Agencies stop tying bonuses to annual appraisals

Fewer federal agencies are giving employees bonuses on the basis of their annual performance evaluations, instead rewarding outstanding performance through group awards and on-the-spot cash incentives, according to a new report.

The report, issued by the Office of Personnel Management, said many agencies are "delinking awards and performance appraisals." An OPM spokeswoman said that means agencies are linking awards "more to specific work or specific activities. By separating awards from the annual performance review process, it tends to send a message about what work is more meaningful," she said.

In a 1999 survey, only 31 percent of federal employees agreed that recognition and rewards are based on merit. Only 26 percent said their agencies clearly define "good performance."

According to OPM, the average annual performance rating for federal employees rose throughout the 1990s. Most federal workers are now ranked in the top two tiers ("exceeds fully successful" or "outstanding") of the standard five-tier performance appraisal system.

In its report, "Incentive Awards: The Changing Face of Performance Recognition," OPM reviewed 15 agencies' performance management systems. OPM had looked at each of the agencies in 1996 and 1997 and wanted to see what changes the agencies have made since then.

In addition to delinking awards and appraisals, agencies are increasingly using Web-based systems to administer recognition programs. Some agencies have reformed their incentive programs more than others.

The Commerce Department, for example, rewrote its performance management handbook last year and created an online system that allows managers to nominate employees for awards via the Web. The department has also boosted the amount of its on-the-spot awards, known as "Cash in a Flash," to $1,000.

The Veterans Affairs Department lets employees help decide who should receive time-off, on-the-spot and other awards.

Managers at several agencies must wait until the end of the year to reward excellent employees because incentive budgets are not set until late in each fiscal year.

The Army, the Justice and Treasury departments, and the National Archives and Records Administration reported that they have not made major changes to their incentive programs in recent years.