This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

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REGISTER issue of each week.

Rules and Regulations Federal Register

60837

Vol. 65, No. 199

Friday, October 13, 2000

OFFICE OF PERSONNEL

MANAGEMENT

5 CFR Part 430

RIN 3206–AI57

MANAGING SENIOR EXECUTIVE

PERFORMANCE

AGENCY: Office of Personnel

Management.

ACTION: Final rule.

SUMMARY: The Office of Personnel

Management (OPM) is amending its

regulations governing performance

appraisal in the Senior Executive

Service (SES). The amended regulations

will help agencies hold senior

executives accountable by: Reinforcing

the link between performance

management and strategic planning;

requiring agencies to use balanced

measures in evaluating executive

performance; and giving agencies more

flexibility to tailor performance

management systems to their unique

mission requirements and

organizational climates.

EFFECTIVE DATES: November 13, 2000.

FOR FURTHER INFORMATION CONTACT:

Anne Kirby, (202) 606–1610, or email to

SESmgmt@opm.gov.

SUPPLEMENTARY INFORMATION: OPM

published a proposed rule in the

Federal Register on June 21, 2000 (65

FR 38442) to amend the regulations

governing SES performance appraisal.

We received 15 written comments

during the public comment period: 7

from Federal departments and agencies;

2 from professional organizations; and 6

from individuals. In addition, we have

discussed the proposals with a number

of senior executives and other

stakeholders since publication of the

proposed rule. There was broad support

for the proposed changes, especially

those that give agencies greater

flexibility for tailoring their

performance management systems to

their organizational and operational

needs. There was also general support

for the concept of balanced

measurement, although some

commenters said they need additional

information and guidance about using

balanced measures. There were a few

suggested modifications to the

proposals, and some commenters

proposed additional requirements. We

discussed the public comments and

suggestions with a representative group

of agency SES program managers. We

have included their views in our

reactions to these comments and

suggestions.

Background

The members of the Senior Executive

Service (SES) are dedicated, hardworking public servants. Individually

and through the organizations they lead,

these senior executives strive to deliver

value to the American people. This

results-orientation was central to the

original vision for the SES, outlined in

the Civil Service Reform Act (CSRA) of

1978. CSRA intended that SES

performance management systems:

• ‘‘Ensure accountability for honest,

economical, and efficient Government’’

• ‘‘Assure that senior executives are

accountable and responsible for the

effectiveness and productivity of

employees under them’’

• ‘‘Ensure that compensation,

retention, and tenure are contingent on

executive success which is measured on

the basis of individual and

organizational performance’’

• ‘‘Recognize exceptional

accomplishment.’’

The Government Performance and

Results Act (GPRA) of 1993 and the

National Partnership for Reinventing

Government (NPR) validated this

original vision and challenged

Government to shift its focus from

internal processes and outputs to results

that are aligned with customer

expectations.

In discussions with stakeholders that

were triggered by OPM’s 1998 Draft

Framework for Improving the Senior

Executive Service, executives and others

said the current regulations discourage

results-oriented performance

management. They also told us that

agency leaders must drive the effort to

strengthen their SES performance

management systems. Respondents to

OPM’s survey of the Senior Executive

Service in 1999 reinforced these

findings:

• Only 72% believed their

performance rating represents a fair and

accurate picture of their performance;

• Only 48% felt that SES bonus

determinations are based on merit; and

• 57% did not think poor performing

executives are removed from their

positions.

(The survey findings are available on

OPM’s website (www.opm.gov/SES).)

In response to these concerns, OPM

proposed to amend the regulations

governing SES performance appraisal.

The amended regulations give agencies

more flexibility to reinvigorate their SES

performance management systems—to

focus on results over process. They

reinforce the agencies’ responsibility to

communicate performance expectations

and to use the results of the

performance management process as a

basis for performance awards and other

personnel decisions. The regulations

also require SES performance

management systems to balance

organizational results with the needs

and perspectives of customers and

employees.

Overall Approach

Our intent was to substantially

deregulate in order to give agencies

much more flexibility to tailor their

systems and approaches for managing

senior executive performance to fit their

unique and changing mission and

operational needs and organizational

climates. We pared many of the current

regulatory requirements back to the

statutory requirements. We eliminated

requirements that are unnecessarily

constraining and burdensome to

agencies or are process-bound. The

changes balance the agencies’ desire for

maximum flexibility with the need for

a corporate approach that safeguards

merit principles and contributes to a

better, more diverse, results-oriented

Government. In addition, we totally

restructured the regulations to organize

the material more logically and to use

plain language, as the President directed

in June 1998.

We broadened the focus from

determining annual summary ratings to

managing performance on an ongoing

basis and shifted the emphasis from

process to results. The restructured

regulations establish separate sections

on the key components of performance

60838 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations

management: planning and

communicating, monitoring, appraising,

and rating performance and using

performance results.

As part of this expanded focus, we

revised the purpose statement to stress:

• Expecting excellence in senior

executive performance;

• Holding executives accountable for

results;

• Communicating regularly about

goals and expectations;

• Appraising senior executive

performance using measures that

balance organizational results with

customer, employee, or other

perspectives; and

• Making performance the basis for

pay, awards, and other personnel

decisions.

This emphasis is fundamental to the key

regulatory changes.

Most commenters supported this

approach. One agency in particular

expressed appreciation for OPM’s efforts

to make the regulations as open as

possible, with few absolute restrictions.

Four commenters specifically

mentioned support for reinforcing the

links between SES performance and

agency strategic planning initiatives.

Another agency said the changes would

help agencies hold senior executives

accountable.

