Statute: 5 U.S.C. 4311-4315

Regulations: 5 CFR Part 430, Subparts C and D

An essential goal of the SES, as stated in 5 U.S.C. 3131, is “to ensure accountability for honest, economical, and efficient Government.” In order to achieve this goal, senior executives must be held accountable for their individual and organizational performance through an effective performance management system. Performance management incorporates planning, monitoring, developing, evaluating, and rewarding both individual and organizational performance. [Regulations under 5 CFR 430 subpart B cover performance management for senior-level and scientific and professional employees.]

Using Appraisal and Rating Information

Important consequences flow from executive performance appraisals, as they should in any performance-based personnel system. To underscore the importance for agencies to establish sound performance management systems, below is a list of executive personnel actions that must be based on performance appraisals and ratings. The annual summary rating, and the appraisal information on which it is based, shall be used as a basis for making decisions in the following situations, as indicated:

Pay Adjustments

Under 5 U.S.C. 5382 and 5383, each senior executive shall be paid at one of the rates within the SES pay range based on individual performance, contribution to the agency’s performance, or both, as determined under a rigorous performance management system. [See Chapter 5, SES Pay, Adjusting Individual Pay Rates.]

Performance Award

Under 5 U.S.C. 5384, only a career appointee who has a Fully Successful rating or higher is eligible for a performance award. [See Chapter 6, Awards, Performance Awards.]

Performance Removals

If the annual summary rating is less than the Fully Successful level, the agency must take the personnel actions required by 5 U.S.C. 4314(b) as follows:

• The executive must be reassigned or transferred to another position within the SES, or removed from the SES, for one Unsatisfactory rating;
• The executive must be removed from the SES for two Unsatisfactory ratings in a five- year period; or
• The executive must be removed from the SES for two less than Fully Successful ratings (Unsatisfactory or Minimally Satisfactory) in a three-year period.

The agency must provide assistance in improving performance for those executives retained in the SES. This may include formal or on-the-job training, counseling, or closer supervision.

The agency must inform the executive of the effect of any personnel action being taken. If the executive is being retained in the SES, he or she should be advised of the effect of another less than Fully Successful rating.

Reduction in Force

Under 5 U.S.C. 3595(a), the determination of who shall be removed from the SES in a reduction in force (RIF) is made through competitive procedures based primarily on performance. [See Chapter 9, Reduction in Force.]

Executive Development

Under 5 CFR 412.401(a), each agency must establish a program(s) for the continuing development of its senior executives in accordance with 5 U.S.C. 3396(a). Such agency programs must include preparation, implementation, and regular updating of an Executive Development Plan (EDP) for each senior executive. Using input from the performance evaluation cycle, EDPs should be reviewed annually and revised, as appropriate, by an ERB or similar body designated by the agency to oversee executive development. [See Chapter 7, Executive Development.]

Performance Appraisal Systems

Basic SES Performance Appraisal System

The Basic SES Appraisal System, developed by OPM with extensive participation by inter- agency working groups, satisfies the regulatory system standards at 5 CFR 430.305 and promotes consistency, clarity, equity, and mutual regard for SES appraisal processes, standards, feedback, and ratings across Government. Implementation of the Basic SES Appraisal System also provides a streamlined and efficient means for SES performance appraisal systems to be approved and certified by OPM. Agencies are strongly encouraged to adopt and adapt, as appropriate, the Basic SES Appraisal System to meet their specific needs. Agencies must continue to comply with all laws and regulations pertaining to SES and SL/ST certification, pay, awards, and performance management. Visit the SES and SL/ST MAX Portal for the latest information and resources on the Basic SES Appraisal System.

Agency Responsibilities

Each agency must establish and maintain one or more SES performance appraisal systems that will encourage excellence in performance. An agency may develop its own performance appraisal system that must include the requirements identified below or adopt the Basic SES Appraisal System, which incorporates all the requirements.

The performance appraisal system must provide for—

1. Identifying executives covered by the system;
2. Monitoring progress in accomplishing critical elements and performance requirements and conducting progress reviews at least once during the appraisal period;
3. Establishing an official performance appraisal period for which an annual summary rating must be prepared;
4. Establishing a minimum appraisal period of at least 90 days;
5. Ending the appraisal period at any time after the minimum period is completed, but only if the agency determines there is an adequate basis on which to appraise and rate the executive’s performance and the shortened appraisal period promotes effectiveness; and
6. Establishing criteria and procedures to address performance of executives who are on detail, temporarily reassigned, or transferred.

Each agency performance appraisal system also must incorporate the following system standards—

1. Use critical elements based on OPM-validated executive competencies;
2. Align critical elements and performance requirements with agency mission and strategic planning initiatives;
3. Establish five summary performance levels as follows:
   • An Outstanding level;
   • An Exceeds Fully Successful level;
   • A Fully Successful level;
   • A Minimally Satisfactory level; and
   • An Unsatisfactory level.

Agencies choosing to use agency-specific terms for the levels must include equivalency statements for the five summary levels:

4. Define performance standards for each of the summary rating levels;
5. Appraise each executive’s performance at least annually against requirements and standards;
6. Derive an annual summary rating through a mathematical method that ensures an executive’s performance aligns with level descriptors contained in performance standards, which clearly differentiate levels above fully successful, while prohibiting a forced distribution of rating levels; and
7. Use performance appraisal as a basis to adjust pay, reward, retain, develop, remove executives, or make other personnel decisions.

Agencies must—

1. Submit proposed SES performance appraisal systems to OPM for approval;

2. Provide appropriate training and information to agency leadership, supervisors and executives on the performance appraisal system;
3. Evaluate the effectiveness of their performance appraisal system(s) on a periodic basis and implement improvements as needed. Evaluations must provide for both assessment of effectiveness and compliance with relevant laws, OPM regulations, and OPM performance appraisal policy; and
4. Establish timelines for communicating performance plans, conducting appraisals, and assigning and communicating annual summary ratings.

OPM Responsibilities

OPM approves agency performance appraisal systems and provides guidance on their implementation. If OPM finds that an appraisal system does not meet legal and regulatory requirements, it shall direct the agency to implement appropriate system changes.

