59

Mr. Mica. We thank you, Dr. Shields, and now I would like to
recognize Mr. Frank Cipolla, who is director of the Center for
Human Resource Management, the National Academy of Public
Administration. Welcome.

Mr. CipoLia. Thank you, Mr. Chairman. The last member of the
panel to speak has the expectation of giving the shortest summary,
so I'll try to do that and see if I turn out to be a poor performer
or someone who meets the performance expectations.

Mr. Mica. We're grading all of you. Go ahead.

Mr. CrpoL.a. The National Academy of Public Administration is
an organization which, as you know, is chartered by the Congress
to do work to improve governance and governance processes at all
levels of government.

In connection with that work, over the past year and in the cur-
rent year, we at the Center for Human Resource Management have
been working with more than 30 agencies of Government in help-
ing them address the human resource management challenge of
the current Federal environment. A good deal of that work has fo-
cused on performance management and accountability issues.

Now, what I would like to do is to summarize five key points that
we have gleaned from some of that research and studies, and then
comment briefly on those. The points are these—and I might say,
in making these observations, that we’re not commenting strictly
on what we learned from the private sector. We’re also commenting
on innovations that have been instituted in other public organiza-
tions.

These are some of the major trends that we've observed in the
important area of accountability and performance. First, any per-
formance management system must have an individual and organi-
zational performance link that focuses on expectation: and out-
come. Second, defining intended outcomes early on and working the
flow down to the individual is the best way to address the perform-
ance issue.

Third, in Federal agencies, there is a logical potential link be-
tween organizational and individual performance management
through the GPRA, the Government Performance and Results Act.
Fourth, the multiple appellate systems for providing employee due
process need to be streamlined.

And finally—and one that has implications well beyond the sub-
ject of this particular hearing—and that is that rethinking the con-
cept of career- and tenure-based employment should be part of any
comprehensive civil service reform Proposals.

Now, just some brief observations. Performance accountability is-
sues have long been ongoing themes in the public service environ-
ment. They’ve been referenced in the Civil Service Reform Act of
1978 and its attempt to link performance and pay incentives in es-
tablishing procedures to make it easier for managers to fire incom-
petent employees.

Despite these and other previous efforts, we still don’t have an
employee performance management system that works well, espe-
cially in terms of the problems of addressing the poor performer,
and that issue is still with us.

But our belief is that the focus has been at the wrong end of the
performance management spectrum, and much more needs to be


123

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25

conjunction with the myriad of federal, state, county and city
laws and ordinances permitting the filing of legal actions which
are the underpinning of management's fear of litigation can only
be addressed with any degree of success by a major revision in
corporate personnel policies. ‘That revision involves the
adoption of employment agreements providing for binding
arbitration of employee claims. Even then, current federal and
state laws may limit the use of compelled binding arbitration to
resolve statutory claims. At this time, for example, federal and
state courts are divided on the question of whether non-union
employers can require employees to arbitrate discrimination
claims pursuant to an employment agreement. Though it appears
that the majority of federal and state courts which have ruled on
the issue hold that properly executed employment agreements
containing arbitration clauses operate to bar litigation of such
issues, the matter will not be resolved until either the Supreme
Court decides the question or Congress enacts legislation
addressing the issue. And, even were the issue to be resolved in
favor of the arbitrability of all employment disputes, adopting a
policy of binding arbitration constitutes a major change in
management's handling of employee issues. In deciding whether to
adopt such a drastic alteration of the employer-employee
relationship, management would weigh the benefit of reduced
exposure to the potential of substantial and unpredictable jury
verdicts against the perceived diminution of management's

absolute authority to control the workplace and the possibility

12


154

THERE IS ALSO THE PROBLEM OF LACK OF SUPPORT FROM TOP MANAGEMENT.
THE GENERAL ACCOUNTING OFFICE, IN ITS 1990 REPORT "PERFORMANCE

MANAGEMENT: HOW WELL IS THE GOVERNMENT DEALING WITH POOR PERFORM-

ERS?", NOTED THAT, WHILE MOST SUPERVISORS INDICATED THEY WERE
WILLING TO TAKE PERFORMANCE-SASED ACTIONS WHEN NEEDED, THEY FELT A
LACK OF SUPPORT FROM UPPER MANAGEMENT. IT IS HUMAN NATURE TO AVOID
DEALING WITH THE UNPLEASANT TASK OF TELLING SOMEONE THAT HIS OR HER
WORK IS INADEQUATE. "KOM THE TOP LEVEL DOWN, MANAGEMENT NEEDS TO
SUPPORT ANY INITIATIVE TAKEN BY A SUPERVISOR TO DEAL FORTHRIGHTLY
WITH PERFORMANCE PROBLEMS. FOR EXAMPLE, WHEN A SUPERVISOR HAS TO
FOCUS ON ASSISTING AN EMPLOYEE WHO IS FAILING, THAT PROCESS TAKES
ITS TOLL ON THE ENTIRE ORGANIZATION. MANAGEMENT NEEDS TO DEMON-
STRATE SUPPORT VERY CLEARLY, SO THAT SUPERVISORS WILL BE MORE
LIKELY TO ASSUME RESPONSIBILITY FOR ADDRESSING PERFORMANCE
PROBLEMS. THE TOP LEVELS OF MANAGEMENT ALSO HAVE RESPONSIBILITY
FOR ASSURING THAT MANAGERS AND SUPERVISORS ARE TRAINED IN THE
PERFORMANCE MANAGEMENT SYSTEM, INCLUDING METHODS FOR IDENTIFYING

POOR PERFORMERS AND WAYS TO CORRECT DEFICIENCIES.

WE HAVE WORKED WITH THE NATIONAL PERFORMANCE REVIEW AND FEDERAL
AGENCIES IN DEVELOPING PERFORMANCE MANAGEMENT PROPOSALS FOR CIVIL.
SERVICE REFORM. INCLUDED IN THIS REFORM INITIATIVE ARE PROVISIONS
FOR ALLOWING A PROBATIONARY PERIOD LONGER THAN ONE YEAR FOR SOME
JOBS, SHORTENING THE NOTICE PERIOD FOR TAKING AN ACTION AGAINST A
POOR PERFORMER, STREAMLINING THE "DUAL-TRACK” PROCESS FOR TAKING A

PERFORMANCE~BASED ACTION SY ELIMINATING THE SEPARATE PROCESS UNDER



149

“4-
REGULATIONS GO A LONG WAY TOWARD DECENTRALIZING PERFORMANCE

MANAGEMENT.

IN ADDITION TO HAVING AUTHORITY TO VARY THE NUMBER OF PERFORMANCE
LEVELS THEY USE, AGENCIES, UNDER OUR NEW REGULATIONS, WILL BE ABLE
TO ALLOW SUPERVISORS TO EXERCISE MORE DISCRETION IN THE TYPES OF
EVALUATION TECHNIQUES THEY USE IN EVALUATING PERFORMANCE. AGENCIES
WILL BE ABLE TO USE TEAM EVALUATIONS, AS WELL AS PEER AND CUSTOMER
EVALUATIONS, AND INCREASE EMPLOYEE INVOLVEMENT IN THE APPRAISAL
PROCESS. FOR INSTANCE, TEAM PERFORMANCE COULD BE INCLUDED IN A
SUMMARY RATING, BUT A POOR PERFORMER WHO WAS A MEMBER OF A
SUCCESSFUL TEAM COULD NOT AVOID ACCOUNTABILITY FOR HIS OR HER POOR
PERFORMANCE. EMPLOYEE PERFORMANCE PLANS MUST INCLUDE AT LEAST ONE
CRITICAL INDIVIDUAL PERFORMANCE ELEMENT. EACH EMPLOYEE STILL MUST
MEET THE RETENTION LEVEL IN ALL CRITICAL INDIVIDUAL PERFORMANCE,
ELEMENTS TO BE RETAINED IN HIS OR HER POSITION. WITH THIS GREATER
FLEXIBILITY AND DISCRETION, MANAGERS AND SUPERVISORS ALSO WILL BE
HELD ACCOUNTABLE FOR PROVIDING APPROPRIATE FEEDBACK UNDER THESE NEW
STRUCTURES AND FOR ADDRESSING PERFORMANCE DEFICIENCIES. IT IS OUR
HOPE THAT THE NEW REGULATIONS WILL HELP AGENCIES FOCUS MORE
INTENTLY ON IMPROVING ORGANIZATIONAL PERFORMANCE, THEREBY ENSURING
APPRAISALS THAT ARE MORE RESULTS-ORIENTED AND LESS PROCESS-

ORIENTED.

OUR NEW REGULATIONS PERMIT, BUT NEITHER ENCOURAGE NOR DISCOURAGE,

TWO LEVEL APPRAISAL SYSTEMS, OFTEN REFERRED TO AS “PASS-FAIL"


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

WILLIAM F. CLINGER,

BENJAMIN A. GILMAN, New York

DAN BURTON, Indiana

J. DENNIS HASTERT, Illinois

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

STEVEN SCHIFF, New Mexico

ILEANA ROS-LEHTINEN, Florida

WILLIAM H. ZELIFF, Jr., New Hampshire

JOHN M. McHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

PETER BLUTE, Massachusetts

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

JON D. FOX, Pennsylvania

RANDY TATE, Washington

DICK CHRYSLER, Michigan

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

WILLIAM J. MARTINI, New Jersey

JOE SCARBOROUGH, Florida

JOHN B. SHADEGG, Arizona

MICHAEL PATRICK FLANAGAN, Illinois

CHARLES F. BASS, New Hampshire

STEVEN C. LaTOURETTE, Ohio

MARSHALL “MARK” SANFORD, South
Carolina

ROBERT L. EHRLICH, JR., Maryland

dR., Pennsylvania, Chairman

CARDISS COLLINS, Hlinois

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, Jn., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

JOHN M. SPRATT, Jr., South Carolina

LOUISE McINTOSH SLAUGHTER, New
York

PAUL E. KANJORSKI, Pennsylvania

GARY A. CONDIT, California

COLLIN C. PETERSON, Minnesota

KAREN L. THURMAN, Florida

CAROLYN B. MALONEY, New York

THOMAS M. BARRETT, Wisconsin

GENE TAYLOR, Mississippi

BARBARA-ROSE COLLINS, Michigan

ELEANOR HOLMES NORTON, District of
Columbia

JAMES P. MORAN, Virginia

GENE GREEN, Texas

CARRIE P. MEEK, Florida

CHAKA FATTAH, Pennsylvania

BILL BREWSTER, Oklahoma

‘TIM HOLDEN, Pennsylvania

BERNARD SANDERS, Vermont
(Independent)

James L, CLARKE, Staff Director
KEVIN Sano, General Counsel
JupitH McCoy, Chief Clerk
Bub MYERS, Minority Staff Director

SUBCOMMITTEE ON CIVIL SERVICE
JOHN L. MICA, Florida, Chairman

CHARLES F. BASS, New Hampshire
BENJAMIN A. GILMAN, New York
DAN BURTON, Indiana

CONSTANCE A. MORELLA, Maryland

JAMES P. MORAN, Virginia
BERNARD SANDERS, Vermont (Ind.)
‘TIM HOLDEN, Pennsylvania

EX OFFICIO

WILLIAM F. CLINGER, Jr., Pennsylvania

CARDISS COLLINS, Illinois

GrorGe NESTERCZUK, Staff Director
SUSAN MOSYCHUK, Professional Staff Member
NED LyNcH, Professional Staff Member
CAROLINE FIEL, Clerk
CeDRIC HENDRICKS, Minority Professional Staff

al


119

complaints. They have become a terrible burden for agencies, and
have so overwhelmed the EEO system that valid complaints are
often ignored or “lost,” or, at best, take years to be recognized

and dealt with fairly.

If an employee chooses to pursue his/her EEO case, OSC case,
IG case, etc., he/she would be free to do so, even if he/she had
been removed for poor performance from federal service. However,
if he/she prevailed before one of these investigative or
appellate agencies, that entity could order the employee to be
made whole for his/her losses. However, there should be other
remedies available which do not require forcing an agency to
reinstate an employee who had been proven incapable of performing
the job which he/she had previously occupied at a fully
successful level, Other monetary or equitable remedies should be
Provided which would make the employee whole, but the emplovee
must not be placed back in the position from which he/she was
removed for unsatisfactory performance.

The civil rights and whistleblower communities might allege
that employees will be fired willy-nilly, and there would be no
way under our proposal to prevent this. However, under the
Whistleblower Protection Act, the Office of Special Counsel has
the authority to intervene at the MSPB and get a "stay" of the
action being taken against the employee. This authority should

"remain with the Office of Special Counsel, so that if partisan

ce


68

uses a performance management system linked to its broad-banding job classification and pay

system.

One of the factors driving some of the new approaches to performance management
involves some fundamental re-thinking of one of the key tenets of the civil service - the concept
of career and tenure-based employment systems. Some organizations are viewing employment
in a different fashion as significant segments of the workforce become more "contingent" in
nature.

- The government of Australia this past year completed a substantial overhaul of

the statutory base for its public service. One of the conclusions reached was the
removal of the concept of “office” and the recognition of different tenure

arrangements to match the needs of organizations.

- The government of New Zealand now uses a system of performance agreements
beginning with fixed-term 5-year contracts for chief executives with performance-

based criteria.

- Many private companies in the U.S. view their employment relationship with
their employees under a “new deal” which stresses job security less and value-

added employee contributions more,


152

-7-

IMPROVE AND ASSISTANCE FOR POOR PERFORMERS.

WHEN ACTION IS TAKEN, MANAGERS' DECISIONS ARE SUBJECT TO REVIEW BY
VARIOUS THIRD PARTIES. THIS THIRD-PARTY REVIEW IS ESPECIALLY
PROBLEMATIC IN DEALING WITH POOR PERFORMERS UNDER CHAPTER 43, AND
SOME ACTIONS ARE REVERSED BASED ON FAILURE TO MEET CERTAIN REQUIRE-
MENTS NOT INITIALLY ENVISIONED BY THE LAW. FOR EXAMPLE, THE
PERFORMANCE STANDARDS AND OPPORTUNITY PERIOD ARE SUBJECT TO HYPER-
TECHNICAL REVIEW. AS A RESULT, ACTIONS CAN BE AND ARE REVERSED
BASED ON WHAT MIGHT BE CONSIDERED FAIRLY TECHNICAL GROUNDS THAT
HAVE NOTHING TO DO WITH WHETHER OR NOT THE EMPLOYEE PERFORMED AT AN
ACCEPTABLE LEVEL. THE ADDITIONAL TIME NEEDED TO COMPLETE ACTION
UNDER CHAPTER 43, AND THE POTENTIAL FOR GREATER SCRUTINY DURING THE
APPEALS PROCESS, HAVE CREATED THE PERCEPTION AMONG MANY MANAGERS
THAT THE SYSTEM DOES NOT ALLOW THEM TO DEAL EFFECTIVELY WITH POOR

PERFORMERS.

THAT'S A SHORT DESCRIPTION OF THE CURRENT PROCESS AND ITS SHORTCOM-
INGS. LET'S LOOK AT WHAT THE NUMBERS TELL US ABOUT HOW WELL THE
SYSTEM IS BEING USED. IN FISCAL YEAR 1994, THERE WERE 364 REMOVALS
BASED SOLELY ON PERFORMANCE, 155 DEMOTIONS BASED SOLELY ON
PERFORMANCE, AND 314 REMOVALS INVOLVING A COMBINATION OF PERFOR-
MANCE AND MISCONDUCT. THIS RELATIVELY SMALL NUMBER OF PERFORMANCE-
BASED ACTIONS IN THE FEDERAL GOVERNMENT DO NOT GIVE US THE FULL
PICTURE. FOR EXAMPLE, THEY DO NOT INCLUDE ACTIONS WHERE THE

‘TERMINATION OCCURS DURING AN EMPLOYEE'S PROBATIONARY PERIOD OR


79

The accountability issue needs to be addressed and ingrained. In
other words, managers simply have to be willing to take the actions
when they can be supported and not hide behind the multiple ap-
pellate mechanism until we can find a way to fix it.

There really is no excuse, in some cases, for managers working
around incompetent or poor performers and living with that. As a
matter of fact, there is no incentive, frequently, for them to take
the action. They live with it.

Mr. Mica. Did you want to comment, Dr. Shields, maybe about
the armadillos and the tank?

Ms. SHIELDS. The armadillo? Maybe I should comment on the
tank, given my history. I think that there are employees in large
private sector organizations that might feel the same way, because
if there is anything that I’ve found, in looking at both the private
and the public sector, it is that managers hate to confront poor per-
formers. Even when they’re given the opportunity to confront poor
performers, you find that they don’t do that.

So there are many excuses that people may hide behind, but pro-
viding coaching, feedback, or dealing with performance problems,
T’ve found to be one of those things least well done and least fre-
quently done in both the private and the public sector.

I think it goes back to some of Mr. Wheeler’s comments with re-
gard to training managers with regard to how to provide the feed-

ack, how to confront employees in a productive way to increase
performance.

Mr. MICA. Well, that raises my next question for Mr. Wheeler.
You know, the other problem is we’ve created such a convoluted
and extensive appeals process that the manager is frustrated. I’m
told the average length of one appeal is 18 months, and most peo-
ple are so frustrated by the process that they won’t even undertake
it.

Mr. Wheeler, in your testimony, you state that managerial ac-
countability is the keystone in a program that successfully address-
es substandard performance. But, you know, when I and the public
look at incidents—for example, I will use Waco, because I sat in
this room for many days.

Every report that came to us said that there was incompetence,
there was malfeasance, misfeasance, nonfeasance, and all types of
improper actions by various individuals. I think I shared the frus-
tration of the public in that nobody got fired. I’m wondering how
you can achieve managerial accountability and how high up the
management chain do we need to go at the Federal level to correct
this?

Mr. WHEELER. Mr. Chairman, I don’t perceive there’s any signifi-
cant difference between the problem that you face with the civil
servant in the Federal employee system and that which is faced by
large organizations in the private sector. I, too, deal on a weekly
basis with the same type of issues that you’ve described in Waco.

Employees or managers at a mid level or a lower level don’t per-
form well or commit misconduct. Their superiors don’t take an ap-

ropriate action to deal with that. When it’s finally brought to
Fent—in my case, it’s generally in a lawsuit, and that’s when I first
learn of it—and I inquire as to why that didn’t happen, well, the
district manager or the second tier manager just didn’t do it.


15

two years of service should not have been hired in the first
place. In most cases, unsuitable employees are hired due to
inadequate, nonexistent or disregarded hiring practices or
standards.

Identifying quality applicants is best achieved through a
formal, multi-faceted hiring process consisting of four steps.
They are developing hiring standards for each position, aptitude
screening, screening for job knowledge, and thorough reference
checks. Hiring decisions for every position, whether hourly or
management, should be measured against written requirements
delineating the minimum capabilities which an applicant must
possess at the time of hiring. These standards will vary
according to the employer's need to hire fully trained
individuals and its ability both in terms of time and manpower to
provide developmental training. ‘The standards should be absolute
and should not be disregarded unless the employer's needs change.
Hiring an applicant who possesses the ability to learn, but does
not have the minimum skills needed to perform in a position from
the date of hire, invariably produces an employee whose
performance fails to meet the employers expectations and creates
a dissatisfied employer and a disgruntled employee.

Initial screening to determine an applicant's aptitude for
employment with an employer generally, and a specific position in
particular, helps identify applicants whose work style and ethos
are compatible with the employer's work environment. Achieving

optimal employee performance requires workers who are technically


197

The Honorable John L. Mica
Chairman

November 17, 1995

Page 2

be received (in the form of a within-grade increase) became a
mathematical calculation. The "bonus pools" were divided based on
a numeric system among all those receiving “outstanding” appraisals
and most of those receiving “highly successful” appraisals. As a
result, the amount received by any one individual became quite
small, and no longer served as an incentive.

‘The granting of within-grade increases was speeded up so that
PMRS employees received within-grade increases or a portion thereof
each year; and most rapidly moved to the top of their grade levels.
Agency payroll costs escalated, and the awards based on performance
from the “bonus pool" ceased to have any incentive value, since
nearly everyone got a portion of the pool. Even then, employees
were not satisfied and sought additional changes. Finally,
Congress threw up its hands and allowed the system to sunset in
1993.

‘The problems made it clear that the system could not be made
to function as originally envisioned. Every employee who did not
get a “highly successful" or "outstanding" rating, (and many of
those who did receive "highly successfuls" but not “outstandings"),
filed grievances and fought for higher ratings. All of this
occurred because the concept of “subjective judgment” not.
accepted by PMRS managers. They argued that all indications that
subjective judgment might have been exercised were instances of
personal favoritism or discrimination, or had some other nefarious
motive. No one was willing to take the position that senior
managers should have some discretion in their performance appraisal
systems and that it was absolutely impossible to quantify with
precision, and reduce to numbers, all the management functions
performed by PMRS managers.

If any form of the PMRS system were to be revived, the same
objections would be raised. It would take a major change in the
attitude of employees for a system like PMRS to work properly.

You devoted a significant portion of your testimony to describing
methods that employees can use to file “affirmative defenses.”

2. Do you have any statistics or other data developed from agency
records that would support your description of the
“affirmative defense" approach that you described?

We have limited statistics from the Merit systems Protection
Board‘s annual reports for FY 1988 through FY 1994. The only
information we have from those reports is about “mixed casei
which are cases in which allegations of discrimination are made as
affirmative defenses. We did not examine other affirmative
defenses, but, obviously, there are many that were raised in



128

TESTIMONY OF
ROBERT M. TOBIAS
NATIONAL PRESIDENT

Mr. Chairman and Members of this Subcommittee, my name is
Robert M. Tobias. I am the National President of the National
Treasury Employees Union. NTEU is the exclusive representative for
fourteen diverse agencies throughout the federal government. These
agencies include, but are not limited to the Internal Revenue
Service, the Customs Service, Pension Benefit Guaranty Corporation,
Health and Human Services, Nuclear Regulatory Commission, Federal
Election Commission, Department of Energy, Federal Communication
Commission, the Federal Deposit Insurance Corporation, Food and
Consumer Services, and the Patent and Trademark Office. Each of
these agencies provide a very distinct and meaningful contribution
to our Nation. Therefore, it is essential to ensure that employees
at these agencies are performing at the optimum level and if there
is truly an employee that is unable to perform his/her job
satisfactorily, after adequate guidance and management, that

employee ought be terminated.

In my testimony today, I will address the actual and
perceived reasons why managers fail to take actions against federal
employees. I will also propose suggestions for changing the
termination processes for federal employees so that we can all move

on to more pressing problems in the government.

It is NTEU’s position that civilian employees of the United

States Government are hardworking, loyal, and competent public


134

to address this problem. We would be willing to eliminate the
appeal process to both court and the Federal Labor Relations
Authority (FLRA) after an arbitrator has issued a removal decision.
In other words, arbitrators’ decisions in removal cases for federal
employees would be binding and not subject to appeal to the FLRA or

to court.

We have no set formula as to what should be done in this area.
We have suggested some far reaching solutions and would explore
other ideas as well in the context of civil service reform.
Although others may believe differently, NTEU gains nothing by

having truly poor performers remain in the Federal Government.

Thank you for the opportunity to testify before this
Subcommittee. I would be happy to answer any questions that you

have on this issue.


189

may be the only remedy available, In instances other than motivation as the problem (c.g.,
person-job mismatch, grief, substance abusc), feedback to the employee and positive actions to
remedy the situation are more appropriate and docking of pay may be necessary as a last resort to
get the employee's attention and to focus the employee's efforts on steps to improve performance
change.

4. Question: The Administration’s draft bill would eliminate a employee’s right to appeal the
denial of a within-grade increase to the MSPB. What impact could this have on an employee’s
performance or a manager’s ability to manage?

‘Response: From the employee's perspective, it would depend on the rationale for the appeal. For
example, if the employee's perception is that the increase was denied because of discrimination
(eg, race, sex, age, political views), the employee is likely to need a determination by an

third party (Le, the MSPB) to be mollified. Rightly or wrongly, aggrieved
employees tend to believe that agencies generally will back their managers. If not satisfied, the
‘employee may be less motivated to perform and withdraw somewhat, a situation which will
reinforce the potential problem,

From the manager’s viewpoint, denial of a within-grade increase is one tool and a relatively
drastic one for sanctioning poor performance. The elimination of the right of appeal to the MSPB
is less important than improving the operational process for the denial of the increase itself.
Although one or two steps short of termination, it is probably rarely used because of the lack of
clear alignment between problem and sanction or because of the supporting documentation
required. Regarding the alignment of problem and sanction, some of the same comments could be
made here as listed in the response to question 3 above regarding docking of pay. Regarding the
supporting documentation, the difficulty here is the lack of meaningful outcome-based
performance standards and competency requirements for each job above the threshold job
description and knowledge, skills, and abilities requirements. ‘These latter are input measures not
outcome-based performance measures. Without a change to reliance on such

measures, it will tend to remain a rarely used tool, whether or not the right of appeal to the MSPB
is eliminated.

5. Question: How might Congress proceed to add flexibility to the hiring system?

Response: The hiring system itself appears to have sufficient flexibility to accomplish its goals.
Some of the detailed system-wide regulations and some of the regulations and operations by the
Personnel units in agencies make the implementation process cumbersome and make it appear
relatively inflexible at times. For example, the time from creation of a job or need to fill a vacancy
to actual employee on the. job is much too long. But is this really an issue of flexibility? As
another example, in an era of increased work by teams, team results depends in no small part on
team cohesion, a factor that in tum is to no small extent personality (“chemistry”) driven. Yet the
traditional personnel approach is to provide only the top 3 or 5 candidates from the eligible pool.
While these candidates may be more technically qualified than the remainder of the eligible pool


178

Based on these factors, all affected employees are placed on a RIF register in rank order.

‘An employee's rank can be improved by adjusting their service date based on
performance ratings, thus potentially adding several years of service and increasing their
ranking based on performance.

We believe that veterans’ preference should not be reduced in comparison to the effect of
performance as factors in RIF.

In this debate, the Congress will have to weigh the government's obligation to ameliorate
the burdens of military service against other interests. We urge the Congress to maintain
ahigh level of consideration to be accorded veteran status in RIF.

‘The ability of the government to recruit quality military personnel into an all-volunteer
“total” force is limited by the public perception that those who serve are cared for.
Department of Defense data indicate that the pool of quality youth recruits is
diminishing, not only in real numbers. but also in their interest in enlisting. While having
minimal real effect on the average military recruit, the message de-emphasizing the
assistance to overcome the burden of military se another negative they will weigh
along with lost seniority resulting from time in military training or on active duty.

Vietnam veterans--median age 48-are the last large pool of five-point veterans”
preference eligibles, unless there is another war. When they were drafted or enlisted, the
current RIF principles were in place. However, protections for certain military annuitants
and those with the rank of Major and above are severely limited under current law.

‘These men and women entered the military young. Now the number of federal personnel
is being reduced while these veterans are at the peak of their careers. Now that RIF
protection is important to them, the RIF protections in place when they entered the
service are being debated. The RIF policies are in debate because these veterans may
benefit from these policies. How ironic. The debate is about a benefit which may do
what it was designed todo. Those who were supposed to benefit because of this service.
may lose the benefit because it benefits them, The rules of the game may be changed
‘when they are most important to those who served, those who bore the burden of service.

For those who promote the desirable goal of performance as the primary consideration in
personnel acquisition and downsizing. the discussion often ignores the subjective,
‘mercurial and inconsistent appraisal instruments and their often erratic implementation.
Even so, itis still an important factor but must be weighted against other legitimate
government interests, such as the maintenance of a quality military and ameliorating the
burden of service on those who served.

Congressman Mica, your letter refers to our recommendation for an administrative
process which would enable veterans who believe they had improperly been denied their


74

Some more progressive, I think, approaches, are to focus on the
individual and that person’s skills and competencies. Dr. Shields
had alluded to that in her comments, in terms of modeling the be-
haviors of your high performers, developing a profile of their com-
petencies, really using that kind of a method to focus on what em-
ployees should be achieving, which is, personally, becoming strong-
er, more knowledgeable, more competent, and using that as a
method to adjust base pay. It’s a difficult process to do, but I think
the companies that have undertaken it have found it to be very re-
warding.

Mrs. MoreELLa. I think I’ve used my allocation of time, unless
anyone else would like to comment on it, so I would yield back to
the chairman.

Mr. Mica. I thank you. We'll get back, if you have additional
questions. I’ll recognize the vice chairman, Mr. Bass.

Mr. Bass. Thank you very much, Mr. Chairman.

I appreciated your interesting testimony. I could only think, Mr.
Wheeler, about your four criteria for hiring, to continue the line of
my colleague from Maryland. No. 1, hire great employees. We all
know that’s the case. We're in the process, now—at least I am—
of understanding and receiving the type of training, and we know
what’s going to happen with the assessment procedure and their
methods of correction for poor performance, as it applies to Mem-
bers of Congress.

Mr. Mica. That’s funny.

Mr. Bass. It’s correct.

Mrs. MorRELLA. That’s right.

Mr. Bass. And rarely is it a positive evaluation.

In your business, Mr. Wheeler, performance evaluation is sub-
stantially easier to evaluate, because you have a series of busi-
nesses, and if you make money, they’re doing OK. If they’re losing
money, they’ve failed. You can move to any level of assessment that
you wish, right down to the person who’s making the beds, and so
forth.

I think—is there not a difference in individual performance and
collective performance in your business? Is there any way that you
can apply those standards, or is it possible to apply those stand-
ards to a bureaucracy, which has entirely different standards of
performance?

As I think it was Ms. O’Neil who pointed out, one of the major
problems is to measure performance. Is there any simple mecha-
nism whereby we can evaluate performance in government that
may have some parallels to private industry?

Mr. WHEELER. I would think that there is, Mr. Congressman, but
I'm not sure I agree with the assessment that performance in the
business—at least in the large business sector, the mega organiza-
tions—is as simplistic as, if you make money, you're successful; if
you don’t, you’re not.

In fact, that is one of the major difficulties that major organiza-
tions have. There are many managers who are technically com-
petent and who can make money. The difficulty comes, is that they

ve other serious performance weaknesses that don’t show up on
the operational level—that is, their interaction with the client to
make money.


32

manage performance all year, rather than rate it once a year. Com-
panies tell it like it is, and they try and tell it often. Performance
feedback is candid and constructive. There’s a differentiation be-
tween poor, good, and great performance, and there has got to be
positive and negative confidences allocated as appropriate.

A fifth principle is that they do frequently get 360-degree feed-
back. High-performance companies get performance feedback from
all sources that have relevant data. These sources can be peers, su-
pervisors, subordinates, customers, oneself—hence the term, “360-
degree feedback.” Each employee’s situation is different, so it’s im-
portant to focus on the individuals that have opportunities to ob-
serve performance.

A sixth principle is, they who use it own it. Line management
is held accountable.

A seventh principle revolves around the issue of grades. People
should be assessed, not rated. No one wants to be a 3 on a 5-point.
scale, no matter what the labels are. One approach has been to
shift to a 3-point scale—outstanding, meets standards, and needs
improvement.

Research has shown that people generally agree on the extreme
cases, the best and the worst. If there is an interest in identifying
poor performers and in giving recognition to outstanding workers,
the 3-point scale seems to work in some organizations.

An eighth principle, the whole concept of base pay is being re-
thought in these organizations. For example, skill-based programs
have a future orientation. The message of skill-based pay is that
an employee’s value depends on what he or she can do. The more
employees can do, the higher their value, and this will be reflected
on their salary.

It tends to move away from the whole focus on promotion as a
means in order to accomplish a pay increase. One firm in south
Florida has replaced its traditional merit program with what we’ve
called learning contracts. Each employee contracts with their su-
pervisor regarding the specific skills and abilities they will be re-
sponsible for adding to their personal repertoire.

A ninth principle, a lot of companies are using non-cash recogni-
tion rewards. I mean going beyond these employee of the month
and employee of the year plaque kind of program. These nontradi-
tional awards are being used in every sector of American industry
to reward employees for productivity and quality improvements.

Noncash awards have a leverage value; they’ve got trophy value.
Every time an employee sits in that lounge chair or plays with that
set of golf clubs, the employee is reminded that it’s earned for per-
sonal achievement and improving performance. That memory can
last for years.

Finally, performance management should not be abandoned. It
does need to be selectively reinvented. As America moves toward
a balanced budget, I believe the need to do more with less, the im-
perative of motivating employees in a strict sense of accountability,
will face the Government as never before.

I believe, as my parents believed, that implementing the key
principles of performance management will assist public employers
to meet the challenges ahead and to continue to improve quality


103

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are to prosper.

Manage performance as a process, not an event. In high-performance companies, performance
management is a cyclical process: determine what and how to measure; link organization to unit
to process to team to individual goals; set and communicate performance expectations; monitor,
coach, and provide ongoing feedback; assess, develop, and reward performance. Managers at all
levels are expected to manage performance all year rather than rate it once a year. If people do
not know what counts and what is expected at the outset of a performance cycle, there is little
chance they will attain (or agree on how well they attained) the goals at the end of the cycle.
Further, these companies tell it like it is and tell it often; performance feedback is candid and
constructive. There is also differentiation between poor, good, and great performers; positive

and negative consequences are allocated, as appropriate.

Get "360-degree” feedback. High performance companies get performance feedback from all
sources who have relevant data. Sources can be peers, subordinates, customers, suppliers,
oneself, and superiors~hence the term 360-degree feedback. This is an approach that is
consistent with the total quality management philosophy. Each employee's situation is different,
so it is important to focus on the individuals who have opportunities to observe performance.
This recognizes that the supervisor may not have the best vantage point for assessing a
subordinate’s performance. It also serves to diminish the adverse consequences that can be
triggered when the supervisor is the sole source of performance feedback.

6


164

PLEASE NOTE

The following charts are based on information obtained from the Central
Personnel Data File (CPDF). The CPDF Library is a comprehensive
information resource for program managers and analysts, workforce analysts,
policy planners, and other users of Federal civilian workforce statistics.
CPDF was developed and is maintained by the U.S. Office of Personnel
Management, Human Resources Systems Service, Office of Workforce
Information.

Central Personnel Data Coverage

CPDF covers approximately 2.2 million Federal civilian employees including all agencies in the
Executive Branch except: the U.S. Postal Service, Postal Rate Commission, Central Intelligence
Agency, National Security Agency, Tennessee Valley Authority, White House Office, Office of
the Vice President, Board of Governors of the Federal Reserve System, and Defense Intelligence
‘Agency. And, the Federal Bureau of Investigation supplies only limited data to CPDF.

From the Legislative Branch, CPDF includes only the Government Printing Office, U.S. Tax
Court, and selected commissions.

Exclusions from CPDF include the Judicial Branch, non-appropriated fund employees of DoD,
Commissioned Officer Corps employees, foreign nationals outside of the U.S. or its territories,
and contract employees.



64

than outcomes because outcomes are more difficult to define and the contribution of an

individual to an outcome is even more difficult.

Our research indicates that one of the fundamental problems with the issue of the "poor
performer" is the inability to identify sub-par performance in terms of expected contributions
rather than the difficulty in figuring out what to do about the employee after the fact. The
federal employee performance management system has not been linked sufficiently to
organizational performance. All government agencies are using strategic planning tools to define
the goals and performance objectives of the organization. Agency success in attaining these
goals will be measured via GPRA. Since these goals can only be met through the efforts of
employees, individually and in teams, we have in GPRA a method and a purpose for linking

individual and organizational performance.

The new regulations issued by the Office of Personnel Management (OPM) in August

1995 allow for aligning individual and organizational performance to a greater extent. In our

initial efforts to define a link between employee performance management and GPRA, the
NAPA Center for Human Resources Management has developed a model for bridging the two
systems (individual and organizational performance) using as a starting point the performance
contracts between the President and each of his cabinet secretaries. Their contracts get further
refined at succeeding subordinate levels. Accountability is built in to individual performance

agreements, based in the agency's strategic plan. Other models could also be developed. All


The Honorable John L. Mica
Chairman

November 17, 1995

Page 8

management.
16. Should such training be made mandatory?

Such training should be absolutely mandatory. While agencies
have in the past been mandated to provide such training, often it
has not occurred. We recommend that the training be made mandatory
and the burden placed on the supervisors and managers to get
training. If they do not, they should be removed from supervisory
or managerial positions for lack of training hours completed. This
would cause the employees to put pressure on management to provide
the training that they need and, we believe, would be a substantial
spur to agency management to develop and provide the courses
manda’

17. If so, how often should managers have to be trained? What
subjects should be included in that training?

Every manager should have a mandatory two weeks of basic
supervisory training when first given any supervisory
sponsibility. ‘They should then receive an additional week for
every additional supervisory position achieved. The training would
have to be completed before the employee had finished his or her
probationary period in the new position. Lack of completion of the
training would bar an employee from receiving permanent appointment
to the position until it is completed. In addition, every
supervisor and manager should be required to complete a minimum of
16 hours of continuing professional education annually and have the
completion certified. This should be utilized to keep federal
managers up to date with the latest management techniques utilized
in the private (as well as public) sector. It would also allow
agency officials the opportunity to ensure that supervisors and
managers were updated each year on the agency’s mission and the
manner in which it should be accomplished under their leadership.

