The incredible shrinking bonus

As you probably have heard by now, the Obama administration has drawn a line in the budgetary sand that caps the total amount agencies can spend on individual performance awards.

According to guidance in a memo issued by the Office of Personnel Management and the Office of Management and Budget, the total an agency can spend for individual performance awards for its senior executive service, senior-level, scientific, and/or professional employees can be no more than 5 percent of those employees’ aggregate salaries. For all other employees, including General Schedule employees, it can be no more than 1 percent of those employees’ aggregate salaries.

In other words, for SES employees, for example, all their bonuses added together cannot exceed 5 percent of all their salaries added together. The cap, effective immediately, applies to fiscal 2012 as well.

At the same time, there is “there is no cap on the percentage of employees receiving awards or the number of individual awards granted,” according to the memo. And, as the memo states: “Like the overall number of awards, no specific limit is being placed on the amount of any single individual award.”

Translation: A lot of people could get small awards, a few people could get big awards, or some combination of those two. And while the most equitable thing would apply the same level of restraint across all the individual awards, that might be too much to wish for in the real world.

With the federal pay climate the way it is, one thing is clear: Those who hold the purse strings on these awards will have to exercise some careful decision-making in the months ahead.

But even if the awards end up being distributed as fairly as possible, the bonus cap—like other recent federal austerity measures—may end up begin just one more thing to deter the best job candidates from choosing a federal career.