Pentagon's New Personnel System: Coping with the Challenges of Human Capital

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : HROB114 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges


Human Capital/Performance Management/Compensation Management
Case Length : 21 Pages
Period : 2000-2008
Pub Date : 2008
Teaching Note : Not Available
Organization : US Department of Defense
Industry : Public sector (Defense/Others)
Countries : USA


In the early 2000s, USA's largest employer, the Department of Defense (DoD) (popularly known as the Pentagon) realized that its decades-old General Schedule (GS) payment system was not in sync with the rapidly changing scenario. The needs of the defense forces and the way they worked had changed and the civilian personnel supporting them needed to change too. Moreover, Pentagon wanted to be a more competitive employer and felt that the GS system was unable to attract and retain the best talent. Pentagon introduced a new civilian personnel management system, the National Security Personnel System (NSPS), to reward employees based on their performance.

But it required huge effort on the part of policy markers to actually design the systems, seek participation and approval from multiple stakeholders, and implement the program. The implementation of the NSPS also met with resistance from several quarters including from federal labor unions. The labor unions contended that the NSPS did not focus on elements such as adverse actions, collective bargaining, labor relations, etc. resulting in the erosion of job security of the workers.


Understand the rationale behind DoD making a shift from the General Schedule system to the National Security Personnel System.

Understand various issues and challenges involved in designing and implementation of a new personnel system.

Discuss the benefits and drawbacks of the NSPS and Compare and contrast the NSPS with the GS system.

Understand how the implementation of a 'pay for performance'system would help the DoD in attracting, rewarding, and retaining employees.

Discuss the challenges faced in implementing the NSPS in a large public sector organization like the DoD.


  Page No.
Introduction 1
History of DoD 2
The General Schedule System 3
The National Security Personnel System 5
DoD Unveils NSPS 7
Conversion to NSPS 8
The NSPS Implementation 10
The Benefits 11
The Challenges 12
Outlook 14
Exhibits 16

Key Words:

Personnel management, Personnel management system, performance-based pay system, pay for performance, human capital, attracting, retaining, pay banding system, performance management, change management, collective bargaining, workforce shaping, labor relations, National Security Personnel System, General Schedule payment system

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