Time to Step Up: Pay for Performance Emerging as Key Federal Agency Improvement Tool

It’s safe to say that there’s a “whole lotta shakin’ goin’ on” in Washington these days. And a number of developments in particular brings great potential to significantly elevate the government’s positive impact by closely tying the pay of federal employees – and even job security – to their performance:

  • The Trump administration has voiced support for policies which “financially reward employees who do a good job, and fire those who don’t,” as Vice President Mike Pence has put it. In stressing the need for more accountability, Pence has criticized a system which depends upon “outdated civil service rules” which prevent leaders from properly disciplining troublesome workers.
  • In January, the Department of Defense (DoD) announced that it was revising its reduction in force (RIP) policies to designate performance as the most important factor in deciding who gets laid off and who doesn’t. Prior to the change, managers had to prioritize an employee’s tenure and veteran’s status over appraisal results. “This is not signaling that any RIF is imminent,” said a senior DoD official. “But if it becomes necessary, we want to have the policies in place to keep our highest-performing employees. We want to have policies that allow us to do RIFs in a consistent way.”
  • In November, agencies gained approval to raise their limits on spending for employee awards in FY 2017. They can now spend up to 1.5 percent of aggregate salaries for all non-Senior Executive Service employees at the end of the year based upon ratings-based performance awards and individual contribution awards. The previous limit was about 1 percent. “The Office of Personnel Management and the Office of Management and Budget recognize that awards programs are valuable tools to help agencies reward employee performance excellence and reinforce a high-performing culture that will help improve organizational effectiveness,” OMB Director Shaun Donovan and OPM acting Director Beth Cobert wrote in a Nov. 22 memo.
  • In March of last year, the DoD announced that its New Beginnings initiative will require more frequent reviews between supervisors and employees while better linking performance to rewards such as bonuses and promotions. New Beginnings will also introduce a three-tiered rating system to assess staffers, with supervisors holding a minimum of three formal documented performance discussions with an employee per year. As a result, the DoD intends to more clearly align an individual’s work quality to organizational strategies.

Jeff Neal, former Chief Human Capital Officer for the Department of Homeland Security and currently Senior Vice President at ICF International, feels “there is still a lot of support for having pay be driven, at least in part, by performance. The Merit System Principles mandate recognition of excellence. Dealing with poor performers also requires some measure of what constitutes good or bad performance.”

While I’ll stop short of saying that performance-based compensation is a “done deal” at this point, it’s obviously something that agency HR leaders should at least be thinking about and probably something they need to be preparing for.

Those agencies still using “pen and paper” or simply scanning OPM performance appraisal forms are not going to be able to adequately adapt to this emerging world. Without at least some level of automation, agencies will not be able to keep up with the volume of activity and recording that needs to be accomplished. Proper measurement will be virtually impossible.

Simple automation is the foundation for any level of insight into top performers as well as poor performers. With the proper tools, automation can be achieved without a great degree of difficulty or investment. And with that foundation in place, insight into employee performance can really take off, reforming and bettering agency performance management goals such as:

  • accountability
  • top and poor performer identification
  • better engagement and manager/employee relationships
  • improved retention strategies
  • enhanced employee development.

People analytics solutions help agencies effectively track and quantifiably assess performance. With this, they identify which areas are struggling, and which are thriving – and take best practices from the latter to benefit the former. (That’s something that these leaders should seek to do anyway, regardless of whether the changes are coming.)

By investing in solutions which enable this, they’ll see work performance elevated and quality improve agency-wide – the kind of “shakin’ going on” that everyone wants to see.

At Acendre, we engage every day with agencies to make such improvements a reality. If this sounds like something you’d like to learn more about, let’s talk.

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