Subjects should include performance management, counseling
skills and techniques, achieving customer satisfaction, dealing
with citizens in a courteous and professional manner, utilizing the
adverse action and disciplinary action processes, and time and
leave management of employees, (including dealing with (a)
tardiness; (b) misuse of sick leave; (c) the granting of annual
leave; (d) when to grant leave-without-pay versus charging an
employee with AWOL; and (e) the requirements of the Family Friendly
Leave Act). Time management is one of the most misunderstood and
under-utilized areas of personnel management in the federal
government. Most managers are woefully unprepared to utilize
effective time management techniques in fulfilling their duties and
responsibilities, nor are they routinely updated on technological
advances such as those in information technology.


148

-3-
* FIRST, THE SYSTEM IMPOSED A LEVEL OF DETAILED REQUIREMENTS
ON AGENCIES WHICH PREVENTED THEM FROM DESIGNING AND TAKING
OWNERSHIP OF THEIR APPRAISAL PROGRAMS--A SURE WAY OF

CREATING PROGRAMS THAT DON'T WORK.

* SECOND, THE SYSTEM REQUIRED THE ANNUAL SUMMARY RATING TO
DO TOO MUCH. IT WAS TIED DIRECTLY TO PAY, AWARDS, PROMO-
TIONS, AND STEP INCREASES. THIS LINKAGE CONTRIBUTED TO
SIGNIFICANT RATING INFLATION, THUS UNDERCUTTING THE

PURPOSE OF THE APPRAISALS.

* THIRD, AN EXCLUSIVE EMPHASIS ON DISTINCTIONS AMONG
INDIVIDUALS DIMINISHED THE USEFULNESS OF PERFORMANCE
APPRAISAL IN AN ENVIRONMENT WHERE, BECAUSE OF DELAYERING,
COOPERATION AND TEAMWORK ARE MORE IMPORTANT THAN IN THE

PAST.

THE FIRST TWO SYSTEM WEAKNESSES IN PARTICULAR LED TO THE ABOLISH-
MENT IN 1993 OF THE PMRS, THE GOVERNMENTWIDE SYSTEM FOR GS-13, 14,
AND 15 MANAGERS AND SUPERVISORS.

OPM'S NEW PERFORMANCE MANAGEMENT REGULATIONS, WHICH WERE PUBLISHED
LAST AUGUST, CREATE AN OPPORTUNITY TO ADDRESS THESE DEFECTS BY
PROVIDING AGENCIES GREATER FLEXIBILITY IN DESIGNING THEIR OWN
RATING SYSTEMS, WITHIN BROAD GOVERNMENTWIDE GUIDELINES. ALTHOUGH

AGENCY APPRAISAL SYSTEMS WILL STILL REQUIRE OPM APPROVAL, THE NEW


35

Whether the process is formal or informal, every organization assesses its performance and that
of its people. In successful private sector firms, performance is measured not only for each
employee, but also for every business unit, plant, department, cost center, and function.
Organization units are often measured on customer satisfaction or cost per unit; teams can be

measured on cycle time; individuals, on such measures as collaboration.

The performance management process can be vastly different depending on the organization.
The owner of a 70 person multi-color printer of catalogs in Miami measures business
performance on profitability, translated into such measures as the number of re-dos at the work
team level. Individuals are measured by their skill level, as well as such basics in a small firm as
attendance. The multinational pharmaceutical company, by contrast, has a formal system to
measure, manage, and appraise performance of its sixty thousand employees working in
fifty-three countries. The system is replete with “official” forms, procedures, policies, and
computerized databases containing summary appraisals, developmental needs, and even statistics

on ratings distributions.

Focus must initially begin at the organization level in order for performance management to be
successful. Motorola's corporation wide “six sigma" defect-free goal is an example of an
organization wide measure. Federal Express uses organization-wide measures; a Service Quality
Index (SQI) that drives customer satisfaction are identified and communicated to all seventy-five
thousand employees daily, Levi Strauss and Johnson & Johnson are examples of companies that
regularly poll their people to ensure that corporate values are operating.

2


67

Performance management is an integral process in all of the high performing
organizations that our Center staff has studied. How these organizations use their performance
management systems is quite varied and different. The axiom that “no one size fits all” is a
valid one when it comes to human resources systems generally, including performance
management. Each successful organization decides on its own objectives for its system. We
have available a number of case studies from the private sector, other public sector entities, and
some federal agencies that provide benchmarks, best practices, lessons leamed, and contain some

tools, forms and related material.

We have identified a variety of performance management systems used by high
performing organizations from this material. The following are a few examples from what we
have reviewed: (1) The State of Washington has a system that emphasizes individual
accountability for program results and management skills. It is used as a tool for developing and
refining skills to meet future needs instead of being used to keep score on past events: (2) At
Weyerhaueser, all employees set four to six performance goals which are linked to company and
unit business goals. A team-based, cascading approach is used to create alignment and
ownership of goals. Clear goals and measures are communicated from top to bottom; (3) At
AT&T, the performance management system measures individual, team, and organizational
performance, is driven by customer expectations and requirements and measured by the level
of customer satisfaction. It uses 360 degree feedback and is skill-based in its focus on the

developmental aspects of employee performance; and (4) The General Accounting Office (GAO)


190

(although in many cases not by much), they may not be appropriate candidates for the team. The
procedure for tuming down these “top” candidates and requesting a longer list is somewhat
cumbersome (e.g., written rationale) and often causes friction between the hiring unit and the
personnel unit. Again, is this really an issue of flexibility? Finally, as noted in the response to
question 7 and in my testimony of 26 October 1995 before your Subcommittee, introduction of
job competency assessments would be a major improvement in the hiring system. However,
‘again, is the issue addressed by such an improvement really one of flexibility?

6. Question: Is flexibility really what is needed (to improve the hiring process)?
Response: No. See response to question 5 above and 8 below.

7. Question: What methods do you recommend for incorporating other, less tangible factors
(than knowledge, skills, and abilities) into pre-employment screening?

Response: A more competency-based human-resource management system would go a long way
to improving the hiring process and have other significant performance results. As part of the
hiring process, job competency assessments should be performed and job competency
requirements should be matched with person competencies. Details on the Job Competency
Assessment methodology were provided in my testimony of 26 October 1995 before your
Subcommittee.

8. Question: What methods do you encourage organizations to use when they identify poor
performers?

Response: We encourage organizations to adopt a competency-based human resource
management system, including assessments for job-person match and competency-based and
outcome-based performance standards. Using the job competency assessment approach, the
improved job-person match decreases the likelihood of poor performance in the first place. Using
such performance standards, a manager can more readily determine if and in what way an
employee is a poor performer (despite the apparent job-person match). The diagnosis is easier
(eg. motivation, personal problems, job-related capability), and the remedy clearer (e.g.,
feedback, coaching, counseling, training). Performance against the standards can be measured
continually during the remedy implementation period and the supporting documentation for
reassignment or removal, if required, can be built more readily from these performance measures.

9. Question: Does your guidance differ between public and private organizations?
Response: Not as an overall approach. Implementation steps obviously are different.


196

=

Senior Executives ASSOCIATION

PO. BOX 7610 » BEN FRANKLIN STATION
WASHINGTON, DC. 20044
202-927-7000

November 17, 1995

The Honorable John L. Mica

Chairman

Civil Service Subcommittee

Committee on Government Reform
and Oversight

Room 2157

Rayburn House Office Building

Washington, D.C. 20515-6143

Re: Responses to Supplementary Questions from October 26,
2995 Subcommittee Hearing on Performance Management
and Accountability

Dear Mr. Chairman:

Following are the responses of SEA to your letter of November
9, 1995. In your letter, you asked additional questions to those
posed to us at the October 26, 1995 hearing on performance
management and accountability. We appreciate the opportunity to
respond. Our responses conform to the numbered questions.

1. The Congress allowed the much criticized Performance
Management and Recognition System, which covered mid-level
managers, to sunset in 1993. In your view, what were the
problems with it and why were they not resolvable?

The Performance Management and Recognition System (PMRS) was
originally established to provide pay incentives to mid-level
managers by allowing more frequent and more substantial within-
grade increases and a “bonus pool" to reward managers when
justified by performance. As is often the case, it was immediately
criticized as providing too much money to some and not enough to
others because the appraisals on which the bonuses and pay raises
were based were allegedly “subjective.” Rather than acknowledge
that all appraisals are subjective to some extent, Congr nd the
Administration tried to tinker with the system to ensure that
employees rated “highly successful" and "outstanding" all received
equal raises. The stated purpose of the PMRS system was then
nullified. Immediately, performance appraisals for mid-level
managers all were raised to the highly successful or outstanding
rating (primarily outstanding), and the determination of bonuses to



104

sen vi Resin At
APPENDIX C scam ie een

. jurisdiction in reviewing cases certified to it.
Sp ecial Panel Lynch ». Department of Education (August 22,

During Fiscal Year 1986 the Special Panel 1986)-
issued its first two decisions: ‘The Special Panel in a split decision adopted
the Board's opinion that removal of a

Ignacio w. U.S. Postal Service (February 27, 1986). Wuewicaroeed Peonloyer was lawful because the
In a split decision, the Special Panel held that agency had attempted to accommodate the
Federal agencies must consider reassignment as a employee's handicap and the medication used to

reasonable accommodation for physically treat it. The majority of the Panel held that the
handicapped employees prior to taking 2 agency was not required to provide training to
removal action. The majority held that the the employee as an accommodation where there

decision of the EEOC, requiring consideration _was no indication that training would improve
of reassignment prior to removal, is reasonable the employee's performance.



167

5) Over the past ten years how many Federal employees have been demoted?
What percentage was due to performance?
What percentage was due to misconduct?

Percentage Distribution of Demotion Actions

% due to % due to
FY Number Performance Misconduct
(432) (752)
94 601 26 14
93 57S 29 na
92 547 39 61
OL 665 36 64
90 834 40 60
89 870 43 ST
88 736 47 53
87 897 36 64
86 1,059 34 66
85 794 52 48

This data only reflects actions taken “for cause” and therefore excludes voluntary demotion
actions, reclassification actions, and demotions taken under reduction in force procedures.
Included in the number of voluntary demotions would be actions involving any employee who
voluntarily accepted or requested a lower grade based on poor performance.

‘The data file does not contain a category for demotion taken for both misconduct and
performance, therefore, those actions are coded under the Part 752 (misconduct) category.

NOTE: Percentages are independently rounded and may not add up to 100.


126

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45

Mr. Mica. We thank you, and now Ill call on our wounded wit-
ness, Dr. Joyce Shields, president of the Hay Group.

Welcome.

Ms. SHIELDS. Thank you. I am pleased to be here.

Mr. Chairman and members of the subcommittee, I am pleased
to have the opportunity to talk with you today about Government
reform. I have been with the Hay Group for the last 10 years, and,
in that role, I've had the opportunity to look at both public and pri-
vate sector organizations in our consulting assi; ents.

But prior to that, I spent 19 years with the Federal Government,
and, in my last position there, I was the director of the Manpower
and Personnel arch Laboratory. So I have a great respect for
the professionalism of the Federal employee and a number of the
very good things that are happening in the Federal Government,
as well.

As you know, many things are happening in both the public and
private sector organizations that are leading to and underscore the
need for change within civil service today. I would like to make
three observations today.

One, I think that there are practices and principles in the private
sector that can be used effectively in the public sector.

At the same time, there are significant differences in the leader-
ship and management responsibilities and requirements in the
public and private sector. However, there are methodologies that
can make explicit what are the competencies and the requirements
of the public sector leader and manager so that one can hold both
agencies and individuals accountable.

Third, the role of the personnel manager and the competencies
of the personnel manager in the public sector will have to change
in order to successfully implement civil service reform.

As you know, the world of work in the private sector is changing,
and organizations that are the most successful, are focu: on
aligning the mission, the individual work cultures, and their
human performance systems.

Organizations are moving from hierarchical, functional types of
organizations to the consideration of other types of work cultures,
such as process work cultures that are focused more on customer
satisfaction and continuous improvement; time-based types of orga-
nizations that are focused on flexibility and agility; network types
of organizations that are focused on being able to flexibly respond
to changing demands in organizations and then are configuring dif-
ferent alliances and ways of working together.

All of these ways of doing work force you to think about different
ways of managing personnel. The most successful organizations are
those that align their personnel and human resource management
systems with the mission and work culture that will allow you to
achieve that strategy.

So those organizations where the human resource systems are
aligned with the strategy and mission of the organization have
been found to be most successful within the private sector. The im-
plication, then, for the public sector is that your human resource
systems, or the public sector human resource systems, must be de-
signed and managed around the differences in agency and organi-
zational mission.


87

Before I discuss the specific issue of poorly performing Federal employees, may I
say that I agree fully with the sentiment in your media advisory dated October 20,
1995, expressing a commitment to the principle that "people who operate effectively
should be rewarded for their efforts.” Too often the debate on how to deal with poor
performers overshadows the fact that the overwhelming majority of Federal employees
are well-qualified, hard-working, and committed to doing a good job.

Effective performance management, of course, not only deals with poor
performers but it also engenders good performance and ensures accountability, in part,
through a focus on how well the mission of the organization is being accomplished. In
this context, the process for dealing with poor performers is one part of a larger system
intended to achieve effective and efficient Government service.

In examining that part of the system intended to address the removal of poor
performers, we need to separate perception from reality--if they are not the same--and
deal appropriately with both. There is little to be gained in trying to fine tune a specific
aspect of the process for dealing with poor performers that may be working well within
the parameters established for it.

‘What we have learned from our studies is that the issue of dealing with poor
performers needs to be addressed on a larger level. In this regard, we note that the
underlying objectives of the Civil Service Reform Act of 1978 (CSRA) with regard to
performance management are still valid. Seventeen years after passage of the CSRA,
the evidence suggests that the problem is not with the goals inherent in the framework
of the CSRA but with the failure to adequately meet those objectives. As we revisit the
Government's current performance management system--and specifically the elements

dealing with poor performers—two basic points are worth bearing in mind:


STATEMENT OF THE
HONORABLE CONSTANCE A. MORELLA
HEARING ON CIVIL SERVICE REFORM II:
PERFORMANCE AND ACCOUNTABILITY

SUBCOMMITTEE ON CIVIL SERVICE

OCTOBER 26, 1995

1 would like to thank Chairman Mica for calling this hearing.
The earlier hearings on civil service reform have provided solid
information and have established a good base for our continued

af
discussions. 1 know the Chairman has a principit interest in
performance management. I, too, have a keen interest in this
subject, and | look forward to today’s dialogue.

1 do not plan to give a lengthy statement, but | would like to
mention some of the issues | would like to explore today,
specifically the pass/fail initiative, 360 degree evaluations, the
Administration’s poor performer proposal and performance
management accountability.

| have made it no secret that | have problems with some of
these initiatives, particularly the poor performer proposal that
would authorize a pay reduction of up to 25 percent for as long as
120 days. | think this a very penal concept, and it would shock

me if a good manager would even consider using it.


CIVIL SERVICE REFORM II: PERFORMANCE
AND ACCOUNTABILITY

THURSDAY, OCTOBER 26, 1995

HOUuSsE OF REPRESENTATIVES,
SUBCOMMITTEE ON CIVIL SERVICE,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 9:10 a.m., in room
2154, Rayburn House Office Building, Hon. John L. Mica (chair-
man of the subcommittee) presiding.

Present: Representatives Mica, Morella, Bass, and Moran.

Staff present: George Nesterczuk, staff director; Garry Ewing,
counsel; Susan Mosychuk and Ned Lynch, professional staff mem-
bers; Caroline Fiel, clerk; Cedric Hendricks, minority professional
staff; and Jean Gosa, minority staff assistant.

Mr. Mica. Good morning. I would like to call this meeting of the
House Subcommittee on Civil Service to order and welcome you to
this hearing. This hearing is a continuation of the subcommittee’s
series of hearings on topics related to civil service reform.

Today, we'll examine comparisons between management in the
private sector and the public sector. We're attempting, as we define
characteristics of successful organizations, to adapt those traits as
much as possible to public sector management.

It’s obvious that Federal agencies have major problems in man-
aging people, as well as programs. We are fortunate today to have
some people who can shed some light on some of the programs and
some of the management techniques that are so important in im-
proving our civil service system.

Those management challenges reflect changes that have con-
fronted the private organizations during the past decade. Federal
agencies are only now coming to grips with the fiscal constraints
that the private sector has addressed during that timeframe. We
need to reach some agreement about how to resolve those chal-
lenges for the coming years.

It’s obvious that the ways in which managers evaluate perform-
ance and provide direction to Federal employees is one part of the
system that I believe truly needs repair. Our current system ties
the hands of managers who really want to do a good job. It’s a fine
demonstration of the “Lake Woebegon effect,” where nearly every-
one scores better than average.

The Office of Personnel Management statistics for fiscal year
1993 indicate that 99.6 percent of the Federal employees who were
rated received evaluations of fully successful or better. I’m not cer-
tain what the data tell us when only 0.4 percent are rated less

fed)


150

5.
APPRAISALS. THE LAW HAS ALWAYS ALLOWED A "PASS-FAIL" APPROACH,
ALTHOUGH OUR REGULATIONS DID NOT. EVEN THOUGH WE WANT TO LEAVE IT
UP TO EACH AGENCY TO DECIDE WHETHER TO TRY A "PASS-FAIL" SYSTEM,
SOME AGENCIES SEE CERTAIN POTENTIAL ADVANTAGES TO THIS APPRAISAL
METHOD. FIRST, IT REMOVES THE SPOTLIGHT FROM THE RATING ITSELF SO
THAT THE EMPLOYEE AND HIS OR HER SUPERVISOR CAN ENGAGE IN AN HONEST
DISCUSSION OF THE EMPLOYEE'S STRENGTHS AND AREAS THAT NEED
IMPROVEMENT . "PASS-FAIL" APPRAISALS CAN REDUCE INDIVIDUAL
COMPETITION AND ENCOURAGE COOPERATION AND TEAMWORK, WHICH ARE
NEEDED IN MOST ORGANIZATIONS IN THE 1990'S. ALSO, "PASS-FAIL" 1S
AN OBVIOUS WAY TO COMBAT RATING INFLATION. IT IS IMPORTANT TO KEEP
IN MIND THAT MANAGEMENT WOULD STILL BE ABLE TO MAKE OTHER PERFOR~-
MANCE DISTINCTIONS AMONG EMPLOYEES WHO "PASS" FOR OTHER PURPOSES,
SUCH AS GRANTING AWARDS AND SELECTING FOR PROMOTION. AND WE ARE
ALSO AWARE THAT SOME AGENCIES THAT WERE ONCE INTERESTED IN "PASS-
FAIL" APPRAISALS HAVE DECIDED NOT TO USE THEM. THE POINT IS SIMPLY
THAT AGENCIES USUALLY ARE IN THE BEST POSITION TO KNOW WHAT KIND OF
APPRAISAL SYSTEM MOST EFFECTIVELY PROMOTES GOOD PERFORMANCE BY

THEIR WORKFORCE.

WE BELIEVE THAT OUR EFFORTS TO PROVIDE AGENCIES WITH A PERFORMANCE
MANAGEMENT STRUCTURE THAT ENHANCES AND ENCOURAGES GOOD PERFORMANCE
WILL REDUCE POOR PERFORMANCE IN THE WORKPLACE. I WANT TO EMPHASIZE
THAT, DURING THE DEVELOPMENT OF OUR REGULATIONS, AGENCIES ARGUED
REPEATEDLY THAT REGULATIONS ON PERFORMANCE MANAGEMENT SHOULD NOT BE

AIMED AT THE TINY PERCENTAGE OF EMPLOYEES WHO ARE NOT PERFORMING,


42

traditional merit matrix program with leaning contracts. Each employee contracts with their
supervisor regarding the specific skills and abilities they will be responsible for adding to their
personal repertoire; the performance contract time frames will vary, based on the time needed to
develop the repertoire. from six months to twenty-four months; the pay adjustment upon

completion also varies based on the significance of the added capabilities.

Use Non-Cash Recognition Rewards. There is additional leverage to be gained by using noncash
awards instead of, or in addition to, cash to improve an organization's performance and
competitiveness. These nontraditional awards are being used in every sector of North American
industry -- manufacturing, health care, service, distribution -- to reward employees for
performance improvement of productivity, quality, education, cost reduction, and long-time
accident reduction. Cash awards, in the amounts that organizations can afford to pay, often do
not have the leverage of noncash awards of equal cost. The average payment value for
operational performance plans in a recent study conducted for the Consortium for Altemative
Rewards is $660 per employee per year, or 2.5% of the base pay. If you break down $660 into
monthly payments and take out taxes, the net award is about $40 a month. That may not be
terribly motivating. However, 40 dollars worth of points accumulated over a period of time and
used to purchase a camcorder or VCR will be remembered and appreciated by the individual and
the family for a long time. Noncash awards have what is called trophy value -- every time the
employee sits in that lounge chair or plays with that set of golf clubs, the employee is reminded
that it was eamed for a personal achievement in improving performance. That memory can last
for years, reinforcing the employee's belief that he or she can continue to improve performance.

9


161

FY85.94 AWARDS DATA-GOVERNMENTWIDE BY TYPE OF AWARD

Type ot Spending Sondgas Numberot Average AvgAmtas | Rate100 Rateli0
avard jal__ Awards Amount % Avg Sal Eligible Ees Govt Ees
356 «$1165 160%. 5800
2308 $5584 76% 3800
83585 $1204 23% 5 4a
aoe 62824 210192
162030 $473 1.7% 94 89
2s $282 10% 272 12
Totsal= ‘a a va na na
ssa0159
(lors) __TOTAL-All Awards $5942
Fva7 ‘SES Rank Awards $38 001% 325 $11785 162% 09
SES Performance Awards «S118 «002% ©2008. $5804 1%, 01
14858 © PMRS Performance Awés «$827 018% © -76928 «$1075 21% 38
EIS data —«PMS(GS+WG) Perf Awds, «$2052 «038% «350088 $585 23%, 172
‘Special AclOther Awards 3680 012% an778Sa7G 1.7%, 70
Suggestion Awards S79 001% «= 41.888 $215 BK 24
Tot Sal Gainshares va wa va va oa
3546165
(riions) TOTAL ~All Awards $3784 613909 e183 va 202
Fva6 ‘SES Rank Awards) $22 17 812486 18.4% 29° —(00
SES Performance Avards $120 2080 $5758 SK. 345 Ot
1465 & PRS Performance Ads na ‘a va va wa va
EIS dala GM+GS+WG Pert Awds $250.0 378555 $660 25% 168 186
: ‘Awards $630 117,063 $538 20% 5958
Suggestion Awards 388 S22 08% 243022
Ganshares a a va Na Na a
TOTAL-Al Awards $3360 54263 $619 23% 27
‘SES Rank Awards $16 127 $1250 185% 24 00
‘SES Performance Avards «$115 2038 $5645 8a 33000 t
1465 & PMRS Performance Ads ‘Na a ia a a
ElS data GM+GS+WG Perf Awds $1760 265969 «$655 25% 135 132
Special AcUOther Awards $578 tose $539 21% 52 53
Suggestion Awards 380 48800 $2860 1.1% 2924
TotSal= Gainshares a ‘va la via a a
3523741
(rilions)__TOTAL-AN Awards $2549 049% 427275 S557 _—«23% na 210
Please note: FY94 data are taken straight from CPDF and Executive Information System (EIS) reports
Please consider the FY94 ttals tobe preliinary, draft figures for now.
Figures fox FY5-FY93 are principally derived from manual reports submited by agencies on OPM Form 1465.
USOPMPMIAD 2 107385


73

ployee of the month or employee of the year, there is no such thing
as a non-cash reward. It may be noncash to the person who re-
ceives it. It was certainly cash to the organization that gives it, be-
cause they have to buy it or they have to spend manpower and
time in working the program. So every award, in some fashion, has
an articulable cost.

Companies in the private sector manage the reward system from
a cost analysis. How much does it cost to put the reward in, and
what are the benefits that are going to be gotten out of it?

Now, in terms of giving gifts, as I like to call them, rather than
a cash bonus, for some hourly employee positions, it works very
well. My experience, in talking to human resources managers at
my company that use that sort of approach, find that hourly em-
ployees tend to like the stereo, the television, et cetera, rather than
a $50 or a $60 or $100 check, in some areas.

When it comes to management, my experience has been that
managers prefer cash to anything else, even above intangibles such
as det ferred stock or stock options, which may go up or down. In
today’s world, they like the green stuff.

Mrs. MorRELLA. I think you put it pretty clearly. You’ve all kind
of alluded to the fact that managers also need training. You need
to train and educate managers.

I just want to ask one final question of you. There’s a strong link-
age between classification systems and performance management,
and I wonder, how must this classification system in government
change? To what degree must it change to achieve performance
management reform? If any of you would like to comment on that.

Mr. CIPOLLA. I would be happy to comment on that. If I under-
stood your question, how much has it changed? Not nearly enough.
How much does it need to change? An awful lot, the classification
system.

Its relationship to performance management, I think, is one that
we don’t think about frequently enough. Our performance manage-
ment and our performance evaluation system in Government is po-
sition-based. We tend to think of employee responsibilities in terms
of what’s in that position description, what we can put our arms
around or circumscribe at any point in time.

That simply isn’t the modern world. It isn’t the modern world of
work, where employees’ contributions have to be viewed as part of
what a team does, what a larger organization, what a larger group
does. So the implications for a classification system that is based
on a position, I think, are obvious.

We need to really move to a broader concept of managing work
and, thereby, managing performance, as well. But we would strong-
ly favor, as I think you know, approaches like broad-banding in or-
ganizations where they would work. In some they would work, and
in others they wouldn’t. There are a number of studies now that
indicate the criteria or the factors that have to be considered before
employing that kind of a system.

Mrs. MORELLA. Anyone else like to comment on that?

Ms. O’NEIL. I ‘would definitely agree. It has been our finding in
the private sector that the traditional classification point factor job-
based systems just seem to promote a continuation of some of the
bureaucracies and the focus on the job, not the individual.


82

agers are accountable for accomplishing them, they need to under-
stand what that accountability is and act on it.

Now, to the extent that that can be imbued in training courses
that deal with these other aspects, that’s fine, but it’s a tremendous
challenge. The only way, really, as Dr. Shields says, is to expose
managers to the whole process and get them involved as muc!
possible, up front, in establishing those outcomes and expectations
so that they can then understand what’s being expected of them
and what’s being expected of the people that comprise their team.

Mr. WHEELER. I think when we talk about training, Madame
Congresswoman, we shouldn’t focus on, even on the personnel side,
what would truly be functional or operational training. That’s, how
do you fill out the form? How do you do the written warning? Et
cetera, in the technical sense.

When we speak of training, we have to focus on the methodology,
the “Why do you do it?” What the result of doing it, what the result
of not doing it is, what’s going to happen 6 months down the road
if you have another problem with this employee.

This t: of training, I think, needs to be at all levels, from
entry-level manager on up. You cannot start with a mid-level man-
ager or a senior manager and unlearn 10 years or 15 years of
knowledge that they’ve gained by discussing things with other peo-
ple who have never been trained, either.

I do a fair amount of training, both within my company and,
also, in the private arena through SMU. My experience has been
that, when you get a group of junior managers, zero to maybe 4 or
5 years, and you go through one of these methodology training pro-
grams on how you use the disciplinary Process or how you use the
performance process to achieve your goals and what the results are
if you don’t, invariably, a third or more of the comments that will
come back on the evaluation forms for the training seminar, “My
manager should be required to attend this course.” Or, and in
many cases, “My human resource manager should be required to
attend this course.”

They tell us all the things that are wrong. Those comments are
not uncommon, which tells me that we do a lot of training, per-
haps, in personnel matters, but we don’t do the right type of train-
ing. You need to develop managers from the beginning.

To get to your question of whether you can develop managers,
yes, you can. There are some people, obviously, who are innately
that way, but the majority of people need to be developed.

Ms. O’NEIL. If I could make one brief comment, in the training
focus, you also need to focus on training every single employee—
not just the managers, but the employees—on how to establish per-
formance standards, because people focus on the responsibilities,
but they don’t focus on establishing the standards for what is good
performance, what is outstanding performance, and that’s some-
thing that can also be trained.

Mrs. MorELLA. Thank you. I want to thank you all, and I want
to thank you, Mr. Chairman.

Mr. Bass. Thank you very much, Mrs. Morella.

Mr. Moran wanted to ask questions of the panel here today. Un-
fortunately, he had another commitment, another testimony to
.give, and, without objection, we will submit these questions to the


CIVIL SERVICE REFORM If: PERFORMANCE AND
ACCOUNTABILITY

HEARING

BEFORE THE
SUBCOMMITTEE ON
CIVIL SERVICE

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

OCTOBER 26, 1995

Printed for the use of the Committee on Government Reform and Oversight

te

U.S. GOVERNMENT PRINTING OFFICE
97-393 CC WASHINGTON : 1997

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-054181-6
a



108

is being considered for removal or demotion for unacceptable per-
formance?” This should be taken into consideration.

There should be a mechanism established in law allowing the
agencies or EEOC to summarily dismiss frivolous complaints. If the
employee chooses to pursue his or her case, there should be equi-
table remedies, but the employee must not be placed back in the
position from which he or she was removed for unsatisfactory per-
formance.

Under the Whistleblower Protection Act, the Office of Special
Counsel has the authority to intervene at the MSPB and get a stay
of an action taken against employees. Similar authority should be
given by law to the EEOC where EEO allegations are alleged, and
this would prevent any abuse of the system. Employees should not
be deprived of their right to raise affirmative defense in conduct
cases, because they are totally different.

We thank you for your consideration of our testimony and our
proposal. I’m sorry I took so long.

(NoTe.—Due to high printing costs, the Senior Executives Asso-
fiation “Poor Performers” survey can be found in subcommittee
iles.

[The prepared statement of Mr. Shaw follows:]


182

1. The Administration’s draft civil service reform bill would allow agencies to appoint
individuals to nonpermanent positions for up to five years. What if any
performance problem would this type of hiring system address?

Expanded authority to hire nonpermanent federal workers is designed to give agencies more
hiring flexibility to meet fluctuating workload needs in a more efficient and cost-effective
manner. Under current hiring authorities, nonpermanent employees can be and are removed
more easily. Thus, if the federal workforce of the future was composed of proportionately more
nonpermanent employees, the proposed changes in appointment authorities would, as a by-
product, help to alleviate the poor performer "problem". However, using this rationale to
support expansion of nonpermanent hiring authorities seems inappropriate. First, the traditional
way performance is measured is inadequate; a more effective employee performance
management system should be linked with organizational performance measures. Secondly,
changes in appointment authorities should be accompanied by changes in the availability of
employee benefits to maintain and improve the quality of new hires and to allow federal hiring
to be competitive in the job market. Finally, procedures for removing nonpermanent employees
may need to be changed if nonpermanent employees become more representative of the
bargaining unit segment of the workforce.

2. The Administration’s draft civil service reform bill would permit extending
probationary periods for up to three years. What if any performance problem
would this address? Do you have any specific recommendations about an
appropriate length of a probationary period?

Extending probationary periods beyond the current one-year limit would apply to permanent new
hires only. Greater flexibility in setting probationary periods would give agencies more
opportunity to identify performance issues before making a “career” commitment with the
additional security and protections that provides. Agencies could decide how long a timeframe
is needed to assess the new hire’s capability to perform the full range of tasks required in the
position. For instance, most professional-level occupations (those identified in the current
position classification system as two-grade interval) have a three-year developmental cycle from
trainee to full performance level. A probationary period of up to three years would allow the
agency to assess the new hire’s performance in the position over the entire developmental
period. Even when some positions (e.g. scientific occupations) are filled at the full performance
level, they include duties which require a cycle of more than one year to complete and assess
the performance of the new hire, If regulations regarding removal during probation remain
unchanged, allowing expanded probationary periods should provide for improved performance
evaluation and removal as needed, thus reducing poor performer "problems". ‘The appropriate
length of probationary periods should be determined on an agency by agency basis to meet its
organizational performance needs.


131

4. Supervisors are afraid to take action against a poor performer
because they believe that higher management will not support them,
their decisions will be reversed on appeal, or they will be accused

of acting in a discriminatory manner.

The reasons for not taking action against an employee clearly
indicate that supervisors are not receiving adequate guidance on
these issues. Except for the belief that the removal procedures
are too onerous, none of the reasons cited for failing to take
action against a poor performer would change if the procedures were
revised. Nevertheless, NTEU is ready and willing to discuss
changes to the removal procedures in order to change public
perception and move on to more pressing issues facing the

government.

Under current law, there are two statutory procedures that are
used to terminate a federal employee. Under Chapter 75, agencies
must establish by a preponderance of the evidence that the
termination of a federal employee promotes the efficiency of the
service and all relevant factors were considered prior to
terminating the employee. Under these procedures, prior to
termination, an employee is entitled to 30 day advance notice as to
the reasons why they are being terminated, has an opportunity to
respond orally or in writing to the person making the charges, and
has a right to a final agency determination in writing listing the
reasons for the termination decision. Thereafter, an employee may

appeal the decision to a neutral third party.


eo)

159

Please provide statistics on bonuses, incentive awards, Special Act/Achievement
Awards, and performance-based base pay adjustments disbursed over the past ten years,

‘The attached tables provide data for:

+ lump-sum awards (bonuses, incentive awards, Special Act/ Achievement
Awards), and

+ quality step increases, which are adjustments to base pay that may be granted
only to employees with “Outstanding” performance ratings.

Technically, all periodic step (within-grade) increases are “performance-based” in that
the employee must have at least a “Fully Successful” performance rating to be granted
the increase. However, these more routine increases are not considered among the
general category of performance-based rewards such as quality step increases and other
Tump-sum awards.




191

10. Question: Do you find private sector organizations more effective in managing poor
performers?

Response: No. We have found that many of the same forces are at work in both sectors, such as
labor-management policies (although labor unions in the private sector have the power to strike,
they represent a very small percentage of private sector workers holding jobs similar to those in
the federal government), government laws and regulations (imposed on itself and on private
onganizations), and higher priorities of managers (“get on with the real job” of the organizational
unit).

After all other remedies are tried, one approach available in the private sector is abolition of a job
for lack of work (also called “lack of coverage”). The termination of employment of a targeted
job holder can be accomplished gracefully with appropriate severance benefits and letters of
recommendation. The only requirement is that the organization not re-create essentially the same
job for which the targeted employee would have been eligible. There are some positions in the
public sector where lack of work can be used, for example, organizations which require fees for
services (also called “industrial funded”), e.g., Patent and Trademark Office, National Technical

11. Question: What factors contribute most to this difference?
Response: Not applicable.

12. Question: In your opinion, have these laws (Chief Financial Officers Act and the
Government Performance and Result Act) achieved effective links between effort and results?

Response: It is much too early to make such a determination. These laws go beyond formally

prescribing activities and mandating processes (as most laws do) to informally expecting
organizational change and cultural transformation. These changes are at the heart of an
organization and its culture and thus take a significant amount of time to accomplish.

13. Question: What other steps should Congress take to link the performance of federal
employees more closely to agencies’ missions?

Response: Pay for performance and competencies is the logical next step in a competency-based
human resource management system, after job competency assessments and outcome-based
performance measurement systems.


109

G. JERRY SHAW
GENERAL COUNSEL,
TO THE SENIOR EXECUTIVES ASSOCIATION

Thank you Mr. Chairman and Members of the Subcommittee for
giving us the opportunity to testify on this important subject.
As you know, the Senior Executives Association is a professional,
non-profit association which represents the interests of career
members of the Senior Executive Service, Senior Level and Senior
Technical employees and career executives in other equivalent

positions.

One of the enduring images of the Works Project
Administration (WPA) which provided jobs for a huge number of
American citizens during the Depression in the 1930's is the
“lazy" group of workers leaning against their shovels watching
one other worker actually perform on the job. We all know that
in most instances this was a false image, and many of the great
federal buildings still in use in the Washington, D.c. area are
products of the efforts of the workers who toiled on the WPA
projects.

‘The image of the lazy bureaucrat who sits at a desk all day
and shuffles papers from one side to the other, comes to work
late, leavi ly, takes long lunch hours, and abuses his/her

sick leave, is the often identified image of federal employees

today. The WPA stereotype was a false image of workers then and

the lazy bureaucrat is a false image of federal employees today.


30

result in litigation. Recognizing this dilemma, my company
instituted an Income Extension Program, one provision of which
Provided for limited severance (one week per year of service) to
be paid to management employees who voluntarily agree to leave
the company rather than undergo the rigors of improving their
substandard performance. Only employees who do not have active
disciplinary actions are eligible for the limited severance
benefit. Initial concerns that the program would cause managers
to “take the easy way out” when dealing with substandard
performers have not been supported by the results. The program
is used only in limited circumstances and only when pressing
business considerations preclude the use of the company's normal

corrective action policies.


89

The remaining appeals filed with the Board, and which are not taken under
Chapter 43 or Chapter 75 procedures, primarily involve whistleblower cases,
disputes over retirement benefits, reduction-in-force actions, and termination of
probationers.

In FY 1994, final action was taken by the Board on 224 appeals of Chapter 43
performance-based actions. Many of the appeals were settled or dismissed for a
variety of reasons. Of the 46 appeals that were adjudicated on the merits, the
Board affirmed the agency's action 63 percent of the time (29 of 46 cases).

By comparison, in FY 1994, final action was taken by the Board on 3,519 appeals
of personnel actions taken under Chapter 75 procedures. Again, many of these
were settled or dismissed. Of the 780 appeals that were adjudicated on the merits,
the Board affirmed the agency's action 70 percent of the time (544 of 780 cases).

Iam submitting for the record a 10 year statistical history of the Board's appeals
workload and the adjudication record for Chapter 43 and 75 actions. You will
find that although fiscal year 1994 was a year of peak workload in terms of
appeals received and decided, the final disposition of those appeals was fairly
typical in comparison to previous years.

