[Merit Pay and the Senior Executive Service]

In a speech before an international conference, GAO discussed the Civil Service Reform Act of 1978 which was designed to revise the Federal personnel system. Recommendations made by GAO provided the basis for much of the law, which incorporated changes previously made by Presidential Reorganization Plans. Managerial flexibility was a critical component of civil service reform to provide managers with more flexibility in managing human resources, new tools to motivate subordinate supervisors and employees, and an organizational structure better equipped to manage Government programs. The Act also improved advancement opportunities for career executives, and it prescribes an equitable and effective mechanism to operate the merit pay system. Two important principles of the Act concerning merit pay are that: (1) merit pay determinations must be based on sound performance appraisal systems; and (2) payroll expenditures under merit pay would not exceed what otherwise would have been spent on payroll increases. Further, GAO will seek changes in the paysetting practices for Federal executives so that a more equitable system is established and maintained. GAO believes that the Act provides a reasonably good balance between management flexibility and employee protection, and GAO will focus on the provisions of the Act to determine if they are properly implemented and managed.