Fall 2001 Vol. 9, No. 1

Workforce Performance

Theodore Roosevelt Building n 1900 E Street, NW n Washington, DC 20415-8340 Performance Management and Incentive Awards Division

Workforce

Compensation

 and Performance

Service

Compensation Conference Charts the

Course for Good Management

PM held its 2001 Strategic Compensation

Conference: Charting a Successful Course for Pay,

Classification, and Performance in Alexandria, Virginia, on

August 28-29, 2001. The Conference provided Federal

managers and human resources practitioners with

updates, forecasts, and practical information on pay and

leave administration, performance management,

classification, and the efforts to improve the available

compensation tools that support agency missions. More

than 500 Federal employees from 81 agencies in 37 states

and as far away as Germany attended this third annual

conference. In support of the conference theme, the

plenary speakers focused on a number of issues that are

important for charting the course towards maintaining

and improving the Government’s performance.

Keeping Our Focus on Results. OPM Director

Kay Coles James led the way as the keynote speaker.

She reiterated the President’s directive that we should

strive to create a Government that is citizen-centered,

results-oriented, and market-based. In doing so, our

focus should shift from personnel administration to

human capital management. High performing

organizations recognize that employee skills, talent, and

motivation have a huge impact on results. Developing

the incentives necessary to attract, reward, and retain

experienced and high-performing men and women is

essential to preventing further brain drain from the

Federal workforce. One way to create a more resultsoriented Government is by integrating employee

performance management systems with agency program

performance management and budgeting systems.

Director James also spoke of the President's Freedom to

Manage Initiative and explained how it will help agencies

move forward by removing some of the barriers to

efficient management. The Initiative is designed to help

agencies make better use of the flexibilities currently in

place to acquire and develop talent and leadership.

Effective Leadership. Ambassador Richard Haass,

Director of the Policy Planning Staff at the Department

OPM Director, Kay Coles James

of State, spoke on “How to be an Entrepreneurial

Bureaucrat.” He said becoming an entrepreneurial

bureaucrat requires effective leadership — being smart is

not enough. Creating measures for effective leadership

can be hard to do, especially when there is no bottom

line. The Ambassador described several characteristics

of effective leadership. Effective leaders:

ß tell their bosses the truth, keep them informed, and

support their decisions;

ß realize that they owe their subordinates their loyalty;

ß do not micromanage;

(continued on page 6)

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2

Telecommuting: Reviewing the Basics

hether you use the term telecommute, telework,

or flexiplace, all three mean the same — an

arrangement in which an employee regularly works at an

alternate work site such as the employee's home, a

telecenter, or other location that allows him or her to

accomplish work in an effective and efficient manner.

To be formally considered as a telecommuting

agreement for reporting purposes, the arrangement

must be continuously and regularly used, averaging at a

minimum once per week.

The law now requires each Executive agency to establish

a policy under which eligible employees may participate in

telecommuting to the maximum extent possible without

diminished employee performance. The law further directs

the Director of the Office of Personnel Management

(OPM) to assure these requirements are applied to 25

percent of the eligible Federal workforce by April 2001,

and to an additional 25 percent of the workforce each

year thereafter.

Benefits of Telecommuting. The benefits of

telecommuting include:

ß improvements in employee morale and

effectiveness;

ß reductions in transportation costs including car

insurance, maintenance, and wear;

ß retention of skilled employees and reduction in

turnover due in part to increased job satisfaction;

ß accommodation of employees with short- or longterm health problems or family responsibilities, such

as those associated with elder care and latch-key

children;

ß cost savings to the Government in regard to office

space, sick leave absences, and energy conservation;

ß better use of employees’ peak productivity periods

within the limits of established laws;

ß reduction in automobile-created air pollution and

traffic congestion;

ß potential for increased productivity; and

ß improved work atmosphere due to fewer co-worker

non-business interruptions.

Barriers to Telecommuting. The Interim Report on

Telework in the Federal Government, prepared by OPM in

June 2001, identified barriers to telecommuting. The

barrier mentioned most often was manager reluctance.

