The Federal Government will Become America's Model Employer for the 21st Century.
Recruit, Retain and Honor a World-Class Workforce to Serve the American People.
Find out more about Federal compensation throughout your career and around the world.
Staffing to align with your agency's mission
Review the new 2014 Federal Employees' Group Life Insurance (FEGLI) Handbook
Answering your questions about Healthcare and Insurance
Manage your retirement online.
Human Resources and Security Specialists should use this tool to determine the correct investigation level for any covered position within the U.S. Federal Government.
OPM’s Human Resources Solutions organization can help your agency answer this critically important question.
Developing senior leaders in the U.S. Government through Leadership for a Democratic Society, Custom Programs and Interagency Courses.
Visit this federal site to search for our regulatory notices, proposed and final rules.
See the latest tweets on our Twitter feed, like our Facebook pages, watch our YouTube videos, and page through our Flickr photos.
The content available is no longer being updated and as a result you may encounter hyperlinks which no longer function. You should also bear in mind that this content may contain text and references which are no longer applicable as a result of changes in law, regulation and/or administration.
The U. S. Postal Service (USPS) and the U.S. General Accounting Office (GAO) have both adopted programs that compensate their employees based on performance. Representatives from these agencies discussed various aspects of their pay-for-performance programs during the 1999 Strategic Compensation Conference.
Paul Weather-head and George Jones from the USPS described the historical context from which the USPS' pay-for-performance plan arose. During the early 1990s, the USPS experienced severe financial difficulties including a projected budget deficit of some $2 billion in 1992. Factors identified by the USPS that contributed to this crisis were that pay was not related to performance, compensation was not at levels comparable to the private sector, and customer focus was lacking. To help address these problems, the USPS adopted a pay-for-performance plan for its management employees that included a group incentive program (i.e., a variable pay program). (Note: agencies covered by title 5 also can use this type of program.)
The objectives of the USPS' variable pay program are to:
The program is a group incentive plan that provides lump sum cash payouts based upon how well organizational units achieve their objectives. The driving force behind the program is the USPS' "Customer Perfect" performance management model, which is based on balanced measures the USPS refers to as the "Voice of the Customer, the Voice of the Employee, and the Voice of the Business." Performance indicators for these "Voices" include on-time delivery rates, lost workday injuries, and the Economic Value Added (EVA), respectively. EVA financial performance provides the program's funding.
The success of the USPS' pay-for-performance program, as measured by its three "Voices," has been significant. From 1994 to 1998 the percent of on-time delivery for overnight mail has steadily increased each year, while lost workday injuries as a percent of work hours has steadily decreased each year. And, for the first time in its history, the USPS has had a positive net income for 5 consecutive years.
Gil Fitzhugh from the GAO described its pay-for-performance program. The program's objectives include basing rewards on contributions and performance, making pay increases available yearly, and providing larger base pay increases than are currently allowed under the General Schedule to top performers.
The plan includes a pay system with four broad pay ranges (i.e., a broadbanding system) that covers all evaluators, evaluator-related specialists, and attorneys at the developmental, full performance, senior, and managerial levels. To determine pay increases, panels made up of unit managers take into consideration the employee's performance appraisal, a contribution statement prepared by the employee, and the panelists' knowledge of the employee's work. Employees are then compared to each other in terms of the extent to which they exceeded job expectations, the magnitude of their contributions, the complexity of their work, the quality standards they met, the teamwork skills they demonstrated, and the innovation or creativity required of their job. Top performing employees can receive as much as a 6 percent pay increase.
Mr. Fitzhugh stressed that successful pay-for-performance plans must have clear and convincing objectives that will improve quality and help the organization operate more efficiently and economically. Additionally, agencies adopting pay-for-performance programs should not underestimate the impact the program will have on the organization's culture and related systems such as recruitment, appraisal, and payroll.
Back to Top