Appellants contesting a proposed personnel action may raise as an "affirmative
defense” an allegation that the action constitutes a prohibited personnel practice
(under 5 U.S.C. § 2302(b)(2))—such as political coercion, granting of an
unauthorized preference, and nepotism as well as whistleblowing and
discrimination. In addition, appellants may raise other defenses challenging the
legal or factual basis of an action in conjunction with an affirmative defense.


199

me Honorable John L. Mica

Novenber 17, 1995
Page 4

purposes, but be required to utilize their own leave.
Subsequently, if they prevail or if there is a settlement which is
favorable to the employee, the leave-taking could be converted to
official t:

In addition in BEO cases, if the agency Director of EEO feels
that, even though the employee did not achieve a settlement or a
favorable decision but the complaint had substantial justification,
the Director could be allowed the authority to change the annual
leave taken to official time on a case by case basis.

There are also some instances where collective bargaining
agreements allow official time in the presentation of unfair labor
practices, etc. before the FLRA. We would propose that the same
standard be applied in those matters as in the EEO and collective
bargaining process cited above.

We do not, in general, favor filing fees. A fee large enough
to act as a deterrent might prove to be a bar to justifiabl
complaints from lower-graded employees. However, we woul:
consideration of a fee if an employee filed in excess
complaint or grievance in any one calendar year.
prevent the multiplicity of complaints being filed by Pp rtcequent
filers," because a price would have to be paid for excessive
filings. For this purpose, we would suggest a $100 filing fee
which could be utilized to offset the cost of processing the second
and subsequent complaints in any calendar year.

7 How do the MSPB’s 120-day processing targets prevent agencies
from providing managers with adequate assistance, including
legal assistance before the action is taken?

And isn’t that really when such assistance is most valuable?

‘The MSPB’s 120-day processing targets do not prevent agencies
from providing managers with adequate assistance, including legal
assistance before the action is taken. The 120-day limitation has
only served to put pressure on administrative judges to force
settlements because they lack the resources to handle all the
appeals they receive. For an administrative judge to handle all

appeals he or she receives in 120 days would be an
faposstbiiity. It is a fact that, while employee appeals have
increased or at least remained the same, the number of
administrative judges and other resources of the MSPB have declined
over the last few years. We strongly believe that the MSPB should
be granted sufficient resources by Congress and the Administration
to handle all appeals and, thus, not be required to force
settlements in order to meet their time requirements.



84

The performance management system should be as straightforward
and uncomplicated as possible, while still protecting the public’s in-
terest in ensuring that Federal employees are not subjected to arbi-
trary actions unrelated to the efficiency of the service.

The system must be timely, especially starting from the point
when the need to take formal action is first identified to the point
when a final, binding decision is issued, if the action is contested.
There is a growing consensus, as you know, that it is time to reex-
amine the Government’s response to Federal employees who cannot
or will not adequately carry out their responsibilities.

In fiscal year 1994, a total of 8,775 appeals were received by the
Board. Of these, only 204, or 2 percent, were appeals of perform-
ance-based removals or reductions in grade taken under chapter 43
procedures.

In fiscal year 1994, final action was taken by the Board on 224
appeals of chapter 43 performance-based actions. Of the 46 appeals
that were adjudicated on the merits, the Board affirmed the agen-
cy’s actions 63 percent of the time.

By contrast, 3,768, or 43 percent, of the appeals filed with the
Board in fiscal year 1994 involved adverse actions, such as remov-
als or reductions in grade, because of misconduct, as well as actions
for inadequate performance, taken under chapter 75 procedures.

In fiscal year 1994, final action was taken by the Board on 3,519
appeals of personnel actions taken under chapter 75 procedures. Of
the 780 appeals that were adjudicated on the merits, the Board af-
firmed the agency’s actions 70 percent of the time. I am submitting
for the record a 10-year statistical history of the Board’s appeals
workload and adjudication record.

Appellants contesting a proposed personnel action may also raise
as an affirmative defense, an allegation that the action constitutes
a prohibited personnel practice, such as reprisals for whistle-
blowing or discrimination. While we do not track all such defenses,
we do know that in fiscal year 1994, of the 224 chapter 43 appeals
decided by the Board, 109 involved an affirmative defense of dis-
crimination.

Separate from the adjudicatory function and as another part of
the Board’s statutory responsibility, my office has conducted a
number of studies over the years focused on performance manage-
ment issues. In September 1995, the MSPB released an issue paper
titled “Removing Poor Performers in the Federal Service.” This
paper draws from the results of a recent survey of some 5,700 man-
agers and supervisors.

Among the findings, very few Federal managers bother to use
performance-based removal actions, in part because they simply do
not understand either the chapter 43 or chapter 75 provisions for
taking such actions. Supervisors report that they frequently receive
inadequate or confusing advice and assistance fiom th
cy experts.

Many supervisors and managers believe, incorrectly, that only
chapter 43 procedures can be used to address a poor performance
problem, and they perceive those procedures to be too complicated,
time-consuming, or onerous.

Many supervisors also believe that if they take formal action
against a poor performer, there is a real possibility that higher-

eir own agen-


12

Over the past decade, businesses have implemented numerous
technical and functional programs, such as empowerment, TQM,
and a host of others. It has been my experience that despite the
virtues of these programs—and they are many—none significantly
impacts the issues of individual accountability in a meaningful

way.

Individual accountability is the keystone for an organization’s
successful accomplishment of its own goals and objectives. While
the operation results may be improved through the use of team or
group efforts, the maximization of individual performance in a per-
sonal nature is the key to successful business operations.

Optimization of employee performance requires a personnel sys-
tem that accomplishes four goals. First, it has to hire high quality
employees. Second, it has to provide not only technical, but the ad-
ministrative training that is necessary to make sure that you have
optimization of that work. Third, you need to insure a reliable per-
formance assessment system. And, finally, there has to be in place
a method to correct and remove employees whose conduct or per-
formance is substandard.

The hiring of competent, personally accountable employees can
only be achieved through a multifaceted recruiting process that fo-
cuses on both the applicant’s technical capabilities, as well as his
or her abilities to function within the organization’s environment.
Through screening for both requirements, this can be accomplished.

Unfortunately, many organizations, when hiring at the low- and
mid-level manager situation, emphasize technical capabilities while
minimizing the investigation of the applicant’s capacity to function
within the organization’s work environment. This can result in the
hiring of unsuited employees who later burden the organization.

Similarly, many organizations focus their training programs al-
most exclusively on operational issues. While technical training is
essential, it is equally important to develop a management work
force which holds employees accountable for their performance. To
accomplish this goal, training must focus, in addition, on the meth-
odology of handling personnel issues, especially evaluations and
disciplinary actions.

Because managers lack the appropriate training, they often view
performance and conduct problems as individual matters. They fail
to appreciate the relationship between managerial decisions in one
situation and those in another, or between the decisions made
today regarding one employee and those which may be taken at
some future time to the same employee.

The performance assessment provides probably the best example
of the lack of individual accountability in today’s business organiza-
tions. This is a process which is intended to identify talented em-
ployees, develop potential, and document performers who fail to
perform.

In many cases, today’s performance assessment process simply
doesn’t do that. This failure stems from inadequate training of
managers, managers’ desire to avoid confrontation with their sub-
ordinates, a limited opportunity to provide rewards for superior
performers, and poorly designed evaluation criteria.

Finally, the development of effective procedures to correct or dis-
cipline employees whose performance or conduct is substandard is


54

‘© Identification and budgetary justification of training and development needs;
© Assessment of employees to identify managerial development needs;

© Assessment of employees to assist in ranking them for higher-graded
supervisor, managerial, and leadership jobs (i.e., for promotions), and

© Streamlined feedback and coaching of individual employees to enhance
performance.

Individual competency models have been developed for several career programs or areas
including: Acquisition Program Management, Logistics, Contracting and Manufacturing;
Financial Management; Communications and Computers; Scientists and Engineers; and
Civilian Personnel. All of the models were developed based upon extensive data collected
from Air Force personnel in the target areas. This user involvement has led to employee
acceptance of the approach. Management procedures or products based upon the models
currently being used by the Air Force include:

© Personnel assessment forms and procedures designed to minimize scoring
inflation;

Training and development guides for targeting limited resources towards the
most need and benefit;

¢ Communication seminars and videos so that employees and supervisors
understand and accept the program; and

© Development of software system integrating all elements into a paper-less
environment.
These products and procedures have been in place for several years and have been used to
assess thousands of employees for use in ranking for promotions and to identify training
and development needs across several different career areas,


171

9. How many removal actions taken under Part 432 procedures are due to an employee's
abandonment of his or ber position?

Since abandonment is a voluntary action, neither Part 432 nor Part 752 procedures are used when
an agency takes action for abandonment. Therefore, this chart reflects separate data, not included
in the previous charts.

NOTE: The number of actions taken for AWOL or other leave-related misconduct is included in
the previous charts, under Part 752 (misconduct) actions.

Removals for Abandonment of Position

FY Number
94 692
93 641
92 813
91 926
90 1,542
89 1,652
88 1,664
87 1,607
86 1,274
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185

9. Do you have reason to believe that comparable reforms could be adapted into the
American civil service? (NOTE: This refers to experiments to improve
accountability such as putting managers under contract that appear to have worked
in Australia and New Zealand.)

The concept of entering into term-type contracts with senior managers in the American civil
service is not only feasible, it is consistent with " ‘rethinking the concept of career and tenure-
‘based employment’ " as addressed in #4, above. Senior managers can be held accountable for
their performance and that of their organizations through mechanisms such as the current
performance agreements between the President and his Cabinet level agency heads which are
driven by expected outcomes in the agency's performance as measured by the action plans
required by the Government Performance and Results Act(GPRA). To insure accountability,
senior managers must be allowed considerable delegation of authority to manage their programs
and adequate resources to accomplish the agreed upon objectives; the tools for measuring
performance must be adequate and consistent; and both Congress and the President must support
the process.

10. Does the political context here-especially the situation where different political
parties control the Congress and the executive--restrict the types of managerial
reforms that could be adopted?

The tools for offsetting political considerations, including the situation where different political
parties control the Congress and the Executive Branch, to implement reforms such as the use
of term contracts with senior managers discussed in #9, above, are already in place. Congress,
in legislating GPRA, recognized the need for both performance accountability among
government agencies and broader civil service reform. It also recognized that converting to a
system that measures outcomes and results requires timeframes that go beyond the political ones
of elected public officials. Through the National Performance, Review, the Administration has
also called attention to the need for significant reform and greater accountability. Therefore,
there is already a basis in principle for bi-partisan action which builds on these common goals
and objectives.


170

8) Please provide statistical data of the past ten years on cases of retirement in lieu of
removal or demotion.

‘What percentage was due to misconduct?

What percentage was due to performance?

Retirements In Lieu of Involuntary Separation

FY Retirements
94 3,459
93 2,030
92 887
91 729
90 565
89 461
88 664
87 863
86 633
85 658

Our data files do not distinguish performance or misconduct from all other reasons for
retirement in lieu of involuntary separation.

We believe the significant increase in these actions during the last two fiscal years reflects the
large number of reduction in force actions occurring in the Federal government,


15

So they can bring the dollar in, but they may cost the company
money because they don’t practice good management techniques.
They abuse their employees; they discriminate; they do a variety
of things which don’t impact the making of money, but cause the
company, ultimately, to lose money. There is a whole litany—and
I could go on indefinitely, and I won’t—on those types of problems.

So I think that, in the private sector, there is the same type of
concern and same type of problem of how to manage employees
outside the narrow profitability line, if you will. We face those chal-
lenges every day.

I think, in most big companies, you have a bureaucracy of sorts.
You have staffs that are extremely large. How do you measure the
performance of staff personnel? I’m sure you all run into those
problems annually when you review your staffs. So does private in-
dustry. I see those problems coming across my desk daily with peo-
ple who simply haven’t performed well, but have been rated well
because they’re in a staff position.

How do we address those issues? It’s very, very difficult. I think
the first way you address those is by training the managers who
have to do the evaluations, and this has to come down from senior
management. Senior management, in many organizations, does not.
put the training emphasis on what I call the administrative side
of performance. They put it on the technical side.

Managers who have oversight responsibility have to be trained in
the methodology of discipline, in the methodology of evaluating, so
they understand the interrelationship between what they do with
employee X or Y and what that may cost the company. Not how
much the company will make, but what it will cost the company
if they fail to take the appropriate action later on.

That’s the way I think you solve that problem. I’ve seen it work.
In those suborganizations within our company where senior man-
agers have stressed the administrative or methodology training, I
have seen an improvement in the performance of the managers, as
well as the overall performance of the organization. It’s a slow
process.

Ms. SHIELDS. Could I comment on that, as well? As far as the
methodology, I believe, that’s being used, both in the private sector,
as well as the public sector, and organizations are finding, as Mr.
Wheeler was commenting, that it’s not just what an individual
achieves, but how they go about doing that particular work.

You can define that and make it explicit about what the expecta-
tions are with regard to how people actually help to create capacity
within their organizations, so that it deals with the behaviors that
individuals demonstrate as they’re going about doing their work on
a day-to-day basis.

You can make and put into, as organizations are doing, models
and make it very explicit what the expectations for performance
are, not only with regard to the technical aspects of the job, but
how people go about doing the work.

Mr. Bass. Any other comments? You don’t have to comment.

Mr. C1poua. I would like to extend Dr. Shields’ comment a bit,
if I might. The question arises, how do we establish those expecta-
tions? What’s the format, or what’s the approach?


36

I would like to encourage the Subcommittee members to examine the following principles of
effective private sector performance management as you consider changes to the government's

system:

‘What Gets Measured Gets Done. If something is important to a company, or public agency --
innovation, safety, customer service, community involvement, environmental protection,
leadership -- it should be measured. For example, companies that say that they value
collaboration but do not measure and reward it will convince no one. Unfortunately, many

unimportant things also get measured and hence get done!

American Express and USAA consistently assess customer satisfaction. USAA has developed a
“family of measures" (customer satisfaction, quality, development of people) used to guide
performance reviews, which are updated monthly. Quality-driven companies like Xerox have
‘numerous quality-based measures. Leaming organizations that do not measure (and reward)

leaming are hard-pressed to sustain the belief that learning counts.

‘DuPont has retooled their compensation structure for senior scientists to reflect competencies and
development. Effective performance measurement provides employees a window into values,
beliefs, and behavior. Values, such as customer service, typically show up as performance

measures that are goal-defined.

Both the small printing firm and the global pharmaceutical company must make numerous
3


181

RESPONSES TO FOLLOW-ON QUESTIONS FROM THE
STATEMENT OF FRANK P. CIPOLLA
DIRECTOR
CENTER FOR HUMAN RESOURCES MANAGEMENT
NATIONAL ACADEMY OF PUBLIC ADMINISTRATION

(Cctober 26, 1995)

FOR THE
SUBCOMMITTEE ON CIVIL SERVICE

OF THE

U.S. HOUSE OF REPRESENTATIVES

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

DECEMBER 4, 1995


48

changes, as you are aware, underscore the need for a review of matters related to civil
service reform.

I would like to offer three observations:
First, there are practices and principles in the private sector that can be used
effectively by the public sector.

Second, there are significant differences in leadership and management
requirements in the public and private sector, and there are methodologies
available that can help to make explicit the competencies required for effective
leadership and management.

© Third, the role and competencies of personne! managers in the public sector
must be carefully re-examined with a view toward change.

Private Sector Observations

To respond to the changing world of work, organizations are learning to adapt their
human resource management systems to specific unit goals and priorities. Human
resource management programs, policies, and procedures no longer can be designed and
promulgated based on the assumption that they can be centrally designed and locally
applied with equal effectiveness. Personnel management must be viewed as a process that
focuses on individual organizational goals, aligned with the desired work culture, and
measured based on operating results.

We have found that the success of human resource management is contingent upon the
proper alignment of the following factors:

© Organization mission
© Work culture
¢ Human resource systems

If any one of the factors is poorly defined or misaligned with the other factors, then the
organization will not achieve superior performance. Each of these factors can be defined
in the following way:


117

no basis in fact or in law. Many of these settlements involve
substantial cash payments to the complainants and the payments of
attorney's fees. SEA believes that it is the agency's
responsibility (including the heads of the agencies who often
encourage these practices) to not utilize hard earned taxpayer
dollars to “pay off" employees whose complaints have no basis in
fact or law. The tragic part about this is that over 55% of
those responding to the SEA survey state that there are
legitimate complaints by employees in their agency which are not
filed because of the plethora of frivolous complaints that are
clogging up the system. We leave it to you, Mr. Chairman, and
your staff to read the written comments that we received from the
frustrated and discouraged career SES employees who responded to

the survey.

A reasonable person might ask, "Can there be a solution to

this myriad of problems?" Well, SEA has one to suggest.

We propose that current law be changed to prevent an
employee from raising “affirmative defenses" before the agency or
the MSPB in performance cases under 5 U.S.C., Section 4303. The
current requirements for a Performance Improvement Period (which
should be limited to a maximum of 30 days) prior to action and
retaining the substantial evidence standard would remain. The _
only issue when the employee does his/her oral or written reply
prior to the agency decision, and on appeal to the MSPB, should


53

Job competency models can be developed to describe job requirements. These models are
comprised of several individual competencies, which include knowledge, skills, attitudes,
values, and motives. These characteristics exist at various levels in a person, with the
inner levels (values and motives) representing characteristics that are more enduring, and
often have a wider range of effect on the individual’s behavior. Further, the more complex
the job, the more important job competencies are relative to technical or task mastery.

Different types of competencies are associated with different aspects of human behavior
and with the ability to demonstrate such behavior. For example, an “influence”
competency would be associated with specific actions, such as having an impact on others,
convincing them to perform certain activities, inspiring them to work toward
organizational objectives. A “planning” competency, on the other hand, would be
associated with specific actions such as setting goals, assessing risks, and developing a
sequence of actions to reach a goal. These two types of competencies involve different
aspects of human behavior on the job.

The importance of competencies is often overlooked in favor of specialized job-related
knowledge. This is partly because skill and knowledge have a more observable effect on
an individual’s performance, However, many scientists believe that although knowledge is
important, it is essential to focus on the competencies that allow employees to use the
facts and concepts contained in the knowledge. IfI asked you to describe the best people
that ever worked for you, you would probably describe how they accomplished their
work, not their technical knowledge.

We have been working with the Air Force to develop and use managerial competency
models as part of the civilian career management system. The models identify and
document the critical characteristics that are found in the most highly successful
individuals occupying civilian positions within the Air Force environment. These
competency models are used for the:


The Honorable John L. Mica
Chairman

November 17, 1995

Page 9

Managers should also be trained in the granting of spot
avards, bonuses, additional leave time off, flexi-place, flexi-
time, employee indebtedness, EEO requirements, and how to identity
and eliminate sexual harassment and other discrimination, and, as
part of their annual CPE requirements, should be given a’ briefing
on all new laws and regulations affecting government employees and

managers enacted in the last year (such as results measurement).
They could also be trained in how to supervise employees vorking at
hoas, the use of telecomsunications centers, hov to establish and
monitor performance requirements, and so forth.

In our view, there is no lack of subjects in which managers
need to be trained. The lack is in the amount of training that
they actually receive and in the failure to have that training
upgraded annually so they can have new learning experiences such as
being briefed on “best management" techniques.

Thank you for the opportunity to provide our views to the
Subcommittee. If we can be of further assistance or if you would
like any clarification of our answers, please do not hesitate to
call us.

Sincerely,

Cone 0. Sereeore

Carol A. Bonosaro .
President “ ni lounsel


138

Mr. Toptas, None. The law says 30 days. So I don’t think there
are any situations under which termination should occur sooner
than 30 days. That’s what the law requires.

Mr. Mica. What if we change the law?

Mr. Tostas. Are you suggesting, can we live with something less
than 30 days?

Mr. Mica. Yes, and under what circumstances can somebody be
terminated?

Mr. SHAW. Can I clarify for a moment? Are we talking about per-
formance cases?

Mr. Mica. Well, performance, other instances.

Mr. SttAw. Conduct, also?

Mr. Mica. Conduct, yes.

Mr. Tosias. Well, as one of the many participants in the Na-
tional Performance Review, NTEU agreed to shorten the notice pe-
riod to 15 days. And we could live with 15 days, but I don’t think,
Mr. Mica, that the delay that’s often attributed to processing dis-
charge actions is associated with the 30-day period. The delay
comes at the end, not at the beginning.

The delay comes once a decision is made, and, in my testimony,
I’m suggesting that we eliminate the protections that are currently
in law under chapter 43 and chapter 75 and, instead, allow the
parties to bargain whatever protections they would bargain, exactly
as in the private sector, and that an arbitrator would make a deci-
sion, and that would be the end of it. There would be no appeal
to a court; there would be no appeal to FLRA.

That would significantly shorten the time period under discus-
sion. And I suggest further that agencies create procedures for
those who are not represented by unions and for their managers
and that there be a similar process, so that we wouldn’t have the
delays that are associated with the MSPB. I think that would have
a significant impact on shortening the time period around these is-
sues.

Mr. SHAW. I would like to go back to the first part of your ques-
tion on shortening the 30-day notice period. I don’t have a problem
with that on chapter 43 cases, on performance cases, if they have
been given a performance improvement period. I mean, to walk
into somebody’s office and say, “You’re not performing. You're fired.
Get out of here in a week,” I don’t think meets the normal stand-
ards of justice, if it’s based on performance.

On the conduct cases, employees typically need 30 days to be
able to defend themselves, because they don’t even know what the
charges are until they're given that letter saying, “We propose to
remove you from the Federal Government in no fewer than 30 days
from the date of this letter.”

And it takes every bit of that—having represented many employ-
ees in conduct cases—to be able to prepare a response to the agen-
cy so that you get basic due process, because this is your notice.
That notice letter is the first time they know for sure what they’re
being charged with. So I would not favor that.

What was your point? I’m sorry. I’ve got to start writing the
danged stuff down.

Mr. Mica. Ms. Swift, did you want to respond?


49

Organization mission is crucial to define why the organization exists in the first place. What
is the purpose of the organization? To what end are people showing up for work every day?
High-performing organizations have a clearly-defined mission, providing the work force with
a results-oriented focus for their daily work. In addition, leading organizations have a well-
articulated vision that defines where the organization is headed, laying out a road map in terms
of performance expectations for the future that can be followed by its employees. The mission
and vision of the organization drives the work culture.

Work culture defines how people within the organization are to interact with each other,
interface with their customers, and make individual decisions in their work. Work culture
is created by the leadership within the organization, and is demonstrated by organizational
values and individual behaviors. For instance, through our research, we have identified
four basic work cultures models that are exhibited by most organizations today. Complex
organi
organizations to structure themselves differently to do the work; and value and reward

ions are formed of intersecting work cultures. These work cultures require

different skills and competencies in their people. These work culture models are:

Functional Model. This is the most common model, and the most prevalent
within the Federal Government. Work in these organizations is designed around
the technical specialization of individuals and is directed through management
hierarchies. Performance is measured through reliability and quality, and rewards
are based on technical proficiencies and internal equity.

Process Model. This model is driven by customer satisfaction and continuous
improvement and is prevalent in the manufacturing industry. Work in these
organizations is designed around customer-focused processes, with planning,
execution, and control integrated as close to the customer as possible.
Performance is measured through customer satisfaction and process
benchmarking, and rewards are based on competencies valued by customers and

often incorporate measures of team results.


78

group happy. You can’t make it so large that nobody does. So mak-
ing it on terms of an entire agency, I think, would be very difficult
to work with.

Ms. SHIELDS. I think the team approach is very, very difficult to
manage. There are many, many, many different types of teams.
But what we’re finding is that many successful organizations, who
are successfully managing people, that are going for goals that are
organizationwide, are being more suecessfur as organizations than
those who are going for single, individual performance against
their own particular goals.

But the complexity of leading and managing teams and setting
bonuses is great. There are many, many books. It’s probably the
management topic that’s most being written about today: of exact):
how to get the power of individuals working toward a common goal.

But certainly, that has to be one of the major objectives within
the Federal Government. Whenever a particular agency does not
control a particular outcome, and there’s an interaction across
many agencies, the consideration of how to get that particular
power, I think, is very worthwhile in considering.

Mr. Bass. Thank you, Mr. Chairman.

Mr. Mica. Thank you, Mr. Bass. I haven’t asked my questions,
and I would like to get a couple of minutes in at this point. One
of the things that I get as chairman is letters from all over the
country. Some of them have some excellent suggestions.

I want to share with the panelists, witnesses, and the audience,
this letter from a Federal civil servant in Vermont. It’s dated Octo-
ber 17. I won’t identify the individual, but let me read just one of
his statements here. He has a number of things that are very inter-
esting.

He said, “Compared to private sector workers, Federal employees
are safer than Texas armadillos in an M—1 tank.” Did you hear
that? “Compared to private sector workers, Federal employees are
safer than a Texas armadillo in an M-1 tank.”

If I could ask Mr. Cipolla to comment. You also tweaked my in-
terest with your comments relating to the problems with the mul-
tiple appellate process, but how do you respond to something like

is?

Mr. CIPOLLA. Well, the multiple appellate process and the per-
ceptions of it are what contribute to that image, to a large extent,
of safety and protection. The problem is that the growing number
of people who agree that that process needs to be streamlined,
needs to be made more expeditious, have not found the solution

yet.

I know that the 30-plus agencies that we’re working with are so
concerned about it that they’ve asked us to help facilitate a solu-
tion, or a proposal, at least, to that end. But they continue to report
their views that a large part of the constraint, or restraint, on the
part of managers to take the kinds of actions that ought to be
taken with poor performers is the view that they’re going to lose
on appeal.

Now, in many cases, that’s just an escape mechanism. In other
cases, it is a reality in the minds of people. But I can’t let the point
go without saying that, notwithstanding all the training, managers
also need to develop the skills to deal with poor performers.


88

‘The entire system should be as straight-forward and uncomplicated as possible
while still protecting the public's interest in ensuring that Federal employees are
not subjected to arbitrary actions unrelated to the efficiency of the service.

The system must be timely, especially starting from the point when the need to
take formal action is first identified to the point when a final, binding decision is

issued if the action is contested.

Without losing sight of this larger perspective, however, there is a growing

consensus that it is time to re-examine the Government response to Federal employees

who cannot or will not adequately carry out their assigned responsibilities. Within this

context, the following is a summary of the statistical information you requested

regarding the Board's adjudicatory process:

In fiscal year 1994, a total of 8,775 appeals were received by the Board. Of
these, only 204 or about 2 percent were appeals of performance-based removals
or reductions in grade taken under what is referred to as Chapter 43 procedures~
that is, actions taken under an agency appraisal system that has been approved by
the Office of Personnel Management (OPM).

By contrast, 3,768 or about 43 percent of the appeals filed with the Board in FY
1994 involved adverse actions such as removals or reductions in grade taken
under Chapter 75 procedures to promote the efficiency of the service. Chapter 75
actions can be based on misconduct--offenses such as excessive absence without
leave, disruptive behavior on the job, substance abuse, sexual harassment--as well

as inadequate performance.


43

This continual reinforcement pays far greater dividends than a cash bonus that may be barely

remembered a year later, or a "merit" increase that may be considered an entitlement.

Organizations are moving from the dysfunctional aspects to ones that fit their business strategies.
Performance management arose in the first place to fill a need: people want to be guided and
encouraged to develop particular skills and to direct their performance toward critical

organizational outcomes. That need still exists.

Conclusion
Employers that use performance management to meet their employees’ needs in innovative ways
will find themselves consistently providing high quality products and service. This truth applies

to both private and public sector employers.

Since the federal government has no competitors, government employers have not traditionally
faced the keen challenges that have changed the culture in many private sector companies.
However, as America moves toward a balanced budget, I believe that the need to do more with
less, the imperative of motivating employees, and a strict sense of accountability will face the
government as never before. I believe, as my parents believe, that implementing key principles
of performance management will assist public employers to meet the challenges ahead and to

continue to provide quality customer service for all American citizens.


129

servants. I am disturbed that the focus of this debate is on the
“poor employee performer." This focus is far too narrow. Often
times poor performers are simply good performers that have not been

properly trained.

There seems to be a public perception that the “poor
performer" problem rests with the inability of managers to
terminate employees. This is simply not true. Invariably there
will be an occasional poor performer in the federal government. We
believe that the burden rests with the manager to properly counsel
and train that employee and if that is unsuccessful, there are
adequate procedures to terminate that employee. This is not

happening.

According to a survey recently conducted by The Merit System
Protection Board, with over 5,700 managers and supervisors
responding, 78% of government supervisors said they had supervised
an employee for poor performance; yet, only 23% of these
supervisors proposed removing or demoting these employees. (U.S.
Merit Systems Protection Board, Issue Paper: Removing Poor
Performers in the Federal Service, September, 1995.) In other
words, 77% of supervisors who worked with poor performers, in the
federal government, took no personnel action against that poor
performing employee despite the fact that the supervisor believed
that the employee was not performing in a satisfactory manner.

Therefore, the majority of alleged “poor performers" remain in the

federal government not because the system favors employees; but


113

information at the Internal Revenue Service, for actions
which were taken as much as five years after the
“whistleblowing" by the perpetrator. The OSC has sought to
fire, debar from federal employment and fine federal
managers and executives based on supervisory actions taken
years after the alleged whistleblowing, whether the
"whistleblowing" allegations had any merit or not. We are
not blaming the oSc, because clearly the law as it now

stands allows them to take such actions.

They write a letter to their Member of Congress and allege
all kinds of nefarious activities on the part of the
supervisor and the installation where they work, alleging
the misuse of funds, equipment and everything else they can
think of.

If they are a union member or an official in the union, they
file an unfair labor practice charge with the Federal Labor
Relations Authority, alleging that the manager is taking

these actions against him/her because of his/her affiliation

with the union.

This is a partial list. Other actions can be taken which are

only limited by the imagination of the employee. These steps are

often taken by employees before the manager has taken any action

against them. Often the manager has merely expressed displeasure


122

under state or federal law. Similar, but better, MSPB options
would remain available to federal employees in performance cases,
but could not so readily be used to intimidate managers into

ignoring unacceptable performance.
We thank you for your consideration of our testimony and our

Proposal. We would be pleased to answer any questions you might

have.

14


127

1 Mr. Bass. Thank you very much. The Chair now recognizes Mr.
oblas.

Mr. Tostas. Thank you very much, Mr. Chairman. Thank you for
allowing NTEU to testify on this most important subject.

I start with the proposition that civilian employees of the U.S.
Government are hard-working, loyal, and competent public serv-
ants. However, they've been demeaned, degraded, and devalued by
politicians who fail to look at the facts and seek to advance their
own political agenda.

As a result, it’s not surprising there is a public perception that
we have a poor performer problem in the Federal Government,
which rests, it is alleged, on the inability and unwillingness of
managers to terminate poor performers.

It’s not the inability, Mr. Chairman. The process is easier and
the burden of proof less than most situations in the private sector.
It’s the failure to engage the perceived poor performer and provide
support, assistance, and training, and it’s the failure to make a de-
cision, not the inability to make a decision to discharge.

A recent MSPB survey that Ms. Swift referred to reveals that 77
percent of the supervisors who work with a perceived poor per-
former took no personnel action against the employee, but that’s
not the fault of the system. The MSPB indicates that only 20 per-
cent of discharges are challenged. Thus, 80 percent of all removals
are unchallenged. Of those who challenge, only 17 percent of the
poor performer cases are reversed.

Therefore, of 100 discharged Federal employees, 3.4 are reversed,
an incredibly small number. This statistic provides little basis for
the management complaint that poor performers can’t be dis-
charged. When a decision is made, it sticks.

The MSPB survey revealed the reasons, why decisions to dis-
charge are not made, are founded on the lack of understanding in
how to use the current system. Managers lack the basic training
to use the system. This is not an indictment of the system, itself,
but rather an indictment of those who use the system.

Now, we do, however, recognize that this ingrained perception
has to be dealt with, even if it’s wrong. Our proposal is to do it ex-
actly as they do it in the private sector. Allow the parties to fashion
their own procedure through the collective bargaining process,
where a union exists, and allow the agencies to fashion it inde-
pendently, where a union doesn’t exist. We would be willing to give
up the statutory protections in chapter 43 and 75 and challenge the
managers to create a process that we can both live with, that we
can both accept, that we can both understand.

We would also be willing to give up the FLRA and EEOC and
court appeals after an arbitrator’s decision. In short, once the arbi-
trator decided, that would be it. There wouldn’t be any further ap-
peals. We wouldn’t be talking about 18 months to decide cases. We
believe creating our own process and making it work faster will re-
move any perceived problem and any basis for legitimate com-
plaint.

Thank you very much, Mr. Chairman.

(The prepared statement of Mr. Tobias follows:]


151

-6-
BUT SHOULD BE DESIGNED TO ENABLE AGENCIES TO PROMOTE BETTER

PERFORMANCE THROUGHOUT THE WORKFORCE.

WE RECOGNIZE, HOWEVER, THAT EVEN THE BEST SYSTEM AND THE BEST
EFFORTS OF OUR BEST SUPERVISORS WILL NEVER PREVENT ALL INSTANCES OF
POOR PERFORMANCE. FOR THIS REASON, ALL EFFECTIVE APPRAISAL SYSTEMS
MUST HAVE A USABLE MECHANISM FOR RESOLVING PERFORMANCE DEFICIEN-

CIES.

TO LOOK AT WHETHER WE ARE SUCCESSFUL IN DEALING WITH POOR PERFORM-
ERS, WE MUST BEGIN WITH A LOOK AT THE CIVIL SERVICE REFORM ACT OF
1978. THAT LAW CREATED A SEPARATE PROCESS (UNDER CHAPTER 43 OF
TITLE 5) TO DEAL WITH EMPLOYEES WHO DON'T PERFORM ACCEPTABLY.
ALTHOUGH THIS NEW PROCESS WAS INTENDED TO MAKE IT EASIER TO REMOVE

POOR PERFORMERS, MANAGERS PERCEIVE IT AS CUMBERSOME AND CONFUSING.

FEDERAL MANAGERS CURRENTLY HAVE TWO METHODS OF REMOVING POOR
PERFORMERS: ONE IS ESTABLISHED UNDER CHAPTER 43 AND THE OTHER IS
AUTHORIZED BY CHAPTER 75 OF TITLE 5 OF THE UNITED STATES CODE.
BOTH CHAPTER 43 AND CHAPTER 75 REQUIRE DUE PROCESS IN THE FORM OF
A PROPOSAL WHICH STATES THE REASON FOR ACTION AGAINST THE EMPLOYEE,
THE EMPLOYEE'S RIGHT TO RESPOND, AND A FINAL WRITTEN DECISION.
CHAPTER 75 REQUIRES AGENCIES TO PROVE, BY A PREPONDERANCE OF THE
EVIDENCE, THAT THE PROPOSED ACTION WILL PROMOTE THE EFFICIENCY OF
THE SERVICE. CHAPTER 43 HAS A LOWER BURDEN OF PROOF (SUBSTANTIAL
EVIDENCE), BUT REQUIRES THE AGENCY TO PROVIDE AN OPPORTUNITY TO


155

-10-
CHAPTER 43 OF TITLE 5, AND ELIMINATING APPEAL RIGHTS FOR DENIAL OF
A WITHIN-GRADE PAY INCREASE. WE BELIEVE THESE CHANGES WILL ENHANCE
MANAGERS' ABILITY TO RESOLVE PERFORMANCE PROBLEMS WHILE RETAINING
EMPLOYEES' DUE PROCESS RIGHTS. CONSOLIDATING ALL ACTIONS UNDER
CHAPTER 75 SHOULD REDUCE SUPERVISORS' CONFUSION AND TAKE AWAY SOME,
OF THE PERCEPTION THAT PERFORMANCE PROBLEMS ARE TOO TOUGH TO

HANDLE.

EVEN IF THESE SYSTEM CHANGES RELATED TO AGENCY ACTIONS ARE ENACTED,
OTHER SYSTEM FACTORS REMAIN THAT AFFECT AN AGENCY'S ABILITY TO
ADDRESS POOR PERFORMANCE. PERHAPS MOST SIGNIFICANT OF THESE
FACTORS IS THAT OF DUE PROCESS AND THE MULTIPLE FORUMS AVAILABLE
FOR A THIRD-PARTY REVIEW OF AN AGENCY'S ACTION. THE APPEALS
PROCESS PRESENTS A DAUNTING LEGAL PICTURE TO A SUPERVISOR WHO IS
FACED WITH ADDRESSING POOR PERFORMANCE BY A SUBORDINATE. A RELATED
ISSUE IS THAT OF EXPANDED EMPLOYEE COVERAGE. SINCE THE DUE PROCESS
AMENDMENTS OF 1990, MORE EMPLOYEES HAVE ACCESS TO THESE MANY APPEAL
FORUMS THAN IN PREVIOUS YEARS. WE ARE PLEASED THAT THE SUBCOMMIT-

TEE PLANS TO REVIEW THE APPEALS PROCEDURES FOR FEDERAL EMPLOYEES.

OPM IS COMMITTED TO ASSISTING AGENCIES WITH THEIR EFFORTS TO
ACHIEVE A HIGH PERFORMING WORKFORCE, WHICH INCLUDES DEALING WITH
THOSE EMPLOYEES WHO ARE UNABLE TO PERFORM EFFICIENTLY AND EFFEC-
TIVELY. AT THIS TIME, OPM'S OFFICE OF MERIT SYSTEMS OVERSIGHT AND
EFFECTIVENESS IS DEVELOPING AN AGENDA FOR ITS STAFF THAT WILL

EXAMINE PERFORMANCE MANAGEMENT SYSTEMS.