Managers reported concerns about managing remote

workers, due to perceived loss of control over current

efficient business operations. Many managers are

accustomed to communicating face-to-face. They

conduct meetings with staff as a means of keeping abreast

of individual and team projects and perceive that the

lines of communication close when an employee is

working off-site. The narrative reports revealed some

managers have difficulty monitoring results of projects

when some team members telecommute and others do

not. To help managers overcome these barriers, OPM

plans to:

ß offer telecommuting leadership seminars for toplevel agency officials;

ß broadcast satellite educational programs to Federal

agencies;

ß offer conferences aimed at agency supervisors and

managers;

ß publish a guide for managers and supervisors; and

ß help agencies evaluate their progress in

implementing telecommuting programs.

Available Resources. The Balancing Work and

Family Demands Through Telecommuting guide was issued by

the Family Friendly Workplace Advocacy Office within

OPM in September 1995. It provides basic guidelines

for establishing a telecommuting program. An OPM

study released in the spring of this year, Telework Works:

A Compendium of Success Stories, highlights successful

Federal telecommuting experiences. Employees in the

study had formal agreements to work at least 1 day per

week away from the traditional office. You can

download this report at

http://www.opm.gov/studies/FINALTELEWRK.htm.

For Up-To-Date Information on

Telecommuting. OPM and the General Services

Administration designed a Web site,

http://www.telework.gov, to provide one-stop

shopping on Federal telecommuting policies. A single

location provides access to guidance issued by both

agencies and other information on initiatives and

activities. You may contact Mallie Burrus with OPM's

Family Friendly Workplace Advocacy office at 202-606-

5529 for additional information.

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3

Managing Teleworker Performance

As the number of teleworkers increases, managers must

maintain performance levels and meet organizational

goals. Meeting these challenges requires excellent

performance management skills. At OPM’s 2001

Strategic Compensation Conference, Ms. Clair Krizov,

Executive Director, Environmental and Social

Responsibility at AT&T, and Adriane Thormahlen,

Senior Program Analyst from the Internal Revenue

Service (IRS), described the success their organizations

have had managing teleworker performance.

Teleworking at AT&T. AT&T has had teleworkers

for over a decade. By 2000, 56 percent of managers at

AT&T teleworked at least once a month and 11 percent

were in a full-time virtual office status. According to

Ms. Krizov, managing teleworkers successfully requires

the same basic performance management skills used to

supervise workers who are at the work site. These skills

include:

ß planning and establishing goals at the work unit

level,

ß setting expectations for what needs to be accomplished and how well,

ß measuring performance, coaching, and giving timely

feedback, and

ß recognizing employees for their achievements.

Ms. Krizov acknowledged that using voice messages, cell

phones, conference calls, and emails to communicate

with employees requires specific communication skills.

Since there is little face-to-face contact, excellent

listening skills are key to understanding the intent behind

words. Managers need to ask for clarification if needed,

ask probing questions, notice the tone being used, and

use encouraging words to maximize the flow of

information. At the same time, interpreting email

messages demands that managers understand the

connotation of words, the meanings of words being

emphasized, and the tone of the message.

At AT&T, teleworking has had a triple bottom-line

impact that allows it to meet the needs of today without

compromising the needs of future generations. These

positive results include social, business, and

environmental performance:

ß 70 percent of employees are more satisfied with the

job,

ß projected savings are $100 million in productivity,

$18 million from reduced turnover, and $25 million

in real estate costs, and

ß pollution was reduced because 110 million fewer

commuting miles were driven.

Ms. Krizov explained that when teleworker participation

at AT&T reached 56 percent in 2000, major problems

such as isolation, loneliness, and loss of camaraderie

decreased significantly. Creating that critical mass of

teleworkers ensures a sustainable program and makes

teleworking easier and more productive.