Two commenters questioned whether

regulations are needed to accomplish

the goals of this initiative. One agency

said that agencies can align performance

management systems with GPRA goals

under current regulations. A

professional organization said

rulemaking is not the most appropriate

vehicle for establishing guidelines for

managing performance, as this is an

ever-evolving art. This organization

preferred that we use more informal

methods to provide guidance to

agencies.

It is true that many of the performance

management improvements included in

these regulations can be implemented

under the current framework of law and

regulation. In fact, several agencies have

already implemented innovative

performance management systems

which incorporate balanced measures.

However, many agencies told us that the

current regulations focus too much on

process and inhibit results-oriented

performance management. They asked

for more latitude to design performance

systems that better fit their

organizational cultures and operational

goals. By overhauling these regulations,

we hope to promote a culture change—

a culture change that views SES

performance management as a tool for

driving results, instead of an irritating,

annual chore.

Key Changes in Current Requirements

We modified system requirements to

prescribe a framework for agency

systems that identifies key system

components, without specifying how

these components will be implemented.

Within this framework, agencies can

design performance management

systems to meet their organizational and

operational needs. No commenters

opposed this modification.

We modified the minimum appraisal

period. The current requirements

provide for a minimum appraisal period

of 90–120 days. Agencies can rate a

senior executive’s performance after he/

she has completed the minimum period,

provided there is enough information on

which to base a rating. We proposed to

keep the 90-day minimum, but remove

the 120-day cap to allow agencies to

establish minimum appraisal periods

that are longer than 120 days. There was

general support for this proposal.

However, one professional organization

recommended that the minimum

appraisal period be lengthened from 90

days to 120 days because, in their view,

90 days does not give sufficient time to

form the basis for a meaningful

evaluation. The minimum appraisal

period has always been 90 days, with

the caveat that agencies can rate an

executive’s performance only if there is

enough information on which to base a

rating. To date, there has been no

evidence of agency or senior executive

difficulty with the 90-day minimum.

Further, the SES program managers

preferred to retain the 90-day minimum

period, provided that we also retain the

caveat. Therefore, we are not adopting

the organization’s recommendation. The

final regulations reflect the minimum

appraisal provisions as proposed.

We changed performance standards

to performance requirements to reflect

the term used in statute, and eliminated

the requirement to use the term noncritical element. Agencies will establish

performance requirements for critical

elements and any other performance

elements that will be used to appraise

performance and derive the annual

summary rating. There were no

objections to these changes, so they are

adopted as proposed.

We modified rating level requirements

to remove the requirement to establish

three rating levels for each critical

element. The performance on each

critical element and any other

performance elements must be

appraised. No commenters objected to

these changes, so they are adopted as

proposed.

We reduced the summary rating level

requirements to the minimum three

summary rating levels prescribed in

statute (i.e., fully successful, minimally

satisfactory, and unsatisfactory). We

removed the current maximum of five

levels (i.e., no more than two levels

above fully successful). There were no

objections to these changes, so they are

adopted as well.

We revised rating terms to reflect the

statutory requirement for an annual

summary rating. There are now only

two rating terms: the initial rating

becomes initial summary rating and the

final rating becomes the annual

summary rating. We removed references

to other types of ratings. There were no

comments on these changes, so they are

adopted as proposed.

We modified the method for deriving

summary ratings to remove the current

requirement to give critical elements

more weight than non-critical elements

in determining a summary rating. There

were no comments on this change, so it

is adopted.

Balanced Measurement

The regulations require agencies to

evaluate senior executive performance

using measures that balance

organizational results with customer

satisfaction, employee perspectives, and

any other measures agencies decide are

appropriate. Introduction of the

balanced scorecard concept in 1992 by

Robert Kaplan and David Norton of the

Harvard Business School as well as

recent studies by the National

Partnership for Reinventing Government

and others have shown that both the

public and private sectors are

increasingly and successfully using

balanced measurement to help create

high-performing organizations. They

indicate that an approach to

performance planning, management,

and measurement that balances the

needs and perspectives of customers,

stakeholders, and employees with the

achievement of the organization’s

business or operational results is critical

to successful improvement efforts.

By institutionalizing the use of

balanced measures, the Government

acknowledges what its best executives

have always known: leading people and

building customer coalitions are the

foundation of organizational success. In

OPM’s 1999 SES survey, career

executives reported that ‘‘leading

people’’ and ‘‘building coalitions’’ are

the most important contributors to

executive success now, and they will be

even more important in the future.

There is general support for the

concept of balanced measurement,

although some commenters requested

additional information and guidance

about using balanced measures. There

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations 60839

was consensus that the regulations

should not prescribe how balanced

measures are imposed and

implemented. The regulations require

agencies to evaluate senior executive

performance using balanced measures,

but they do not dictate how. Agencies

can define the measures, determine the

appropriate balance among the various

measures, and decide an

implementation method that best meets

their organizational and operational

needs.

In discussions with stakeholders

about the proposed regulations, some

have expressed anxiety about the

measurement factors and what they

mean. Some fear that employee

perspectives means a supervisor’s

popularity with employees. Some said

that senior executives have multiple

customers and stakeholders, many of

whom have conflicting views and

interests. They are concerned that these

considerations might not be taken into

account. A few worried that senior

executives would be held accountable

for program results over which they

have little or no control. Others were

concerned that using balanced

measurement would require agencies to

invest in expensive surveys or

sophisticated measurement tools.

These are all valid concerns, but

agencies will have latitude under the

regulations to weigh employee and

customer concerns in whatever manner

they decide is appropriate to their

missions and structures. The employee

perspectives factor is not a ‘‘popularity

contest.’’ Rather, this factor focuses on

such things as how executives lead and

motivate their employees, address job

and training needs, and provide a

healthy working environment.