CONTENTS

Hearing held on October 26, 1995 ....
Statement of:
Swift, Evangeline W., Director, Policy and Evaluation, U.S. Merit Sys-
tems Protection Board; G. Jerry Shaw, general counsel, Senior Execu-

tives Association; Robert M. Tobias, national president, the National
Treasury Employees Union

83
Wheeler, Courtney Bryan, assistant general counsel, Marriott Inter-
national; Sandra O'Neil, SPHR, Societ ty for Human Resource Manage-
ment; Dr. Joyce L. Shields, president, Hay Group; Frank Cipolla, direc-
tor, Genter for Human Resource Management, National Academy of
Public Administration .. u
Letters, statements, etc., submitted for the record by:
Cipolla, Frank, director, Center for Human Resource Management, Na-
tional Academy of Public Administration, prepared statement of 61
Mica, John L., a Representative in Congress from the State of Florida,
prepared statement of ... 4
Morella, Hon. Constance A., a Representative in Congress from the State
of Matyland, pre mae statement of ... 8
O'Neil, Sandra, SPHR, Society for Human Resource Management, pre-
pared statement of 34
Shaw, G. Jerry, general counsel, Senior Executives Association prepared
statement of 109
Shields, Dr. Jo: 7 47
Swift, Evangeline W., Director, Policy and Evaluation, U.S. Meri
tems Protection Board, prepared statement of .. 86
Tobias, Robert M., national president, the Nation:
Union, prepared statement of .. 128

Wheeler, Courtney Bryan, assistant gener:

national, prepared statement of .. 14

(aD


145

clear that they are frivolous. Some are; some aren’t. And so, to
have this hearing focus on such a small piece of the action misses
the doughnut. We're looking at the hole, not at the doughnut, here.

Mrs. More.a. I agree. I agree, and I don’t think the hearing
has, frankly, focused on this. I think that the survey is a very in-
teresting survey, and I think we’ve been talking throughout about
what we do need for performance management.

And this goes to Ms. Swift. How do you create a performance
management system that is, in quoting you, “straightforward and
uncomplicated as possible, while ensuring that Federal employees
are not subjected to arbitrary actions unrelated to the efficiency of
the service”? I think this is what we’re getting at, in many ways
which deal with training of managers, deal with the kind of sup-
port network they have and what they compare.

Ms. Swift, would you like to comment?

Ms. Swirt. Yes. Well, I think a performance management system
should be simple. It should be something that we understand.
Agencies should not add to the system. That was what happened,
for example, in the chapter 43 cases. It was supposed to be a sim-
ple system. It was supposed to help managers remove employees.

You had a very low standard of evidence, in comparison to the
preponderance of the evidence standard. It was supposed to be
timely. You were supposed to give the employee an opportunity to
improve. -

And yet, what happened is, you have agencies that created this
plethora of rules and regulations around performance removals,
and you had all kinds of documentation required. You had perform-
ance improvement plans required, when that was not what the
statute said. It says, “an opportunity to improve.” That is not nec-
essarily a performance improvement plan.

As you know, that was the language used only in PMRS, which
is sunsetted. But agencies, once they create a system, never change
it. So now you have this enormous system out here, dealing with
poor performers, that looks larger than the chapter 75 procedures
which were supposedly more complicated in the first place.

Mr. Mica. I don’t want to cut anyone short, and I would like ev-
eryone to have an opportunity to respond, but we have less than
5 minutes to vote. I will conclude the hearing at this time. I also
invite additional comments for the record from our panelists, and
will be submitting some questions to you and would like your re-
sponse, which will all become part of the official record.

There being no further business, I declare this meeting ad-
journed. Thank you.

[Whereupon, at 12 p.m., the hearing was adjourned.]

(Additional information for the hearing record follows:]


106

sit Bass. Thank you very much. The Chair recognizes Mr.
aw.

Mr. SHAw. Thank you, Mr. Chairman and members of the sub-
committee for the opportunity to testify here before you.

The image of the lazy bureaucrat is often the public image of
Federal workers today. It is a false image. However, we all know
there are poorly performing employees, but none of us know how
many. An October 1990 GAO report on performance management
estimated that 5.7 percent of Federal employees were poor perform-
ers, While the number is not that high, the number is not insignifi-
cant.

Many have speculated about why managers do not take action
against these employees. The September 1995 MSPB issue paper
recommends that the chapter 43 appeals process be done away
with and the multilevel of reviews that Federal employees can uti-
lize in challenging performance actions be reduced.

John Sturdivant, national president of AFGE, a week or so ago
before this subcommittee, alleged that the problem is that man-
agers need to stop “whining” about how hard it is to get rid of poor
performers. He stated that the problem is “timid or incompetent
managers who either will not or cannot rout them out.”

The real reason, however, is not because of the system, and it is
not because they are poor managers. It is because to take an action
against a poorly performing employee is to invite a plethora of at-
tacks by the employee on the manager.

Just a few of these include filing an EEO complaint; making
anonymous allegations about the manager on the IG hotline; filing
an agency grievance or a grievance under the collective bargaining
agreement; alleging to the Office of Special Counsel that the man-
ager’s actions are really being taken against them because they are
a whistleblower; writing letters to their Members of Congress and
alleging all kinds of nefarious activities; and filing an unfair labor
practice charge with the Federal Labor Relations Authority, if they
are affiliated with the union.

This is only a partial list. Other actions can be taken and allega-
tions made which are only limited by the imagination of the em-
ployee. If the manager prevails against all these actions, it could
be years later.

Then, the manager will have to defend the action all over again
at the Merit Systems Protection Board, because each and every one
of hese allegations can be raised as affirmative defenses before the

If the employee prevails on any one of the myriad of challenges,
they will be put back in their jobs, given back pay and attorney’s
fees, and, in some instances, paid substantial monetary damages.
This is true even if the manager has proven that the employee has
performed at the unsatisfactory level and should be removed for
poor performance.

The aftermath is a thoroughly demoralized manager, a demor-
alized office staff, and the establishment of an attitude within the
agency that taking performance-based actions is just not worth it.
Is it any wonder that 26 percent of the 5,700 managers, or nearly
1,500, surveyed by MSPB believe that they would not be supported
by higher management?


66

proposal did not adequately resolve the poor performer problem, the real problems being (1) the
administrative process for dealing with poor performers is too litigious, complex, and time-
consuming and (2) the processes and structures the federal government has set up go too far in

the effort to provide due process.

The appeals structure with its multiple jurisdictions is an issue that Congress has already
identified and expects further review and reports on possible consolidation and streamlining.
For your information, the consortium of agencies I described earlier has asked NAPA to
undertake a review of the multiple jurisdiction issue on their behalf with the objective of
facilitating a recommended solution. The results of our review can be made available should

you wish to see them.

Earlier research associated with President Carter’s Civil Service Reform revealed that
another aspect of the "serious performer” issue was the failure of too many managers to address
the problem early enough or skillfully enough, We are told that although the appeal process was
even then blamed for much of the failure to address the problem, detailed analyses at that time
showed a far more serious difficulty of equipping and motivating supervisors to carry out their
responsibility to deal effectively with poor or marginal employees. Since our studies have not
focused on this dimension of poor performers, we are not in a position to advise the Committee

‘on the extent to which this situation still exists.


52

‘More constraints and more organizational review Frequent presentations to multiple levels within
of presentations. organization.

Our research has also shown that there are unique competencies that are associated with
different organizations. Hay has developed and employed a methodology to identify and
tailor the competencies that are most appropriate to a specific organization’s mission and
work culture. This grew out of David McClelland’s research at Harvard many years ago.

Job competencies are the critical characteristics that cause or predict outstanding job
performance in an organization. The concept of job competencies arose out of a
methodology called Job Competency Assessment which is formulated around three basic

assumptions:

« Inevery job, some people perform more effectively than others. These people
also approach their jobs differently from the average worker.

© These differences in approach relate directly to specific characteristics or
competencies of the superior performers that are often absent in the fully
successful performers.

© The best way to discover the characteristics that relate to effective
performance in an organization is to study its top performers.

Often our “gut feelings” tell us when someone is a high performer in a job, but we can not
tell exactly why it is so; the qualities that lead to high performance levels are often difficult
to identify. However, traditional job analysis approaches focus entirely on the tasks
performed in a job, rather than on top performers. An error in this approach is that it will
usually lead to a definition of what is required for average or even minimum performance.
Job competency assessment takes a more direct approach by focusing on the superior
rather than the average performers, and identifying what they do when they are in critical
job situations, We have provided you a copy of Competency Assessment Methods,
History and State of the Art, by Lyle M. Spencer, Jr., Ph.D., David C. McClelland, Ph.D.,
and Signe M. Spencer, which provides an easy to read overview of competencies.


173

| agree that the vast majority of our government's employees
do their jobs well. They do them well despite the fact that annual
Pay raises are repeatedly scaled back. They do them well despite
the fact we are in the midst of major restructuring and downsizing.
They will continue to do them well despite the Majority's plan to
raise the cost of federal pensions in order to pay for tax cuts for
the rich. Federal workers are being "slammed." Their character,
pay, and benefits are all under attack. | don't believe they
deserve the poor treatment they are receiving. As | see it, federal
workers deserve our gratitude and respect.


101

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26

that the number of employees who would challenge adverse
personnel actions would increase. It is by no means certain how
the majority of companies would decide that question. The number
©f non-union companies which have adopted some form of
arbitration of employee claims is relatively small. While at
least some of the companies who have adopted the arbitral
approach to dispute resolution are pleased with the results,
there is insufficient reliable data available to determine
whether such an approach is feasible on a large scale.

The creation of what can best be called the “human resource
bureaucracy” also impacts managers’ ability to effectively manage
personnel problems. The implementation of well-reasoned
personnel policies is essential to the proper functioning of any
business. Personnel policies provide a necessary framework for
managers and non-management employees to articulate issues,
address problems, and resolve disputes within an organization.
However, as in administrative environment, the implementation of
personnel policies can become so bureaucratic that the system
ceases to function in accordance with its fundamental tenant,
namely that personnel policies are designed to support business!
primary goal - profitable operation. When this occurs, personnel
decisions cease to be substantive decisions, and instead become
matters of form. It is not uncommon to hear operational managers
complain that they are prevented from taking a necessary
personnel action because “human resources" disapproves of the

proposed personnel action due to technical “violations” of the

13


22

subordinates or mandate such training when it is available. The
“right sizing" of corporate America has created significant time
pressures for mid and lower level management. Increased
operational responsibilities and work loads have reduced the time
available for training. As a result, managers tend to utilize
the limited training time available for operational development.
Additionally, as time constraints increase, managers tend to pass
off administrative matters, such as personnel issues, to other
staff personnel. This results in human resource personnel being
given with the responsibility of handling personnel issues that
are best addressed by on-site management. Human resource
personnel, while valuable adjuncts to managers in addressing
performance or conduct issues, cannot replace the operational
manager who is in the best position to properly evaluate the
needs of the business in relationship to the resolution of
employee performance and conduct issues. Financial constraints
adversely impact training availability. Increasing emphasis on
reducing overhead costs results in the curtailment of
administrative programs that are viewed as non-revenue enhancing.
Personnel training programs that do not directly result in
increased profitability are frequently reduced or eliminated.
Managers often fail to recognize that monies expended for
personnel training significantly reduce the direct and indirect
financial costs associated with inadequately or improperly

addressed personnel problems.


APPENDIX C
SPECIAL PANEL DECISION

105

During Fiscal Year 1987 the Special Panel
issued one decision:

‘Shoemaker v. Department of the Amy
(eptember 2, 1987)

Handicap Discrimination - Accommodation

Inaunanimous decision. the SpecialPanel
adopted the Board’s decision in this case,
which involved a Chapter 43 performance-
bosed removal.

The appellant had been a Federal em-
ployee for approximately 24 years when he
advised the agency that he intended to
apply for disability retirement because of an
‘ocular disability (double vision). Following this,
notification, the appellant receivednotice of
Proposed removal for failure to meet two
critical elements of his position. The
‘appeliant’s most recent performance rating
had been "marginally satisfactory.”

The appellant's removal was effected by
the agency on May 25, 1983. and on May 31.
1983 the appellant was notified by OPM that
his disability retirement application was
gfonted. Thereatter. the appellont filed an
‘appec! ot his removal with MSPB, contending
that his removal was the result of handicap
‘and age discrimination, and that the agency
had committed harmful procedural error by
failing to hold the removal action in abey-
ance while his disability retirement applica-
fion was pending with OPM.

The appeliant’sremovalunder Chapter 43,
was sustained by the administrative judge,
who found that the agency was under no
obligation to hold the removal action in
abeyance pending OPM's decision on his
disability retirement application. The admin-
istrative judge also found that the agency
was not required to reassign the appeliant as
‘an accommodation to his handicap: how-
ever, this wos prior to the Special Panel deci-
sionin Ignacio v. USPS, which requires Federal
‘agencies to consider reassignment as a rea
sonable accommodation for physically
handicapped employees.

On review. the EEOC found that the
agency's unexplained failure to hold the
Temoval action in abeyance was the result of
handicap discrimination. (No age discrimi-

nation was found.) When the case wos re-
ferred to the Board, it disagreed, holding that
EEOC’s decision had been based solely onits
teading of an internal Department of the
‘Army regulation which was inapplicable to
Chapter 43 cases and which, additionally.
had been superceded by a regulation which
contained no provision requiring that re-
‘moval actions be held in abeyance pending
© determination on a disability retirement
‘application. Atthough the Boardagreed with
EEOC that under the SpecialPanel's decision
in Ignacio, the agency had to consider reas
signment, it found that the evidence indi-
cated no positions existed to which the op-
Pellant could be reassigned.

The case wasreterred to the Special Pane!
for resolution. In its decision, the Panel
agreed with the Board that the EEOC’s deci-
sion was based on its interpretation of the
‘agency's regulation and, therefore. on civil
service law. ttfurther found that the agency's
regulation did not require that the removal
‘ction be held in abeyance. Thus, the Panel
deterred to the Board's determination and
no handicap discrimination was found.

Intheir separate concurring opinion. EOC
Chairman Thomas and Board Member Deva-
ney stated that when OPM granted the
‘appeliant’s application for disability retire-
ment one week after hisremoval. the agency
had the discretion to amend its records to
show that he was on sick leave until the
ettective dote of his retirernent, and that his
separation was by retirement. They noted
that the agency's failure to do so resulted in
an expenditure of time and money “com-
pletely out of proportion to the legal merits of
the case.”

40


162

FY85-94 QUALITY STEP INCREASES--GOVERNMENTWIDE

FY94
FY93
FY92
FY91
FY9O
FY89
FY88
FY87
FY86
FY8S

USOPM:PMIAD-

Estimated
4" Year Cost
(mitions)

$35.4
$33.0
$28.1
$24.1
$21.3
$18.7
$15.4
$17.7
$16.8
$17.4

Number
Granted

63,160
62,158
57,786
56,158
48,565
44,322
40,619
45,918
46,440
48,220

Average
1* Year Cost

$560
$530
$486
$430
$438
$422
$379
$386
$362
$361

Rate/100
Employees

43
46
37
3.5
33
29
27
3.9
4.0
3.9

10/23/95


165

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169

7) Please provide statistical data of the past ten years on cases of resignations in lieu of
removal or demotion.

What percentage was due to misconduct?

‘What percentage was due to performance?

Resignations In Lieu of Removal/Demotion

FY Resignations % Performance % Misconduct
94 520 17 83
93 526 20 80
92 517 13 87
91 546 16 84
90 614 15 85
89 761 1S 85
88 656 16 84
87 657 19 81
86 729 21 79
85 804 25 75

We are aware, through our routine contacts with agencies, that there is a common practice of
not documenting a resignation personnel action to show that the action was in lieu of
involuntary action. This can’result from a formal or informal settlement agreement.
Therefore, we do not believe these numbers accurately reflect the number of instances in
which an employee resigns rather than face the consequences of unacceptable performance or
misconduct.



34

SANDRA O’NEIL, SPHR
VICE PRESIDENT H R ASSOCIATES

Mr. Chairman and Members of the Subcommittee:
My name is Sandra O’Neil, and I am the vice president of HR Associates located in Miami,
Florida. I am here today on behalf of the Society for Human Resource Management (SHRM).
SHRM is the leading voice of the human resource profession, representing the interests of more
than 67,000 professional and student members from around the world. SHRM provides its
membership with education and information services, conferences and seminars, government and
media representation, and publications that equip human resource professionals for their roles as
leaders and decision makers within their organizations. The Society is a founding member and
Secretariat of the World Federation of Personnel Management Associations (WFPMA) which
links human resource associations in 55 nations. We commend the Subcommittee for holding
this hearing to examine the important issue of performance management in the federal

government.

As the daughter of retired career federal employees (my mother was a civil servant for 23 years;
my step-father for 30 years), I learned the value of hard work. However, frequently, the topic of
discussion at the dinner table was their frustration due to a perceived lack of focus on achieving a
high level of performance within their agency. My mom, who is a particularly hard worker,
would often times be depressed after her annual review, either because she was highly rated (but
saw nothing come of it) or for some inexplicable reason she had not received her usual glowing
evaluation. In preparing for this testimony, I called and asked them "Did you ever see a link

between your daily work and the agency's goals?” Unfortunately, the answer was negative.


115

The Administration's 1993 National Performance Review
concluded in its report that the existing processes for assessing
performance, rewarding good performance, and taking action to
address poor performance are not serving the needs of the
federal government or its employees. The report recommends
that the one size fits all approach to performance management be
dropped and that agencies be allowed to design performance
management systems tailored to their own needs. It also
recommends that the system for dealing with poor performers be
improved. On the surface, both of these proposals appear to
have merit. | look forward to hearing the views of today's
witnesses concerning them.


115

higher management if they took action against an employee? This
is not to place blame on higher levels of management. They know
that they will have to deal with, devote resources to, and, in
some instances, adjudicate allegations against the supervisor
that resulted from taking the performance action. Before they
support the supervisor, they must weigh and balance what is in
the interest of their agency, and whether the cost in staff and
dollars that will have to be expended in defending the supervisor
is worth the benefit that will be received, i.e., the removal of

one employee.

In an informal survey of its career executive members
conducted by the Senior Executives Association (attached to this
testimony), 95% of the respondents said they have employees with
performance problems in their agency who are "frequent filers,"
that is, they file grievances, IG allegations, whistleblower
complaints, EEO complaints and other complaints on a regular
basis. 92% of the respondents said that some to all of the
complaints are frivolous. 91% verified that the complaint
systems are abused in order to intimidate a supervisor or agency
management from taking an action against a poor performer. They
stated that this is a "common occurrence". 33% of the
respondents said that their agency does not deal effectively with
poorly performing employees, and 56% said that the agency only
"sometimes" does. In addition, 90% of the executives said that

their agencies are inclined to settle complaints even when they


194

Answer 4: Yes, I believe that managers do need greater discretion
in managing their employees. Managers’ hands have been tied for
too long because they have had to follow government-wide rules
which are often inapplicable to their own agency. Employees have
also had their hands tied for too long and have often followed
rules when they have known them to be counterproductive. We do not
believe that it makes sense to provide managers with carte blanche
decision making authority. Employees on the front line are in the
best position to offer constructive suggestions to increase the
efficiency of their agency. Managerial discretion must be
accompanied by employee discretion. Employee participation can be
achieved through collective bargaining and in the context of
partnership arrangements.

Question 5: In addition to change areas identified in your
testimony, agencies are implementing work force restructuring
plans, and Congress is enacting legislation that will make agencies
smaller. Would you recommend any changes in regulations or laws
governing Reductions in Force (RIF).

Answer 5: I believe that RIFs often result in the wrong person
doing the wrong job. When an agency uses RIF procedures to
downsize, managers often displace employees with decades of
experience. The agency loses the employee with experience and ends
up paying more money for less experience. NTEU firmly believes
that early outs and other retirement incentives should be offered
to implement downsizing changes. This ensures that people leave
voluntarily and allows the agency to fill open slots with qualified
and appropriately paid personnel. In addition, we believe that
managers and supervisors should not be allowed to "bump down" to
non-supervisory jobs. This does not occur in the private sector
and should not occur in the federal sector.

Answer 6: Have the Partnership Councils contributed effectively to
the development and implementation of work force reduction
strategies at any agencies? Could you cite some examples?

Answer 6: At this time, NTEU has not been involved in any
downsizing initiatives. We expect next year, as a result of the
1996 appropriations bills, that we will be involved in many
initiatives. We plan to use the partnership councils in these
agencies to ensure that agency and employee needs are best met.

Question 7: Several witnesses have testified that the critical need
for many government organizations is increased flexibility --
including discarding the idea that individuals will have one career
track through their working lives. This would include greater
reliance on contractors for support services and for work that is
temporary , short-term, or otherwise fluctuating. What changes in
current operations, law, or regulations would be required to gain
your support for more flexibility in these areas?

Answer 7: NTEU believes that federal employees recognize that they
may have more than one career track through their working lives.


136

Mr. SHAW. Absolutely. That’s the system. And again, all I am
saying is that since the agencies take the attitude, “We have to set-
tle,” then they will settle long before they get to the MSPB, there,
especially in the face of an EEO complaint and a special counsel
complaint, whistleblower investigation, et cetera. It’s just not worth
it.

The point is not that the 120 days is too short or that settle-
ment’s a bad thing. The point is that the agencies will not stand
up to poor performers because of the ability of poor performers to
use the multiplicity of systems to totally bog down the process, and
the agencies throw up their hands and get out.

There has only been, 300—I think the MSPB report said, or I
read somewhere—there has only been 300-and-some performance
cases adjudicated in the last whatever period of time. I mean, not
a lot of them are getting there.

Mr. Bass. Thank you. It’s interesting. Mr. Shaw also stated in
his testimony that settlements of EEO complaints are nearly man-
datory and alleged that Government executives are being forced to
settle EEO complaints that are not only invalid, but have, perhaps,
no basis of fact. Could you make observations on that?

Ms. Swirt. Well, there’s no different standard for EEO than any
other, if they bring it up during the process. Settlement is the
same. There is no difference if it has an EEO element than if it
does not.

I don’t know where Mr. Shaw is getting the mandatory. We have
no mandatory requirements. Settlement is, by its very nature, an
agreement between the parties. We cannot mandate that they set-
tle. I don’t know what he means by that, actually.

Mr. SHAW. I’m not talking about Merit Systems Protection Board
decisions. In fact, less than three-tenths of 1 percent of the MSPB
decisions decide for the employee on the basis of these affirmative
defenses. No question about that. Once they get to MSPB, they’re
fine.

The settlement comes at the agency level, where managers are
told, “We’re not going to go through this process. You settle this
case.” I’ll point to Department of Agriculture. They’re famous for it,
absolutely famous for it. They have paid off employees with thou-
sands and thousands of taxpayer dollars in order to get rid of the
system.

They had a famous case that was on the national news about
they paid some employee a couple of hundred thousand dollars, and
everybody agreed. It was just, “Get rid of them.” The employee had
become such a big problem, and the agency couldn’t get rid of them
any other way, so they bought them out during the EEO process.

And it’s not isolated. I had a call from a Department of Ag
culture executive, as recently as last week, who said that his politi-
cal manager had told him, “You settle this case.”

And he said, “It has no merit.”

And he said, “I don’t care. You get us out of this. We don’t want
to waste the resources on it.”

Mr. Tosias. That’s not system; that’s judgment. That’s not the
system. We’re not talking about a bad system here, we're talking
about bad judgment by people who are administering a pretty good



117

Motto: "If 9 cannat speak good of any comrade, 3 will not spac ill of him.”

DISABLED AMERICAN VETERANS

NATIONAL SERVICE and LEGISLATIVE HEADQUARTERS
1807 MAINE AVENUE, S.W.
WASHINGTON, 0.¢. 20024
(202) 554-3501

December 6, 1995

Honorable John L. Mica
Chairman, Civil Service Subcommittee
U.S. House of Representatives

2157 Rayburn House Office Building
Washington, DC 20515-6143

Dear Congressman Mica:

It was an honor and a privilege to be invited to address the House Civil Service
Subcommittee which you chair.

Thank you for this opportunity to respond to additional questions,

Question: This Subcommittee heard a remarkable consensus during our hearing
‘supporting stronger measures to address problems in the management of poor performers.
How should we address veterans’ preference in these actions?

Answer: Veterans’ preference has not been a factor in efforts to address poor
performance. We see no reason to make veteran status a factor.

Question: ‘The Subcommittee understands your concerns about the role of veterans”
preference under RIF rules. The Subcommittee has heard suggestions that any revision to
RIF rules give greater consideration to outstanding performers. As we reduce the size of
government, would you have any suggestions of factors that might be changed in revising
RIF rules?

Answer: We appreciate what we believe is a conscientious concer for maintaining
higher performing federal employees during agency reduction-in-force (RIF). There are
those who argue that considering veterans’ preference in RIF will necessarily conflict
with this desirable goal. Frequently, veterans’ preference is cited as a nonmeritorious
consideration which seriously damages any rational RIF plan and therefore must be
reduced or eliminated as a factor. We disagree.

Current RIF policy considers four elements: (1) tenure; (2) veterans’ preference; (3)
length of service; and (4) credit for performance.


58

In conclusion, our research and our experiences in both the public and private sectors have
convinced us that it is possible for organizations to increase performance. It requires
effective leadership and a human resource system that focuses all of its elements
(selection, training, promotion, reward, etc) on superior performance. The implications
go well beyond the personnel managers’ staff role to all line managers. This results not
only in organizations that work, but in organizations people want to work for.

In closing, Mr. Chairman, I would agree with other witnesses that it appears to be a
propitious time to address issues related to civil service reform. You or other members of
the Subcommittee may have questions and I would be pleased to answer them.


112

discrimination, which protects people with disabilities,

including alcoholism and drug dependency.’

They call and make an anonymous (and often false or grossly
exaggerated) allegation about the manager on an IG
"Hotline". Invariably an investigation results, and the
more outrageous the allegation, the more vigorous and

lengthy the investigation.

They file an agency grievance or a grievance under the
collective bargaining agreement. Often these grievances are
about some minor technicality, having nothing to do with the
substance of the action, but rather the "process" that has

been used in supervising or evaluating the employee.

They allege at the Office of Special Counsel that the
manager's actions are being taken against them because they
are a "whistleblower," for example, because they made the
anonymous allegation to the IG's Hotline mentioned above.
The OSC and the MSPB have prosecuted actions against
managers and executives where the whistleblower had made an

allegation, based on his/her illegal search through tax

‘In a comparative study on the filing of EEO complaints that

SEA did last year for the period 1982 - 1992, we found that federal
employees in general file EEO complaints at a rate seven times that
of private sector employees. However, they prevail on these
complaints at a rate 33% lower than those in the private sector.
(See attached exhibit for additional information.)

4


76

Many organizations, now, even in the private sector and in other
governments, are using performance agreements, starting at the
top of the organization. In fact, we have, in our own Government,
requirements emanating from the National Performance Review
and the GPRA that would have executives establish performance
agreements where expectations are identified and, then, those ex-

ectations cascade down the organization chain, and employees
Fave oals clarified in the process.

In Australia and in New Zealand, those agreements are backed
up by fixed-term contracts. At the end of 5 years, if those expecta-
tions aren’t met, the individuals either go someplace else or they
leave government. We have many large organizations attempting
that sort of approach.

There are ways, if the focus is on outcomes, rather than effort.
We tend, in Government, to evaluate effort and don’t focus enough
time and attention on outcome, projected outcome.

Mr. Bass. Let me change the subject ever so slightly, and this
will be my last question, Mr. Chairman. As a member of the Budg-
et Committee, in the process of evaluating the whole Federal Gov-
ernment and all the agencies, corporations, and so forth, all kinds
of individuals have come in to see me, in essence, to protect their
appropriation.

't has been my observation that the very small groups whose
leader, if you will, comes in, and this group knows that they’re on
the line; they are working as a team. It’s almost reminiscent of the
ads you see on television of a major car manufacturer, where these
teams of people are producing cars, and they put notes in the glove
box for the owner to find, and so forth.

There seems to be a difference, across the board, from groups
that come in to see me. I don’t know how to quantify that, but I’m
trying to focus here, in this question, on the collective performance
versus the individual performance and a mechanism, perhaps, to
establish incentives for collective groups of individuals to perform
better, maybe, in comparison to other groups, as they deal with
much larger issues—that is, continued existence, in this instance,
or success and so forth, rather in a subjective fashion, but rather
in a more objective way.

Tm sorry, I guess I’m being somewhat vague about this, but ’'m
wondering if you could comment on that, if anybody has any com-
ments on that, on the observation, or if we’re developing standards
for agency evaluation and performance and creating an atmosphere
of competition, but in a positive way. Does anybody have any obser-
vations?

Ms. O’NEIL. What I was thinking of as I listened to you speak,
Mr. Congressman, was an old approach that started back in the
1930’s with something that was called gain-sharing. It worked in
a manufacturing environment and really focused on productivity
improvement.

cause so many of our industries and our companies are serv-
ice-focused, that technique or that methodology has been somewhat
revised into something that’s called goal-sharing or success-sharing
or something along those lines.

But really, as an organization, they focus on things like produc-
tivity improvements, turn-around time improvements, quality im-


28

written warnings in a twelve month period (3 for non-management
employees and 2 for management employees). Under what is named
the Guarantee of Fair Treatment process, employees can appeal _
adverse personnel actions to higher authority. All non-
management and most management employees are provided an initial
appeal to a regional authority followed by a final appeal at the
division level. senior management may appeal adverse actions to
the division level with a final appeal to the corporate level.
While employees are free to obtain advice from private counsel,
counsel is not permitted to represent the employee during these
administrative proceedings. This policy reduces the potential
for appeal reviews to become adversarial in nature. The
appellate authority's decision is final and not subject to
further internal review. Though the majority of personnel
actions are upheld, appellate authorities have modified or set
aside adverse personnel actions where, in their opinion, the
disciplinary action was unwarranted or overly severe. The system
operates efficiently and expeditiously.

In addition to the Guarantee of Fair Treatment, one division
has permitted individual operating units to adopt an alternative
form of employee grievance resolution called Peer Review.
Employees electing the Peer Review process forgo a review of
their complaint under the Guarantee of Fair Treatment process.
The Peer Review process provides employees with the option of
having their appeal of a disciplinary action heard and decided by

a panel of employees. (Issues involving allegations of

1s


US. Merit Systems Protection Board
Petitions for Review (PFR’s) of Initial Appeals - FY 1994

Types of PFR’s-Filed

Adverse Action 44% (683) Performance 2% (39)
[Individual Right of Action 4% (66)
5— CSRS Retirement: Overpayment 2% (31)
CSRS Retirement: Disability 3% (50)

CSRS Retirement: Legal 19% (291)

I FERS Retirement: 2% (37)

Other Appeals 8% (119)

Denial of Within Grade 1% (8)
‘Termination of Probationers 1% (23)

Reduction in Force 14% (213)

Total Number of PFR's: 1,566


In thinking about the pass/fail system, I’m reminded of an
article written by Dr. Donald Devine, former Director of OPM, that
revealed this as a further weakening of the system. As a former
professor, there were a lot of students who wished they could
have had a pass/fail option in my class. And unless someone can
educate me on the benefits of this system, and I’m willing to
remain open-minded, | am inclined to agree with Dr. Devine’s
assessment.

I have heard some wonderful things about 360 degree
evaluation. But without the proper structure and accountability,
his evaluation system has the potential of being a popularity
contest where no one get's a true rating.

To reference the earlier hearings, | want to say that | was a
little disappointed in some of the sentiments expressed by some of
the agency officials. 1 do not know how my Subcommittee
colleagues felt, but it seems that many of these agency officials
want more flexibility, while at the same time, they don’t want the
accountability. And ! don’t think we are in a position to continue

to ignore accountability in performance management.


77

provements, and people are rewarded as a group that usually in-
cludes both exempts and nonexempts, management and non-
management people.

But the focus is on accomplishing things together, as a group.
There would be an overall measurement for that organization or for
that plant or facility. So it can be a very powerful tool in terms of
focusing people really on what matters within that particular orga-
nization.

Mr. Bass. And the strong individuals can pull the weaker ones
along, and it improves the whole process.

Ms. O’NEIL. Yes. You tend to start, then, focusing on some peer
pressure issues. People’s annual increase may depend on accom-

lishing whatever it is, and the intent and, what I’ve seen, success
is that you do tend to pull along the weaker ones. There also has
to be, I think, a methodology, though, for the organization to let go
folks that maybe aren’t able to accomplish at the standards that
are needed.

Mr. WHEELER. Mr. Congressman. In small organizations or small
groups, the team approach may be effective, because you can still
evaluate the individual performance within the team when it’s
needed. There’s a risk in the team approach, of course, that the
weaker and, perhaps, substandardly performing employee will get
pulled along and will not be let go. That’s a drag on the organiza-
tion.

But if you go to the large group or the large organization evalua-
tion approach on the team methodology, I have not seen that work
effectively. In fact, what I have seen is, on an individual basis,
members within that team have decided that they don’t like that
approach,

In my own company, I’ve seen this with respect to bonuses. Cer-
tain levels of managers in different groups and different organiza-
tions within the company get bonuses. Ten years ago, it was pretty
much an individually based system. If you did very well, and your
unit did well, then you got a bonus. If you didn’t, then you didn’t
get your bonus.

Then that expanded to the district you were in. If the district did
well, you got a bonus. Well, that was not too bad, because you only
had 6 to 12 people, managers like yourself, in your district, so you
could use peer pressure.

But then, in order to force greater change within the organiza-
tion as a whole, that bonus chgibiity was then driven to the re-
gional level. It became impossible, then, for managers to work and
put peer pressure on each other to get bonuses.

And now, in parts of the organization, it has gone to the entire

division, which means nationwide within certain groups. If the divi-
sion makes a bonus, then managers in the field who are bonus eli-
gible may get a bonus.
What has happened is that managers in the field in some areas
who are doing very well realize that managers in other areas sim-
ply are not doing as well, and that, as a result, nobody’s going to
get a bonus. That’s a disincentive.

I think, if you use a team approach and you're going to link some
sort of reward to that, it has to be on a manageable group, where
each person has a vested interest in keeping other members of the


83

panel members in writing and hope that you will have an oppor-
tunity to respond.

T'll terminate with one observation for you to think about. I just
noticed that there is—you notice these nameplates, all of them in
front of everybody’s place here. I notice that there’s one in front of
me that is behind this little decoration here. I’m wondering, when
you think about, as you go home, how you would have evaluated
the person who put nameplates in front of every single place, in-
cluding one here. Is that over-performance or incompetence?

Thank you very much. We'll excuse you at this time.

At this time, we'll call our second panel. We have Evangeline W.
Swift, Director of the Office of Policy and Evaluation of the Merit
Systems Protection Board; G. Jerry Shaw, general counsel, Senior
Executives Association; Robert M. Tobias, national president of the
National Treasury Employees Union.

As is customary before this committee and other subcommittees,
as well as the full committee, we would like to get an oath from
you folks, if you could please stand and raise your right hand.

[Witnesses sworn.]

Mr. Bass. Thank you. You may be seated. Let the record show
that fhe witnesses answered in the affirmative. We will begin with

's. Swift.

STATEMENTS OF EVANGELINE W. SWIFT, DIRECTOR, OFFICE
OF POLICY AND EVALUATION, U.S. MERIT SYSTEMS PROTEC-
TION BOARD; G. JERRY SHAW, GENERAL COUNSEL, SENIOR
EXECUTIVES ASSOCIATION; AND ROBERT M. TOBIAS, NA-
TIONAL PRESIDENT, THE NATIONAL TREASURY EMPLOYEES
UNION

Ms. Swirt. Thank you, Mr. Chairman. It’s a pleasure to appear
before you today to discuss an issue of great importance to the vi-
tality, efficiency, and effectiveness of the Federal civil service.

I am here in my capacity as Director of Office of Policy and Eval-
uation for the U.S. Merit Systems Protection Board. I request that
my full statement and the September 1995 issue paper, “Removing
Poor Performers in the Federal Service,” be included in the record.

Mr. Bass. Without objection, so ordered.

Ms. Swirt. Thank you. Before I discuss the specific issue of poor-
ly performing Federal employees, may I say that I agree fully with
the sentiment in the recent media advisory expressing a commit-
ment to the principle that “people who operate effectively should be
rewarded for their efforts.”

Too often, the debate on how to deal with poor performers over-
shadows the fact that the overwhelming majority of Federal em-
ployees are well qualified, hard working, and committed to doing
a good job.

The issue of dealing with poor performers needs to be addressed
on a larger level, and you are laying the groundwork here today.
Seventeen years after the passage of the Civil Service Reform Act
of 1978, the evidence suggests that the problem is not with the
goals inherent in the framework of CSRA, but the failure to ade-
quately meet those objectives.

As we revisit the Government’s current performance manage-
ment system, two goals identified in 1978 are still worth pursuing.


‘Chapter 75 of Title 5, which deals with cases involving misconduct. Others expressed reservations about
the level of support that they would receive from senior agency management.

