Results-Oriented Cultures: Using Balanced Expectations to Manage Senior Executive Performance
Published: 2002-09-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Effective performance management systems link individual performance to organizational goals. In October 2000, the Office of Personnel Management amended regulations to require agencies to link senior executive performance with organizational goals; to appraise executive performance by balancing organizational results with customer satisfaction, employee perspective, and other areas; and to use performance results as a basis for pay, awards, and other personnel decisions. Agencies were to establish these performance management systems by their 2001 senior executive performance appraisal cycles. Because they implemented a set of balanced expectations prior to the Office of Personnel Management requirement, GAO studied the Bureau of Land Management's, Federal Highway Administration's, Internal Revenue Service's, and Veterans Benefits Administration's use of balanced expectations to manage senior executive performance in order to identify initial approaches that may be helpful to other agencies in holding senior executives accountable for results.
section_title: What GAO Found
paragraphs: The agencies GAO reviewed developed an initial set of balanced expectations for senior executives to address in their individual performance plans. GAO found that these agencies are in the early stages of using a set of balanced expectations to appraise senior executive performance and there are significant opportunities to strengthen their efforts as they move forward in holding executives accountable for results. Specifically, more progress is needed in explicitly linking executive expectations for performance to organizational goals. In addition, while these agencies address partnering with customers and other stakeholders, greater emphasis should be placed in fostering the collaboration within and across organizational boundaries to achieve results. Successful organizations understand that they must often change their culture to successfully transform themselves, and such change starts with top leadership. Senior executive performance expectations to lead and facilitate change could be a critical element as agencies transform themselves.

section_title: Letter
paragraphs: Leading organizations have recognized that a critical success factor in  fostering a results-oriented culture is a performance management system  that creates a “line of sight” showing how unit and individual performance  can contribute to overall organizational goals and helping them understand  the connection between their daily activities and the organization’s  success. Effective performance management systems first align  leadership’s performance expectations with organizational goals and then  cascade performance expectations through all levels in the organization.  Effective systems are not merely once- or twice-yearly expectation setting  and appraisal tools, but can help the organization manage on a day-to-day  basis. Leading organizations use their performance management systems  to achieve results, accelerate change, and facilitate communication  throughout the year so that discussions about individual and organizational  performance are integrated and ongoing. Thus, an effective performance  management system can be a strategic tool for organizations to drive  internal change and achieve external results.
We have observed that modernizing performance management systems and  linking them to agency strategic plans and desired outcomes should be a  top priority as agencies seek to transform their cultures in response to  existing and emerging challenges and opportunities. Performance  management systems in leading organizations typically seek to achieve  three key objectives. First, they strive to provide candid and constructive  feedback to help individual employees maximize their contribution and  potential in understanding and realizing the goals and objectives of the  agency. Second, they seek to provide management with the objective and  fact-based information it needs to reward top performers. Third,  performance management systems provide the necessary information and  documentation to deal with poor performers. Most federal performance  management systems fail to achieve these objectives.
In January 2001, GAO designated strategic human capital management as a  governmentwide high-risk area. One of the key areas challenging federal  agencies is creating results-oriented organizational cultures. Many agencies  lack organizational cultures that promote high performance and  accountability, which are critical to successful organizations. To help  agency leaders effectively lead and manage their people and integrate  human capital considerations into daily decision making and the program  results they seek to achieve, we developed a strategic human capital  model. The model highlights the kinds of thinking that agencies should  apply, as well as some of the steps they can take, to make progress in  managing human capital strategically. As detailed in that model, one critical  success factor is to link unit and individual performance to organizational  goals.
To help agencies hold senior executives accountable for organizational  results, the Office of Personnel Management (OPM) amended regulations  for senior executive performance management in October 2000. These  amended regulations on governing performance appraisals for senior  executives require agencies to establish performance management systems  that (1) hold senior executives accountable for their individual and  organizational performance by linking performance management with the  results-oriented goals of the Government Performance and Results Act of  1993 (GPRA), (2) evaluate senior executive performance using measures  that balance organizational results with customer satisfaction, employee  perspectives, and any other measures agencies decide are appropriate, and  (3) use performance results as a basis for pay, awards, and other personnel  decisions. Agencies were to establish these performance management  systems by their 2001 senior executive performance appraisal cycles.
The first objective of this report was to describe the sets of balanced  expectations selected federal agencies used to appraise senior executive  performance for organizational results, customer satisfaction, and  employee perspectives. Our second objective was to identify the initial  implementation approaches these agencies have taken to manage senior  executive performance that may be helpful to other agencies as they  implement OPM’s amended regulations governing senior executive  performance management systems. We selected the Bureau of Land  Management (BLM), Federal Highway Administration (FHWA), Internal  Revenue Service (IRS), and Veterans Benefits Administration (VBA)  because they used a set of balanced expectations to manage the  performance of all or a significant portion of their senior executives prior  to the OPM requirement. IRS incorporated balanced expectations into its  senior executive performance management system in response to the  Internal Revenue Service Restructuring and Reform Act of 1998; the other  agencies established their systems administratively to emphasize senior  executives’ accountability for organizational results and other  expectations. As appropriate, agencies developed the performance  expectations for senior executives’ individual plans to meet particular  program and management objectives and agency needs. To describe  agencies’ expectations for senior executive performance, we used the  categories prescribed by OPM’s regulations—organizational results,  customer satisfaction, and employee perspective. For additional  information on our objectives, scope, and methodology, see appendix I.
subsections: section_title: Background
paragraphs: Strategic human capital management, and specifically the need to develop  results-oriented organizational cultures, is receiving increased attention  across the federal government. The Congress has underscored the  consequences of human capital weaknesses through a wide range of  oversight hearings held over the last few years. In addition, to foster a  results-oriented culture in federal agencies, the Congress is considering  legislative proposals to, among other things, focus attention on the impact  poor performance can have on the effectiveness of an organization and  require agencies to have a chief human capital officer to select, develop,  and manage a productive, high-quality workforce.
The President’s Management Agenda, released in August 2001, identified  human capital as one of the five key governmentwide management  challenges currently facing the federal government. Subsequently, the  Office of Management and Budget and OPM developed criteria that  recognized the importance of creating a performance culture that appraises  and rewards employees based on their contributions to organizational  goals as a key dimension of effective human capital management.
We developed a model of strategic human capital management to highlight  the kinds of thinking that agencies should apply, as well as some of the  steps they can take, to make progress in managing human capital  strategically. The model consists of eight critical success factors, which  are organized to correspond with four cornerstones of effective strategic  human capital management: (1) leadership, (2) strategic human capital  planning, (3) acquiring, developing, and retaining talent, and (4) results- oriented organizational cultures. Within the cornerstone of results-oriented  organizational cultures, a critical success factor is linking unit and  individual performance to organizational goals.
One way to reinforce accountability and alignment of individual  performance expectations with organizational goals is through the use of  results-oriented performance agreements. We have reported that other  countries have begun to use their performance management systems as a  strategic tool to help achieve results. In particular, they use performance  agreements to align and cascade organizational goals to individual  performance expectations through several levels in their organizations.  They also use performance agreements to help identify the crosscutting  connections both within and between agencies and align the performance  commitments of top-level executives with broader governmentwide  priorities.
Further, our work has shown that U.S. agencies have benefited from their  use of results-oriented performance agreements for political and senior  career executives. Although each agency developed and implemented  performance agreements that reflected its specific organizational  priorities, structures, and cultures, the performance agreements met the  following characteristics. They  strengthened alignment of results-oriented goals with daily operations,  fostered collaboration across organizational boundaries,  enhanced opportunities to discuss and routinely use performance  information to make program improvements,  provided a results-oriented basis for individual accountability, and  maintained continuity of program goals during leadership transitions.
Prior to OPM amending its regulations on senior executive performance  management systems, BLM, FHWA, IRS, and VBA implemented systems  that used a set of balanced expectations to manage senior executive  performance. BLM implemented a balanced approach to manage its senior  executive performance to focus attention and accountability on  organizational priorities, make resource allocations, and minimize  employee frustration. BLM incorporated performance elements in senior  executives’ individual performance plans for the rating year ending June  2000 that were structured around its strategic goals to (1) “Restore and  Maintain the Health of the Land,” (2) “Serve Current and Future Publics,”  and (3) “Improve Organizational Effectiveness.” BLM also included a  performance element in the senior executives’ plans to “Improve Human  Resources Management and Quality of Work Life.” (For more information  on BLM’s senior executive performance plans, see app. II.)