• Having multiple stakeholders is a

‘‘given’’ in the Federal sector, where

executives frequently have to balance

the needs of a variety of customers and

stakeholders. For example, in regulatory

agencies, executives often make

decisions that stakeholders do not

endorse. The customer satisfaction

factor considers how executives deal

with stakeholders, balance the varying

needs of customers, and build

partnerships and coalitions to achieve

results. The issue is not always whether

customers or stakeholders agree with

the decision, but how the executives

reach the decision; i.e., whether

stakeholders have an opportunity to

participate in the decision-making and

share their views, whether customers

are treated with interest and respect, etc.

• Regarding measurement, we believe

that agencies can measure results in

ways that do not require elaborate

systems.

Further, agencies will have the

flexibility to define measures and design

systems that fit their organizational and

operational needs and are aligned with

their strategic and performance

planning initiatives. These flexibilities

should enable agencies to address their

senior executives’ concerns.

Two commenters suggested

mandating additional measures. One

was the addition of financial results to

more directly reflect Kaplan and

Norton’s balanced scorecard approach.

The other proposed adding diversity

and representation.

The National Partnership for

Reinventing Government’s August 1999

report on Balancing Measures states

that, although there is no such thing as

a fixed and truly balanced set of

measures, a balanced approach should

factor in at least employee, customer,

and business perspectives. Agencies

may add other measures; however they

must not dilute the importance of the

key measures. (The report on Balancing

Measures is available on the NPR

website at: www.npr.gov.)

We discussed these recommended

additions with SES program managers,

who preferred that the regulations only

specify the three most common factors,

i.e., organization results, customer

satisfaction, and employee perspectives.

Most believed that the three key

measures are broad enough to

incorporate diversity and financial

measures. However, agencies have the

flexibility to address them as separate

factors, if they choose. Therefore,

consistent with our approach to give

agencies as much flexibility as possible

to develop measures that reflect their

overall mission strategies, we are not

adopting the recommendations. OPM

will issue supplemental guidance and

continue ongoing discussions with

stakeholders to help agencies address

balanced measurement.

Additional Proposed Requirements

Evaluation Criteria. Two commenters

proposed that we mandate additional

evaluation criteria. One proposed to

include selected leadership

competencies as an element of each

executive’s appraisal. Another proposed

a requirement that two of the executive

core qualifications for entry into the

Senior Executive Service (leading

people and building coalitions) be made

critical elements in all SES appraisals.

Strong and effective leadership is

fundamental to executive success; it is

manifested through the three balanced

measures. All new career executives

must demonstrate their leadership

ability in five areas (i.e., leading change,

leading people, results-driven, business

acumen, and building coalitions). Some

agencies have incorporated the themes

of these Executive Core Qualifications

into their SES performance management

systems. We support this approach, but

SES program managers indicated that

we should not dictate it. Since the

suggested changes would be

inconsistent with the flexible approach

taken in the regulations, we are not

adopting them.

One commenter also suggested that an

increased emphasis on diversity and

representation as an SES performance

element would serve to increase

accountability for results. We agree that

this is important. The appraisal criteria

in the revised regulations at § 430.307(a)

address an executive’s progress in

meeting affirmative action, equal

employment opportunity, and diversity

goals.

Another commenter proposed that the

regulations clarify that senior executives

are responsible and accountable for

protecting the human and workplace

assets under their control and for

ensuring that these assets are used in

ways that prevent pollution and use

energy resources efficiently. We believe

that effectively managing the work

environment is inherent in both the

‘‘organizational results’’ and ‘‘employee

perspectives’’ factors of balanced

measurement, which agencies can

describe in ways that are appropriate to

their organizational needs. Accordingly,

we are not adopting this proposed

addition.

Supervisor Appraisals. An agency was

concerned about the lack of incentive

for supervisors to conduct timely

performance assessments. The agency

wanted the regulations to require that,

before a supervisor changes jobs or

leaves an agency he/she be required to

appraise the performance of subordinate

senior executives in writing. The

proposed regulations include

requirements for appraisals of senior

executives who change jobs, but they

are silent on departing supervisors. The

current regulations do not address this,

but we have issued supplemental

guidance to agencies that encourages

them to obtain appraisal information

from departing supervisors. We sought

the views of SES program managers,

who felt that we should not mandate

this as a governmentwide requirement,

but continue to address it in

supplemental guidance. We agree.

Agencies have the latitude to include

such a requirement in their performance

management systems.

Written Progress Reviews. The same

agency also felt that the requirement for

periodic progress reviews needed to be

strengthened by requiring that the

60840 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations

overall results of each progress review

be documented in writing. We shared

this comment with the SES program

managers, who did not support the

proposal. We understand the concern,

but we prefer to let agencies decide how

best to ensure that there is ongoing

communication between supervisors

and senior executives about their

performance. The emphasis should be

on communication, rather than process

or format.

Performance Review Boards. A

professional organization proposed

mandating that agencies include

women, minorities, and people with

disabilities on Performance Review

Boards (PRBs) in organizations,

organizational components, and

geographical locations where minorities,

women, and persons with disabilities

are determined to be underrepresented

in the workforce. We appreciate the

concerns about diversity that prompted

this comment, but it might be difficult

for other than large departments and

agencies to comply with such a

requirement. The revised regulations

encourage agencies to include women,

minorities, and people with disabilities

on PRBs. Including this in the actual

language of the regulation sends a strong

message to agency leadership. Further,

we want to maintain the focus on the

substance of diversity and diverse

viewpoints, rather than on numbers or

process.

Editorial Suggestions. One commenter

suggested more precise language for

clarity. For example, the commenter felt

the term ‘‘strategic planning initiatives’’

might be misinterpreted as a processfocused item, rather than a linkage

between performance accountability

and an agency’s long-term and annual

goals and objectives. By using this term,

we intended a broad focus on strategic

and annual performance planning and

evaluation efforts and any related

initiatives. In our view, using more

precise terminology or definition could

narrow that focus or limit an agency’s

flexibility. Therefore, we are not

adopting the suggested language

changes.