During our October 12 hearing, administration witnesses estimated that acting against a poor
performer requires about five hours per week of a manager's time. 1s this why so few people in federal
‘employment ever get fired ot face stiff disciplinary measures? Is this why only 0.4 percent of employees
are rated less than fully successful? | am fully committed to the principle that people who operate
effectively should be rewarded for their efforts. The flip side of the coin is the need for accountability
when the job isn’t done right. That doesn’t happen often enough in the federal sector.

To help the Subcommittee explore these issues, we have convened two panels. Our first pane!
consists of Mr. Courtney Wheeler, assistant general counsel of Marriott International, who will provide
the experience of a leading private firm. He will be followed by Ms. Sandra O'Neil of the Society for
Human Resource Management, who will explore private sector practices more generally. Dr. Joyce
‘Shields will testify on the basis of the Hay Group's consulting experience for both private corporations
and government agencies, including both civilian and defense agencies. Mr. Frank Cipolla, Director of
the Center for Human Resources Management of the National Academy of Public Administration, will
examine the topic based on his work with the Academy and his extensive public service career.

‘Our second panel will focus upon the government's management of its personnel resources.
Evangeline Swift, Director of the Merit Systems Protection Board’s Office of Policy and Evaluation will
report on the Board’s activities and its studies of related issues. Federal employee organizations will be
heard from on two levels. Jerry Shaw, general counsel of the Senior Executives Association will reflect
the perspectives of people who invariably play an important rote in each decision, and Robert Tobias,
National President of the National Treasury Employees Union, will discuss the views of rank and file
employees.


lll

said they need to "stop making excuses" and just do it. He
stated that the problem is "timid or incompetent managers who
either will not or cannot rout them out." His suggestion for
fixing the problem is obviously aggressive and competent managers
and a "one bite at the apple" process by which employees could
have their performance actions reviewed by an arbitrator under
the collective bargaining agreement, or a hearing at the MSPB.

He believes that the process should then end.

We disagree with Mr. Sturdivant, whose union has
aggressively defended these alleged poor performers for many
years, but his suggestions, as well as those of GAO and MSPB have
merit, and many of them would help. The real reason, however,
that managers do not take actions against poorly performing
employees is not because of the system, and it is not because
they are poor managers; it is because to take an action against a
poorly performing employee is to invite a plethora of attacks by
the employee on the manager. Employees who are even suspicious
that a supervisor may be thinking that their performance is less
than fully successful routinely do the following, often with the

assistance of their union representative:

1. ‘They file an EEO complaint alleging discrimination of some

kind by the manager. The most common allegation is handicap


81

vational, when you’ve using very wide-based awards. You know,
the average cash award is something like $660. If you divide that
out by 12 months and take out taxes and everything else, you don’t
end up with much.

So the value of the noncash award is that, No. 1, you leverage
it beyond the cash basis, and, No. 2, as I’ve mentioned, you have
that trophy. The people have something that they maintain, that
their family uses.

So what a lot of companies have done, they have gone to accumu-
lating a point system, for instance. They use catalogs where people
can purchase, as they accumulate points, something that’s mean-
ingful to them.

Mr. Mica. Well, I thank you, and we are paying attention to you.
I rarely leave the hearings I chair, except when my wife calls with
an emergency or the Speaker calls. The good news is my wife is
happy today, but I’ve got to meet with the Speaker and the Florida
delegation for just a few minutes.

I’m going to turn the chair over to Mr. Bass, who will continue.
Mr. Moran had some questions and hasn't had an opportunity. So,
Mr. Bass, would you assume the chair, please.

Mr. Bass [presiding]. Thank you very much, Mr. Chairman.

Congresswoman Morella, do you have any further questions you
would like to address to the panel?

Mrs. MoRELLA. I just would like to ask the panel, you know, you
talked about the need for managers’ understanding, starting at the
top, et cetera, understanding performance, expectations and all.

Can managers be trained, and should they be trained as such?
Should there be a training course, because some people show the
potential but they need to know what is required? Or is it some-
thing that’s innate, that you don’t hire somebody for unless they’re
absolutely ready for it? Any comments on that?

Ms. SHIELDS. I believe Mr. Wheeler spoke of the necessity of
training in his testimony, and I definitely agree with that aspect
of development. But I think that developing managers over a ver:
long period of time is through a set of experiences, through provid-
ing coaching and feedback, through selecting people and providing
significant training on leader and management behaviors and com-
petencies.

I think one of the things that has happened—at least my experi-
ence—in the Federal Government, when people were asked to go
to personnel management training, they thought of it as simply a
series of administrative procedures that they didn’t really care very
much about in the first place, “took time away from their real job,”
and really wasn’t focused on what they wanted to be doing.

So I think if the emphasis can be put back more on being a very,
very successful performer, yourself, through the success of the peo-
ple that you manage, and then understanding how to acquire those
particular skills and competencies and motivating and coaching
and providing feedback to employees, you can put together a suc-
cessful management and training and development program to
achieve those objectives.

Mr. CrpoLLa. I would agree with that. I think that, though, we
should be careful in how we use training, because it simply can’t
be a substitute for fortitude. When actions are required and man-


188

‘Responses to Questions from Rep. John L. Mica, Chairman, Civil Service Subcommittee
in his letter of 9 November 1995

1 Question: The Administration’s draft civil service reform bill would allow agencies to
appoint individuals to nonpermanent Positans fos pw to five years. What if any performance-
related problem would this type of hiring system address’

Response: First, such a hiring system would prevent obsolescence in rapidly changing fields
requiring significant specialized training (e.g., in science or technology) or areas with rapidly
changing priorities that also require significant specialized training (e.g., in certain legal and
regulatory specialties). Criteria could be developed relatively easily for selecting categories of
jobs appropriate for designation as this type of nonpermanent position. As an example, the
‘National Science Foundation uses the concept of permanent “rotator” position for many of its
program managers in scientific disciplines.

Second, such a hiring system would allow more time to determine mismatches between job and
individual and ease termination or reassignment. This is most likely to be appropriate at the
managerial level. For example, many newly-appointed first- and second-line managers who were
substantively/technically very competent are found to be poor managers but this situation does not
become apparent immediately. However, five years may be too long. Extending the probationary
periods to three years for managers (covered in question 2 following) may be a more appropriate
approach to this problem.

2. Question: The Administration's draft civil service reform bill would permit extending the
probationary periods for up to three years. What if any performance problem would this address?
Do you have any general recommendations about an appropriate length for a probationary period.

Response: The current probationary period is a “one-size-fits-all” approach. A three-year
probationary period also is a “one-size-fits-all” approach. Managerial jobs are likely to need a
jonger probationary period than administrative and technical jobs; higher level jobs are more likely
to need a longer probationary period than lower level jobs. Fortunately, there is the obvious
correlation between managerial and higher level jobs. Thus, for SES and GS 13-15 level (or
equivalent) positions, extending probationary periods for up to three years may be appropriate.
For GS 7-12 (or equivalent) positions, the probationary period could be shorter: six months to a
year, For the lowest level positions (GS 1-6 or equivalent), an even shorter probationary period
than currently exists might be used: e.g., 90 to 120 days.

3. Question: The Administration’s draft civil service reform proposal provides for docking a
poorly performing employees’ pay for up to 25% for up to 120 days. Do you believe that this
sanction could lead to any improvement in a targeted employee's performance?

Response: In most case, docking pay is not an appropriate remedy. If the employee’s problem is
only poor motivation and prior counseling and warnings have not worked, docking of pay alone


107

It’s not higher management’s fault. They know that they'll have
to deal with, devote resources to, and, in some instances, adjudicate
allegations against the supervisor that resulted from taking the ac-
tion. This cost in staff and dollars has got to be factored into their
decision process on whether or not to support an action.

In an informal survey of its career executive members conducted
by the SEA last month, 95 percent of the respondents said that
they have employees who are “frequent filers.” That is, they file
EEO grievances, IG allegations, et cetera, on a regular basis; 92
percent of the respondents said that some, to all, of the complaints
are frivolous; 91 percent verified that the complaint systems are
abused in order to intimidate a supervisor or agency management
from taking action against them. They stated that this is a common
occurrence.

Also, 33 percent said that their agency does not deal effectively
with poorly performing employees, and 56 percent said that the
agency only sometimes does; 90 percent of the executives said that
their agencies are inclined to settle complaints even when they
may not be valid in order to avoid the time and expense involved
in defending the supervisor or the agency action.

The September MSPB report identified inadequate assistance
provided by agency personnel and legal staff. Ironically, one of the
reasons for this is because of the policy followed by the MSPB, it-
self. Administrative MSPB judges are given very short time lim-
its—120 days—to complete the cases that are appealed to them.

They are encouraged to settle about 50 percent of all the cases
appealed. Agency attorneys and personnel counsel inform their
agency managers of this, and the result is that they know they
really only have a 50-50 chance of prevailing on appeal.

In many agencies, settlements of EEO complaints are nearly
mandatory. SEA has had many anguished telephone calls from
Government executives who are being forced by their political supe-
riors to settle EEO complaints that they know are not valid. Many
of these settlements involve substantial cash payments to the com-
plainants.

The tragic part of this is that over 55 percent of those responding
to the SEA survey state that there are legitimate complaints by
employees in their agency which are not filed because of the pleth-
ora of frivolous complaints that are clogging the system.

Is there an answer? We propose that current law be changed to
prevent an employee from raising affirmative defenses before the
agency or the MSPB ir performance cases under section 4303. The
PIP should be limited to 30 days—the performance improvement
period—and the substantial evidence standard must be retained.

The only issue, when the employee does his or her oral reply or
written reply prior to the agency decision, should be, “Is the em-
ployee performance acceptable under his or her critical elements
and performance standards?” If it is, the employee should be reas-
signed, demoted, or removed—if it is not. Excuse me.

The same standard should prevail at the MSPB on appeal. Em-
ployees would not be denied the ability to file all their other ac-
tions. However, the first query by all these enforcement agencies
should be, “Are these allegations being made by an employee who


92

‘example, even though many supervisors would agree with the statement that it's very
difficult if not almost impossible to try to fire an employee, the fact of the matter is that
most removal actions that are taken against employees are not even contested--and
when they are contested, most of the time the management decision is upheld. Based
on estimates provided by knowledgeable agency officials from a number of Federal
agencies, on average only about 20 percent of all removals and demotions are appealed
to MSPB. And, at the Board, our records show that with regard to the outcome of
initial appeals that are not dismissed, the agency action is overturned or the penalty
imposed by the agency is reduced only about 13 percent of the time.

Finally, in a recent "customer satisfaction” survey that my office conducted for
the Board, we received a total of 571 responses from agency or appellant
representatives who have appeared before the Board. These individuals, who have had
first hand experience with that portion of the appeals process administered by the
Board, provide fairly positive feedback on that process. In short, the large majority of
representatives report that questions addressed to MSPB judges and staff are answered
promptly and courteously; the information is helpful; the rulings issued by MSPB are
fair, reasonable, easy to understand, and consistent with the law; and they agree that
the Board's standard of issuing an initial decision within 120 days of receipt of the
appeal is appropriate (actual experience is that the average processing time for an initial
appeal is between 80 and 90 days).

Mr. Chairman, this concludes my formal testimony and I will be happy to answer
any questions that you or other members of the Subcommittee may have, Thank you.


180

jolee/#5
/O 120/9

National Academy Of Public Administration Chane bs Congress
Center for Human Resources Management

MNAPA
>|

December 4, 1995

Honorable John L. Mica
Chairman, Civil Service Subcommittee
Committee on Government Reform and Oversight
House of Representatives

Congress of the United States

2157 Rayburn House Office Building
Washington, DC 20515-6143

Dear Congressman Mica:

Enclosed, as requested in your letter of November 9, are our responses to the additional
questions arising from my testimony at the Civil Service Subcommittee’s October 26 hearing on
performance management and accountability. I appreciated the opportunity to represent the
National Academy of Public Administration at this very important series of hearings on civil
service reform issues and look forward to continuing t work with you and your staff as you
consider this and other related topics.

Should you have any questions regarding the enclosed material or related human resources
management matters please do not hesitate to contact us, Our new address and telephone
‘number are:

National Academy of Public Administration
Center for Human Resources Management
800 North Capitol Street

Suite 115

Washington, DC 20002

(202) 682-4010

‘Thank you for your interest in the Academy and its efforts.

Sincerely,

Frank P. Cipotla
Director
Center for Human Resources Management

Enclosure

955 L1Enfant Plaza North, S.W , Suite 4000, Washington, D.C. 20024 (202) 651-8062, FAX (202) 484-4899


183

3. The Administration’s draft civil service reform proposal provides for docking poorly
performing employees pay for up to 25% for up to 120 days. Do you believe that
this sanction could lead to any improvement in a targeted employee’s performance?

Emphasizing measures such as docking pay as a method for improving poor performance does
not get at the major issue unless it is part of a broader restructuring of the entire performance
management system. Some poor performers may respond to negative stimuli such as the
temporary reduction in pay proposed in the draft civil service reform package. What this type
of measure does is to establish a clear link between pay and performance, albeit a negative one.
If the ultimate objective is to establish a pay for performance system, our current laws on
compensation and position classification are inadequate. The concept of pay (or lack thereof)
for performance should recognize both ends of the performance spectrum. It may be more
appropriate to concentrate efforts on redesigning the federal position classification and
compensation system by considering alternative approaches such as broad-banding systems.

4, How would you suggest instituting greater flexibility in the tenure of federal
employees?

To accommodate changes in the overall work environment and to compete in the job market for
quality employees, the federal government will need to offer options to traditional career tenure
benefits and protections. Some federal occupations, including many in law enforcement (e.g. FBI,
Secret Service) and those directly supporting our military services, need employees who are
dedicated to the agency mission. For them, tenure is a recruitment incentive and retention is
cost-effective to the agency. Filling many of the Government's hiring needs should be more
workload-driven than the current hiring process allows. Different incentives to attract quality
candidates are needed. Greater flexibilities were actually begun with the implementation of the
Federal Employees Retirement System (FERS) which was designed, in part, to be a portable
system that would allow those covered by it to move, career-wise, within the public sector and
between the public and private sector. Use of a "travelling" package of benefits needs to be
broadened. Employees of the future should be able to go where their skills are needed, taking
with them the level of health, developmental, and retirement security needed to protect
themselves and their dependents. The up-to-three-year probationary period, renewable term
contracts with employees such as those used by Australia and New Zealand for senior managers,
and up-or-out promotion and development systems are additional approaches which could also
be considered.

5. Has legislation such as the Government Performance and Results Act improved
abilities to identify either organizational or individual poor performance?

The Government Performance and Results Act (GPRA), which requires implementation of a
results-driven system, has created an opportunity to link the individual's and the organization's
performance. In order to be an effective link, it needs to be supported by reliable and
appropriate measurement tools. Currently, there does not appear to be much of an effort by

2


60

done at the front end, that is, establishing expectations and out-
comes. As I said earlier, the GPRA provides that kind of oppor-
tunity.

If progressive organizations have made success in new perform-
ance management systems, it has been in viewing the individual
in terms of contributions to the work of the team and the work of
the organization. So our testimony stresses that linkage and, in
fact, provides some, information that could be helpful in developing
models that will succeed in doing that.

At the risk of taking any more time, I think I will quit and will
be willing to respond to any questions you have.

[The prepared statement of Mr. Cipolla follows:]


56

goals, Human resource management must learn to identify the skills and behavioral
characteristics of superior performance, and train front-line managers to hire and develop
those skills in their work force. Performance management must become an ongoing
process focused on planning, coaching, and providing feedback to employees. Reward
systems must be designed to directly support organization mission and reinforce the
desired work culture.

Human Resource Systems Focused on Superior Performance. If you aim for
mediocre performance, you will achieve mediocre performance. In industry today, high-
performing organizations do not settle for “acceptable” performance, they set their targets
on “best in the industry” or “world class” performance. Customer satisfaction and
financial viability are key measures for organization performance. For individual jobs,
measures of superior performance also must be established. How do you build a human
resource system focused on superior performance? There are four basic steps to
constructing such a system:

Step 1: Identify job requirements that are aligned with organization mission and
work culture. Jobs in Federal Government have been described typically in terms
of tasks, activities, and functions that need to be performed, often based on
minimum requirements. Leading-edge organizations (i.e., the U.S. Air Force) have
begun to describe jobs not only in terms of results (what needs to be done), but
also in terms of how work should be done, with a focus on superior performance
and desired behaviors that reinforce the work culture.

Step 2: Use a selection process that enables you to hire the right person for the
job. Since superior performance can be predicted during the selection process, it is
much easier to hire a superior performer in the first place than it is to try to train a
mediocre performer to become a superior performer. High-performing,
organizations use methods and tools to objectively measure the “fit” between a job
candidate and the job requirements. Often times, poor performance is the result of

10


18

organizations fails to achieve its purpose. And, in many cases,
it creates adverse personnel situations. The performance
assessment process fails for four reasons: inadequate training
of managers, managers' desire to avoid confrontation, the limited
opportunity to reward superior performers, and poorly designed
evaluation criteria.

Managers frequently receive little to no training in the
methodology of the performance review process. As a result,
performance reviews tend to reflect what the reviewing manager
considers important rather than what the employer needs to know
about an employee's performance. Even where the rating manager
understands the performance review process, the lack of training
in how to write performance reviews so that necessary information
is clearly articulated renders the review worthless. Reviews
prepared in this manner do not provide organizations with the
information needed to make sound personnel decisions regarding
promotions and assignments.

Managers, like other people seek to avoid confrontation.
This human trait is inherently at odds with the performance
assessment process which, if it is to be effective, may require
the reviewer to communicate unfavorable opinions and information.
To avoid potential confrontation, managers fail to articulate an
employee's performance shortcomings. Even where an employee's
performance has met standards, managers are frequently reluctant
to tell a subordinate who has done a credible job that he or she

is “average.” Rating an employee as ‘average” is considered the


47

Statement by:

Joyce L. Shields, Ph, D.

Managing Director of Human Resources Planning and Development
for North America

The Hay Group

‘Mr. Chairman and Members of the Subcommittee:

T am very pleased to have the opportunity to talk with you about issues encompassed in
the performance and management of Government employees and would like to thank the
Chairman and Members of the Subcommittee to be able to participate and provide my
views. For the last ten years, I have worked with the Hay Group, consulting in the field
of human resources management for both the private and public sectors. Prior to joining
the Hay Group, I worked in the Federal Government, with the Department of the Army,
finishing there as a Senior Executive.

In my role with the Department of the Army, I was Director of the Manpower and
Personnel Research Laboratory. My experience with the public sector gave me great
respect for the professionals in the Federal Government. At the same time, my current
work with the private sector gives me the opportunity to compare the two environments.

Both public and private sector organizations are experiencing some basic changes in the
world of work that are impacting the way people are hired, managed, and rewarded. Asa
variety of pressures create the need to reduce costs, the number of workers needed to
produce a product or service is steadily declining. At the same time, the need for
employees with multiple skills and competencies is increasing. Organizations are being
restructured around teams and processes rather than individual jobs. As the public
becomes more demanding in its service requirements, organization designs and strategies
are being determined by the customer. Organizations that reinforce bureaucracy and pre-
engineered or outdated responses are viewed as less efficient and less effective than those
that provide customers with the best-tailored solutions in the shortest time. These


51

{As organizations today are moving away from functional work models to process or time-
based models, they are changing the way they view their work force. Employees are no
longer seen as narrow specialists with a fixed set of technical skills; rather, they are seen as.
dynamic individuals with competencies and abilities to contribute to team and group
performance. Workers are selected based on their capacity to expand their skills, develop
needed competencies, and adapt to the changing demands of the organization.
Performance is measured and rewarded based on results; a focus on responding to
customer requirements, flexibly and quickly, is valued over longevity and meeting

“minimum requirements.”

The implication for federal personnel management is that human resource management
systems must be designed and developed around the changing needs of individual
departments, agencies and work units. Management systems, to be effective, must be
aligned with organization mission and work culture, This is an interesting challenge in the
public sector where Congress and the Administration may not always agree on
‘organization mission or desired work culture.

Differences in Leadership and Management Requirements

How can the principles and practices from the private sector be translated to the public
sector? First, one must understand that there are significant differences in the roles of the
public and private sector leaders.

Public Sector

Greater functional integration; lack of consensus
over measures of performance and productivity.

‘Less opportunity for individual, unilateral change;
more bureaucratic obstacles.

‘More standard operating procedures and detailed
policies and regulations; higher routinization,

Less opportunity to symbolically assert one’s
status.

Private Sector

Greater access to performance feedback and
specific measures of productivity, ie., profit,
market share, waste.

Less formalization; more opportunity to establish
goals and plans, and to solve problems,

Fewer policies and standardized procedures; less
routinization; greater need to make strategic
decisions, access to a greater amount and variety
of information,

‘More access to symbols of power


80

His superior doesn’t deal with it, because that individual, overall,
is a good performer. He makes a lot of money; he does his job tech-
nically well. It was just this one thing that he didn’t do well. This
is what I was alluding to earlier about the difference between per-
formance based in terms of dollar income and the other parts of
management that you need.

How do you resolve this? You have to resolve it from the top
down. It will not resolve itself from the bottom up. The very senior
managers in any organization have to go to the level below them
and say, “You didn’t manage well. You didn’t handle this situation.
You do everything else well, but this problem is so significant that
you're going to get dinged.”

When that happens, and each subsequent level of management
begins to operate this same way, then you will get change. In my
own organization, I have seen that happen. We have some vice
presidents who operate under that methodology.

They will tell subordinates who are excellent performers, “You
did not use good judgment in handling this personnel problem.
There are going to be repercussions. Here is your disciplinary ac-
tion. Here is your written warning”—whatever. There is some ac-
tion taken.

In those districts, you get accountability. You go to other areas,
where you have a different management philosophy, where that
isn’t done, and you have a total absence of accountability by man-
agement. But it has to start at the top. It can’t start at the middle
and work down.

Ms. SHIELDS. Could I add just one thing, please, sir?

Mr. Mica. Sure.

Ms. SHIELDS. I believe, also, that the focus needs to be on the
front end, rather than dealing with poor performance after it has
happened, taking the actions on a day-to-day basis that really em-
phasizes good performance and that has a focus on what you expect
of employees, so that it is instilled on a day-to-day basis, because
if you get to the point of appeals and litigation, I believe you've al-
ready failed.

Mr. Mica. Thank you. Ms. O’Neil, you were talking about some
noncash recognition; was that you?

Ms. O’NEIL. Yes, sir.

Mr. Mica. You talked about golf clubs and things?

Ms. O’NEIL. Yes, sir.

Mr. Mica. Do you have any other ideas?

Ms. O’NEIL. Yes, sir.

Mr. Mica. That caught my attention, but there are some things
we can’t do in the public sector that you can do in the private sec-
tor. Maybe you could elaborate a little bit on what you had in
mind. Maybe there are some innovative incentives that we aren’t
doing at the Federal level, other than golf clubs.

Ms. O’NEIL. Other than the golf clubs?

Mr. Mica. Yes.

» Ms, O’NEIL. Other than, maybe, a trip to Miami or the Carib-
ean?

Mr. Mica. Causing more heartburn.

Ms. O’NEIL. What happens is that when you use cash rewards,
first of all, what you can actually afford to do tends not to be moti-


142

Mr. Mica [presiding]. Mr. Moran, if we could have him go first,
and then excuse himself. I know he was trying to catch a plane.

Mr. Moran. Oh, I didn’t realize that. I’m sorry.

Mr. Tostas. Actually, I have decided to stay here, Mr. Mica.
Thank you for your consideration.

Mr. Mica. It has gotten interesting.

Mr. Moran. Go on, then, Mr. Tobias.

Mr. Topias. I think a continuing education account is a good
idea, and I think that, oftentimes, the first thing that’s cut when
budgets get tight are training and education and infrastructure
support. I think that the first panel highlighted over and over
again the need for training to supplement achieving goals and ob-
jectives.

With respect to poor performers not receiving step increases, I
certainly agree with that. That’s what step increases are all about.
If somebody is not performing, they shouldn’t receive a step in-
crease.

I would oppose, however, failure to provide what you described
as a COLA increase. The increases that the Federal Government
pays to employees are an attempt to achieve some sort of equality
with the private sector, and what we've seen is that we're still
some 28 percent behind the private sector. So this is not pay based
on merit, but pay based on an attempt to attract a qualified work
force.

So I don’t think that that pay ought to be made part of perform-
ance. We have promotions, which are evaluated in connection with
performance and with in-grades, which are evaluated in connection
with performance, but not basic pay. That, I think, is basic pay and
ought not be part of the performance system.

Mr. Moran. Thank you, Mr. Tobias. Mr. Shaw.

Mr. SHAw. I don’t disagree with anything Mr. Tobias said. I
agree with him.

Mr. Moran. Ms. Swift.

Mr. Toptas. Let the record reflect that.

Mr. Moran. Do you want that to apply to everything he has said
throughout his career, or just this particular response?

Mr. SHAW. Just this single instance, thank you, sir.

Mr. Moran. Just this single instance? OK.

Ms. Swirt. I believe that everybody is in agreement that the sys-
tem needs better education and training, certainly for managers.
One of the problems that the system has right now is that it’s
changing. Managers are required to enter into more line manager,
more personnel, more budget action, than they've ever had to do

efore.

In the past, we had these segregated departments that did it for
us. With the new goal of flexibility, we have line managers that
came up in the old hierarchical system, and they’re—I train them
all the time, and they just feel helpless. They're standing out there;
they don’t know exactly what to do. They’re getting a limited
amount of training.

They were successful in the old system, as-—for example, myself.
I was a great litigator, so what did they do? They made me a man-
ager, with zippo training. So I think that we have a lot of that. And
then, the type of training that is provided, many times, is not ade-


135

Mr. Bass. Thank you very much, Mr. Tobias. I appreciate your
testimony. We have a series of votes in process right now. What I
would like to do is to recess this committee for 30 minutes.

[Recess.]

Mr. Bass. The Subcommittee on Civil Service will be in order
and will be heard. For those of you who weren’t here 20 minutes
ago, we heard testimony from the three panelists, and now it’s time
for questions.

I will begin with Ms. Swift. Ms. Swift, how would you respond
to Mr. Shaw’s concern that the 120-day period that your agency
has set as a target to complete a decision pushes MSPB toward set-
tlement in at least half of the appeals cases?

Ms. Swirt. It seems to me that in debating the Civil Service Re-
form Act in 1978, the problem was that people died before they got
their decisions, and the big complaint was, in those days, that it
just took too long. So the 120-day standard, which, as I recall, was
not there in 1978, was put in to make the decisions go faster so
that people and agencies could have final action. And so a 120-day
standard was set up.

We have found that we complete our cases in approximately 96
days at the initial decision stage and 96 days before the Board.
Managers that we surveyed found this to be a very positive thing.

We did a customer survey a few months ago, and this was one
of the positives. They were overwhelmingly positive that the Board
decided a case in x period of time, and it didn’t take a long time.
Federal managers and the evidence that we have do not support
Mr. Shaw’s contention.

Mr. Bass. Do you have any comments on that?

Mr. SHAW. Well, we are not criticizing the 120 days to decision
at all. I mean, we think it is really a good system. The problem is
not the 120 days; it’s the pressure on the administrative judges to
settle 50 percent of their cases. I’m not overstating that. That’s in
the Merit Systems Protection Board annual reports, and they are
very, very proud of it.

T would be proud of it, too, except that to settle, you usually have
to give something to both sides, and the perception, therefore, of
personnelists and attorneys in the agencies, which they then tell
the managers, is, “Look, we’re going to have to settle. Therefore,
let’s give them something now and not go through the process.”
That’s the result. I’m just talking about a result that the law of un-
intended results has come about.

Mr. Tostas. Settlement means people agree. I mean, no one’s
arm is broken in this process. Settlement means that people agree
that that’s how the case ought to be resolved. And so, to say that
there is extreme pressure—my goodness. I mean, these folks are
adults, and they make rational decisions, we assume.

So, to say that, because 50 percent settle, that that’s a bad thing,
it seems to me we ought to be celebrating the fact that decisions
are achieved and we're on to the next case.

Ms. Swirt. Could I make one point? We don’t force anyone to set-
tle. It’s part of the whole legal system that settlements are encour-
aged. We encourage and we provide the forum. We don’t force any-
body to settle at all. Mr. Shaw appears before us many times and
has gotten some decent settlements, as I recall.


13

critical to optimizing employee performance. However, despite the
established procedures, managers often fail to take effective, timely
action to correct such problems.

That failure is attributable to many factors, the most significant
being inadequate training, fear of litigation, and the formation in
some organizations of something which can be best described as a
human resource bureaucracy. Only by effectively dealing with these
issues can managers truly optimize employee performance.

Thank you, Mr. Chairman.

{The prepared statement of Mr. Wheeler follows:]


137

system. That’s a whole different issue and a whole different discus-
sion than we're having right now.

Mr. SHAW. Well, I don’t agree with that, because I don’t think
that—I'm not talking about system. I don’t think the system is the
problem. I mean, we can tinker with chapter 43, or we can tinker
with chapter 75 in title 5. We can mess around the edges, and you
can do all kinds of things.

Mr. Tobias proposed and MSPB proposed we essentially go back
to the system before the Civil Service Reform Act. What we had in
the early 1970’s is you had to prove your case by a preponderance
of the evidence. One would wind up in hearings, trying to get rid
of a scientist, where the scientist would bring in three Nobel Prize
winners who say, “Yeah, this is a good scientist.”

The agency says, “He hasn’t done anything for 3 years.”

“Yeah, but he’s working on an important project.” I mean it got
bogged down into absolute minutiae, and, based on a preponder-
ance of the evidence, you could not deal with it.

OK, that’s gone in performance cases, and that’s good, because
the standard of evidence now is substantial evidence, which is
something that most agencies can meet. PIP’s are a problem; peo-
ple don’t like them. Tough nuggets. Everybody ought to have a
chance, especially on performance.

But what we’re talking about is, we have to solve the ability of
the employee to throw up this entire smoke screen that the agency
is forced by law to deal with, that they don’t deal with because it
is so expensive, it takes so much resources, and the management—
I mean, I’m not saying this. The managers are saying this. All
you've got to do is read the MSPB survey. Read SEA surveys. The
managers are saying that’s exactly what’s stopping them.

It’s not the system. It’s not the appeals process. It’s the ability
of an employee to intimidate the hell out of an agency because it
takes too much time and effort to deal with them. And it happens
day in and day out. Everybody can deny it if they want to, but the
fact of the matter is, that’s what the surveys show.

Mr. Bass. Thank you. One last question of you, Ms. Swift. The
subcommittee’s attention has recently been drawn to a decision in
Walsh vy. the Department of Veterans Affairs, a 1994 decision where
the Board held that Federal employees cannot be punished for
making false statements to agency investigators.

One critical element of any investigator’s job is an ability to be
a credible witness in a trial. If that decision is applied to law en-
forcement agents, how could they possibly perform their job?

Ms. Swirt. Weil, I hate to duck a question, Mr. Chairman, but
the Walsh decision was driven by controlling Federal circuit prece-
dent. It is presently pending before the court because the Office of
Personnel Management has appealed it, and since it is pending and
is still in litigation, I think it inappropriate for me to comment on
this matter at this time.

Mr. Bass. Thank you very much. I'll recognize Mr. Mica.

Mr. Mica. Thank you. Mr. Tobias, and maybe the other panel
members, under what conditions should an agency be able to termi-
nate an employee without a 30-day advance notice?


55

‘The Changing Role of the Personnel Manager

How can alignment between mission, work culture, and management systems be achieved
in Federal Government? Two basic factors we have found predict whether an
organization can achieve “high-performance” status:

© Effective leadership

‘© Human resource system focused on superior performance
Effective Leadership. Individuals who lead high-performing organizations clearly
articulate organization mission, establish a compelling vision of the future, and reinforce
consistent values and performance goals. These leaders also create a strategy that
integrates critical success factors in operations with critical success factors in human
resources management. In other words, human resources is seen as an “enabler” to
achieve organizational outcomes, not an “administrative” or “compliance” function.

Accountability for performance management is placed squarely on the line manager and
individual performer. The role of the personnel manager shifts to one of internal
consultant to the line manager.

Organization leadership extends to the human resources function, where the most effective
human resource managers are able to contribute directly to organization mission, vision,
and strategy by helping to identify core competencies required for high-performance, and
designing personnel management systems to select, develop, manage, and reward desired
competencies. Human resources, to be effective, must be repositioned away from the
traditional “administrator” of payroll and benefits to an “active change agent” or “business
partner” which anticipates and supports the evolving operational requirements of the

‘Human resource management must become a strategic partner in the leadership of the
organization of the future. Its value-added will be to help make the linkage between
organization goals and the people that will need to perform the work to achieve those


2

than fully successful. I can recognize problems, however, when
more than 73 percent of those employees were rated, as is termed,
fully successful or outstanding.

Federal programs are really not performing at the Federal level
in a manner of excellence that these individual ratings would lead
any rational observer to expect. Indeed, recent laws, such as the
Chief Financial Officers Act and the Government Performance and
Results Act, both directed major provisions to improving the meas-
ures the Federal Government uses to assess its programs.

We know that the vast majority of Federal employees work hard
to make their agencies as effective as possible, but we also know
that the system is very reluctant to act against poor performers. Of
even greater concern, the poor performers know this and some-
times use this. Few factors can corrode the morale of an organiza-
tion more steadily than the knowledge that people who work hard
and perform well are rewarded nearly the same as those who don’t
measure up or really don’t perform.

The Merit Systems Protection Board reports that 78 percent of
Federal managers who responded to their survey had managed an
employee with serious problems. Only 23 percent of those man-
agers initiated personne! actions to demote or terminate those em-
ployees.

Some managers reported being confused about the differences be-
tween authorities provided under chapter 43, which addresses per-
formance problems, and chapter 75 of title 5, which deals with
cases involving misconduct. Others expressed reservations about
the level of support that they would receive from a senior agency
manager or management.

During our October 12 hearing, administration witnesses esti-
mated that acting against a poor performer requires about 5 hours
per week of a manager’s time. Is this why so few people in Federal
employment ever get fired or face disciplinary measures? I think
we have to ask ourselves some of these questions. Is this why only
0.4 percent of employees are rated less than successful?

I am fully committed to the principle that people who operate ef-
fectively should be rewarded for their efforts. The flip side of the
coin is, we need accountability when the job isn’t done right. Unfor-
tunately, accountability doesn’t happen often enough in the Federal
sector.

To help the subcommittee explore these issues, we have convened
two panels. Our first panel consists of Mr. Courtney Wheeler, as-
sistant general counsel of Marriott International, who will provide
the experience of a leading private organization.

He will be followed by Ms. Sandra O’Neil, of the Society for
Human Resource Management, who will explore private sector
practices in a more general fashion.

Dr. Joyce Shields will testify on the basis of the Hay Group’s con-
sulting experience for both private corporations and Government
agencies, including both civilian and defense agencies.

Mr. Frank Cipolla, director of the Center for Human Resources
Management of the National Academy of Public Administration,
will examine the topic based on his work with the academy and
also his extensive public service career.


174

Today's hearing on "Performance and Accountability" should
provide an opportunity to set the record straight. The testimony
we will receive from the Office of Personnel Management and the
Merit Systems Protection Board will provide us with hard data
which shows that the number of personnel actions against poor
performers is relatively small. This suggests to me that the
competitive hiring process does bring many of the best and
brightest into federal service. It also suggests that, in many
instances where performance problems occur, federal managers
are providing counseling or training to help resolve deficiencies
before they deteriorates to where termination is warranted.


198

The Honorable John L. Mica
Chairman

Noveaber 17, 1995

Page 3

addition to EEO discrimination. We know that the Merit Systens
Protection Board’s annual reports contain these numbers. We are
unable to get the information from the MSPB since, as of the day of
this response, most government employees are on furlough, including
those at the MSPB.

3. Could you cite any inspectors general who have identified this
Problem in their reports?

We do not know whether any inspectors general have identified
this problem in their reports. We do not routinely see copies of
IG reports, nor are they routinely circulated.

4. Are there any penalties in current law for filing false
charges with these agencies?

There are no penalties for filing false charges with any of
the appellate agencies. There are a few cases (we know of two)
where agencies disciplined employees for making false allegations,
when the agency was able to prove that an employee lied by a
preponderance of the evidence. In the two instances of which we
e Merit Systems Protection Board upheld the penalty of
We do not now believe appellate agenci: ke any attempt
to monitor false charg

5. are there any fees currently required to file such charges?

There are no fees currently required to file any kind of
charge.

6. Would you recommend the institution of these (or other)
barriers to frivolous filings?

We would recommend the institution of some barriers.
Currently, in EEO cases employees are allowed to use official
government time to visit with the EEO counselor, to prepare their
EEO complaint, to be present at any EEO hearing at the agency, the
EEOC, or in court. We would suggest that employees be required to
use their own time for all of these functions, but that if they
prevail in their case, either through a favorable settlement or an
ultimate decision, the leave that they took during the processing
of the EEO case be retroactively converted to official time and
their leave restored.

Many collective bargaining agreements provide for official
time for employees to participate in the grievance process under
the agency contract and to attend arbitration hearings, etc. We
again suggest that employees not be granted official time for these



3)

163

Have there been any studies correlating these awards to performance ratings?

Although OPM does conduct general evaluations and oversight of the use of various
awards authorities, we have no recent studies that specifically correlate awards with
performance ratings. The principal reason for not looking at this in particular is that
many, if not most, awards are rather strictly correlated to ratings by design. For
instance, quality step increases require an “Outstanding” rating. (In the future, if an
agency does not use the “Outstanding” level, specific criteria would have to be set up
for identifying the exceptional performance that a QSI is intended to recognize and an
employee would also be required to have the highest rating that is used by the agency.)
Other performance, or rating-based, awards are typically granted under agency policies
that require that larger award amounts be given to employees with higher ratings. This
was a regulatory requirement within the Performance Management and Recognition
System and many awards programs for other employees were designed and operated to
mirror PMRS requirements.