OPM, with concurrence from OMB, certifies agency performance appraisal systems. If OPM determines that an agency’s certified appraisal system is no longer in compliance with certification criteria, OPM, with OMB concurrence, may suspend the agency’s certification. An agency’s system certification is automatically suspended when OPM withdraws performance appraisal system approval or mandates corrective action because of misapplication of the system.

Planning Performance

Individual Performance Plans

Performance plans must be established for all SES members (including individuals serving on career, noncareer and limited appointments) on or before the beginning of the appraisal period. A template for an executive performance plan is included as part of the Basic SES Appraisal System and is available on the SES and SL/ST MAX Portal.

Performance plans must be developed in consultation with the executive. The executive’s immediate supervisor must communicate the plan to the executive in writing, including through the use of automated systems. Additionally, executive performance plans must describe the individual and organizational expectations for the appraisal period that clearly fall within the senior executive's area of responsibility and control.

Each executive performance plan must include—

1. Critical elements that reflect individual performance results or competencies and organizational performance priorities within the executive’s area of responsibility and control, which are based on OPM-validated executive competencies;
2. Performance standards describing each level of performance at which a senior executive’s performance can be appraised. Performance standards for a level of performance establish the general expectations an executive must meet to be rated at a particular level and the benchmark for developing associated performance requirements; and
3. At a minimum, performance requirements that describe expected accomplishments or demonstrated competencies at the Fully Successful level. Performance requirements may also be established for other levels of performance. Performance requirements must be aligned with agency mission and strategic planning initiatives and must contain measures of the quality, quantity, timeliness, cost savings, or manner of performance, as appropriate, expected for the applicable level of performance.

Critical elements, performance standards, and requirements must be consistent with the goals and performance expectations in the agency’s strategic planning initiatives. An agency performance appraisal system may also provide for review or approval of an executive’s proposed performance plan by a higher-level supervisor or committee (e.g., the Performance Review Board) prior to implementation. This may help ensure that performance elements and requirements are in accord with mission requirements and planned resource allocations, are consistent among supervisors and across organizational lines, and are fair and equitable. If the reviewer does not agree with the performance plan, it can be returned to the supervisor and executive for modification.

The agency performance appraisal system should provide for revision of the performance plan during the appraisal period if modifications are necessary due to factors such as changes in agency or organizational priorities, available resources (e.g., budget or staff), deadlines, or workload. The supervisor should consult with the executive and provide the executive in writing, including through the use of automated systems, with any modification of the plan. If changes occur with fewer than 90 days (or other agency prescribed minimum) remaining in the official appraisal period, the agency should consider: (1) ending the appraisal period on schedule, appraising affected elements based on prior performance requirements, and implementing new performance requirements in the next appraisal period; (2) extending the current appraisal period so that an executive’s ratings can take into account performance under the revised performance requirements; or (3) closing out the current appraisal period early and initiating a new appraisal period that will run longer than 12 months. Whenever possible, an executive should be rated on schedule to promote consistency, stability, and objectivity in appraisal. However, an executive must have adequate time to perform before being appraised against performance requirements that have changed.

Monitoring Performance

A supervisor must conduct at least one progress review with an executive during the appraisal period. Supervisors must monitor each executive’s performance during the appraisal period and provide feedback on meeting the performance requirements described in the plan. Supervisors must advise executives on how to improve their performance. The progress review may be conducted informally rather than formally with a written appraisal but the fact that it took place should be documented.

The progress review can also be used as an opportunity to modify critical elements and performance requirements to reflect changes that may have taken place since the performance plan was initially developed.

Appraising Performance

Rating all Executives

All senior executives (including individuals serving on career, noncareer and limited appointments) must be assigned an annual summary rating. The following are inappropriate reasons for not assigning a rating to an executive at least annually (this list is not exhaustive, but rather represents common situations):

• The executive’s rating official departed before a rating was assigned – in such a situation, the next-level supervisor and/or reviewing official should assume the responsibility for observing and appraising performance and assigning an initial rating;
• Not rating executives because they are limited term, limited emergency, or noncareer appointees – all executives, regardless of appointment type, must be rated at least annually; or
• Not rating executives because they were not assigned to a performance plan – all executives should be assigned to a performance plan on or before the beginning of the appraisal period.

Extending the Appraisal Period

The agency SES appraisal system must indicate the beginning and end dates of the official appraisal period. The agency SES performance appraisal system must also establish a minimum appraisal period of at least 90 days. If an executive has not served the minimum period, the appraisal period must be extended.

For instance, a new executive is appointed to a position effective September 1. The agency’s appraisal cycle ends September 30. Listed below are possible options for extending the appraisal period.

1. The executive’s appraisal period is extended to November 30 allowing for completion of the 90-day minimum period; or
2. The executive’s appraisal period is extended to a total of 13 months, adding the additional month to the next 12-month appraisal period.

In considering the options for extending the appraisal period, agencies should review their pay policies and the impact possible extensions could have on an executive’s pay.

An agency may terminate the appraisal period at any time after the minimum period if there is an adequate basis on which to appraise and rate an executive’s performance and doing so will promote effectiveness.

When an executive cannot be evaluated due to special circumstances that take the executive away from normal duties (e.g., extended sick leave), the supervisor should document the special circumstances on the appraisal form.

Reassignment or Transfer of Executive

If an executive is reassigned, or transferred to a new agency, and had been in the former position for more than the minimum appraisal period, the former supervisor must appraise the executive’s performance in writing, including through the use of an automated system, before the executive leaves and provide this information to the executive.

The most recent annual summary rating and any subsequent appraisals must be transferred to the gaining agency or organization. The gaining supervisor must consider the rating and appraisals when deriving the initial summary rating at the end of the appraisal period.

At times, an executive may receive an interim summary rating in a former position upon reassignment or transfer but will not have served in the new position for the minimum appraisal period. (For example, the executive is reassigned on August 1, and the period ends on September 30.) The agency system description or policy documentation should specify what to do in these instances. Listed below are possible options for addressing the situation:

1. The agency may provide that the appraisal period will be extended until the executive has served the minimum period in the new position, so that the executive’s initial summary rating can take into account the appraisal for that position along with any interim summary ratings for former positions held during the appraisal period; or
2. The agency may provide that the appraisal period will end as scheduled and the initial rating will be based on the interim summary rating, or ratings, received during the appraisal period.