System Approval

During the public comment period,

we discussed with agency SES program

managers options for obtaining OPM

approval of revised performance

management systems, in accordance

with 5 U.S.C. 4312. The general

consensus was agency self-certification,

similar to the method used to approve

performance management systems for

the general workforce to comply with

requirements at 5 CFR 430.209 and 210.

Under this approach, OPM would

develop a checklist of key system

requirements, and agencies would

certify that their revised performance

management systems comply with these

requirements and provide supporting

documentation as appropriate. OPM

will provide these materials and

accompanying guidance to agencies

within 60 days of the publication of this

final rule.

Additional Guidance

OPM will issue additional guidance

in various formats to help agencies

implement the changes, including

examples of ways to use the various

flexibilities provided under these

regulations. We will also share

information about how public and

private sector organizations are using

balanced measurement to evaluate

senior executive performance.

Table of Changes

The following table lists the changes

to the current regulations. The ‘‘current

rule’’ column lists the regulations in the

current subpart C affected by the final

regulations. The ‘‘final rule’’ column

shows the disposition of the current

rules. The third column explains each

change.

Current rule Final rule Explanation of change

430.301(a) ............................ 430.301(a) .......................... Plain language edits.

430.301(b) ............................ 430.301(b) .......................... Revises purpose to emphasize expecting excellence, holding senior executives accountable for results, communicating goals and expectations, factoring balanced

measurement into performance appraisal, and making performance the basis for

personnel decisions.

430.302(a) ............................ 430.302(a) .......................... Plain language edits.

430.302(b) ............................ 430.302(b) .......................... Plain language edits.

430.303 ................................ 430.303 .............................. Revises definitions as follows:

Annual summary rating replaces the term summary rating to reflect the statutory

terminology and means the overall rating level the appointing authority assigns at

the end of the appraisal period after considering PRB recommendations.

Appointing authority is revised to clarify that this individual must be authorized to

make SES appointments.

Appraisal is replaced with performance appraisal and edited for plain language.

Appraisal period reflects plain language edits.

Appraisal system is replaced with the term performance management system to

broaden the focus from the annual appraisal to managing performance on an ongoing basis.

Balanced measures is added because the regulations require agencies to use balanced measurement to evaluate senior executive performance.

Critical element is broadened to cover the senior executive’s work, which may include more than the duties of the position, and focus on organizational results.

Final rating is replaced with the term used in statute, annual summary rating, and

edited for plain language.

Initial rating is replaced with initial summary rating and revised for clarity.

Non-critical elements is replaced with the broader term, other performance elements, which refers to components of an executive’s work that are not critical but

may be important enough to factor into the executive’s appraisal.

Performance is broadened from the focus on critical and non-critical elements of

the position to the accomplishment of work described in the senior executive’s

performance plan.

Performance appraisal is added to replace appraisal and edited for plain language.

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations 60841

Current rule Final rule Explanation of change

Performance Appraisal System is replaced with the term performance management

system, which refers to a framework of policies and practices for planning, monitoring, developing, evaluating, and rewarding individual and organizational performance and for using performance information as a basis for personnel decisions.

Performance Management Plan is deleted. The concepts are covered under performance management system.

Performance plan is replaced with the term senior executive performance plan

which is expanded to address work the senior executive is expected to accomplish and the requirements against which performance will be evaluated.

Performance standard is replaced by the term performance requirement used in

statute and reflects plain language edits.

Progress review reflects plain language edits.

Rating of record is deleted.

Summary rating is replaced with annual summary rating.

Strategic planning initiatives is added because of new requirements for aligning

performance plans with strategic planning.

430.304 ................................ 430.304 .............................. Retitles section as SES Performance Management Systems; edits substantially and

restructures it to include the key components of agency systems. Moves other

requirements to other sections in the subpart.

430.304(a) ............................ 430.304(a) .......................... Plain language edits.

430.304(b) ............................ 430.305(b) .......................... Moves critical element requirements to Planning and Communicating Performance.

Replaces reference to non-critical elements with the broader other performance

elements.

430.307(a) .......................... Moves appraisal requirements to Appraising Performance; revises them to reflect

deletion of term non-critical elements.

430.308(d) .......................... Moves summary rating requirements to Rating Performance.

430.304(c) ............................ 430.304(b) .......................... Planning performance becomes a key component of performance management

systems.

430.305(a) .......................... Moves requirements for individual senior executive performance plans to Planning

and Communicating Performance.

430.304(d)(1) ....................... 430.304(b) .......................... Replaces performance standards with the statutory term performance requirements;

some provisions are included in performance management system requirements.

430.305 .............................. Moves establishing and communicating critical elements and requirements to Planning and Communicating Performance.

430.307(a) .......................... Moves annual appraisal requirements to Appraising Performance.

430.304(d)(2) ....................... 430.304(b)(1), 430.305 ...... Includes accomplishing organizational objectives in requirements to address organizational performance and to link performance management with GPRA goals and

with strategic planning initiatives.

430.304(e) ............................ 430.305(b) .......................... Revises section to eliminate the requirement to establish three rating levels for

each critical element. Replaces performance standards with performance requirements and moves it to senior executive performance plan requirements under

Planning and Communicating Performance.

430.304(f) ............................. 430.304(c)(3) ...................... Edits derivation method requirements to remove references to non-critical elements

and moves it to system requirements. New section incorporates restriction on rating level distribution.

430.304(g) ............................ 430.304(c)(2) ...................... Modifies summary rating level requirements to reflect the statutory requirement for

a minimum of three levels. Removes the 5-level maximum and rating level numbers.

