Performance Ratings – Why Do We Do Them?

This is the third post in my series on performance ratings.The first two are (1) here and (2) here.

My earlier posts explained why I believe most performance rating processes are inherently flawed and doomed to fail unlikely to produce good results. There is another reason – most performance rating processes were designed without a clear purpose in mind. In the past year I have talked with Chief Human Capital/Resources Officers, line managers, employees, union officials and HR practitioners about the subject of performance. One of the most striking facts is that most can explain the alleged benefits of their performance appraisal process, but few will claim they explicitly designed it with those ends in mind. Even fewer will claim it actually accomplishes those objectives.

Most Federal HR leaders and practitioners will tell you they have the system they do because it is mandated by law (5 USC 4302) to do it. Section 4302 requires agencies to use the results of performance appraisals as a basis for training, rewarding, reassigning, promoting, reducing in grade, retaining, and removing employees. In other words, for almost all significant decisions regarding employees. Doing something solely because it is required by law is not enough to produce a good result. In fact, it tends to produce poor processes that are nothing more than compliance exercises. Current rating processes affect more than 2 million Federal employees, cost a fortune, often harm morale and productivity, and generate few benefits.

Consider the time it takes for those folks to participate in the rating process, then add the time their supervisors and any other reviewers are consuming. If each employee spends only 5 hours annually in the process and each supervisor or manager spends 40 hours (very conservative estimates), the annual cost* of the current processes is over $900 million. That does not include systems and other non-labor costs, nor does it include the cost of grievances, appeals, arbitration and lawsuits. What does our $900+ million buy us? The vast majority of employees receive a rating at or above the mid-point. The number of marginal or less-than-satisfactory ratings is small. The number of unsatisfactory ratings is miniscule. Few managers, employees, union officials (or anyone else) will tell you the rating process serves a useful purpose. Many will say it is harmful. So – the Federal government spends more than $900,000,000 every year on a process that generates little positive return and most likely does harm.

A big part of the problem is lack of clear intent. A process that is not designed with a clear purpose in mind produces goodness only by accident. While we could be charitable and say the government has a clear intent – the legal requirement to use the ratings for training, rewarding, reassigning, promoting, reducing in grade, retaining, and removing employees, saying it doesn’t make it so. Let’s take a look at those requirements one at a time:

  • Training. To be effective in indentifying training requirements for employees, an agency would need to link its training and rating processes. It would identify goals, performance deficiencies, the competencies that are lacking, courses or other training that might provide those skills, and a means of incorporating them into individual development plans. Some agencies have the component parts, but few agencies formal procedures that link performance ratings to the training process. Training that results from a performance rating is likely to be in those rare cases where an employee is placed on a performance improvement period following an unsatisfactory rating.
  • Rewarding. Most agencies link ratings and some awards, while others are attempting to decouple awards/bonuses from the appraisal process. The thinking is sound – ratings are done once each year and recognition for great work should be more proximate to the work being done. The dollar value of awards in the Federal government is so small, that little meaningful difference exists between awards for above-average and top performers. Now that OMB has frozen awards as a result of sequestration, the question is, for the time being, moot.
  • Reassigning. Reassignments based on performance ratings are virtually impossible to quantify, because there is no way to track them in current HR systems. Anecdotal evidence suggests they are uncommon, and when they do occur, they are in lieu of a more severe action, such as a downgrade or removal.
  • Promoting. Most agencies factor the rating into the promotion process, but it is not the primary or even a key driver of promotion eligibility or selection. Some opponents of using performance ratings in the selection process make the argument that allowing the same people to assign ratings, then use the ratings they assigned as the basis for selections they will make is a type of pernicious double-dipping that is not in the public interest. For the most part, it is safe to say agencies do, to some degree, use ratings for promotion purposes.
  • Reducing in grade. Downgrades for performance purposes are uncommon. The regulations governing such actions require an agency to prove the basis for the action, but do not provide for review of the type of action by the Merit Systems Protection Board. MSPB can review whether the agency followed the correct procedures and proved the employee did not meet approved performance standards. They cannot decide a demotion should have been one grade rather than two or more or a removal should have been a demotion.  As a result, an agency that goes through the long process of taking a performance-based action is unlikely to stop at a demotion. Add to that the negative effects on morale that can result from a demoted employee still being in the workplace, and the rationale for downgrading versus removal is weak.
  • Retaining. Retention decisions typically involve probationary periods, such as for new hires or newly promoted supervisors. How does that work out? New supervisors must complete a 1-year probationary period. MSPB’s 2010 report, A Call to Action: Improving First-Level Supervision of Federal Employees, found that less than one half of one percent of supervisors are removed from their supervisory position during probation.  In MSPB’s 2005 report, The Probationary Period: A Critical Assessment Opportunity, MSPB reports that 1.6% of competitive service employees are removed from their jobs in the first year of service. Clearly, little is being done with respect to retention decisions.
  • Removing. Since 2008, between 7,488 and 8,187 full-time, permanent Federal employees have been removed for performance or misconduct reasons each year. The majority of those are for conduct. If less than two tenths of one percent of employees are removed for performance reasons, it is safe to conclude the performance rating process is not working for making removal decisions.