FHWA implemented a balanced approach to managing its senior executive  performance in response to its 1999 employee satisfaction survey.  Specifically, the majority of employees that responded indicated that they  did not understand their workgroup’s role in implementing FHWA’s  corporate management strategies that were based on the Malcolm  Baldridge National Quality Award and the Presidential Quality Award  Criteria—leadership, strategic planning, customer and partner focus,  information and analysis, human resource development and management,  process management, and business results. Beginning in fiscal year 2000,  FHWA appraised senior executives on these corporate management  strategies. (For more information on FHWA’s senior executive performance  plans, see app. III.)
In response to the Internal Revenue Service Restructuring and Reform Act  of 1998, IRS initiated a method of measuring performance designed to  foster quality service, promote compliance with the tax laws, and consider  the impact on employees. In fiscal year 2000, IRS implemented a senior  executive performance management system that aligned the executives’  performance expectations with a set of balanced expectations consisting of  employee satisfaction, customer satisfaction, and business results, and  with two additional areas of responsibility—leadership and equal  employment opportunity. (For more information on IRS’s senior executive  performance plans, see app. IV.)
VBA adopted a balanced scorecard approach in fiscal year 1999 as a  strategic management tool to drive organizational change, provide  feedback to employees on measures they can influence, link performance  appraisal and reward systems to performance measures, and provide  incentives to managers to work as teams in meeting performance  measures. Its scorecard included measures for accuracy, speed and  timeliness, unit cost, customer satisfaction, and employee development  and satisfaction. VBA incorporated these measures in the performance  appraisals for senior executives in its regional offices where the majority of  senior executives are located. (For more information on VBA’s senior  executive performance plans, see app. V.)
section_title: Agencies’ Balanced Expectations for Senior Executive Performance
paragraphs: Effective performance management systems translate organizational  priorities and goals into direct and specific commitments that senior  executives will be expected to achieve during the year. To this end, BLM,  FHWA, IRS, and VBA developed a set of expectations for senior executive  performance that were intended to balance organizational results,  customer satisfaction, and employee perspectives and offered a menu of  expectations for senior executives to incorporate into their individual  performance plans. They appraised senior executives’ contributions to  organizational results by the core competencies and supporting behaviors  senior executives followed or the targets they met. In addition, the agencies  appraised senior executives’ performance against their expectations for  customer satisfaction and employee perspectives.
subsections: section_title: Organizational Results
paragraphs: OPM’s regulations emphasize holding senior executives accountable for  their individual and organizational performance by linking individual  performance management with results-oriented organizational goals. To  appraise senior executive contributions to organizational results, BLM,  FHWA, IRS, and VBA identified core competencies and supporting  behaviors for senior executives to follow, while VBA also identified targets  for senior executives to meet that are directly linked to organizational  results, as shown in table 1.
Core competencies and supporting behaviors: The agencies identified core  competencies and supporting behaviors for senior executives to follow that  are intended to contribute to their agencies’ achievement of performance  goals. For example, FHWA set a performance expectation for senior  executives to develop strategies to achieve FHWA’s strategic objectives and  performance goals. To help meet this expectation, the Director of Field  Services-South convened the “Southern Executive Safety Summit” in 2000  to address the region’s highway fatality rates—the highest in the nation— and their impact on FHWA achieving its goal on safety. The participants,  including state and federal transportation and safety officials from the  region, learned what each state was doing to decrease fatality rates and  discussed how to create new safety strategies for each state and the region  as a whole. Following the summit, Kentucky, North Carolina, and  Mississippi held subsequent state safety summits and pursued numerous  initiatives to reduce fatalities. The senior executive reported in his self- assessment for fiscal year 2001 that many states in the region have  experienced a reduction in the number of highway fatalities since the  Southern Executive Safety Summit, which is helping FHWA meet its goal of  reducing the number of highway-related fatalities by 20 percent in 10 years.
Similarly, to address IRS’s performance expectation for senior executives  to develop and execute plans to achieve organizational goals, a senior  executive who is the area director for compliance in New York has a  performance expectation in his fiscal year 2002 individual performance  plan to ensure that taxpayers affected by the events of September 11, 2001,  are treated and audited according to their circumstances, and that the  compliance guidelines and policy regarding affected taxpayers are adhered  to. In particular, these taxpayers—including individuals and businesses— were not to be audited for prior tax years before the end of March 2002, if  such an audit was necessary.
To contribute to its strategic goal to restore and maintain the health of the  land, BLM set an expectation for senior executives to understand and plan  for the condition and use of public lands. In particular, the senior executive  who heads the Colorado state office had a performance expectation in her  individual performance plan for the 2001 performance appraisal cycle to  conduct land use assessments and complete plans as scheduled for the  Gunnison Gorge National Conservation Area. In her self-assessment for the  2001 performance appraisal cycle, she stated that she began conducting  land use assessments for Gunnison Gorge and approved “pre-plans,” which  outline the anticipated schedule, budget, and stakeholder involvement to  complete a land use plan.
Targets directly linked to organizational results: VBA identified targets with  specific levels of performance for senior executives to meet. These targets  link to the priorities in VBA’s balanced scorecard and the Department of  Veterans Affairs’ (VA) strategic goals. For example, to contribute to VA’s  strategic goal to “provide ‘One VA’ world class service to veterans and their  families through the effective management of people, technology,  processes and financial resources” and to address its priority of accuracy,  VBA set a national target of 72 percent for fiscal year 2001 for the accuracy  rate of original and reopened compensation and pension claims and  appeals that were completed and determined to be technically accurate. To  contribute to that national target, the senior executive in the Nashville  regional office had a performance expectation for his office to meet a  target accuracy rate of 59.2 percent. Similarly, to further contribute to VA’s  strategic goal of world-class service and to address its priority of speed and  timeliness, VBA set a national target for property holding time—the  average number of months from date of acquisition to date of sale of  properties acquired due to defaults on VA guaranteed loans—of 10 months  for fiscal year 2001. To contribute to the national target, the same senior  executive had a performance expectation for his office to meet a target of  8.6 months.
section_title: Customer Satisfaction
paragraphs: OPM’s regulations recognize that senior executives in public sector  organizations face the challenging task of balancing the needs of multiple  customers, who at times may have differing or ever competing  expectations. Customer involvement is important to first make senior  executives aware of differing or competing expectations and to then build  partnerships and coalitions to reach mutual understanding of the issues. To  this end, BLM, FHWA, IRS, and VBA set expectations for senior executives  to address customer satisfaction in their individual performance plans and  appraised their performance on the basis of partnerships, customer  feedback, and improved products and services. Examples of the agencies’  expectations for customer satisfaction are shown in table 2.
Partnerships: Partnerships and coalitions can help senior executives work  collaboratively with their customers to ensure that the organization takes  into account their multiple interests and achieves results. BLM’s senior  executives have relied on resource advisory councils (RAC) consisting of  local residents with diverse interests as a way to involve customers,  identify issues, and reach a reasonable degree of consensus regarding  BLM’s land management programs. To meet BLM’s expectation to establish  cooperative and constructive relationships that facilitate input from a  range of stakeholders, the senior executive who heads the Montana state  office set an expectation to expand partnerships and maintain close  working relationships with national interest groups in his individual plan  for the 2001 performance appraisal cycle. This senior executive solicited  feedback from the Central Montana RAC to discuss among his customers  how to balance the ongoing, yet potentially competing uses—including  recreation, grazing, and oil and gas leases—of a 150-mile stretch of the  Missouri River and surrounding areas. According to the senior executive,  the RAC recommended that ongoing uses continue, but that this stretch  receive special protection from further development. In his self-assessment  for the 2001 performance appraisal cycle, the senior executive stated that  he continues to use the RAC as a highly effective citizen advisory group  that plays a significant role in land management deliberations.
Customer feedback: Customer feedback can help senior executives  determine customers’ needs and their levels of satisfaction with existing  products and services. To hold its senior executives accountable for  customer satisfaction, senior executives in VBA’s regional offices had  performance expectations to meet targets for veterans giving a high rating  on satisfaction surveys. Specifically, the senior executive in the Nashville  regional office had a target in fiscal year 2001 to attain 85 percent in overall  satisfaction in a national survey of customers using vocational  rehabilitation and employment services and support.
