Pay for Performance:

Implementation of the Performance Management and Recognition System

GGD-87-28: Published: Jan 21, 1987. Publicly Released: Feb 4, 1987.

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In response to a congressional request, GAO provided information on: (1) five federal agencies' transition from merit pay to the Performance Management and Recognition System (PMRS); (2) how PMRS addressed the problems identified with merit pay; (3) the problems that still exist under PMRS; (4) the pay increases and performance awards PMRS employees received in fiscal year 1985; and (5) selected employees' initial perceptions of PMRS operations.

GAO found that: (1) the Office of Personnel Management (OPM) and the agencies lacked time to prepare for implementing PMRS because Congress enacted PMRS approximately 1 month after it was to have become effective; (2) OPM often issued untimely, unclear, and inconsistent guidelines and regulations during the initial months after implementing PMRS; (3) three of the few agencies that provided personnel data provided their employees with general pay and merit increases and performance awards in accordance with PMRS; (4) one agency miscalculated the increases for many of its PMRS employees, which could result in erroneous merit increases in future years; (5) certain nonperformance-related factors that caused inequities under merit pay continued to exist in PMRS; and (6) award amounts varied considerably for employees with the same grades and performance ratings.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: On September 23, 1987, OPM published Federal Personnel Manual letter No. 540-2. It contained guidance and information for agencies to use in calculating PMRS general pay increases. This information should ensure that agencies provide appropriate payouts for PMRS employees.

    Recommendation: The Director, OPM, should clarify the formula in current OPM guidance and regulations for calculating PMRS general pay increases. Specifically, the Director should provide more detailed guidance to agencies that would explain: (1) how PMRS general pay increases could have been miscalculated using previous OPM guidance and regulations; (2) what results could occur from seemingly small miscalculations of general pay increases on PMRS employees' positions in the salary range and their subsequent merit increases; and (3) how such miscalculations can be corrected.

    Agency Affected: Office of Personnel Management

 

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