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entitled 'Results-Oriented Cultures: Creating a Clear Linkage between 
Individual Performance and Organizational Success' which was released 
on April 04, 2003. 

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Report to Congressional Requesters: 

March 2003: 

Results-Oriented Cultures: 

Creating a Clear Linkage between Individual Performance and 
Organizational Success: 

GAO-03-488: 

GAO Highlights: 

Highlights of GAO-03-488, a report to congressional requesters: 

Why GAO Did This Study: 

The federal government is in a period of profound transition and faces 
an array of challenges and opportunities to enhance performance, ensure 
accountability, and position the nation for the future. High-performing 
organizations have found that to successfully transform themselves, 
they must often fundamentally change their cultures so that they are 
more results-oriented, customer-focused, and collaborative in nature. 
To foster such cultures, these organizations recognize that an 
effective performance management system can be a strategic tool to 
drive internal change and achieve desired results. 

Based on previously issued reports on public sector organizations’ 
approaches to reinforce individual accountability for results, GAO 
identified key practices that federal agencies can consider as they 
develop modern, effective, and credible performance management systems. 

What GAO Found: 

Public sector organizations both in the United States and abroad have 
implemented a selected, generally consistent set of key practices for 
effective performance management that collectively create a clear 
linkage—“line of sight”—between individual performance and 
organizational success. These key practices include the following:
1. Align individual performance expectations with organizational goals. 
An explicit alignment helps individuals see the connection between 
their daily activities and organizational goals.
2. Connect performance expectations to crosscutting goals. Placing an 
emphasis on collaboration, interaction, and teamwork across 
organizational boundaries helps strengthen accountability for results. 
3. Provide and routinely use performance information to track 
organizational priorities. Individuals use performance information to 
manage during the year, identify performance gaps, and pinpoint 
improvement opportunities.
4. Require follow-up actions to address organizational priorities. 
By requiring and tracking follow-up actions on performance gaps, 
organizations underscore the importance of holding individuals 
accountable for making progress on their priorities.
5. Use competencies to provide a fuller assessment of performance. 
Competencies define the skills and supporting behaviors that 
individuals need to effectively contribute to organizational results. 
6. Link pay to individual and organizational performance. Pay, 
incentive, and reward systems that link employee knowledge, skills, and 
contributions to organizational results are based on valid, reliable, 
and transparent performance management systems with adequate 
safeguards.
7. Make meaningful distinctions in performance. Effective performance 
management systems strive to provide candid and constructive feedback 
and the necessary objective information and documentation to reward top 
performers and deal with poor performers.
8. Involve employees and stakeholders to gain ownership of performance 
management systems. Early and direct involvement helps increase 
employees’ and stakeholders’ understanding and ownership of the system 
and belief in its fairness.
9. Maintain continuity during transitions. Because cultural 
transformations take time, performance management systems reinforce 
accountability for change management and other organizational goals. 

www.gao.gov/cgi-bin/getrpt?GAO-03-488.
To view the full report, including the scope and methodology, click on 
the link above. For more information, contact J. Christopher Mihm at 
(202) 512-6806 or mihmj@gao.gov. 

[End of section] 

Letter: 

Results in Brief: 

Background: 

Key Practices for Effective Performance Management: 

Appendix I: Objective, Scope, and Methodology 

Related GAO Products: 

Table: 

Table 1: IRS’s Bonus Levels and Bonus Ranges of Base Salary for Senior 
Executive Summary Evaluation Ratings for Fiscal Year 2001: 

Figures: 

Figure 1: Key Practices for Effective Performance Management: 

Figure 2: Aligning FAA Individual Goals with DOT and FAA Organizational 
Goals: 

Figure 3: Alignment of Strategic Goals, Critical Job Responsibilities, 
and Supporting Behaviors for Enforcement Group Managers: 

Figure 4: Process for Awarding Performance Pay to Executives in OPS: 

Abbreviations: 

BLM: Bureau of Land Management: 

DOT: Department of Transportation: 

FAA: Federal Aviation Administration: 

IRS: Internal Revenue Service: 

OMB: Office of Management and Budget: 

OPM: Office of Personnel Management: 

OPS: Ontario Public Service: 

TSA: Transportation Security Administration: 

VA: Department of Veterans Affairs: 

VBA: Veterans Benefits Administration: 

VHA: Veterans Health Administration: 

VISN: Veterans Integrated Service Network: 

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Letter March 14, 2003: 

The Honorable George V. Voinovich
Chairman
Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia
Committee on Governmental Affairs
United States Senate: 

The Honorable Jo Ann Davis
Chairwoman
Subcommittee on Civil Service and Agency Organization
Committee on Government Reform
House of Representatives: 

The federal government is in a period of profound transition and faces 
an array of challenges and opportunities to enhance performance, ensure 
accountability, and position the nation for the future. High-performing 
public and private organizations here in the United States and abroad 
have found that to successfully transform themselves, they must often 
fundamentally change their cultures so that they are more results-
oriented, customer-focused, and collaborative in nature. To transform 
their cultures, high-performing organizations have recognized that an 
effective performance management system can be a strategic tool to 
drive internal change and achieve desired results.[Footnote 1] 

Effective performance management systems are not merely used for once-
or twice-yearly individual expectation setting and rating processes, 
but are tools to help the organization manage on a day-to-day basis. 
These systems are used to achieve results, accelerate change, and 
facilitate two-way communication throughout the year so that 
discussions about individual and organizational performance are 
integrated and ongoing. The Office of Personnel Management (OPM) 
recognizes that performance management systems are to extend beyond 
rating individual performance.[Footnote 2] According to OPM, 
performance management is the systematic process by which an 
organization involves its employees, as individuals and members of a 
group, in improving organizational effectiveness in the accomplishment 
of the mission and goals. 

Recently, the Congress and the administration have pinpointed potential 
solutions for modernizing performance management systems and, 
specifically, making meaningful distinctions in performance. In 
November 2002, the Congress passed the Homeland Security Act of 
2002,[Footnote 3] which provides for the increase of the total annual 
compensation limit for senior executives in those agencies that have 
been certified by OPM and the Office of Management and Budget (OMB) as 
having performance appraisal systems that, as designed and applied, 
make meaningful distinctions based on relative performance. For 2003, 
the senior executive total compensation limit would increase from 
$171,900 to $198,600. 

In February 2003, the administration proposed for fiscal year 2004 to 
allow managers to increase pay beyond annual raises for high-performing 
employees. OPM would administer a $500 million Human Capital 
Performance Fund for the purpose of allowing agencies to deliver 
additional pay to certain employees based on individual performance or 
other human capital needs, in accordance with plans submitted to and 
approved by OPM. In addition, the administration also has proposed 
creating a wider, more open pay range for senior executive 
compensation, thus allowing for pay to be more directly tied to 
performance. 

