Sept27-2002_d02966.txt

United States General Accounting Office
Report to Congressional Subcommittees
GAO

September 2002
RESULTS-ORIENTED CULTURES



Using Balanced Expectations to Manage Senior Executive
Performance
a
United States General Accounting Office September 2002

RESULTS-ORIENTED CULTURES
G A O Using Balanced Expectations to Manage

Accountability Integrity Reliability



Senior Executive Performance
Highlights


Why GAO Did This Study
Effective performance management systems link individual
performance to organizational goals. In October 2000, the Office of
Personnel Management amended regulations to require agencies to
link senior executive performance with organizational goals; to
appraise executive performance by balancing organizational results
with customer satisfaction, employee perspective, and other areas;
and to use performance results as a basis for pay, awards, and
other personnel decisions. Agencies were to establish these
performance management systems by their 2001 senior executive
performance appraisal cycles.
Because they implemented a set of balanced expectations prior to
the Office of Personnel Management requirement, GAO studied the
Bureau of Land Management's, Federal Highway Administration's,
Internal Revenue Service's, and Veterans Benefits Administration's
use of balanced expectations to manage senior executive performance
in order to identify initial approaches that may be helpful to
other agencies in holding senior executives accountable for
results.


What GAO Found
The agencies GAO reviewed developed an initial set of balanced
expectations for senior executives to address in their individual
performance plans. GAO found that these agencies are in the early
stages of using a set of balanced expectations to appraise senior
executive performance and there are significant opportunities to
strengthen their efforts as they move forward in holding executives
accountable for results. Specifically, more progress is needed in
explicitly linking executive expectations for performance to
organizational goals. In addition, while these agencies address
partnering with customers and other stakeholders, greater emphasis
should be placed in fostering the collaboration within and across
organizational boundaries to achieve results. Successful
organizations understand that they must often change their culture
to successfully transform themselves, and such change starts with
top leadership. Senior executive performance expectations to lead
and facilitate change could be a critical element as agencies
transform themselves. The agencies generally agreed with these
conclusions, as well as the selected initial implementation
approaches GAO identified, as shown below.

Selected Initial Implementation Approaches to Manage Senior
Executive Performance that May Be Helpful to Other Agencies
Provide Useful Data. The agencies disaggregated data from
agencywide customer and employee surveys. In addition, the Bureau
of Land Management and Veterans Benefits Administration provide
senior executives with objective data through real-time data
systems so that executives can track their individual progress
against organizational goals.
Require Follow-up Action. The Internal Revenue Service requires
senior executives to develop action plans to follow up on customer
and employee issues identified through agencywide surveys. The
Federal Highway Administration requires executives to use
360-degree feedback instruments to solicit employee views on their
leadership skills and then incorporate action items into their
performance plans for the next fiscal year.
Make Meaningful Distinctions in Performance. The agencies are
working at making distinctions in senior executive performance. To
recognize varying levels of significance and complexity among
executive performance, the Internal Revenue Service established an
executive compensation plan that assigns executives to bonus levels
with corresponding bonus ranges based on levels of responsibilities
and commitments.

This is a test for developing highlights for a GAO report. The
full report, including GAO's objectives, scope, methodology, and
analysis is available at www.gao.gov/cgi-bin/getrpt?GAO-02-966. For
additional information about the report, contact J. Christopher
Mihm on [phone]. To provide comments on this test
highlights, contact Keith Fultz (202-512-3200) or email 
[email protected].



Contents


Letter1

Results in Brief3 
Background6 
Agencies' Balanced Expectations for Senior Executive
Performance9 
Initial Implementation Approaches to Manage Senior
Executives'
Performance18 
Conclusions26 
Agency Comments27



Appendixes

Appendix I: Appendix II:
Appendix III:
Appendix IV:

Appendix V:
Appendix VI: 
Objectives, Scope, and Methodology29

BLM's Senior Executive Performance Plans31 
Performance Elements31 
Performance Standards for Elements32 
Performance Standards for Summary Ratings32 
Proposed Revisions for the 2002 Rating Year Performance
Plans32

FHWA's Senior Executive Performance Plans34 
Performance Elements34 
Performance Standards for Elements35 
Performance Standards for Summary Ratings35

IRS's Senior Executive Performance Plans37 
Performance Elements37 
Performance Standards for Elements38 
Performance Standards for Summary Ratings39

VBA's Senior Executive Performance Plans41 
Performance Elements41 
Performance Standards for Elements42 
Performance Standards for Summary Ratings43 
Revisions to the Fiscal Year 2002 Performance
Plans44



Comments from the Internal Revenue Service47

Table 1: Examples of BLM's, FHWA's, IRS's, and VBA's
Expectations




Tables
for Senior Executive Performance in Contributing to 
Organizational Results10 
Table 2: Examples of BLM's, FHWA's, IRS's, and VBA's Customer
Satisfaction Expectations for Senior Executive
Performance12

Page i GAO-02-966 Senior Executive Performance Management
Contents


A
United States General Accounting Office Washington, D.C.
20548
September 27, 2002
The Honorable Daniel K. Akaka Chairman The Honorable Thad
Cochran Ranking Minority Member Subcommittee on International
Security, Proliferation, and
Federal Services Committee on Governmental Affairs United States
Senate
The Honorable Richard J. Durbin Chairman The Honorable George V.
Voinovich Ranking Minority Member Subcommittee on Oversight of
Government Management,
Restructuring, and the District of Columbia Committee on
Governmental Affairs United States Senate
Leading organizations have recognized that a critical success
factor in fostering a results-oriented culture is a performance
management system that creates a "line of sight" showing how unit
and individual performance can contribute to overall organizational
goals and helping them understand the connection between their
daily activities and the organization's success. Effective
performance management systems first align leadership's performance
expectations with organizational goals and then cascade performance
expectations through all levels in the organization. Effective
systems are not merely once-or twice-yearly expectation setting and
appraisal tools, but can help the organization manage on a
day-to-day basis. Leading organizations use their performance
management systems to achieve results, accelerate change, and
facilitate communication throughout the year so that discussions
about individual and organizational performance are integrated and
ongoing. Thus, an effective performance management system can be a
strategic tool for organizations to drive internal change and
achieve external results.
We have observed that modernizing performance management systems
and linking them to agency strategic plans and desired outcomes
should be a top priority as agencies seek to transform their
cultures in response to existing and emerging challenges and
opportunities.1 Performance management systems in leading
organizations typically seek to achieve three key objectives.
First, they strive to provide candid and constructive feedback to
help individual employees maximize their contribution and potential
in understanding and realizing the goals and objectives of the
agency. Second, they seek to provide management with the objective
and fact-based information it needs to reward top performers.
Third, performance management systems provide the necessary
information and documentation to deal with poor performers. Most
federal performance management systems fail to achieve these
objectives.
In January 2001, GAO designated strategic human capital
management as a governmentwide high-risk area.2 One of the key
areas challenging federal agencies is creating results-oriented
organizational cultures. Many agencies lack organizational cultures
that promote high performance and accountability, which are
critical to successful organizations. To help agency leaders
effectively lead and manage their people and integrate human
capital considerations into daily decision making and the program
results they seek to achieve, we developed a strategic human
capital model.3 The model highlights the kinds of thinking that
agencies should apply, as well as some of the steps they can take,
to make progress in managing human capital strategically. As
detailed in that model, one critical success factor is to link unit
and individual performance to organizational goals.
To help agencies hold senior executives accountable for
organizational results, the Office of Personnel Management (OPM)
amended regulations for senior executive performance management in
October 2000. These amended regulations on governing performance
appraisals for senior executives require agencies to establish
performance management systems
1 U.S. General Accounting Office, Managing for Results: Using
Strategic Human Capital Management to Drive Transformational
Change, 
GAO-02-940T (Washington, D.C.: July 15,2002).
2 U.S. General Accounting Office, High-Risk Series: An Update, 
GAO-01-263 (Washington, D.C.: January 2001).
3 U.S. General Accounting Office, A Model of Strategic Human
Capital Management, 
GAO-
02-373SP (Washington, D.C.: Mar. 15, 2002).



Results in Brief
that (1) hold senior executives accountable for their individual
and organizational performance by linking performance management
with the results-oriented goals of the Government Performance and
Results Act of 1993 (GPRA), (2) evaluate senior executive
performance using measures that balance organizational results with
customer satisfaction, employee perspectives, and any other
measures agencies decide are appropriate, and
(3) use performance results as a basis for pay, awards, and
other personnel decisions. Agencies were to establish these
performance management systems by their 2001 senior executive
performance appraisal cycles.
The first objective of this report was to describe the sets of
balanced expectations selected federal agencies used to appraise
senior executive performance for organizational results, customer
satisfaction, and employee perspectives. Our second objective was
to identify the initial implementation approaches these agencies
have taken to manage senior executive performance that may be
helpful to other agencies as they implement OPM's amended
regulations governing senior executive performance management
systems. We selected the Bureau of Land Management (BLM), Federal
Highway Administration (FHWA), Internal Revenue Service (IRS), and
Veterans Benefits Administration (VBA) because they used a set of
balanced expectations to manage the performance of all or a
significant portion of their senior executives prior to the OPM
requirement. IRS incorporated balanced expectations into its senior
executive performance management system in response to the Internal
Revenue Service Restructuring and Reform Act of 1998; the other
agencies established their systems administratively to emphasize
senior executives' accountability for organizational results and
other expectations. As appropriate, agencies developed the
performance expectations for senior executives' individual plans to
meet particular program and management objectives and agency needs.
To describe agencies' expectations for senior executive
performance, we used the categories prescribed by OPM's
regulations-organizational results, customer satisfaction, and
employee perspective. For additional information on our objectives,
scope, and methodology, see appendix I.
BLM, FHWA, IRS, and VBA are in the early stages of implementing
new performance management systems for their senior executives.
Each agency has taken the first step in developing an initial set
of expectations for senior executives to address in their
individual performance plans that are intended to balance
accountability for organizational results with a focus on customer
satisfaction and a consideration of employee

Page 3 GAO-02-966 Senior Executive Performance Management
perspectives. The agencies offered a menu of expectations for
senior executives to choose from and incorporate into their
individual performance plans. The agencies subsequently used these
expectations as the basis of senior executives' performance
appraisals.


