In November 2003, Congress authorized a new performance-based pay system for members of the SES. According to OPM’s interim regulations, SES members are to no longer receive annual across-the-board or locality pay adjustments with the new pay system. Agencies are to base pay adjustments for SES members on individual performance and contributions to the agency’s performance by considering such things as the unique skills, qualifications, or competencies of the individual and their significance to the agency’s mission and performance, as well as the individual’s current responsibilities. Specifically, the revised pay system, which took effect in January 2004, replaces the six SES pay levels with a single, open-range pay band and raises the pay cap for all SES members to $145,600 in 2004 (Level III of the Executive Schedule) with a senior executive’s total compensation not to exceed $175,700 in 2004 (Level I of the Executive Schedule). If OPM certifies and OMB concurs that the agency’s performance management system, as designed and applied, makes meaningful distinctions based on relative performance, an agency can raise the SES pay cap to $158,100 in 2004 (Level II of the Executive Schedule) with a senior executive’s total compensation not to exceed $203,000 in 2004 (the total annual compensation payable to the Vice President). In an earlier step, to help agencies hold senior executives accountable for organizational results, OPM amended regulations for senior executive performance management in October 2000. These amended regulations 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. High-performing organizations have recognized that their performance management systems are strategic tools to help them manage on a day-to- day basis and achieve organizational goals. While Education, HHS, and NASA have undertaken important and valuable efforts to link their career senior executive performance management systems to their organizations’ success, senior executives’ perceptions indicate that these three agencies have opportunities to use their career senior executive performance management systems more strategically to strengthen that link. Based on our survey of career senior executives, we estimate that generally less than half of the senior executives at Education, HHS, and NASA feel that their agencies’ are fully using their performance management systems as a tool to manage the organization or to achieve organizational goals, as shown in figure 1. Further, effective performance management systems are not merely used for once-or twice-yearly individual expectation setting and rating processes. These systems facilitate two-way communication throughout the year so that discussions about individual and organizational performance are integrated and ongoing. Effective performance management systems work to achieve three key objectives: (1) they strive to provide candid and constructive feedback to help individuals maximize their contribution and potential in understanding and realizing the goals and objectives of the organization, (2) they seek to provide management with the objective and fact-based information it needs to reward top performers, and (3) they provide the necessary information and documentation to deal with poor performers. In this regard as well, generally less than half of the senior executives felt that their agencies are fully using their performance management systems to achieve these objectives, as shown in figure 2. High-performing 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. Further, our prior work has identified nine key practices public sector organizations both here and abroad have used that collectively create this line of sight to develop effective performance management systems. To this end, while Education, HHS, and NASA have begun to apply the key practices to develop effective performance management systems for their career senior executives, they have opportunities to strengthen the link between their senior executives’ performance and organizations’ success. An explicit alignment of daily activities with broader results is one of the defining features of effective performance management systems in high- performing organizations. These organizations use their performance management systems to improve performance by helping individuals see the connection between their daily activities and organizational goals and encouraging individuals to focus on their roles and responsibilities to help achieve these goals. Education, HHS, and NASA require their senior executives to align individual performance with organizational goals in order to hold them accountable for organizational results. Our review of the senior executives’ performance plans showed that all the plans at each agency identified individual performance expectations that aligned with organizational goals. In addition, nearly all of the senior executives at each agency have reported that they communicate their performance expectations to at least a small extent to those whom they supervise. Cascading performance expectations in this way helps individuals understand how they contribute to organizational goals. Still, while most senior executives at each agency indicated that they see a connection between their daily activities and organizational goals to a very great or great extent, fewer of these senior executives felt that their agency’s SES performance management system holds them accountable for their contributions to organizational results to a very great or great extent, as shown in figure 3. These responses are generally consistent with our governmentwide surveys on the implementation of GPRA. In particular, governmentwide, senior executives have consistently reported that they are held accountable for results. Most recently, we reported in March 2004 that 61 percent of senior executives governmentwide feel they are held accountable for achieving their agencies’ strategic goals to a very great or great extent. To reinforce the accountability for achieving results-oriented goals, we have reported that more progress is needed in explicitly linking senior executives' performance expectations to the achievement of these goals. Setting specific levels of performance that are linked to organizational goals can help senior executives see how they directly contribute to organizational results. While most senior executives at HHS have set specific levels of performance in their individual performance plans, few senior executives in Education and NASA have identified specific levels. HHS requires its senior executives to set measurable performance expectations in their individual performance plans that align with organizational priorities, such as the department’s “One-HHS” objectives and strategic goals and their operating divisions’ annual performance goals or other priorities. We found that about 80 percent of senior executives’ performance plans identified specific levels of performance linked to organizational goals. For example, a senior executive in CDC set an expectation to “reduce the percentage of youth (grade 9-12) who smoke to 26.5%,” which contributes to CDC’s annual performance goal to “reduce cigarette smoking among youth” and the One-HHS program objective to “emphasize preventive health measures (preventing disease and illness).” However, specifying levels of performance varies across operating divisions. We found that approximately 63 percent of senior executives at FDA versus 80 percent at CDC identified specific levels of performance linked to organizational goals in their individual performance plans. Education requires its senior executives to include critical elements, each with specific performance requirements, in their individual performance plans that align with the department’s goals and priorities, including the President’s Management Agenda, the Secretary’s strategic plan, the Blueprint for Management Excellence, and the Culture of Accountability. We found that approximately 5 percent of senior executives’ performance plans identified specific levels of performance linked to organizational goals. NASA requires its senior executives to include seven critical elements, each with specific performance requirements that focus on the achievement of organizational goals and priorities, in their individual performance plans. For example, senior executives’ performance plans include the critical element “meets and advances established agency program objectives and achieves high-quality results,” and specifically “meets appropriate GPRA/NASA Strategic Plan goals and objectives.” Senior executives may modify the performance requirements by making them more measurable or specific to their jobs; however, only about 23 percent of senior executives added performance requirements that are specific to their positions in their individual performance plans. Also, about 1 percent of senior executives have performance expectations with specific levels of performance that are related to organizational goals in their individual plans. As public sector organizations shift their focus of accountability from outputs to results, they have recognized that the activities needed to achieve those results often transcend specific organizational boundaries. Consequently, organizations that focus on collaboration, interaction, and teamwork across organizational boundaries are increasingly critical to achieve results. In a recent GAO forum, participants agreed that delivering high performance and achieving goals requires agencies to establish partnerships with a broad range of federal, state, and local government agencies as well other relevant organizations. High-performing organizations use their performance management systems to strengthen accountability for results, specifically by placing greater emphasis on collaboration to achieve results. While most senior executives in each agency indicated that they collaborate with others to achieve crosscutting goals, fewer of these senior executives felt that their contributions to crosscutting goals are recognized through their agency’s system, as shown in figure 4. We reported that more progress is needed to foster the necessary collaboration both within and across organizational boundaries to achieve results. As a first step, agencies could have senior executives identify specific programmatic crosscutting goals that would require collaboration to achieve in their individual performance plans. As a next step, agencies could have senior executives name the relevant internal or external organizations with which they would collaborate to reinforce a focus across organizational boundaries. HHS, Education, and NASA are connecting performance expectations to crosscutting goals to varying degrees. While HHS does not require executives to identify programmatic crosscutting goals specific to the individuals in their performance plans, according to an agency official, it holds all senior executives accountable for the crosscutting One-HHS program objectives, such as to increase access to health care.