By Scott Kupor, Director, U.S. Office of Personnel Management

September 15, 2025

Grade inflation is rampant on university campuses. About 80% of students at Harvard and Yale reportedly receive an A in every class. No doubt these students represent the best of the best – many of them were valedictorians of their high school classes, received a perfect score on the SAT, and probably never earned anything less than an A in any of their previous classes. They were the top students in their respective high schools.

But, when they matriculate to Ivy League schools, they are now part of a new cohort of similarly academically successful students and the “sorting” game – at least in theory – starts all over again. I say “in theory” because that’s not what actually happens in practice. Instead, professors refuse to distinguish between students, opting to give nearly all of them A’s.

So, what’s wrong with that? For those of you who are gaming nerds, forgive me for borrowing a (maybe tortured) analogy from your domain.

A school without academic distinction is like playing a game in “single-player” mode – I am not competing against anyone other than myself. If I want to study really hard for the test, I can get an A, and my score doesn’t prevent anyone else from also getting an A. There are no relative winners and losers, nor meaningful distinctions among students.

That’s arguably fine in deterministic domains. If we all successfully add 2 + 2 and correctly answer that the sum is 4, then we should all get the same grade on the test. There is simply one answer. But few things in the working world – or even in most academic disciplines – are deterministic.

Rather, we mostly operate in stochastic domains. And thus, we depart from single-player mode and enter multi-player mode.

Success in most things we do in life is probabilistic to some extent – influenced by events outside of our control – and often dependent on other people, systems, and organizations. For example, I may do a great job building a spreadsheet to analyze my business, but the business may ultimately fail (or succeed) for all kinds of reasons other than the beauty of my spreadsheet. And I may be really good at building that spreadsheet in isolation, but if I can’t effectively interact with other teammates whose contributions are critical to the accuracy of my work, I may also fail. My work is an input to the success of the organization, but it is not determinative in most cases of ultimate success.  

Ok I’ll say it out loud: in the real world we are not all equally successful and differences in performance from one person to the next are in fact real. We simply can’t all get A’s because not everyone’s contributions to the success of the organization are the same. Some people simply perform better than others – whether by luck or skill.

This is particularly true as you get to more senior managerial roles in an organization. The job of a manager is to help a team of individuals deliver on a set of agreed-upon objectives (true “multi-player” mode) and performance is always relative. Some managers can successfully run a more efficient organization than their colleagues; some managers can deliver higher customer satisfaction scores than their colleagues; some managers simply outlast, outrun, and outplay others by consistently going above and beyond even what is asked of them.

Nearly every organization recognizes this and uses an annual review and compensation system designed to align differential success with differential pay. For example, the Sales VP who achieves 110% of her team quota may get promoted faster and paid much more than the Engineering VP who delivers 95% of her product releases on time, in budget and at quality standards.

Every organization, that is, but the federal government.

The Senior Executive Service (SES) – aptly named – is the federal government’s most senior managers. There are about 8,000 of them today and they are highly skilled. Most have worked their way up the ranks of the government hierarchy over long service tenures and were given special training opportunities to ultimately make it into the SES ranks. They’ve earned their seniority.

Like most other federal employees, the SES are ranked annually based on performance using a scale of 1 to 5 (1 being the lowest and 5 being the highest). Roughly 96% of them are ranked a 4 or 5 (btw, 64% alone are ranked a 5); 3.5% are ranked a 3; 0.5% are ranked 1 or 2. Grade inflation ala Harvard and Yale, which in turn creates little differentiation among the SES in terms of compensation, promotion opportunities, feedback, etc.

This is not what Congress intended when it created the SES. It set forth the requirements for the SES performance appraisal system with great care, to ensure it created incentives for truly excellent performance and provided the agency head an accurate basis for performance awards and retention in the SES. A system where 96% of SES get the highest grades does not encourage excellence or allow the agency head to determine which SES are truly deserving of performance awards.

Today, however, the Office of Personnel Management has taken steps to end this practice by repealing a prohibition on forced distributions of SES and requiring that no more than 30% of SES receive a grade of 4 or 5 going forward. The rule will be effective starting in FY 2026, the upcoming performance review period. We have also separately issued guidance that this cohort of the 30% top managers should receive at least 60% of annual bonus/other reward, aligning performance and accountability with a matching set of compensation incentives.

Critics of these changes have raised a number of concerns.

Won’t this create competition among SES members? The answer is “maybe,” but healthy competition in furtherance of better serving the American taxpayers is a feature, not a bug, of the new ranking system. We want people to always perform their best and raise the bar for everyone in the organization – their colleagues and subordinates alike.

But won’t this discourage teamwork and collaboration? The answer is no. If we want SES to partner with others and collaborate – which we do – then we simply align performance objectives around this goal. All successful organizations succeed in large part based upon teams working together to achieve a common mission; distinguishing between those executives who do a better job in supporting that mission does not discourage teamwork.

And isn’t this simply unfair? The SES have worked hard to achieve their positions – this is undoubtedly true – so why make them subject to a forced distribution? Because everyone – no matter their level – is accountable to the success of the organization’s mission. Performance rankings that truly reflect differential contributions to the mission only further the mission – great people want to be part of the truly elite class of top performers and will continue to up their game in furtherance of that.

Our founding fathers were correct that we are all created equal. But we don’t all perform equally in all things. Today, the federal government recognizes that.