Authorize Programs to Improve Performance

Authorize Agencies to Develop Programs for Improvement of Individual and
Organizational Performance

Background

Following the lead of the private sector, the Civil Service Reform Act
of 1978 established governmentwide performance management systems for
federal employees that linked employee pay to individual performance.

The system was designed to serve as a vehicle to improve agency and
individual performance through improved communications of performance
expectations between employees and supervisors. A yearly work plan,
consisting of critical elements and performance standards, was
envisioned to support agency planning and accomplishment of work.
Ongoing feedback from the supervisor, including a formal, end-of-the-
year appraisal, would provide feedback to the employee. Management
decisions on promotions, awards, training, and retention were to be
linked directly to the performance management process.(1)

Currently, there are separate performance management systems for
supervisors and general managers (GM) included in the Performance
Management and Recognition System (PMRS), and employees included in the
General Schedule (GS). PMRS expires on October 31, 1993; thus, new
legislation is required. Congress established a PMRS Review Committee as
part of the PMRS Amendments of 1991 to advise the Office of Personnel
Management (OPM) on improvements to PMRS. Congress reaffirmed its
commitment to the linkage of pay and performance in the Federal
Employees Pay Comparability Act (FEPCA) of November 5, 1990, and
directed OPM to establish a Pay for Performance Labor Management
Committee to advise OPM on the design and establishment of pay for
performance systems for GS employees. In May 1993, OPM circulated a
working draft proposal for changes in performance management systems
titled "Principles and Features of Performance Management Reform." The
OPM recommendations are similar to the National Performance Review
recommended actions.

Need for Change

Performance management systems for GS and GM employees, in the view of
virtually all observers (e.g., the General Accounting Office, Merit
Systems Protection Board, National Academy of Public Administration,
National Research Council, and academic researchers such as Perry and
Ingraham), have not resulted in the desired improvements in individual
and organizational performance. The failure of performance management
systems to improve performance results from several factors:

--- Performance management systems were designed to meet multiple,
sometimes conflicting purposes (performance, pay, retention,
development), and as a result meet none of them.

--- Systems are governmentwide, inflexible, and not responsive to the
varying needs and cultures of diverse federal agencies.

--- Systems are not owned by managers who must make them work but are,
instead, seen as belonging to OPM.

--- There is an overemphasis on dealing with the poor performer, and
insufficient emphasis on improving the performance of the majority of
employees who meet expectations now but can do even better in the
future.

--- Systems are perceived as top-down control mechanisms rather than
tools for empowering employees and supervisors to improve performance.

--- Systems emphasize individual performance and do not support
emerging efforts to manage group and organizational performance.  ---
Employees report that too frequently there is inadequate communication
of performance expectations and feedback on performance.

--- There are perceived inaccuracies in performance ratings, perceived
rating quotas, and negative perceptions of the fully satisfactory
rating.

--- The performance appraisal is often threatening to employee and
supervisor alike, inhibiting the opportunities for meaningful
communication.

--- Performance ratings are generally thought to be inflated, e.g., the
average rating for a GM employee in 1991 was 4.1 on the required
five-point scale; for GS employees, the average rating was 3.95.

--- Performance ratings are unevenly distributed by grade, gender,
occupation, geographic location, ethnic group, and agency.

The ideal performance management program will have one objective:
improvement of individual and organizational performance. Agencies will
be required to develop performance management programs that meet their
unique needs and are consistent with the culture of their organization.
Performance management programs will seek to improve the performance of
all employees, both the majority of employees who meet performance
expectations now and the few who do not. Employees and their
representatives will be involved in design and implementation of
performance management programs and with development of performance
expectations.

Feedback on performance--during and at the end of the period--should be
developmental in nature, focusing on how to improve future performance.
To reinforce the emphasis on improvement of future performance,
performance ratings and awards should be disassociated and independent
of each other; i.e., after a determination is made that performance
meets expectations, a further determination would be made to decide
which of the employees who meet expectations will receive special
recognition. Decisions about recognition could include factors unique to
work group and organization mission and culture.

Action


Authorize agencies to design their own performance management programs.

By fall 1994, the director of OPM should submit draft legislation to
Congress to authorize agencies to design and implement performance
management programs based on the following principles:

--- Performance management is a developmental tool with one objective:
improvement of individual and organizational performance.  ---
Employees and/or their representatives must be fully involved in design
and implementation of performance management programs and in development
of performance standards; in the case of employees represented by a
union, collective bargaining will be required.  --- Employees must be
involved in development of performance expectations and receive
feedback for improvement of future performance.  --- At least two
levels of performance must be identified: meets and does not meet
expectations.

Complete decentralization of performance management within a framework
of broad, governmentwide principles is expected to result in development
of agency-based performance management programs that meet each agency's
unique needs. Agencies should be able to develop performance management
programs that seek improved performance of all employees. Development of
agency-based programs will result in programs that are owned by agency
managers.

Involving employees and their representatives in development and
implementation of performance management programs should result in
programs that are owned by employees. Identifying a single objective for
performance management makes it easier to achieve that objective, and to
evaluate the success of performance management programs.  Disassociating
performance ratings and awards reinforces the emphasis on the objective
of performance improvement. Agency heads, who are responsible for
organizational performance, should be held accountable for development
and use of performance management programs.  Results-oriented
accountability factors include improvements in organizational
performance, ownership of the system by employees and supervisors, and
the vigilance of employee unions and associations of management-level
employees.

Endnote

1. International Personnel Management Association, Federal Section,
"Critical Personnel Management Issues: Performance Management," December
1989, pp. 1-2.