In addition, to address his performance expectation for customer  satisfaction, the senior executive who heads VBA’s Waco regional office  convened frequent “town hall” meetings to listen to veterans’ needs and  discuss VBA issues, such as legislative changes that affect the processing of  veterans’ claims. According to this executive, the town hall meetings  helped improve his customer satisfaction levels because veterans identified  the concerns that were most important to them, gained direct access to the  VBA employees working on their benefit claims, and were better able to  understand the claims process. Specifically, the senior executive reported  in his self-assessment that during fiscal year 2001 he worked with local  service officers to identify in advance those veterans planning to attend the  town hall meetings, had their claims folders available for review at the  meetings, and was thus able to enhance outreach programs.
Improved products and services: Senior executives can use the feedback  from customers to enhance the customers’ understanding of the  organization and make improvements in the organization’s products and  services. For example, to meet IRS’s performance expectation for senior  executives to address customer satisfaction by continuously improving  products and services, a senior executive responsible for submission  processing and taxpayer assistance had a performance expectation in her  fiscal year 2001 individual performance plan to develop a communication  plan. This plan was intended to better serve customers by helping improve  their knowledge and understanding of the tax return process.
To hold its senior executives accountable for improved products and  services, VBA set targets for executives to achieve, such as the abandoned  telephone call rate—the percentage of callers who get through to VBA, but  are put on hold and hang up before being connected to an employee.  Specifically, for fiscal year 2001, the senior executive in the Nashville  regional office had a target for his office for an abandoned telephone call  rate of not more than 5 percent for customers’ inquiries of VBA’s benefit  programs, such as compensation and pension services.
section_title: Employee Perspectives
paragraphs: OPM’s regulations recognize that an agency’s people are vital assets and  people achieve organizational goals and results. Accordingly, the  regulations call for senior executive performance plans and appraisals to  contain performance expectations on employees’ perspectives. To this end,  BLM, FHWA, IRS, and VBA set expectations for senior executives to  address employee perspectives in their individual performance plans and  appraised their performance on the basis of the training provided to staff,  safe and healthy work environment, teamwork, employee satisfaction, and  fairness and diversity. Examples of the agencies’ expectations for employee  perspectives are shown in table 3.
Training: Senior executives can provide employees with the necessary  training and continuous developmental opportunities to perform their jobs  more effectively. To address VBA’s performance expectation for senior  executives to ensure that plans exist and are adequately implemented to  recruit, train, retain, motivate, empower, and advance employees, the  senior executive in VBA’s Manila, Philippines, Regional Office and  Outpatient Clinic conducted focus groups to identify actions needed to  respond to the results of the 1999 employee survey. One action was to task  a training committee to develop and implement a Training Needs  Assessment tool to determine employees’ training needs and to schedule  training for fiscal year 2002. The senior executive stated in his self- assessment for fiscal year 2001 that the employees and their supervisors  used the assessment tool to establish individual development plans and the  training committee has been scheduling training sessions to ensure that  individual development plans are met.
To meet BLM’s expectation for senior executives to help attract and retain  well-qualified employees, the senior executive who heads BLM’s Nevada  state office set a performance expectation for the 2001 performance  appraisal cycle to maintain a trained and motivated workforce. This  executive worked with his Human Resources Development Committee,  composed of representatives from the eight BLM field offices in Nevada.  The committee meets regularly to identify employee issues, make  recommendations, and implement actions. Specifically, with input from the  committee, the senior executive developed a Statewide Mentoring Program  to enhance and promote opportunities for employees’ skill development  and to assist them in achieving their career goals. The senior executive did  not discuss the mentoring program in his self-assessment for the 2001  performance appraisal cycle, but generally stated that his office provided  training to enhance leadership and interpersonal skills.
Safe and healthy work environment: Senior executives can provide  employees with safe, secure, and healthful work conditions to ensure that  the workspace is conducive to effective performance. To address VBA’s  expectation for senior executives to provide a safe, healthy work  environment in fiscal year 2001, the senior executive who heads VBA’s  Manila, Philippines, Regional Office and Outpatient Clinic worked with  employees to improve the security and safety of the regional office.  Specifically, to prepare the office in case suspicious materials are received,  the senior executive reviewed and updated its emergency evacuation plan  and then met with employees to ensure they understood the plan’s  procedures and were comfortable with their responsibilities. In addition,  he worked with the Regional Security Office to provide security awareness  training to employees and held several emergency drills to test employees’  responses. He stated in his self-assessment for fiscal year 2001 that while  employees were still concerned with security, he believed confidence in  their safety and welfare had improved.
Teamwork: Senior executives can encourage a teams-based approach to  help improve employee morale and job satisfaction by creating an  environment that is open to communication and has a sense of shared  responsibility for accomplishing organizational goals. To create an  environment in which knowledge is managed, shared, and used effectively,  FHWA encourages its senior executives to use organizational self- assessments to solicit employee perspectives and gauge their employees’  work environment. FHWA provides sample questions for these self- assessments that are based on the Malcolm Baldridge criteria. For  example, the senior executive heading the Office of Information and  Management Services required each of her three divisions to complete an  organizational self-assessment in 2001. FHWA employees trained in the  Baldridge criteria facilitated the half-day sessions for each division. As a  result of the sessions, the office consolidated the three divisions’ self- assessments and summarized the office’s “strengths” and “opportunities for  improvement” in a report. The report identified one of the office’s strengths  to be management’s support and approval for training, and one of its  opportunities for improvement to be keeping employees’ individual  development plans up to date. In response, the senior executive identified  in her individual performance plan a specific expectation of updating  individual development plans for every employee by April 30, 2002.
To meet IRS’s performance expectation for senior executives to motivate  employees to achieve high performance through open and honest  communication and involve them in decision making, a senior executive  who is the area director for compliance in New York included an  expectation in his fiscal year 2001 individual performance plan to look for  partnering opportunities to maximize problem resolution and employee  involvement, while developing and maintaining effective relationships with  the seven National Treasury Employees Union chapters in his area.
Employee satisfaction: Senior executives can monitor employees’  satisfaction with their work environment to gauge if they feel empowered  and motivated to contribute to organizational goals. For senior executives  in the regional offices, VBA set a target for employee satisfaction that  senior executives were to achieve for fiscal year 2001. Based on a 1-to-5  scale, the target was set by estimating the average response on two  questions from the employee satisfaction survey. The two questions ask  about the employee’s satisfaction with his or her job and the employee’s  overall satisfaction with the organization. For example, VBA set a national  target score of 3.6 for employee satisfaction in the compensation and  pension services business line in fiscal year 2001. All regional offices  contribute to the target for this business line. Specifically, the senior  executive in the Nashville regional office had a performance expectation  for his office to meet a target score of 3.5 for employee satisfaction.
Fairness and diversity: Senior executives can foster fairness and diversity  by protecting the rights of all employees, providing a fair dispute resolution  system, and working to prevent discrimination through equality of  employment and opportunity. To meet BLM’s performance expectation for  senior executives to establish a zero tolerance standard for discrimination,  harassment, and hostile work environments, a senior executive who heads  BLM’s Nevada state office set an expectation in his individual plan for the  2001 performance appraisal cycle that he would demonstrate commitment  to nondiscrimination in the workplace by ensuring fair access to  developmental opportunities for employees.
section_title: Initial Implementation Approaches to Manage Senior Executives’ Performance
paragraphs: While the four agencies tailored their performance management systems to  fit their organizational and operational needs, we identified an initial set of  implementation approaches that BLM, FHWA, IRS, and VBA are taking that  may be helpful to other agencies as they manage senior executive  performance against balanced expectations. BLM, FHWA, IRS, and VBA  require follow-up actions, and  make meaningful distinctions in performance.
subsections: section_title: Provide Useful Data
paragraphs: Providing objective data for organizational results, customer satisfaction,  and employee perspectives can help senior executives manage during the  year, identify performance gaps, pinpoint improvement opportunities, and  compare their performance to other executives. Specifically, the agencies  developed data systems so that senior executives can track their  individual performance against organizational results, and  disaggregated customer and employee satisfaction survey data.
Developed data systems: To help senior executives see how they are  contributing to organizational results during the year, BLM and VBA  developed data systems for executives to use to track their individual  performance against organizational results. For example, BLM’s Director’s  Tracking System collects and makes available on a real-time basis data on  each senior executive’s progress in their state offices towards BLM’s  national priorities and the resources expended on each priority. In  particular, a BLM senior executive in headquarters responsible for the wild  horse and burro adoptions program can use the tracking system to identify  where the senior executives in the state offices are against their targets and  what the program costs have been by state. Specifically, as of mid-June  2002, the BLM state director in California had completed 532 adoptions at a  total cost of $460,000 towards his target of 1,150 adoptions for fiscal year  2002. Similarly, the state director in Montana had completed 46 adoptions  at a total cost of $63,000 towards his target of 300 adoptions.
