More Execs Get Top Performance Ratings

After years of cracking down on generous performance ratings for senior executives, agencies appear to be loosening up.

Last year, the percentage of Senior Executive Service members rated at the highest performance level increased — from 43.4 percent in 2006 to 46.7 percent in 2007. That’s the first increase in at least five years.

The trend toward higher performance ratings reflects a new reality for many agencies: Workloads are increasing and agency leaders are desperate to hold on to the increasingly retirement-eligible senior executives and the expertise they bring to the job.

The Nuclear Regulatory Commission is one of those agencies. Last year, as it saw its senior executives edge closer to retirement eligibility and its workload booming, the agency made a conscious decision to be more generous with its performance ratings after being the strictest of all agencies for several years.

Last year, 29.2 percent of NRC’s senior executives were rated as outstanding — a sharp spike from the 9.4 percent in the preceding year.

“We’re sensitive to how our guys think we appreciate them,” the agency’s human resources director, Jim McDermott, said. “We’ve had banner years, got recognized [as the federal government’s Best Place to Work by the Partnership for Public Service], yet they were still at the low end of the outstanding ratings? There was a disconnect there. So we said if you want to give ‘outstandings,’ we won’t take your head off.”

And at NRC, there’s another motivation for showing more love to their senior execs: competition from industry.

“People say, ‘This is the best place I’ve ever worked, but I’ve got kids in college. I’m going to take my pension and go to work in the private sector,’ ” McDermott said.

The Office of Personnel Management began pushing agencies to be more stingy with their top ratings in 2002, when eight of 23 agencies surveyed gave more than 98 percent of their senior executives the highest ratings.

But some agencies, like NRC, worried their stinginess had gone too far.

After 2003, when NRC gave every single executive the top rating, it limited top ratings to between 9.0 percent and 9.4 percent of its executives for the next three years.

NRC had either the lowest or second-lowest rates among all federal agencies between fiscal 2004 and fiscal 2006.

NRC reversed course after it kept noticing the large number of outstanding ratings handed out at other agencies, and worried that its strict approach could drive away senior executives just as the agency was expecting a surge of work spurred by an increasing national interest in nuclear power.

Increasing workloads at the Housing and Urban Development Department also drove a nearly 15 percentage point increase in the number of executives receiving outstanding ratings. Almost 58 percent of its executives were rated outstanding in fiscal 2007.

HUD spokesman Jerry Brown said the housing crisis forced the agency to streamline its processes and make several changes to the Federal Housing Administration to help people facing foreclosures.

“The challenges in the housing market required a number of changes: creativity, innovation, and a lot more work from executives here,” Brown said.

All but five of 24 agencies surveyed gave top ratings to a higher percentage of senior executives in 2007 than in the previous year. The data are in OPM’s latest SES compensation report, released in July.

Nine out of 10 SES members received either the top rating or second-best rating in fiscal 2007. SES members are rated on a five-level or four-level performance rating system.

Defenders of the high ratings, like Carol Bonosaro, president of the Senior Executives Association, say they are deserved because SES members are the best and most experienced employees in government. The fact that they’re in the highly selective SES corps attests to their star qualities.

“In a random population, you’d get a normal curve,” Bonosaro said. “But we’re not looking at a random population. If they didn’t perform this well, you could argue that something was wrong with the selection process.”

But some experts disagree, saying that a performance rating scale for senior executives should be made more challenging and expectations should be ratcheted upward for them.

Paul Dorf, managing director of the human resources consulting firm Compensation Resources Inc., said the lopsided results show that the SES pay-for-performance system isn’t being properly monitored and is seriously flawed.

“If you’re hiring better people, smarter people, then you have to have greater expectations,” Dorf said. “They need to raise their expectations with what their superstars should be doing. Whoever’s doing these reviews is not being critical enough.”

Pay-for-performance systems for executives tend to be more generous than those for rank-and-file employees, Dorf said. But he said the SES system is so lenient that it is virtually useless when trying to make distinctions based on performance.

Dorf doesn’t agree that the skills and proven abilities that landed civil servants in the SES should guarantee they’ll be exceptional executives deserving of top performance ratings.

“You see it all the time in sales,” Dorf said. “Someone may be a really great salesman, but end up being a lousy sales manager.”

And while some executives may truly be doing an excellent or outstanding job, Dorf said the prevalence of mismanagement throughout the federal government — as evidenced in numerous reports by inspectors general and the Government Accountability Office — indicates that the number of top-rated executives should be far less than 90 percent.

“If those people were that good, they wouldn’t have those kinds of problems,” he said.

Agencies that are exceedingly liberal with their performance ratings end up shortchanging their executives, Dorf said.

“The whole reason we evaluate employees’ performance is to identify their weaknesses and shortcomings, and to try to correct those problems,” Dorf said. “You can’t have pay for performance if you don’t measure their performance.”

OPM needs to be tougher when certifying agencies’ SES performance management systems to make sure they are accurately measuring how well executives do their jobs, he said.

“This may be a good program that was certainly well-intended, but it needs to have more work done on it,” Dorf said.

OPM officials were unavailable to comment by press time, but in a statement issued to Federal Times, the agency said that the SES system is improving.

“The quality of SES appraisal systems and performance plans have improved significantly,” OPM said. “Executive performance plans are now linked directly to agency strategic plans. ... In 2003, 74.5 percent of career executives were rated at the highest rating level, but in 2007 that number was 46.7 percent.”