•
Organizational results. To appraise senior executives'
contributions to organizational results, the agencies identified
(1) core competencies and supporting behaviors for senior
executives to follow that are intended to achieve results, such as
learning about current issues and applying that knowledge to make
sound decisions or pursuing business excellence, and (2) to only a
limited extent, targets for senior executives to meet that are
directly linked to organizational goals, such as the average return
on sales of acquired properties or the percent of cases meeting
accuracy standards.


•
Customer satisfaction. The agencies set expectations for
senior executives to address customer satisfaction in their
individual performance plans and appraised their performance on the
basis of partnerships formed, customer feedback, and improved
products and services.



•
Employee perspectives. The agencies set expectations for
senior executives to address employee perspectives in their
individual performance plans and appraised their performance on the
basis of the training provided to staff, safe and healthy work
environment, teamwork, employee satisfaction, and fairness and
diversity.

In addition, we identified an initial set of selected
implementation approaches BLM, FHWA, IRS, and VBA are taking that
may be helpful to other agencies as they manage senior executive
performance against balanced expectations. BLM, FHWA, IRS, and
VBA:


•
Provide useful data. The agencies provide senior
executives with objective data to help them manage their balanced
expectations during the year. For example, data systems at BLM and
VBA provide real-time data to help senior executives track their
individual performance against organizational results and allow
them to compare their performance against others. In addition, the
agencies disaggregated data from agencywide surveys so that the
results were applicable to the senior executives' customers and
employees.


•
Require follow-up action. IRS and FHWA require senior
executives to identify action items to follow up on customer and
employee issues. For example, IRS requires executives to hold
workgroup meetings and develop action plans to follow up on
customer and employee issues identified through agencywide surveys.
In addition, FHWA requires senior executives to use 360-degree
feedback instruments to solicit employee views on the executives'
leadership skills and then incorporate action items into their
individual performance plans based on the results.


•
Make meaningful distinctions in performance. The agencies
are working at implementing effective performance management
systems that make meaningful distinctions in senior executive
performance, such as by identifying varying levels of significance
and complexity among senior executive performance and considering
these levels in awarding bonuses. Towards this end, IRS established
an executive compensation plan for determining base salary,
performance bonuses, and other awards for senior executives that
corresponds bonus levels to different levels of responsibilities
and commitments. FHWA weights the elements it uses to appraise
senior executive performance to make distinctions among its
executives' performance.


BLM, FHWA, IRS, and VBA recognize that they are in the early
stages of implementation in using a balanced set of expectations as
part of their senior executive performance management systems. Not
surprisingly, therefore, there are significant opportunities to
strengthen their efforts as they move forward in holding senior
executives accountable for results. In particular, more progress is
needed in explicitly linking senior executive expectations for
performance to results-oriented organizational goals. Efforts at
making this direct linkage were often very limited. In addition,
while these agencies address partnering with customers and other
stakeholders, greater emphasis should be placed in fostering the
necessary collaboration both within and across organizational
boundaries to achieve results.
Lastly, there is a growing recognition, driven by a variety of
worldwide trends and pressing long-term fiscal challenges, that the
federal government is on the brink of an enormous transformation in
what the government does, how it does business, and, in some cases,
who does the government's business. Ultimately, successful
organizations understand that they must often change their culture
to successfully transform themselves, and that such a change starts
with top leadership. Senior



Background
executive performance and accountability for change management
will therefore be critical to the success of the federal
government's transformation. A specific performance expectation to
lead and facilitate change could be a critical element as agencies
transform themselves to succeed in an environment that is more
results oriented, less hierarchical, and more integrated. The
Commissioner of Internal Revenue provided written comments
generally agreeing with the contents of a draft of this report. In
addition, cognizant agency officials from BLM, FHWA, and VBA
generally agreed with a draft of this report.
Strategic human capital management, and specifically the need to
develop results-oriented organizational cultures, is receiving
increased attention across the federal government. The Congress has
underscored the consequences of human capital weaknesses through a
wide range of oversight hearings held over the last few years. In
addition, to foster a results-oriented culture in federal agencies,
the Congress is considering legislative proposals to, among other
things, focus attention on the impact poor performance can have on
the effectiveness of an organization and require agencies to have a
chief human capital officer to select, develop, and manage a
productive, high-quality workforce.
The President's Management Agenda, released in August 2001,
identified human capital as one of the five key governmentwide
management challenges currently facing the federal government.
Subsequently, the Office of Management and Budget and OPM developed
criteria that recognized the importance of creating a performance
culture that appraises and rewards employees based on their
contributions to organizational goals as a key dimension of
effective human capital management.
We developed a model of strategic human capital management to
highlight the kinds of thinking that agencies should apply, as well
as some of the steps they can take, to make progress in managing
human capital strategically.4 The model consists of eight critical
success factors, which are organized to correspond with four
cornerstones of effective strategic human capital management: (1)
leadership, (2) strategic human capital planning, (3) acquiring,
developing, and retaining talent, and (4) resultsoriented
organizational cultures. Within the cornerstone of
results-oriented
4 
GAO-02-373SP.
organizational cultures, a critical success factor is linking
unit and individual performance to organizational goals.
One way to reinforce accountability and alignment of individual
performance expectations with organizational goals is through the
use of results-oriented performance agreements. We have reported
that other countries have begun to use their performance management
systems as a strategic tool to help achieve results.5 In
particular, they use performance agreements to align and cascade
organizational goals to individual performance expectations through
several levels in their organizations. They also use performance
agreements to help identify the crosscutting connections both
within and between agencies and align the performance commitments
of top-level executives with broader governmentwide priorities.
Further, our work has shown that U.S. agencies have benefited
from their use of results-oriented performance agreements for
political and senior career executives.6 Although each agency
developed and implemented performance agreements that reflected its
specific organizational priorities, structures, and cultures, the
performance agreements met the following characteristics. They


•
strengthened alignment of results-oriented goals with
daily operations,


•
fostered collaboration across organizational
boundaries,


•
enhanced opportunities to discuss and routinely use
performance information to make program improvements,


•
provided a results-oriented basis for individual
accountability, and


•
maintained continuity of program goals during leadership
transitions.


Prior to OPM amending its regulations on senior executive
performance management systems, BLM, FHWA, IRS, and VBA implemented
systems
5 U.S. General Accounting Office, Results-Oriented Cultures:
Insights for U.S. Agencies from Other Countries' Performance
Management Initiatives, 
GAO-02-862(Washington, D.C.: Aug. 2, 2002).
6 U.S. General Accounting Office, Managing for Results: Emerging
Benefits From Selected Agencies' Use of Performance Agreements, 
GAO-01-115(Washington, D.C.: Oct. 30, 2000).
Page 7 GAO-02-966 Senior Executive Performance Management
that used a set of balanced expectations to manage senior
executive performance. BLM implemented a balanced approach to
manage its senior executive performance to focus attention and
accountability on organizational priorities, make resource
allocations, and minimize employee frustration. BLM incorporated
performance elements in senior executives' individual performance
plans for the rating year ending June 2000 that were structured
around its strategic goals to (1) "Restore and Maintain the Health
of the Land," (2) "Serve Current and Future Publics," and (3)
"Improve Organizational Effectiveness." BLM also included a
performance element in the senior executives' plans to "Improve
Human Resources Management and Quality of Work Life." (For more
information on BLM's senior executive performance plans, see app.
II.)
FHWA implemented a balanced approach to managing its senior
executive performance in response to its 1999 employee satisfaction
survey. Specifically, the majority of employees that responded
indicated that they did not understand their workgroup's role in
implementing FHWA's corporate management strategies that were based
on the Malcolm Baldridge National Quality Award and the
Presidential Quality Award Criteria-leadership, strategic planning,
customer and partner focus, information and analysis, human
resource development and management, process management, and
business results.7 Beginning in fiscal year 2000, FHWA appraised
senior executives on these corporate management strategies. (For
more information on FHWA's senior executive performance plans, see
app. III.)
In response to the Internal Revenue Service Restructuring and
Reform Act of 1998, IRS initiated a method of measuring performance
designed to foster quality service, promote compliance with the tax
laws, and consider the impact on employees. In fiscal year 2000,
IRS implemented a senior executive performance management system
that aligned the executives' performance expectations with a set of
balanced expectations consisting of employee satisfaction, customer
satisfaction, and business results, and with two additional areas
of responsibility-leadership and equal employment opportunity. (For
more information on IRS's senior executive performance plans, see
app. IV.)
7 The Malcolm Baldridge National Quality Award and the
President's Quality Award are given to organizations for their
overall achievements in quality and performance. In 2002, the
President's Quality Award criteria were reoriented to be consistent
with the President's Management Agenda.
Page 8 GAO-02-966 Senior Executive Performance Management
VBA adopted a balanced scorecard approach in fiscal year 1999 as
a strategic management tool to drive organizational change, provide
feedback to employees on measures they can influence, link
performance appraisal and reward systems to performance measures,
and provide incentives to managers to work as teams in meeting
performance measures.8 Its scorecard included measures for
accuracy, speed and timeliness, unit cost, customer satisfaction,
and employee development and satisfaction. VBA incorporated these
measures in the performance appraisals for senior executives in its
regional offices where the majority of senior executives are
located. (For more information on VBA's senior executive
performance plans, see app. V.)
Effective performance management systems
translate organizational priorities and goals into direct and
specific commitments that senior executives will be expected to
achieve during the year. To this end, BLM, FHWA, IRS, and VBA
developed a set of expectations for senior executive performance
that were intended to balance organizational results, customer
satisfaction, and employee perspectives and offered a menu of
expectations for senior executives to incorporate into their
individual performance plans. They appraised senior executives'
contributions to organizational results by the core competencies
and supporting behaviors senior executives followed or the targets
they met. In addition, the agencies appraised senior executives'
performance against their expectations for customer satisfaction
and employee perspectives.


