Performance Problem

In the recently passed legislation to overhaul the Defense department personnel system, Defense Secretary Donald Rumsfeld won a key victory: House and Senate negotiators removed a provision that would have required him to phase in a new system. The legislation allows Rumsfeld to move forward immediately with a new system for 300,000 workers, and to extend it to all employees when he certifies that a new performance appraisal system is in place.

But that's the tricky part. Creating an effective performance evaluation system is a task that has eluded virtually every other federal agency.

"If anyone can solve the performance evaluation problem, he should be entitled to the Nobel, the Pulitzer and the Heisman in the same year," said Diane Disney, who previously oversaw civilian employees at Defense and is now dean of Commonwealth College at Pennsylvania State University.

The 1978 Civil Service Reform Act provided for bonuses and merit salary increases for high-performing civil servants. But as a public service commission headed by former Federal Reserve Chairman Paul Volcker noted in a January report, Congress rarely has provided sufficient appropriations to fund the bonuses. And managers tended to spread what bonus money there was among all of their employees to supplement annual raises.

The evaluation problem goes beyond Defense. A 2001 study by the Brookings Institution found that of 700,000 employees across government rated in 2001 using a pass/fail system, less than a tenth of 1 percent failed. Meanwhile, of 800,000 federal employees who were rated using a five-point grading system, 43 percent were rated as "outstanding," 28 percent as "exceeds fully successful," 18 percent as "fully successful," and less than 1 percent as either "minimally successful" or "unacceptable."

Nevertheless, many employees believe that the process of rewarding top workers and punishing or firing poor performers is based less on merit than on favoritism, political pressure or supervisory incompetence. Employees often believe that the managers evaluating them have little real understanding of the work they do.

Conversely, many federal managers believe that the performance management system assumes they have bad intentions. Federal supervisors have come to feel that their bosses won't back them up, so they avoid using the system as it was intended. "The amount of effort and paperwork and the stress that I would have inflicted upon myself was more costly than I was willing to spend in order to fire a poor performer," a Defense Department manager told Government Executive earlier this year.

The success or failure of Defense personnel reform depends on creating a performance evaluation system that manages to bridge the huge chasm of mistrust between managers and employees.

Brian Friel contributed to this column.