At your request, this report identifies key practices for federal 
agencies to consider to develop modern, effective, and credible 
performance management systems. To identify the key practices, we 
reviewed our issued reports on performance management that draw from 
the experiences of public sector organizations both in the United 
States and abroad.[Footnote 4] While these organizations developed 
different performance management systems to reflect their specific 
structures, priorities, and cultures, they implemented these key 
practices to reinforce individual accountability for results. 
Consistent with these key practices, GAO has implemented a performance 
management system that reinforces individual accountability for results 
that has features such as broadbanded pay-for-performance and a set of 
validated competencies intended to link employee performance to our 
strategic plan and core values. We included the agency examples 
illustrating the key practices primarily from these issued reports and 
added examples from other GAO reports, where appropriate. For 
additional information on our objective, scope, and methodology, see 
appendix I. 

Results in Brief: 

Federal agencies can develop effective performance management systems 
by implementing a selected, generally consistent set of key practices. 
These key practices helped public sector organizations both in the 
United States and abroad create a clear linkage--”line of sight”--
between individual performance and organizational success and, thus, 
transform their cultures to be more results-oriented, customer-focused, 
and collaborative in nature. (See fig. 1.) 

Figure 1: Key Practices for Effective Performance Management: 

[See PDF for image] 

[End of figure] 

Beyond implementing these key practices, high-performing organizations 
understand that their employees are assets whose value to the 
organization must be recognized, understood, and enhanced. They view an 
effective performance management system as an investment to maximize 
the effectiveness of people by developing individual potential to 
contribute to organizational goals. To maximize this investment, an 
organization’s performance management system is designed, implemented, 
and continuously assessed by the standard of how well it helps the 
employees help the organization achieve results and pursue its mission. 

Because the key practices and examples were drawn from previously 
issued GAO reports, we did not seek official comments on the draft 
report from agency officials. We provided the draft report to the 
Director of OPM for her information. 

Background: 

Strategic human capital management is receiving increased attention 
across the federal government. In January 2001, we designated strategic 
human capital management as a governmentwide high-risk area and 
continued this designation with the release of High-Risk Series: An 
Update in January 2003.[Footnote 5] Despite the considerable progress 
over the past 2 years, it remains clear that today’s federal human 
capital strategies are not appropriately constituted to meet current 
and emerging challenges or drive the needed transformation across the 
federal government. One of the key areas that federal agencies continue 
to face challenges in is creating results-oriented organizational 
cultures. Agencies lack organizational cultures that promote high 
performance and accountability and empower and include employees in 
setting and accomplishing programmatic goals, which are critical to 
successful organizations. To help agency leaders effectively lead and 
manage their people and integrate human capital considerations into 
daily decision making and the program results they seek to achieve, we 
developed a strategic human capital model. The model highlights the 
kind of thinking that agencies should apply, as well as some of the 
steps they can take, to make progress in managing human capital 
strategically.[Footnote 6] 

Since we designated strategic human capital management as a high-risk 
area in January 2001, the President’s Management Agenda, released in 
August 2001, placed the strategic management of human capital at the 
top of the administration’s management agenda. In October 2002, OMB and 
OPM updated the standards for success in the human capital area of the 
President’s Management Agenda, reflecting language that was developed 
in collaboration with GAO. To assist agencies in responding to the 
revised standards and addressing the human capital challenges, OPM 
released the Human Capital Assessment and Accountability Framework. One 
of the standards of success in the framework is a results-oriented 
performance culture, specifically a performance management system that 
effectively differentiates between high and low performance. 

On September 24, 2002, we convened a forum to discuss useful practices 
from major private and public sector organizational mergers, 
acquisitions, and transformations that federal agencies could learn 
from to successfully transform their cultures and that the then 
proposed Department of Homeland Security could use to merge its various 
originating agencies or their components into a unified 
department.[Footnote 7] The participants identified the use of 
performance management systems as a tool to help manage and direct the 
transformation process. Specifically, performance management systems 
must create a line of sight showing how team, unit, and individual 
performance can contribute to overall organizational results. The 
system serves as the basis for setting expectations for employees’ 
roles in the transformation process and for evaluating individual 
performance and contributions to the success of the transformation 
process and, ultimately, to the achievement of organizational results. 

Key Practices for Effective Performance Management: 

An effective performance management system can be a strategic tool to 
drive internal change and achieve desired results. We found that public 
sector organizations in the United States and abroad have implemented a 
selected, generally consistent set of key practices as part of their 
performance management systems. Federal agencies can implement these 
practices to develop effective performance management systems that help 
create the line of sight between individual performance and 
organizational success and transform their cultures to be more results-
oriented, customer-focused, and collaborative in nature. 

Align Individual Performance Expectations with Organizational Goals: 

An explicit alignment of daily activities with broader results is one 
of the defining features of effective performance management systems in 
high-performing organizations. These organizations use their 
performance management systems to improve performance by helping 
individuals see the connection between their daily activities and 
organizational goals and encouraging individuals to focus on their 
roles and responsibilities to help achieve these goals. Such 
organizations continuously review and revise their performance 
management systems to support their strategic and performance goals, as 
well as their core values and transformational objectives. 

High-performing organizations can show how the products and services 
they deliver contribute to results by aligning performance expectations 
of top leadership with organizational goals and then cascading those 
expectations down to lower levels. To this end, we reported that in 
fiscal year 2000 the Federal Aviation Administration (FAA) was able to 
show how the Department of Transportation’s (DOT) strategic goal to 
promote public health and safety was cascaded through the FAA 
Administrator’s performance expectation to reduce the commercial air 
carrier fatal accident rate to a program director’s performance 
expectation to develop software to help aircraft maintain safe 
altitudes in their approach paths, as shown in figure 2.[Footnote 8] 

Figure 2: Aligning FAA Individual Goals with DOT and FAA Organizational 
Goals: 

[See PDF for image] 

Note: GAO analysis of DOT and FAA planning documents. 

[End of figure] 

The FAA Administrator’s performance agreement for fiscal year 2000 
included a performance expectation to reduce the commercial air carrier 
fatal accident rate by implementing the Safer Skies Agenda. As part of 
implementing the Safer Skies Agenda, the Flight Standards Service 
Director had a performance expectation to meet milestones for reducing 
a type of crash called controlled flight into terrain, which occurs 
when pilots lose their sense of the plane’s relation to the surface 
below. Among these milestones included validating Minimum Safe Altitude 
Warning software, which had to be developed by the Aviation Systems 
Standards Program Director. This software system is designed to aid air 
traffic controllers through both visual and aural alarms by alerting 
them when a tracked aircraft is below, or predicted by the computer to 
go below, a predetermined minimum altitude. 