Agencies' Balanced Expectations for Senior Executive
Performance

Organizational Results
OPM's regulations emphasize holding senior executives
accountable for their individual and organizational performance by
linking individual performance management with results-oriented
organizational goals. To appraise senior executive contributions to
organizational results, BLM, FHWA, IRS, and VBA identified core
competencies and supporting behaviors for senior executives to
follow, while VBA also identified targets for senior executives to
meet that are directly linked to organizational results, as shown
in table 1.
8 The balanced scorecard is a tool to measure performance at
various levels of an organization and to provide employees with
data to help them achieve individual and organizational
results.
Page 9 GAO-02-966 Senior Executive Performance Management
Table 1: Examples of BLM's, FHWA's, IRS's, and VBA's
Expectations for Senior Executive Performance in Contributing to
Organizational Results

Basis for senior executive appraisals Examples of expectations
to contribute to organizational results
Core competencies and supporting behaviors


•
Pursue business excellence through effective process
management and the application of balanced measures.


•
Learn about current and emerging issues/developments in
own field of expertise and apply knowledge to make technically
sound operational decisions.


•
Understand and plan for the condition and use of the
public lands by assuring that assessments and land use plans are
completed.


•
Improve program accountability and performance by staying
within the organizational cost targets and assuring the accuracy of
cost data.


•
Make progress in the improved use of existing automation
tools.


•
Develop and execute plans to achieve organizational
goals.


•
Develop critical business metrics to measure the overall
quality of processes and services and report results.


•
Translate strategies into unit, division, team, and
individual action plans with performance measures based on the
strategic objectives and performance goals.


Targets directly linked to organizational results


•
Proportion of veterans who receive planned service and
are rehabilitated, compared with all veterans who exit the
program.


•
Average number of months from date of acquisition to the
sale date of properties acquired due to defaults on Department of
Veterans Affairs' guaranteed loans.


•
Average number of days from when the veteran begins
"employment services" status to when the veteran enters suitable
employment.


•
Percent of original and reopened compensation and pension
claims and appeals completed and determined to be technically
accurate.


•
Cost per compensation claim completed.


•
Average return on sales of acquired
properties.


Source: BLM, FHWA, IRS, and VBA fiscal year 2001 guidance.
Core competencies and supporting behaviors: The agencies
identified core competencies and supporting behaviors for senior
executives to follow that are intended to contribute to their
agencies' achievement of performance goals. For example, FHWA set a
performance expectation for senior executives to develop strategies
to achieve FHWA's strategic objectives and performance goals. To
help meet this expectation, the Director of Field Services-South
convened the "Southern Executive Safety Summit" in 2000 to address
the region's highway fatality rates-the highest in the nation- and
their impact on FHWA achieving its goal on safety. The
participants, including state and federal transportation and safety
officials from the region, learned what each state was doing to
decrease fatality rates and discussed how to create new safety
strategies for each state and the region as a whole. Following the
summit, Kentucky, North Carolina, and Mississippi held subsequent
state safety summits and pursued numerous initiatives to reduce
fatalities. The senior executive reported in his self-assessment
for fiscal year 2001 that many states in the region have
experienced a reduction in the number of highway fatalities since
the Southern Executive Safety Summit, which is helping FHWA meet
its goal of reducing the number of highway-related fatalities by 20
percent in 10 years.
Similarly, to address IRS's performance expectation for senior
executives to develop and execute plans to achieve organizational
goals, a senior executive who is the area director for compliance
in New York has a performance expectation in his fiscal year 2002
individual performance plan to ensure that taxpayers affected by
the events of September 11, 2001, are treated and audited according
to their circumstances, and that the compliance guidelines and
policy regarding affected taxpayers are adhered to. In particular,
these taxpayers-including individuals and businesses- were not to
be audited for prior tax years before the end of March 2002, if
such an audit was necessary.
To contribute to its strategic goal to restore and maintain the
health of the land, BLM set an expectation for senior executives to
understand and plan for the condition and use of public lands. In
particular, the senior executive who heads the Colorado state
office had a performance expectation in her individual performance
plan for the 2001 performance appraisal cycle to conduct land use
assessments and complete plans as scheduled for the Gunnison Gorge
National Conservation Area. In her self-assessment for the 2001
performance appraisal cycle, she stated that she began conducting
land use assessments for Gunnison Gorge and approved "pre-plans,"
which outline the anticipated schedule, budget, and stakeholder
involvement to complete a land use plan.
Targets directly linked to organizational results: VBA
identified targets with specific levels of performance for senior
executives to meet. These targets link to the priorities in VBA's
balanced scorecard and the Department of Veterans Affairs' (VA)
strategic goals. For example, to contribute to VA's strategic goal
to "provide 'One VA' world class service to veterans and their
families through the effective management of people, technology,
processes and financial resources" and to address its priority of
accuracy, VBA set a national target of 72 percent for fiscal year
2001 for the accuracy rate of original and reopened compensation
and pension claims and appeals that were completed and determined
to be technically accurate. To contribute to that national target,
the senior executive in the Nashville regional office had a
performance expectation for his office to meet a target accuracy
rate of 59.2 percent. Similarly, to further contribute to VA's
strategic goal of world-class service and to address its priority
of speed and



Customer Satisfaction
timeliness, VBA set a national target for property holding
time-the average number of months from date of acquisition to date
of sale of properties acquired due to defaults on VA guaranteed
loans-of 10 months for fiscal year 2001. To contribute to the
national target, the same senior executive had a performance
expectation for his office to meet a target of
8.6 months.
OPM's regulations recognize that senior executives in public
sector organizations face the challenging task of balancing the
needs of multiple customers, who at times may have differing or
ever competing expectations. Customer involvement is important to
first make senior executives aware of differing or competing
expectations and to then build partnerships and coalitions to reach
mutual understanding of the issues. To this end, BLM, FHWA, IRS,
and VBA set expectations for senior executives to address customer
satisfaction in their individual performance plans and appraised
their performance on the basis of partnerships, customer feedback,
and improved products and services. Examples of the agencies'
expectations for customer satisfaction are shown in table 2.
Table 2: Examples of BLM's, FHWA's, IRS's, and VBA's Customer
Satisfaction Expectations for Senior Executive Performance

Basis for senior executive appraisals Examples of customer
satisfaction expectations
Partnerships • Balance a variety of federal, state, and local
interests through timely and enhanced consultation, cooperation,
and communication to build consensus.


•
Establish cooperative and constructive relationships,
networks, and alliances that facilitate input from a wide range of
internal and external stakeholders.


•
Engage customers and stakeholders in alternative dispute
resolution to manage and/or resolve conflicts in a positive and
constructive manner.


Customer feedback • Identify customer and partner needs and
measure their level of satisfaction.


•
Receive and act upon feedback from customer surveys,
listening sessions, focus groups, and other learning
techniques.


•
Percentage of veterans giving a high rating on the
satisfaction surveys.


•
Percentage of veterans' satisfaction with the way VBA
handled their claims.


Improved products and services • Initiate actions and manage
risks to develop new products and services within or outside the
organization.


•
Use customer input to improve products and services to
ensure customer and partner needs are met.


•
Act to continuously improve products and
service.


•
Percentage of callers who get through, but hang up before
being connected to an employee.


•
Average length of time that a caller waits before being
connected to the telephone agent.


Source: BLM, FHWA, IRS, and VBA fiscal year 2001 guidance.
Partnerships: Partnerships and coalitions can help senior
executives work collaboratively with their customers to ensure that
the organization takes into account their multiple interests and
achieves results. BLM's senior executives have relied on resource
advisory councils (RAC) consisting of local residents with diverse
interests as a way to involve customers, identify issues, and reach
a reasonable degree of consensus regarding BLM's land management
programs. To meet BLM's expectation to establish cooperative and
constructive relationships that facilitate input from a range of
stakeholders, the senior executive who heads the Montana state
office set an expectation to expand partnerships and maintain close
working relationships with national interest groups in his
individual plan for the 2001 performance appraisal cycle. This
senior executive solicited feedback from the Central Montana RAC to
discuss among his customers how to balance the ongoing, yet
potentially competing uses-including recreation, grazing, and oil
and gas leases-of a 150-mile stretch of the Missouri River and
surrounding areas. According to the senior executive, the RAC
recommended that ongoing uses continue, but that this stretch
receive special protection from further development. In his
self-assessment for the 2001 performance appraisal cycle, the
senior executive stated that he continues to use the RAC as a
highly effective citizen advisory group that plays a significant
role in land management deliberations.
Customer feedback: Customer feedback can help senior executives
determine customers' needs and their levels of satisfaction with
existing products and services. To hold its senior executives
accountable for customer satisfaction, senior executives in VBA's
regional offices had performance expectations to meet targets for
veterans giving a high rating on satisfaction surveys.
Specifically, the senior executive in the Nashville regional office
had a target in fiscal year 2001 to attain 85 percent in overall
satisfaction in a national survey of customers using vocational
rehabilitation and employment services and support.
In addition, to address his performance expectation for customer
satisfaction, the senior executive who heads VBA's Waco regional
office convened frequent "town hall" meetings to listen to
veterans' needs and discuss VBA issues, such as legislative changes
that affect the processing of veterans' claims. According to this
executive, the town hall meetings helped improve his customer
satisfaction levels because veterans identified the concerns that
were most important to them, gained direct access to the VBA
employees working on their benefit claims, and were better able to
understand the claims process. Specifically, the senior executive
reported in his self-assessment that during fiscal year 2001 he
worked with local service officers to identify in advance those
veterans planning to attend the town hall meetings, had their
claims folders available for review at the meetings, and was thus
able to enhance outreach programs.
Improved products and services: Senior executives can use the
feedback from customers to enhance the customers' understanding of
the organization and make improvements in the organization's
products and services. For example, to meet IRS's performance
expectation for senior executives to address customer satisfaction
by continuously improving products and services, a senior executive
responsible for submission processing and taxpayer assistance had a
performance expectation in her fiscal year 2001 individual
performance plan to develop a communication plan. This plan was
intended to better serve customers by helping improve their
knowledge and understanding of the tax return process.
To hold its senior executives accountable for improved products
and services, VBA set targets for executives to achieve, such as
the abandoned telephone call rate-the percentage of callers who get
through to VBA, but are put on hold and hang up before being
connected to an employee. Specifically, for fiscal year 2001, the
senior executive in the Nashville regional office had a target for
his office for an abandoned telephone call rate of not more than 5
percent for customers' inquiries of VBA's benefit programs, such as
compensation and pension services.
Employee Perspectives OPM's regulations
recognize that an agency's people are vital assets and people
achieve organizational goals and results. Accordingly, the
regulations call for senior executive performance plans and
appraisals to contain performance expectations on employees'
perspectives. To this end, BLM, FHWA, IRS, and VBA set expectations
for senior executives to address employee perspectives in their
individual performance plans and appraised their performance on the
basis of the training provided to staff, safe and healthy work
environment, teamwork, employee satisfaction, and fairness and
diversity. Examples of the agencies' expectations for employee
perspectives are shown in table 3.
Table 3: Examples of BLM's, FHWA's, IRS's, and VBA's Employee
Perspective Expectations for Senior Executive Performance


