Human Capital:

Does the Federal Incentive Awards Program Improve Productivity?

FGMSD-79-9: Published: Mar 15, 1979. Publicly Released: Mar 15, 1979.

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The federal government uses incentive awards and quality step increases (QSI) to encourage employees to improve their work performance and, consequently, government operations, by recognizing work exceeding normal performance requirements.

A questionnaire sent to federal employees revealed that many felt unmotivated by their agencies' incentive programs and believed that the workers most deserving of cash awards were often passed over. Other comments identified the failure of awards programs to increase productivity and the feeling that improvements in efficiency were not recognized with awards. An analysis of incentive awards programs revealed that some workers receiving awards were rated as below-average performers. These problems exist because agency programs overlook the following basic components: linkage to agency goals, systems for setting work expectations and measuring performance, motivation of managers to use awards programs, timely and relevant awards separated from the basic salary rate, and an annual evaluation of program results. Most employees questioned believed that an improved incentives system would improve their performance. In most agencies surveyed, GAO found an excessive use of the QSI as the most commonly granted form of cash recognition, rather than the generally preferable promotion. The Civil Service Reform Act of 1978 helps associate incentive awards and employee performance, although the Act provides only the framework for change; the responsibility for accomplishment lies with supervisors and managers.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should require the Director of the Office of Personnel Management (OPM) to ensure the granting of QSI's in accordance with the Federal Personnel Manual and demonstrate that this has been accomplished. If this cannot be demonstrated, the Director should be required to terminate quality step increases altogether and merge funds set aside for this purpose with incentive awards program funds for employees not covered by the Senior Executive Service and Merit Pay provisions of the Civil Service Reform Act.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director, OPM, should revise chapter 451 of the Federal Personnel Manual to require the review and approval of agency incentive award plans, provide that agencies take necessary corrective actions if plans do not comply with Office guidelines, establish appropriate award scales for different grade levels, and offer alternatives to conventional cash and honorary awards.

    Agency Affected:

 

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