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More senior executives are earning bigger bonuses

By Alyssa Rosenberg arosenberg@govexec.com September 29, 2009

More members of the Senior Executive Service are receiving top performance ratings and their bonuses are growing as well, according to new data released by the Office of Personnel Management.

Since 2004, agencies have been shifting their senior executives into pay-for-performance systems that are certified by OPM, and by the end of 2007, 99 percent of executives were covered by those systems. In fiscal 2005, 44.5 percent of senior executives who were in pay-for-performance systems received the highest rating possible; the most recent available data shows that by fiscal 2008, 49.9 percent of senior managers earned the top rating -- an increase of 5.4 percent over three years.

"Senior executives, they're the best employees to get into the SES to start with, so you'd expect them to have high performance ratings," said Bill Bransford, general counsel for the Senior Executives Association. "I think [in the past] there was a lot of pressure to decrease the number of employees with high performance ratings, but that pressure isn't as strong as it once was. The ratings reflect what people really deserve."

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The size of performance bonuses for career senior executives and the number of executives receiving them also has increased since agencies adopted pay-for-performance. In fiscal 2005, 66.5 percent of career executives received performance awards, which averaged $13,814 per person. In fiscal 2008, the number of awardees rose to 76 percent of career executives and the average award increased to $14,831 per person.

But Bransford said overall, senior executives' raises were smaller than those given to civil servants covered under the General Schedule system after locality pay was taken into account.

"I think the pay-for-performance system feels pressure with the ceiling and may feel pressure to keep those increases down," he said. "If there was a higher ceiling, a more realistic schedule for the Senior Executive Service, [then] the increases might be higher." Federal pay is capped at a certain level, and top managers' salaries can bump up against that limit.

The State Department topped the list of departments and agencies with the strongest correlation between performance ratings for career senior executives and the pay increases they received as a result of those measures, followed by the Commerce and Education departments, according to OPM. The Housing and Urban Development Department and the Small Business Administration demonstrated the least connection between performance ratings and pay.

But the agencies that scored best on linking senior executive pay and performance were not necessarily the ones with the top scores on the Office of Management and Budget's scores of performance in program assessments. State, for example, met or exceeded 55 percent of its targets in 2008, while the National Science Foundation had the best performance score on the OMB evaluation, meeting 88 percent of its 2008 targets.

Bransford said in an ideal world, the agency with the highest relationship between senior executive performance and compensation also would be the agency with the strongest organizational performance.

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  • “of course I was being sarcastic in my post” Oh, thank heaven… I must admit that I sometimes have trouble “reading” sarcasm. Like I said, I was inclined to perceive your comment in that light except for the last couple of sentences. Funny you should mention the recently and relatively quiet Skeeter; for I’ve seen such as him and his ilk jump on similar band wagons; thinking them headed one way when in reality they were backing up in an expression of disdain. Perhaps, in such light, you can see my concern. I definitely agree with your summation of recent trends in capitalistic stalwarts such as the financial industry. Most of the profits I’ve seen in the past decade are the results of bubble creation, short selling, excessive profiteering (e.g. the oil refinery industry after Katrina) and/or slick accounting. Division selloffs, once taken as a sign of managerial failure, are now being touted on the books as one-time profits and averaged across a three year period creating a profit trend where none would otherwise exist. I would also agree with your assessment of the NSPS implementation and am quite thankful for the recent congressional reproach of that same system. Thanks again for the reassurance. I find common sense not as common as it once was; and common courtesy, such as you gave, even less so.
    Tip off Posted October 8, 2009 12:53 PM
  • Tip Off, of course I was being sarcastic in my post (except for Dan K, who probably thought I was serious). But I can't help but have this uneasy feeling about how our country is being run. Over the past 30 years executive compensation has skyrocketed, while at the same time average working salaries (adjusted for inflation) have remained flat or actually decreased. Supposedly this fantastic remuneration of our corporate leadership has been in response to stellar performance. But as far as I can tell, their tactics for increasing corporate profit comes from strategies such as out-sourcing jobs overseas, in-sourcing jobs to illegal aliens, and cutting wages, retirement benefits, and health care costs for the American workforce that remains. But apparently these measures were not enough as evidenced by the corporate fraudulent behavior exposed in scandals by Enron, Country Wide, Health South, Bernie Madoff, et al. Then we have the financial crisis which exposes the house of cards, and we the workforce (as taxpayers) are tapped yet again to put up the billions (or is it trillions) to make the system right again, all the while the leadership of our businesses firmly defend the status quo. In this respect, NSPS was just a small first stage of implementing this private sector remuneration system into the public sector.
    The way it should be! Posted October 8, 2009 7:25 AM
  • OMG! “It is time that government gets with the program: High pay for leadership as a reward for cutting employee costs.” PLEASE tell me you were being facetious! Come on, you just have to be?! Say it isn’t so!! “Joe Simpson, your speech would have been great during the Kennedy or FDR administration but is a bit dated for our modern corporate banditry times.” Personally, after the recent “success” shown by our capitalists I can only pray for a return to the selfless dedication and determination to make the world a better place exemplified during the “Camelot” years. You were correct to use the term “our modern corporate banditry times.” I would have automatically assumed your use of sarcasm except for the last two sentences. Between those and the rhetoric we are hearing today of the gold standards of capitalism, I fear for a resurgence of the “robber barons”. While I firmly agree that capitalism beats the hell out of socialism; I also firmly believe that we capitalists are a greedy lot and that ANY extreme invariably leads to a Darwinian exit. I hope we can keep the pendulum swinging between socialism and capitalism to a minimum and find a happy medium; for, if left to our own devices, surely we will screw ourselves up so badly that lost financial support from foreign nations will be the least of our problems. Just like I refuse to be held hostage to foreign sovereigns, I also realize that we should not be “a rock”; “an island” without interaction on the foreign stage. While we must be world leaders, for lack of a better choice being available; we must also be perceptive of others views because… well, to be quite honest, sometimes the mirror lies. And you actually CAN break your own arm patty yourself on the back.
    Tip off Posted October 6, 2009 1:08 PM
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