VBA also developed a data system that tracks organizational and individual  performance. Its balanced scorecard data are updated monthly and senior  executives and other employees can access the data through the agency’s  Intranet. The balanced scorecard compares actual performance against the  targets set for the national and regional office levels. According to VBA  officials, the scorecard helps employees understand how they can affect  the results of the organization. Senior executives refer to the balanced  scorecard data at their leadership meetings, discuss how they performed  relative to the scorecard, and identify the causes behind outstanding and  poor performance.
Disaggregated survey data: Specific customer and employee feedback  helps senior executives pinpoint actions to improve products and services  for customers and to enhance employee satisfaction. BLM, FHWA, IRS, and  VBA disaggregated the data from agencywide customer and employee  satisfaction surveys so that the results were applicable to a senior  executive’s customers and employees. For example, from its Use  Authorization Survey administered to its various customers in fiscal year  2000, BLM disaggregated the survey data to provide the applicable results  to individual senior executives who head the state offices. Specifically, the  senior executive in the Montana state office received data for his state  showing that 81 percent of the grazing permit customers surveyed gave a  favorable rating for the timeliness of permit processing and for service  quality. In his self-assessment for the 2001 performance appraisal cycle, he  stated that issuing grazing permits has progressed without any problem or  backlogs and that permittees have not experienced any delays.
VBA disaggregates its survey results to the regional offices and policy and  program support offices that are larger than 15 employees in order to allow  the senior executives to determine actions that are appropriate for their  offices. In 2001, VBA administered its most recent employee survey to  measure aspects of organizational climate related to high performance. For  each question on the survey, VBA provided the office results and the VBA  average, as well as baseline data from surveys conducted in 1997 and 1999.  For example, 47 percent of the employees surveyed in the St. Paul regional  office either strongly agreed or agreed that managers provided an  environment that supports employee involvement, contributions, and  teamwork. According to the 2001 survey results, this percentage is slightly  higher than the VBA average of 43 percent and indicated an improvement  from the 33 percent the office scored on this question in both the 1997 and  1999 employee surveys. VBA compiles a national report of the results so  that senior executives can compare how their office scored against other  offices and VBA as a whole.
IRS disaggregates data to the workgroup level from its IRS/National  Treasury Employees Union Employee Satisfaction Survey, which measures  general satisfaction with IRS, the workplace, and the union. The Gallup  Organization administers this survey to all employees, which is comprised  of Gallup’s 12 questions (“Q12”); additional questions unique to IRS, such  as views on local union chapters and employee organizations; as well as  questions on issues IRS has been tracking over time. Gallup provides the  results for each workgroup. For example, a senior executive can compare  how his workgroup performed to other operating divisions and to IRS as a  whole. Specifically, one senior executive’s workgroup scored 3.68 out of a  possible 5 for “having the materials and equipment they need to do their  work right” compared to the IRS-wide score of 3.58 on the survey. To allow  senior executives and managers to benchmark externally, Gallup compares  each workgroup’s results to the 50th (median) and 75th (best practices)  percentile scores from Gallup’s Q-12 database. To benchmark internally,  IRS provides the servicewide results from the previous year’s survey in  each workgroup report.
section_title: Require Follow-up Actions
paragraphs: As part of its senior executive performance management system, IRS and  FHWA require their senior executives to follow up on customer and  employee issues. To improve customer satisfaction, the Commissioner of  Internal Revenue set an expectation that the business units, headed by  senior executives, develop action plans based on customer survey data that  are relevant to the needs of their particular customers. IRS provided  guidance to senior executives and managers to help them understand and  interpret the customer survey data, identify areas for improvement, and  develop action plans to respond to customers’ issues and concerns.
For example, to address the customer satisfaction expectation in his fiscal  year 2002 individual performance plan, an IRS senior executive who is the  area director for compliance in Laguna Niguel, California, requires each of  his territory managers to present an action plan identifying ways to  improve low scores from customer surveys. He then rolls up these  managers’ plans into a consolidated area action plan for which he is  responsible. Specifically, an expectation in his action plan is to improve  how customers are treated during collection and examination activities by  ensuring that examiners explain to customers their taxpayer rights, as well  as why they were selected for examination and what they could expect.  Further, the senior executive plans to ensure that territory managers solicit  feedback from customers on their treatment during these activities and  identify specific reasons for any customer dissatisfaction. In his midyear  self-assessment for fiscal year 2002, the senior executive stated that  substantial progress is being made in achieving the collection and  examination customer satisfaction goals.
Similarly, to address employee perspectives, IRS requires senior executives  to hold workgroup meetings with their employees to discuss the  workgroups’ Employee Satisfaction Survey results and develop action  plans to address these results. According to a senior executive in IRS’s  criminal investigation unit, the workgroup meetings were beneficial  because they increased communication with employees and identified  improvements in the quality of worklife. For example, through the  workgroup meetings, employees identified the need for recruiting  supervisory special agents to even out some of the workload. Subsequently,  the senior executive set an expectation in his fiscal year 2002 individual  performance plan to ensure that the field office has a strong recruitment  program to attract viable candidates. He also has an expectation to ensure  his field offices hold timely workgroup meetings and develop and  implement action plans to address concerns identified during these  meetings.
To reinforce the importance of follow-up action, IRS developed a Web- based database system to track workgroup issues across IRS. According to  an IRS official, the system is being upgraded to improve its usefulness for  senior executives and will allow them to track their progress in completing  the actions identified in the workgroup meetings. In addition, all employees  will be able to access summary information to help identify trends in the  data across workgroups. The system will also provide employees with the  opportunity to share best practice information on resolved workgroup  issues.
To help meet their employee perspective performance expectations, FHWA  requires senior executives to use 360-degree feedback instruments to  solicit employee views on their leadership skills. Based on the 360-degree  feedback, senior executives are to identify action items and incorporate  them into their individual performance plans for the next fiscal year. FHWA  piloted the 360-degree feedback instrument for half its leadership team of  senior executives in fiscal year 2001 and scheduled the rest for fiscal year  2002. The 360-degree feedback process is designed to provide an executive  direct input from various sources—peers, customers, and subordinates— and to compare those results to a self-evaluation and input from a  supervisor.
While the 360-degree feedback instrument is intended for developmental  purposes to help senior executives identify areas for improvement and is  not included in the executive’s performance evaluation, executives are held  accountable for taking some action with the 360-degree feedback results  and responding to the concern of their peers, customers, and subordinates.  For example, based on 360-degree feedback, a senior executive for field  services identified better communications with subordinates and increased  collaboration among colleagues as areas for improvement, and as required,  he then incorporated action items into his individual performance plan. In  fiscal year 2001, he set a performance expectation to develop a leadership  self-improvement action plan and identify appropriate improvement goals.  In his self-assessment for fiscal year 2001, he reported that he improved his  personal contact and attention to the division offices as evidenced by a 30  percent increase in visits to the divisions that year. Also, he stated that he  encouraged his subordinates to assess their leadership skills.  Consequently, 9 of his 11 subordinates are using 360-degree feedback  instruments to improve their personal leadership competencies.
section_title: Make Meaningful Distinctions in Performance
paragraphs: According to OPM, the amended regulations were designed to recognize  that effective performance management requires agency leadership to  make meaningful distinctions between acceptable and outstanding  performance of senior executives and to appropriately reward those who  perform at the highest level. Effective performance management systems  provide agencies with the objective and fact-based information they need  to distinguish levels of performance among senior executives and serve as  a basis for bonus recommendations.
OPM data on senior executive performance ratings indicate that agencies  across the federal government are not making meaningful distinctions  among senior executives’ performance. Specifically, agencies rated about  85 percent and 82 percent of senior executives at the highest level their  systems permit in their performance ratings in fiscal years 2000 and 2001,  respectively. Nearly all of the senior executives are rated using three- and  five-level rating systems with the majority of senior executives rated under  five-level systems. When disaggregating the data by rating system, the  percentage of senior executives that received the highest level rating under  five-level systems was approximately 77 and 75 percent in fiscal years 2000  and 2001, respectively. In the same period, the percent of senior executives  receiving the highest level rating under three-level systems was about 99  percent.