Similarly, we recently reported that as a first step in establishing a 
permanent performance management system, the Transportation Security 
Administration (TSA) has implemented standardized performance 
agreements for groups of employees, including transportation security 
screeners, supervisory transportation security screeners, supervisors, 
and executives.[Footnote 9] These performance agreements include both 
organizational and individual goals and standards for satisfactory 
performance that can help TSA establish a line of sight showing how 
individual performance contributes to organizational goals. For 
example, each executive performance agreement includes organizational 
goals, such as to maintain the nation’s air security and ensure an 
emphasis on customer satisfaction, as well as individual goals, such as 
to demonstrate through actions, words, and leadership, a commitment to 
civil rights. To strengthen its current executive performance agreement 
and foster the culture of a high-performing organization, we 
recommended that TSA add performance expectations that establish 
explicit targets directly linked to organizational goals, foster the 
necessary collaboration within and across organizational boundaries to 
achieve results, and demonstrate commitment to lead and facilitate 
change. TSA agreed with this recommendation. 

We reported in September 2002 that some agencies set targets for 
individual performance that were linked to organizational goals. For 
example, the Veterans Benefits Administration (VBA) identified targets 
with specific levels of performance for senior executives that were 
explicitly linked to VBA’s priorities for fiscal year 2001 and the 
Department of Veterans Affairs’ (VA) strategic goals for fiscal years 
2001 to 2006.[Footnote 10] For example, to contribute to VA’s strategic 
goal to “provide ‘One VA’ world class service to veterans and their 
families through the effective management of people, technology, 
processes and financial resources” and to address its priority of speed 
and timeliness, VBA set a national target for property holding time--
the average number of months from date of acquisition to date of sale 
of properties acquired due to defaults on VA guaranteed loans--of 10 
months for fiscal year 2001. To contribute to the national target, the 
senior executive in the Nashville regional office had a performance 
expectation for his office to meet a target of 8.6 months. 

Connect Performance Expectations to Crosscutting Goals: 

As public sector organizations shift their focus of accountability from 
outputs to results, they have recognized that the activities needed to 
achieve those results often transcend specific organizational 
boundaries. Consequently, organizations that are flatter and focused on 
collaboration, interaction, and teamwork across organizational 
boundaries are increasingly critical to achieve results. High-
performing organizations use their performance management systems to 
strengthen accountability for results, specifically by placing greater 
emphasis on fostering the necessary collaboration both within and 
across organizational boundaries to achieve results. 

For example, in August 2002, we reported that Canada’s agricultural 
department, Agriculture and Agri-Food Canada, used individual 
performance agreements to specify the internal or external 
organizations whose collaboration is needed to help individuals 
contribute to the departmental crosscutting goals or areas.[Footnote 
11] Specifically, the head of the department’s Market and Industry 
Services Branch had in his 2001-02 performance agreement the 
expectation to “lead efforts to develop the department’s ability to 
deal with emerging technical trade issues” that aligned with the 
crosscutting area of “international issues.” The agreement also listed 
two internal units whose collaboration was needed to meet the 
expectation--the department’s Research Branch and its Strategic Policy 
Branch--as well as two external organizations--the Canadian Food 
Inspection Agency and Health Canada. While the performance agreement 
provides a vehicle for identifying and communicating with the various 
organizations associated with each crosscutting performance 
expectation, the department leaves it up to individuals to determine 
how to collaborate with their organizations when working to fulfill 
their performance agreements. 

Similarly, we reported in October 2000 that the Veterans Health 
Administration’s (VHA) Veterans Integrated Service Network (VISN) 
headquartered in Cincinnati implemented performance agreements that 
focused on patient services for the entire VISN and were designed to 
encourage the VISN’s medical centers to work collaboratively.[Footnote 
12] In 2000, the VISN Director had a performance agreement with “care 
line” directors for patient services, such as primary care, medical and 
surgical care, and mental health care. In particular, the mental health 
care line director’s performance agreement included improvement goals 
related to mental health for the entire VISN. To make progress towards 
these goals, this care line director had to work across each of the 
VISN’s four medical centers with the corresponding care line managers 
at each medical center. As part of this collaboration, the care line 
director needed to establish consensus among VISN officials and 
external stakeholders on the strategic direction for the services 
provided by the mental health care line across the VISN; develop, 
implement, and revise integrated clinical programs to reflect that 
strategic direction for the VISN; and allocate resources among the 
centers for mental health programs to implement these programs. 

Provide and Routinely Use Performance Information to Track 
Organizational Priorities: 

High-performing organizations provide objective performance 
information to individuals to show progress in achieving organizational 
results and other priorities, such as customer satisfaction and 
employee perspectives, and help individuals manage during the year, 
identify performance gaps, and pinpoint improvement opportunities. 
Having this performance information in a useful format also helps 
individuals track their performance against organizational goals and 
compare their performance to that of other individuals. 

To this end, we described in September 2002, the Bureau of Land 
Management’s (BLM) Web-based data system called the Director’s Tracking 
System that collects and makes available on a real-time basis data on 
each: 

senior executive’s progress in his or her state office towards BLM’s 
organizational priorities and the resources expended on each 
priority.[Footnote 13] In particular, a BLM senior executive in 
headquarters responsible for the wild horse and burro adoptions program 
can use the tracking system to identify at anytime during the year 
where the senior executives in the state offices responsible for this 
program are against their targets and what the program costs have been 
by state. 

To address progress towards its performance goals, we reported in 
October 2000 that VHA produced quarterly Network Performance Reports 
that presented both VHA-wide and VISN-specific progress on each of the 
goals in the then 22 VISN directors’ performance agreements.[Footnote 
14] VHA’s then Chief Network Officer and each of the VISN directors 
used these performance reports to inform quarterly meetings they had 
and to discuss each VISN’s progress towards the goals in the director’s 
performance agreement. Specifically, the Network Performance Report 
issued in May 2000 showed that 90 percent of the patients in VISN 5 
located in Baltimore received follow-up care after hospitalization for 
mental illness in the third quarter of fiscal year 2000. Further, that 
VISN produced biweekly performance reports that allowed it to monitor 
its three medical centers’ progress on the VHA-wide performance goals 
in the VISN director’s performance agreements. For example, the VISN’s 
biweekly performance report for August 2000 showed that the VISN-wide 
rate for follow-up care after hospitalization for mental illness 
remained at 90 percent, while its three medical centers ranged from 89 
to 91 percent for follow-up care. 

In addition to showing progress in achieving organizational results, 
high-performing organizations also provide performance information on 
other priorities, such as customer satisfaction and employee 
perspectives. We reported in September 2002 that to emphasize a 
balanced set of performance expectations, some agencies disaggregated 
customer and employee satisfaction survey data so that the results were 
applicable to an executive’s customers and employees.[Footnote 15] For 
example, from its Use Authorization Survey administered to various 
customers in fiscal year 2000, BLM disaggregated the survey data to 
provide the applicable results to individuals who head the state 
offices. Specifically, the executive in the Montana state office 
received data for his state showing that 81 percent of the grazing 
permit customers surveyed gave favorable ratings for the timeliness of 
permit processing and for service quality. The executive addressed the 
results of the customer survey in his self-assessment for the 2001 
performance appraisal cycle. 

