Performance Management Looks Ahead While Job Ratings Look Back, Report Says

With about 16 months left in office, the Bush administration is not giving up on pay for performance. And federal unions and many employees are not giving in to the administration.

Union opposition has taken the wind out of the pay-for-performance project at the Department of Homeland Security, and slowed the rollout of a new pay system for the rank and file at the Defense Department. Meanwhile, a four-year, government-wide effort to convert federal executives to performance-based pay has received mixed reviews.

There is a way out of this muddle if federal managers and employees work together to improve the performance of their agencies and enhance opportunities for employees to achieve career aspirations, according to two compensation experts who reviewed federal performance-management practices.

Howard Risher, a compensation consultant, and Charles H. Fay, a Rutgers University professor, have teamed up to write "Managing for Better Performance" to show that the government can provide better rewards and incentives for civil service employees.

Their report, published by the IBM Center for the Business of Government, begins with a call for more clarity within agencies about the meaning of "performance management," and recommends that agencies involve employees in defining "successful performance."

Too often, Risher and Fay write, managers and employees tend to equate annual evaluations of employees as performance management. But, they point out, job ratings are backward-looking, and performance management is a broader, forward-looking practice designed to help employees understand what is expected of them and how their work contributes to the agency's mission.

Risher and Fay propose that the administration create a program-management office within agencies to bring together experts who can lead new pay and performance systems. They note that the Pentagon created a program office for its new National Security Personnel System, which has kept that system going in the face of union opposition and litigation.

Creating program-management offices would make workplace changes an "organizational priority" and attract more support than if they were left to personnel offices, the authors say.

They recommend that the administration stick with the new, performance-based pay system for the Senior Executive Service, which covers about 6,000 career managers in government. "Until the SES system is seen as effective, it is unlikely that lower-level systems will be successful," Risher and Fay write.

The two acknowledge that opposition to the administration goal of putting federal employees under more rigorous management "reflects a lack of trust that they will be treated fairly within their own organization and treated equitably with employees in other organizations."

Part of the problem, Risher and Fay also note, is that managers often fall into a pattern of rating employees higher than warranted, making it difficult to reinforce the importance of job performance.

"The rating process has to be seen as credible -- and employees have to believe they will not be disadvantaged if their supervisor is honest," the two write.

"An employee who is basically meeting the expectations of his or her job -- in other words, doing the job -- should be able to expect an average [pay] increase. The majority of employees generally fall into that group. It is only the limited number of employees who exceed the expectations of the job who deserve an above-average increase," they write.

Because it is "middle management" that is chiefly responsible for employee performance, Risher and Fay recommend that agencies provide bonuses and other incentives to managers who are bridges between employees and executives.

Mid-level managers in government should get extra compensation, just as corporations award bonuses and stock options to members of their management teams, the authors contend. In their view, government has focused too much on the SES and almost ignored mid-level managers.

"Simply stated," Risher and Fay conclude, "the management of people needs to be a core responsibility of every manager."

To read the Risher-Fay report, go to www.businessofgovernment.org. Stephen Barr's e-mail address isbarrs@washpost.com.