Federal HR professionals who administer these systems do not claim they are great systems. Many will agree they are frustrating, difficult to administer, generate far too many grievances and appeals, too costly for the benefits they return, and generally not satisfactory. They recognize it is difficult to design a process to accomplish significant results with respect to people issues. They know it is next to impossible to design a successful process that accomplishes many conflicting goals all at once. Imagine how difficult it is to design a process that accomplishes outcomes that were not in the process designer’s minds during the design process.

The Swiss Army Knife approach to rating processes is almost certain to fail. Conflicting goals, inconsistent messaging and employee pushback are the result when we claim our rating processes can do everything. The only way to design an effective rating process is to set limited, very clear goals for what it will accomplish. It requires the discipline to throw out the Swiss Army Knife approach, determine what outcomes are most needed by the organization and its people, and establish clear measures to determine whetherthe rating process actually does what it is designed to do.

* Cost estimates are based upon 2 million employees with an average salary of $77,535 and approximately 260,000 managers and supervisors with an average salary of approximately $107,000. Because supervisors and managers also are employees for purposes of performance ratings, they are included in the count of employees as well.

Are New Political Appointees Ready to Govern?

Political appointees come from all walks of life and all sorts of backgrounds. Some understand and have worked in government, while others know little or nothing about how Washington works (when it does). A new appointee has to learn how to work within his/her agency, how to work with the White House (the Office of Management and Budget in particular), other agencies, the Congress, and the public. Many come with the idea that they are there to change the world. The fact that they are appointed by the President leads many to conclude they have tremendous power to enact the President’s policies and priorities. Their sense of urgency is high, their goals are far-reaching, and their desire to do good is often off the scale.

Appointee, meet Reality – Reality, meet Appointee.
It doesn’t take long for reality to rudely intrude and bring even the most dedicated professionals down to earth. Simply being appointed by the President or a member of his Cabinet does not bring with it the power to successfully execute significant changes in government. The ability of other agencies, the Congress and coutless other stakeholders to put up roadblocks is maddening. And as if that isn’t enough, they run headlong into the federal budget, procurement and HR processes. Faced with those realities, is it any wonder the average tenure of a political appointee is 18-24 months? Every appointee knows that statistic and understands (1) they serve at the pleasure and (2) Presidents are elected for 4 years at a time. Appointees see the ticking clock and act as if they are running a sprint to the finish line. They will work obscene numbers of hours for the few years they are in government to make certain they can accomplish some good. That collides with a career workforce that cannot possibly work at that pace and work those hours for 20 to 30 years. Even with 31 years as a career employee, I found myself pushing my staff so hard that one seasoned and highly respected career SES told me I had successfully made the transition to being an appointee because I expected everything immediately. I had to admit he was right. My view of what was doable was influenced by the knowledge that my time was limited.

During 31 years as a career federal employee and 2 years as a political appointee, I found the process for onboarding appointees was generally inadequate to prepare them for the enormous responsibilities they are taking on. As an appointee, many of my colleagues were so frustrated with government and so disappointed by the difficulty in effecting real change that they were ready to leave government. They had the passion, drive and real-world skills, but were struggling to effect real change.

What can be done to make it more likely these motivated individuals will be successful? A number of studies in recent years have identified the problem and dozens of recommendations for fixes. One of the best studies was published by the Partnership for Public Service. Ready to Govern, published in January 2010, identified a number of actionable steps that can be taken to improve the quality of Presidential transitions. Many of the Ready to Govern recommendations can also be applied throughout the term of an Administration to ensure its appointees are effective. Ready to Govern and other studies consistently recommend training for all new appointees. To be most effective, the training must occur early in their appointment (or even before) and should address the budget, procurement, and HR processes, and the ethics restrictions covering appointees. The Obama Administration implemented a successful Presidential Appointee Leadership Program to provide training for new appointees. When I was in the Administration, I participated in the program and helped train over 1,000 appointees. The interest in government, enthusiasm for the public good, and superb quality of the appointees was tremendously inspiring. In addition to the White House program, in the past year the Partnership for Public Service has worked with a group of experienced former career SES and political appointees to develop a series of Ready to Govern courses for new appointees. I have been privileged to work with them and serve as faculty for several of the sessions. We have piloted the program and gotten tremendous feedback on its effectiveness and real world applicability. 

Programs such as these can equip appointees with the information they need to be successful in government. In addition, they need agency-specific training regarding mission, structure, budget and employee data (demographics, Federal Employee Viewpoint Survey and Best Places to Work results). It is critical to understand what is happening internally – why the agency exists and how it gets its funding. Appointees also need to understand how the agency workforce views the place if they hope to work closely with the career workforce to get their priorities accomplished.

An effective government-wide training program that provides the broad government view, combined with agency-specific onboarding programs that provde a deeper understanding of their own agencies, can help ensure that political appointees are truly Ready to Govern.