Detail of Executive

If an executive is detailed for 120 days or longer to another position within the agency, the supervisor shall provide written critical elements, performance standards, and requirements as soon as possible after the beginning of the detail and appraise the executive’s performance in writing, including through the use of automated systems. A detail does not remove the requirement for an agency to rate executives annually, and the supervisor of the executive’s position of record remains responsible for preparing the initial rating used in determining the detailed executive’s annual summary rating for the appraisal cycle. The supervisor of the detail must therefore provide timely appraisal information for the executive’s supervisor of record to consider in preparing the initial rating. If an executive is detailed to a position outside the agency, to include by Intergovernmental Personnel Act (IPA) assignment to a non-federal organization, for more than the agency’s minimum appraisal period, the supervisor of record must make a reasonable effort to obtain appraisal information from the outside organization for use in preparing the detailed executive’s initial summary rating. For any interagency detail, the borrowing agency’s obligation to provide appraisal information to enable the lending agency to conduct performance appraisal for the executive should be addressed before the detail begins.

Departure of Supervisor

Although not required by regulation, agencies may provide that supervisors who are leaving their positions must give an interim summary rating for all executives who have been under their supervision for the minimum appraisal period.

Appointment of New Supervisor

If, at the conclusion of the appraisal period, the supervisor has served for less than the minimum appraisal period, there are several options available, depending on agency policy, including the following:

• the new supervisor may give the initial summary rating;
• the next level supervisor may give the initial summary rating, if that supervisor has sufficient knowledge of the executive’s performance; or
• the appraisal period may be extended to allow a minimum appraisal period under the new supervisor before the initial summary rating is given.

In all cases, the initial summary rating must take into account interim summary ratings prepared by previous supervisors.

Moratorium

Performance appraisals and ratings for career appointees may not be made within 120 days after the beginning of a new Presidential administration [5 U.S.C. 4314(b)(1)(C)]. When the new President is inaugurated on January 20, appraisal actions may not be taken until May 21 unless the inauguration is for a second term of a continuing presidency.

The moratorium applies to all phases of the formal appraisal process—the initial summary rating recommendation by the supervisory official, any review by a higher-level official, review and recommendation by the Performance Review Board (PRB), and the annual summary rating by the appointing authority. The length of the performance appraisal period is not extended by the moratorium, which merely delays the appraisal and rating actions.

The moratorium does not preclude the issuance of a written appraisal when an executive changes positions, as required by 5 CFR 430.310, or when the supervisor leaves if agency policy requires a rating at that time. A progress review is not a formal appraisal and is not subject to the moratorium. Additionally, a reduction in pay based on a less than Fully Successful annual summary rating assigned prior to the beginning of a new Presidential administration is not subject to the moratorium.

Rating Process

Initial Summary Rating

The initial summary rating is the summary rating of the executive’s performance made by the supervising official (normally the immediate supervisor) and provided to the Performance Review Board. The supervising official assigns an initial summary rating based on an evaluation of the executive’s performance against individual critical elements, performance standards, and requirements in the executive’s performance plan.

In addition to balanced measures based on customer and employee perspective found in the performance plan, the agency’s SES appraisal system also must require the consideration of performance appraisal guidelines as a factor when assigning an initial summary rating.

Guidelines must be based upon assessments of organizational performance and provided by the oversight official to senior executives, rating and reviewing officials, PRB members, and appointing authorities at the conclusion of the appraisal period and before completion of the initial summary ratings.

Appraisal of elements. The executive must be appraised on each critical element in the performance plan, unless the executive has had insufficient opportunity to demonstrate performance on the element. The rating for each critical element depends on the degree to which the executive has achieved the performance requirement(s) for the element and met the performance standards. A brief explanation justifying the rating level selected, along with specific examples of accomplishments or failure, is desirable to communicate the basis for the supervising official’s judgment and to support later steps in the process, particularly if the rating is below the Fully Successful level. The agency’s appraisal system must include a mathematical method to derive an initial summary rating from the assessments/ratings on individual elements.

Consideration of interim ratings. In preparing the initial summary rating, the supervising official must consider and appropriately factor in any interim summary rating prepared for an executive who changed positions during the appraisal period, any ratings on critical elements prepared for an executive on detail within the agency, and any appraisal information obtained on an executive detailed to another agency or outside organization.

Discussion with executive. There must be a discussion between the supervising official and the executive so that the official can review the appraisal with the executive, provide guidance and any necessary counseling, and receive feedback from the executive. The official should discuss and document areas for future emphasis or training and development.

Proposed ratings. An agency may elect to have proposed initial summary ratings considered by the next level supervisor to help ensure that appraisals are done in a uniform and equitable manner. Following this review, the supervising official would assign the official initial summary rating.

Executive rights. The executive must be given a copy of the official initial summary rating and advised of the right to respond in writing. The executive must also be advised of the right to request a higher-level review of the rating, if such a review is not mandatory following the initial rating.

Higher-Level Review

The agency’s performance appraisal system or internal operational policy should specify when the higher-level review is to take place and how the reviewer is to be determined. The reviewer must be at a higher organizational level than the supervising official, but not necessarily in the same organization. The reviewer should not be a member of the PRB or an official who participated in determining the initial summary rating. If agency policy requires that all proposed initial ratings be reviewed by the next level supervisor, then the next level supervisor is considered to be involved in the initial rating process.

The higher-level reviewer must be given a copy of any written response made by the executive regarding the initial rating. The agency may also provide the reviewer with additional information deemed relevant for conducting the review as outlined in the agency’s policy. The review must precede action by the Performance Review Board, so that the Board will have the opportunity to consider the reviewer’s comments in its deliberations.

An executive is entitled to only one higher-level review during the rating process. Some agencies provide for a mandatory higher-level review of all initial ratings by an official who was not involved in the initial rating process. In those circumstances, if the executive’s written comments on the initial rating are considered by the mandated reviewer, then no further higher- level review is required. However, an executive must be given the opportunity to respond in writing to the initial appraisal provided to the PRB. An official who has authority to change the initial rating provided to the PRB cannot provide the higher-level review to which an executive is entitled.

If a senior executive declines review by agency-designated higher-level officials, the agency may offer an alternative review but is not obligated to do so since the agency has provided an opportunity for higher-level review. The agency must document the executive’s declination of the higher-level review opportunity before offering an alternative review.

