Nearly 300,000 federal employees are presently in pay systems that attempt to link pay increases to job performance—which arguably may be defined as how effectively, efficiently, or thoroughly one performs his or her job. A basic challenge with such arrangements, whether used in the private or the public sector, is arriving at credible and objective performance measures. In addition, while the private sector is ultimately concerned that employee performance be of such effectiveness that it contributes to the profits of a business, the federal government has other objectives to which employee performance is expected to contribute—such as the efficient, economical, and effective provision of services to those who qualify for, and are otherwise entitled to, them. Available performance-based pay funding is often pooled. This variability in pay increases may lead to valence problems for the merit-based pay system.
In many occupations today, pay is intended to reflect employee performance—or how effectively, efficiently, or thoroughly one performs his or her job. The federal government is no different from the private sector in this regard. Nearly 300,000 federal employees are currently in pay systems that attempt to make pay increases contingent upon job performance—such a system is often referred to as either a merit-based pay system or a performance-based pay system. A basic challenge with such an arrangement is arriving at credible and objective performance measures. In addition, while the private sector is ultimately concerned that employee performance be of such effectiveness that it contributes to the profits of a business, the federal government has other objectives to which employee performance is expected to contribute—such as the efficient, economical, and effective provision of services to those who qualify for, and are otherwise entitled to, them. This report discusses issues related to measuring performance across the federal government and analyzes a variety of methods utilized by the government to measure employee performance and its linkage to pay. As developments warrant, this report will be updated.