LINCOLN — About 3,000 state employees in Nebraska will soon have to earn annual pay raises through job performance rather than relying on automatic increases.
Gov. Pete Ricketts announced Wednesday that he’s implementing a performance pay system for nonunion state employees in his Cabinet agencies. The program will apply to about 3,000 professional and management employees and will be funded without additional budget requests, he added.
“About every private-sector company that’s successful finds ways to reward their highest performers,” Ricketts said. “We want to take that same tool and apply it to state government.”
The performance pay system will be optional for nonunion employees at state agencies overseen by boards or commissions but not under the governor’s management. It will not apply to workers in the public employee unions, who make up the bulk of the roughly 17,500 state employees.
The governor said he will evaluate the new system before deciding whether to ask the Nebraska Association of Public Employees to consider adopting performance raises for their members in the next two-year labor contract. Negotiations on the contract are scheduled to begin next year.
Mike Steadman, a lead negotiator for the union, said Wednesday that he doesn’t know whether his members would agree to negotiate for a performance-based system. He said such systems need clear, measurable goals that are realistic to obtain to be perceived as fair. Problems arise when personality conflicts emerge between a manager and an employee who relies on a good evaluation for a raise.
“Across-the-board increases allow working families the opportunity for a raise regardless of whether your supervisor likes you or not,” he said. “It takes out the appearance of cronyism.”
The performance pay system will apply to certain employees in agencies including the Department of Health and Human Services, the Department of Transportation, the State Patrol and the Department of Environmental Quality.
The governor explained that employees and their supervisors will set work goals tailored for each agency. At the end of 2018, employees will be evaluated, and those who meet their goals will receive a standard raise. Those who fall short will get no raise, and those who exceed the goals could receive a bonus above the standard raise if money is available within the salary budget.
In a larger sense, Ricketts said, the goals also will be guided by his mission to make state government more efficient, cost-effective and customer-friendly.
Years before he took office in 2015, Ricketts was an executive at TD Ameritrade, the Omaha-based discount brokerage founded by his father, Joe Ricketts. The company used bonuses to reward employee performance because they worked, the governor said.
Jason Jackson, the state’s chief human resources officer, said Wednesday that he’s heard from some employees who are ready for the new system.
“They want to be recognized and rewarded when they achieve their goals,” Jackson said. “They want to see success differentiated.”
About 20 other states use performance pay systems, Jackson added. While it may have been used before in Nebraska on a more limited basis, Jackson said he was not aware of it being implemented for an entire category of employees in recent memory.