Alternative Review

When an agency cannot provide a review by a higher-level official for an executive who receives an initial summary rating from the agency head because no such higher-level official exists in the agency, the agency must offer an alternative review by an official the agency deems appropriate other than an official involved in determining the initial summary rating or a PRB member. An agency should also offer an alternative review in other circumstances where no higher-level official exists in the agency.

OPM regulations provide for alternative review only when the higher-level review, as defined in statute, is not possible, or those higher-level review opportunities offered by the agency are declined (in which case, alternative review is at the agency’s option). Since this applies where higher-level review as provided in statute is not available or has been declined, an agency may provide for alternative review by an official who is not at a higher-level or who is not within the agency, as needed.

An official providing the higher-level review or an alternative review is authorized to present the findings of the review and make recommendations, but not to change the initial summary rating. Copies of the reviewer’s findings and recommendations must be provided to the executive, the supervising official who gave the initial summary rating, and the Performance Review Board.

Annual Summary Rating

The annual summary rating is the official final rating for the appraisal period assigned by the appointing authority (and may not be delegated to an official who does not have authority to make SES appointments), after considering (1) the initial summary rating; (2) any input from the executive; (3) any higher-level review; and (4) the recommendations of a Performance Review Board. Agencies should complete all steps in the rating process in time for the annual summary rating to be communicated to the executive in writing, including through the use of automated systems, normally no later than three months after the end of the appraisal period. Annual summary ratings should be based on an appraisal of both individual and organizational performance.

The annual summary rating shall be provided to the executive and the supervising official who made the initial summary rating. Review of the annual summary rating is subject to the following provisions:

• Under 5 S.C. 4312(d) and 5 CFR 430.309(d), there is no appeal of the annual summary rating;
• A career appointee may file a complaint with the Office of Special Counsel on any aspect of the rating process that the individual believes to involve a prohibited personnel practice; and
• A non-probationary career appointee who is removed from the SES as a result of the performance rating may request an informal hearing before the Merit Systems Protection Board on the removal.

An annual summary rating cannot be changed based on additional information obtained after the annual summary rating. If the agency receives additional information regarding the executive’s performance that has any bearing on his/her performance in the current appraisal period, it should be addressed appropriately and given consideration during the ensuing rating cycle.

Performance Review Board (PRB)

Each agency must establish one or more Performance Review Boards (PRB) to make recommendations to the appointing authority on the performance of executives (career, noncareer, and limited appointees), including recommendations on performance ratings, performance-based pay adjustments, and performance awards.

Membership

Size. Each PRB shall have three or more members appointed by the agency head or by another official or group (such as the Executive Resources Board) acting on behalf of the agency head.

Composition. PRB members must be appointed in such a manner as to assure consistency, stability, and objectivity in performance appraisal. Agency heads are encouraged to consider diversity and inclusion in establishing their PRBs.

PRB composition can include all types of executives (e.g., noncareer appointees and military officials as well as career appointees) from both within and outside the agency. OPM recommends that members of the PRB have maintained at least Fully Successful performance ratings, possess an understanding of the agency appraisal system, and occupy SES or equivalent positions. 

Career membership. More than one-half of the membership of a PRB must be SES career appointees when reviewing appraisals and recommending performance-based pay adjustments or performance awards for career appointees. SES members from other agencies may be used to meet this requirement when it cannot be met by using an agency’s own career SES members. Exceptions to this requirement may be granted by OPM on receipt of a written request from the agency. However, since SES career executives from outside an agency may serve on PRBs, exceptions will be granted only in very rare circumstances.

Publication. Prior to serving on a PRB, the name of each PRB member must be published in the Federal Register. For large agencies, it may be practical to establish a PRB roster. An agency could appoint individuals to a PRB roster with multi-year membership terms, publish their names in the Federal Register, including the membership time period, and then establish specific PRBs from this roster.

Small agencies. PRB requirements in 5 U.S.C. 4314(c) and 5 CFR 430.311 apply to all executive agencies, including very small agencies where the agency head makes both the initial and final appraisal for each agency executive. The head of the agency must establish a PRB, publish names of PRB members in the Federal Register before their service begins, and finalize executive ratings only after considering PRB recommendations. A small agency intending to select PRB members from another agency’s published list should either arrange to state that intent in the applicable FR notice or publish its own FR notice to identify the published agency list from which its PRB members will be drawn.

Procedures

Each PRB reviews and evaluates the initial summary rating by the executive’s supervisory official, the executive’s written response (if any), and the written review of the initial summary rating by a higher-level executive, if such a review was made.

The PRB must be provided and take into account appropriate assessments of organizational performance when making recommendations on performance ratings of executives. Guidelines for using organizational performance results are provided by the oversight official to senior executives, rating and reviewing officials, PRB members, and appointing authorities at the conclusion of the appraisal period and before completion of the initial summary ratings. In its deliberations, a PRB may obtain additional records and statements, and may call witnesses. The PRB may not review an initial summary rating to which the executive has not been given the opportunity to respond in writing, including through the use of automated systems.

The PRB should attempt to achieve equity and consistency among the ratings of executives as well as the accuracy and fairness of individual ratings. It is within the PRB’s purview to ensure that organizational accomplishments have been properly taken into account in the appraisals of individual performance. The PRB should consider guidance provided by the Oversight Official or agency head concerning the extent to which performance of senior executives has brought about organizational accomplishments consistent with strategic targets established for those components.

What to Avoid in the PRB

PRB members are prohibited from making recommendations to achieve a forced or artificial distribution (such as a bell curve) of rating levels for senior executives.

PRB members may not be involved in deliberations involving their own appraisals, performance- based pay adjustments, and performance awards. Agencies may also, if they wish, exclude members from actions involving their own supervisors and subordinates. (An exception is when the member is called as a witness before the PRB.) A majority of participating PRB members must be SES career appointees when acting on a career appointee’s appraisal, performance-based pay adjustments, or performance award recommendation.

Recommendations to the Appointing Authority

As provided in 5 CFR 430.311(b)(2), the PRB must make a written recommendation, including through the use of automated systems, to the appointing authority concerning an executive’s annual summary rating (5 U.S.C. 4314(c); 5 CFR 430.311), performance-based pay adjustment (5 U.S.C. 5382; 5 CFR 534.404) and performance award (5 U.S.C. 5384; 5 CFR 534.405).

