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Why Federal Bonus Awards Are a Problem

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Rep. Jason Chaffetz, R-Utah, may not appreciate it fully but his interest in bonuses could open the Pandora’s box of workforce management.  The awards may be suspect but are only the result of underlying management weaknesses. 

Hopefully his intention is not to end future awards. The practice is almost universal in the private sector. When managed effectively, awards encourage employees to focus on organizational priorities.  The recognition of exemplary individual performance is central to high organizational performance. And the psychological value is far more important than the money.

It’s not clear why Chaffetz is focused on three quite different agencies—the FBI, Forest Service and Bureau of Land Management. However, that serves to emphasize a core issue. 

The foundation of federal HR policies and practices is the belief that all jobs can be matched to class standards—inflexible, uniform answers—thus ignoring the operational realities that make each agency different. That of course is the basis for administering the General Schedule. The reliance on standard approaches extends to OPM’s role in recruiting and hiring. Agencies apparently are incapable of doing something that far smaller employers handle routinely.

It reflects the core assumption that work and workers should be administered, not managed. It originated in an era when employees were interchangeable widgets. That continues to be the foundation of civil service. 

For years, agencies relied on pass/fail performance ratings. As recently as 2014, the Consumer Financial Protection Board reverted to pass-fail ratings. Within the past several weeks another agency was considering a similar policy change. That ignores the importance of recognizing the best performers—and the need to justify bonuses. That’s central to creating a performance culture.

The Problem Defies Simplistic Answers

Chaffetz has asked for a lot of information going back several years. The analyses could take months.  In addition to the awards data, the analysis should take into consideration performance expectations/metrics, announced policies, grievances, promotions, etc. It’s important to avoid simplistic conclusions. It would be useful to start at the senior executive level and progress level by level to assess how fairly managers rate employees. When it’s not a priority at the senior level, it’s rarely a priority at lower levels.

Looking back like that is analogous to looking at the bullet holes after the gunfight at the O.K. Corral and trying to determine if Wyatt Earp or Doc Holliday made the most accurate shots. No one will be able to say if the performance expectations were fair or how sequestration and changing circumstances impacted employee performance. It will not be possible to compare across the three agencies or to generalize.

Focusing strictly on data also ignores the soft, day-to-day differences that are responsible for an agency’s work environment. Those differences are central to managing performance and the use of financial rewards. The data say nothing about agency culture, values, or the work management philosophy. Nor do data say anything about issues like the importance of teamwork. Bonuses should reinforce and encourage desired behavior. It seems obvious that the use of bonuses in the FBI would be very different than in the Forest Service or Bureau of Land Management. 

It’s those differences, along with an agency’s “brand,” the availability of talent, trends and events that impact an agency’s mission, the need to collaborate with state and local agencies, etc. that argue for allowing each agency to develop its own HR policies and practices.

On point here is the importance of gaining agreement on a reward management policy. Employees need to know what they need to do to earn an award and what they can expect.

All the evidence indicates agencies do not manage performance effectively. The annual employee survey shows the majority of employees do not believe (1) awards are based on performance, (2) promotions are based on merit, (3) differences in performance are recognized, or (4) creativity and innovation are rewarded. And of course, less than three in 10 believe “steps are taken to deal with a poor performer.” 

The solution is holding managers accountable for effective performance management. Financial rewards should be an important tool.

Managers are the Key

A core issue is that the role of middle managers has been effectively ignored. Research shows they have more impact on an organization’s performance than senior executives. The best create committed, high-performing teams. They must be central to initiatives aimed at improving performance.

Managerial skills can be learned but not without role models, adequate training and regular feedback. When training budgets are cut, manager and employee performance is adversely impacted.  New skills have to be reinforced or they are quickly forgotten. Bonuses should be reserved for the most effective managers.

Training, however, will not solve a central problem. As with teachers, some managers are “hard markers” and some are easy. That inconsistency creates problems with bonus awards that should be addressed.

A new practice to enhance consistency that has rapidly gained acceptance in leading companies is the use of calibration committees composed of peer-level managers. Managers are expected to explain and justify planned performance ratings, awards, and promotions. It strengthens credibility and fairness, contributes to a performance culture, and would minimize congressional concerns. It’s an idea government should try. 

Government needs to do better or Congress is unlikely to agree to changes needed to improve the federal work experience. That’s important to current and future employees.

Howard Risher is a consultant focusing on pay and performance. In 1990, he managed the project that led to the passage of the Federal Employees Pay Comparability Act and the transition to locality pay. Howard has worked with a variety of federal and state agencies, the United Nations and OECD. He earned his bachelor’s degree from Penn State and an MBA and Ph.D. in business from the Wharton School, University of Pennsylvania. He is the co-author of the new book It's Time for High-Performance Government: Winning Strategies to Engage and Energize the Public Sector Workforce (2016), with Bill Wilder.

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