The most important aspect in Commerce Alternative Personnel System (CAPS) pay administration is the use of pay for performance, which governs individual pay progression within bands. Pay for performance has three components:
- The annual adjustment to basic pay, which includes the annual general increase and the locality pay increase;
- Annual performance pay increases; and
The amount of the basic pay and locality pay increase approved by Congress and the President will continue to be applied to pay schedules and employee salaries.
Performance pay increases are linked to performance appraisals and employees' rank within a pay pool. These increases are added to employees' basic pay. Bonuses are cash awards (up to $10,000) given at the supervisor's discretion following the performance appraisal process. Pay for performance increases the perception of fairness and provides both a motivational and retention tool. Other pay tools used are supervisory performance pay, flexible pay setting for new hires, and more flexible pay setting upon promotion.