine complete analyses to posts via the Regional Bureaus.  Mike is optimistic that all 76 posts will receive their analyses by late May/early June.

About ⅓ of the analyses recommend across the board increases; the majority have grade-specific increases. The variable nature of increases at any one post generated significant discussion; some posts felt this was unfair. However the Under Secretary upheld this OE policy. The top 51 posts are more than 10% below average; the others (52-76) are often only a couple of points behind the local labor market average compensation. Many posts, of course, find the 50% goal an inadequate target.

Commerce remarked that the 50% target had been a useful tool for the initial phase and wondered how agencies could be best informed about future increases for budgetary needs. Mike indicated that OE will sit down with the Regional Bureaus to review the traditional 75% target; it is possible that this may trend downwards towards 60%. New compensation instruments, like the multiple data comparators and Indigo automation, will ensure more consistent results. CDC remarked it would be useful afterwards to see which posts did not accept recommended increases.

PEPFAR requested that agencies receive a running list of country status and OE agreed to send it on.

OE also agreed to send out Talking Points to help explain the increases to field staff who are not all supportive of the increases, despite agency buy-in.

Mission Classification (MClass) Update HRO Ronnie McCall

A cable is in coordination that will address recent revisions to MClass software.  The field will see some of these changes to MClass around the end of May.  MClass replaced CAJE in October 2011, and posts have been responsible until now for position classification. Over the next 12-18 months, the Department of State and the Agency for International Development (USAID) will regionalize this function.  Several posts will continue to perform classification actions.  The idea is to reduce the number of Department of State classifiers from the current approximate 500, (plus approximate 80 in USAID) to around 30 and 10, respectively.  We believe regionalization will develop expertise, standardize the classification process, and save money.   In response to a question on ICASS implications, Mike said that at this time the Regional Bureaus are bearing the initial costs and the final funding mechanism has not yet decided. 

Looking ahead – the expansion of Merit Based Compensation (MBC) Acting Policy and Coordination Division Chief Debbie Higgins

OE will hold a meeting soon on Merit Based Compensation, date TBD. Essentially this system replaces (Within Grade Increases) WGIs at post. WGIs are automatic annual or biennial wage step increases dependent only upon a satisfactory performance level. Locally employed staff at higher grade levels do not benefit from WGIs. Merit Based Compensation replaces the fixed WGIs with a variable increase based on an employee’s performance score. It offers an alternative variable reward system based on actual performance and permits employees at their top grade step to receive rewards for good performance. All employees are reviewed on the same annual cycle; there are no grade steps – only a minimum and maximum, and employees are rewarded on a numerical scoring system.

At present seven posts have opted to follow Merit Based Compensation: UK (19 years), Italy, Geneva, Belgium, Turkey, Latvia and Ireland. LE Staff surveys and informal field reports both indicate a high level of satisfaction with MBC and other bureaus have expressed interest in this system.

Other items

Debbie Higgins mentioned that OE hopes to circulate the Performance Management chapter of the Family Member Employment guidebook for agencies’ review before the next meeting.

HRM Specialist Wendy Holloway-Brown outlined recent work on standardizing job titles for overseas employees: direct hire and PSA LE Staff and family member employees. There are currently in use about 120,000 position titles. For instance there are more than 100 driver titles. OE expects to reduce the number to about 600. Mike emphasized this is part of a greater effort to standardize global practices. The new listing will probably take effect this summer.