Basis for senior executive appraisals Examples of employee
perspective expectations
Training • Ensure that employees have the tools and training to
perform their jobs.


•
Create an environment for continuous learning and
development opportunities.


•
Ensure that plans exist and are adequately implemented to
recruit, train, retain, motivate, empower, and advance
employees.


•
Ensure workforce has skills aligned with the agency's
objectives.


•
Help attract and retain well-qualified
employees.


•
Ensure that the organization focuses appropriate
resources on employees' needs.


Safe and healthy work environment • Provide a safe, healthy work
environment.


•
Provide leadership and direction to identify initiatives
that improve the quality of worklife of employees.


•
Commit resources to making the organization workplace
friendly.


•
Create an environment conducive to performance excellence
and personal and organizational growth.


Teamwork • Effectively use ongoing feedback and coaching to
promote cooperation, teamwork, knowledge/skill sharing, and goal
accomplishment.


•
Motivate employees to achieve high performance through
open and honest communication and involve them in decision
making.


•
Promote and maintain an effective labor-management
relations program that incorporates the principles of
partnership.


•
Create an environment in which knowledge is managed,
shared, and used effectively.


Employee satisfaction • Employees' satisfaction with their
jobs.
• Employees' overall satisfaction with the organization.
Fairness and diversity • Take steps to implement equal
employment opportunity goals.


•
Require all subordinate managers and supervisors to
receive diversity awareness and equal opportunity
training.


•
Establish a zero tolerance standard for discrimination,
harassment, and hostile work environments.


Source: BLM, FHWA, IRS, and VBA fiscal year 2001 guidance.
Training: Senior executives can provide employees with the
necessary training and continuous developmental opportunities to
perform their jobs more effectively. To address VBA's performance
expectation for senior executives to ensure that plans exist and
are adequately implemented to recruit, train, retain, motivate,
empower, and advance employees, the senior executive in VBA's
Manila, Philippines, Regional Office and Outpatient Clinic
conducted focus groups to identify actions needed to respond to the
results of the 1999 employee survey. One action was to task a
training committee to develop and implement a Training Needs
Assessment tool to determine employees' training needs and to
schedule training for fiscal year 2002. The senior executive stated
in his selfassessment for fiscal year 2001 that the employees and
their supervisors used the assessment tool to establish individual
development plans and the training committee has been scheduling
training sessions to ensure that individual development plans are
met.
To meet BLM's expectation for senior executives to help attract
and retain well-qualified employees, the senior executive who heads
BLM's Nevada state office set a performance expectation for the
2001 performance appraisal cycle to maintain a trained and
motivated workforce. This executive worked with his Human Resources
Development Committee, composed of representatives from the eight
BLM field offices in Nevada. The committee meets regularly to
identify employee issues, make recommendations, and implement
actions. Specifically, with input from the committee, the senior
executive developed a Statewide Mentoring Program to enhance and
promote opportunities for employees' skill development and to
assist them in achieving their career goals. The senior executive
did not discuss the mentoring program in his self-assessment for
the 2001 performance appraisal cycle, but generally stated that his
office provided training to enhance leadership and interpersonal
skills.
Safe and healthy work environment: Senior executives can provide
employees with safe, secure, and healthful work conditions to
ensure that the workspace is conducive to effective performance. To
address VBA's expectation for senior executives to provide a safe,
healthy work environment in fiscal year 2001, the senior executive
who heads VBA's Manila, Philippines, Regional Office and Outpatient
Clinic worked with employees to improve the security and safety of
the regional office. Specifically, to prepare the office in case
suspicious materials are received, the senior executive reviewed
and updated its emergency evacuation plan and then met with
employees to ensure they understood the plan's procedures and were
comfortable with their responsibilities. In addition, he worked
with the Regional Security Office to provide security awareness
training to employees and held several emergency drills to test
employees' responses. He stated in his self-assessment for fiscal
year 2001 that while employees were still concerned with security,
he believed confidence in their safety and welfare had
improved.
Teamwork: Senior executives can encourage a teams-based approach
to help improve employee morale and job satisfaction by creating an
environment that is open to communication and has a sense of shared
responsibility for accomplishing organizational goals. To create an
environment in which knowledge is managed, shared, and used
effectively, FHWA encourages its senior executives to use
organizational selfassessments to solicit employee perspectives and
gauge their employees' work environment. FHWA provides sample
questions for these selfassessments that are based on the Malcolm
Baldridge criteria. For example, the senior executive heading the
Office of Information and Management Services required each of her
three divisions to complete an organizational self-assessment in
2001. FHWA employees trained in the Baldridge criteria facilitated
the half-day sessions for each division. As a result of the
sessions, the office consolidated the three divisions'
selfassessments and summarized the office's "strengths" and
"opportunities for improvement" in a report. The report identified
one of the office's strengths to be management's support and
approval for training, and one of its opportunities for improvement
to be keeping employees' individual development plans up to date.
In response, the senior executive identified in her individual
performance plan a specific expectation of updating individual
development plans for every employee by April 30, 2002.
To meet IRS's performance expectation for senior executives to
motivate employees to achieve high performance through open and
honest communication and involve them in decision making, a senior
executive who is the area director for compliance in New York
included an expectation in his fiscal year 2001 individual
performance plan to look for partnering opportunities to maximize
problem resolution and employee involvement, while developing and
maintaining effective relationships with the seven National
Treasury Employees Union chapters in his area.
Employee satisfaction: Senior executives can monitor employees'
satisfaction with their work environment to gauge if they feel
empowered and motivated to contribute to organizational goals. For
senior executives in the regional offices, VBA set a target for
employee satisfaction that senior executives were to achieve for
fiscal year 2001. Based on a 1-to-5 scale, the target was set by
estimating the average response on two questions from the employee
satisfaction survey. The two questions ask about the employee's
satisfaction with his or her job and the employee's overall
satisfaction with the organization. For example, VBA set a national
target score of 3.6 for employee satisfaction in the compensation
and pension services business line in fiscal year 2001. All
regional offices contribute to the target for this business line.
Specifically, the senior executive in the Nashville regional office
had a performance expectation for his office to meet a target score
of 3.5 for employee satisfaction.
Fairness and diversity: Senior executives can foster fairness
and diversity by protecting the rights of all employees, providing
a fair dispute resolution system, and working to prevent
discrimination through equality of




Initial Implementation Approaches to
Manage Senior Executives' Performance
employment and opportunity. To meet BLM's performance
expectation for senior executives to establish a zero tolerance
standard for discrimination, harassment, and hostile work
environments, a senior executive who heads BLM's Nevada state
office set an expectation in his individual plan for the 2001
performance appraisal cycle that he would demonstrate commitment to
nondiscrimination in the workplace by ensuring fair access to
developmental opportunities for employees.
While the four agencies tailored their performance management
systems to fit their organizational and operational needs, we
identified an initial set of implementation approaches that BLM,
FHWA, IRS, and VBA are taking that may be helpful to other agencies
as they manage senior executive performance against balanced
expectations. BLM, FHWA, IRS, and VBA


•
provide useful data,


•
require follow-up actions, and


•
make meaningful distinctions in performance.


Provide Useful Data Providing objective
data for organizational results, customer satisfaction, and
employee perspectives can help senior executives manage during the
year, identify performance gaps, pinpoint improvement
opportunities, and compare their performance to other executives.
Specifically, the agencies


•
developed data systems so that senior executives can
track their individual performance against organizational results,
and


•
disaggregated customer and employee satisfaction survey
data.