In addition, OPM data show that, governmentwide, approximately 52  percent of senior executives received bonuses each year since fiscal year  1999. Between fiscal years 1999 and 2001, the average bonus payment  increased from about $10,200 to $12,300. OPM officials told us that they  plan to closely monitor the distribution of fiscal year 2002 performance  ratings and bonuses.
IRS, FHWA, VBA, and BLM recognize that they are still working at  implementing effective performance management systems that make  meaningful distinctions in senior executive performance. For example, IRS  established an executive compensation plan for determining base salary,  performance bonuses, and other awards for its senior executives that is  intended to explicitly link individual performance to organizational  performance and is designed to emphasize performance. To recognize  performance across different levels of responsibilities and commitments,  IRS assigns senior executives to one of three bonus levels at the beginning  of the performance appraisal cycle. Assignments depend on the senior  executives’ responsibilities and commitments in their individual  performance plans for the year, as well as the scope of their work and its  impact on IRS’s overall mission and goals. For example, the Commissioner  of Internal Revenue or Deputy Commissioner assigns senior executives to  bonus level three—considered to be the level with the highest  responsibilities and commitments—only if they are a part of the Senior  Leadership Team. IRS restricts the number of senior executives assigned to  each bonus level for each business unit.
In addition, for each bonus level, IRS establishes set bonus ranges by  individual summary evaluation rating, which is intended to reinforce the  link between performance and rewards. The bonus levels and  corresponding bonus amounts of base salary by summary rating are shown  in table 4.
To help ensure realistic and consistent performance ratings, each IRS  business unit has a “point budget” for assigning performance ratings that is  the total of four points for each senior executive in the unit. After the initial  summary evaluation ratings are assigned, the senior executives’ ratings are  converted into points—an “outstanding” rating converts to six points; an  “exceeded” to four points, which is the baseline; a “met” to two points; and  a “not met” to zero points. If the business unit exceeds its point budget, it  has the opportunity to request additional points from the Deputy  Commissioner. IRS officials indicated that none of the business units  requested additional points for the fiscal year 2001 ratings.
IRS piloted the compensation plan in fiscal year 2000 with the top senior  executives that report to the Commissioner of Internal Revenue and used it  for all senior executives in fiscal year 2001. For fiscal year 2001, 31 percent  of the senior executives received a rating of outstanding compared to 42  percent for fiscal year 2000, 49 percent received a rating of exceeded  expectations compared to 55 percent, and 20 percent received a rating of  met expectations compared to 3 percent. In fiscal year 2001, 52 percent of  senior executives received a bonus, compared to 56 percent in fiscal year  2000. IRS officials indicated that they are still gaining experience using the  new compensation plan and will wait to establish trend data before they  evaluate the link between performance and bonus decisions.
FHWA weights the elements it uses to appraise senior executive  performance to make meaningful distinctions among its senior executives.  These elements include (1) strategic and performance plan  accomplishments and corporate management improvements and results  and (2) job significance and complexity. The senior executives receive a  score totaling 100 points, with a maximum of 70 points for strategic and  performance plan accomplishments and corporate management  improvements and results, and a maximum of 30 points for job significance  and complexity. FHWA provides definitions for assigning points. For  example, to receive all 70 points for strategic and performance plan  accomplishments, the executive must achieve all the performance  expectations identified in the individual performance plan, including  exceptional advancement on the corporate management strategies. To  receive all 30 points for job significance and complexity, the executive must  have a position that is highly visible, with a high degree of difficulty due to  legislation, court decisions, political pressures, and other factors. Rating  officials use these scores in assigning a rating to senior executives of  “achieved results,” “minimally satisfactory,” or “unsatisfactory.” In fiscal  year 2001 and 2000, all 45 senior executives received a rating of achieved  results. FHWA recommended 20 of the 45 senior executives (44 percent)  receive bonuses in fiscal year 2001 and 22 of the 45 executives (49 percent)  in fiscal year 2000. For both years, each senior executive recommended for  a bonus received one.
For VBA, a task force was established in April 2001 to review VBA’s claims  processing. It found that 82 percent of VBA’s senior managers were  recommended to receive either a performance bonus or an increase in  senior executive rank in 2000 when performance for the organization as a  whole was considerably below program goals and performance varied  among regional offices. Stating that there must be appropriate rewards for  outstanding performance and negative consequences for those who do not  perform according to their performance agreement, the task force  recommended that detailed performance agreements be incorporated into  the performance standards for the senior executives in the regional offices.
Following VA guidance for bonuses in fiscal year 2001, senior executives in  VBA receive bonuses by demonstrating significant individual and  organizational achievements during the performance appraisal year as  evidenced by clearly documented, specific executive achievements, such  as substantive improvements in the quality of work or significant cost  reductions. In fiscal year 2001, 50 percent of the senior executives in VBA  received a bonus, with 24 of the 50 executives receiving the highest  performance rating of “outstanding.”
BLM appraises senior executives’ performance and recommends them for  performance awards based on their achievement of the performance  elements in their individual performance plans and the executives’  demonstration of leadership excellence. BLM rates its senior executives’  performance as “pass,” “provisional,” or “fail.” Senior executives receive a  pass rating if they fulfill the fully successful standards for the performance  elements in their performance plans. All of the senior executives received a  pass rating in the 2000 and 2001 performance appraisal cycles. For the 2000  and 2001 performance appraisal cycles, the Department of the Interior  guidance limited BLM’s total number of senior executive nominations for  performance awards, including the Secretary’s Executive Leadership  Award, performance bonuses, or pay rate increases, to no more than 45  percent or 9 of its career senior executives as of the end of the appraisal  cycles. Of BLM’s 17 rated career senior executives, 4 received performance  bonuses, 3 received pay rate increases, and 1 received the Secretary’s  Executive Leadership Award in 2000. In 2001, of BLM’s 19 rated career  senior executives, 5 received performance bonuses and 4 received pay rate  increases.
section_title: Conclusions
paragraphs: Leading organizations use their performance management systems to  achieve results, accelerate change, and facilitate communication  throughout the year so that discussions about individual and organizational  performance are integrated and ongoing. Toward this end, BLM, FHWA,  IRS, and VBA are in the early stages of implementing their new  performance management systems for senior executives. In particular,  while these agencies identified core competencies and supporting  behaviors for senior executives to follow that are intended to contribute to  results, they identified to a much lesser extent targets for senior executives  to meet that are directly linked to organizational goals. In addition, they  identified expectations for senior executive performance for customer  satisfaction and employee perspectives.
These agencies have taken the first steps in creating a performance  management system for senior executives that is a strategic tool for  holding individuals accountable for their contributions to results and  organizational success. Their initial implementation approaches to manage  senior executives’ performance recognize the importance of providing  useful data so that executives can track their individual performance  against organizational results on a real-time basis and the benefit of  requiring follow-up action on customer and employee issues through  workgroup meetings and action plans. However, these agencies also  acknowledge that they are still working at implementing effective systems  that can make meaningful distinctions in performance.
There are significant opportunities to strengthen these efforts as they move  forward in holding senior executives accountable for results. In particular,  more progress is needed in explicitly linking senior executive expectations  for performance to results-oriented organizational goals, fostering the  necessary collaboration both within and across organizational boundaries  to achieve results, and demonstrating a commitment to lead and facilitate  change. These expectations for senior executives will be critical to keep  agencies focused on transforming their cultures to be more results  oriented, less hierarchical, and more integrated, and thereby be better  positioned to respond to emerging internal and external challenges,  improve their performance, and assure their accountability.
section_title: Agency Comments
paragraphs: We provided a draft of this report in August 2002 to the Secretaries of the  Interior, Transportation, the Treasury, and Veterans Affairs and the  Commissioner of Internal Revenue for their review. We received written  comments from the Commissioner of Internal Revenue stating that our  draft report accurately accounted for the factors that influence IRS’s  executive performance management and compensation system (see app.  VI). In addition, cognizant agency officials from the Departments of the  Interior, Transportation, and Veterans Affairs responded that they generally  agreed with the contents of the draft report. In some cases, they also  provided technical comments to clarify specific points regarding the  information presented. Where appropriate, we have made changes to this  report that reflect these technical comments.
We are sending copies of this report to the Secretaries of the Interior,  Transportation, the Treasury, and Veterans Affairs; the Commissioner of  Internal Revenue; and the Director of OPM. We will also make this report  available to others upon request. In addition, the report will be available at  no charge on the GAO Web site at http://www.gao.gov.