Teleworking at IRS. IRS recently completed a

flexiplace pilot with 2 managers and 18 employees as

volunteers. The pilot, according to Ms. Thormahlen,

allowed the information technology function of IRS to

demonstrate that teleworking was a win-win for the

organization and its employees. Teleworkers were given

cell phones, laptops with email access, and hoteling

workstations (i.e., shared work space). Success of the

pilot depended on excellent performance management

skills, including setting goals and expectations, evaluating

performance, and giving feedback to employees. The

program had positive results:

ß 82 percent of employees reported an increase in

productivity,

ß 100 percent of managers were satisfied, and

ß 60 percent of employees felt more motivated.

Formal training for supervisors and employees engaged

in teleworking efforts is critical, stated Ms. Thormahlen.

Supervisors must learn to establish effective

communication networks and employees must learn how

to plan, organize work, and set up a home office. The

most difficult hurdles to overcome at IRS were the

technical support problems faced by the teleworkers.

Remote management did not pose any challenges that

could not be addressed.

More Information. For information about teleworking

at AT&T, you may email Ms. Krizov at ckrizov@

att.com . For information about teleworking at IRS,

you may contact Ms. Thormahlen at 202-283-4081 or

email her at Adriane.Thormahlen@IRS.gov.
4

PILLAR Award Recipients Honored at the

Strategic Compensation Conference

PM Director Kay Coles James presented the second

annual OPM Director's PILLAR Award at the 2001

Strategic Compensation Conference on August 28, 2001.

This award stands for Performance, Incentives, and

Leadership Linked to Achieve Results and showcases

agencies that use effective employee performance

management to support organizational goals. The two

award recipients were the Program for Empowered

Performance established in the Department of the

Interior's Office of Surface Mining (OSM), Division of

Compliance Management, and the Visuals for Veterans

Program within the Department of Veterans Affairs (VA),

Veterans Benefits Administration (VBA), Los Angeles

Regional Office. Representatives of both organizations

gave conference participants brief presentations

highlighting their respective programs.

Program for Empowered Performance. Jim

Krawchyk, Chief of the Division of Compliance

Management, OSM, shared the excellent organizational

results that the Program for Empowered Performance

(PEP) achieved. PEP is an employee performance

program within OSM that bases employee performance

expectations, appraisals, and recognition on strategic

organizational goals that are cascaded down through

the organization to the employee level. The program

involves employees in the development of their

individual performance plans, stresses the development

of coaching skills for supervisors, introduces a 360-

degree feedback mechanism for supervisors, broadens

and enhances communication of performance data, and

stresses internal and external customer service.

Mr. Krawchyk shared how the PEP encompasses the

Division's trust-based processes for achieving results

through incorporating training, measurement,

communication, and recognition in the following eight

steps:

ß establishing outcome-based mission, vision, and

goals, integrated with the agency's strategic plan and

employee performance plans;

ß constructing employee performance plans that

reflect and support organizational goals;

ß incorporating self-directed work teams;

ß training managers in coaching skills and providing

them with employee feedback;

ß sharing information at all levels;

ß using customer feedback;

ß reporting on results; and

ß recognizing superior performance and developing

plans for improving performance.

Results of the PEP include a 99 percent compliance rate,

a 100 percent customer satisfaction rate, and 5

consecutive years of productivity improvement.

Visuals for Veterans Program. Stewart Liff,

Director of the VA Los Angeles Regional Office

(LARO) highlighted the Visuals for Veterans Program

for conference attendees. The LARO is responsible for

providing benefits and services to over 1,200,000

veterans. The Program is a comprehensive visual

communication program. It uses a series of visual

displays, including television monitors, to provide

feedback that is updated daily. These visual displays

sensitize employees to the veterans' experiences. The

Visuals for Veterans Program integrates the VBA

strategic goals as well as its balanced scorecard at the

network, station, division, and team levels. Goals are

described at various levels throughout the organization

from the overall regional goals through team goals.

LARO also uses its scorecard results when distributing

"share" rewards tied to the achievement of national,

network, and station targets. The program

communicates to each employee his or her contribution

to VBA's specific strategic goals and objectives for

serving veterans.