Developed data systems: To help senior executives see how they
are contributing to organizational results during the year, BLM and
VBA developed data systems for executives to use to track their
individual performance against organizational results. For example,
BLM's Director's Tracking System collects and makes available on a
real-time basis data on each senior executive's progress in their
state offices towards BLM's national priorities and the resources
expended on each priority. In particular, a BLM senior executive in
headquarters responsible for the wild horse and burro adoptions
program can use the tracking system to identify where the senior
executives in the state offices are against their targets and what
the program costs have been by state. Specifically, as of mid-June
2002, the BLM state director in California had completed 532
adoptions at a total cost of $460,000 towards his target of 1,150
adoptions for fiscal year 2002. Similarly, the state director in
Montana had completed 46 adoptions at a total cost of $63,000
towards his target of 300 adoptions.
VBA also developed a data system that tracks organizational and
individual performance. Its balanced scorecard data are updated
monthly and senior executives and other employees can access the
data through the agency's Intranet. The balanced scorecard compares
actual performance against the targets set for the national and
regional office levels. According to VBA officials, the scorecard
helps employees understand how they can affect the results of the
organization. Senior executives refer to the balanced scorecard
data at their leadership meetings, discuss how they performed
relative to the scorecard, and identify the causes behind
outstanding and poor performance.
Disaggregated survey data: Specific customer and employee
feedback helps senior executives pinpoint actions to improve
products and services for customers and to enhance employee
satisfaction. BLM, FHWA, IRS, and VBA disaggregated the data from
agencywide customer and employee satisfaction surveys so that the
results were applicable to a senior executive's customers and
employees. For example, from its Use Authorization Survey
administered to its various customers in fiscal year 2000, BLM
disaggregated the survey data to provide the applicable results to
individual senior executives who head the state offices.
Specifically, the senior executive in the Montana state office
received data for his state showing that 81 percent of the grazing
permit customers surveyed gave a favorable rating for the
timeliness of permit processing and for service quality. In his
self-assessment for the 2001 performance appraisal cycle, he stated
that issuing grazing permits has progressed without any problem or
backlogs and that permittees have not experienced any delays.
VBA disaggregates its survey results to the regional offices and
policy and program support offices that are larger than 15
employees in order to allow the senior executives to determine
actions that are appropriate for their offices. In 2001, VBA
administered its most recent employee survey to measure aspects of
organizational climate related to high performance. For each
question on the survey, VBA provided the office results and the VBA
average, as well as baseline data from surveys conducted in 1997
and 1999. For example, 47 percent of the employees surveyed in the
St. Paul regional

Require Follow-up Actions
office either strongly agreed or agreed that managers provided
an environment that supports employee involvement, contributions,
and teamwork. According to the 2001 survey results, this percentage
is slightly higher than the VBA average of 43 percent and indicated
an improvement from the 33 percent the office scored on this
question in both the 1997 and 1999 employee surveys. VBA compiles a
national report of the results so that senior executives can
compare how their office scored against other offices and VBA as a
whole.
IRS disaggregates data to the workgroup level from its
IRS/National Treasury Employees Union Employee Satisfaction Survey,
which measures general satisfaction with IRS, the workplace, and
the union. The Gallup Organization administers this survey to all
employees, which is comprised of Gallup's 12 questions ("Q12");9
additional questions unique to IRS, such as views on local union
chapters and employee organizations; as well as questions on issues
IRS has been tracking over time. Gallup provides the results for
each workgroup. For example, a senior executive can compare how his
workgroup performed to other operating divisions and to IRS as a
whole. Specifically, one senior executive's workgroup scored 3.68
out of a possible 5 for "having the materials and equipment they
need to do their work right" compared to the IRS-wide score of 3.58
on the survey. To allow senior executives and managers to benchmark
externally, Gallup compares each workgroup's results to the 50th
(median) and 75th (best practices) percentile scores from Gallup's
Q-12 database. To benchmark internally, IRS provides the
servicewide results from the previous year's survey in each
workgroup report.
As part of its senior executive performance management system,
IRS and FHWA require their senior executives to follow up on
customer and employee issues. To improve customer satisfaction, the
Commissioner of Internal Revenue set an expectation that the
business units, headed by senior executives, develop action plans
based on customer survey data that are relevant to the needs of
their particular customers. IRS provided guidance to senior
executives and managers to help them understand and interpret the
customer survey data, identify areas for improvement, and develop
action plans to respond to customers' issues and concerns.
9 Gallup identified 12 questions that measure employee
perspective and, according to Gallup, the responses to these
questions link directly to organizational outcomes.
Page 20 GAO-02-966 Senior Executive Performance Management
For example, to address the customer satisfaction expectation in
his fiscal year 2002 individual performance plan, an IRS senior
executive who is the area director for compliance in Laguna Niguel,
California, requires each of his territory managers to present an
action plan identifying ways to improve low scores from customer
surveys. He then rolls up these managers' plans into a consolidated
area action plan for which he is responsible. Specifically, an
expectation in his action plan is to improve how customers are
treated during collection and examination activities by ensuring
that examiners explain to customers their taxpayer rights, as well
as why they were selected for examination and what they could
expect. Further, the senior executive plans to ensure that
territory managers solicit feedback from customers on their
treatment during these activities and identify specific reasons for
any customer dissatisfaction. In his midyear self-assessment for
fiscal year 2002, the senior executive stated that substantial
progress is being made in achieving the collection and examination
customer satisfaction goals.
Similarly, to address employee perspectives, IRS requires senior
executives to hold workgroup meetings with their employees to
discuss the workgroups' Employee Satisfaction Survey results and
develop action plans to address these results. According to a
senior executive in IRS's criminal investigation unit, the
workgroup meetings were beneficial because they increased
communication with employees and identified improvements in the
quality of worklife. For example, through the workgroup meetings,
employees identified the need for recruiting supervisory special
agents to even out some of the workload. Subsequently, the senior
executive set an expectation in his fiscal year 2002 individual
performance plan to ensure that the field office has a strong
recruitment program to attract viable candidates. He also has an
expectation to ensure his field offices hold timely workgroup
meetings and develop and implement action plans to address concerns
identified during these meetings.
To reinforce the importance of follow-up action, IRS developed a
Webbased database system to track workgroup issues across IRS.
According to an IRS official, the system is being upgraded to
improve its usefulness for senior executives and will allow them to
track their progress in completing the actions identified in the
workgroup meetings. In addition, all employees will be able to
access summary information to help identify trends in the data
across workgroups. The system will also provide employees with the
opportunity to share best practice information on resolved
workgroup issues.


Make Meaningful Distinctions in
Performance
To help meet their employee perspective performance
expectations, FHWA requires senior executives to use 360-degree
feedback instruments to solicit employee views on their leadership
skills. Based on the 360-degree feedback, senior executives are to
identify action items and incorporate them into their individual
performance plans for the next fiscal year. FHWA piloted the
360-degree feedback instrument for half its leadership team of
senior executives in fiscal year 2001 and scheduled the rest for
fiscal year 2002. The 360-degree feedback process is designed to
provide an executive direct input from various sources-peers,
customers, and subordinates- and to compare those results to a
self-evaluation and input from a supervisor.
While the 360-degree feedback instrument is intended for
developmental purposes to help senior executives identify areas for
improvement and is not included in the executive's performance
evaluation, executives are held accountable for taking some action
with the 360-degree feedback results and responding to the concern
of their peers, customers, and subordinates. For example, based on
360-degree feedback, a senior executive for field services
identified better communications with subordinates and increased
collaboration among colleagues as areas for improvement, and as
required, he then incorporated action items into his individual
performance plan. In fiscal year 2001, he set a performance
expectation to develop a leadership self-improvement action plan
and identify appropriate improvement goals. In his self-assessment
for fiscal year 2001, he reported that he improved his personal
contact and attention to the division offices as evidenced by a 30
percent increase in visits to the divisions that year. Also, he
stated that he encouraged his subordinates to assess their
leadership skills. Consequently, 9 of his 11 subordinates are using
360-degree feedback instruments to improve their personal
leadership competencies.
According to OPM, the amended regulations were designed to
recognize that effective performance management requires agency
leadership to make meaningful distinctions between acceptable and
outstanding performance of senior executives and to appropriately
reward those who perform at the highest level. Effective
performance management systems provide agencies with the objective
and fact-based information they need to distinguish levels of
performance among senior executives and serve as a basis for bonus
recommendations.
OPM data on senior executive performance ratings indicate that
agencies across the federal government are not making meaningful
distinctions among senior executives' performance. Specifically,
agencies rated about 85 percent and 82 percent of senior executives
at the highest level their systems permit in their performance
ratings in fiscal years 2000 and 2001, respectively. Nearly all of
the senior executives are rated using three- and five-level rating
systems with the majority of senior executives rated under
five-level systems.10 When disaggregating the data by rating
system, the percentage of senior executives that received the
highest level rating under five-level systems was approximately 77
and 75 percent in fiscal years 2000 and 2001, respectively. In the
same period, the percent of senior executives receiving the highest
level rating under three-level systems was about 99 percent.
In addition, OPM data show that, governmentwide, approximately
52 percent of senior executives received bonuses each year since
fiscal year 1999. Between fiscal years 1999 and 2001, the average
bonus payment increased from about $10,200 to $12,300.11 OPM
officials told us that they plan to closely monitor the
distribution of fiscal year 2002 performance ratings and
bonuses.
IRS, FHWA, VBA, and BLM recognize that they are still working at
implementing effective performance management systems that make
meaningful distinctions in senior executive performance. For
example, IRS established an executive compensation plan for
determining base salary, performance bonuses, and other awards for
its senior executives that is intended to explicitly link
individual performance to organizational performance and is
designed to emphasize performance. To recognize performance across
different levels of responsibilities and commitments, IRS assigns
senior executives to one of three bonus levels at the beginning of
the performance appraisal cycle. Assignments depend on the senior
executives' responsibilities and commitments in their individual
performance plans for the year, as well as the scope of their work
and its
10 The rating levels for five-level systems include
"unsatisfactory," "minimally satisfactory," "fully successful,"
"first level above fully successful," and "second level above fully
successful"; and the three-level rating systems include
"unsatisfactory," "minimally satisfactory," and "fully
successful."
11 By regulation, bonus amounts paid to individual career senior
executives are limited to between 5 and 20 percent of the
executive's basic pay. Agency bonus totals cannot exceed the
greater of 10 percent of the aggregate career senior executive
basic pay or 20 percent of the average rates of career senior
executive basic pay. In compliance with the Internal Revenue
Service Restructuring and Reform Act of 1998, IRS's bonus totals
cannot exceed 5 percent of the aggregate career senior executive
basic pay.
impact on IRS's overall mission and goals. For example, the
Commissioner of Internal Revenue or Deputy Commissioner assigns
senior executives to bonus level three-considered to be the level
with the highest responsibilities and commitments-only if they are
a part of the Senior Leadership Team. IRS restricts the number of
senior executives assigned to each bonus level for each business
unit.
In addition, for each bonus level, IRS establishes set bonus
ranges by individual summary evaluation rating, which is intended
to reinforce the link between performance and rewards. The bonus
levels and corresponding bonus amounts of base salary by summary
rating are shown in table 4.
Table 4: IRS's Bonus Levels and Bonus Ranges of Base Salary for
Senior Executive Summary Evaluation Ratingsa

