Agencies internally pan OPM’s bid to overhaul federal performance management

Federal agencies almost unanimously warned the Office of Personnel Management that its forthcoming regulatory proposal overhauling federal performance management and instituting limits on how many employees can be rated above average will worsen mission delivery and open agencies up to litigation.

A draft notice of proposed rulemaking, which would propose removing the prohibition on the “forced distribution” of performance ratings, removing the level two or “minimally satisfactory” rating from the five-level structure currently used by many federal agencies, and greenlighting supervisors to grant level one—or “unacceptable” performance—without the higher-level review that is currently required, was promulgated to agencies for review and feedback last month.

But in comments on the proposal, reviewed by Government Executive, most agencies sought to push back against OPM’s plan, warning that enforcing a forced distribution of performance ratings contradicts merit systems principles and reduces collaboration and cohesion among employees.

“While we endorse the proposal’s focus on a supervisory critical element, omitting level 2 on performance and biennial certification as effective tools, we strongly recommend retaining the prohibition on forced distribution,” wrote the Defense Department. “This practice is fundamentally at odds with the Merit Systems Principles, which require that performance be assessed against an individual’s own success in meeting objective criteria, not their standing relative to others in a mandated quota . . . Decades of management research, and the subsequent reversal of this policy by many private sector organizations, confirm that forced ranking systems degrade organizational effectiveness.”

At least the departments of Defense, Treasury, Housing and Urban Development, Energy, Labor and Health and Human Services, as well as NASA and the General Services Administration provided comments criticizing the rule in whole or in part. Of the comments reviewed by Government Executive, only the Social Security Administration actually expressed support for forced distributions, though it too expressed concerns about other aspects of the proposed rule.

The White House, conversely, proposed appending a new provision to the internal draft: a ban on employees filing union grievances over a perceived unfair performance rating. OPM adopted the recommendation.

“[Trump’s 2018 executive order targeting unions and poor performers] generally prohibited union grievances over performance ratings,” the Executive Office of the President wrote. “We think that is good policy and would like to return to that. Request adding in a prohibition on unions grieving performance ratings in this rule.”

OPM told agencies that it plans to institute the new rating system in time for the fiscal 2026 performance review season, though employees at a smattering of agencies have reported their agencies have already quietly instituted forced distributions, despite the standing ban.

Several agencies warned that applying a forced distribution of ratings on a workforce could come into conflict with federal regulations and merit system principles that state that performance ratings be based on objective criteria, as spelled out in employees’ performance plans. They cautioned that the new system would require managers to award “arbitrary” ratings distinctions between similarly performing employees, which would lead to less trust in the system. 

“The forced distribution system without any flexibility to account for actual performance may prohibit supervisors from assigning an accurate rating,” wrote NASA. “A forced distribution system by definition and as described here, could align individual performance to a predetermined distribution outcome (e.g., a fixed percentage of employees must fall into each rating category). As a result: employees may receive ratings unrelated to their actual performance; individual performance may receive different ratings depending on distribution constraints; and objective, job-related criteria become secondary to statistical targets.”

Other agencies cautioned the changes could unfairly punish highly performing offices. 

“With the intent to drive high performance, this could have unintended negative consequences if applied to small high-performing teams where there truly are no bottom-level performers,” said the Treasury Department. “Alternatively, would a team of mediocre performers still have a segment of top ratings due to forced distribution? Forced distribution has the potential to lead to inconsistent ratings across the workforce if employees are rated against a ‘curve’ instead of an established performance standard.”

In response, OPM noted the creation last year of a new performance management officer role within federal agencies, who will be responsible with handling those questions.

“As part of that role, the agency PMO should develop, through agency policy, how the forced distribution of the GS population will be applied and validated,” OPM wrote. “Prior to the end of [fiscal] 2026, OPM will issue guidance on how the role of the PMO should be used with respect to the forced distribution of ratings.”

The Equal Employment Opportunity Commission, meanwhile, said the rule would discourage collaboration. Forced distribution risks “turning colleagues into competitors,” EEOC said, and disincentives mentoring and solving problems collectively. OPM countered that managers should remind employees they will be evaluated only on their own, individual work.

The White House suggested that OPM had a branding problem. The agency should use the term “curve” or “stacked ranking” rather than “forced distribution,” EOP said, which it described as “hostile sounding” and “not great framing/messaging.” OPM rejected the suggestion, saying its terminology is more accurate even if more hostile. 

White House officials also recommended that OPM elaborate on its reasoning for overturning the forced distribution ban, which has been on the books for more than 30 years, in an apparent nod toward the Administrative Procedure Act’s requirement that agencies give reasonable explanations for their regulatory actions.

“Think the rule needs to do more to explain why it is removing the prohibition on a forced distribution, given that this is a change in position from the Clinton administration rulemaking,” the Executive Office of the President wrote. OPM disagreed.

“OPM has provided significant explanations on the benefits of forced distribution through its rulemaking with the [Senior Executive Service] and [senior professional] populations, as well as its recent guidance on normalizing ratings,” the agency wrote. “Additionally, although this is a change in position, OPM has provided the recent ratings data which illustrates how ratings have skewed far beyond a normalization of a majority of fully successful ratings.”