72

In addition, if you’re looking to determine rewards for employees,
you would set up different types of systems. If you’re looking to
provide information for the development of employees, you would
set up other types of systems. So that I think just a simple pass-
fail is not giving the organization or the individual the type of in-
formation that’s required for superior performance.

Mrs. MORELLA. you would go along with what Mr. Wheeler
said, ena, in some instances—affirmative, attendance—that might

e OK.

Ms. SHIELDS. It might be appropriate.

Mrs. MORELLA. But not in terms of achievement.

Ms. SHIELDS. It’s for what purpose you would look.

Mr. CiPoLLa. I would agree with both Dr. Shields and Mr.
Wheeler. I think the important question to ask, along with whether
pass-fail is the proper kind of a system, is what’s the rest of the
system?

You ask about gradations in performance, especially above sim-
ply meeting minimum requirements and, therefore, passing. It de-
pends on how you design the incentive system and the performance
awards system and how that complements the performance man-
agement and performance evaluation process. So it’s difficult to
look at it as a single question.

I think it’s safe to say that most organizations, public and pri-
vate, that are instituting new performance evaluation systems, use,
typically, a three-level system. But there are others who use pass-
fail. There are others who use even a five-level system, as we have
in the Federal Government over the past years.

Mrs. MoRELLA. So there is the variation. I have a number of
other questions, but I wanted to pick up on what Ms. O’Neil had
mentioned in her testimony and her statement that she submitted,
and that is, in terms of the rewards, I think she focused pretty
much on the concept that non-cash rewards are far more meaning-
ful. I just wondered if any of you wanted to comment on that, for
the recognition for superior performance, versus cash awards. Any-
one want to comment on it?

Ms. SuHIeELps. I think a lot of organizations are moving toward
looking at the total way that you can emphasize superior perform-
ance, and there are a number of alternative means that organiza-
tions are currently looking at, given declining dollars.

In addition, if you really look at compensation systems, as we
have, many times you find that there is a very little bit of money
that differentiates what goes to the most outstanding performer
and the average performer. Unfortunately, not only is it a very lit-
tle bit of money, but many employees don’t understand why they
got more money than the other employee did.

id so, we found that those organizations that emphasize re-
ward, where good things happen to good people and bad things
happen to bad people, where it’s in all of the systems and the signs
that you send out—those people who have the opportunity to go to
training, those people who get development opportunities, those
people who are rewarded in a number of different senses—those
are the signs that you’re sending with regard to reward.

Mr. WHEELER. Madam Congresswoman, my experience has
taught me that, with the exception, perhaps, of a plaque for em-


27

company's personnel policies. While, in my experience, many such
complaints are the product of a manager's dissatisfaction with
the human resource professional's wise and well-reasoned counsel,
especially in view of the litigious nature of our society, there
are too many instances where the advice is grounded on matters of
form rather than the substantive nature of the employee's
misconduct or poor performance.

The resolution of this problem requires the implementation
of personnel policies that are equitable yet simple, bereft of
unnecessary paperwork, easily learned by inexperienced managers,
and expeditious. ‘Too often personnel policies appear to be the
near equivalent of legal requirements which create pseudo-
constitutional rights. Not only are such policies difficult to
administer in today's fast paced business environment, they often
promote needless personnel conflict, require the services of
large numbers of human resource personnel to administer, and, in
the end, frequently fail to resolve the employee's complaint that
his or her “rights” were violated. Any examination of the
burgeoning litigation alleging breach of an employment contract
in states where laws recognize the existence of an employment
contract solely on the basis that the employer promulgated an
employee handbook evidences these problems.

My company has approached this issue by establishing a
limited number of offenses which warrant immediate termination
without prior warning and a universal rule providing for the

termination of employees who receive a specified number of

14


70

Mr. Mica. Thank you. You didn’t say as much as the others, but
when you talked about looking at the multiple appellate process,
you got my attention. We appreciate all of your testimony.

I wanted to take just a moment, if I may, and recognize two visi-
tors we have today observing our subcommittee process and the
subject of our subcommittee hearing. We have, from the Cabinet of
Ministers of the Ukraine, Mr. Selivon, First Deputy Minister of
Cabinet Ministers, and Mr. Ivan Tymchenko. If you could stand, we
welcome you. [Applause.]

We hope that you learn something from our process, and we’re
delighted to have you at our subcommittee hearing as observers
today.

With that, I will return to our witnesses. I’m going to reverse the
process. Usually, I get to ask the question first, being the chair-
man, but I’m going to reverse the order and start with Mrs.
Morella first for questions. She is probably the most knowledge-
able. Mr. Bass and I are new to the panel and the process, and
we're fast, quick learners, but we want to give Mrs. Morella the op-
portunity, so we'll reverse the order of questions.

Mrs. MoRELLA. With a preface. I would, I think, grade you all
maybe an “A,” including the chairman and the vice chairman of the
committee. I don’t know whether to say I grade you a pass, an “A,”
a highly satisfactory, or whether I wait for the 360-degree evalua-
tions to all come in from all of the corners.

But my question to all of you is: Do you think that the pass-fail
rating is a satisfactory way to measure performance? I would start
off, then, with Mr. Wheeler, and go through.

Mr. WHEELER. Madam Congresswoman, I think the pass-fail
method, as an overall rating system, is unsatisfactory, because it
fails to identify those performers who are exceptionally good or ex-
ceptionally bad. People can fail and be close to passing; people can
pass and be close to failing. I think, if we’re looking to optimize em-
Ployee performance, there needs to be some gradation so you can
separate different levels of management performance or lack of per-
formance.

I do, however, think that the pass-fail rating in some areas with-
in a performance evaluation is certainly better than what many
evaluations now have. I can tell you, from the private sector, I rou-
tinely am frustrated when I have to defend at trial evaluations on
simplistic matters like EEO support, attendance, things of that na-
ture, where the employee either is successful or not successful.

You come to work every day; that’s expected. Why should you get
a 1ona 5-point scale, which technically means you’re exceptional?
You either support affirmative action and EEO opportunities or
you don’t. In those areas, I think pass-fail is very important.

Too often, performance evaluations use one system for all types
of ratings, and, as a result, you automatically inflate poor perform-
ance ratings, because the person may come to work all the time,
may support affirmative action, may do any of those things which
are pass-fail items. Those are rated very highly. Very important is-
sues may be rated low, yet the person passes, because the overall
evaluation is brought up by less significant evaluators. So I think
you really need a combination.


146

STATEMENT OF
ALLAN HEUERMAN
ASSOCIATE DIRECTOR
HUMAN RESOURCES SYSTEMS SERVICE
U.S. OFFICE OF PERSONNEL MANAGEMENT
before the
SUBCOMMITTEE ON CIVIL SERVICE
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U.S, HOUSE OF REPRESENTATIVES
on
PERFORMANCE AND ACCOUNTABILITY IN THE FEDERAL GOVERNMENT

OCTOBER 26, 1995

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTES:

I APPRECIATE THE OPPORTUNITY TO DISCUSS PERFORMANCE MANAGEMENT,
ACCOUNTABILITY, AND DEALING WITH POOR PERFORMERS IN THE FEDERAL

GOVERNMENT .

MR. CHAIRMAN, FIRST LET ME SAY THAT THE VAST MAJORITY OF FEDERAL
EMPLOYEES ARE HARD-WORKING AND ARE COMMITTED TO DOING A GOOD JOB.
THEREFORE, IN CONSIDERING THE ISSUE OF PERFORMANCE MANAGEMENT, WE
NEED TO FOCUS ON DEVOTING OUR RESOURCES AND ENERGY TO IMPROVING AND
PROMOTING GOOD PERFORMANCE. WHILE THE ISSUE OF ADDRESSING POOR
PERFORMANCE IS IMPORTANT, OUR ULTIMATE OBJECTIVE IS TO FOSTER
EXCELLENCE THROUGHOUT THE FEDERAL WORKFORCE AND THEREBY MINIMIZE

INSTANCES OF POOR PERFORMANCE.

CLEARLY, PROMOTING GOOD PERFORMANCE REQUIRES THAT WE ADDRESS POOR
PERFORMANCE, BUT IT DEMANDS THAT WE DO MUCH MORE. CREATING AN

EFFECTIVE WORKFORCE IS A MULTI-FACETED PROCESS INCLUDING EFFECTIVE


managers to fire incompetent employees. Concern over fraud, waste, and abuse led to additional
reform intended to “clean up" government waste, including removing poor performers. Despite
these previous efforts, we still don’t have an employee performance management system that
works well and the problems of addressing the poor performer issue are still with us. Federal
managers feel that earlier efforts did not work; they “did little to make the system responsive

to their needs."

These issues are complex. They cannot be addressed independent from other human
resource management issues. As with many federal administrative procedures, there is much
overlap and the intersection among procedures makes it difficult to correct one without changing
or impacting others. How should a focus on performance and accountability matters be defined?
Why doesn’t the current system work? Is the system broken? Are we focusing on the right part

of the system?

Exploration of some of these questions may help us better focus on the key issues of
performance and accountability. Whether the current system works, is broken, should be fixed
or totally replaced revolves around the purpose of performance and work in the organizational
climate, how it is measured, and how accountability is executed in rewarding the good performer
as well as taking action against the poor performer. The philosophy of having an employee
performance management program is based-on the premise that an individual's contributions do
make a difference. But a difference towards what outcome? Work can be defined as an

“intended outcome of purposeful activity." Organizations and supervisors measure effort rather


20

Because anything less than a max rating appears to indicate some
problem with the employee's performance in these such areas,
employees are routinely given maximum ratings in these
categories, thus skewing the results of the final evaluation.
Preventing inflated ratings is, at the very least, a difficult
task. Indeed, it may be impossible. If any progress in this
area is to be made, methods for holding raters accountable for
inflated ratings must be implemented. This in itself would be a
daunting undertaking.

Optimizing employee performance requires the implementation
and use of disciplinary and non-disciplinary procedures to
correct misconduct, improve substandard performance, and
terminate employees who fail to meet required conduct or
performance standards. Managerial accountability is the keystone
of a program that successfully addresses substandard performance
or conduct. However, the success of corrective action programs
is often affected adversely by management's failure to assume
responsibility for addressing performance or conduct issues in an
appropriate and timely manner. Management's failure in this
regard is attributable to several factors: inadequate training,
fear of litigation, and the formation of a “human resource
bureaucracy.”

Management accountability cannot exist in the absence of
appropriate training. It is my experience that minor performance
and conduct issues are often permitted to develop into

significant problems because managers are inadequately trained in


37

decisions about each of their employees; these decisions influence the company's ability to
execute corporate strategies. They decide whom to pay more, whom to promote, whom to move
to what position, whom to hold accountable for what goals, and whom to coach. Many
companies are also making tough decisions about whom to lay off and whose job to eliminate.

These critical decisions are made, to a large degree, on the basis of performance.

The diseases underlying performance management systems symptoms (managers’ dislike of
completing the forms; the rater may not be in the best position to judge performance; etc.) relate
to a company's culture (how important is high performance?), its expectations for its managers
(are they accountable for measuring, assessing, managing, rewarding, and developing
performance?), and whether there are compelling business reasons (profit, revenue, and

productivity) for being effective at performance management. If performance-based culture and

values, managerial performance management accountability, and individual-level performance
linkages are the underlying causes of performance management problems, they are also the keys
to its lasting improvement. High-performing companies have discovered this linkage and use it

to make performance management work.

Measure what counts. High-performance companies take the measurement of performance very
seriously. Overnight delivery at Federal Express, customer service at USAA, quality at Xerox,
drug development cycle time at Merck, and productivity at General Electric are all examples. At
Citibank, the branch manager's bonus is linked to customer satisfaction ratings. All of these
high-performing companies have determined what is important, communicate it repeatedly, set a

4


157

1) Please provide a ten year history of the frequency distributions of employee
performance ratings.

‘See attached table.


57

a misfit between an individual and the job, not the result of a lack of capability.
Superior performing organizations build systems that allow them to fill jobs with
superior performers, not just those who meet minimum requirements. This
involves not only determining the knowledge, skills, and abilities of applicants, but
also their values, motives, and attitudes. Today, the government focuses almost
solely on knowledge, skills, and abilities.

‘Step 3: Once an individual is in a job, continuously measure individual
performance, provide feedback, and develop capabilities that support the desired
work culture. Performance management systems should be focused on the critical
success factors for the job and organization. High-performing organizations
design systems and train managers to provide employees with objective feedback
so they understand performance expectations, take corrective actions, and
recognize accomplishments. Ongoing coaching and training are critical roles of
managers within organizations, allowing employees to continuously improve
performance. Managers must change from being “controllers” of work to.
“enablers” of the work force. For example, Bill Lindner, Florida’s Secretary for the
Department of Management Services (DMS), is taking steps to change the DMS

culture from “regulator to a resource” for their customers.

Step 4: Tie rewards to desired individual, team, or unit performance. Superior
performance must be rewarded to be sustained. Reward systems must be tied to
organization mission and critical success factors, and must support and reinforce
the desired work culture. Compensation that is clearly linked to performance
motivates employees. Compensation that is disconnected from performance
breeds discontent and reinforces poor performance. Direct linkages must be made
between the way work is organized and how outcomes are achieved; reward
systems must be aligned with individual, team and unit performance objectives.


23

It has been my experience that resolving the problem of
inadequate personnel training can only be addressed effectively
by senior level management. Managers accomplish what they
perceive is important to the superiors. Understandably, this
means bottom line operational results. Only when senior
management directs that subordinate managers participate in
personnel training will managers adjust their work schedules to
include such training.

One division within my company has addressed the training
problem by mandating that every manager attend forty hours of
continuing personnel training annually. Training opportunities
are provided on the unit and regional levels. At the regional
level, the Cluster Training format is used. Cluster Training
seminars, which are generally one week in duration, are held four
times a year in major locations with substantial company
operations. Operational and staff managers, including human
resource managers and corporate attorneys, present a compendium
of seminars on various management issues, including training on
personnel matters. Some senior managers within that division
have expanded on the training obligation by requiring that their
managers attend specified personnel management seminars. Where
senior management exhibits interest in personnel training, the
number of lower level managers enrolling in personnel seminars is
substantially increased. Concomitantly, personnel issues in
operations run by managers who have attended personnel training

programs tend to be less severe and occur less frequently than in

10


144

Mr. Moran. Thank you.

Mrs. Morea. I appreciate reading your testimony and, also,
getting the benefit of your expertise and your experience. I was in-
terested—I got a big kick out of the survey of the Senior Executives
Association and the “frequent filers’—and I just wondered, when
you talk about putting together a program for the managers and
the need for training of managers, do you ever talk about who the
frequent filers are, and do you ever talk about what managers
seem to be the ones that are subjected to the poor performance, the
managers who have the frequent filers? Jerry, I’m just kind of curi-
ous.

Mr. Suaw. I’m not sure that I understand the question, Mrs.
Morella. Are managers sometimes frequent filers who are poor per-
formers?

Mrs. MorELLA. No, who have—do you ever talk about—you
know, since you have—matter of fact, it’s pretty shocking. It says
that—of the fact that you have these frequent filers—incidentally,
one of the other questions you asked is about whether or not the
complaints are frivolous, and 76 percent of the people who re-
sponded either said, “Most of the time,” “Many of them are,” and
“Some of them are.”

Mr. SHAW. That’s true.

Mrs. MorELLA. That’s a pretty high percentage. What I’m won-
dering is, do you ever look at who these frequent filers are? I mean,
in common, you know, as kind of a support network. Second, do
you seem to find the same managers who have most of the frequent
ilers?

Mr. SHAw. I understand that. To the extent that we know, fre-
quent filers tend to be individuals who have performance problems,
because it’s an excellent defense to use against actions being taken
against you. We do not have any statistics or any information
about whether or not the frequent filers are those who have the
same manager, but, in my own personal experience, that has not
been the situation.

I would add that the term, “frequent filers,” did not come from
us. It came from a panel where the heads of the agencies of MSPB,
EEOC, and others were there, and one of the agency heads used
it, because they recognize it, too. They know that it’s a truism, and
they know that they have to look at these with some—make sure
that they’re examined, on the one hand, and on the other hand,
they have to deal with all of the complaints.

There is no mechanism for getting rid of frivolous complaints.
That’s why we suggested that there be some way to get rid of frivo-
lous complaints, and I think it should be a labor-management part-
nership on that. I mean I think there should be a panel set up to
get rid of frivolous complaints in an agency, and it should be a co-
operative undertaking.

5 Mrs. MoRELLA. I think Bob wants to say something about that,
erry.

Mr. Tostas. Well, I hope that this hearing doesn’t focus solely on
alleged frequent filers. | mean the issue of poor performers and
how performers are dealt with is a serious question, a serious
issue, not in reality, but in perception. This esoteric issue of fre-
quent filers applies to such a small number of folks, and it’s not


90

While we do not track all such defenses, we do know that in FY 1994, of the 224

Chapter 43 appeals decided by the Board, 109 involved an affirmative defense of

discrimination and 26 of these cases were decided on the merits. We have tracked
some of this data since 1990, and I have attached a summary of that data.

Separate from the adjudicatory function and as another part of the Board's
statutory responsibility, my office has conducted a number of studies over the years
focused on performance management issues. In September 1995, the MSPB released
an issue paper titled "Removing Poor Performers in the Federal Service.” The paper
draws from the results of a recent survey of over 5,700 managers and supervisors.

Among the findings from this study and some related data-gathering are the following:

= Very few Federal managers bother to use the performance-based removal actions
established by the law, in part, because they do not understand either the Chapter
43 or Chapter 75 provisions but believe them to be difficult to use.

= Supervisors report that they frequently receive inadequate or confusing advice and
assistance from agency “experts” on removal procedures.

= Many supervisors and managers believe, incorrectly, that only Chapter 43
procedures can be used to address a poor performance problem and they perceive
those procedures to be too complicated, time consuming, or onerous.

= Already reluctant to create an unpleasant work environment, many supervisors
also believe that if they take formal action against a poor performer there is a real
possibility that (1) higher level management will not support them, (2) their


172
Crtess Colin Me

STATEMENT OF HONORABLE CARDISS COLLINS,
RANKING MEMBER OF THE
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
BEFORE THE SUBCOMMITTEE ON CIVIL SERVICE
HEARING ON PERFORMANCE AND ACCOUNTABILITY

October 26, 1995

Mr. Chairman, the performance of the Federal workforce is a
subject under constant discussion, both inside and outside the
government. This week, a local TV news program is running a
series of stories called "Uncle Slam" in which several federal
employees addressed the constant stereotyping and blanket
criticism routinely heaped on federal workers by the press, the
public, and even some Members of Congress. They expressed
great frustration with the view that all federal workers are lazy,
intrusive, red tape loving bureaucrats. They pointed out that the
public depends greatly upon the jobs federal workers perform and
that the vast majority of our work force performs those jobs very
well.


44

[appreciate the opportunity to address the Subcommittee and hope that you will continue to tum

to SHRM for human resource expertise on the issues of performance and accountability.

I would be happy to answer any questions,


85

level management will not support them, their decisions will be re-
versed upon review or appeal, or they will be falsely accused of
having acted for discriminatory reasons.

In contrast to the disincentives and perceived personal risk asso-
ciated with attempting to remove a poor performer, many super-
visors see little downside cost, and, actually, no cost at all, in not
taking any action.

When examining the reluctance of Federal managers to remove
poor performers from the Federal service, it is useful, I think, to
note that supervisors report that they do take some action to deal
with performance problems, such as informal counseling, giving a
less than satisfactory rating, or placing an employee on a perform-
ance improvement plan.

The positive actions supervisors take typically stop, however,
short of formal action to remove. While supervisors take actions, or
decline to take actions based on their perception that the removal
process is difficult, it is also important, I think, to recognize that
their perceptions are sometimes inaccurate.

For example, even though many supervisors would agree with
the statement that it’s very difficult, if not almost impossible, to
fire an employee, the fact of the matter is that most removal ac-
tions that are taken against employees are not even contested, and
when they are contested, the management decision is upheld, cer-
tainly, in a majority of the cases.

It has been estimated, for example, that on an average, only 20
percent of all removals and demotions are appealed to the MSPB,
and, at the Board, our records show that with regard to the out-
come of all initial appeals that are not dismissed, in fiscal year
1994, the agency action was overturned or the penalty imposed by
the agency reduced only 13 percent of the time.

While remaining mindful, as I mentioned earlier, that the major-
ity of Federal employees are well-qualified, hard-working, and com-
mitted to doing a good job, the challenge in efforts to improve the
Federal Government’s response to poor performers will be to de-
velop alternatives that address both perceptions and the reality re-
garding how we deal with poor performers and strike a reasonable
balance between the need to encourage and enable the taking of
timely corrective action and the need to protect employees from ar-
bitrary, nonmeritorious actions.

Mr. Chairman, this concludes my formal testimony, and I'll be
happy to answer any questions. Thank you.

[The prepared statement of Ms. Swift follows:]


176

Again, Mr. Chairman, | believe that the Federal government
has good workers who give the American public good service. |
also believe, however, that to sustain a high level of performance,
it is essential that we have modern and flexible performance
management systems in place. | hope that the review which this
subcommittee has undertaken will ensure that we do.


202

The Honorable John L. Mica
Noveaber 17, 1995
age 7

favor of management and, in a high percentage of the cases, the
Federal Circuit Court affirms the MSPB. However, in the 10% or so
cases that the Federal Circuit does reverse the MSPB, they
establish important precedent and prevent outrageous abuses of the
process. Wa believe that it in important for an independent,
federal court, beholden to neither the Executive or Legislative
Branch, to have the final review in such cas We would not
support eliminating such judicial review.

Mr, Courtney Wheeler described Marriott’s “Peer Review" system, in
which a panel of managerial and non-managerial employees are given
the authority to make a binding decision.

13. Do you believe a similar system would work in the federal
government? Why?

No. In a high percentage of its operations, Marriott does not
have employees represented by unions. Thus, there is noticeably
absent a policy reason on the part of employees for opposing
management actions. We do not believe the same holds true in the
federal government. Unions sometimes resist management actions for
reasons unrelated to the specific action. If such were to occur in
government, it could have seriously adverse resul| To begin
with, the ratio of managerial to non-managerial level employees on
such a panel would probably be negotiable. We doubt very much that
federal unions would agree to be in the minority on such panels.
The problems that such a “Peer Review" system in removal or
disciplinary actions raises are huge, and the procedural fights
would be enormous. We do not believe that it would be worth it.

14. Would legislation be needed to permit or encourage such
systems?

Legislation would be necessary to permit or encourage such
systems because federal employees would be deprived of valuable
ppeal rights they currently have. As noted in No. 13, we oppose
such a system.

15. Do federal managers currently receive adequate training on
performance management?

No. In our response to No. 8, we discussed the course that
the SEA/Professional Development League sponsors on dealing with
poor performers. This course was started because of a lack of
adequate training of managers in dealing with problem employees.
Many managers have never received training in supervisory or
managerial skills and know little about their rights as a manager,
let alone their responsibility to be in control of the workplace.
This is especially true in matters involving time and leave


62

the federal level; identified trends; and linked this research with examples of high performing
organizations. The research, interviews, and analyses have been compiled into a series of
publications on innovative approaches to human resources management, a guide to broad-banding
alternatives, managing downsizing efforts, and transforming the human resources management
program. A new consortium of agencies has just been set up for fiscal year 1996. Its focus will
be on transforming the "best practices" and “lessons learned” into practical projects to improve
the current federal work environment. A panel of advisors, including NAPA Fellows and other

experts, oversees our projects, including the consortium efforts.

In our projects and activities relating to performance management, we work closely with
NAPA’s Program on Improving Government Performance, which focuses on implementation of
the Government Performance and Results Act (GPRA). Our discussions continue to reflect two
key needs: (1) a stronger connection between individual and organizational performance
management and (2) greater emphasis on setting expectations rather than the appraisal process.
In short, when addressing the "poor performer” issue, attention has focused on the wrong part
of the process. GPRA should provide an opportunity to shift the focus and help managers better
concentrate on expected contributions from employees and on their own accountability for the

work of the organization.

Performance and accountability issues are ongoing themes in the public administration
environment. Previous reform efforts such as the Civil Service Reform Act of 1978 linked

performance with pay incentives and established procedures intended to make it easier for


86

STATEMENT OF EVANGELINE W. SWIFT

DIRECTOR, POLICY AND EVALUATION

U.S. MERIT SYSTEMS PROTECTION BOARD

Chairman Mica, Ranking Member Moran, and Members of the Subcommittee:

It's a pleasure to appear before you to discuss an issue of great importance to the
vitality, efficiency, and effectiveness of the Federal civil service. I am here in my
capacity as Director of Policy and Evaluation for the U.S. Merit Systems Protection
Board.

The Board was established by the Civil Service Reform Act of 1978 as an
independent, quasi-judicial agency in the executive branch with responsibility to
adjudicate Federal employee appeals from personnel actions taken against them.
Approximately two million Federal employees--two-thirds of the Federal workforce
have appeal rights to the Board. In addition, the Board is charged with conducting
independent studies of major civil service issues and reviewing the significant actions of
the Office of Personnel Management. It is this latter responsibility which my office
carries out for the Board.

Mr. Chairman, we were pleased to respond to a recent request from
Subcommittee staff seeking a number of the reports of past MSPB studies. We believe
these reports contain objective and useful information on a variety of important civil
service and human resource management issues. In your invitation to testify you asked
that we summarize a recent MSPB issue paper titled "Removing Poor Performers in the
Federal Service." This latter paper provides some of the most current Federal data and
analysis on the perceptions and experiences of Federal managers and supervisors on the
issue of poor performers. You also requested certain statistical information regarding
the Board's adjudicatory function. I am pleased to provide this information as part of

my testimony.


121

of discrimination as an affirmative defense against an adverse
action. Clearly then the supervisors and managers have not been

abusing their authority in either whistleblower or EEO cases.

Employees should not, however, be deprived of a right to
raise affirmative defenses before the MSPB in conduct cases under
Chapter 75 of Title 5. Conduct cases could be much more easily
fabricated and more speciously taken against employees. Thus,
the availability of affirmative defenses is important in conduct
cases. Performance cases, on the other hand, are generally not
precipitous actions, but deal with performance that has taken
place over a number of months and often a year or more.
Performance is not one specific incident as is conduct and, thus,
is not as likely to be subject to arbitrary or wrongful motives.
We believe this system would restore the balance between the
ability of an agency to remove an employee for unsatisfactory
performance and the employee's right to fairness, due process and

an appeal to MSPB.

The system in the private sector is similar to what we have
proposed. Private companies can remove poorly performing
employees without regard to whether employees allege that the
removal is because of discrimination or other illegal action.
The employee, however, has the option of filing a discrimination
complaint with the EEOC and pursuing it and has the option of

filing suit in court if they believe the removal was improper

13


195

I believe that Congress also recognized this change when they
created FERS. This system, unlike CSRS, is portable, recognizing
that many federal employees will move on to new jobs in the private
sector. I strongly disagree with the notion that the federal
government should rely on contractors for support services or other
fluctuating functions. Almost every GAO study has concluded that
contracting out is not cost effective. I simply see no need or
rationale to substitute contract employees for the hard working,
experienced public servant. I am strongly opposed to the flimsy
philosophical assumption underlining this proposal that the private
sector can always do work faster and cheaper. Until I am convinced
that there is a need in this area, I will continue to oppose any
initiatives that increase the use of contract employees.

Thank you for allowing me the opportunity to share my opinion
with you on these important matters.

Sincerely,

No ni fire

Robert M. Tobias
National President


124

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31

Mr. Mica. We thank you and would like to call now on Sandra
O'Neil, with the Society for Human Resource Management.

You're recognized.

Ms. O’NEIL. Thank you, Mr. Chairman. My name is Sandra
O'Neil. I'm the vice president of HR Associates in Miami, FL. I am
here today on behalf of the Society for Human Resource Manage-
ment [SHRM]. SHRM is the leading voice of the human resource

rofession, representing the interests of more than 67,000 mem-

Ts.

I also have the pleasure to tell you that I’m the daughter of re-
tired career Federal employees. My mother was a civil servant for
23 years and my step-dad was for 30 years. I learned from them
the value of work.

However, frequently, the topic of discussion at our dinner table
was their frustration due to a perceived lack of focus on achieving
a high level of performance within their agency. My mom, who's a
particularly hard worker, would oftentimes be depressed after her
annual review, either because she was highly rated and saw noth-
ing come of it or, for some unknown reason, had not received her
usual glowing evaluation.

In preparing for this testimony, I called and asked them, “Did
you ever see a link between your daily work and the agency’s
goals?” Unfortunately, the answer they gave me, both of them, was
negative.

believe focus has to initially start at the organizational level in
order for performance management to be successful. Motorola’s cor-
poration-wide “six sigma” defect-free goal is an example of an orga-
nization-wide measure. Such measures provide employees a win-
dow into the company’s values and beliefs and best define an em-
Ployee’s nece! behavior.

fe all know the symptoms of performance management illness,
such as how much managers dislike completing the appraisal
forms. The diseases underlying these symptoms relate to a compa-
ny’s culture, its expectations for its managers, and whether there
are compelling business reasons for being effective at performance.

I would like to highlight the following principles of effective pri-
vate sector performance management as you consider changes to
the Government system.

The first principle that I've seen companies follow is that they
measure what counts. High-performance companies take the meas-
urement of performance very seriously. At Citibank, for instance,
the branch manager’s bonus is linked to customer satisfaction rat-

ings.

The second principle is that they benchmark performance man-
agement practices. Hi h-performing companies are both learners as
well as innovators. They continually search out the best practices.
They compare themselves to the best, and they make adjustments
fairly rapidly.

A third principle is that they try to set order-of-magnitude per-
formance improvement erect as opposed to little incremental tar-
gets. They set their sights igh and their performance expectations
and targets affect employees’ confidence and optimism.

Fourth, performance management is a process; it’s not an annual
event. It should be a cyclical process. Managers are expected to


156

-11-
IN ADDITION, OPM HAS A MULTI-FACETED PROGRAM TO ASSIST AGENCIES.
FOR EXAMPLE, OPM CONDUCTS PRACTITIONERS' CONFERENCES, WORKSHOPS AND
AGENCY BRIEFINGS THROUGHOUT THE YEAR CONCERNING PERFORMANCE MANAGE-
MENT. WE SEND WRITTEN GUIDANCE TO ALL AGENCIES ON ISSUES AND
PRECEDENTIAL CASE LAW RELATING TO PERFORMANCE-BASED ACTIONS. WE
PROVIDE TECHNICAL ASSISTANCE TO AGENCIES. OPM TAKES A CAREFUL LOOK
AT ALL DECISIONS OF THE MSPB AND ARBITRATORS INVOLVING PERFORMANCE-
BASED ACTIONS. WE EXERCISE OUR AUTHORITY TO INTERVENE IN ANY CASE
WHERE WE BELIEVE THE DECISION IS ERRONEOUS AND WILL HAVE A
DETRIMENTAL IMPACT ON FEDERAL AGENCIES' ABILITY TO TAKE PERFOR-

MANCE-BASED ACTIONS.

WHILE ALL OF THESE INITIATIVES ARE CONTINUING, WE ALSO RECOGNIZE
THAT THE FEDERAL WORKFORCE IS OPERATING IN A CHALLENGING ENVIRON-
MENT CHARACTERIZED BY SHRINKING RESOURCES AND CHANGING MISSIONS.
DOWNSIZING IS FORCING AGENCIES TO MAXIMIZE THE PRODUCTIVITY OF
REMAINING STAFF. CONSEQUENTLY, MANAGERS AND SUPERVISORS ARE
WORKING HARD TO DEVELOP NEW PERFORMANCE SYSTEMS THAT INVOLVE AND
MOTIVATE EMPLOYEES. WE ARE SEEING A MOVEMENT TOWARD MORE ORGANIZA-
TIONAL AND PERSONAL ACCOUNTABILITY FOR THE QUALITY OF WORK PRODUCTS
AND SERVICES. AT OPM, WE RECOGNIZE THAT IT IS ESSENTIAL FOR US TO
PROVIDE MANAGERS AND SUPERVISORS WITH A SYSTEM THAT SUPPORTS THESE
INITIATIVES AND ALLOWS THEM TO HOLD ALL INDIVIDUALS ACCOUNTABLE FOR
MEETING PERFORMANCE EXPECTATIONS.


179

veterans” preference rights in hiring to obtain remedies as though the original harm had not been

done.

Question: Do you intend for such review authority to be located within OPM?

Is this recommendation intended to address all mistakes, or would you require a
demonstration of intentional denial?

Answer: The answer to your first question is still being discussed among the Veterans”
Service Organizations (VSOs). In general, these discussions support the notion that the
veteran complainant should be able to start the initial informal administrative review in a
‘geographic location near them. For example, the personnel office where the veteran
applied for the federal job might accept the complaint and do an initial review.

However, VSOs believe the veterans should have the right to appeal their complaint to a
central hearing body such as the Office of Personnel Management (OPM). The agency.
having authority to provide a final administrative decision regarding the veteran's
complaint. should be obligated to conduct a proceeding which would produce a record
that would constitute evidence before the United States Court of Appeals for the Federal
Circuit,

In answer to the second part of your question, this recommendation was intended only to
address the damages inflicted on the veteran regardless of the intent of the parties who
committed the error, However. if federal employee intentionally violated the law.
especially when someone is damaged. we believe that should be a factor in the employee
evaluation, discipline might be appropriate. and they may be held liable for damages
covered under the law.

We hope these views assist you in your deliberations. We would be pleased to meet with

You oF your staff to clarify our views as the eivil service reform proposals begin to be dratted

LENNOX E. GILMER
Associate National Legislative Director

LEG:Imb

ce:

American G.I. Forum. Art Solis

‘American Legion, Emil Naschinski

AMVETS, Bob Carbonneau

Non-Commissioned Officers Association, Richard Johnson
Paralyzed Veterans of America, Blake Ortner

Veterans of Foreign Wars, Sid Daniels

Vietnam Veterans of America, Bill Crandell


7

tion system has the potential of being a popularity contest where
no one gets a true rating.

To reference the earlier hearings, I want to say that I was a little
disappointed in some of the sentiments expressed by some of the
agency officials. I don’t know how my subcommittee colleagues felt,
but it seems that many of these agency officials want more flexibil-
ity while, at the same time, they don’t want accountability. I don’t
think we’re in a position to continue to ignore accountability in per-
formance management.

There is a statement in Mr. Bruce Moyer’s testimony of October
13 that I feel is quite appropriate. I was disappointed. that I was
unable to be here yesterday to explore some of it with him, but I
was attending a markup of my bill in the Science Committee.

In his testimony, Mr. Moyer said that, “We need to find new
ways to reduce administrative burdens, encourage supervisors to
deal head-on with performance problems, and establish greater ac-
countability for performance,” and that’s exactly what we should be
looking for here.

The Civil Service Reform Act of 1978 was a good piece of legisla-
tion for its time. It had its successes and its failures, but, regard-
less, it would not be applicable to today’s management philosophies
and workplace environments. It’s time for change, and I look for-
ward to working with the chairman on this reform, and again I
would like to thank you, Mr. Chairman, for calling this hearing.

[The prepared statement of Hon. Constance A. Morella follows:]


139

Ms. Swirr. Well, anything that improves the efficiency of the
process, I think, would be welcomed by the managers. Our work
shows that the basic problem isn’t after it comes to the MSPB, but
the basic problem is in trying to decide what to do.

So a lot of people are confused about the system, which avenues
to go to. It’s one of the hardest things they have to do. People do
not like to fire people. You heard that from the private sector this
morning. It seems to be a part of our system, that we don’t like
to fire people, look them in face and tell them that they are not
doing a good job, and, therefore, they're gcing to be removed.

It seems to me that anything that shortens or improves the proc-
ess would be looked upon very positively by the managers that we
survey.

Mr. Mica. Mr. Shaw, if you want to comment.

Mr. SHAW. Yes. We have no problem with doing away with chap-
ter 43 performance cases and only using 75, so long as, in perform-
ance cases, the standard of evidence necessary to sustain the action
is substantial evidence. If we go back to preponderance of the evi-
dence in performance cases, we’re never going to get any of them
done, because it turns into an interminable process.

As far as the procedure, you know, we're not concerned with it.
MSPB is not delaying cases I don’t think. I think they’re very time-
ly. MSPB serves a very useful function that an arbitrator does not
serve, in that MSPB Board members are appointed by the Presi-
dent and confirmed by the Senate. They have to undergo that proc-
ess. There are policy determinations that go into the decisions that
MSPB makes.

Arbitrators are whoever’s off the street that somebody can agree
with will adjudicate a case, and while sometimes they’re good and
sometimes they’re bad, I certainly don’t think they should be set-
ting public policy by their decisions in the Federal Government.

Ms. Swirt. Could I comment?

Mr. Mica. Ms. Swift, maybe you can comment. Your September
1995 issue paper identifies the current “multi-level, multi-agency
appeal process” as deterring supervisors from taking performance-
based actions they believe are warranted. Do you have any specific
recommendations on how to correct that? You were going to com-
ment.

Ms. Swirt. I was actually going to comment on the chapter 75
cases that Jerry was talking about. Actually, performance cases are
also brought under chapter 75.