aBonuses paid to IRS career senior executives are governed by
the limits set forth in 5 USC 5384 and 9505, which provide that
bonuses shall be not less than 5 percent of basic pay.
Source: IRS guidance for fiscal year 2001.
To help ensure realistic and consistent performance ratings,
each IRS business unit has a "point budget" for assigning
performance ratings that is the total of four points for each
senior executive in the unit. After the initial summary evaluation
ratings are assigned, the senior executives' ratings are converted
into points-an "outstanding" rating converts to six points; an
"exceeded" to four points, which is the baseline; a "met" to two
points; and a "not met" to zero points. If the business unit
exceeds its point budget, it has the opportunity to request
additional points from the Deputy Commissioner. IRS officials
indicated that none of the business units requested additional
points for the fiscal year 2001 ratings.
IRS piloted the compensation plan in fiscal year 2000 with the
top senior executives that report to the Commissioner of Internal
Revenue and used it for all senior executives in fiscal year 2001.
For fiscal year 2001, 31 percent of the senior executives received
a rating of outstanding compared to 42 percent for fiscal year
2000, 49 percent received a rating of exceeded expectations
compared to 55 percent, and 20 percent received a rating of met
expectations compared to 3 percent. In fiscal year 2001, 52 percent
of senior executives received a bonus, compared to 56 percent in
fiscal year 2000. IRS officials indicated that they are still
gaining experience using the new compensation plan and will wait to
establish trend data before they evaluate the link between
performance and bonus decisions.
FHWA weights the elements it uses to appraise senior executive
performance to make meaningful distinctions among its senior
executives. These elements include (1) strategic and performance
plan accomplishments and corporate management improvements and
results and (2) job significance and complexity. The senior
executives receive a score totaling 100 points, with a maximum of
70 points for strategic and performance plan accomplishments and
corporate management improvements and results, and a maximum of 30
points for job significance and complexity. FHWA provides
definitions for assigning points. For example, to receive all 70
points for strategic and performance plan accomplishments, the
executive must achieve all the performance expectations identified
in the individual performance plan, including exceptional
advancement on the corporate management strategies. To receive all
30 points for job significance and complexity, the executive must
have a position that is highly visible, with a high degree of
difficulty due to legislation, court decisions, political
pressures, and other factors. Rating officials use these scores in
assigning a rating to senior executives of "achieved results,"
"minimally satisfactory," or "unsatisfactory." In fiscal year 2001
and 2000, all 45 senior executives received a rating of achieved
results. FHWA recommended 20 of the 45 senior executives (44
percent) receive bonuses in fiscal year 2001 and 22 of the 45
executives (49 percent) in fiscal year 2000. For both years, each
senior executive recommended for a bonus received one.
For VBA, a task force was established in April 2001 to review
VBA's claims processing. It found that 82 percent of VBA's senior
managers were recommended to receive either a performance bonus or
an increase in senior executive rank in 2000 when performance for
the organization as a whole was considerably below program goals
and performance varied among regional offices. Stating that there
must be appropriate rewards for outstanding performance and
negative consequences for those who do not perform according to
their performance agreement, the task force recommended that
detailed performance agreements be incorporated into the
performance standards for the senior executives in the regional
offices.
Following VA guidance for bonuses in fiscal year 2001, senior
executives in VBA receive bonuses by demonstrating significant
individual and organizational achievements during the performance
appraisal year as evidenced by clearly documented, specific
executive achievements, such as substantive improvements in the
quality of work or significant cost reductions. In fiscal year
2001, 50 percent of the senior executives in VBA received a bonus,
with 24 of the 50 executives receiving the highest performance
rating of "outstanding."
BLM appraises senior executives' performance and recommends them
for performance awards based on their achievement of the
performance elements in their individual performance plans and the
executives' demonstration of leadership excellence. BLM rates its
senior executives' performance as "pass," "provisional," or "fail."
Senior executives receive a pass rating if they fulfill the fully
successful standards for the performance elements in their
performance plans. All of the senior executives received a pass
rating in the 2000 and 2001 performance appraisal cycles. For the
2000 and 2001 performance appraisal cycles, the Department of the
Interior guidance limited BLM's total number of senior executive
nominations for performance awards, including the Secretary's
Executive Leadership Award, performance bonuses, or pay rate
increases, to no more than 45 percent or 9 of its career senior
executives as of the end of the appraisal cycles. Of BLM's 17 rated
career senior executives, 4 received performance bonuses, 3
received pay rate increases, and 1 received the Secretary's
Executive Leadership Award in 2000. In 2001, of BLM's 19 rated
career senior executives, 5 received performance bonuses and 4
received pay rate increases.
Leading organizations use their performance
management systems to



Conclusions
achieve results, accelerate change, and facilitate communication
throughout the year so that discussions about individual and
organizational performance are integrated and ongoing. Toward this
end, BLM, FHWA, IRS, and VBA are in the early stages of
implementing their new performance management systems for senior
executives. In particular, while these agencies identified core
competencies and supporting behaviors for senior executives to
follow that are intended to contribute to results, they identified
to a much lesser extent targets for senior executives to meet that
are directly linked to organizational goals. In addition, they
identified expectations for senior executive performance for
customer satisfaction and employee perspectives.
These agencies have taken the first steps in creating a
performance management system for senior executives that is a
strategic tool for holding individuals accountable for their
contributions to results and organizational success. Their initial
implementation approaches to manage senior executives' performance
recognize the importance of providing useful data so that
executives can track their individual performance against
organizational results on a real-time basis and the benefit of
requiring follow-up action on customer and employee issues through
workgroup meetings and action plans. However, these agencies also
acknowledge that they are still working at implementing effective
systems that can make meaningful distinctions in performance.
There are significant opportunities to strengthen these efforts
as they move forward in holding senior executives accountable for
results. In particular, more progress is needed in explicitly
linking senior executive expectations for performance to
results-oriented organizational goals, fostering the necessary
collaboration both within and across organizational boundaries to
achieve results, and demonstrating a commitment to lead and
facilitate change. These expectations for senior executives will be
critical to keep agencies focused on transforming their cultures to
be more results oriented, less hierarchical, and more integrated,
and thereby be better positioned to respond to emerging internal
and external challenges, improve their performance, and assure
their accountability.
We provided a draft of this report in
August 2002 to the Secretaries of the


Agency Comments
Interior, Transportation, the Treasury, and Veterans Affairs and
the Commissioner of Internal Revenue for their review. We received
written comments from the Commissioner of Internal Revenue stating
that our draft report accurately accounted for the factors that
influence IRS's executive performance management and compensation
system (see app. VI). In addition, cognizant agency officials from
the Departments of the Interior, Transportation, and Veterans
Affairs responded that they generally agreed with the contents of
the draft report. In some cases, they also provided technical
comments to clarify specific points regarding the information
presented. Where appropriate, we have made changes to this report
that reflect these technical comments.
We are sending copies of this report to the Secretaries of the
Interior, Transportation, the Treasury, and Veterans Affairs; the
Commissioner of Internal Revenue; and the Director of OPM. We will
also make this report available to others upon request. In
addition, the report will be available at no charge on the GAO Web
site at 
http://www.gao.gov.
If you have any questions about this report, please contact me
or Lisa Shames on [phone] or 
[email protected]. Janice Lichty and BryanRasmussen were
key contributors to this report.
Sincerely yours,