If you have any questions about this report, please contact me or Lisa  Shames on (202) 512-6806 or mihmj@gao.gov. Janice Lichty and Bryan  Rasmussen were key contributors to this report.
section_title: Objectives, Scope, and Methodology
paragraphs: To meet our objectives, we focused our review on federal agencies that  have implemented a set of balanced expectations in their performance  management systems for all or a significant portion of their senior  executives prior to the Office of Personnel Management (OPM) amending  the regulations. Based on research and interviews with knowledgeable  officials, we identified agencies that had relevant experience in using a set  of balanced expectations for senior executive performance management  systems. Among the possible agencies with relevant experience, we  selected the Bureau of Land Management (BLM), Federal Highway  Administration (FHWA), Internal Revenue Service (IRS), and Veterans  Benefits Administration (VBA) because they provided variation in mission,  size, and organizational structures.
To describe the sets of balanced expectations these agencies used to  appraise senior executive performance, we collected and analyzed  agencies’ strategic plans, annual performance plans, and performance  reports; personnel policies and memoranda; survey instruments and  analyses; and the individual performance plans and self-assessments of the  senior executives we interviewed. We used the categories in OPM’s  regulations to classify the agencies’ expectations for senior executive  performance—organizational results, customer satisfaction, and employee  perspectives. Based on our review of the agencies’ expectations, we  identified and categorized the general approaches that agencies took to  contribute to organizational results, customer satisfaction, and employee  perspectives, as shown in tables 1, 2, and 3 and included a sample of  expectations along these approaches. Our analysis and characterization for  categorizing the performance expectations and examples of those  expectations was independently reviewed and agreed upon for the three  categories.
To identify the initial implementation approaches these agencies have  taken that may be helpful to other agencies as they manage senior  executive performance against the balanced expectations, we interviewed  senior executives in person or over the telephone at the four agencies. At  BLM, FHWA, and VBA, we randomly selected 10 career senior executives  to interview at each agency, including 5 executives randomly drawn from  central headquarters and 5 executives randomly drawn from the field  offices. At IRS, because of the larger number of senior executives, we  randomly selected 21, or 10 percent, of the career senior executives to  interview, including at least 5 executives randomly drawn from central  headquarters and at least 5 executives randomly drawn from the field  offices. The random selections covered two or more levels of the Executive  Schedule for senior executives in each agency. This sample is  representative of the senior executives at their respective agencies.
We identified the examples described in this report through our interviews  with senior executives and other agency officials. We did not independently  verify the testimonial evidence from the interviews or the documents that  senior executives and agency officials provided to us. We also did not  attempt to assess the prevalence of the examples we cite among the senior  executives within the same agency. Therefore, senior executives other than  those cited for a particular example may, or may not, be engaged in the  same actions.
In addition, we spoke with the Commissioner of Internal Revenue, the  former Under Secretary of Benefits for VBA, and the former Deputy  Director for BLM to discuss their agencies’ experiences and challenges in  implementing balanced expectations in their performance management  systems. We interviewed agency officials responsible for managing human  capital, implementing the Government Performance and Results Act  (GPRA), and administering agencywide customer and employee  satisfaction surveys, as well as other agency officials identified as having  particular knowledge of balanced expectations and performance  management in general. We spoke to OPM officials responsible for the  senior executive performance management regulations to discuss the  development and implementation of the regulations, as well as officials  responsible for amending and implementing the general workforce  performance management regulations. Lastly, we met with the President of  the Senior Executives Association and other subject matter experts from  the National Academy of Public Administration, Brookings Institution, and  PricewaterhouseCoopers Endowment for The Business of Government. We  performed our work in Washington, D.C. from October 2001 to July 2002 in  accordance with generally accepted government auditing standards.
section_title: BLM’s Senior Executive Performance Plans
subsections: section_title: Performance Elements
paragraphs: BLM’s senior executive performance plans for the 2001 performance  appraisal cycle from July 1, 2000, through June 30, 2001, are structured  around four performance elements that correspond with BLM’s strategic  goals. These performance elements and their fully successful performance  standards include the following.
Restore and maintain the health of the land: Understand and plan for the  condition and use of the public lands by conducting assessments and  completing land use plan evaluations; restore at-risk resources and  maintain functioning systems, particularly riparian areas and watersheds;  incorporate management land health standards into decisions and plans;  implement the National Fire Plan; and emphasize resource protection by  assuring that work commitments for monitoring and inspection are met,  appropriate enforcement actions are taken, and results are recorded.
Serve current and future publics: Ensure the National Environmental  Policy Act and environmental analyses are sufficient to sustain program  decisions; reduce threats to public health, safety, and property by  completing deferred maintenance projects; continue action on energy and  mineral leases, permits, and claims; implement BLM’s wild horse and burro  national strategy in accordance with program directives; and improve land,  resource, and title information by participating in the development and  implementation of bureauwide data standards.
Improve organizational effectiveness: Continue to improve customer  service through timely and enhanced consultation, cooperation, and  communication with government officials and others to build consensus;  review public comment cards and survey results to determine where  improvements can be made; expand partnerships to implement on-the- ground activities; implement the service-first concept and improve overall  services; and improve program accountability and performance by staying  within the organizational cost targets and assuring the accuracy of cost  data, conducting the work aligned with cost targets, and improving work  processes and internal management practices based on analyses of  management and evaluation data, such as activity-based cost data.
Improve human resources management and quality of worklife: Develop a  strategy to provide for a needed workforce by developing and  implementing a response to the workforce plan; maintain a trained and  motivated workforce by implementing plans and strategies to improve the  satisfaction of BLM employees by assuring each employee has a current  position description and individual performance plan linked to the strategic  plan, and providing appropriate training for employees at all levels;  demonstrate improvement in diversity and composition of the workforce  as measured by the percent of hiring opportunities in which diversity  candidates are placed; demonstrate commitment to nondiscrimination in  the workplace by ensuring that individuals are not denied employment or  career advancement opportunities due to gender, race, and other factors;  and provide development opportunities to subordinates to help them  participate in the goal of achieving workforce diversity.
section_title: Performance Standards for Elements
paragraphs: BLM included the fully successful performance standards for each of the  performance elements in the executive’s individual performance plans,  described above. Executives receive a rating of “pass” if they meet the fully  successful standard for an element. Executives could also receive a rating  of “provisional” or “fail” for each element.
section_title: Performance Standards for Summary Ratings
paragraphs: Executives receive a summary rating of “pass” if they fulfill the fully  successful standards for all the performance elements in their performance  plans. Executives could also receive a summary rating of “provisional” or  “fail.”
section_title: Proposed Revisions for the 2002 Rating Year Performance Plans
paragraphs: According to BLM officials, BLM is planning to revise the performance  elements in its senior executive performance plans for the 2002  performance appraisal cycle to reflect the priorities of BLM and the  Department of the Interior. The elements include GPRA, key management  objectives, the President’s Management Agenda, and 4Cs philosophy  (consultation, cooperation, communication, all in the service of  conservation). Each performance element will include a fully successful  performance standard. The performance elements and standards include  the following.
GPRA— (1) Restore and maintain the health of the land by conducting  assessments and completing land use plan actions as planned, (2) serve  current and future publics by ensuring the National Environmental  Policy Act and environmental analyses are sufficient to sustain program  decisions implementing the President’s Energy Plan while assuring that  the National Environmental Policy Act and planning guidelines are met,  and (3) implementing BLM’s wild horse and burro national strategy.
Key management objectives—Implement the Director’s priorities by  (1) assisting in the development of options to establish conservation  reserves, (2) improving the productivity and diversity of public lands,  (3) executing the National Fire Plan, (4) developing opportunities for  alternative sources of energy in land use planning and program  implementation, (5) completing new or revised land use plans as  proposed in congressional justifications, and (6) achieving targets for  abandoned mine lands/herd management areas consistent with the  revised wild horse and burro strategy and BLM’s annual performance  plan.
