GAO Reviews Alignment of Agency and Employee Performance Plans

The Government Accounting Office (GAO) reviewed six Government Performance and Results Act pilot projects where agencies had taken steps to align their employee performance management systems with their organizational missions and goals. They looked at:

• the Army Audit Agency (AAA),
• the Army Research Laboratory (ARL),
• the National Oceanic and Atmospheric Administration (NOAA),
• the Small Business Administration (SBA),
• the Department of Veteran Affairs-New York Regional Office (VA-NYRO), and
• the Federal Energy Technical Center (FETC).

The GAO report entitled Performance Management: Aligning Employee Performance with Agency Goals at Six Results Act Pilots provides information on the primary approaches taken and the issues and challenges commonly confronted while developing and implementing these alignments.

Pilot Projects Aligning Employee Performance with Organizational Goals

The projects' employee performance management approaches were intended to support their missions and goals and to address particular circumstances or needs. The pilot projects' approaches varied in significant ways:

• the kinds of employees on whom they focused;
• the extent to which organizational goals were explicitly reflected in employees' performance plans; and
• whether they emphasized creating accountability for results at the individual or team level.

Focus on managers

Four of the pilots (AAA, ARL, NOAA, SBA) focused on managers rather than on staff at other levels because they felt that managers hold key responsibility for the business of the organization and for implementing change among its employees. A common factor among these pilots was their traditional approach: managers' accountability for results was carried out through a system of expectation-setting and evaluation by their superiors.

For example, NOAA officials made "strategic plan support" a critical element in the performance plans of its Senior Executive Service (SES). This allowed the agency to simultaneously monitor program and individual managers' progress. The executives prepared self-assessments based on the accomplishment of annual goals. In addition, the senior executives' supervisors rated them using a five-level scale. The self-assessments and the ratings were forwarded to NOAA's Performance Review Board to determine awards. While the SES performance-bonus allocation was calculated based on 3 percent of the total SES payroll, the agency decided in 1997 to withhold 10 percent of that money to give to senior executives who had contributed the most to achieving NOAA's strategic goals. NOAA plans to eventually include strategic goals in the performance plans of the GS-15 and GS-14 office directors.

Focus on employees

In contrast, the other two pilots (VA-NYRO, FETC) focused their approaches on all employees, relying on Total Quality Management (TQM) principles as a guide and organizing employees into self-directed work teams. For example, at FETC, a team-based performance management approach was introduced to enhance teamwork, improve productivity and quality, and help the center accomplish its performance goals. This team- based approach included: (1) a 360-degree feedback system; (2) formally appraising performance at two levels (i.e., meets or exceeds expectations/fails to meet expectations) to help eliminate barriers to communications between supervisors and employees; and (3) a team awards approach that supports organizational performance. Employee performance plans emphasized the competencies and behaviors considered necessary to support the team's efforts to meet the agency's strategic goals.

The link to organizational goals seemed less explicit for the pilot projects using a team-based approach than for the projects focusing on managers. In the projects focusing on teams, the expectation was that employees would contribute to achieving organizational goals by contributing to the performance of their teams. In contrast, the pilot projects that focused on managers made a direct link between organizational strategic plans and managers' performance plans.

Issues and challenges the pilot projects faced

All six pilot projects found sufficient flexibilities available to them in the current human resource regulations to take at least some steps toward aligning their performance management programs with their missions and goals. Nonetheless, the pilots found it challenging to include appropriate and meaningful goals and performance measures in their performance management approaches. For example, most of the pilot projects that focused on managers took almost the same approach: assigning responsibility for organizational goals to managers in their performance plans. But these pilots varied widely in their efforts to "cascade" organizational goals and measures to employees at lower levels. Officials from all the pilot projects mentioned that developing results-oriented goals and measures was a continuing challenge.

Another challenge faced by each pilot was the need to redirect its culture toward a new understanding of the organization's mission or way of doing business and to secure employee buy-in. In addition, pilot officials encountered unintended consequences as a result of using new employee performance management approaches. Officials noted that in establishing new goals and measures or new appraisal programs for their employees, they had encountered cases in which employees were "gaming" the system, that is, manipulating the performance measures to make their performance look better than it might actually have been. Also, some employees perceived a lack of fairness in the approaches' implementation.

The benefits and outcomes

None of the six pilots reported having formally evaluated its performance management approach, but all reported possible benefits, including:

• improved teamwork and communications;
• greater accountability;
• higher customer satisfaction; and
• improved service delivery.

In addition, all six pilots considered their approaches worth pursuing further and have continued to refine or expand their efforts to align performance management with organizational missions and goals after their participation as pilot projects ended.

GAO noted that successful performance management systems depend, in part, on agencies putting in place a framework of clearly defined organizational mission statements, goals, and performance measures that can serve as the basis for setting employees' performance expectations and evaluating their performance.

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