The Visuals for Veterans Program has been extremely

successful and is having an enormous impact on the way

the VA serves veterans. In fact, the LARO is often used

as a model for the rest of VA, with station level

scorecard results placing it in the top 15 out of 57

regional VBA offices.

More Information. For further information about the

PEP Program, you may contact Mr. Krawchyk at 412-

937-2912. For further information about the Visuals for

Veterans Program of the Los Angeles Regional Office, you

may contact Mr. Liff at 310-235-7696.

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5

Balancing Measures for Managers

In November 2000, OPM issued performance

regulations for the Senior Executive Service (SES)

requiring agencies to evaluate senior executive

performance using measures that balance:

ß business results,

ß customer perspective, and

ß employee perspective.

Because these measures are in executive performance

plans, similar measures likely will cascade down to nonSES managers and supervisors. At OPM’s 2001

Strategic Compensation Conference, OPM staff

presented a workshop titled Balanced Measures for

Managers that described how to develop performance

plans for non-SES managers that incorporate these

balanced measures.

Business Results. Business results are an

organization’s expected outcomes or end products and

services. Business results for managers can range from

overall agency outcomes to work group or individual

outputs or services, depending on the level of the

organization for which the manager is responsible. For

example, business results for high-level executives may

be program outcomes (e.g., fewer highway deaths or

clean water). Business results for a lower-level, non-SES

manager or supervisor, however, probably would be

group outputs or services (e.g., a new highway that

incorporates safety design features or a report that

includes accurate water purity data and sound

recommendations).

The expected outcomes agencies establish in their

strategic plans under the Government Performance and

Results Act are their organizational business results.

Agencies should cascade these to managers and

supervisors. Some examples of business results

measures for non-SES managers and supervisors could

include:

ß For the supervisor of a claims processing unit: The work

unit processes at least 220-230 claims per week with

an 88-93 percent accuracy rate and taking an average

of 90-100 days per claim.

ß For an engineering supervisor: 80-90 percent of projects

are within plus or minus 10 percent variance of the

latest approved budget.

ß For a computer systems team leader: New machines include

required software and are delivered according to

delivery schedule.

Customer Perspective. Customer perspective

measures consider the organization's performance

through the eyes of its customers, so that the

organization retains a careful focus on customer needs

and satisfaction. To achieve the best in business

performance, agencies must incorporate customer needs

and wants and must respond to them as part of their

performance planning. To do this, Federal managers

and employees must determine who their customers are

and what those customers expect from them. For

managers of line organizations (i.e., organizations that

directly achieve the agency's mission), customers may

include a wide variety of public groups, other agencies,

other governments, and Congress. [Note: When an

agency factors customer feedback into the performance

rating process, the appraising official makes the final

rating determination, not the customer(s).]

Examples of customer perspective measures for

managers of line organizations could include:

ß For a park manager: Visitors to the manager's national

park had a satisfactory experience during their visit.

ß For a nursing supervisor: Most patients on a specific

ward in a hospital rate the nursing staff as exceptionally

competent and helpful.

ß For a policy office supervisor: Agencies respond that the

regulations a policy work unit proposed are flexible,

easier to read and follow, and take into account

agencies' previous comments.

A support organization, such as a human resources office, a

building services office, or an acquisitions office, also will

have goals and measures, but most of the customers of

support organizations will likely be employees who work

for the same agency. Examples of customer perspective

goals and measures for managers and supervisors of

various support organizations could include:

ß For a human resources supervisor: Most managers of the

agency believe they receive adequate assistance

when they call their human resources office.

ß For a building services manager: Employees are

generally satisfied with the food service provider in

their building.

ß For a procurement officer: Managers believe that the

procurement office provides adequate instruction on

new procurement procedures.