We also reported that to help senior executives address employee 
perspectives, the Internal Revenue Service (IRS) disaggregated data to 
the workgroup level from its IRS/National Treasury Employees Union 
Employee Satisfaction Survey, which measures general satisfaction with 
IRS, the workplace, and the union.[Footnote 16] The Gallup Organization 
administered this survey to all IRS employees. The survey comprised 
Gallup’s 12 questions (Q12);[Footnote 17] additional questions unique 
to IRS, such as views on local union chapters and employee 
organizations; and questions on issues IRS has been tracking over time. 
Gallup provided the results for each workgroup. For example, an 
executive could compare the performance of his or her workgroup to that 
of other operating divisions and to that of IRS as a whole. 
Specifically, for the 2001 survey, an executive’s workgroup scored 3.68 
out of a possible 5 for the question “I have the materials and 
equipment I need to do my work right” compared to the IRS-wide score of 
3.58. To allow individuals to benchmark externally, Gallup compared 
each workgroup’s results to the 50th (median) and 75th (best practices) 
percentile scores from Gallup’s Q12 database. To benchmark internally, 
IRS provided the servicewide results from the previous year’s survey in 
each workgroup report. 

Require Follow-up Actions to Address Organizational Priorities: 

High-performing organizations require individuals to take follow-up 
actions based on the performance information available to them. By 
requiring and tracking such follow-up actions on performance gaps, 
these organizations underscore the importance of holding individuals 
accountable for making progress on their priorities. 

To help address employee perspectives in their senior executive 
performance management system, we reported in September 2002 that the 
Federal Highway Administration required senior executives to use 360-
degree feedback instruments to solicit employees’ views on their 
leadership skills.[Footnote 18] Based on the 360-degree feedback, 
senior executives were to identify action items and incorporate them 
into their individual performance plans for the next fiscal year. While 
the 360-degree feedback instrument was intended for developmental 
purposes to help senior executives identify areas for improvement and 
was not included in the executive’s performance evaluation, executives 
were held accountable for taking some action with the 360-degree 
feedback results and responding to the concerns of their peers, 
customers, and subordinates. For example, based on 360-degree feedback, 
a senior executive for field services identified better communications 
with subordinates and increased collaboration among colleagues as areas 
for improvement, and as required, he then incorporated action items 
into his individual performance plan. In fiscal year 2001, he set a 
performance expectation to develop a leadership self-improvement action 
plan and identify appropriate improvement goals. In his self-assessment 
for fiscal year 2001, he reported that he improved his personal contact 
and attention to the division offices as evidenced by a 30 percent 
increase in visits to the divisions that year. Also, he stated that he 
encouraged his subordinates to assess their leadership skills. 
Consequently, 9 of his 11 subordinates used 360-degree feedback 
instruments to improve their personal leadership competencies. 

We also reported that to address employee perspectives based on the 
performance information obtained through its employee survey, IRS 
required senior executives to hold workgroup meetings with their 
employees to discuss the workgroups’ survey results and develop action 
plans to address these results.[Footnote 19] According to a senior 
executive in IRS’s criminal investigation unit, the workgroup meetings 
were beneficial because they increased communication with employees and 
identified improvements in the quality of worklife. For example, 
through this executive’s workgroup meetings on the 2001 employee survey 
results, employees identified the need for recruiting supervisory 
special agents to even out some of the workload. Subsequently, the 
senior executive set a performance expectation in his fiscal year 2002 
individual performance plan to ensure that the field office had a 
strong recruitment program to attract viable candidates. 

Similarly, for its customer satisfaction survey, the former 
Commissioner of Internal Revenue set an expectation that the senior 
executives who head the business units develop action plans based on 
the performance information from IRS’s customer survey that are 
relevant to the needs of their particular customers.[Footnote 20] For 
example, an IRS senior executive who is the area director for 
compliance in Laguna Niguel, California, developed a consolidated 
action plan based on the plans he required from each of his territory 
managers that identified ways to improve low scores from the customer 
survey. Specifically, the senior executive had an expectation in his 
action plan to improve how customers were treated during collection and 
examination activities by ensuring that examiners explain to customers 
their taxpayer rights, as well as why they were selected for 
examination and what they could expect. Further, the senior executive 
planned to ensure that territory managers solicited feedback from 
customers on their treatment during these activities and identify 
specific reasons for any customer dissatisfaction. In his midyear self-
assessment for fiscal year 2002, the senior executive stated that 
substantial progress was being made in achieving the collection and 
examination customer satisfaction goals. 

Use Competencies to Provide a Fuller Assessment of Performance: 

High-performing organizations use competencies to examine individual 
contributions to organizational results. Competencies, which define the 
skills and supporting behaviors that individuals are expected to 
exhibit to carry out their work effectively, can provide a fuller 
picture of an individual’s performance. 

To help reinforce employee behaviors and actions that support the 
agency’s mission, we reported that in fiscal year 2000, IRS implemented 
a performance management system that requires executives and managers 
to include critical job responsibilities with supporting behaviors in 
their performance agreements, which serve as the basis for their annual 
performance appraisals.[Footnote 21] The critical job 
responsibilities, which represent IRS’s core values, include 
leadership, employee satisfaction, customer satisfaction, business 
results, and equal employment opportunity and are further defined by 
supporting behaviors--broad actions and competencies that IRS expects 
its executives and managers to demonstrate during the year. The 
critical job responsibilities and supporting behaviors are intended to 
provide executives and managers with a consistent message about how 
their daily activities are to reflect the organization’s core values. 
Three of the five critical job responsibilities--customer satisfaction, 
business results, and employee satisfaction--align with IRS’s strategic 
goals as shown in figure 3. For example, by establishing a critical job 
responsibility and supporting behavior in customer satisfaction, IRS 
aligns managers’ performance to its strategic goal of “top-quality 
service to each taxpayer in every interaction.”: 

Figure 3: Alignment of Strategic Goals, Critical Job Responsibilities, 
and Supporting Behaviors for Enforcement Group Managers: 

[See PDF for image] 

Note: GAO analysis of IRS’s group manager performance management 
system. 

[End of figure] 

The other two critical job responsibilities, leadership and equal 
employment opportunity, reinforce behaviors that IRS considers 
necessary for organizational change and an open and fair work 
environment. 

We described in August 2002 how the United Kingdom considers 
competencies in evaluating executives.[Footnote 22] The executives in 
the Senior Civil Service have performance agreements that include both 
business objectives and certain core competencies that executives 
should develop in order to effectively achieve these objectives. For 
example, an executive and his supervisor select one or two 
competencies, such as “thinking strategically,” “getting the best from 
people,” or “focusing on delivery.” Each competency is further 
described by several specific behaviors. For example, the competency of 
“getting the best from people” includes behaviors such as “developing 
people to achieve high performance;” “adopting a leadership style to 
suit different people, cultures, and situations;” “coaching individuals 
so they achieve their best;” and “praising achievements and celebrating 
success.” The supervisor evaluated the executive’s demonstration of 
these selected competencies and the achievement of business objectives 
when determining the size of the annual pay award. 