When the PRB does not concur with the initial rating, or when the record shows employee or reviewing official disagreement with the initial rating, the PRB should provide a written explanation of the basis for its recommendation that is consistent with the derivation method used in the agency’s SES appraisal system.

PRBs should establish adequate means for documenting the written recommendations to the appointing authority about each senior executive’s annual summary rating, performance-based pay adjustment, and performance award. The written recommendations provided by the PRB should also be distinguishable from documentation of the appointing authority’s final determinations.

Other Guidance

USERRA

Appraisal law and regulations require appraising executives at least annually and USERRA requires the agency to treat the executive as if he or she never left the agency. When no current rating is available and there is no way to conduct an appraisal for the executive (i.e., the minimum appraisal period cannot be met and the appraisal period cannot be extended), agencies must find another method, such as a carryover or modal rating, to serve as a basis for granting pay adjustments and/or performance-based award (if warranted by OPM and agency policy). (See Chapter 5 for information on SES pay.) OPM has no preferred method for doing this. An agency must decide upon the most appropriate method in view of the agency’s performance appraisal practices and results.

If the executive was on military duty for a majority of the appraisal period and returned prior to the end of the appraisal cycle (but will not have satisfied the minimum appraisal period at the time appraisals are conducted), agencies should follow 5 CFR 430.309(c) and extend the appraisal period until the minimum appraisal period is met. This may require a reconvening of the PRB.

The rating that is used for USERRA purposes is not used as a rating of record; it is only used to provide the pay adjustment and/or performance-based bonus that the employee would have received if not away serving the military.

Timing of Rating

Agencies should complete all the steps in the rating process in time for the annual summary rating to be communicated to the executive in writing, including through the use of automated systems, normally within 3 months of the end of the appraisal period.

Distribution of Ratings

An agency may not prescribe a distribution of levels of ratings for executives. Agencies must avoid any policies or practices that would lead to pre-determined ratings/a forced distribution.

Communication of System Application Results

Agencies must communicate to executives in writing, including through electronic communication, the results of the previous appraisal period (i.e. overall ratings distribution, and average pay adjustment and average performance award percentages for each rating level). Such action is likely to promote confidence in the fairness of the process and is a certification criterion with which agencies must comply. Where such communication might compromise individual performance information, it is acceptable to communicate only the average rating, pay increase, and award. In very small organizations (less than five executives), this requirement may be waived.

Documentation and Records

Agencies must retain SES annual summary ratings and the performance plans on which they are based for at least five years from the date the annual summary rating is issued. [See 5 CFR part 293 and OPM’s Guide to Personnel Recordkeeping.]

Performance Appraisal Certification for Pay Purposes

Certification, which applies to SES and Senior-Level (SL) or Scientific and Professional (ST) appraisal systems only, provides access to a higher maximum rate of pay and a higher limit on aggregate compensation, as described in the Pay Limitations section below. The statutes and regulations requiring agencies to implement a pay-for-performance system and apply a higher aggregate compensation limitation to senior executives or senior professionals are significant features of a Federal compensation system that gives the highest pay to agencies' highest performing employees. In order to access the flexibilities offered by these statutes and regulations, agencies must first obtain certification from OPM, with OMB concurrence, of their applicable performance appraisal system(s) under subpart D of 5 CFR part 430. An Office of Inspector General must obtain certification of its SES performance appraisal system separately from the agency SES system.

Certification may be granted for a period not to exceed 24 months beginning on the date of certification, unless extended by the Director of OPM for up to six additional months (this request is granted in limited circumstances such as when an agency has requested approval of its adoption of the Basic SES or SL/ST Appraisal System). Generally, the length of the period for which certification is granted will be determined by the degree to which the agency submission meets the criteria for certification. To assist in preventing a lapse in certification, an agency under the Basic SES or SL/ST Appraisal System should submit its request for certification three months prior to the expiration of its current certification. Other agencies using agency-designed appraisal systems should submit their requests for certification six months prior to the expiration of their current certification.

Pay Limitations

An agency may set the rate of basic pay for a senior executive or senior professional covered by a certified appraisal system at a rate that does not exceed the rate for level II of the Executive Schedule and must limit aggregate compensation in a calendar year to the Vice President’s salary. An agency that does not have a certified appraisal system may set the rate of basic pay for a senior executive or senior professional at a rate that does not exceed the rate for level III of the Executive Schedule and must limit aggregate compensation in a calendar year to the rate for level I of the Executive Schedule. (See Chapter 5 for information on SES pay.)

Certification Processes

Certification regulations contained in 5 CFR 430 Subpart D require performance appraisal systems for SES and SL/ST employees to meet the same certification criteria (see Certification Criteria section below). The processes used by OPM to review systems’ compliance with those requirements differ based on the type of system for which certification is requested. Meaningful distinctions in performance must be accomplished through an agency's performance appraisal systems for both SES and SL/ST employees. Additionally, systems must ensure pay differentiation, so that SES or SL/ST employees who have received the highest performance ratings also receive the largest corresponding pay adjustments, performance awards, and levels of pay.

Certification 2.0 - Changes to SES and SL/ST Performance Appraisal System Certification Process

In November 2018, OPM revised the SES and SL/ST Performance Appraisal System Certification Process. A significant amount of administrative improvement was made to the process, hereafter referred to as Certification 2.0, that reduces agency burden and minimizes the time and resources spent on preparing and reviewing certification submissions. Certification 2.0 applies to agencies that request certification of OPM-approved basic SES or SL/ST performance appraisal systems; agencies that have designed their own appraisal systems will continue to use the SES or SL/ST Performance Appraisal Assessment Tool (PAAT) to request certification. The certification criteria at 5 CFR 430.404(a) have not changed and agencies must continue to comply with all laws and regulations pertaining to SES and SL/ST certification, pay, awards, and performance management.

Certification 2.0 places more responsibility on agencies in verifying the proper application of their SES performance system, thereby reducing the administrative burden on agencies and significantly decreasing the quantity of information and materials required for certification reviews. Templates and checklists to aid agencies in fulfilling certification requirements are available.