(continued on page 6)
6

Charting the Course for Good Management (continued from page 1)

ß delegate and trust their subordinates to do their jobs;

ß provide their subordinates with public praise and, as

necessary, private criticism;

ß are able to persuade or sell an idea or cause to their

colleagues and peers, and, as necessary, cooperate

with them even though they may be competitors in

some respects;

ß realize that their customers and stakeholders are

important, even though they may be the easiest

to ignore;

ß spend time with their customers and listen to what

they have to say;

ß realize that it is not enough to have a good idea —

they must be able to sell that idea;

ß keep their priorities limited to a few items;

ß focus on being effective and on the issues that will

make a real difference; and

ß do not believe leadership means the boss tells

subordinates what to do.

NAPA Study. Myra Howze Shiplett, Director of the

Center for Human Resources Management at the National

Academy of Public Administration (NAPA) and Fred

Thompson from the Federal IT (Information

Technology) Workforce Committee of the Chief

Information Officers Council, spoke on the results of

NAPA’s comparative study of IT pay systems. The

results were reported in NAPA’s final report, The

Transforming Power Of Information Technology: Making the

Federal Government an Employer of Choice for IT Workers,

which was published in September 2001. The NAPA

report recommends specific reforms to enhance the

Federal Government's ability to attract and retain a

skilled IT workforce. The study brought together two

critical issues — human capital and IT. The study team

found that:

ß the Government has a critical need to increase the

IT workforce by 20 percent over the next 7 years to

compensate for an aging workforce and the effects

of IT outsourcing;

ß a pay gap exists between the private and public sectors;

ß the recruitment system is broken — there are long

hiring delays with complicated steps in the hiring

process in many agencies;

ß in 2001, about 70 percent of IT dollars were paid to

contractors;

ß the Government increasingly relies on outside experts

to keep up with the dynamics of technology while

focusing its internal resources on strategic planning,

procurement, and project management; and

ß IT professionals prefer compensation systems that

determine pay increases primarily based on

performance rather than longevity.

The study provides several recommendations, including:

ß establish effective pay for performance programs,

ß create balanced work/life programs that meet the

needs of the IT professional,

ß streamline the hiring process, and

ß enhance IT training and developmental

opportunities.

More Information. See the full text of Director

James’ speech at http://www.opm.gov/speeches/

2001/KCJ-August28.htm. The NAPA report is

available at

http://www.napawash.org/napa/index.html.

Balancing Measures for Managers (continued from page 5)

Employee Perspective. Employee perspective

measures focus attention on essential internal processes

that drive the organization, including employee

development and retention. This perspective directs

attention to the basis of all future success—the

organization's people and infrastructure. Adequate

investment in these areas is critical to long-term success.

Employee retention is especially critical and is something

that managers can significantly affect. Recent studies in

several private sector businesses and studies conducted

by the Gallup Organization found that poor supervisory

behavior was the main reason people leave their jobs.

These studies verify that it is not so much opportunities

for raises or promotion through the ranks that keep

employees happy. The length of an employee's stay is

related to the manager's skill at customizing

responsibilities, fostering long-term learning

opportunities, and providing plenty of informal

feedback.
3

(continued on page 8)
7

Performance Management Programs Are

Integral to Compensation System Design

When organizations base compensation in any way on

employee performance, redesigning a compensation

system requires examination of the performance

management program. At OPM’s 2001 Strategic

Compensation Conference, representatives of the Office

of the Comptroller of the Currency (OCC) and their

adviser, Steve Safier from the Hay Group, described

how OCC redesigned its compensation system, which

required it to also redesign its performance management

program.

Changes Needed. OCC is not covered by General

Schedule pay requirements and had been using a 25-

grade classification system and a 5-level performance

management program. It found that while 25 grades

allowed frequent promotions, the system was too

complex and made it difficult for managers and

employees to differentiate between grades. The base

salary system was perceived to be comparable to systems

used by similar Federal agencies but not believed to be

competitive with private-sector financial institutions.

While the performance management program used

generic, skill-based standards to make the process easier

and provided some differentiation among

performance levels and pay increases, the agency

perceived that generic standards were not accurate for all

employees and that the limited merit budget was not

enough for adequate recognition. OCC decided it

needed to redesign these systems.