430.304(h) ............................ 430.306(c) .......................... Broadens requirement for performance assistance to require agencies to help senior executives improve their performance, not just those who are rated less than

fully successful, to reflect the emphasis on overall performance improvement.

430.304(i) ............................. 430.309(c) .......................... Edits requirements for action on less than successful performance ratings and

moves them to the new section, Using Performance Results. This section is

added to focus on basing personnel decisions on performance.

430.305 .............................. Adds two new sections on Planning and Communicating Performance and Monitoring Performance, which are key components of performance management

systems.

Consolidates senior executive performance plan requirements under Planning and

Communicating Performance.

430.306 .............................. Consolidates progress review and performance improvement requirements under

monitoring performance.

430.305 ................................ 430.307 .............................. Retitles heading as Appraising Performance, a key component of performance

management systems.

430.305(a)(1) ....................... 430.304(c)(1) ...................... Moves appraisal period requirements to System Requirements.

430.307(b) .......................... Moves rating performance on details and temporary assignments to Appraising

Performance. Replaces summary rating requirement with requirement to appraise

performance and factor appraisal into initial summary rating.

430.305(a)(2) ....................... 430.304(c)(1)(ii) .................. Edits provisions for terminating the appraisal period and moves them to System

Requirements.

430.305(a)(3) ....................... 430.304(c)(1)(iii) ................. Edits restriction on appraisals and ratings during Presidential election periods and

moves it to System Requirements.

430.305(b) ............................ 430.304(c)(1)(i) ................... Revises minimum appraisal period to eliminate the 120-day maximum and moves it

to System Requirements.

60842 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations

Current rule Final rule Explanation of change

430.305(c) ............................ 430.307(a)(1) ...................... Deletes the requirement to appraise on non-critical elements. Requires appraisal on

critical elements only—appraising other elements is optional.

430.305(d)(1) &

430.305(d)(2).

430.307(b)(1),

430.307(b)(2),

&430.307(b)(3).

Substantially edits requirements for appraising performance on details and temporary assignments. Modifies the current requirement for rating on critical elements to appraising performance and factoring that appraisal into the initial summary rating.

430.305(e) ............................ 430.306(b) .......................... Edits progress review requirements and moves them to Monitoring Performance.

430.306 ................................ 430.308 .............................. Retitles heading as Rating Performance, a key component of performance management systems.

430.306(a)(1) ....................... 430.308(a) .......................... Plain language edits.

430.306(a)(2) ....................... 430.308(a) .......................... Plain language edits.

430.306(a)(3) ....................... 430.308(b) .......................... Plain language edits.

430.306(a)(4) ....................... 430.308(b), 430.308(c) ....... Plain language edits.

430.306(a)(5) ....................... 430.308(b) .......................... Removes specific section; provisions are inherent in higher level review requirements.

430.306(b) ............................ 430.308(b) .......................... Adds requirement that higher level reviewer may not change initial summary rating,

but can recommend a different rating to PRB and appointing authority. Plain language edits.

430.308(c) .......................... Adds new section in Rating Performance on PRB review for clarity.

430.306(c) ............................ 430.308(d) .......................... Changes term final rating to annual summary rating for consistency with statutory

language and edits for plain language.

430.306(d) ............................ 430.304(c)(3) ...................... Includes requirement in derivation methods under System Requirements and edits

for plain language.

430.306(e) ............................ 430.308(e) .......................... Includes provisions under new section, Extending the appraisal period; edits for

plain language.

430.308(f) ........................... States statutory language that appraisals and ratings are not appealable.

430.306(f) ............................. 430.307(b) .......................... Modifies requirement for summary rating on transfer to a written appraisal which

the gaining supervisor must factor into the annual summary rating. Plain language edits.

430.306(g) ............................ 430.308(a), 430.308(b),

430.311(c).

Deletes section; incorporates requirements for executive notification in relevant sections.

Edits documentation maintenance requirements and moves them to Training and

Evaluation.

430.307 ................................ 430.310 .............................. Plain language edits.

430.307(a) ............................ 430.310(a)(1) ...................... Plain language edits.

430.307(b) ............................ 430.310(a)(4) ...................... Plain language edits.

430.307(c) ............................ 430.310(a)(2) ...................... Plain language edits.

430.307(d) ............................ 430.310(a)(3) ...................... Deletes reference to OPM authority to waive requirement for career majority on

PRBs. Authority is stated in statute.

430.307(e) ............................ 430.310(b)(1) ...................... Plain language edits.

430.307(f) ............................. 430.310(b)(3) ...................... Plain language edits.

430.307(g) ............................ 430.301(b)(2) ...................... Plain language edits.

430.308 ................................ 430.311(a), 430.311(b) ...... Plain language edits.

430.309(a) ............................ 430.312(b) .......................... Plain language edits.

430.309(b) ............................ 430.312(c) .......................... Plain language edits.

430.310 ................................ 430.312(a) .......................... Moves requirement to section on OPM review of agency systems and edits for

plain language.

E.O. 12866, Regulatory Review

This final rule has been reviewed by

the Office of Management and Budget in

accordance with Executive Order 12866.

Regulatory Flexibility Act

I certify that these regulations will not

have a significant economic impact on

a substantial number of small entities

because the regulations pertain only to

Federal employees and agencies.

List of Subjects in 5 CFR Part 430

Government employees, Performance

management.

Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is amending 5 CFR

Part 430 as follows:

PART 430—PERFORMANCE

MANAGEMENT

1. The authority citation for part 430

continues to read as follows:

Authority: 5 U.S.C. chapter 43.

2. Subpart C is revised to read as

follows:

Subpart C—Managing Senior

Executive Performance

Sec.

430.301 General.

430.302 Coverage.

430.303 Definitions.

430.304 SES performance management

systems.

