The Performance Alchemist-Administraiton Limiting Performance Awards

(From this week in FED Manager)

Last Friday, Office of Personnel Management (OPM) Director John Berry and Jeffrey Zients, deputy director for management and chief performance officer of the Office of Management and Budget (OMB), sent a memorandum to agency heads stating that performance awards for Senior Executives should not exceed 5 percent of an agency’s aggregate senior level salaries during fiscal years 2011 and 2012. This includes all members of the Senior Executive Service and senior-level and scientific and professional employees (SL/ST). According to the memo, agencies should use aggregate salaries at the end of fiscal year 2010 for limit calculations.

“In many cases, awards are broadly and inconsistently allocated and some Federal employees have come to expect awards as part of their compensation,” wrote Berry and Zients. “At the same time, recent survey results show that a large number of both agency managers and employees do not perceive the current employee performance management systems to be fair or accurately reflect differences in performance levels.”

Additionally, the guidance limits award spending for all other employees to no more than 1 percent of aggregate salaries for those positions.

Bonuses and awards for political appointees are also affected by the memo. A current freeze for political appointees was scheduled to sunset at the end of fiscal year 2011, but will now continue through fiscal year 2012.

The limit applies to individual awards including rating-based performance awards and individual special act awards. It does not apply to travel savings and foreign language awards.

“Agencies are encouraged to leverage existing award programs to reward employees who identify improvements that result in documented, validated cost savings and productivity improvements,” stated the memo. “An emphasis on awards of this nature is particularly important in light of the fiscal challenges we are facing.”

The memo closely mirrors a draft document that was released last month.

Question: Although we are experiencing a mercurial budget environment and cuts must be made somewhere, will these cuts result in the cost savings Government leaders desire?