Richard Spires, deputy commissioner of operations support at the Internal Revenue Service, said the agency has learned firsthand from its seven years’ experience with establishing pay for performance that agencies must:
• Move cautiously to establish the program that is right for the organization.
• Communicate often.
• Establish an effective performance evaluation system and review the system to ensure evaluation consistency.
• Train managers properly to use the system and make sound evaluations.
• Evaluate programs often and be willing to make changes to the pay-for-performance system to meet changing needs.
Pay for performance has been heralded as an approach that would allow agencies to reward the good work that people do rather than their time in service while also allowing government pay to catch up with the private sector.
However, critics claim that implementing pay-for-performance plans across government has been inconsistent and lacks transparency. Even agency executives in charge of implementing the alternative pay systems that have shown progress say that it will take time for the government to get it right.
The Office of Personnel Management released a survey in July on trends in pay for performance that reported agencies granted higher performance awards and pay adjustments to their top performers in fiscal 2007. The results indicate that given time and proper implementation, performance-based pay systems can be effective, said Linda Springer, then OPM administrator.
Agencies are increasingly using performance data as part of employee performance reviews and decisions to reward highly productive employees, the Government Accountability Office said. The performance appraisal and pay systems of Senior Executive Service members require a clear link between individual performance and pay. Agencies can raise SES base pay and total compensation caps if OPM and the Office of Management and Budget certify that their performance appraisal systems link the individual’s performance to the organization’s goals and make meaningful distinctions based on relative performance.
“Performance-based pay cannot be simply overlaid on most organizations’ existing performance management systems,” said Bernice Steinhardt, GAO’s director of strategic issues, at a recent hearing of the Senate Homeland Security and Governmental Affairs Committee’s Federal Financial Management, Government Information, Federal Services and International Security Subcommittee.
Before they change to pay for performance, agencies need to clearly align individual employee’s expectations with the organization’s results; communicate often about individual contributions to annual goals; and make meaningful distinctions in employee performance, Steinhardt said. Executives who are held accountable for results in performance management systems can provide the continuity and focus on the organization’s priorities, especially during periods of transition, she said.
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