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Federal Diary

OPM Reports Increase in Spending on Performance Bonuses

By Stephen Barr
Tuesday, March 15, 2005; Page B02

Spending on cash awards to recognize the good work of federal employees has continued to grow, hitting $1 billion for the first time in fiscal 2003, according to an Office of Personnel Management report on the federal workforce.

In 2003, there were more than 1.17 million "individual cash" awards made, with the average award worth $858, OPM reported.

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That was up from fiscal 2002, when the government spent about $923 million on more than 1.15 million cash awards, averaging $800 each, OPM said.

Although $1 billion in bonuses may seem large, the OPM report noted that the individual cash awards amounted to less than 1 percent of the federal payroll.

Still, the data suggest that the government has in place a method for rewarding good performance -- one of the Bush administration's key goals. The bonus money was awarded based on performance ratings given employees as part of their annual job evaluations or as a way to recognize specific accomplishments.

The report notes that in 2003, an additional $111.4 million went for "group" awards that recognized special achievements. There were 197,597 of those awards, and the average award was $564.

In addition to individual and group bonuses, the government spent $49.3 million on merit raises, known as "quality step increases," in fiscal 2003. Agencies granted 60,913 of the raises, which averaged $809, OPM said. That was up from the previous year, when the average raise was $797. Merit raises go to federal employees who receive an outstanding or other high job rating.

Federal agencies also granted more "time-off" awards in fiscal 2003, with the average award worth 14.1 hours of paid time, about the same as in 2002, OPM said.

The Bush administration changed the reporting requirements for cash awards in fiscal 2001, making it difficult to compare the most recent data against data for previous years, including those during the Clinton administration. But the data indicate that since 1997, the government has steadily increased spending on bonuses that reward top-notch job performance. The OPM report was released Friday and posted on the agency's Web site (www.opm.gov).

The OPM data also show that agencies spent $10 million on "rank awards" given to 332 members of the Senior Executive Service in fiscal 2003, slightly less than the $10.4 million given to 348 award winners in fiscal 2002. A "distinguished rank" award was worth 35 percent of basic pay; a "meritorious rank" award was worth 20 percent of pay.

The government's ability to reward good performance has been faulted through the years, especially by employees who contend that award programs are not well managed.

In 2002, only 30 percent of federal employees said their agency's awards program gave them an incentive to do their best, an OPM survey found. Less than half of the survey respondents said high-performers were rewarded on a timely basis.

A survey of federal employees conducted in 2000 by the Merit Systems Protection Board found that just 33 percent believed that awards in their workplace were based on merit and that only 37 percent were satisfied with the recognition they received for their work.

Ken Abosch, a senior consultant at Hewitt Associates, said the firm's most recent compensation study found that 78 percent of corporations provide performance awards similar to those given in the government. Most of the companies are spending an estimated 9.9 percent of payroll on performance awards, he said.

"It seems like the government is getting into the game, but the level of spending is behind what we see on the corporate side," Abosch said.

Defense to Testify

Sen. George V. Voinovich (R-Ohio), chairman of the Senate government management and federal workforce subcommittee, has scheduled a hearing for this morning on the Pentagon's plan to overhaul the Defense Department's civil service system.

Among those asked to testify on the proposed National Security Personnel System are Charles Abell, principal deputy undersecretary for personnel and readiness at Defense; George Nesterczuk, a senior policy adviser at OPM; and two presidents of unions that represent Defense Department employees, John Gage and Gregory Junemann.

E-mail: barrs@washpost.com

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