Similarly, we described in August 2002 how New Zealand’s Inland Revenue 
Department evaluated the performance of its employees against results 
and core and technical competencies and weighted these results and 
competencies differently in each employee evaluation depending on the 
position.[Footnote 23] All employees were evaluated on their 
commitments to deliver results, which account for 40 to 55 percent of 
their overall performance evaluations. In addition, all employees were 
evaluated against core organizational competencies such as customer 
focus, strategic leadership, analysis and decision making, and 
communication, which make up 20 to 50 percent of their evaluations. 
Some employees who have special knowledge and expertise in areas such 
as tax policy, information technology, and human capital were also 
evaluated against technical competencies that may account for 20 to 35 
percent of their overall performance evaluations.[Footnote 24] An 
employee who was considered fully successful in achieving his or her 
performance commitments, but does not demonstrate the expected 
competencies, may not be assessed as fully successful in his or her 
particular position. Conversely, if an employee demonstrated the 
expected competencies, but did not achieve the agreed to performance 
commitments, he or she could also be considered less than fully 
successful. As part of the department’s review of the program conducted 
in 2000, both managers and staff cited the department’s policy of 
evaluating individual performance based on both results and 
competencies as a better way to measure staff performance than focusing 
on only results or competencies alone. 

Link Pay to Individual and Organizational Performance: 

High-performing organizations seek to create pay, incentive, and reward 
systems that clearly link employee knowledge, skills, and contributions 
to organizational results. At the same time, these organizations 
recognize that valid, reliable, and transparent performance management 
systems with adequate safeguards for employees are the precondition to 
such an approach. 

For example, we reported in August 2002 how Canada links pay to the 
performance of its senior executives through its Performance Management 
Program.[Footnote 25] Under the Performance Management Program, 
introduced in 1999, a significant portion of the total cash 
compensation package that top and senior executives can receive takes 
the form of “at-risk” pay. This annual lump-sum payment ranges from 10 
to 15 percent of base pay for senior executives, and as high as 25 
percent for deputy ministers. Another central feature of Canada’s 
Performance Management Program is that both increases in base salary 
and at-risk pay are only awarded to executives who successfully achieve 
commitments agreed to in their annual performance agreements. These 
commitments are of two types: “ongoing commitments,” which include 
continuing responsibilities associated with the position, and “key 
commitments,” which identify priority areas for the current performance 
cycle. Departments award increases in base pay to executives who 
successfully carry out their ongoing commitments and award at-risk pay 
to individuals who, in addition to meeting all ongoing commitments, 
also successfully deliver on key commitments. Executives who do not 
meet at least one key commitment are not eligible for this lump-sum 
performance award. Under the Performance Management Program, there are 
no automatic salary increases connected with length of service. 

The Ontario Public Service (OPS) links executive performance pay to the 
performance of the provincial government as a whole, the performance of 
the executive’s home ministry, the contribution of that ministry to 
overall governmentwide results, as well as the individual’s own 
performance.[Footnote 26] The amount of the award an individual 
executive can receive ranges from no payment to a maximum of 20 percent 
of base salary. To determine the amount of performance pay for any 
given fiscal year, the Premier and Cabinet, the top political 
leadership of the Ontario government, first determine whether and to 
what extent the government as a whole has achieved the key provincial 
goals it established at the beginning of the fiscal year. If they 
determine that the government has met a threshold of satisfactory 
performance, these officials designate a certain percentage as the 
governmentwide “incentive envelope,” which represents the percentage 
that will be the basis for subsequent calculations used to determine 
performance awards. The Secretary of Cabinet, in consultation with the 
Premier, then assesses each ministry’s performance based on the 
ministry’s relative contribution enabling Ontario to achieve its key 
provincial goals and the ministry’s performance against its own 
approved business plan. As a result of this assessment, each ministry 
receives an amount equivalent to a specific percentage of the 
ministry’s total executive payroll for performance awards. Finally, 
each ministry determines the actual amount of an executive’s 
performance award by assessing both the individual’s actual performance 
against his or her prior performance commitments as well as the 
individual’s level of responsibility. 

For example, in the 1999-2000 performance cycle, the Premier and 
Cabinet determined that the government as a whole had met a threshold 
of satisfactory performance and set an incentive envelope of 10 
percent. The Secretary of Cabinet and the Premier then assessed the 
performance of a particular ministry deciding that it had a “critical 
impact” on the government’s ability to deliver on its results that 
year, including the roll out of its quality service and e-government 
initiatives. They also found that this ministry “exceeded” the key 
commitments established in its business plan. In this case, the 
ministry received an amount equivalent to 12.5 percent of its executive 
payroll towards performance payments. Individual awards, depending upon 
the performance and position of the executive, ranged from no payment 
to 15 percent, and could have reached as high as 20 percent under the 
program’s regulations. In contrast, during the same performance cycle, 
the Secretary of Cabinet and the Premier found that
another ministry had only “contributed” to governmentwide goals while 
having “met” its business commitments. Accordingly, this ministry 
received only 5 percent of its executive payroll towards performance 
payments. Individual awards in this case ranged from no payment to 7.5 
percent. (See fig. 4.) 

Figure 4: Process for Awarding Performance Pay to Executives in OPS: 

[See PDF for image] 

Note: GAO presentation of information from the Centre for Leadership, 
Ontario Cabinet Office. 

[End of figure] 

Make Meaningful Distinctions in Performance: 

Effective performance management requires the organization’s 
leadership to make meaningful distinctions between acceptable and 
outstanding performance of individuals and to appropriately reward 
those who perform at the highest level. In doing so, performance 
management systems in high-performing organizations typically seek to 
achieve three key objectives: 
(1) they strive to provide candid and constructive feedback to help 
individuals maximize their contribution and potential in understanding 
and realizing the goals and objectives of the organization, (2) they 
seek to provide management with the objective and fact-based 
information it needs to reward top performers, and (3) they provide the 
necessary information and documentation to deal with poor performers. 

We reported that IRS recognizes that it is still working at 
implementing an effective performance management system that makes 
meaningful distinctions in senior executive performance.[Footnote 27] 
For example, IRS established an executive compensation plan for 
determining base salary, performance bonuses, and other awards for its 
senior executives that is intended to explicitly link individual 
performance to organizational performance and is designed to emphasize 
performance. IRS piloted the compensation plan in fiscal year 2000 with 
the top senior executives who report to the Commissioner of Internal 
Revenue and used it for all senior executives in fiscal year 2001. To 
recognize performance across different levels of responsibilities and 
commitments, IRS assigned senior executives to one of three bonus 
levels at the beginning of the performance appraisal cycle. Assignments 
depend on the senior executives’ responsibilities and commitments in 
their individual performance plans for the year, as well as the scope 
of their work and its impact on IRS’s overall mission and goals. For 
example, the Commissioner of Internal Revenue or the Deputy 
Commissioner assigns senior executives to bonus level three--considered 
to be the level with the highest responsibilities and commitments--only 
if they are part of the Senior Leadership Team. IRS restricts the 
number of senior executives assigned to each bonus level for each 
business unit. 

