Human Capital:

Posthearing Questions Related to Pay for Performance

GAO-03-793R: Published: May 19, 2003. Publicly Released: May 19, 2003.

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J. Christopher Mihm
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On April 1, we testified before the Subcommittee on Civil Service and Agency Organization, House Committee on Government Reform at a hearing on "Compensation Reform: How Should the Federal Government Pay Its Employees?" This letter responds to a request that we provide answers to follow-up questions from the hearing.

Specifically, we outlined points that could provide a starting point for developing a set of statutory safeguards in connection with any additional efforts to expand pay for performance systems. We also identified the key practices leading public sector organizations both here and abroad have used for effective performance management. We have reported that Office of Personnel Management leadership is critical to accomplish its mission in a decentralized human capital environment in which direct accountability for strategic human capital management continues to shift to agencies. We defined and outlined the importance of "Line of Sight" management. We found that additional testing of the concept of pay for performance at the federal level is not what is needed at this point. Our experience at GAO and the experiences of others have shown that it is possible to better link employee pay to performance. We also outlined specifics to its own pay for performance system. Further, we identified pay for performance efforts that have failed due to various shortcomings in the setup of the system. We reported the results of its interview with Federal Aviation Administration officials concerning their new pay for performance system and employee reactions to it. Finally, we gave our opinion on which form of pay for performance it finds to be the most effective.

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