President’s Management Agenda—Improve financial management,  improve performance and budget integration, implement e-government,  make progress in the strategic use of human capital, and develop and  implement BLM’s competitive sourcing plan. Specific ways to address  these areas were included.  4Cs philosophy—Demonstrate innovative approaches to implementing  the Secretary’s 4Cs so that those impacted by BLM decisions are  considered and their concerns addressed; and demonstrate personal  leadership through significant contributions to achieving the  organization’s goals, positioning the organization for the future, through  complex situations and working with others.
section_title: FHWA’s Senior Executive Performance Plans
subsections: section_title: Performance Elements
paragraphs: FHWA’s senior executive performance plans for fiscal year 2001 consist of  performance objectives that senior executives work to achieve during the  year. FHWA requires its senior executives to set critical and noncritical  performance objectives that are tailored to their responsibilities within  their respective offices and aligned with the FHWA Administrator’s  performance agreement with the Secretary of Transportation. These  objectives are to contribute to FHWA’s corporate management strategies,  which are based on the Malcolm Baldridge and the Presidential Quality  Award criteria. These criteria include the following.
Leadership—Strengthen FHWA’s Leadership System, through training  and other developmental initiatives, for the agency’s new organizational  culture; set the vision and direction, ensure accountability, and provide  the resources to deliver the products and services to the customers in an  excellent and timely manner.
Strategic planning—Translate strategies into unit, division, team, and  individual action plans with performance measures based on the  strategic objectives and performance goals.
Customer and partner focus—Identify customer and partner needs and  measure their level of satisfaction; achieve success through extensive  cooperation and partnering with state and local transportation agencies;  receive and act upon feedback from customers and use that information  to improve products and services to ensure customer and partner needs  are met.
Information and analysis—Identify and develop key business  information systems that meet and track the Department of  Transportation and FHWA strategic goals; create an environment in  which knowledge, as a key asset of the agency, is managed, shared, and  used effectively.
Human resource development and management—Increase employee  technical competence, authority, and the tools needed to meet agency  and customer needs; continue to develop and utilize the full potential of  the agency’s human resources and create an environment that is  conducive to performance excellence and personal and organizational  growth.
Process management—Design, manage, and improve key processes to  achieve better results; use customer- and employee-focused support,  service, and delivery processes to continually improve performance and  enhance products and services.
Business results—Develop critical FHWA business metrics to measure  the overall quality of processes and services and report results; use  customer feedback and benchmark high-performance organizations to  continuously improve overall performance for the customers.
section_title: Performance Standards for Elements
paragraphs: FHWA appraises senior executives on their achievement towards each  critical and noncritical performance objective.
Initial assessment ratings: For each performance objective in their  individual performance plan, senior executives receive an assessment of  “achieved results,” “minimally satisfactory,” or “unsatisfactory.”
Achieved results—Performance that fully meets, exceeds, or  demonstrates sufficient progress toward the attainment of the objective  as defined by the performance targets.
Minimally satisfactory—Performance that only partially meets or only  partially demonstrates sufficient progress toward the attainment of the  objective as defined by the performance targets.
Unsatisfactory—Performance that fails to meet or demonstrate  sufficient progress toward attainment of the objective as defined by the  performance targets.
section_title: Performance Standards for Summary Ratings
paragraphs: FHWA appraises senior executives on their achievement towards all the  performance objectives in their individual plans.
Summary ratings: Senior executives receive a summary rating on the  achievement of their performance objectives. The summary rating levels  include “achieved results,” “minimally satisfactory,” and “unsatisfactory.”
Achieved results—All critical objectives must be assessed achieved  results. No more than one noncritical objective can be assessed  minimally satisfactory and none can be assessed unsatisfactory.
Minimally satisfactory—One or more critical objectives or two or more  noncritical objectives assessed minimally satisfactory, or one or more  noncritical objectives assessed unsatisfactory.
Unsatisfactory—Unsatisfactory assessment on any critical objective.
section_title: IRS’s Senior Executive Performance Plans
subsections: section_title: Performance Elements
paragraphs: IRS’s senior executive performance plans for fiscal year 2001 are structured  around responsibilities, commitments, and a retention standard.
Responsibilities: The responsibilities reflect the core values of IRS that are  shared by all executives and managers for achieving performance  excellence. The responsibilities are structured around (1) leadership,  (2) employee satisfaction, (3) customer satisfaction, (4) business results,  and (5) equal employment opportunity.
Leadership—Successfully leads organizational change, effectively  communicates the mission and strategic goals to employees and other  stakeholders, responds creatively to changing circumstances, and uses  sound judgment to make effective and timely decisions.
Employee satisfaction—Ensures that a healthy work environment is  maintained, creates an environment for continuous learning and  development opportunities, and effectively uses feedback and coaching  to promote teamwork and skill sharing.
Customer satisfaction—Listens to customers, analyzes their feedback to  identify their needs and expectations, builds strong alliances, and  involves stakeholders in making decisions and achieving solutions.
Business results—Develops and executes plans to achieve  organizational goals, leverages resources to maximize efficiency and  produce high quality results, and learns about current and emerging  issues in own field of expertise.
Equal Employment Opportunity—Takes steps to implement equal  employment opportunity; cooperates with equal employment  opportunity officials on complaints; assigns work and makes  employment decisions without regard to sex, race, color, national origin,  and other factors; and monitors work environment to prevent instances  of prohibited discrimination and/or harassment.
Commitments: Executives are to identify commitments they will  accomplish during the year that are based on the responsibilities. The  commitments describe a limited number of critical actions; objectives,  such as personal development objectives; and/or results that the executive  will work to achieve. They are specific to each executive and should be  derived from, and directly contribute to, the program priorities and  objectives established by the organization’s annual business or operations  plan. In addition, senior executives are to establish a principal commitment  in their individual performance plans focused on the overall attainment of  objectives to accomplish the operating division’s performance plan.
Retention standard: IRS developed a performance standard relating to the  fair and equitable treatment of taxpayers that senior executives must  meet. The retention standard states: “Consistent with the individual’s  official responsibilities, administers the tax laws fairly and equitably,  protects taxpayers’ rights, and treats them ethically with honesty, integrity,  and respect.” According to IRS, the executive and supervisor review the  retention standard to ensure mutual understanding.
section_title: Performance Standards for Elements
paragraphs: IRS appraises senior executives on their achievement towards their  responsibilities, commitments, and retention standard.
Responsibilities: The executives receive a rating on how well they achieved  their responsibilities during the year and the actions taken to support the  accomplishment of the strategic goals and annual business plan. These  ratings include the following.
Exceeded—In addition to placing appropriate emphasis on the five sets  of responsibilities, served as a role model in one or more of the five sets.  Actions taken were exemplary in promoting accomplishment of the  annual business plan and strategic goals.
Met—Placed appropriate emphasis on each of the five sets of  responsibilities. Appropriate actions were taken to support  accomplishment of the annual business plan and strategic goals.
Not met—Placed insufficient emphasis on one or more sets of  responsibilities. Actions taken were inappropriate, ineffective, or  undermined strategic goals or annual business plan accomplishment.
Commitments: The executives receive a rating on how well they achieved  the desired results outlined in their performance commitments. The ratings  include the following.
Exceeded—Overcame significant obstacles, such as insufficient  resources, conflicting demands, or unusually short time frames, in  achieving or exceeding desired results.
Met—Achieved or made substantial progress toward achievement of  desired results.
Not met—Did not achieve or make substantial progress toward  achievement of desired results.
Retention standard: Executives are rated on whether they met or failed to  meet their retention standard.
section_title: Performance Standards for Summary Ratings
paragraphs: Senior executives receive a summary evaluation, which combines the  ratings they received for their responsibilities, commitments, and retention  standard. Summary evaluation ratings include the following.
Outstanding—The executive met the retention standard and performed  as a model of excellence by exceeding the responsibilities and  commitments in the individual performance plan, despite constantly  changing priorities, insufficient or unanticipated resource shortages,  and externally driven deadlines. The executive consistently  demonstrated the highest level of integrity and performance in  promoting the annual business plan and IRS’s strategic goals and  objectives. The executive’s effectiveness and contributions had impact  beyond his or her purview.
Exceeded—The executive met the retention standard and generally  exceeded both the responsibilities and commitments in the individual  performance plan. However, the executive may have met the retention  standard and demonstrated exceptional performance in either  responsibilities or commitments and met the expectations of the other.  The executive may have overcome significant organizational challenges,  such as coordination with external stakeholders (e.g., the National  Treasury Employees Union and the Congress) or insufficient resources.  The executive’s effectiveness and contributions may have had impact  beyond his or her purview.
Met—The executive met the retention standard and the responsibilities  and commitments in the individual performance plan with solid,  dependable performance. The executive consistently demonstrated the  ability to meet the requirements of the job. Challenges encountered and  resolved are part of the day-to-day operation and are generally routine in  nature.