In addition, for each bonus level, IRS establishes set bonus ranges by 
individual summary evaluation rating, which is intended to reinforce 
the link between performance and rewards. The bonus levels and 
corresponding bonus amounts of base salary by summary rating are shown 
in table 1. 

Table 1: IRS’s Bonus Levels and Bonus Ranges of Base Salary for Senior 
Executive Summary Evaluation Ratings for Fiscal Year 2001: 

Bonus levels: 3; Met: 5 to 10%; Exceeded: 10 to 15%; Outstanding: 15 to 
20%. 

Bonus levels: 2; Met: 5%; Exceeded: 5 to 10%; Outstanding: 10 to 15%. 

Bonus levels: 1; Met: 0%; Exceeded: 5%; Outstanding: 5 to 10%. 

Source: IRS. 

Note: Bonuses paid to IRS career senior executives are governed by the 
limits set forth in 5 U.S.C. 5384 and 9505, which provide that bonuses 
shall be not less than 5 percent of basic pay. 

[End of table] 

To help ensure realistic and consistent performance ratings, each IRS 
business unit had a “point budget” for assigning performance ratings 
that is the total of four points for each senior executive in the unit. 
After the initial summary evaluation ratings were assigned, the senior 
executives’ ratings were converted into points--an “outstanding” rating 
converted to six points; an “exceeded” rating to four points, which is 
the baseline; a “met” rating to two points; and a “not met” rating to 
zero points. If the business unit exceeded its point budget, it had the 
opportunity to request additional points from the Deputy Commissioner. 
IRS officials indicated that none of the business units requested 
additional points for the fiscal year 2001 ratings. For fiscal year 
2001, 31 percent of the senior executives received a rating of 
outstanding compared to 42 percent for fiscal year 2000, 49 percent 
received a rating of exceeded expectations compared to 55 percent, and 
20 percent received a rating of met expectations compared to 3 percent. 
In fiscal year 2001, 52 percent of senior executives received a bonus, 
compared to 56 percent in fiscal year 2000. IRS officials indicated 
that they are still gaining experience using the new compensation plan 
and will wait to establish trend data before they evaluate the link 
between performance and bonus decisions. 

To stress making performance results the basis for pay, awards, and 
other personnel decisions for senior executives, OPM implemented 
amended regulations for senior executive performance management 
requiring agencies to establish performance management systems for the 
rating cycles beginning in 2001. These systems are to hold senior 
executives accountable for their individual and organizational 
performance by linking performance management with results-oriented 
organizational goals and evaluating senior executive performance using 
measures that balance organizational results with customer 
satisfaction, employee perspectives, and other measures agencies decide 
are appropriate. According to OPM, these regulations require agency 
leadership to expect excellence and take action to reward outstanding 
performers and deal appropriately with those who do not measure up. 

Involve Employees and Stakeholders to Gain Ownership of Performance 
Management Systems: 

High-performing organizations have found that actively involving 
employees and stakeholders, such as unions or other employee 
associations, when developing results-oriented performance management 
systems helps improve employees’ confidence and belief in the fairness 
of the system and increase their understanding and ownership of 
organizational goals and objectives. Effective performance management 
systems depend on individuals’, their supervisors’, and management’s 
common understanding, support, and use of these systems to reinforce 
the connection between performance management and organizational 
results. These organizations recognize that they must conduct frequent 
training for staff members at all levels of the organization to 
maximize the effectiveness of the performance management 
systems.[Footnote 28] Overall, employees and supervisors share the 
responsibility for individual performance management. Both are actively 
involved in identifying how they can contribute to organizational 
results and are held accountable for their contributions. 

We described in August 2002 that, when reforming their performance 
management systems, public sector organizations in other countries 
consulted a wide range of employees and stakeholders early in the 
process, obtained direct feedback from them, and engaged employee 
unions or associations.[Footnote 29] 

Consult a Wide Range of Stakeholders Early in the Process. An important 
step to ensure the success of a new performance management system is to 
consult a wide range of stakeholders and to do so early in the process. 
For its new Senior Civil Service performance management and pay system, 
the United Kingdom’s Cabinet Office recognized the importance of 
meeting with and including employees and stakeholders in the formation 
of the new system. The Cabinet Office obtained feedback from various 
employee associations, a civil servant advisory group, a project board 
composed of personnel directors, and permanent secretaries 

As part of Canada’s effort to consult stakeholders concerning its new 
performance management system, the government convened an 
interdepartmental committee to explore and discuss possible approaches, 
consulted networks of human capital professionals and executives across 
the country, and engaged top executives through the Committee of Senior 
Officials, consisting of the Clerk of the Privy Council and heads of 
major departments and other top officials. 

Obtain Feedback Directly from Employees. Directly asking employees to 
provide feedback on proposed changes in their performance management 
systems encourages a sense of involvement and ownership, allows 
employees to express their views, and helps validate the system to 
ensure that the performance measures are appropriate. Asking employees 
to provide feedback should not be a one-time process, but an ongoing 
process through the training of employees to ensure common 
understanding of the evaluation, implementation, and results of the 
systems. 

For example, the United Kingdom’s Cabinet Office provided a packet 
detailing proposed reforms of the existing performance management 
system to approximately 3,000 members of the Senior Civil Service in a 
large-scale effort to obtain their feedback on the proposed changes. In 
addition, each department also held consultations where individuals 
listened to proposed reforms. More than 1,200 executives (approximately 
40 percent of the Senior Civil Service) participated in the process. 
The Cabinet Office then collected and incorporated these views into the 
final proposal, which was adopted by the government and implemented in 
April 2001. 

Engage Employee Unions or Associations. We have previously reported 
that in the United States obtaining union cooperation and support can 
help to achieve consensus on planned changes, avoid misunderstandings, 
and assist in the expeditious resolution of problems.[Footnote 30] 
Agencies in New Zealand and Canada actively engaged unions or employee 
associations when making changes to performance management systems. 

In New Zealand, an agreement between government and the primary public 
service union created a “Partnership for Quality” framework that 
provides for ongoing, mutual consultation on issues such as performance 
management. Specifically, the Department of Child, Youth, and Family 
Services and the Public Service Association entered into a joint 
partnership agreement that emphasizes the importance of mutual 
consideration of each other’s organizational needs and constraints. For 
example, two of the objectives stated in the 2001-02 partnership 
agreement were to (1) develop the parties’ understanding of each 
other’s business and (2) equip managers, delegates, and members with 
the knowledge and skills required to build a partnership for a quality 
relationship in the workplace. Department and union officials told us 
that this framework had considerably improved how both parties approach 
potentially contentious issues, such as employee performance 
management. Also included in the partnership agreement were measures to 
evaluate the success of the relationship such as 
(1) sharing ownership of issues, plans, and outcomes and (2) quickly 
resolving issues in a solution-focused way, with a reduction in 
grievances. 

