Problems With the Small Business Administration's Merit Appraisal and Compensation System

FPCD-81-74: Published: Sep 21, 1981. Publicly Released: Sep 21, 1981.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GAO reviewed the performance appraisal/merit pay program of the Small Business Administration (SBA).

SBA experienced numerous problems in its initial implementation of merit pay. Some of these problems appear to be associated principally with implementation; others appear to be recurring, such as: (1) difficulties in developing, with employee involvement, meaningful performance standards; (2) problems with rating distribution skewness, resulting in management's prescribing a distribution of ratings contrary to Office of Personnel Management regulation; and (3) problems with using preestablished performance objectives as the basis for performance appraisals leading to the substitution of new appraisal criteria after the appraisal period contrary to the requirements of the Civil Service Reform Act. These problems contributed to negative attitudes and reduced the credibility of the SBA Merit Appraisal and Compensation (MAC) System. Unless these problems are addressed and resolved, many of the problems may well occur again in fiscal year 1981. No new official SBA management goals have been developed in 1981 for headquarters and field offices. As these goals serve as the primary basis for setting individual performance objectives, many individuals' performance objectives will be based on fiscal year 1980 goals that have not been revised or updated. Because few changes were made in the MAC system in 1981, there is a good chance that performance measures other than preestablished objectives might again be used as the basis for appraising performance, resulting in increased employee dissatisfaction.

Recommendations for Executive Action

  1. Status: Closed

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

    Recommendation: SBA should take corrective actions in 1981 to insure that specific distributions of employee performance ratings are not prescribed or forced.

    Agency Affected: Small Business Administration

  2. Status: Closed

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

    Recommendation: SBA should require that each level of management responsible for reviewing performance appraisals also be required to review and approve performance objectives early in the appraisal period or be willing to accept preestablished objectives as the basis for the appraisal review.

    Agency Affected: Small Business Administration

  3. Status: Closed

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

    Recommendation: SBA should take corrective actions in 1981 to insure that performance criteria other than preestablished performance objectives are not used by firstline supervisors in appraising employee performance or by higher level staff in reviewing and changing the initial appraisals.

    Agency Affected: Small Business Administration

  4. Status: Closed

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

    Recommendation: SBA should insure that individuals' objectives are jointly developed by the people being appraised and those doing the appraisals.

    Agency Affected: Small Business Administration

 

Explore the full database of GAO's Open Recommendations »

Sep 7, 2016

Aug 10, 2016

Jul 14, 2016

May 26, 2016

Apr 14, 2016

Apr 11, 2016

Mar 21, 2016

Feb 8, 2016

Jan 27, 2016

Nov 16, 2015

Looking for more? Browse all our products here