# Presentation: 672026

## Strategic Compensation Conference 2000

**Does Pass/Fail Work?**
**August 28, 2000**

## Health Care Financing Administration

- Pass/Fail Experience
- ‘95 Appraisal Period 1/1/95 - 12/31/95
-        5-level converted to 2 level 10/1/95
- ‘96 Appraisal Period 1/1/96 - 9/30/96
-        First 2-level period only 9 Months
- ‘97 Appraisal Period 10/1/96 - 7/5/97
-        Truncated due to major agency reorganization
- ‘98 Appraisal Period 10/1/97 - 9/30/98
- ‘99 and beyond 10/1  -  9/30

## Backdrop to Pass/Fail

- HCFA Strategic Plan - stakeholder input included Union representatives
- Goal 1 “Build a high-quality customer focused team”

## Labor-Management Relationship

- National Performance Review
- Agency Partnership Council (Formed early ‘95-Labor/Management Leadership at the Associate Administrator level)
- Interest Based Bargaining with 1994 Agreement
- Agreed to cover Central Office bargaining unit employees
- Later brought in Regional Office employees, supervisors and non-SES managers
- At present, program covers 4,200 employees and 400 supervisors/managers

## Driving Forces Leading to Pass/Fail

**Surveys show dislike/distrust for the 5-tier system**
- Difficulty distinguishing between performance levels
**Rating inflation in 5-tier system**
- 40% Outstanding, 50% Excellent, 10% Fully Satisfactory
**Increased span of control for managers**
- In combination with labor-intensive 5-tier system, raised frustration level of managers
- Managers expressed concerns to Administrator
**Appraisals generated more grievances than any other issue**
- 5-tier system generated conflict, rather than feedback to employee
- More concerned with rating than meaningful feedback on performance

## Agency Action

**Agency-level Quality Initiative Team (QIT) recommends “Pass/Fail”**
- QIT was joint Union/Management team
- Recommendations made just prior to the beginning of MLA negotiations in 1994
**Goal of System**
- Stress communication
- Promote teamwork
**Stresses Communication - **Consistent with changing culture
**New Role of Manager as “Coach”**
- Manager as coach, not technical expert
**Shared Responsibility**
- Employees and managers share responsibilities for communication
- Both can initiate performance discussions

## Performance Plan Linked to Position Description (PD)

**Critical Elements**
- More time for informal communication/discussions
- Result of decrease in time needed to write Performance Plan due to:
- 1) critical elements pulled _*verbatim*_ from the Major Duties of the PD
- 2) Automated Preparation of Plans
- Minimum of one (1) critical element - no maximum, average number 3-4
- Non-critical elements eliminated

## Performance Plan Linked to Position Description (PD) cont.

**“****Successful” Performance Standard**
- Generic Performance Standard is used for all non-supervisory employees
- Based on premise, most employees are Pass, no need to devise complex standards
- If necessary, supervisor can develop alternative standards

## Performance Assistance Plan (PAP) Performance Enhancement Plan (PEP)

- If supervisor identifies performance problem, informal PAP must be prepared
- 1) minimum of 30 days in length
- 2) details assistance to be provided to employee
- 3) clarifies generic performance standard
- If no improvement by conclusion of PAP, more formal PEP begins (90 day minimum)
- Within grade increases and promotions can be withheld during PEP stage
**Eliminates Performance Bonuses**
- No performance bonuses based on end-of-year ratings
- Employees remain eligible for incentive awards if “Pass” on current rating
- Awards determined by component awards panel following nomination by supervisors or peers

## Lessons Learned

- Organizational commitment to performance management is critical
- Understand conflicting program objectives
- individual accountability
- improve employee and agency performance
- Support of all stakeholders
- Final thought: “On the one hand, performance appraisal systems are intricate, complicated, and troublesome but necessary; on the other, they are inconvenient, subversive, and troublesome but unnecessary.”  Dennis M. Daley, *Public Productivity & Management Review*, Fall 1992