The government of Canada repeatedly consulted with the Association of 
Professional Executives of the Public Service of Canada (Association) 
about its proposed reforms to the executive performance management 
system and accompanying pay-at-risk provisions. This dialogue began 
prior to the system’s rollout and continued through initial 
implementation during which the Association was actively involved in 
collecting feedback from executives as well as making recommendations. 
For example, as part of an assessment of Canada’s Performance 
Management Program, based on consultations the Association had with its 
membership after the first year of the program, the Association 
identified several issues needing further attention, including the need 
to provide executives with additional guidance on how to develop their 
individual performance agreements, particularly with regard to 
identifying and selecting different types of performance commitments. 
This recommendation and others were shared with the government, and the 
official Performance Management Program guidance issued the following 
year incorporated these concerns. 

Maintain Continuity during Transitions: 

The experience of successful cultural transformations and change 
management initiatives in large public and private organizations 
suggests that it can often take 5 to 7 years until such initiatives are 
fully implemented and cultures are transformed in a substantial manner. 
Because this time frame can easily outlast the tenures of top political 
appointees, high-performing organizations recognize that they need to 
reinforce accountability for organizational goals during times of 
leadership transitions through the use of performance agreements as 
part of their performance management systems. 

At a recent GAO-sponsored roundtable, we reported on the necessity to 
elevate attention, integrate various efforts, and institutionalize 
accountability for addressing management issues and leading 
transformational change.[Footnote 31] The average tenure of political 
leadership and the long-term nature of the change management 
initiatives that are needed can have critical implications for the 
success of those initiatives. Specifically, in the federal government, 
the frequent turnover of the political leadership has often made it 
difficult to obtain the sustained and inspired attention required to 
make needed changes. 

The average tenure of political appointees governmentwide for the 
period 1990-2001 was just under 3 years.[Footnote 32] In addition, 
career executives can help provide the long-term commitment and focus 
needed to transform an agency, but the retirement eligibility of 
executives is increasing.[Footnote 33] For example, 71 percent of 
career senior executive service members will reach retirement 
eligibility by the end of fiscal year 2005--an historically high rate 
of eligibility. Without careful planning, the retirement eligibility 
rate suggests an eventual loss in institutional knowledge, expertise, 
and leadership continuity. 

High-performing organizations use their performance management systems 
to help provide continuity during these times of transition by 
maintaining a consistent focus on a set of broad programmatic 
priorities. Performance agreements can be used to clearly and concisely 
outline top leadership priorities during a given year and thereby serve 
as a convenient vehicle for new leadership to identify and maintain 
focus on the most pressing issues confronting the organization as it 
transforms. We have observed that a specific performance expectation in 
the leadership’s performance agreement to lead and facilitate change 
during this transition could be a critical element as organizations 
transform themselves to succeed in an environment that is more results-
oriented, less hierarchical, and more integrated.[Footnote 34] More 
generally, the existence of an established process for developing and 
using performance agreements provides new leadership with a tested tool 
that it can use to communicate its priorities and instill those 
priorities throughout the organization. 

We described in August 2002 how OPS and Canada’s Performance Management 
Program institutionalized the use of performance agreements in their 
performance management systems to withstand organizational changes and 
cascaded the performance agreements from top leadership to lower levels 
of the organizations.[Footnote 35] Since 1996, OPS has used performance 
agreements to align and cascade performance goals down to all 
organizational levels and all employees and has required senior 
executives to have annual performance agreements that link their 
performance commitments to key provincial priorities and approved 
ministry business plans. In 2000, OPS extended this requirement so that 
agreements are now required of all employees, from senior executives to 
frontline employees. Specifically, all employees develop individual 
performance commitments that link to their supervisors’ performance 
agreements and their ministries’ business plans. Senior executives and 
some middle-level managers and specialists also link commitments 
contained in their individual performance plans to the government of 
Ontario’s key provincial priorities in areas such as fiscal control and 
management, human capital leadership, and fostering a culture of 
innovation. 

Similarly, Canada’s Performance Management Program cascades goals down 
through all levels of senior executives. It requires that each 
department’s deputy minister--the senior career public service official 
responsible for leading Canadian government departments--has a written 
performance agreement that links his or her individual commitments to 
the organization’s business plan, strategies, and priorities. From the 
deputy minister, commitments cascade down through assistant deputy 
ministers, directors general, and directors. At every level, the 
performance agreement between each executive and his or her manager is 
intended to document a mutual understanding about the performance that 
is expected and how it will be assessed. Some agencies, such as 
Industry Canada and the Public Service Commission, have established 
their own programs to cascade commitments below the director level and 
require the use of performance agreements for some middle managers or 
supervisors within their organizations. 

As agreed with your offices, unless you publicly announce its contents 
earlier, we plan no further distribution of this report for 30 days 
from its date. At that time, we will provide copies of this report to 
interested congressional committees and the Director of OPM. We will 
also make copies available to others upon request. In addition, the 
report will be available at no charge on the GAO Web site at http://
www.gao.gov. 

If you have any questions concerning this report, please contact me or 
Lisa Shames on (202) 512-6806 or at mihmj@gao.gov. Anne Kidd and Janice 
Lichty were key contributors to this report. 

J. Christopher Mihm
Director, Strategic Issues: 

Signed by J. Christopher Mihm: 

[End of section] 

Appendixes: 

Appendix I: Objective, Scope, and Methodology: 

To meet our objective to identify key practices for effective 
performance management, we summarized our most recent reports on 
performance management for public sector organizations both in the 
United States and abroad.[Footnote 36] We reviewed and synthesized the 
information contained in the reports to identify key practices for 
modern, effective, and credible performance management systems. We 
included the agency examples supporting the key practices primarily 
from the previous three reports and added examples from other GAO 
reports where appropriate. The specific objectives, scope, and 
methodology of each of these reports are included in the reports. 

We discussed the set of key practices with agency officials at the 
Office of Personnel Management (OPM) responsible for performance 
management of the general workforce. We also spoke with the President 
of the Senior Executives Association and the Director of the Center for 
Human Resources Management at the National Academy for Public 
Administration to obtain any observations or general comments on the 
key practices we identified. Likewise, we provided the key practices, 
for their general comments, to the Presidents for the National Treasury 
Employees Union and the American Federation of Government Employees; 
the Director of the Office of Policy and Evaluation, U.S. Merit Systems 
Protection Board; and the Vice President for Policy and Research, 
Partnership for Public Service. 

We did not seek official comments on the draft report from agency 
officials because the practices and examples were drawn from previously 
issued GAO reports. We provided the draft report to the Director of OPM 
for her information. We also did not update the examples, and as a 
result, the information in the examples may, or may not, have changed 
since the issuance of the report. We performed our work in Washington, 
D.C., from December 2002 through February 2003 in accordance with 
generally accepted government auditing standards. 

[End of section] 

Related GAO Products: 

[End of section] 

Major Management Challenges and Program Risks: A Governmentwide 
Perspective. GAO-03-95. Washington, D.C.: January 2003. 

