October 28, 2002
Many agencies' systems for evaluating and rewarding senior executives are flawed, according to an official from the Office of Personnel Management.
While one size may not fit all, executives should make sure to use evaluation systems that link individual performance to agency-wide results and provide incentives for even the best performers to improve, said Doris Hausser, assistant director for performance and compensation systems design at OPM, Friday at a forum sponsored by the Performance Institute, a Washington think tank.
"This requires a culture change," Hausser said. "The change has to start at the top and trickle down."
Under the 1993 Government Performance and Results Act, agencies must develop strategic plans and measure progress in meeting mission goals. But some agencies still fail to link senior executive performance ratings to results achieved under GPRA plans, Hausser said.
In addition, agencies often fail to distinguish executives who are merely meeting performance goals from those who are exceeding goals, she said. Nearly 84 percent of federal executives received the highest performance ratings in fiscal year 2001, according to a letter OPM Director Kay Coles James sent to agency chiefs in September.
When agencies fail to make distinctions, they not only miss out on an opportunity to identify weaknesses, they also forego the chance to recognize truly exceptional executives, Hausser said. In some agencies, senior executives all receive the same bonus, regardless of the quality of their work, she said.
This is partly because bonuses are not merely used to reward performance, but to help compensate for the pay compression executives face, said Carol Bonosaro, president of the Senior Executives Association. The Senior Executive Service has a six-level pay scale, but because of pay caps, employees at the top three levels receive the same salary. In some areas of the country, executives at the top four or five levels receive equal salaries.
Despite the difficulty agencies have linking performance to results, two agencies at the forum said they have made strides in improving their executive performance management systems.
Nina Hatfield, deputy assistant secretary of budget and finance at the Bureau of Land Management, said that the agency has gone beyond a one-dimensional rating system and now uses a "balanced scorecard" to rate executives in four areas: financial management, customer service, employee satisfaction and business strategies.
Executives at BLM resisted the new system at first, according to Hatfield. "They did not like to have performance linking to goals," she said. But Hatfield said executive performance has already improved notably under the system.
The Internal Revenue Service now uses a point system to evaluate executive performance and rewards exceptional executives with higher bonuses. The rating system is based on 21 competency areas and five core measures, Chief Human Resources Officer Ron Sanders told participants at the forum. The agency also implemented a mandatory mid-year review process, helping facilitate more frequent communication about performance, he said.
October 28, 2002