J. Christopher Mihm Director, Strategic Issues Appendix I



Objectives, Scope, and Methodology
To meet our objectives, we focused our review on federal
agencies that have implemented a set of balanced expectations in
their performance management systems for all or a significant
portion of their senior executives prior to the Office of Personnel
Management (OPM) amending the regulations. Based on research and
interviews with knowledgeable officials, we identified agencies
that had relevant experience in using a set of balanced
expectations for senior executive performance management systems.
Among the possible agencies with relevant experience, we selected
the Bureau of Land Management (BLM), Federal Highway Administration
(FHWA), Internal Revenue Service (IRS), and Veterans Benefits
Administration (VBA) because they provided variation in mission,
size, and organizational structures.
To describe the sets of balanced expectations these agencies
used to appraise senior executive performance, we collected and
analyzed agencies' strategic plans, annual performance plans, and
performance reports; personnel policies and memoranda; survey
instruments and analyses; and the individual performance plans and
self-assessments of the senior executives we interviewed. We used
the categories in OPM's regulations to classify the agencies'
expectations for senior executive performance-organizational
results, customer satisfaction, and employee perspectives. Based on
our review of the agencies' expectations, we identified and
categorized the general approaches that agencies took to contribute
to organizational results, customer satisfaction, and employee
perspectives, as shown in tables 1, 2, and 3 and included a sample
of expectations along these approaches. Our analysis and
characterization for categorizing the performance expectations and
examples of those expectations was independently reviewed and
agreed upon for the three categories.
To identify the initial implementation approaches these agencies
have taken that may be helpful to other agencies as they manage
senior executive performance against the balanced expectations, we
interviewed senior executives in person or over the telephone at
the four agencies. At BLM, FHWA, and VBA, we randomly selected 10
career senior executives to interview at each agency, including 5
executives randomly drawn from central headquarters and 5
executives randomly drawn from the field offices. At IRS, because
of the larger number of senior executives, we randomly selected 21,
or 10 percent, of the career senior executives to interview,
including at least 5 executives randomly drawn from central
headquarters and at least 5 executives randomly drawn from the
field offices. The random selections covered two or more levels of
the Executive
Appendix I Objectives, Scope, and Methodology
Schedule for senior executives in each agency. This sample is
representative of the senior executives at their respective
agencies.
We identified the examples described in this report through our
interviews with senior executives and other agency officials. We
did not independently verify the testimonial evidence from the
interviews or the documents that senior executives and agency
officials provided to us. We also did not attempt to assess the
prevalence of the examples we cite among the senior executives
within the same agency. Therefore, senior executives other than
those cited for a particular example may, or may not, be engaged in
the same actions.
In addition, we spoke with the Commissioner of Internal Revenue,
the former Under Secretary of Benefits for VBA, and the former
Deputy Director for BLM to discuss their agencies' experiences and
challenges in implementing balanced expectations in their
performance management systems. We interviewed agency officials
responsible for managing human capital, implementing the Government
Performance and Results Act (GPRA), and administering agencywide
customer and employee satisfaction surveys, as well as other agency
officials identified as having particular knowledge of balanced
expectations and performance management in general. We spoke to OPM
officials responsible for the senior executive performance
management regulations to discuss the development and
implementation of the regulations, as well as officials responsible
for amending and implementing the general workforce performance
management regulations. Lastly, we met with the President of the
Senior Executives Association and other subject matter experts from
the National Academy of Public Administration, Brookings
Institution, and PricewaterhouseCoopers Endowment for The Business
of Government. We performed our work in Washington, D.C. from
October 2001 to July 2002 in accordance with generally accepted
government auditing standards.
Appendix II


BLM's Senior Executive Performance Plans
BLM's senior executive performance plans
for the 2001 performance

Performance Elements
appraisal cycle from July 1, 2000, through June 30, 2001, are
structured around four performance elements that correspond with
BLM's strategic goals. These performance elements and their fully
successful performance standards include the following.
Restore and maintain the health of the land: Understand and plan
for the condition and use of the public lands by conducting
assessments and completing land use plan evaluations; restore
at-risk resources and maintain functioning systems, particularly
riparian areas and watersheds; incorporate management land health
standards into decisions and plans; implement the National Fire
Plan; and emphasize resource protection by assuring that work
commitments for monitoring and inspection are met, appropriate
enforcement actions are taken, and results are recorded.
Serve current and future publics: Ensure the National
Environmental Policy Act and environmental analyses are sufficient
to sustain program decisions; reduce threats to public health,
safety, and property by completing deferred maintenance projects;
continue action on energy and mineral leases, permits, and claims;
implement BLM's wild horse and burro national strategy in
accordance with program directives; and improve land, resource, and
title information by participating in the development and
implementation of bureauwide data standards.
Improve organizational effectiveness: Continue to improve
customer service through timely and enhanced consultation,
cooperation, and communication with government officials and others
to build consensus; review public comment cards and survey results
to determine where improvements can be made; expand partnerships to
implement on-the-ground activities; implement the service-first
concept and improve overall services; and improve program
accountability and performance by staying within the organizational
cost targets and assuring the accuracy of cost data, conducting the
work aligned with cost targets, and improving work processes and
internal management practices based on analyses of management and
evaluation data, such as activity-based cost data.
Improve human resources management and quality of worklife:
Develop a strategy to provide for a needed workforce by developing
and implementing a response to the workforce plan; maintain a
trained and motivated workforce by implementing plans and
strategies to improve the satisfaction of BLM employees by assuring
each employee has a current
Appendix II BLM's Senior Executive Performance Plans
position description and individual performance plan linked to
the strategic plan, and providing appropriate training for
employees at all levels; demonstrate improvement in diversity and
composition of the workforce as measured by the percent of hiring
opportunities in which diversity candidates are placed; demonstrate
commitment to nondiscrimination in the workplace by ensuring that
individuals are not denied employment or career advancement
opportunities due to gender, race, and other factors; and provide
development opportunities to subordinates to help them participate
in the goal of achieving workforce diversity.
BLM included the fully successful
performance standards for each of the


Performance
performance elements in the executive's individual performance
plans,

described above. Executives

receive a rating of "pass" if they meet the fully successful
standard for an element. Executives could also receive a rating of
"provisional" or "fail" for each element.
Executives receive a summary rating of
"pass" if they fulfill the fully


Performance

successful standards for all the
performance elements in their performance plans. Executives could
also receive a summary rating of "provisional" or Summary Ratings
"fail."


Proposed Revisions for the 2002 Rating
Year Performance Plans
According to BLM officials, BLM is planning to revise the
performance elements in its senior executive performance plans for
the 2002 performance appraisal cycle to reflect the priorities of
BLM and the Department of the Interior. The elements include GPRA,
key management objectives, the President's Management Agenda, and
4Cs philosophy (consultation, cooperation, communication, all in
the service of conservation). Each performance element will include
a fully successful performance standard. The performance elements
and standards include the following.
• GPRA- (1) Restore and maintain the health of the land by
conducting assessments and completing land use plan actions as
planned, (2) serve current and future publics by ensuring the
National Environmental Policy Act and environmental analyses are
sufficient to sustain program decisions implementing the
President's Energy Plan while assuring that the National
Environmental Policy Act and planning guidelines are met, and (3)
implementing BLM's wild horse and burro national strategy.
Appendix II BLM's Senior Executive Performance Plans



•
Key management objectives-Implement the Director's
priorities by



(1)
assisting in the development of options to establish
conservation reserves, (2) improving the productivity and diversity
of public lands,


(3)
executing the National Fire Plan, (4) developing
opportunities for alternative sources of energy in land use
planning and program implementation, (5) completing new or revised
land use plans as proposed in congressional justifications, and (6)
achieving targets for abandoned mine lands/herd management areas
consistent with the revised wild horse and burro strategy and BLM's
annual performance plan.




•
President's Management Agenda-Improve financial
management, improve performance and budget integration, implement
e-government, make progress in the strategic use of human capital,
and develop and implement BLM's competitive sourcing plan. Specific
ways to address these areas were included.


•
4Cs philosophy-Demonstrate innovative approaches to
implementing the Secretary's 4Cs so that those impacted by BLM
decisions are considered and their concerns addressed; and
demonstrate personal leadership through significant contributions
to achieving the organization's goals, positioning the organization
for the future, through complex situations and working with
others.


Appendix III



FHWA's Senior Executive Performance Plans
FHWA's senior executive performance plans
for fiscal year 2001 consist of

Performance Elements
performance objectives that senior executives work to achieve
during the year. FHWA requires its senior executives to set
critical and noncritical performance objectives that are tailored
to their responsibilities within their respective offices and
aligned with the FHWA Administrator's performance agreement with
the Secretary of Transportation. These objectives are to contribute
to FHWA's corporate management strategies, which are based on the
Malcolm Baldridge and the Presidential Quality Award criteria.
These criteria include the following.


•
Leadership-Strengthen FHWA's Leadership System, through
training and other developmental initiatives, for the agency's new
organizational culture; set the vision and direction, ensure
accountability, and provide the resources to deliver the products
and services to the customers in an excellent and timely
manner.


•
Strategic planning-Translate strategies into unit,
division, team, and individual action plans with performance
measures based on the strategic objectives and performance
goals.


•
Customer and partner focus-Identify customer and partner
needs and measure their level of satisfaction; achieve success
through extensive cooperation and partnering with state and local
transportation agencies; receive and act upon feedback from
customers and use that information to improve products and services
to ensure customer and partner needs are met.


•
Information and analysis-Identify and develop key
business information systems that meet and track the Department of
Transportation and FHWA strategic goals; create an environment in
which knowledge, as a key asset of the agency, is managed, shared,
and used effectively.


•
Human resource development and management-Increase
employee technical competence, authority, and the tools needed to
meet agency and customer needs; continue to develop and utilize the
full potential of the agency's human resources and create an
environment that is conducive to performance excellence and
personal and organizational growth.


Appendix III FHWA's Senior Executive Performance Plans


•
Process management-Design, manage, and improve key
processes to achieve better results; use customer- and
employee-focused support, service, and delivery processes to
continually improve performance and enhance products and
services.


•
Business results-Develop critical FHWA business metrics
to measure the overall quality of processes and services and report
results; use customer feedback and benchmark high-performance
organizations to continuously improve overall performance for the
customers.


FHWA appraises senior executives on their
achievement towards each


Performance

critical and noncritical
performance objective.
Initial assessment ratings: For each performance objective in
their individual performance plan, senior executives receive an
assessment of "achieved results," "minimally satisfactory," or
"unsatisfactory."


•
Achieved results-Performance that fully meets, exceeds,
or demonstrates sufficient progress toward the attainment of the
objective as defined by the performance targets.


•
Minimally satisfactory-Performance that only partially
meets or only partially demonstrates sufficient progress toward the
attainment of the objective as defined by the performance
targets.


•
Unsatisfactory-Performance that fails to meet or
demonstrate sufficient progress toward attainment of the objective
as defined by the performance targets.




Performance Standards for Summary
Ratings
FHWA appraises senior executives on their achievement towards
all the performance objectives in their individual plans.
Summary ratings: Senior executives receive a summary rating on
the achievement of their performance objectives. The summary rating
levels include "achieved results," "minimally satisfactory," and
"unsatisfactory."
• Achieved results-All critical objectives must be assessed
achieved results. No more than one noncritical objective can be
assessed minimally satisfactory and none can be assessed
unsatisfactory.
Appendix III FHWA's Senior Executive Performance Plans


•
Minimally satisfactory-One or more critical objectives or
two or more noncritical objectives assessed minimally satisfactory,
or one or more noncritical objectives assessed
unsatisfactory.