430.305 Planning and communicating

performance.

430.306 Monitoring performance.

430.307 Appraising performance.

430.308 Rating performance.

430.309 Using performance results.

430.310 Performance Review Boards

(PRBs).

430.311 Training and evaluation.

430.312 OPM review of agency systems.

Subpart C—Managing Senior

Executive Performance

§ 430.301 General.

(a) Statutory authority. Chapter 43 of

title 5, United States Code, provides for

performance management for the Senior

Executive Service (SES), the

establishment of SES performance

appraisal systems, and appraisal of

senior executive performance. This

subpart prescribes regulations for

managing SES performance to

implement the statutory provisions at 5

U.S.C. 4311–4315.

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations 60843

(b) Purpose. The regulations in this

subpart require agencies to establish

performance management systems that

hold senior executives accountable for

their individual and organizational

performance in order to improve the

overall performance of Government

by—

(1) Expecting excellence in senior

executive performance;

(2) Linking performance management

with the results-oriented goals of the

Government Performance and Results

Act of 1993;

(3) Setting and communicating

individual and organizational goals and

expectations;

(4) Systematically appraising senior

executive performance using measures

that balance organizational results with

customer, employee, or other

perspectives; and

(5) Using performance results as a

basis for pay, awards, development,

retention, removal, and other personnel

decisions.

§ 430.302 Coverage.

(a) This subpart applies to all senior

executives covered by subchapter II of

chapter 31 of title 5, United States Code.

(b) This subpart applies to agencies

identified in section 3132(a)(1) of title 5,

United States Code.

§ 430.303 Definitions.

Terms used in this subpart are

defined as follows:

Appointing authority means the

department or agency head, or other

official with authority to make

appointments in the Senior Executive

Service.

Appraisal period means the

established period of time for which a

senior executive’s performance will be

appraised and rated.

Balanced measures means an

approach to performance measurement

that balances organizational results with

the perspectives of distinct groups,

including customers and employees.

Critical element means a key

component of an executive’s work that

contributes to organizational goals and

results and is so important that

unsatisfactory performance of the

element would make the executive’s

overall job performance unsatisfactory.

Other performance elements means

components of an executive’s work that

do not meet the definition of a critical

element, but may be important enough

to factor into the executive’s

performance appraisal.

Performance means the

accomplishment of the work described

in the senior executive’s performance

plan.

Performance appraisal means the

review and evaluation of a senior

executive’s performance against

performance elements and

requirements.

Performance management system

means the framework of policies and

practices that an agency establishes

under subchapter II of chapter 43 of title

5, United States Code, and this subpart,

for planning, monitoring, developing,

evaluating, and rewarding both

individual and organizational

performance and for using resulting

performance information in making

personnel decisions.

Performance requirement means a

statement of the performance expected

for a critical element.

Progress review means a review of the

senior executive’s progress in meeting

the performance requirements. A

progress review is not a performance

rating.

Ratings: (1) Initial summary rating

means an overall rating level the

supervisor derives from appraising the

senior executive’s performance during

the appraisal period and forwards to the

Performance Review Board.

(2) Annual summary rating means the

overall rating level that an appointing

authority assigns at the end of the

appraisal period after considering a

Performance Review Board’s

recommendations. This is the official

rating.

Senior executive performance plan

means the written summary of work the

senior executive is expected to

accomplish during the appraisal period

and the requirements against which

performance will be evaluated. The plan

addresses all critical elements and any

other performance elements established

for the senior executive.

Strategic planning initiatives means

agency strategic plans, annual

performance plans, organizational

workplans, and other related initiatives.

§ 430.304 SES performance management

systems.

(a) To encourage excellence in senior

executive performance, each agency

must develop and administer one or

more performance management systems

for its senior executives.

(b) Performance management systems

must provide for:

(1) Planning and communicating

performance elements and requirements

that are linked with strategic planning

initiatives;

(2) Consulting with senior executives

on the development of performance

elements and requirements;

(3) Monitoring progress in

accomplishing elements and

requirements;

(4) At least annually, appraising each

senior executive’s performance against

requirements using measures that

balance organizational results with

customer and employee perspectives;

and

(5) Using performance information to

adjust pay, reward, reassign, develop,

and remove senior executives or make

other personnel decisions.

(c) Additional system requirements.

(1) Appraisal period. Each agency

must establish an official performance

appraisal period for which an annual

summary rating must be prepared.

(i) There must be a minimum

appraisal period of at least 90 days.

(ii) An agency may end the appraisal

period any time after the minimum

appraisal period is completed, if there is

an adequate basis on which to appraise

and rate the senior executive’s

performance.

(iii) An agency may not appraise and

rate a career appointee’s performance

within 120 days after the beginning of

a new President’s term of office.

(2) Summary performance levels.

Each performance management system

must have at least three summary

performance levels: one or more fully

successful levels, a minimally

satisfactory level, and an unsatisfactory

level.

(3) Method for deriving summary

ratings. Agencies must develop a

method for deriving summary ratings

from appraisals of performance against

performance requirements. The method

must ensure that only those employees

whose performance exceeds normal

expectations are rated at levels above

fully successful. An agency may not

prescribe a forced distribution of rating

levels for senior executives.

§ 430.305 Planning and communicating

performance.

(a) Each senior executive must have a

performance plan that describes the

individual and organizational

expectations for the appraisal period

and sets the requirements against which

performance will be evaluated.

Supervisors must develop performance

plans in consultation with senior

executives and communicate the plans

to them on or before the beginning of

the appraisal period.

(b) Senior executive performance plan

requirements:

(1) Critical elements. At a minimum,

plans must describe the critical

elements of the senior executive’s work

and any other relevant performance

elements. Elements must reflect

individual and organizational

performance.

