Why Bonuses Should Be Part of the Solution at VA

If this is the “opportunity of a lifetime” to institute VA reforms, the keystone to tie everything together will be the Senior Executive Service pay and performance system. In other sectors, including health care, it’s the prospect of financial rewards that reinforces accountability. Incentives are used broadly to help everyone focus on what needs to be accomplished.

Proposals to eliminate bonuses for all Veterans Affairs employees for three years would be a huge mistake. Fear can generate compliance, but it is not going to inspire the commitment the VA needs. Patient care is apparently excellent and employees should be rewarded for their contributions, especially in light of the criticism that has broadly tainted VA. Denying bonuses to executives or anyone is not going to solve anything.

This is a situation in which behavior change is needed, and there is no better way to accomplish that than basing financial rewards on successful change. Continuing practices that contributed to the problems is not sound practice.

An independent study is needed. Reports of organizational problems are not new to the VA; the history is a long one.

House Veterans Affairs Committee Chairman Rep. Jeff Miller, R-Fla., is correct; this is an opportunity to address dysfunctional or inefficient operations and make the VA a model for government. The assessment should be led by individuals who have the experience and standing to identify and define sensitive problems in large, complex agencies. The National Academy of Public Administration has completed similar studies in the past.

Many VA employees would be anxious to help. They would like nothing more than to make the VA a model workplace and to feel renewed pride in their agency. No one enjoys working in a situation that involves ongoing dishonesty, especially if they know it’s hurting others. Employees are aware of such problems and have a better sense of how to solve them than anyone. Relying on information-gathering methods that assures their confidentiality could open a floodgate.

A great deal of the information-gathering, analyses and planning of corrective actions could be completed by VA employees, which would hold down costs. Their findings and recommendations are far more likely to be accepted than those of an outside entity. Employees could be responsible for identifying best practices—in health care that information is readily available. Their involvement would minimize any “not invented here” resistance.

Each VA hospital and clinic should be addressed separately. If the study is limited to selected hospitals, its likely employees at other facilities would invite an assessment. The first phase report should document the problems, break them down into separate tasks with timelines, resource requirements and expected results.

Incentives should be linked to the successful completion of those goals. To ensure changes are implemented as quickly as possible, incentive payouts should increase for early completion. Those who complete tasks late should be penalized through smaller awards or none at all.

Witnesses at a recent House VA committee hearing said most of the metrics used to track performance are process oriented rather than outcome oriented. That highlights a fundamental shift in health care. They also said the VA is tracking too many measures. Hundreds have been developed. The VA should have easy access to some of the nation’s experts, many of whom work in or have ties to government, to help develop new paradigms for tracking performance.

In light of the scheduling revelations, it may be important to focus on metrics related to patient experience. Hospitals routinely monitor patient satisfaction on issues like staff responsiveness, communication, and confidence in caregivers. Those measures could be reflected in group incentives. Payouts could be modest—even 2 percent to 3 percent of base pay would be enough to improve performance.

Perhaps the most powerful incentive would be to post a list of each hospital’s performance on key metrics on a public area. That type of competition is used routinely in other sectors. With the many hospitals and clinics, comparative measures as well as measures of improvement would be of broad interest. Incentives are frequently used as part of a turnaround strategy.

The universal basis for managing and rewarding the performance of executives and managers in other sectors is a combination of organizational and individual goals. Health care is no different. Federal agencies may not have quantified goals, but workers at every level should be able to articulate what they expect to accomplish and what constitutes outstanding performance. That should be the basis for determining incentive awards across the VA.

Howard Risher managed compensation consulting practices for two national firms. He has written four books, including Aligning Pay and Results (New York: AMACOMBooks, 1999). He has an MBA and Ph.D. from the Wharton School.

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