Grading the Grading System

Perhaps pass-fail systems are not so passé. This month, the Merit Systems Protection Board reported that newly popular five-tier employee evaluation systems in federal agencies are not much better than their pass-fail predecessors.

A major tenet behind the Bush administration's push for overhauling how the federal workforce is managed is the banishment of pass-fail rating systems. Instead, officials want five-tier systems that, they hope, make more meaningful distinctions between employees, and will allow managers to pay their employees based on those grades.

Usually those systems have ratings along the lines of "unacceptable," "minimally successful," "fully successful," "exceeds expectations" or "outstanding."

When the administration floated its proposal for governmentwide personnel reform in the summer of 2005, it left a lot of room for individual agencies to craft their own management systems. But the draft legislation specifically barred one method: pass-fail ratings.

So the MSPB compared answers to its 2005 Merit Principles Survey from employees under pass-fail systems and those rated on five levels. Right now, about 45 percent of the federal workforce is in each. Another 8 percent works under a three-level rating system.

Fifty-three percent of respondents in five-level systems said that in their work unit, performance ratings accurately reflect job performance. Forty-seven percent of respondents under pass-fail systems said that, too.

Another theory behind the multilevel performance evaluation is that it will force employees and managers into conversations about goals at the beginning of the year, spurring more efficient, directed work.

Fifty-five percent of five-tier employees said they discussed goals to evaluate their job performance; so did 50 percent of pass-fail employees.

"Simply moving from a pass-fail system to a five-level system is not enough to ensure that employees will have confidence in the distinctions made in performance ratings and subsequent pay," the MSPB wrote in its report.

MSPB researchers emphasized that what really matters is ensuring that managers are trained on how to develop performance goals and measure them, that employees understand how to participate in their evaluation and that it's rigorous.

In the Homeland Security Department -- which with existing congressional approval to leave the General Schedule is in the vanguard of personnel reform -- 73 percent of employees were rated on the pass-fail system in fiscal 2005, according to the MSPB. A lot of employees are about to gain tiers in their performance appraisals, but it is still an open question as to whether they will gain much else.