Mr. SHAW. Yes.

Ms. Swirt. And we looked at 1 month worth of cases while we
were working on this September report, and approximately 40 per-
cent of that month’s decisions under chapter 75 were taken based
on performance. So it’s not true that only performance-based ac-
tions were taken—there’s a great deal more than that that are
taken in the Federal Government. But, under chapter 43, which
was set up to deal with performance, only 224 were decided last

ear.
¥ Mr. SHaw. Rather than getting into a dispute about whether or
not chapter 43 serves a purpose, we would not have any problem
with that, so long as substantial evidence prevailed in performance
cases, period.


ua

SOB DESIGN, SELECTION OF HIGHLY QUALIFIED CANDIDATES, QUALITY
SUPERVISION, EFFECTIVE TRAINING, APPROPRIATE COMPENSATION AND FAIR
TREATMENT. IN THIS CONTEXT, PERFORMANCE MANAGEMENT CAN MOST
EFFECTIVELY RECOGNIZE AND REWARD GOOD PERFORMANCE, AND IDENTIFY AND
CORRECT POOR PERFORMANCE. THESE ELEMENTS ALL CONTRIBUTE TO
EMPLOYEES DOING THEIR BEST WORK. CONSEQUENTLY, THEY REPRESENT THE

FIRST LINE OF DEFENSE AGAINST POOR PERFORMANCE.

POOR PERFORMANCE MOST OFTEN RESULTS FROM FAILURE TO ADEQUATELY
ASSESS THE SKILLS NEEDED FOR THE JOB, FAILURE TO SELECT THE RIGHT
CANDIDATE, INADEQUATE TRAINING, POOR COMMUNICATION ABOUT PERFOR-
MANCE, OR SOME COMBINATION OF THESE. IF EMPLOYEES TRULY UNDERSTAND
WHAT IS EXPECTED OF THEM, AND IF SUPERVISORS MONITOR PERFORMANCE
EFFECTIVELY, PROVIDING BOTH POSITIVE AND NEGATIVE FEEDBACK WHEN
APPROPRIATE, AND TARGETED TRAINING WHEN NEEDED, PERFORMANCE
PROBLEMS CAN BE DEALT WITH AT THE EARLIEST POSSIBLE STAGES,

INCLUDING REMOVAL IF OTHER CORRECTIVE ACTIONS HAVE FAILED.

EFFECTIVE PERFORMANCE MANAGEMENT ALSO REQUIRES A GOVERNMENTWIDE
SYSTEM THAT PROVIDES A PROPER BALANCE BETWEEN GOVERNMENTWIDE
STANDARDS AND AGENCY FLEXIBILITY. FOR SEVERAL YEARS, OPM, IN
COLLABORATION WITH AGENCIES, UNIONS, MANAGEMENT ASSOCIATIONS AND
EXPERTS FROM THE ACADEMIC AND PRIVATE SECTORS, HAS ASSESSED AND
TAKEN STEPS TO IMPROVE THE PERFORMANCE MANAGEMENT SYSTEM. THIS
APPRAISAL, AS WELL AS AGENCY EXPERIENCE, REVEALED SEVERAL BASIC
WEAKNESSES IN THE GOVERNMENTWIDE SYSTEM:


158

-8-
WHERE THE EMPLOYEE DOES NOT HAVE APPEAL RIGHTS. THESE NUMBERS ALSO
DO NOT INCLUDE SITUATIONS WHERE AN EMPLOYEE WHO IS NOTIFIED OF HIS
OR HER UNACCEPTABLE PERFORMANCE, IMPROVES TO AN ACCEPTABLE LEVEL,
OR REQUESTS A VOLUNTARY DEMOTION, OR VOLUNTARILY LEAVES THE JOB, OR
IS REASSIGNED TO A MORE SUITABLE TYPE OF WORK. FINALLY, THE
INCREASING USE OF ALTERNATIVE DISPUTE RESOLUTION TECHNIQUES
RESOLVES MANY PROBLEMS BEFORE A FORMAL ACTION IS TAKEN AGAINST THE
EMPLOYEE. THESE TECHNIQUES ARE LESS TIME CONSUMING AND MORE COST
EFFICIENT THAN TRADITIONAL EFFORTS TO REMOVE THE EMPLOYEE. IN
SUMMARY, WE BELIEVE THAT MANAGERS ARE DEALING MORE EFFECTIVELY
WITH POOR PERFORMERS THAN THE DATA ON OFFICIAL REMOVALS MIGHT
SUGGEST. NEVERTHELESS, WE ARE CONVINCED THAT BOTH REAL AND
PERCEIVED PROBLEMS EXIST THAT NEED TO BE FIXED TO HELP MANAGERS
ADDRESS PERFORMANCE DEFICIENCIES.

TO EFFECTIVELY ADDRESS THESE PROBLEMS, WE ALSO NEED TO EXAMINE
WHAT ACCOUNTS FOR THE PERCEPTION AMONG MANY SUPERVISORS THAT
NOTHING CAN BE DONE ABOUT POOR PERFORMERS. PART OF THE PROBLEM IS
THAT SUPERVISORS ARE CONFUSED BY THE SYSTEM'S COMPLEXITY AND FEAR
THEY WILL LOSE THEIR CASE ON APPEAL. FOR EXAMPLE, DESPITE THE FACT
THAT MOST ACTIONS UNDER CHAPTER 43 ARE SUSTAINED BEFORE THE MSPB,
THE AGENCY LOSSES ARE THE ONES SUPERVISORS HEAR ABOUT AND ARE THE
BASIS FOR THEIR DREAD OF THE APPELLATE PROCESS. WE ARE ALSO AWARE
THAT SUPERVISORS BELIEVE THERE IS A LACK OF TRAINING, INFORMATION

AND TECHNICAL SUPPORT IN DEALING WITH PROBLEM EMPLOYEES.


46

Turning to the differences in leadership and management re-
quirements in the public and private sector, within the public sec-
tor there is a much greater functional integration, a lack of consen-
sus over how to measure performance and productivity, whereas
within the private sector, you have much greater access to feed-
back, and the actual performance expectations are much easier to
assess.

There is a lot less opportunity within the public sector for unilat-
eral change. There is much less opportunity to symbolically assert
one’s position or status within the public sector, and there are
many more constraints that have to be dealt with.

What we’ve found is that there are ways for making explicit
what the job competency requirements are for superior performers,
so that one looks not only at what are the skills and experiences
that are required in the public sector, but also, what are the under-
lying values, traits, and motives that contribute to the superior
performance.

In research that was begun many years ago at Harvard by David
McClelland, we found that in every job, in public or private sector,
there are individuals who perform more effectively than others and
that there are methodologies, then, for describing and making ex-
plicit what those behavioral competencies are.

In work that we’ve done with the Air Force, one public organiza-
tion, we have made and worked with them to make those explicit
where they're now being used for performance management, for
training and development of employees.

Last, I think that the role of the personnel manager is changing.
The effectiveness within the public and the private sector of good
personnel management lies squarely on the shoulders of the line
manager, and the personnel manager’s role then changes to one of
being an internal consultant and helping the personnel manager to
achieve the results of the organization.

So, in summary, I would just like to say that there are many
types of things which I believe can assist the public personnel man-
ager and the Federal Government in achieving significant civil
service reform by giving organizations more flexibility in making
explicit what those behaviors and competencies are of the superior
performer.

[The prepared statement of Ms. Shields follows:]


6

Mr. Mica. I think we have all of our panelists here, but before
we get to you, I would like to see if any other Members have open-
ing statements. The vice chairman of the panel, Mr. Bass.

Mr. Bass. Thank you very much, Mr. Chairman. I will make a
very brief opening statement. First of all, I’m interested in the
“Lake Woebegon effect.” Maybe you have a new term now that will
be commonly used nationwide. I commend you for your imagination
there. I appreciate the subject of this hearing today and the fact
that you’ve brought into the committee room today representatives
of private industry.

‘he problems that we will be addressing in this hearing are
nothing new. As one who has been in charge of supervising employ-
ees in my own business for many years, I think the problems in
private industry are much the same as those that exist in the Fed-
eral Government, perhaps the only difference being that, in the
Federal Government, you're generally not using your own re-
sources, so there’s less of an incentive to make the system work as
efficiently as possible.

Second, there’s less flexibility in how you can treat employees be-
cause of the layers of oversight that exist, going all the way up to
the Executive and Congress. The lack of flexibility makes it more
difficult to work with the Federal Government, but I think that we
can bring some of the ideas that private industry has developed
into our Federal work force system, understanding that there are
no absolute answers to these problems and, as I said at the begin-
ning, they are not new.

With that, I'll yield back, Mr. Chairman.

Mr. Mica. I thank you, and I now yield to Mrs. Morella.

Mrs. MoRELLA. Thank you, Mr. Chairman. Again, I want to
thank you for calling this hearing. The earlier hearings on civil
service reform have provided solid information and established a
very good base for our continued discussions. I know that the chair-
man has a principal interest in performance management, and I,
too, have a keen interest in this subject and look forward to today’s
dialog with the two panels.

I don’t plan to give a lengthy statement, but I would like to men-
tion some of the issues that I hope to explore today, specifically the
pass-fail initiative, the 360-degree evaluations, the administration’s
oor performance proposal, and performance management account-
ability.

I’ve made it no secret that I have problems with some of these
initiatives, particularly the poor performer proposal that would au-
thorize a pay reduction of up to 25 percent for as long as 120 days.
I think this is a very penal concept, and it would shock me if a
good manager would even consider using it.

In thinking about the pass-fail system, I’m reminded of an article
written by Dr. Donald Devine, former Director of OPM, that re-
vealed this as a further weakening of the system. As a former pro-
fessor, there were a lot of students who wished they could have had
a pass-fail option in my classes. Unless someone can educate me
on the benefits of this system, I’m willing to remain open-minded,
but I am inclined with Dr. Devine’s assessment.

I have heard some wonderful things about the 360-degree evalua-
tion, but without proper structure and accountability, the evalua-


40

They who use it own it. Line management should be held accountable, not the human resources
department, for performance management practices and improvement. Flexibility is allowed at

the local manager level.

Give “grades”. People are assessed, not rated. No one wants to be a three on a five-point scale,
no matter what the labels are. A basic concer that was raised by W. Edwards Deming and the
total quality process is the reliance on performance ratings scales (five points for "outstanding",
one point for “unsatisfactory") in the appraisal process, particularly when the rating is the basis
for merit increases. In response to this, several prominent companies have eliminated the use of
a rating scale and now give supervisors the discretion to determine increases. Eliminating the
scale gives supervisor considerably more latitude and makes their job more difficult. This also
runs contrary to the consistency goal. A related change is the shift to a three-point rating scale:
outstanding, meets standards, needs improvement. Research has shown that people generally
agree on the extreme cases, the best and the worst. By using a three-point scale, companies can
more easily identify individuals who warrant special attention: because 75 to 85 percent of the
workers tend to meet expectations, they are rated in the middle category; thereby minimizing the
problems associated with subjective ratings that make finer distinctions. For the great many
organizations with an interest in identifying poor performers and giving recognition to

outstanding workers, the three-point scale seems to work.

‘Recognize that Base Pay is Being Rethought. Organizations have long focused on the
components of the job, using classification or point factor job evaluation systems to "value" the

7


120

political activity, whistleblower reprisal, or other prohibited
personnel practices are occurring, the MSPB could stay the

action. The employee could then be retained in his/her position
until after a thorough investigation and remedy determination was

completed.

Similar authority should be given by statute to the EEOC
where EEO violations are alleged, and strong evidence exists that
they may have occurred. If it appears that the adverse action is
primarily motivated by racial or handicap discrimination, gender
discrimination, sexual harassment, age discrimination or other
violations of EEO laws, the EEOC should be able to go before the
MSPB and request a “stay” of the action until after the agency
has completed it's investigation and a determination has been
made. Obviously, the standard of proof and the procedure before
the MSPB should be the same for the EEOC as is currently required
of the OSC, so that the authority is not misused by the agencies.
With these two stay remedies, employees would be adequately
protected from real discrimination and real whistleblower

reprisal.

The OSC only initiated disciplinary actions against managers
and supervisors before the MSPB whistleblower reprisal or other
prohibited personnel practices in 10 cases in 1994. Statistics
also show that, of the cases appealed to the MSPB over the last

eight years, only 3/10 of 1% of them have resulted in a finding

12


19

equivalent of telling someone they have a loathsome disease. To
avoid these unpleasant situations, managers inflate ratings.

Such reviews frequently contain non-specific, unsupported
comments concerning performance that provide neither the reviewed
employee nor the corporate management needed information
concerning current performance or potential ability.

American companies are increasingly under financial
pressures to control costs while increasing productivity. This
results in increased constraints being placed on wage increases
and other forms of compensation. In many companies, merit
increases are capped at the 4% to 5% level for the best
performers. Employees rated average receive far less. Managers
dislike telling employees who have worked hard and performed
competently during the rating period that they will receive a
one, two or three percent increase amounting to little more than
$20 per week, before taxes. To avoid this problem, managers
often inflate ratings in order to award higher annual raises.

Poorly conceived performance criteria also operate to
inflate ratings and blur the distinction between exceptional,
average, and substandard performers. It is not uncommon for
average or inadequate performers to “legitimately” receive good
performance reviews because the review standards fail to require
consideration of all essential job functions. Similarly, many
criteria which should be rated as simply met standard or failed

to meet standard, such as attendance, support of equal

opportunity, etc., are subjected to more complex rating schemes.

6


4

TESTIMONY OF COURTNEY B. WHEELER
EFORE

BI
THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT'S
SUBCOMMITTEE ON CIVIL SERVICE

An organization's ability to achieve current objectives and
position itself to successfully meet future challenges is
predicated on its ability to maintain a workforce whose
performance, as a whole, exceeds minimum acceptable standards.
Optimizing employee performance on a sustained basis is, perhaps,
the most difficult challenge facing any organization. The
keystone to meeting this challenge requires the implementation of
effective personnel systems grounded on individual
accountability. To support the optimization of employee
performance, a personnel system must accomplish four goals: hire
high quality employees; provide the technical and administrative
training required to do the job; insure reliable performance
assessments; and provide an effective and expeditious means of
correcting or eliminating employees for misconduct or poor
performance.

Good recruiting practices are critical if employee
performance is to be maximized. Though good recruiting practices
cannot insure subsequent good performance, poor practices
guarantee the employment of some workers whose performance will
be substandard. Good recruiting practices can identify and weed
out applicants with poor performance potential. It is my

experience that many poorly performing employees with less than


3

Our second panel will focus upon the Government’s management
of its personnel resources. Evangeline Swift, Director of the Merit
Systems Protection Board’s Office of Policy and Evaluation, will re-
port on the Board’s activities and its studies of related issues.

Federal employee organizations will be heard from on two levels.
We'll hear from Gerry Shaw, general counsel of the Senior Execu-
tives Association, who will reflect on the perspectives of people who
invariably play an important role in each decision, and we'll also
hear from Bob Tobias, national president of the National Treasury
Employees Union, who will discuss the views of rank and file em-
ployees.

The Office of Personnel Management was invited to participate
as a member of this panel, but has chosen to submit written testi-
mony.

[The prepared statement of Hon. John L. Mica follows:]


132

The other statutory procedure for terminating a federal
employee is under Chapter 43 and is generally used for performance
removals. Agencies under Chapter 43 must prove by substantial
evidence that an employee is being terminated because he/she
performed unacceptably in at least one of his/her critical
elements. Under this procedure, prior to termination, an employee
is entitled to an “opportunity period." During the opportunity
period, the employee is offered assistance to improve his/her
performance. If the employee’s performance does not improve during
this period, the employee is entitled to 30 days notice of a
proposed removal and specific examples of unacceptable performance
from the agency in writing. The employee may respond orally or in
writing to the proposed termination and, the agency provides a
final agency determination listing the specific reasons for the
termination decision. Thereafter, an employee may appeal the

decision to a third party.

There has been much focus on the alleged inadequacy of Chapter
43 removals. Some have suggested that there should only be one
statutory procedure for removals. NTEU would not oppose such a
change. However, we strongly believe that employees, as a
precondition to any unacceptable performance action, should be
given the opportunity to improve their performance after receiving
adequate guidance and supervision. This period of counseling and
clear work expectations can often transform employees with
performance problems. Thereafter the agency should be required to

Prove by a “preponderance of the evidence" that this employee was


110

However, it is an image that is sometimes reinforced by a
small group of federal employees who do abuse the system. We all
know there are poorly performing employees, but what none of us
know is how many. The October 1990 GAO report on performance
management, which was based on site visits and 550 questionnaires
to a governmentwide sample of supervisors, estimated that 5.7% of
federal employees were poor performers (See GAO/GGD-91~7). While
we do not believe that the number is this high, the number is not

insignificant.

Many have speculated about why managers do not take action
against poorly performing employees to remove them from federal
service, and many have suggested solutions. The September 1995
MSPB issue paper on removing poor performers recommends, for
example, that the Chapter 43 appeals process be done away with,
implying that that might solve the problem. The MSPB paper also
encourages a reduction in the multiplicity of forums for appeal
and the multi-levels of review that federal employees can utilize
in challenging performance actions. It also discusses changes to
the Reduction In Force (RIF)laws, so that performance can be

taken into consideration in RIFs.

In the statement by John Sturdivant, National President of
AFGE, before this subcommittee on October 13, 1995, he alleged
that the problem is that managers need to stop "whining" about

how hard it is to get rid of poor performers. Mr. Sturdivant


The impact of this kind of philosophical shift necessitates a good deal of cultural change,
but it does provide a different basis for performance management. Goals and expectations are
inextricably linked to the work and mission objectives of the organization. Agreements
reflecting those performance expectations are controlled by time and specific targets for
accomplishment within those timeframes. There is no employment guarantee beyond the
timeframe of the agreements.

Asa summary, I will restate the major trends that NAPA has observed in this important

area of accountability and performance:

- Any performance management system must have an individual and organizational

performance link, that focuses on expectations;

- Defining intended outcomes early on and working a flow down to the individual

is the best way to address the issue;

- In federal agencies, there is a logical potential link between organizational and

individual performance through GPRA;

- Multiple, appellate systems for providing employee due process need to be

streamlined; and

- Rethinking the concept of career and tenure-based employment should be part of

any comprehensive civil service reform proposals


24

units where less emphasis is placed on personnel training. The
importance of personnel training is best emphasized by the
comments of managers attending the seminars addressing personnel
issues. Training evaluations completed by those managers
routinely contain the comment that the managers' supervisors
should be required to attend personnel training seminars.

Fear of litigation causes many managers to abandon their
managerial responsibility to make timely, effective, and
necessary personnel decisions in the hope of avoiding costly, and
in some cases financially ruinous, litigation. In making
personnel decisions, managers regularly weigh the risk of being
sued against the immediate benefit to be gained by taking or not
taking a particular personnel action. Unless the immediate
operational benefit in disciplining or terminating a poorly
performing employee clearly outweighs the potential legal risk of
doing so, some mangers simply will not deal with adverse
personnel issues. The result is a continual decline in the
performance not only of the undisciplined poor employee, but also
of good employees who conclude that acceptable performance
standards are acceptable. This methodology of decision making,
if allowed to progress to its ultimate conclusion, permanently
undermines management's authority and significantly dissipates
the business’ productivity.

Unlike other factors impeding the proper handling of
performance and conduct issues, management's fear of litigation

is not easily addressed. The myriad of common law claims in

of


143

quate to the needs of the people who are involved, and it’s too often
self-selection. People say, “Oh, I think today I need training in
whatever.” I think that management, top management of the orga-
nizations, have to spend more time concentrating on how to better
select people, because we really select people based upon how well
they’re doing in some other area, not or how they’re going to be as
managers.

And I think, second, if you have a better selection of supervisors,
and you also have better training for all employees in the system,
I think you would have a better system, because we all know that
the first thing cut is training.

You know your training money is going to go. That’s absolutely
the first thing cut. And with low budgets, we're going to get less
and less training. So any sort of thing that would assist in the
training arena would be useful.

Mr. SHaAw. I think training for supervisors and managers should
be absolutely mandatory. SEA sponsored a course, beginning in
1985, on how to rehabilitate or remove the problem employee, be-
cause the fact is that most managers have no idea how the system
works, have no idea of what their rights are, have no idea that
they have the right to approve or deny leave. I mean it goes on and
on and on, and the reason is because they haven’t been trained.

I went from a GS-11 in the Government to an SES, and I never
had a day of training in management. It’s not good, and I think it
should be absolutely mandatory, and the money should be there. I
think the idea of a continuing education fund, where it cannot be
touched for anything else—an individual line item that can’t be
transferred—is an excellent idea.

Mr. Moran. Glad to hear you say that, Mr. Shaw. I think we’re
going to pursue legislation that would do that, because we're find-
ing, both in the public and the private sector, certainly, that people
who are content with a static level of skills and knowledge fall
below even equilibrium in terms of their ability to be competitive
in the work force. Whether it be a public or a private work force,
it’s not adequate to rest on your educational laurels. You have to
continue enhancing them.

It was interesting that Jim King told the chairman and me, at
a meeting with the Vice President, about a group that worked for
the Postal Service, where they offered an incentive—this gets into
another subject, but it’s the subject of the hearing, largely. I think
it was only $50 each, if that particular unit was the highest per-
forming, and they got the highest performance of any of the units?

Do you remember that, Mr. Chairman?

Mr. Mica. Yes.

Mr. Moran. It was amazing how small the incentive was that
was needed to activate a unit performance. So it seems as though
it’s more than just the money itself. It’s the opportunity to compete
and show how well you can do. I think we ought to also have that
kind of approach available within the work force.

I won’t ask any further questions, because I think Connie wants
to ask some questions before we go to vote.

Mr. Mica. Yes, we are running a little short on time, so we'll
yield the next 3 minutes to Mrs. Morella.

Mrs. MorE.La. Oh, that’s really great.


10

There was a statement in Mr. Bruce Moyer’s testimony of
October 13th that | feel is very appropriate. | want to say how
disappointed | was that | was unable to be here yesterday to
explore some of this with him, but | was attending a mark-up of
my bill in the Science Committee. In his testimony, Mr. Moyer
said that, "We need to find new ways to reduce administrative
burdens, encourage supervisors to deal head-on with performance
problems, and establish greater accountability for performance.”
That is exactly what we should be looking for here.

The Civil Service Reform Act of 1978 was a good piece of
‘egislation for its time. It had its successes and its failures, but,
regardless, it would not be applicable to today’s management
philosophies and workplace environments. It is time for change.

I look forward to working with the Chairman on this reform,

and | would again like to thank him for calling this hearing.


141

wanted to raise some points, because we're trying to achieve a bal-
ance.

I do think that there are some people who feel that the Federal
Government should be run like a business, and I don’t think it
should be run like a business in the most important aspect, which
is that of trying to generate a profit.

Golden Rule Insurance Co., for example, 40 percent of its reve-
nues went into profit last year, so clearly it was very successful
from the standpoint of making it a profitable business, and Medi-
care fund could not have been competitive, with only a 2-percent
share going into administrative costs. I’m sure it would have oper-
ated at a loss, but the real criteria is how well it served its cus-
tomers.

So I think that the line of questioning that gets to how can we,
as objectively as possible, measure that performance, measure that
response to customers’ desires and needs, is what we’re looking for.
We're not looking for as much internal profit generation as the ex-
ternal responsiveness.

I think, on many criteria, the Federal Government performs very
well. I was interested to see what the Vice President talked about
last night, and he certainly made mention of the fact that Business
Week recognized the Social Security Administration as having the
best response on the telephone, even better than the other private
corporations that had traditionally gotten that award.

But there are any number of areas where we can, nevertheless,
improve the Federal Government, and that’s what we’re about, try-
ing to come up with some legislation that is balanced.

I do think we are going to give more flexibility to managers in
terms of developing a performance-based system with more re-
wards for good performance and—maybe punishment is too strong
a word—but disincentives for poor performance. But, if we do that,
we've got to find ways to constructively offer people who are not
performing satisfactorily an alternative to losing their employment.

One of the ideas that was brought up earlier this week—I guess
it was us that brought it up. It’s the idea of setting up a continuing
education account so that workers who avail themselves of that op-
portunity to improve their skills and their knowledge base would
have that effort partially subsidized by the Federal Government,
and it would also be rewarded, ultimately.

T want to hear what thoughts you’ve had along those lines. I also
would like to know your reaction to the other side of the coin, and
that is, when people are not performing up to the level deemed sat-
isfactory by their supervisor, that it be reflected in whether or not
they get a step increase—maybe, even, cost-of-living increase has
been suggested. And people who are performing satisfactorily
might get a full cost-of-living increase, and those who are not might
get partial or none. The same thing could be applied to step in-
creases.

There are tools that could be employed to achieve this, but I
think we would like to hear from you whether you think they
would be effective and consistent and, in the long run, help to bet-
ter serve the customers of the Federal Government, the American
taxpayers. So shall we start with Mr. Tobias?


184

agency managers or the Office of Management and Budget to directly link individual
performance management elements to the organizational performance measurement process. The
two performance systems should be integrated as much as possible; expectations should be set
in terms of projected results; and the measurement process should overlap. When individual
employees are given performance expectations based on the organizational performance
expectations spelled out in the GPRA action plan, both the agency and its employees are focused
on achieving the desired outcomes.

6. Do you have any recommendations for improving the personnel management
training for federal supervisors that would improve their ability to identify and
address poor performance?

While some agencies have restructured their programs in recent years, in general, personnel
‘management training for supervisors and managers needs to be updated. Training must be a valid
response to a defined need. The trainee must be able to recognize that need and relate it to
performance expectations and rewards/sanctions within his or her management environment.
Personnel management training should concentrate more on refining skills that help supervisors
perform their leadership and resource management duties and lessen the current emphasis on the
administrative requirements of traditional courses. The roles and responsibilities of supervisors
and managers are changing. Organizations today are experimenting with teams, including self-
directed teams, ir lieu of traditional methods to better accomplish an organization’s work. Now
is an ideal ti.ne for agencies to revitalize personnel management responsibilities and
correspondinesy redo training for supervisors.

7. W ald we strengthen the hand of federal managers if the law were changed so that
+ thin-grade increases are no longer automatic and required affirmative
management action?

The issue on within-grade increases is not the law itself; rather, it is how the law is
implemented. The law does not intend that within-grade increases be automatically granted.
Procedures for approving within-grade increases need to be more effectively utilized and
supported. One way to do so is to assure that performance evaluation criteria are considered
in the within-grade decision-making process.

8. Would that removal of an appeal right have much significance alone, or should we
consider it in the context of changing the method of awarding the increases?

The removal of an appeal right to the Merit Systems Protection Board and substituting use of
agency-level internal appeal procedures would both be helpful and consistent with current efforts
to empower managers to make decisions including decisions to grant or withhold within-grade
increases. Employees are entitled to an avenue to challenge within-grade denials but agency
grievance processes, including negotiated processes are an adequate mechanism for that.


29

discrimination or

xual harassment cannot be reviewed under the
Peer review process.) Employees electing the Peer Review process
are accorded the opportunity to confront the evidence against
them and to present any evidence they deem material to a decision
of their grievance. As with the Guarantee of Fair Treatment,
attorneys cannot participate in the process. The Peer Review
option is available to management and non-management employees.
The decision of the Peer Review panel is binding on the employee
and management. Employees select the panel from a group of
management and non-management employees who have received special
training in evaluating evidence and making fair, impartial
decisions. Non-management panels consist of three non-management
and two management employees. Management panels consist of three
management and two non-management employees. The panel's
decision is arrived at by a secret written ballot. The Peer
Review process has been well received by management and non-
management employees and has worked extremely well. With a
single exception, employees whose disciplinary actions have been
upheld by a Peer Review panel have not pursued their grievance to
litigation.

No personnel management system operates perfectly all
the time. At times, managers who should be terminated are not
because managers responsible for identifying and documenting the
performance failures have failed to do so. In some cases, the
company is faced with an immediate operational need to remove the

manager. Doing so without following established procedures can

16


166

4a) What percentage was due to performance?
What percentage was due to misconduct?

Percentage Distribution of Performance and Misconduct Actions

% due to % due to % due to
FY Performance Misconduct | Both Performance
and Misconduct
94 10 81 9
93 12 80 8
2 I wi il
OL 12 78 10
90 12 76 iW
89 12 7 i
88 4 75 rn |
87 14 lm 14
86 16 7 13
85 16 T2 12

Since probationary employees and those with no appeal rights receive no due process when
they are terminated, the reasons for their removal may not be documented in their personnel
record. Therefore, the percentages of performance-based and misconduct-based actions (or
both) are calculated based only on the data where a reason for action was given.

NOTE: Percentages are independently rounded and may not add to up 100.



186

11. How do you reconcile these different objectives and what kind of changes should we
consider to the civil service to facilitate government reform? (NOTE: The question
refers to a potential conflict between Congressional objectives of significant civil
service reform including major changes in the scope of federal programs, the
methods of federal regulations, and approaches to federal spending and the concept
of a career civil service which promotes "continuity" and "stability").

As indicated in response to #10 above, there is already a basis in principle for building a
consensual approach to major civil service reform. The concept of a career civil service system
does not conflict with reform when the design of the system puts the employee in context as a
contributor to the work of the team or organization rather than as an individual performer.
Significant reforms in civil service systems in other countries and in other jurisdictions in this
country are already underway with civil servants as major contributors to their success. This
is the rationale for performance management, position classification (including broad-banding),
and training reforms already underway in many organizations. If the basis in principle is clear,
there should be no conflict; employees should buy into the reforms if they are aware of the
expectations.



US, Merit Systems Protection Board
Petitions for Review (PFR’s) of Initial Appeals - FY1994

Types of PFR’s—Decisions

‘Adverse Action 46% (784) Performance 3% (50)
Individual Right of Action 6% (98)
CSRS Retirement: Overpayment 2% (32)

CSRS Retirement: Disability 3% (54)

CSRS Retirement: Legal 15% (249)

Denial of Within Grade 1% (14)
‘Termination of Probationers 2% (2¢

Reduction in Force 13% (228)

Suitability 1% (8

Total Number of PFR’s: 1,696
Percentages do not total 100% because of rounding.


140

Mr. Mica. Let me shift back to Mr. Tobias for a second. Does
your organization have a grievance procedure or procedures that
employees can use in place of a formal appeals process? Within the
union or within your organization?

Mr. Tostas. We negotiate—you mean for the union staff?

Mr. Mica. Well, yes.

Mr. Tontas. Is that your question?

Mr. Mica. Yes, for your own folks.

Mr. Tosias. Yes, we do.

Mr. Mica. And how does that work?

Mr. Topas. It works.

Mr. Mica. I mean, how is it structured? I mean do they get mul-
tiple appeals?

Mr. Tostas. Well, of course they get multiple appeals. They file
grievances, and it goes to arbitration, and the arbitrator decides,
and that’s it. I’m proposing the same approach for the Federal sec-
tor.

Mr. Mica. I’m just trying to find out what you do internally and
see if that provides a model.

Mr. Tosias. I do just that—it’s a model. It is indeed a model.

Mr. Mica. It’s a great one. OK. Well, what about in counseling
employees? Do you recommend they use the Federal process rather
than the grievance procedures?

Mr. Tosias. I do not recommend that they use the MSPB. We
recommend people go to arbitration, not the MSPB, and that’s why
I don’t have any problem suggesting that the MSPB be eliminated.

I think that when you have a collective bargaining agreement,
that the parties ought to decide the processes to be used, and that.
the arbitrator’s decision will be definitive, and that there be no ap-
peal after that. So I don’t have a problem with saying that the
MSPB ought to be eliminated.

Mr. Mica. Mr. Shaw, would the SEA support prohibiting a simi-
lar judicial review of MSPB’s decision in performance-based ac-
tions?

Mr. SHAW. You mean the Federal circuit court of appeals, sir,
abolishing that review? Yes, we would support that.

Mr. Mica. OK.

Mr. Tosias. Just to make it clear, Mr. Mica, I’m suggesting not
only for performance-based cases. I’m suggesting conduct cases, as
well,

Mr. Mica. Great.

Mr. Tosias. Just to set the record straight.

Mr. MICA. Well, we're pleased that you’re willing to come forward
and put some of these on the table. We had Mr. Sturdivant at the
table at one of the previous hearings. He’s willing to deal, and you
all certainly represent a large portion of the public employment
sector, and our goal here is to try to come up with some positive
changes that respond, also, to your needs and concerns.

We appreciate your willingness to deal with us, and we hope we
can do it in a positive fashion. I'll yield back.

Mr. Bass. Thank you, Mr. Mica. Mr. Moran.

Mr. Moran. Thank you, Mr. Bass. I’m sorry I missed the earlier
group—we had the reconciliation bill on the floor today—but I



91

decisions will be reversed upon review or appeal, or (3) they will be falsely
accused of having acted for discriminatory reasons.

= In contrast to the disincentives and perceived personal risks associated with
attempting to remove a poor performer, many supervisors see little downside cost
associated with not taking action in their belief that they can work around the
deficiencies of a poor performer and still get the mission of the work unit
accomplished. In short, they believe it is simply not worth the effort to attempt to

remove an employee who cannot or will not perform adequately.

‘When examining the reluctance of Federal managers to remove poor performers
from the Federal Service, it is important to note that according to our survey data,
supervisors report that they do take some action to deal with performance problems but
those actions usually stop short of formal action to remove. For example, 3 out of
every 4 supervisors (78 percent) said they had experience with at least one employee
with a performance problem since becoming a supervisor. Among these supervisors,
89 percent said they counseled the employee with the performance problem and 26
percent said they gave the employce a less than satisfactory performance rating.
Therefore, while most supervisors report that they took some positive action to address
a performance problem, for most supervisors it stopped short of formal action. Fewer
than one out of every four supervisors (23 percent) who claimed they had supervised a

poor performer proposed the demotion or removal of that employee.

My remarks to this point have concentrated on the perceptions of supervisors
regarding the difficulty of the process of removing a poor performer. While
supervisors take actions—or decline to take actions--based on these perceptions, it is

also important that we recognize that these perceptions are sometimes inaccurate. For


193

same holds true for partnership. In order for the productivity
gains to be realized, Congress will need to mandate that the
partnership relationship be fostered.

Question II: You testified that you support incremental changes
along the lines of the National Performance Review's
recommendations regarding the hiring system, the classification
system and the performance management system. Can you be more
specific about the reform that you would support?

Answer II: As I discussed in my statement, I do not believe one
blanket reform should be implemented on a government-wide basis for
hiring or classification. I believe that each federal agency has
its own mission and the accomplishment of this mission must be
incorporated into the creation of any new hiring system,
classification system or performance management system. The best.
way to determine which hiring, classification or performance
management systems work is through demonstration projects which
would allow agencies to experiment and reach the appropriate
balance for their particular personnel needs.

Although I believe that agency demonstration projects are the
best methods for determining appropriate personnel systems, I have
offered various suggestions for alternative personnel systems that
agencies may want to employ. If an agency seeks changes in its
personnel system, I believe that employees must have a voice in
this change. If employees are not brought along at each step of
the change, the change will not be successful. Therefore, I
recommend that all of these suggested changes be negotiated with
the exclusive representative for the employees of that agency. In
the area of hiring, NTEU has suggested that agencies be provided
with more discretion to hire their own employees. In the area of
classification reform, NTBU has suggested pay banding. In the area
of performance management, NTEU has suggested eliminating the
statutory procedures for removal cases and allowing parties to
negotiate termination procedures. NTEU remains open to discussing
these and other ideas with you.

Question 3: Which of these reforms would have highest priority for
you?

Answer 3: I don’t believe that any particular reform would have the
highest order of priority. As I noted above, different agencies
will have more compelling needs in specific areas. I believe that
priority must be determined on an agency by agency basis rather
than on a government-wide basis.

Question 4: During testimony, several witnesses agreed that federal
managers need considerably more discretion in these areas to manage
effectively. Would you support Congress giving greater discretion
to agency managers in these --or other -- matters.


il

Mr. Mica. Thank you so much for your comments. As you may
know, this subcommittee is part of the Government Reform and
Oversight Committee, and has investigative, audit, and other func-
tions. It is the custom of our subcommittee to swear in our wit-
nesses, so if you wouldn’t mind, would you stand and I’ll swear you
in,

[Witnesses sworn.]

Mr. Mica. Thank you. I was a little distracted with your hand.

Dr. SHIELDS. I’m very sincere.

Mr. Mica. Sorry to make you use the wounded right hand. I
want to welcome all of you to the panel. This is an important series
of hearings. I view them as very important, because I think they
will lead to an actual reform in our civil service system.

As Mrs. Morella said, we have a law that served us well in 1978.
We've seen some dramatic changes in the private sector, just in the
last decade, where folks have a job one day and théy’re out the
door the next. Industry has changed, and activities change, and the
whole role of the Federal Government is being reexamined.

We particularly want to pay attention to our subject today, which
deals with performance accountability. All of you offer a wide vari-
ety of experience and knowledge, so we look forward to your testi-
mony.
ri first recognize Mr. Courtney Bryan Wheeler with Marriott
International. We have your full written statement, which will be
made part of the record. If you would like to summarize, it will
give us an opportunity to informally discuss some of the issues in
your viewpoint.

Mr. Wheeler, you’re recognized.