Key changes under Certification 2.0 include—

• Agencies are no longer required to submit performance plans with certification requests;
• Automatic renewal of fully certified appraisal systems based on OPM and OMB review of annual data submissions to determine that ratings, pay, and awards decisions comply with statutory and regulatory requirements; and
• The option for agencies to show pay differentiation using the combination of performance-based pay adjustments and performance awards, referred to as “annual performance-based compensation.”

Descriptions of Key Changes

Automatic Renewal of Fully Certified Appraisal Systems

Following full certification under Certification 2.0, an agency’s system will be renewed for an additional two calendar years if the agency meets the annual reporting requirements in 5 CFR 430.405(g) and, based on those annual reports, OPM determines and OMB concurs, that the appraisal system continues to meet the certification criteria in 5 CFR part 430, subpart D.

Aligned Results - Removing Review of Performance Plans

Agencies are no longer required to submit a sample of SES or SL/ST performance plans as part of a certification submission. Instead, the agency’s Oversight Official will verify in the certification request letter that the agency is in compliance with the Aligned Results criterion. Agencies continue to be responsible for establishing SES and SL/ST performance plans in accordance with law, regulation, and the SES and SL/ST basic systems.

Pay Differentiation through “Annual Performance-Based Compensation”

Senior employees who have demonstrated the highest levels of individual performance and/or contribution to the agency’s performance must receive the highest annual summary ratings or ratings of record, as well as the largest corresponding performance-based pay adjustments and performance awards. Prior to Certification 2.0, agencies were required to demonstrate pay differentiation in performance-based pay adjustments and performance awards separately; however, Certification 2.0 introduced an additional option for agencies to demonstrate pay differentiation—the annual performance-based compensation (APBC) methodology. APBC allows agencies to show differentiation using the combination of performance-based pay adjustments and performance awards.

Performance Distinctions when Modal Rating is Level 5 (or bimodal rating of levels 4 and 5) The application of the appraisal system must result in meaningful distinctions based on relative performance; agencies must be able to justify to OPM and OMB senior employees’ ratings using organizational performance results. Agencies will continue to use the Ratings Distribution Justification template to justify ratings using organizational performance results. However, agencies are only required to submit the template if there is a modal rating of Level 5 (or bimodal rating of levels 4 and 5) and—

• it is the initial request for system certification under Certification 2.0; or
• the system’s most recent certification under Certification 2.0 was provisional.

Organizational Assessment and Guidelines

Agencies are required to conduct assessments of organizational performance and share the results with senior employees, rating and reviewing officials, and Performance Review Board (PRB) and central review panel members to demonstrate that appraisal of SES and SL/ST performance is based on both individual and organizational performance. OPM provides an optional template that agencies may use in crafting communication of Organizational Assessment and Guidelines. Agencies are only required to submit Organizational Assessment and Guidelines documentation if—

• it is the agency’s initial request for system certification under Certification 2.0; or
• the system’s most recent certification under Certification 2.0 was provisional.

Agency Verification and Agency Responsibility

The following will be verified by the Oversight Official in the certification request letter and accompanying verification statement available on the SES and SL/ST MAX Portal:

1. Aligned Results
2. Oversight
3. Communication of System Application Results
4. Consultation
5. Accountability
6. Balance (balanced measures)
7. Training
8. Performance Distinctions (when requesting automatic renewal)
9. Organizational Assessment and Guidelines (when requesting automatic renewal)

OPM reserves the right to request any documentation deemed necessary to support a certification determination.

Automatic Renewal

Under Certification 2.0, an agency’s applicable performance appraisal system (SES or SL/ST) will be eligible for automatic renewal when that system receives full certification. Under the automatic renewal process, OPM will—

• Review the agency’s pay policy whenever updated or, if there are no updates, review at least every five years;
• Ensure (per regulation), the agency head or designee requests certification through a written request to OPM every two years; (however, the request letter, verification statement, and annual ratings, pay, and awards data will be the only required submission materials); and
• Review the agency’s annual data submission and contact the agency to address any issues that may arise.

Tools and Templates

To assist agencies in fulfilling Certification 2.0 criteria, a variety of tools and templates are available. They can be found on the SES and SL/ST MAX Portal in the Resources section.

Required Templates

• Oversight Verification Statement - Enables the Oversight Official to attest that all of the certification criteria, as outlined and defined in 5 CFR part 430, subpart D and OPM policy, have been met.
• Ratings Distribution Justification Template - Designed to capture the number of senior employees rated at each rating level and the justification for that distribution based on the organizational assessment and any additional factors, as described by the agency.
• Annual Data Call Spreadsheet - Mechanism used by agencies to submit annual data on senior employees’ final summary performance ratings, and all pay and awards data.

Optional Templates

• SES/SL/ST Certification Request Letter - May be used by the agency head (or designee) to request certification.
• Organizational Assessment and Guidelines Template - Designed to assist agencies in describing guidelines for using organizational performance results when assigning senior employee ratings.
• SES and SL/ST Pay Policy Templates - May be used by agencies to establish the written procedures required by regulation for setting and adjusting pay for senior employees.
• SES/SL/ST Appraisal System Certification 2.0 Request Checklist - Designed for agencies to use when developing and/or reviewing required documentation and templates submitted to OPM for requesting certification.
• SES Pay Policy Checklist - Designed as a convenient tool for agencies to use to compare their SES pay policy with regulatory requirements and recommendations of OPM.
• SES Pay Fact Sheet with Questions and Answers - Covers SES pay sections in 5 CFR part 534, subpart D along with frequently asked SES pay questions.
• SL/ST Pay Policy Guidance – Designed to assist agencies in developing pay policies for their SL/ST employees. The requirements for developing an SL/ST pay policy are provided in outline format for ease of use and understanding.

SES and SL/ST Performance Appraisal Assessment Tool (PAAT)

Agencies using their own OPM-approved appraisal system (different from the Basic SES or SL/ST Appraisal System) must request system certification using the SES Performance Appraisal Assessment Tool (PAAT) and/or the SL/ST PAAT, as appropriate. Agencies may contact OPM’s Executive Resources and Performance Management (ERPM) for assistance in submitting systems using the PAAT.

Certification Criteria

To obtain certification of one or more appraisal systems, agencies must demonstrate that each appraisal system, as designed and applied, makes meaningful distinctions based on relative performance and meets the certification criteria below.