(2) Performance requirements. At a

minimum, plans must describe the level

60844 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations

of performance expected for fully

successful performance of the

executive’s work. These are the

standards against which the senior

executive’s performance will be

appraised.

(3) Link with strategic planning

initiatives. Critical elements and

performance requirements for each

senior executive must be consistent

with the goals and performance

expectations in the agency’s strategic

planning initiatives.

§ 430.306 Monitoring performance.

(a) Supervisors must monitor each

senior executive’s performance during

the appraisal period and provide

feedback to the senior executive on

progress in accomplishing the

performance elements and requirements

described in the performance plan.

Supervisors must provide advice and

assistance to senior executives on how

to improve their performance.

(b) Supervisors must hold a progress

review for each senior executive at least

once during the appraisal period. At a

minimum, senior executives must be

informed about how well they are

performing against performance

requirements.

§ 430.307 Appraising performance.

(a) Annual appraisals. Agencies must

appraise each senior executive’s

performance in writing and assign an

annual summary rating at the end of the

appraisal period.

(1) At a minimum, a senior executive

must be appraised on the performance

of the critical elements in the

performance plan.

(2) Appraisals of senior executive

performance must be based on both

individual and organizational

performance, taking into account such

factors as—

(i) Results achieved in accordance

with the goals of the Government

Performance and Results Act of 1993;

(ii) Customer satisfaction;

(iii) Employee perspectives;

(iv) The effectiveness, productivity,

and performance quality of the

employees for whom the senior

executive is responsible; and

(v) Meeting affirmative action, equal

employment opportunity, and diversity

goals and complying with the merit

system principles set forth under

section 2301 of title 5, United States

Code.

(b) Details and job changes. (1) When

a senior executive is detailed or

temporarily reassigned for 120 days or

longer, the gaining organization must set

performance goals and requirements for

the detail or temporary assignment. The

gaining organization must appraise the

senior executive’s performance in

writing, and this appraisal must be

factored into the initial summary rating.

(2) When a senior executive changes

jobs or transfers to another agency after

completing the minimum appraisal

period, the supervisor must appraise the

executive’s performance in writing

before the executive leaves.

(3) The annual summary rating and

any subsequent appraisals must be

transferred to the gaining agency. The

gaining supervisor must consider the

rating and appraisals when developing

the initial summary rating at the end of

the appraisal period.

§ 430.308 Rating performance.

(a) Initial summary rating. The

supervisor must develop an initial

summary rating of the senior executive’s

performance, in writing, and share that

rating with the senior executive. The

senior executive may respond in

writing.

(b) Higher level review. The senior

executive may ask a higher level official

to review the initial summary rating

before the rating is given to the

Performance Review Board (PRB). The

senior executive is entitled to one

higher level review, unless the agency

provides for more than one review level.

The higher level official cannot change

the supervisor’s initial summary rating,

but may recommend a different rating to

the PRB and the appointing authority.

Copies of the reviewer’s findings and

recommendations must be given to the

senior executive, the supervisor, and the

PRB.

(c) PRB review. The initial summary

rating, the senior executive’s response to

the initial rating, and the higher level

official’s comments must be given to the

PRB. The PRB must review the rating

and comments from the senior executive

and the higher level official, and make

recommendations to the appointing

authority, as provided in § 430.310.

(d) Annual summary rating. The

appointing authority must assign the

annual summary rating of the senior

executive’s performance, in writing,

after considering any PRB

recommendations. This rating is the

official rating.

(e) Extending the appraisal period.

When an agency cannot prepare an

annual summary rating at the end of the

appraisal period because the senior

executive has not completed the

minimum appraisal period or for other

reasons, the agency must extend the

executive’s appraisal period. The agency

will then prepare the annual summary

rating.

(f) Appeals. Senior executive

performance appraisals and ratings are

not appealable.

§ 430.309 Using performance results.

(a) Agencies will use the results of

performance appraisals and ratings as a

basis for adjusting pay, granting awards,

and making other personnel decisions.

Performance information will also be a

factor in assessing a senior executive’s

continuing development needs.

(b) A career executive whose annual

summary rating is at least fully

successful may be given a performance

award under part 534, subpart D, of this

chapter.

(c) An executive may be removed

from the SES for performance reasons,

subject to the provisions of part 359,

subpart E, of this chapter.

(1) An executive who receives an

unsatisfactory annual summary rating

must be reassigned or transferred within

the Senior Executive Service, or

removed from the Senior Executive

Service;

(2) An executive who receives two

unsatisfactory annual summary ratings

in any 5-year period must be removed

from the Senior Executive Service; and

(3) An executive who receives less

than a fully successful annual summary

rating twice in any 3-year period must

be removed from the Senior Executive

Service.

§ 430.310 Performance Review Boards

(PRBs).

Each agency must establish one or

more PRBs to make recommendations to

the appointing authority on the

performance of its senior executives.

(a) Membership. (1) Each PRB must

have three or more members who are

appointed by the agency head, or by

another official or group acting on

behalf of the agency head. Agency heads

are encouraged to include women,

minorities, and people with disabilities

on PRBs.

(2) PRB members must be appointed

in a way that assures consistency,

stability, and objectivity in SES

performance appraisal.

(3) When appraising a career

appointee’s performance or

recommending a career appointee for a

performance award, more than one-half

of the PRB’s members must be SES

career appointees.

(4) The agency must publish notice of

PRB appointments in the Federal

Register before service begins.

(b) Functions. (1) Each PRB must

review and evaluate the initial summary

rating, the senior executive’s response,

and the higher level official’s comments

on the initial summary rating, and

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Rules and Regulations 60845

conduct any further review needed to

make its recommendations.

(2) The PRB must make a written

recommendation to the appointing

authority about each senior executive’s

annual summary rating.

