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OPM tightens funding for performance bonuses

Jun. 15, 2011 - 02:23PM   |  
By STEPHEN LOSEY   |   Comments
Office of Personnel Management director John Berry said tight budgets are forcing the government to rein in performance bonuses.
Office of Personnel Management director John Berry said tight budgets are forcing the government to rein in performance bonuses. (Chris Maddaloni / Staff file photo)

The federal government is about to get stingier with employee bonuses.

Beginning October, agencies must limit total spending on performance awards for Senior Executive Service members and other senior-level employees to no more than 5 percent of their aggregate salaries. Limits on bonuses for lower-ranking employees are even tighter: 1 percent of their combined salaries, the Office of Personnel Management and Office of Management and Budget said in a June 10 memo.

And the trimming should begin this year, OPM Director John Berry and OMB Deputy Director for Management Jeffrey Zients said in the memo. They did not set specific goals for 2011, but said agencies should make progress toward the 2012 goals this year.

Berry and Zients said tight budgets are forcing the government to rein in performance bonuses. They added some employees view performance awards as an entitlement and part of their regular compensation, and that awards are distributed too broadly and inconsistently. The government's workforce surveys consistently show that many managers and employees think the performance management and awards system is unfair and doesn't accurately reflect differences in performance levels.

"It is critical that these awards be managed in a manner that is cost-effective for agencies and successfully motivates strong employee performance," Berry and Zients said.

Recruitment, relocation and retention incentives or quality step increases during 2011 and 2012 will also be limited to 2010 levels. The memo does not limit Presidential Rank Awards, which executives and senior-level employees are eligible for, though Berry and Zients reminded agencies to remember the tight budget situation and limit their nominations for those awards. Time-off awards will not be limited.

Berry and Zients also ordered agencies to adopt better performance management processes that are transparent and credible and include consistent supervisor communication and feedback.

OPM and OMB are working with agencies' chief human capital officers and the National Council on Federal Labor-Management Relations to find ways to improve the government's performance management.

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