GAO: OPM should clarify performance appraisals

Agencies must make meaningful distinctions among senior executives when assessing their performance for pay-for-performance systems to have credibility, the Government Accountability Office said in a report.

Less than a third of senior government managers said bonuses or pay distinctions were meaningfully different among executives, GAO said in a report released Dec. 15. GAO cited an Office of Personnel Management survey of members of the Senior Executive Service (SES).

OPM can ensure that agencies make distinctions in assessing executives’ performance by emphasizing the importance of using a range of rating levels, GAO said.

Agencies can raise the pay caps for SES members if their performance appraisal systems meet certain criteria, including factoring organizational outcomes into the appraisal decisions and making meaningful distinctions in individual performance, the report states. OPM and the Office of Management and Budget must certify that agencies’ performance management systems meet the criteria before they can raise the pay cap, the report states.

Agencies must build safeguards into their performance appraisal and pay systems for senior executives, including conducting higher-level reviews of performance appraisals and communicating the aggregate results with more transparency, the report states.

“Senior executives need to lead the way in transforming their agencies to become more results-oriented, collaborative in nature and customer-focused,” said Robert Goldenkoff, director of strategic issues at GAO.

In the OPM survey, senior executives agreed overwhelmingly that pay should be based on performance, the GAO report states. Therefore, it is important for them to have confidence that the SES performance-based pay system is operating as intended and that they will be rewarded according to their performance, Goldenkoff said.

The agencies that GAO evaluated for its report said OPM should bolster its communications with agencies and executives on how it uses the SES performance appraisal data to determine whether agencies are making meaningful distinctions among executives.

For the report, GAO evaluated performance-based pay systems at the Defense, Energy, State and Treasury Departments; the Nuclear Regulatory Commission; and the U.S. Agency for International Development. GAO also reviewed OMB’s oversight and OPM’s guidance.

“Further communication from OPM is important in order for agencies to have a better understanding of how they are being held accountable for these certification criteria and make the necessary improvements to their systems to maintain certification,” Goldenkoff said.