Watchdog worries that agencies aren't making meaningful distinctions in performance ratings and bonuses.
This story has been updated.
Most federal agencies are not making meaningful distinctions in performance ratings and bonuses for senior executives, according to a new watchdog report.
About 85 percent of career senior executives received “outstanding” or “exceeds fully successful” ratings in their performance reviews between fiscal years 2010 and 2013, at the same time that agencies have made smaller distinctions in the amount of individual bonuses, the Government Accountability Office found. This has created a system where nearly everyone is considered outstanding, and truly exceptional senior executives are treated similarly to their above-average peers when it comes to performance ratings and awards, GAO concluded.
“For example, for fiscal year 2010, the average performance award for an executive with a rating of 5 was $4,991 more than the average award for an executive with a rating of 4,” the report stated. “By fiscal year 2013, the average performance award for a rating of 5 was $2,604 more than the average award for a rating of 4.” That data is for senior executives at the 24 major agencies under the 1990 Chief Financial Officers Act, not the entire federal government.
Agency officials offered several reasons for this trend, including the belief that the highest performance ratings were justified for many senior executives (after all, this is the top cadre of career officials) to the perception that a “fully successful” rating is considered mediocre among employees, despite that not actually being true. For fiscal years 2010 through 2013, the largest federal agencies used a performance review system for senior executives based on four or five ratings. The five-rating system is made up of the following categories: outstanding, exceeds fully successful, fully successful, minimally satisfactory and unsatisfactory. The top three categories are eligible for performance awards; the bottom two are not.
Budget constraints also have affected how supervisors rate senior executives, the report said. Federal budget pressures prompted the Office of Management and Budget in 2011 to cap awards to Senior Executive Service and senior-level scientific and professional employees to no more than 5 percent of their aggregate salaries (the cap as of February 2014 is 4.8 percent). For example, some agencies reduced how many senior execs received bonuses in fiscal 2013, but increased the amount of average of performance awards handed out. Others decreased the individual bonus size on average, spreading the wealth around to more people.
That has muddied the waters when it comes to meaningful distinctions between ratings and awards. Fewer senior executives across the federal government actually received bonuses in fiscal 2013 than in fiscal 2012, and the ones who did received slightly smaller awards on average, according to the Office of Personnel Management.
But the differences in award amounts among the categories are shrinking: The average award for employees rated “outstanding” on their performance evaluation was $11,139 in fiscal 2013, while those rated “exceeds expectations” and “fully successful” received $8,756 and $8,208 on average in bonus money, respectively.
Career senior executives across government received about $42 million total in bonuses for fiscal 2013. There were 7,900 senior executives in 2013. The average salary for all senior executives across government in fiscal 2013 was $168,608; SESers do not receive locality pay (which has been frozen for those in the General Schedule since 2011), and their pay increases are based on performance and at the agency’s discretion.
Agencies that communicated the value of various ratings – reinforcing the positive status of “fully successful” – rated fewer senior executives at the tip-top. For instance, of the five agencies that GAO studied in detail for the report, the Defense Department had the lowest percentage of SESers receiving the highest rating (31 percent) according to GAO, in part because of its effort to educate the workforce that a “fully successful” rating requires “extraordinary results.”
In December, OPM published a proposed rule to update a three-year-old statute requiring agencies to implement performance standards for SES employees. Each agency would have to designate an official to oversee the performance management system and issue guidelines for appraisal, and OPM would designate an official of its own to oversee those officials. The rule also would expand the power of performance review boards, allowing them to weigh in on performance awards for those in the SES. The boards would be required to consider overall agency performance when making their recommendations. President Obama also has vowed to reform and modernize the SES.
OPM generally agreed with the information in GAO’s report, but not with the watchdog’s recommendations, which included a suggestion to not certify the performance review systems of agencies that include “outstanding” as a category. “Imposing such a criterion would lead to arbitrary manipulation of the final ratings rather than an appropriate comparison of performance to standards,” said Mark Reinhold, OPM’s associate director of employee services, in response to the report. OPM also did not support GAO’s recommendation to make agencies’ performance appraisal systems more transparent by publishing the justification of ratings online or in annual performance reports.
Correction: The original version erroneously said senior executives received $42 billion in total bonuses in fiscal 2013. The correct figure is $42 million.
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