Compensation Objectives. OCC used leadership

interviews, employee focus groups, and surveys to develop

its top 10 compensation objectives. OCC wants:

ß external competitiveness to recruit and retain;

ß to reward performance through salary without grade

promotions;

ß rewards for skill acquisition;

ß internal equity among employees;

ß pay for the person rather than just the job;

ß built-in controls and cost constraints;

ß an understandable and equitable system;

ß parallel career paths for managers and technical

employees;

ß flexibility to adapt quickly to market changes; and

ß management flexibility to assign a range of duties.

Based on these objectives, OCC used a decision-making

tool to help determine which type of classification and

pay system supports those objectives best — a 25-grade

system, a 12-grade system, or a 9-grade system. By

rating these three options as to whether their level of

support for the objective is high, medium, or low, OCC

found that a 9-grade system supported its objectives

best. Next, it turned its attention to designing a

supportive performance management program.

Performance Management Redesign. OCC

redesigned its performance management program to

include the following changes:

ß The appraisal program changed from a five-level

program to a four-level program. OCC needed to

keep distinctions in performance, but wanted to

signal a change to employees. The four levels are

not labeled with terms such as "Fully Successful" or

"Outstanding" because OCC found that people

stopped listening once a label was placed on them.

ß The program maintains generic elements and

standards, but now requires that employees also

have specific objectives related to the specific work

the employee is doing. All standards and objectives

are tied back into OCC's strategic plan and goals

cascade from executives to front-line employees.

Salary increases are based on employee appraisal ratings.

Employees rated 1 or 2 receive no increases at all, not

even the general increase given in January. Employees

rated 3 or 4 are eligible for a salary increase within a

specific range established for each rating. Managers

determine the final salary increase.

Lessons Learned. Redesign lessons learned include:

ß employee and leadership involvement is critical to

the success of the new programs;

ß training and education on new programs are vital;

ß systematic change requires inter-disciplinary

collaboration; and

ß effort in the redesign process pays.

More Information. For more information about

OCC's compensation system, you may contact Donna

Stein at 202-874-4307 or Rhonda Jones at 202-874-4808.

For information about OCC's performance management

program, you may contact Beth Elliott at 202-874-4916.
Workforce Performance is published by: U.S. Office of Personnel Management, Workforce Compensation and

Performance Service, Performance Management and Incentive Awards Division, 1900 E Street, NW., Room 7412,

Washington, DC 20415-8340. Phone: 202-606-2720. Fax: 202-606-2395. Email: perform-mgmt@opm.gov.

We welcome submissions of news and information articles regarding performance management in the Federal

Government. We encourage quoting or reprinting the material contained in this newsletter, which you may do

without seeking our permission.

8

Items Worth Noting

New Awards Calendar Available Online

If you depend on the back page of Workforce Performance

for information on upcoming awards, now you can get

that information online. To view the new

governmentwide Awards Calendar, visit

http://www.opm.gov/perform/honorawd.htm. The

calendar describes award programs sponsored by a

variety of Federal and non-Federal organizations. The

programs are open to employees from all Federal

agencies. The awards calendar includes award

descriptions, nomination deadlines, web addresses, and

contacts for each award.

Balancing Measures for Managers (continued from page 6)

Managers often fear that employee perspective measures

include measuring a manager's popularity with employees. The employee perspective factor is not a

"popularity contest." Rather, this factor focuses on such

things as how managers lead and motivate their

employees, address job and training needs, and provide a

healthy working environment.

Examples of employee perspective measures include

employee perceptions of the level of:

ß the recognition employees receive for doing good

work;

ß the information employees receive from

management about what's going on in the

organization; and

ß the training employees receive for their present jobs

and the career development opportunities they have

for future jobs.

Balanced measures in managerial performance

plans give a more accurate picture of the complete

scope of a manager's performance. Used wisely,

these measures become an excellent tool for

monitoring important aspects of manager and work

unit performance and can help improve

organizational performance overall.