By Barbara Haga, January 18, 2017

I am following up with another article regarding another recommendation included in the report Governing for Results: A Transition and Management Agenda to Lead Policy Change in a New Administration, issued on October 17.  The report is available here:  This time I want to talk about performance recognition for Federal employees.

Taking Authority Away from Agencies  

The report notes that previous performance systems have not lived up to their potential, and the private sector seems to be moving away from traditional performance reviews.  The Transition Group acknowledges that there was no clear consensus in the group about what a new system should look like.  However, on page 25 of the report they list some options in a section entitled “Expand Employee Rewards and Pay-for-Performance Systems”:

Non-Financial Reward Systems: As an alternative to or companion to performance evaluation systems for all employees, create a robust employee recognition and reward initiative. 

Financial Reward Systems: If financial rewards are used, the Administration may want to take decisions for those rewards outside of the agency and provide for a third-party validation entity. To buffer criticism that bonuses are being given out at taxpayer expense, consider partnering with foundations in each mission area of government who could pledge funds to reward federal employees.

The first recommendation skips over the fact there is a merit principle that requires agencies to reward performance.  5 USC 2301(b)(3) states: “Equal pay should be provided for work of equal value, with appropriate consideration of both national and local rates paid by employers in the private sector, and appropriate incentives and recognition should be provided for excellence in performance (emphasis added).”  5 USC 4302(b)(4) requires agency appraisal systems to provide for “… recognizing and rewarding employees whose performance so warrants.”  If any of the performance recommendations included in the report are going to be implemented, then not only is 5 USC Chapter 43 going to need to be overhauled, but the merit principle is going to need to be changed, too.

The Transitions in Governance group is recommending non-financial rewards as an alternative or a companion to performance recognition. I am not sure what they have in mind.  It could be anything from the array of offerings under 5 CFR 451 from time off awards to career recognition awards to employee of the quarter programs.  It could be something entirely new.  Agencies actually have very broad latitude to create incentive award programs under the law and regulations as they exist today.  I agree with the transitions group that an incentive award program can be an effective management tool.  I think our best bet with getting a “bang for the buck” with recognition is to do it when something exceptional happens with an incentive award.

The group’s recommendation about taking award decision-making authority away from agencies is difficult to understand.   If we can’t have confidence in the decisions that managers make about that 1% or 1.5% of the personnel budget that most agencies are allowed to allocate for awards, how is it reasonable to count on them to manage huge programs, prepare regulations and defend agency policies to constituents?  If they can’t be trusted to effectively deal with decisions on rewards for good employees, how could we expect them to make tough decisions about discipline and firing and answering grievances and EEO complaints?

I think this recommendation buys into a perception that Federal managers don’t do a very good job of managing.  Surely there are examples of where there have been failures, but in a lot of cases, I think the awards system drives the bad decisions.  I don’t think that giving the authority to someone else is the answer.  Third-party validation to me would turn performance awards into a bureaucratic nightmare.  The award recommendations would be handed over to a group far away from where the accomplishments took place to people who would be outside of normal agency control.  Handing off important management decisions to folks outside of the chain of command is a scary proposition.  Folks who have a vested interest and have knowledge about the details of the work should be judging who warrants recognition.  We have seen problems with this handing off of authority before.  Anyone out there remember Merit Pay pools from the ’80s?  One could also ask the DoD employees who were under NSPS how well received the pay pool system was where managers many layers of supervision away from the recommending manager were deciding on whether the ratings and thus the pay rewards were warranted.

Get the Money from Somewhere Else

The second half of the recommendation says agencies should get some foundation to give money to use to reward Federal employees to combat the perception that taxpayers are footing the bill for the awards.  Taxpayers fund the salaries, and awards are just a small portion of that amount.  I frankly don’t think the average taxpayer cares until awards are handed out to those who don’t seem to deserve them – such as VA folks who are not taking care of patients as they should, or IT professionals whose programs don’t meet the requirements they were designed to address, or managers who don’t manage.  I don’t think it is an issue of using the taxpayer dollars, but making sure they are used where warranted.

The report takes a different tack.  To me, this is one of the stranger recommendations in this report.  Maybe NASA could find a group to give them award money – and maybe other agencies like NIH or CDC could do so.  But, I would think that a foundation would want to give their money in furtherance of some end that they want to foster.  For example, an aerospace group might give money to “reward” the entities within NASA that do aeronautical research but not to other parts of NASA engaged in climate research or space flight.  But, seriously, what about other agencies that don’t have that “draw’?  What foundation is going to sign up to give money for awards to the TSA, IRS, or SSA?  If a foundation is giving money, isn’t it reasonable to think that they are expecting something for it – some program achievements related to their areas of interest, some report back on what was achieved, some answers about who received award money?

A Better Idea?

I have an alternate solution.  I think the appraisal system would work much better if we got rid of performance recognition completely.   In next month’s column, I’ll explain why.

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