Not met—The executive failed to meet the retention standard,  responsibilities, and/or commitments. Repeated observations of  performance indicated negative consequences in key outcomes, such as  quality, timeliness, and business results. Immediate improvement is  essential.
section_title: VBA’s Senior Executive Performance Plans
subsections: section_title: Performance Elements
paragraphs: VBA’s performance plans for its senior executives in the regional offices for  fiscal year 2001 are structured around common performance elements— service delivery, organizational support/teamwork, leadership  development, external relations, and workplace responsibilities.
Service delivery: The executive leads the regional office in the pursuit of  outstanding performance in all applicable program areas, and as a team  member helps the Service Delivery Network and VBA as a whole to  improve performance. Appropriate emphasis is placed on the balanced  scorecard and the executive’s performance against the balanced scorecard  targets. The categories of the balanced scorecard include:  customer satisfaction—organizational perspective from the viewpoint  of the veterans, service delivery partners, and other stakeholders;  accuracy—the quality of work performed;  speed or timeliness—the length of time it takes to complete specific end  products or work units;  unit cost—costs associated with producing a service or a product; and  employee development and satisfaction—the skill level of the  workforce, training needs, course development, and satisfaction with  the job and organization.
Organizational support/teamwork: The executive regularly participates in  activities and projects intended to further the goals of the Service Delivery  Network and VBA as a whole while functioning as a dedicated and skillful  team player. These activities typically require the contribution of local  resources such as projects at the national level, special ad hoc efforts, and  innovations. The executive is assigned to a certain number of projects  during the year in light of the size of the executive’s regional office.
Leadership development - executive competencies and qualifications: The  executive identifies developmental activities in a proposed leadership  development plan, which is to be submitted at the beginning of the  performance year. The executive engages in substantial personal  development activities such as attending training courses, reading books,  and undertaking projects in order to develop skills. These activities focus  on OPM’s Executive Core Qualifications including leading change, leading  people, results driven, business acumen, and building coalitions and  communications.
External relations: The executive builds effective, productive relationships  with organizations external to VBA in order to further the department’s  goals and interests. Examples of activities include work on a Federal  Executive Board project, participation in Veterans Integrated Service  Network meetings, and relations with the media, congressional offices, and  service organizations.
Workplace responsibilities: The executive assures a high quality of work  life for all employees of the regional office by:  promoting and maintaining an effective labor-management relations  program that incorporates the principles of partnership;  creating and maintaining a working environment that is free of  discrimination and one that assures diversity in the workplace;  ensuring that plans exist and are adequately implemented to recruit,  train, retain, motivate, empower, and advance employees and that they  promote the needs and goals of the individual and the organizations; and  providing a safe, healthy work environment.
VBA identified indicators of performance for this element including  performance management and recognition, employee development and  training, equal employment opportunity policy statement, physical plant  enhancements, and employee satisfaction surveys.
section_title: Performance Standards for Elements
paragraphs: Senior executives receive a level of achievement of “exceptional,” “fully  successful,” or “less than fully successful” for each element in their  individual performance plan as measured against the established  performance requirements. For example, for organizational support and  teamwork, the executive’s performance is acceptable if the rater  determines that completion of projects and innovations is substantially  equal to agreed-upon expectations and the executive demonstrates  cooperation with other executives in the attainment of these goals where  applicable. For elements where a level of achievement other than fully  successful has been assigned, the rating official must describe the  executive’s achievements on additional pages.
Exceptional—Fully successful performance requirements for the  element are being significantly surpassed. This level is reserved for  employees whose performance in the element far exceeds normal  expectations and results in major contributions to the organization.
Fully successful—Performance requirements for the particular element  when taken as a whole are being met. This level is a positive indication  of employee performance and means that the employee is effectively  meeting performance demands for this component of the job.
Less than fully successful—A level of performance that does not meet  the requirements established for the fully successful level. Assignment  of this achievement level means that performance of the element is  unacceptable.
section_title: Performance Standards for Summary Ratings
paragraphs: The senior executives receive a summary rating level of “outstanding,”  “excellent,” “fully successful,” “minimally satisfactory,” or “unsatisfactory”  performance based on the achievement levels assigned for each  performance element.
Outstanding—Achievement levels for all elements are designated as  exceptional.
Excellent—Achievement levels for all critical elements are designated  as exceptional. Achievement levels for noncritical elements are  designated as at least fully successful. Some, but not all, noncritical  elements may be designated as exceptional.
Fully successful—The achievement level for at least one critical element  is designated as fully successful. Achievement levels for other critical  and noncritical elements are designated as at least fully successful or  higher.
Minimally satisfactory—Achievement levels for all critical elements are  designated as at least fully successful.
Unsatisfactory—The achievement level(s) for one (or more) critical  element(s) is (are) designated as less than fully successful.
section_title: Revisions to the Fiscal Year 2002 Performance Plans
paragraphs: For fiscal year 2002, VBA revised its performance plans for the senior  executives in the regional offices to improve individual accountability for  performance elements by linking organizational performance goals and  actual performance with meaningful and measurable performance  elements. VBA outlined specific sub-elements for the service delivery  element and replaced the leadership development element with two  additional elements—program integrity and information security. These  revisions include the following.
Service delivery: This element focuses on the executive’s performance  towards the balanced scorecard targets at the regional office and national  levels, in addition to specific performance priorities with corresponding  targets.
Achieve monthly rating production goals—The executive will meet  monthly rating production goals in either 9 out of 12 months or meet or  exceed overall average monthly production goals.
Improve the timeliness of rating end products completed—The  executive will meet the average days of completion for specific end  products and improve a specified percentage based on his or her office’s  performance relative to the national performance. Also, the executive  will improve the cycle times of claims processing in development,  rating, and authorization time as shown in the Claims Automated  Processing System records. In addition to reducing the cycle time, the  executive will establish 70 percent of his or her claims, after December  1, 2001,within 7 days.
Reduce total compensation and pension cases pending over 6 months— The executive will improve a specified percentage based on the  percentage of fiscal year 2001 cases pending over 6 months. For  example, if an executive’s office has over 50 percent of compensation  and pension cases pending over 6 months as of the end of fiscal year  2001, the executive will achieve a 5 percent improvement by the end of  the 2002 rating year.
Reduce the pending inventory of compensation and pension claims— The executive will reduce the number of rating and authorization cases  pending by set targets for each office. Meeting these targets will reduce  VBA’s inventory of rating-related cases to a total of 315,586 cases and  reduce VBA’s authorization cases by at least 20 percent by the end of the  rating period.
Reduce inventory of appeals and achieve improvement in remand  timeliness—The executive will reduce the total number of pending  appeals by 10 percent and will achieve a 10 percent improvement in the  average number of days a remand is pending.
Achieve established balanced scorecard targets—The executive’s  performance on this element will be determined by comparing the  regional office’s performance towards the regional office scorecard  targets (weighted 80 percent) and the office’s contribution to VBA’s  national scorecard targets (weighted 20 percent). The executive must  achieve a minimum level of 90 percent of the composite target.
Service delivery network resource center and regional processing  organization functions—Service delivery network resource center  executives are required to meet specific monthly production targets  either in 9 of 12 months or meet or exceed the overall average of  monthly production goals. Regional processing organization directors  will have an additional standard provided at a later date.
Additional priorities as established by the Secretary for Veterans Affairs  will also be used to evaluate performance in this element.
Program integrity: The executive will lead his or her regional office to  ensure compliance with VBA’s program integrity directives. The executive  is responsible for ensuring that program integrity initiatives and policies  are implemented, assessed through an effective internal control process,  and adjusted as necessary to achieve appropriate results. The executive  will accomplish this by adhering to VBA’s program integrity directives and  the Inspector General recommendations that are applicable and ensuring  that on-site reviews do not reveal critical flaws in oversight of program  integrity issues.
Information security: The executive must exercise due diligence in efforts  to plan, develop, coordinate, and implement effective information security  procedures as identified by the Office of Management and Budget, the  National Institute of Standards and Technology, Veterans Affairs’ policies,  and VBA guidance and policy documents. The executive will have met this  element by ensuring that information system security plans exist and are  implemented in accordance with the National Institute of Standards and  Technology and Office of Management and Budget guidelines; ensuring that  annual risk assessments are conducted for each identified information  security—applications, hardware, software—to ensure that the identified  risks, vulnerabilities, and threats are addressed by appropriate security  controls; and ensuring that all employees comply with departmental  training requirements to understand their information security  responsibilities.
section_title: Comments from the Internal Revenue Service
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