Aligned Results

Individual performance expectations must be derived from and clearly linked to the agency’s mission, strategic goals, program/policy objectives, and/or annual performance plan and budget priorities. Alignment should be clear and transparent so that senior employees understand how their performance aligns with organizational goal achievement and can be cascaded down to subordinates, if applicable, to ensure alignment of their performance as well. The performance requirements for individual senior employees must —

• apply to their respective areas of responsibility;
• reflect expected agency and/or organizational outcomes and outputs, performance targets or metrics, or policy/program objectives;
• identify specific programmatic crosscutting, external, and partnership-oriented goals or objectives;
• include quality indicators and generally include other performance measures such as quantity, timeliness, cost savings, manner of performance, or other factors; and
• be stated in terms of observable, measurable, and/or demonstrable results.

For agencies using the Basic SES or SL/ST Appraisal System, all performance requirements or objectives for results-focused critical elements must be written in terms of measurable results.

Consultation

Agencies must consult with senior employees in the development of their performance requirements. These performance requirements must be communicated to the employees at the beginning of the appraisal period and at appropriate times thereafter, e.g., upon onboarding of a new employee. This is necessary to provide a continuing basis for direction of federal programs and to enable senior employees to establish performance plans for their subordinates, if applicable, that appropriately cascade responsibility for organizational goal achievement to their subordinates at the beginning of their appraisal period, and/or appropriate times thereafter. For agencies using the Basic Appraisal System(s), this criterion is no longer reviewed for certification purposes, but compliance is verified by the Oversight Official.

Balance

Individual performance expectations must include measures of customer/stakeholder and employee perspectives and feedback, and leadership competencies or behaviors that contribute to and are necessary to distinguish outstanding performance, including two-way communication with customers and with employees. For agencies using the Basic Appraisal System(s), this criterion is no longer reviewed for certification purposes, but compliance is verified by the Oversight Official.

Organizational Assessments and Guidelines

The appraisal system must provide for appropriate assessments of an agency’s performance. Such assessments may include reports of the agency’s success in achieving its goals or annual organizational performance plans and targets. The appraisal system must also provide for individual performance evaluation guidelines based, in part, upon the assessments. Agencies must communicate the assessments and guidelines to senior employees, rating and reviewing officials, Performance Review Board/Centralized Review Panel members, and appointing authorities at the conclusion of the appraisal period, but before individual performance ratings are recommended, so they may serve as a basis for individual performance evaluations.

Agencies should involve their Performance Improvement Officers when developing these assessments and guidelines. For agencies using the Basic Appraisal System(s), this criterion will be assessed by the agency with appropriate documentation provided to OPM as instructed.

Oversight

The appraisal system must provide for oversight by the designated individual who certifies that 1) the appraisal process makes meaningful distinctions based on relative performance; 2) the results of the appraisal process take into account the agency’s organizational performance assessment; and 3) pay levels and adjustments and performance awards based on the results of the appraisal process accurately reflect individual performance and/or contribution to agency performance.

The oversight official provides a centralized review and assurance that the performance appraisal system is functioning as designed throughout the organization.

Agencies should review the delegations of authority or other appropriate sources of assigned responsibilities to determine which official has been assigned these duties. Agencies are responsible for checking to see that the official has performed the assigned duties in a manner that ensures the appraisal requirements have been met. For agencies using the Basic Appraisal System(s), this criterion will be assessed by the agency with appropriate documentation provided to OPM as instructed.

Accountability

For supervisory senior employees, performance plans must include a critical element that holds them accountable for aligning subordinate performance plans with organizational goals and the rigor with which they appraise subordinate employees. For agencies using the Basic Appraisal System(s), this criterion is no longer reviewed for certification purposes, but compliance is verified by the Oversight Official.

Performance Distinctions

For agencies that have not adopted the Basic SES or SL/ST appraisal system, the appraisal system must include at least one summary level of performance above fully successful, including a summary level that reflects outstanding performance, as defined in 5 CFR 430.402, and the annual administration of the system results in meaningful distinctions based on relative performance that take into account the assessment of the agency’s performance against relevant program performance measures, employee performance expectations, and such other relevant factors as may be appropriate. Relative performance does not require ranking senior employees against each other; such ranking is prohibited for the purpose of determining performance ratings. For equivalent systems that do not use summary ratings, the appraisal system must provide for clear differentiation of performance at the outstanding level. For agencies that have adopted the Basic SES or SL/ST system, this requirement is incorporated into the system design. Agencies must justify their rating distributions using organizational performance.

Pay Differentiation

The appraisal system must support pay differentiation so that those senior executives and senior professionals who have demonstrated the highest levels of performance and/or contributions to the agency’s performance receive the highest annual summary ratings or ratings of record, and the largest corresponding pay adjustments, performance awards, and levels of pay, particularly above the rate for level III of the Executive Schedule. OPM reviews agency pay policies to understand the association between individuals’ ratings and their performance pay (i.e., pay adjustments and performance awards). Time-off awards and contribution-based cash awards (special act awards) may not be used to demonstrate pay differentiation.

All agencies requesting certification are expected to demonstrate pay differentiation across all the applicable system’s population and the pay differentiation criterion is met only when an agency’s data demonstrates—

• every individual with a Level 5 rating must receive more than an individual with a Level 4 rating (i.e., All Level 5 > All Level 4; Any Level 4 ≠ Any Level 5), and
• every individual with a Level 4 rating must receive more than an individual with a Level 3 rating (i.e., All Level 4 > All Level 3; Any Level 3 ≠ Any Level 4).

Methodologies for Demonstrating Pay Differentiation

As part of Certification 2.0, OPM introduced greater flexibility for agencies to demonstrate pay differentiation using the combined total of a senior employee’s rating-based pay adjustment(s) and rating-based award, referred to as annual performance-based compensation (APBC).

Alternatively, agencies may choose to continue demonstrating pay differentiation in the rating- based pay adjustment(s) and rating-based award, separately.

Agencies may demonstrate pay differentiation through one of two methodologies:

• Separate, in which each senior employee’s rating-based award and rating-based pay adjustment(s) are evaluated independently of the other; or
• APBC, which is a combination (i.e., sum) of rating-based pay adjustment(s) and a rating- based award.

Agencies also have the flexibility to demonstrate pay differentiation agency-wide, by component/bureau, or pay tier, as specified in the agency’s pay policy or closeout guidance. OPM assesses an agency’s compliance with the pay differentiation criterion according to the methodology chosen by the agency, thereby giving an agency maximum flexibility with regard to how it compensates its highest performers.