(3) PRB members may not take part in

any PRB deliberations involving their

own appraisals.

§ 430.311 Training and evaluation.

(a) To assure that agency performance

management systems are effectively

implemented, agencies must provide

appropriate information and training to

supervisors and senior executives on

performance management, including

planning and appraising performance.

(b) Agencies must periodically

evaluate the effectiveness of their

performance management system(s) and

implement improvements as needed.

(c) Agencies must maintain all

performance-related records for no less

than 5 years from the date the annual

summary rating is issued, as required in

§ 293.404(b)(1) of this chapter.

§ 430.312 OPM review of agency systems.

(a) Agencies must submit proposed

SES performance management systems

to OPM for approval.

(b) OPM will review agency systems

for compliance with the requirements of

law, OPM regulations, and OPM

performance management policy.

(c) If OPM finds that an agency system

does not meet the requirements and

intent of subchapter II of chapter 43 of

title 5, United States Code, or of this

subpart, it will direct the agency to take

corrective action, and the agency must

comply.

[FR Doc. 00–26337 Filed 10–12–00; 8:45 am]

BILLING CODE 6325–01–U

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 99–CE–91–AD; Amendment 39–

11922; AD 2000–20–11]

RIN 2120–AA64

Airworthiness Directives; LET

Aeronautical Works Model L–13

‘‘Blanik’’ Sailplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD) that

applies to all LET Aeronautical Works

(LET) Model L–13 ‘‘Blanik’’ sailplanes.

This AD requires you to inspect the tailfuselage hinge for strength requirements

and damage, and also requires you to

replace any hinge with damage or that

does not meet strength requirements.

This AD is the result of mandatory

continuing airworthiness information

(MCAI) issued by the airworthiness

authority for the Czech Republic. The

actions specified by this AD are

intended to detect and correct any tailfuselage hinge that is damaged or has

inadequate material characteristics. Any

tail-fuselage hinge with damage or

inadequate material characteristics

could fail and result in loss of

controlled flight.

DATES: This AD becomes effective on

November 27, 2000.

The Director of the Federal Register

approved the incorporation by reference

of certain publications listed in the

regulations as of November 27, 2000.

ADDRESSES: You may get the service

information referenced in this AD from

LET Aeronautical Works, Kunovice 686

04, Czech Republic; telephone: +420

632 55 44 96; facsimile: +420 632 56 41

13. You may examine this information

at the Federal Aviation Administration

(FAA), Central Region, Office of the

Regional Counsel, Attention: Rules

Docket No. 99–CE–91–AD, 901 Locust,

Room 506, Kansas City, Missouri 64106;

or at the Office of the Federal Register,

800 North Capitol Street, NW, suite 700,

Washington, DC 20001.

FOR FURTHER INFORMATION CONTACT:

Mike Kiesov, Aerospace Engineer, FAA,

Small Airplane Directorate, 901 Locust,

Room 301, Kansas City, Missouri 64106;

telephone: (816) 329–4144; facsimile:

(816) 329–4090.

SUPPLEMENTARY INFORMATION:

Discussion

What events have caused this AD?

The Civil Aviation Authority (CAA),

which is the airworthiness authority for

the Czech Republic, recently notified

the FAA that an unsafe condition may

exist on all LET Model L–13 ‘‘Blanik’’

sailplanes. The CAA reports an incident

involving one of the affected sailplanes

where the tail-fuselage attachment

fitting was damaged. Further analysis

reveals that the material characteristics

of the tail-fuselage attachment fitting

were inadequate.

What are the consequences if the

condition is not corrected? The tailfuselage attachment fitting is a primary

structural element within the

empennage. Failure of this part, if not

detected and corrected, could result in

loss of controlled flight.

Has FAA taken any action to this

point? We issued a proposal to amend

part 39 of the Federal Aviation

Regulations (14 CFR part 39) to include

an AD that would apply to all LET

Model L–13 ‘‘Blanik’’ sailplanes. This

proposal was published in the Federal

Register as a notice of proposed

rulemaking (NPRM) on August 9, 2000

(65 FR 48648). The NPRM proposed to

require you to inspect the tail-fuselage

hinge for strength requirements and

damage, and would require you to

replace any hinge with damage or that

does not meet strength requirements.

Was the public invited to comment?

Interested persons were afforded an

opportunity to participate in the making

of this amendment. No comments were

received on the proposed rule or the

FAA’s determination of the cost to the

public.

The FAA’s Determination

What is FAA’s Final Determination on

this Issue? After careful review of all

available information related to the

subject presented above, we have

determined that air safety and the

public interest require the adoption of

the rule as proposed except for minor

editorial corrections. We determined

that these minor corrections:

• Will not change the meaning of the

AD; and

• Will not add any additional burden

upon the public than was already

proposed.

Cost Impact

How many sailplanes does this AD

impact? We estimate that this AD affects

140 sailplanes in the U.S. registry.

What is the cost impact of the

inspection for the affected sailplanes on

the U.S. Register? We estimate that it

will take approximately 4 workhours

per sailplane to accomplish the

inspection, at an average labor rate of

$60 an hour. Based on the cost factors

presented above, we estimate the total

cost impact of the inspection on U.S.

operators to be $33,600, or $240 per

sailplane.

What is the cost impact of the

replacement for the affected sailplanes

on the U.S. Register? We estimate that

it will take approximately 16 workhours

per sailplane to accomplish the

replacement (as necessary), at an

average labor rate of $60 an hour. The

manufacturer will provide the

replacement attachment fittings at no

cost. Based on the cost factors presented

above, we estimate the total labor cost

impact of the replacement on U.S.

operators to be $960 per sailplane.

Regulatory Impact

Does this AD impact various entities?

The regulations adopted herein will not