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Performance Management Reference Materials

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Pass/Fail Appraisals

Effective communication and thoughtful planning and implementation are some of the keys to an effective pass/fail performance appraisal system. This was the conclusion of Terrie Barr, Pension Benefit Guaranty Corporation (PBGC), and Jeff Caplan, Overseas Private Investment Corporation (OPIC) as they described their agencies' experiences with pass/fail appraisal at OPM's National Performance Management Conference. Both agencies are Government corporations not subject to coverage by the performance appraisal laws and regulations applicable to most Federal agencies. Therefore, they were able to experiment with two-level appraisal systems before the advent of new performance management regulations which extended this flexibility to all agencies.

Example: Pension Benefit Guaranty Corporation (PBGC)

PBGC piloted pass/fail for 52 non-bargaining unit employees who volunteered to participate in the pilot. The purpose of the pilot was to simplify the appraisal process, to focus more attention on employee feedback and development, and to foster a sense of teamwork. One of their concerns was to make sure that supervisors did not abdicate their responsibilities to provide feedback by just assigning a "Meets Expectations" rating without additional, meaningful feedback to their employees. This was especially important because responses to an internal survey indicated a strong employee interest in receiving feedback. To encourage this feedback, PBGC later developed an "Employee/ Rater Communication Worksheet." It documents the employee's strengths as well as areas needing improvement and recommendations for employee development. The form is used solely as a basis for discussions between supervisors and employees.

Reaction to the new appraisal system within PBGC was most favorable among participating supervisors who saw it as an easier way to provide constructive feedback. Non-supervisory employees, on the other hand, were less positive. They saw the system as benefitting mediocre performers who would be given the same "Meets Expectations" rating as high performing employees. They were also concerned about being disadvantaged in the event of a reduction in force (in terms of using performance ratings to add years of service).

PBGC will not continue its pass/fail pilot because of a lack of consensus in labor/management discussions, but the agency's limited experience has still produced helpful insights for others considering a pass/fail approach.

Example: Overseas Private Investment Corporation (OPIC)

Mr. Caplan stressed that an agency should know why it is moving to pass/fail rather than doing it just because it "sounds good." In OPIC's case, the system was adopted because the previously used five rating level program was considered to have inhibited communications between supervisors and employees. Employees were too preoccupied with knowing their rating to listen to any feedback about their strengths and developmental needs. OPIC sees two-level ratings as a way to get employees to shift their focus away from the rating label. This may not happen automatically, however. Implementation of pass/fail requires a strong emphasis on supervisors' responsibility to provide meaningful feedback. It also requires educating employees to look for feedback and to initiate requests for that feedback if they don't receive it.

Mr. Caplan also stressed that a pass/fail appraisal program needs to find ways to "stroke" star performers once they no longer have the opportunity to receive "Outstanding" ratings. Positive verbal feedback and awards are just two of the ways in which supervisors can let employees know they are recognized as being the best.

So far, the pass/fail system at OPIC has been welcomed. Paperwork has been reduced and there have been no grievances concerning appraisals given under this new program.

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