Demonstrating Pay Differentiation Separately versus APBC

The table below describes and delineates the methodologies by which agencies may demonstrate compliance with the pay differentiation criterion:

Demonstrating Pay Differentiation Separately vs. APBC

APBC Rating-Based Pay Adjustment(s) + Rating- Based Award

SEPARATE Rating-Based Pay Adjustment(s) and Rating-Based Award, separately

All senior employees rated Level 5 receive a combination (i.e., sum) of rating-based pay adjustment(s) and a rating-based award that is more than any senior employee rated at Level 4; All senior employees rated Level 4 receive a combination of rating-based pay adjustment(s) and a rating-based award that is more than any senior employee rated at Level 3; and If any senior employee is rated at Level 3, then all employees at Level 4 must receive a higher combination than all individuals at Level 3. Senior employees rated below Level 3 are ineligible for rating-based pay adjustments or rating-based awards and are not included in the pay differentiation review. No overlap of amounts distributed across rating levels (e.g., a Level 4 and a Level 3 cannot both receive APBC of $0 or 0%). May demonstrate pay differentiation using $ amounts or %; however, agencies must use the same approach for both rating-based pay adjustments and rating-based awards. All senior employees rated at or above Level 3 are assessed for pay differentiation, including those with a salary at the pay/tier cap. Since employees at a pay/tier cap may still receive a rating-based award, these individuals are not excluded from the review of the agency’s pay differentiation under APBC.

All senior employees rated Level 5 receive rating-based pay adjustment(s) and a rating-based award, separately, that are more than that distributed to those senior employees rated at Level 4; and All senior employees rated Level 4 receive rating-based pay adjustment(s) and a rating-based award, separately, that is more than that distributed to any senior employee rated at Level 3. If any senior employee is rated at Level 3, then all employees at Level 4 must receive a higher rating-based pay adjustment(s) and a rating-based award, separately than all individuals at Level 3. Senior employees rated below Level 3 are ineligible for rating-based pay adjustments or rating-based awards and are not included in the pay differentiation review. No overlap of rating-based pay adjustment(s) or rating-based award amounts distributed across rating levels. May demonstrate differentiation in $ amounts or %, separately, in rating- based pay adjustments and rating-based awards. Senior employees with a salary at the pay/tier cap are not assessed for pay differentiation in the rating-based pay adjustment(s) review; however, they are assessed in the rating-based award review.

MRPs and Pay Differentiation

For the purpose of demonstrating pay differentiation in SES populations, a pay increase to maintain relative position (MRP) is incorporated with the rating-based pay adjustment. Agencies do not need to show differentiation in MRPs unless it is the only type of rating-based pay adjustment being used to show pay differentiation (and the agency is using the Separate methodology to demonstrate pay differentiation). In such a case, an agency must ensure that executives with higher ratings receive higher MRPs.

Lack of Pay Differentiation

An agency’s performance appraisal system(s) must demonstrate compliance with all certification criteria to be eligible for certification. If an agency’s appraisal system does not demonstrate compliance with the pay differentiation criterion as described in regulation and guidance, the system will be ineligible for certification until such time as the agency demonstrates compliance. Agencies must demonstrate pay differentiation as described in this guidance utilizing their available budgets. In other words, running out of funds is not an acceptable justification for showing a lack of pay differentiation. It is critical that agencies’ SES and SL/ST performance appraisal systems and accompanying pay and awards policies reflect applicable statutory and regulatory requirements, as well as requirements for certification, when seeking certification of such systems. OPM encourages all agencies to continue to engage with the OPM Executive Resources and Performance Management Group to ensure a full understanding of all certification criteria to avoid a lapse or suspension of certification.

Other Requirements

OPM, with OMB concurrence, will certify only those agency performance appraisal systems that comply with relevant laws and regulations.

Agencies should train senior executives and senior professionals on the policies and operation of their performance appraisal and pay systems as well as communicate the results of the previous appraisal period (i.e., overall ratings distribution, average pay adjustments, and average performance awards for each rating level, as applicable). Agencies with few senior employees should keep in mind that they may neither disclose ratings for individuals nor pay or award amounts that would reveal the recipient’s rating.

Agencies must provide OPM with ratings, pay and awards data for their senior executives and senior professionals in accordance with the annual data call and at any other time as requested to support a certification request. OPM may also request an agency provide other additional information, as needed.

Expiration of Certification

If an agency’s appraisal system certification expires (e.g., due to late submission, incomplete documentation, or a need for corrections), the agency will lose its authority to apply the higher maximum rate of pay and higher aggregate limit. Once certification expires, the agency cannot or adjust a senior executive’s or senior professional’s pay at a rate that exceeds level III of the Executive Schedule. (The rate of basic pay of a senior executive or senior professional that is above level III is not reduced upon expiration of certification.) Additionally, the agency must limit aggregate compensation received by a senior executive or senior professional to the rate for level I of the Executive Schedule. See 5 CFR part 550, subpart B for further information.

OPM, with OMB concurrence, will certify the agency’s system once the agency demonstrates the system meets the certification criteria.

Suspension of Certification

When OPM determines that an agency’s certified appraisal system is no longer in compliance with certification criteria, OPM, with OMB concurrence, may suspend the agency’s certification. OPM will notify the head of the agency at least 30 calendar days in advance of the suspension and the reason(s) for the suspension, as well as any expected corrective action. OPM, with OMB concurrence, may reinstate an agency’s suspended certification after the agency has taken appropriate corrective action.

Upon receiving a notice of suspension and until certification is reinstated, the agency cannot set a senior employee's pay at a rate that exceeds level III of the Executive Schedule. (The rate of basic pay of a senior employee that is above level III is not reduced upon suspension of certification. See Chapter 5, Restrictions on Reducing Pay.) Additionally, the agency must limit aggregate compensation received by a senior employee to the rate for level I of the Executive Schedule.

An agency’s certification is automatically suspended when OPM withdraws performance appraisal system approval or mandates corrective action. Upon an agency’s compliance with mandated corrective action(s), OPM may reinstate the certification of an appraisal system that had been automatically suspended. Reinstatement of a suspended certification does not alter the certification’s original expiration date.