STATEMENTS OF COURTNEY BRYAN WHEELER, ASSISTANT
GENERAL COUNSEL, MARRIOTT INTERNATIONAL; SANDRA
O’NEIL, SPHR, SOCIETY FOR HUMAN RESOURCE MANAGE-
MENT; DR. JOYCE L. SHIELDS, PRESIDENT, HAY GROUP;
FRANK CIPOLLA, DIRECTOR, CENTER FOR HUMAN RE-
SOURCE MANAGEMENT, NATIONAL ACADEMY OF PUBLIC
ADMINISTRATION

Mr. WHEELER. Thank you, Mr. Chairman. Good morning, Mr.
Chairman and members of the subcommittee. I appreciate the op-
portunity to testify concerning how business addresses the prob-
lems involved with performance and accountability in the work
force. I hope that my comments in some small way will assist the
committee in their civil service reform efforts.

Just as this committee is doing, business regularly reassesses
methods of personnel operation in search for more effective means
of managing their work force. That process invariably focuses on
the very issue which is the focal point of these hearings, the opti-
mization of employee performance.

Business addresses performance optimization from two perspec-
tives—first, how to improve technical capabilities in the results
produced by their work force, and, second, how to enhance the level
of individual accountability within the organization. Improving
technical or functional capabilities is far easier than accomplishing
or improving in the relatively low levels of individual accountability
that exist in many organizations.


oT

US. Merit § P tion Board
Initial Appeals of Agency Actions - FY 1994.

Types of Initial Appeals—Decisions

Ke Performance 3% (224)
‘Aavverse Aation 47% (3518) Individual Right of Action 2% (175)

‘CSRS Retirement: Overpayment 4% (318)
‘CSRS Retirement: Disability 4% (287)

-CSRS Retirement: Legal 14% (1,049)

}— FERS Retirement: 4% (321)

Other Appeals 8% (590)

Denial of Within Grade 1% (77)
; ‘Termination of Probationers 4% (265)
Suitability 1% (51) Reduction in Force 9% (654)

Total Number of initial Appeals: 7,530
Percentages do not total 100% because of rounding.


187

Hay Management Consultants
4301 North Fairfax Drive
Suite 500

Alington, VA 22203

Tel: (703) 841-0079

Fax: (703) 841-0330,

Hay December 1, 1995
Management
Consultants The Honorable John L. Mica

Chairman, Civil Service Subcommittee
Committee on Government Reform and Oversight
U.S. House of Representatives

2157 Rayburn House Office Building
Washington, DC 20515-6143

‘Dear Chairman Mica:

I appreciate the opportunity to add to my formal testimony before your
Subcommittee on October 26 by responding to the thirteen additional questions
contained in your letter of November 9. The responses are in the attachment to
this letter.

T hope that these responses assist your Subcommittee in its deliberations to
improve the civil service system. If you have any additional questions where I
may be helpful, please feel free to contact me at any time.

“Managing Director of Human Resources
Planning and Development for North America

HayGroup


102

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201

The Honorable John L. Mica
Chairman

November 17, 1995

Page 6

physical sexual harassment or the “hostile environment" created in
the workplace by such harasssent destroyed an employee’s work
Performance. The Office of Special Counsel is a vigorous
intervenor in sexual harassment cases, as are agency Inspectors
General. They vigorously pursue any allegation of sexual
harassment and undoubtedly would intervene swiftly in a performance
case where such an allegation was made. Suffice it to say, we
believe that such a defense vould be adequately investigated and
thoroughly analyzed by the EEOC, Office of Special Counsel or
Office of Inspector General of the agency. If the IG found sexual
harassment, they have the authority to request the Special Counsel
to intervene and seek a stay.

You argue that the multiple forums for appeals and grievances deter
managers from taking actions that are warranted.

10. Would you suggest that appeals stenming from « performance
action be limited to one forum and that all claims be
consolidated in one appeal?

Yes, we are in favor of appeals being consolidated in one
forum and with one appeal.

11. Would that make it easier to fire poor performers?

Yes, it would be easier to fire poor performers, but,
have previously recommended, it is absolutely crucial to separate
affirmative defenses raised in performance cases from the process.
It makes no sense to keep a poor performer on the payroll in the
Same position if it has been established by substantial evidence
that the employee’s work is unsatisfactory. At the least, they
should be moved to another area and another supervisor if a second
chance is deemed appropriate. Putting a person proven to be a poor
performer back in the office environment where they have done an
unsuccessful job is destructive to the manager and the employees in
that work unit and should not occur.

Mr. Tobias proposed eliminating the right to appeal an arbitrator’s
decision to the FLRA or to court.

12. Would the SEA support prohibiting a similar judicial review of
MSPB’s decisions in performance-based actions?

Mr. Tobias’ proposal to give up FLRA or judicial review of
arbitrators’ decisions is not a substantial sacrifice. In fact,
most of such appeals are made by agencies, because arbitrators have
ruled in favor of the employee and the unions at much higher rates
than the MSPB. Consequently, conceding this appeal right is not
much of a concession. By contrast, MSPB decisions are much more in


192

@NTEU

November 17, 1995

The Honorable John L. Mica
Chairman

Committee on Government Reform and Oversight
2157 Rayburn House Office Building
Washington, DC 20515

Dear Mr. Chairman:

I have received your letter of November 6, 1995 requesting
answers to additional questions on civil service reform. I am
pleased to provide these answers to you and would be happy to
provide any other information you deem necessary.

Question I: You noted examples of changes in work processes
achieved through partnership councils that resulted in increased
efficiency and productivity. Was there anything in civil service
laws or regulations that prevented those productivity gains before
the establishment of partnership councils?

Answer I: The changes in work processes that were noted in my
testimony were achieved through the partnership councils in the
various agencies. These partnership councils were created as a
result of Executive Order 12871. The productivity gains simply
would not have been achieved without the execution of the Executive
Order. Unfortunately, prior to the Executive Order, neither
management nor labor in the federal sector had the incentive to
work together in a non-adversarial fashion. Although no laws
specifically precluded partnership arrangements in the federal
sector, I believe that unless it is mandated, both parties will be
reluctant to change their old unproductive behaviors. In summary,
although there were no laws or regulations preventing productivity
gains before the establishment of partnership councils; without
laws and regulations mandating partnership councils, there would be
no productivity gains.

I want to remind you that often before parties make change, it
must be mandated. I can think of many examples in the history of
our Nation where Congress has had to act in order to ensure
appropriate behavior among our citizens. For example, in 1965
civil rights laws were passed. Arguably, there was nothing to
prevent people from not discriminating prior to the passage of this
law. Discrimination hurts everyone, nevertheless people were
reluctant to change their attitudes and behaviors, We believe the

901 E Suet, N.W. + Suite 600 + Washington, D.C. 20004-2037 + (202) 783-4444



118

be “Is the employee's performance unacceptable under his/her
critical elements and performance standards?" If it is, the
employee should be reassigned, demoted or removed. On appeal to
the MSPB, the only issue should be “Is the employee's performance
unacceptable under his/her critical elements and performance
standards?" If so, the reassignment, demotion or removal should
be sustained. Section 7701 of Title 5 should be amended to
exclude all affirmative defenses in §4303 appeals except for
harmful procedural error or an error of law which would have
resulted in a different decision. Then the MSPB could reverse the

action.

Employees would not be denied the ability to file all of
their other actions, e.g., EEO complaints, Special Counsel
charges and IG allegations. However, the first query by all of
these enforcement agencies should be: "Are these allegations
being made by an employee who is being considered for removal or
demotion for unacceptable performance?" If so, these officials
should require a higher standard of proof of the allegations
before initiating an investigation against the manager or agency.
Meanwhile, the performance case should be allowed to proceed
without other matters interfering with it, and decided under the

standards set forth above.

In addition, there should be a mechanism established in law

allowing the agencies or EEOC to summarily dismiss frivolous EEO

10


65

models should be flexible enough to be customized to meet the needs and objectives of individual

organizations.

The regulations allow agencies to customize their performance management systems in
line with their organizational needs. For instance, an agency can decide if its system should be
linked with or totally separated from the awards and recognition system. Some agencies have
already de-linked pay and performance - and they did so with the approval of OPM, using the
pre-August 1995 regulations. Many agencies may feel that they are constrained from making
such a drastic change. The Army Management Engineering College has such a system and
several other agencies are about to pilot test systems with a similar focus. The new regulations
have also eliminated a number of the more labor-intensive administrative requirements for
detailed documentation and levels of review. On the whole, the new OPM regulations are a
substantial improvement over the former ones and OPM’s leadership role will be an important

factor in progress by agencies as they implement system changes.

Unfortunately, the system improvements generated by the new regulations do not cover
the poor performer aspect of employee performance management. There is a strong feeling
among managers, as you heard at the opening set of hearings, that they feel constrained from
taking action on the poor performer by the myriad of appeal routes the employee has available
and the likelihood that at some point the case will be settled rather than resolved. In response
to OPM’s request for a review of the "Draft Specifications for HRM Reform Legislation,” dated

January 20, 1995, the Academy’s Standing Panel on the Public Service pointed out that the


71

Mrs. MORELLA. Thank you. I appreciate the answer. For all of
you, you might pick up on those points. My second point would be,
if you do have a pass-fail, how do you measure gradations? Do you
say, “This is a high pass?” “This is a low fail?”

Then, also, if you might comment on whether the private sector
utilizes this in any way. Mr. Wheeler, do you know whether the
private sector utilizes this?

Mr. WHEELER. I'm sorry, ma’am, I didn’t hear.

Mrs. MORELLA. In your experience, are there private sector orga-
nizations that employ that?

Mr. WHEELER. employ the pass-fail?

Mrs. MORELLA. Yes.

Mr. WHEELER. Yes, ma’am, there are. I spoke with my com-
patriots in other companies and with attorneys that I deal with
roe and there are some private organizations that do use

Pan some organizations, especially very small ones, it may be very
successful. An operation that employs 20 or 30 or 40 people, the
evaluation is done on a daily basis, almost in a familial atmos-
phere. When you run an organization that has 100,000, 200,000, or
500,000 employees, you don’t have that familial basis, and the abil-
ity to use pass-fail is severely reduced, if not completely eliminated.

Mrs. MORELLA. Thank you. Ms. O’Neil.

Ms. O’NEIL. It reminds me of my college course. I took advanced
calculus, and as soon as I found out that I needed 62 points to
pass, I got 62 points, and I stopped doing any more.

I'm not so certain that I would be supportive of that kind of ap-
proach. I think the United States is a nation of individual
achievers, and I just don’t see that that would be a motivational
ap roach for individual people, in terms of helping to drive their

iors and their accomplishments. We have several hundred cli-
pen and I have no clients that use such a measure, such a meth-
od, so I personally cannot speak to how it might be successful.

Mrs. MORELLA. I think you talk about a 3-point scale.

Ms. O’NEIL. Yes, Congresswoman. We have used a 3-point scale
because, again, what you are doing is focusing on both ends, if you
will, of the Bell curve. Most people are somewhere in that middle.
They're doing a good job; they're accomplishing their goals; they’re
doing what you want them to do.

You focus your attention to some extent on people that are hav-
ng ‘some trouble, that are not achieving, and you also focus on rec-

and rewarding the truly outstanding performers.
[ORELLA. Thank you. Ms. Shields.

Me “SumeLps. I would like to ask what purpose are we using an
evaluation system for, what is the goal of your particular system,
pass-fail for making what types of decisions?

For the pt of performance management, we would like to
focus on exa exactly what the expectations of the superior performer
are, what types of things that individuals should do to contribute
maximally to the organization, so that we would want to have dif-
ferent standards for them in being able to give feedback to employ-
ees on more of a daily basis. So the pass-fail for what purpose, I
would ask you, is one of the things that we would look at.


‘The Honorable John L. Mica
Chairman

November 17, 1995

Page 5

As to matters before the adverse action is actually taken by
the agency, the timing of the action is totally within the agency’s
discretion, and there is no difficulty in providing legal or other
assistance to the manager. The rub comes once again from the
insufficient resources of the MSPB and the resultant 50% settlement
rates because agency counsel and employee relations officials tell
managers that they are going to have to settle half of their cases
anyway, so the agency should settle them early rather than
bothering with going through the appeals process. This has a
tendency to force agencies to back off of what might be meritorious
actions and to achieve settlement by giving in on some possibly
important aspect of the case.

You suggested that the MSPS‘ emphasis on settling cases impedes
effective performance managenent.

8. Have you studied actual settlements to determine their likely
impact on the performance management process?

We have not studied actual settlements. However, we have
substantial informal feedback on the process through the courses
that the SEA Professional Development League (PDL) sponsors. since
1985, PDL has been the sponsor of a course, “How to Rehabilitate or
Remove the Problem Employee." On average, we present eight to ten
of these one day seminars per year to
to 30 federal managers and executiv , therefore, receive
feedback from 200-300 managers each year from a cross-section of
federal agencies. A substantial amount of discussion takes place
in these courses, and it is not at all unusual for a manager to
angrily denounce a settlement into which they were forced by their
agency's employee relations or legal office. It is also normal for
most of the rest of the participants in the class to join in the
denunciation, indicating that similar incidents have occurred in
their offices. We know from these experiences that there is an
impact on the performance management process in many government
agencies.

You recommend a system in which employees could not raii
affirmative defenses in MSPB cases, but where the EEOC or the
Office of Special Counsel had authority to seek stays from the
MSPB.

9. Would such a system adequately protect an employee with a
legitimate claim that poor performance was caused by illegal
discrimination?

In our opinion, the answer is yes. Alleging that illegal
discrimination caused poor performance is nearly universally an
outcome of sexual harassment cases. It is alleged that the actual


16

and attitudinally suited for employment. Technically capable
employees may fail to perform satisfactorily because their work
style is incompatible with that of the organization. Employers,
including some divisions within my company, rely on the job
interview to ascertain whether an applicant is attitudinally
suited for employment. In my experience, employee interviews
are, at the very best, an inexact method of making such a
determination. The quality of the employment decision can be
substantially affected by the interviewer's skills. This is
especially true where, as is often the case, managers are not
trained in conducting interviews. Moreover, a skilled
interviewee may falsely portray himself or herself. It is not
uncommon to hear managers state that the employee they hired
turned out to be completely different than the applicant they
interviewed.

The most effective, and certainly the most consistent method
of determining an applicant's aptitude for employment is the
standardized test. A properly prepared and validated test
generally provides the employer with a more reliable indication
of an applicant's aptitude for employment. The focus of such
tests is the applicant's concept of work, work style, and work
expectations. Substantial coordination between the test
developer and the employer is required to develop a test which
achieves the employer's employment objectives. Close
coordination enables the test developer to understand the

employer's business and employment needs and to develop


160

FY85-94 AWARDS DATA-GOVERNMENTWIDE BY TYPE OF AWARD

‘Spending Spndg as Number of

Average Avg Amt as
‘Amount ‘Sal

Fy94 ‘SES Rank Awards
FIRST DRAFT SES Performance Awards 70%
CPOF& PMRS Performance Awds 17%
Els data PMS(GS¢WG) Perf Auds. 19%
Special ‘Awards 09%
‘Suggestion Awards 07%
TotSal= _Gainshares ne
$76,3613
(rillons) __TOTAL~All Awards 15% nla Eg
FY93 ‘SES Rank Awards 126% 37 09
FINAL DRAFT SES Performance Awards 73% 4A on
A465ICPOF & PMRS Performance Avis $1421 0.19% 120.177 $1,183, 18% 748 60
EIS data PMS(GS#WG) Per Awis «$4475 «059% © 692545 $646 19% 375 M3
Special ActOther Awards $1613 021% © — 519.661 «$310 08% 8 258
‘Suggestion Awards $56 001% «= S021 $109 0.3% 25 25
Gainshares $85 001% = 6.359 $1,342 na ola 03
TOTAL-All Awards, $7996 1.05% 1,399.009 $567 15% ola cy
‘SES Rank Awards $48 0.01% 419° $14,645 11.3% 56 00
‘SES Performance Awards $203 003% 2.939 $6,891 67% 40.4 ot
1465 & PMRS Performance Awds «$131.2 «018% 114079 $1.150 1.8% 720 55
ElS data» PMS(GS#WG) Perf Awds $4185 058% 645: $648 20% 34d a3
‘Special AcUOther Awards $1443 023% © 503,758 $336 4.0% 450245
‘Suggestion Awards $301 09% 12 12
TotSal= _Gainshares $550 a a 24
3725292
(citions)—__YOTALAll Awards 3579 1.6% na 648
Frys ‘SES Rank Awards S1n671 11.7% s7 00
SES Performance Awards $144 0.02% 2475 $5,793 58% 352 on
1465 8 PMRS Performance Awds «$1181 O.18% © 104.491. $1,130 1.9% 704 52
ElSdota —-«PMS(GS+WG) Perf Awds $3694 0.55% ©5911 $025 20% 31 (288
‘Special ActiOther Awards $1434 021% =©— 308.914 «$352 1.0% 96 185
‘Suggestion Awards S74 001% = 23.044 $319 09% 279 12
Tot Sal Gainshares $65 001% = 3.686 $1,763 va na 02
$67,1389
{ilions) —_—TOTAL-All Awards $6639 098% 1,034079 $638 1.9% na 518
Fr90 $45 0.01% 362 «$11,728 149% 56 00
5138 002% 2495 $5517 7.0% 368 ot
1465 & $1105 017% 100,284 $1,102 1.9% os 49
EIS data $3731 059% 32844 «$625 22% 29 0-262
$1246 020% 5368 «$419 13% 14300148
$81 001% «= 24.247 $334 11% 288 12
Tot Sal na na a va nla a na
$53,446
(mitions) __ TOTAL~All Awards $64.6 100% 966.620 $663 21% na 479
Fve9 ‘SES Rank Awards $41 001% 349 $11,805 155% 53 00
‘SES Performance Awards $139 002% ©2535 $5,478 72% 387 of
1465 & PMRS Performance Awds «$1035 «O17%@_— 92.774 $1,116 20% 67 45
ElSdata_— PMS(GS+WG) Pet Awds $311.3 052% «472,364 24% BO 232
‘Special AcvOther Awards S016 017% 204.156 $498 47% too = 100
‘Suggestion Awards $82 001% ©=— 2444 $333 1.9% 22 12
Tot Sat Gainshares na a va na na na na
$59,7140
(cillons)—TOTAL~All Awards $5426 091% 796672 $681 23% na 302
USOPM:PMIAD, 1 10723095


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21

handling personnel issues, Most management training focuses on
technical and operational issues. Little training is provided on
personnel issues, and that which is provided tends to be
functional in nature (procedures for handling personnel paperwork
or the basics of disciplinary policies). Training rarely focuses
on four critical areas. They are: (1) the “nuts and bolts”
issues regarding the imposition of non-disciplinary or
disciplinary actions; (2) the relationship between individual
instances of inappropriate conduct or poor performance and
management's ability to impose more severe corrective action in
the future; (3) the global relationship between the
unsatisfactory conduct and performance of one employee and
management's ability to address conduct or performance issues of
other employees; and (4) the relationship between the imposition
of corrective measures and the company's ability to defend itself
in the event of employee litigation. Training issues exist at
all levels of management. Expecting poorly trained managers to
assume responsibility for handling personnel issues properly is
unrealistic.

Three factors cause inadequate personnel training:
supervisor ignorance, operational needs, and financial
constraints. Upper mid-level and senior management often have
not had appropriate personnel training and therefore do not
understand the importance of addressing personnel problems
quickly and appropriately. As a result, senior management either

fails to provide the necessary personnel training for


50

Time-Based Model. This model is focused on flexibility and agility and has
emerged in the financial industries. Work in these organizations is organized
around multi-functional expertise, directed through a limited management
hierarchy, and often focuses on cross-functional work groups. Performance is
measured in terms of “speed to market,” and rewards are based on competencies
of both individuals and work groups, with linkages to program results.

Network Model. This model is the least prevalent, but is growing in popularity and
is demonstrated in the construction industry. This model focuses on
responsiveness and flexibility relative to the changing needs of the customer.
Work is designed around temporary work groups that are formed based on
needed technical proficiencies and competencies to complete a specific project.
Performance is measured in terms of return on investment, and rewards are based
on market rates for individual competencies and team results.

As mentioned previously, most complex organizations have a mix of these work cultures
and as the world of work is changing in the private sector, organizations are reforming
and changing their infrastructure to support and reinforce the new work cultures. The
type of work culture desired by an individual organization, or work unit within a larger
organization, has a direct implication for the human resource system that is built to
support and reinforce the desired work culture.

‘Human resource systems need to be designed to support the organization’s prevalent or
desired work culture and mission. When designed appropriately, they provide a clear
message to employees about how they can contribute to the organization's success. As
described above, the work culture has direct implications for the organization’s most
effective work process design, job design, performance management approach, and reward
strategy. In the most successful organization, systems and processes to select employees,
train and develop them, manage them, and compensate them, are aligned with the
organization’s mission and work culture.


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33

customer service for all of America’s citizens. I thank you for the
opportunity to be here.
{The prepared statement of Ms. O’Neil follows:]


168

6) Please compare the frequency of removal actions taken during probationary period
versus after the probationary period during the past ten years.

Terminations during Probation versus Removals after Probation

Post Probationary/ Career

FY Probation | Probationary | Post Removal | Conditional

Removals Ratio Appointments
94 2,318 4,030 0.6 36,350
B 2,519 3,996 0.6 46,715
92 3,516 3,723 1.0 70,168
91 4,344 3,567 12 103,180
90 5,052 3,610 14 110,611
89 5,215 3,910 13 145,078
88 4,426 3,705 12 128,635
87 3,822 3,113 12 129,241
86 4,183 3,519 12 115,306
85 4,088 3,321 12 126,112

Since all new employees begin employment on different dates throughout the year, it was not
possible (within the timeframes for this request) to provide the Committee with an actual
frequency comparison of probationary removals to post-probationary removals within each
fiscal year. Instead, we have provided the ratio of probationary removals to removals of
employees who have completed a probationary period for each fiscal year. Additionally, we
have included the number of employees who were appointed each fiscal year under a career
conditional appointment (including conversions to career appointments) that require a
probationary period.


183

still performing in an unacceptable manner. As long as these
standards were incorporated into a removal process, NTEU would not
be opposed to making one system for removals based on the current
Chapter 43 and Chapter 75 removal provisions.

I would also like to pose a novel approach to this problem.
Members on both sides of the aisle in this Subcommittee have
expressed concern that it is too difficult to remove an employee
from the federal government. The unspoken message has been that a
poor performer in the federal government is tolerated while the
same poor performer in the private sector would be terminated.
NTEU would be willing to accept the challenge of being put on the

same footing as the private sector.

In the private sector, parties negotiate what procedures are
to be used when an employer wishes to terminate an employee for
poor performance. There are no statutory mandates as to what must
be done. The responsibilities would fall upon the affected parties
to craft a procedure that both parties could live with in their
collective bargaining agreement. This would also allow the
managers, who are alleging that it is too difficult to terminate a
federal employee, the opportunity to build a termination process to
their liking. We would welcome the opportunity to be a part of

this challenge and change.

Finally, many have complained that the termination process is

too long and has too many layers of appeal. Again, NTEU is ready


17

appropriate questions which enable the employer to get an insight
into how the applicant would work in the employer's business
environment.

Some divisions in my company have successfully used the
Greentree test to evaluate applicant's aptitude for employment.
Where Greentree is used, the post-hire work record of employees
has generally been superior to employees hired prior to
implementation of the testing procedure. The Greentree employees
tend to perform better, have fewer incidents of disciplinary
action, are more satisfied with their jobs, and have fewer
complaints than those who did not undergo the testing process.

Employer evaluation of an applicant's technical knowledge is
usually accomplished through the interview process or testing.
Testing has limited value since most job tests are limited in
scope to particular job requirements (typing/word processing
skills, math skills for cash handlers, etc.) and do not evaluate
the full range of technical skills needed to successfully perform
the job. Interviews, while excellent tools for evaluating an
applicant's technical knowledge, often fail to fulfill their
potential because the manager lacks the skills necessary to
conduct an effective, informative interview.

The lack of managerial accountability is most clearly seen
in the performance assessment process. Intended to provide
management with a multi-purpose tool to identify talented
employees, develop employee potential, and document poor

performers, the performance assessment process in most


61

Statement of Frank P. Cipolla
Director, Center for Human Resources Management
National Academy of Public Administration

Before the
Subcommittee on Civil Service

Committee on Government Reform and Oversight

Good moming, Mr. Chairman and members of the Subcommittee. Thank you for the
opportunity to speak on this important issue of performance and accountability, a key component
of civil service reform. We are pleased to respond to your request to testify on the basis of

work being conducted through the Academy’s Center for Human Resources Management.

‘The National Academy of Public Administration is an organization chartered by Congress
to improve governance at all levels. The Academy's Center for Human Resources Management
has a number of projects and studies underway on behalf of individual agencies to assist their
leadership in today’s changing human resources management environment. Our primary focus
is our work with a consortium of agencies to address common concems and develop initiatives
to help human resources leaders and line managers successfully meet the challenges confronting
their organizations. Our purpose in presenting this testimony is to provide information about
trends and developments identified in our work. This past year we worked with 31 agencies to
research best practices and lessons leamed from the private sector, other public levels, and at


130

rather because managers don’t use the system.

When managers do properly employ the system - the outcome
indicates that poor performers are discharged and stay discharged.
The MSPB estimates that only 20% of all removals and demotions are
ever appealed. Thus, 80% of the time, supervisors remove employees
and there is no challenge to the removal. The other 20% of the
time, when employees challenge their removals, penalties are

reduced or actions are reversed only 17% of the time.

These statistics overwhelmingly indicate that when supervisors
make a decision, it sticks. The statistics also reveal little
basis for the management complaint that poor performers cannot be
discharged. Nevertheless, it is important to understand why the

managers are not using the system.

The MSPB in its’ survey concluded that there were various
factors that discouraged managers from taking formal action against

employees. These factors included:

1. Supervisors did not understand the procedures to remove
employees.
2. Supervisors receive inadequate training on how to remove
employees.
3. Supervisors erroneously believe that they must use Chapter 43
procedures to remove an employee. They believe that this procedure

is too onerous.


114

to the employee about his/her performance. If the manager
prevails against the IG investigation, EEO complaint, unfair
labor practice charge, Office of Special Counsel investigation,
grievance procedure, congressional inquiry, or even a GAO inquiry
(they have a hotline too), and winds up taking the performance
based action, it will probably be years later. Then the manager
will have to defend the action all over again at the MSPB because
each and every one of these allegations, as well as allegations
concerning other portions of the 11 separate prohibited personnel
practices listed at 5 U.S.C., Section 7302(b) can be raised as
“affirmative defenses" before the MSPB.

If the employee prevails on any of the myriad of challenges,
they will be put back in their jobs, given back pay and
attorney's fees, and, in some instances, paid substantial
monetary damages. This is true even if the manager has proven
that the employee has performed at the unsatisfactory level and
should be removed for poor performance.

The aftermath of even attempting to take an action against a
poorly performing employee in the face of all these hurdles is a
thoroughly demoralized manager, a demoralized office staff who
iow that the unsatisfactory employee got away with it, and the
establishment of an attitude within the agency that taking
performance based actions just is not worth it. Is it any wonder
that 26% (1,482) of the 5,700 mangers surveyed by the MSPB in
their recent report believed that they would not be supported by

6


16

may_not be valid in order to avoid the time and expense involved
in defending the supervisor or agency.

In the September 1995 MSPB Report cited above, one of the
problems identified was inadequate assistance provided by agency
personnel and legal staff. Ironically, one of the reasons for
this is because of a policy followed by the MSPB itself. MSPB
Administrative Judges are given very short time limits (120 days)
to complete the cases that are appealed to them. In order to
meet these time limits, and at the urging of their agency, they
are encouraged to settle about 50% of all of the cases appealed.
These settlement statistics are highly touted in the MSPB annual
reports. However, as a result of the pressure on the
Administrative Judges to settle and, in turn, the pressure by the
Administrative Judges on agency counsel and personnel offices to
settle by giving something to the employee who appeals, agency
managers are told that they really only have a 50-50 chance of
prevailing on appeal. While the MSPB study indicates that rarely
are performance cases reversed by the Board, in fact, those
reversals come in the 50% of the cases that are not settled by

the Administrative Judges before they are adjudicated.

In many agencies, settlements of EEO complaints are nearly
mandatory. SEA has had many anguished telephone calls from
government executives who are being forced to settle EEO

complaints that the executives know are not valid and that have


LnnBeS eouP tm CONGRESS

Congress of the Cnited States
Wouse of Representatives

CN GOVERNMENT REFORM AND OVERSIGHT
2157 Baweuen House OFFice BULOING.
WasnncTOn, OC 20518-6143

cone

Opening Statement of the Honorable Joba L.
Chairman, Subcommittee on Civil Service
Hearing on Performance and Accountability
October 26, 1995

ew

Good moming, and welcome to this hearing. a continuation of this Subcommittee’s series of
hearings on topics related to civil service reform. Today, we will examine comparisons between
management in the private sector and the public sector. We are attempting as to define characteristics of
successful organizations and to adapt those traits, as much as possible, to public sector management

I's obvious that federal agencies have major problems in managing people as well as programs.
‘Those management challenges reflect changes that have confronted private organizations for more than
ten years. Federal agencies are only now coming to grips with the fiscal constraints that the private
sector addressed then. We need to reach some agreement about how to resclve those challenges for the
coming years.

It’s rather obvious that the ways in which managers evaluate performance and provide direction
to federal employees is one part of the system that is truly broken. Our current system ties the hands of
managers who want to do good jobs. Its a fine demonstration of the ‘Lake Woebegon Effect,” where
nearly everyone is better than average. The Office of Personnel Management's statistics for fiscal year
1993 indicate that 99.6 percent af federal employees who were rated received evaluations of “fully
successful” or better. I'm not certain what the data tell us when only 0.4 percent are rated less than
“fully successful.” I can recognize problems, however, when more than 73 percent of those employees
were rated “exceeds fully successful” or “outstanding.”

Federal programs are not performing at the level of excellence that these individual ratings
‘would lead any rational observer to expect. Indeed, recent laws such as the Chief Financial Officers Act
and the Government Performance and Results Act both directed major provisions to improving the
measures the federal government uses to assess its programs. We know that the vast majority of federal
employees work hard to make their agencies as effective as possible. But we also know that the system.
is Very reluctant to act against poor performers. Of even greater concern, the poor performers know this,
too. Few factors can corrode the morale of an organization more steadily than the knowledge that people
who work hard and perform well are rewarded nearly the same as those who don’t measure up.

The Merit Systems Protection Board reports that 78 percent of federal managers who responded
to their survey had managed a problem employee. Only 23 percent of those managers initiated personnel
actions to demote or terminate those employees. Some managers reported being confused about the
differences between authorities provided under Chapter 43 (which addresses performance problems) and


U.S. Merit Systems Protection Board
Initial Appeals of Agency Actions - FY 1994

Types of Initial Appeals—Filed

Performance 2%
‘Adverse Action 49% (3,768) Yrdhtaual Fight of Action 2% (161)

CSRS Retirement: Overpayment 3% (307)

CSRS Retirement: Disability 3% (288)

CSRS Retirement: Legal 13% (1,126)

aay lane

‘Other Appeals 7% (582)
Denial of Within Grade 1% (75)
‘Termination of Probationers 3% (262)

Suitability 0% (37) Reduction in Force 19% (1,686)

Total Number of Initial Appeals: 8,775
Percentages do not total 100% because of rounding.


38

challenging target for it, and measure it incessantly. Further, high-performing companies expect,
their managers to operate the performance management system via ongoing communication,
coaching, assessing, feedback, reward, and development; it is a process, not an annual event.
They do not simply delegate performance management to the human resources department, itis

an issue with managerial accountability

Benchmark performance management practices. High-performing companies are both learners

and innovators. They continually search out the best practices and compare themselves to the

best. Performance management benchmarking consists of diagnosis, learning, and applications.

‘Set order-of-magnitude performance improvement targets. High-performing companies set their
sights high, and their performance expectations and targets affect their confidence and optimism.
Incremental improvement, or even “stretch” goals, lead to a little more effort but rarely require a

rethinking of the status quo.

Measure performance of teams. Excellence in execution necessitates collaboration across
numerous boundaries: functional, hierarchical, and in the private sector, country and division.
Participation on cross-functional teams cannot be seen merely as a committee assignment or an
extra task; it must be regarded as a critical priority. To ensure giving proper weight to team
work, team performance must be measured and rewarded. Companies are using such measures
as team behavior (such as listening), team process (decision making), and team results.
‘Companies like Kodak have learned that rewards must come from teams, not functions, if teams

5


158

Percentage Distributions of Performance Ratings

Exceeds Number of
Minimally Fully Fully Average Ratings
Unacceptable Successful Successful Successful Outstanding Rating _ Reported

GS 13-15 (Supervisors and Management Officials)

Fy 1994 0.06 0.13 13.97 44.40 41.44 427 184,543
FY 1993 0.07 0.14 13.98 44.69 41.42 4.27 181,728
FY 1992 0.06 0.14 16.62 46.41 36.77 4.20 149,810
FY 1991 0.06 0.14 17.85 47.25 34.70 ANG 148,983
FY 1990 0.06 0.16 19.52 49.73 30.54 441 143,219
FY 1989 0.08 0.23 22.33 49.44 27.94 4.05 138,017
FY 1988 0.09 0.27 25.54 48.07 26.05 4.00 129,345,
FY 1987 0.13, 0.37 28.75 47.04 23.71 3.94 121,879
FY 1986 0.12 0.36 31.21 46.48 21.84 3.90 113,522
FY 1985, 0.40 144 30.05 47.99 20.72 3.88 103,964
GS 13-15 (Other)

FY 1994 0.05 0.14 21.76 45.55 32.50 4.10 88,349
FY 1993 0.06 0.14 20.61 45.71 33.48 412 103,342
Fy 1992 0.04 0.13, 22.66 45.26 31.91 4.09 91,484
Fy 1991 0,09 021 2271 45.27 31.72 4.08 85,973
FY 1990 0.18 0.28 26.11 45.30 28.15 401 93,192
FY 1989 0.32 0.31 30.63 43.71 25.03 3.93, 87,323
FY 1988" O71 0.38 33.30 42.13 23.49 3.87 81,813
FY 1987? 0.22 0.48 30.05 45.01 24.23 3.93 66,537
FY 1986? 0.14 0.46 36.42 38.46 24.53 3.87 54,273
FY 1985, 0.14 0.43 46.38 33.32 19.72 3.72 53,137
GS 1-12

Fy 1994 0.14 0.31 (24.20 41.63 33.72 4.08 1,096,553
FY 1993, 0.13 0.34 26.52 41.96 31.05, 403 1,145,962
FY 1992 0.13 0.36 29.55 41.32 28.64 3.98 1,174,895
FY 1991 0.12 037 31.16 41.17 2749 3.95 1,126,784
FY 1990 0.13 0.45 35.75 39.07 24.61 3.88 1,147,505,
FY 1989 0.14 0.40 42.23 35.89 21.34 3.78 1,182,980
FY 1988 021 041 44.49 34.59 20.30 3.74 1,122,359
FY 1987? 0.45 0.90 38.98 37.27 22.40 3.80 965,409
FY 1986? O12 0.42 42.60 36.42 20.45 377 1,013,114
FY 1985, 0.16 0.40 50.69 30.99 A777 3.66 905,390
WG

FY 1994 0.03 0.15 23.92 44.61 31.29 407 263,182
FY 1993 0.05 0.19 26.13 45.11 28.53 4.02 283,381
FY 1992 0.04 0.23 30.46 44.66 24.61 3.94 308,661
FY 1991 0.08 028 33.71 43.78 22.20 388 = 310,381
FY 1990 0.08 0.34 39.10 40.80 19.68 380 332,601
FY 1989 0.10 0.29 40.91 41.31 17.39 3.76 341,978
FY 1988 0.12 0.32 42.59 40.34 16.22 3.73 319,543
FY 1987? 0.28 0.48 41,46 43.34 14.44 371 260,804
FY 1986? 0.18 0.31 41.81 43.96 13.74 B71 234,468
FY 1985 (Data not collected by OPM prior to FY 1986)

NOTES:  ' Excludes General Accounting Office due to erroneous data submission.
* Excludes Treasury-IRS due to erroneous data submission.

Percentages may not add to 100 due to rounding.
USOPM:PMIAD 10/23/95


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41

job within the company. Job evaluation systems promote bureaucratic management, reinforce
and overemphasize the job hierarchy, discourage individual initiative, and emphasize stated job
duties rather than individual capabilities or performance. The emphasis is on changing jobs for a
promotion rather than on individual skill development. Some companies are shifting to focus

base pay on the individual and not on the job.

‘Skill Based Programs Have a Future Orientation. The message of skill-based pay is that the
employee's value depends on what he or she can do. The more employees can do, the higher
their value, and this will be reflected in their salary. The concept is also compatible with the
‘TQM philosophy in that it de-emphasizes past performance and conceptually reinforces the

importance of continuous skill improvement.

A similar program concept is competency-based pay. Skills are normally thought of in the
context of hourly or nonexempt workers who focus on manual tasks. The concept of a skill is
less relevant to jobs involving cognitive use of professional or technical knowledge. For some
job families, mental capabilities and expertise — competencies -- are the relevant basis for
assessing individual value. For each family, management has to identify the relevant
competencies and define performance expectations. These may be specific to the job family,
such as knowledge of Securities and Exchange Commission reporting requirements, or more
generic, such as verbal communication. The goal is to provide an incentive for workers to
increase the depth and breadth of their skills. In the same way, the most competent workers can
be expected to make the most significant contribution, One firm in South Florida has replaced its

8