High-Risk Series: Strategic Human Capital Management. GAO-03-120. 
Washington, D.C.: January 2003. 

Transportation Security Administration: Actions and Plans to Build a 
Results-Oriented Culture. GAO-03-190. Washington, D.C.: January 17, 
2003. 

Human Capital: Effective Use of Flexibilities Can Assist Agencies in 
Managing Their Workforces. GAO-03-2. Washington, D.C.: December 6, 
2002. 

Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned 
for a Department of Homeland Security and Other Federal Agencies. GAO-
03-293SP. Washington, D.C.: November 14, 2002. 

Highlights of a GAO Roundtable: The Chief Operating Officer Concept: A 
Potential Strategy to Address Federal Governance Challenges. GAO-03-
192SP. Washington, D.C.: October 4, 2002.: 

Results-Oriented Cultures: Using Balanced Expectations to Manage Senior 
Executive Performance. GAO-02-966. Washington, D.C.:
September 27, 2002. 

Results-Oriented Cultures: Insights for U.S. Agencies from Other 
Countries’ Performance Management Initiatives. GAO-02-862. Washington, 
D.C.: August 2, 2002. 

Managing for Results: Using Strategic Human Capital Management to Drive 
Transformational Change. GAO-02-940T. Washington, D.C.: July 15, 
2002.: 

Managing for Results: Building on the Momentum for Strategic Human 
Capital Reform. GAO-02-528T. Washington, D.C.: March 18, 2002. 

A Model of Strategic Human Capital Management. GAO-02-373SP. 
Washington, D.C.: March 15, 2002. 

Human Capital: Practices That Empowered and Involved Employees. GAO-01-
1070. Washington, D.C.: September 14, 2001. 

Human Capital: Taking Steps to Meet Current and Emerging Human Capital 
Challenges. GAO-01-965T. Washington, D.C.: July 17, 2001. 

Managing for Results: Federal Managers’ Views on Key Management Issues 
Vary Widely Across Agencies. GAO-01-592. Washington, D.C.: 
May 25, 2001. 

Managing for Results: Emerging Benefits From Selected Agencies’ Use of 
Performance Agreements. GAO-01-115. Washington, D.C.: October 30, 2000. 

Human Capital: Using Incentives to Motivate and Reward High 
Performance. GAO/T-GGD-00-118. Washington, D.C.: May 2, 2000. 

(450180): 

FOOTNOTES 

[1] U.S. General Accounting Office, High-Risk Series: Strategic Human 
Capital Management, GAO-03-120 (Washington, D.C.: January 2003). 

[2] U.S. Office of Personnel Management, A Handbook for Measuring 
Employee Performance: Aligning Employee Performance Plans with 
Organizational Goals (Washington, D.C.: September 2001). 

[3] Pub. L. 107-296, Sec. 1322. 

[4] U.S. General Accounting Office, Results-Oriented Cultures: Using 
Balanced Expectations to Manage Senior Executive Performance, GAO-02-
966 (Washington, D.C.: Sept. 27, 2002); Results-Oriented Cultures: 
Insights for U.S. Agencies from Other Countries’ Performance Management 
Initiatives, GAO-02-862 (Washington, D.C.: Aug. 2, 2002); and Managing 
for Results: Emerging Benefits From Selected Agencies’ Use of 
Performance Agreements, GAO-01-115 (Washington, D.C.: Oct. 30, 2000). 

[5] GAO-03-120 and U.S. General Accounting Office, High-Risk Series: An 
Update, GAO-03-119 (Washington, D.C.: January 2003). 

[6] U.S. General Accounting Office, A Model of Strategic Human Capital 
Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002). 

[7] U.S. General Accounting Office, Highlights of a GAO Forum: Mergers 
and Transformation: Lessons Learned for a Department of Homeland 
Security and Other Federal Agencies, GAO-03-293SP (Washington, D.C.: 
Nov. 14, 2002). 

[8] GAO-01-115. 

[9] U.S. General Accounting Office, Transportation Security 
Administration: Actions and Plans to Build a Results-Oriented Culture, 
GAO-03-190 (Washington, D.C.: Jan. 17, 2003). 

[10] GAO-02-966. 

[11] GAO-02-862. 

[12] GAO-01-115. 

[13] GAO-02-966. 

[14] GAO-01-115. 

[15] GAO-02-966. 

[16] GAO-02-966. 

[17] Gallup identified 12 questions that measure employee perspective 
and, according to Gallup, the responses to these questions link 
directly to organizational outcomes. 

[18] GAO-02-966. 

[19] GAO-02-966. 

[20] GAO-02-966. 

[21] U.S. General Accounting Office, Performance Management Systems: 
IRS’s Systems for Frontline Employees and Managers Align with Strategic 
Goals but Improvements Can Be Made, GAO-02-804 (Washington, D.C.: July 
12, 2002). 

[22] GAO-02-862. 

[23] GAO-02-862. 

[24] The precise mix and weight is based on considerations such as job 
requirements and specific agency initiatives that place a greater 
emphasis on a particular competency, such as customer service. The 
system permits flexibility provided that the mix and weighting for each 
employee adhere to the ranges set by the department and are clearly 
articulated, consistently applied, and transparent. 

[25] GAO-02-862. 

[26] GAO-02-862. 

[27] GAO-02-966. 

[28] U.S. General Accounting Office, Human Capital: Practices That 
Empowered and Involved Employees, GAO-01-1070 (Washington, D.C.: Sept. 
14, 2001). 

[29] GAO-02-862. 

[30] GAO-01-1070. 

[31] U.S. General Accounting Office, Highlights of a GAO Roundtable: 
The Chief Operating Officer Concept: A Potential Strategy to Address 
Federal Governance Challenges, GAO-03-192SP (Washington, D.C.: Oct. 4, 
2002). 

[32] This analysis included only those appointed after October 1, 1989, 
(fiscal year 1990) who left before September 30, 2001 (fiscal year 
2001). Political appointees who were appointed before October 1, 1989, 
or who had not left by September 30, 2001, were not included because 
they did not have appointment or separation dates and thus we could not 
determine their length of service. Separations included resignations, 
terminations, retirements, and deaths. 

[33] U.S. General Accounting Office, Senior Executive Service: Enhanced 
Agency Efforts Needed to Improve Diversity as the Senior Corps Turns 
Over, GAO-03-34 (Washington, D.C.: Jan. 17, 2003). 

[34] GAO-02-966. 

[35] GAO-02-862. 

[36] U.S. General Accounting Office, Results-Oriented Cultures: Using 
Balanced Expectations to Manage Senior Executive Performance, GAO-02-
966 (Washington, D.C.: Sept. 27, 2002); Results-Oriented Cultures: 
Insights for U.S. Agencies from Other Countries’ Performance Management 
Initiatives, GAO-02-862 (Washington, D.C.: Aug. 2, 2002); and Managing 
for Results: Emerging Benefits From Selected Agencies’ Use of 
Performance Agreements, GAO-01-115 (Washington, D.C.: Oct. 30, 2000). 

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