•
Unsatisfactory-Unsatisfactory assessment on any critical
objective.


Appendix IV



IRS's Senior Executive Performance Plans
IRS's senior executive performance plans
for fiscal year 2001 are structured

Performance Elements
around responsibilities, commitments, and a retention
standard.
Responsibilities: The responsibilities reflect the core values
of IRS that are shared by all executives and managers for achieving
performance excellence. The responsibilities are structured around
(1) leadership,
(2) employee satisfaction, (3) customer satisfaction, (4)
business results, and (5) equal employment opportunity.


•
Leadership-Successfully leads organizational change,
effectively communicates the mission and strategic goals to
employees and other stakeholders, responds creatively to changing
circumstances, and uses sound judgment to make effective and timely
decisions.


•
Employee satisfaction-Ensures that a healthy work
environment is maintained, creates an environment for continuous
learning and development opportunities, and effectively uses
feedback and coaching to promote teamwork and skill
sharing.


•
Customer satisfaction-Listens to customers, analyzes
their feedback to identify their needs and expectations, builds
strong alliances, and involves stakeholders in making decisions and
achieving solutions.


•
Business results-Develops and executes plans to achieve
organizational goals, leverages resources to maximize efficiency
and produce high quality results, and learns about current and
emerging issues in own field of expertise.


•
Equal Employment Opportunity-Takes steps to implement
equal employment opportunity; cooperates with equal employment
opportunity officials on complaints; assigns work and makes
employment decisions without regard to sex, race, color, national
origin, and other factors; and monitors work environment to prevent
instances of prohibited discrimination and/or
harassment.


Commitments: Executives are to identify commitments they will
accomplish during the year that are based on the responsibilities.
The commitments describe a limited number of critical actions;
objectives, such as personal development objectives; and/or results
that the executive will work to achieve. They are specific to each
executive and should be derived from, and directly contribute to,
the program priorities and
Appendix IV IRS's Senior Executive Performance Plans


Performance Standards for Elements
objectives established by the organization's annual business or
operations plan. In addition, senior executives are to establish a
principal commitment in their individual performance plans focused
on the overall attainment of objectives to accomplish the operating
division's performance plan.
Retention standard: IRS developed a performance standard
relating to the fair and equitable treatment of taxpayers that
senior executives must meet.12 The retention standard states:
"Consistent with the individual's official responsibilities,
administers the tax laws fairly and equitably, protects taxpayers'
rights, and treats them ethically with honesty, integrity, and
respect." According to IRS, the executive and supervisor review the
retention standard to ensure mutual understanding.
IRS appraises senior executives on their achievement towards
their responsibilities, commitments, and retention standard.
Responsibilities: The executives receive a rating on how well
they achieved their responsibilities during the year and the
actions taken to support the accomplishment of the strategic goals
and annual business plan. These ratings include the following.


•
Exceeded-In addition to placing appropriate emphasis on
the five sets of responsibilities, served as a role model in one or
more of the five sets. Actions taken were exemplary in promoting
accomplishment of the annual business plan and strategic
goals.


•
Met-Placed appropriate emphasis on each of the five sets
of responsibilities. Appropriate actions were taken to support
accomplishment of the annual business plan and strategic
goals.


•
Not met-Placed insufficient emphasis on one or more sets
of responsibilities. Actions taken were inappropriate, ineffective,
or undermined strategic goals or annual business plan
accomplishment.


12 For more information on IRS's retention standard, see U.S.
General Accounting Office,
Tax Administration: IRS' Implementation of the Restructuring
Act's Personnel Flexibility Provisions, 
GAO/GGD-00-81 (Washington, D.C.: Apr. 28, 2000).
Page 38 GAO-02-966 Senior Executive Performance Management
Appendix IV IRS's Senior Executive Performance Plans
Commitments: The executives receive a rating on how well they
achieved the desired results outlined in their performance
commitments. The ratings include the following.


•
Exceeded-Overcame significant obstacles, such as
insufficient resources, conflicting demands, or unusually short
time frames, in achieving or exceeding desired results.


•
Met-Achieved or made substantial progress toward
achievement of desired results.


•
Not met-Did not achieve or make substantial progress
toward achievement of desired results.


Retention standard: Executives are rated on whether they met or
failed to meet their retention standard.
Senior executives receive a summary
evaluation, which combines the


Performance

ratings they received for their
responsibilities, commitments, and retention standard. Summary
evaluation ratings include the following.


Summary Ratings


•
Outstanding-The executive met the retention standard and
performed as a model of excellence by exceeding the
responsibilities and commitments in the individual performance
plan, despite constantly changing priorities, insufficient or
unanticipated resource shortages, and externally driven deadlines.
The executive consistently demonstrated the highest level of
integrity and performance in promoting the annual business plan and
IRS's strategic goals and objectives. The executive's effectiveness
and contributions had impact beyond his or her purview.


•
Exceeded-The executive met the retention standard and
generally exceeded both the responsibilities and commitments in the
individual performance plan. However, the executive may have met
the retention standard and demonstrated exceptional performance in
either responsibilities or commitments and met the expectations of
the other. The executive may have overcome significant
organizational challenges, such as coordination with external
stakeholders (e.g., the National Treasury Employees Union and the
Congress) or insufficient resources. The executive's effectiveness
and contributions may have had impact beyond his or her
purview.


Appendix IV IRS's Senior Executive Performance Plans


•
Met-The executive met the retention standard and the
responsibilities and commitments in the individual performance plan
with solid, dependable performance. The executive consistently
demonstrated the ability to meet the requirements of the job.
Challenges encountered and resolved are part of the day-to-day
operation and are generally routine in nature.


•
Not met-The executive failed to meet the retention
standard, responsibilities, and/or commitments. Repeated
observations of performance indicated negative consequences in key
outcomes, such as quality, timeliness, and business results.
Immediate improvement is essential.


Appendix V



VBA's Senior Executive Performance Plans
VBA's performance plans for its senior
executives in the regional offices for

Performance Elements
fiscal year 2001 are structured around common performance
elements- service delivery, organizational support/teamwork,
leadership development, external relations, and workplace
responsibilities.
Service delivery: The executive leads the regional office in the
pursuit of outstanding performance in all applicable program areas,
and as a team member helps the Service Delivery Network and VBA as
a whole to improve performance. Appropriate emphasis is placed on
the balanced scorecard and the executive's performance against the
balanced scorecard targets. The categories of the balanced
scorecard include:


•
customer satisfaction-organizational perspective from the
viewpoint of the veterans, service delivery partners, and other
stakeholders;


•
accuracy-the quality of work performed;


•
speed or timeliness-the length of time it takes to
complete specific end products or work units;


•
unit cost-costs associated with producing a service or a
product; and


•
employee development and satisfaction-the skill level of
the workforce, training needs, course development, and satisfaction
with the job and organization.


Organizational support/teamwork: The executive regularly
participates in activities and projects intended to further the
goals of the Service Delivery Network and VBA as a whole while
functioning as a dedicated and skillful team player. These
activities typically require the contribution of local resources
such as projects at the national level, special ad hoc efforts, and
innovations. The executive is assigned to a certain number of
projects during the year in light of the size of the executive's
regional office.
Leadership development - executive competencies and
qualifications: The executive identifies developmental activities
in a proposed leadership development plan, which is to be submitted
at the beginning of the performance year. The executive engages in
substantial personal development activities such as attending
training courses, reading books, and undertaking projects in order
to develop skills. These activities focus on OPM's Executive Core
Qualifications including leading change, leading
Appendix V VBA's Senior Executive Performance Plans


Performance Standards for Elements
people, results driven, business acumen, and building coalitions
and communications.
External relations: The executive builds effective, productive
relationships with organizations external to VBA in order to
further the department's goals and interests. Examples of
activities include work on a Federal Executive Board project,
participation in Veterans Integrated Service Network meetings, and
relations with the media, congressional offices, and service
organizations.
Workplace responsibilities: The executive assures a high quality
of work life for all employees of the regional office by:


•
promoting and maintaining an effective labor-management
relations program that incorporates the principles of
partnership;


•
creating and maintaining a working environment that is
free of discrimination and one that assures diversity in the
workplace;


•
ensuring that plans exist and are adequately implemented
to recruit, train, retain, motivate, empower, and advance employees
and that they promote the needs and goals of the individual and the
organizations; and


•
providing a safe, healthy work environment.


VBA identified indicators of performance for this element
including performance management and recognition, employee
development and training, equal employment opportunity policy
statement, physical plant enhancements, and employee satisfaction
surveys.
Senior executives receive a level of achievement of
"exceptional," "fully successful," or "less than fully successful"
for each element in their individual performance plan as measured
against the established performance requirements. For example, for
organizational support and teamwork, the executive's performance is
acceptable if the rater determines that completion of projects and
innovations is substantially equal to agreed-upon expectations and
the executive demonstrates cooperation with other executives in the
attainment of these goals where applicable. For elements where a
level of achievement other than fully successful has been assigned,
the rating official must describe the executive's achievements on
additional pages.
Appendix V VBA's Senior Executive Performance Plans


•
Exceptional-Fully successful performance requirements for
the element are being significantly surpassed. This level is
reserved for employees whose performance in the element far exceeds
normal expectations and results in major contributions to the
organization.


•
Fully successful-Performance requirements for the
particular element when taken as a whole are being met. This level
is a positive indication of employee performance and means that the
employee is effectively meeting performance demands for this
component of the job.


•
Less than fully successful-A level of performance that
does not meet the requirements established for the fully successful
level. Assignment of this achievement level means that performance
of the element is unacceptable.


The senior executives receive a summary
rating level of "outstanding,"


Performance

"excellent," "fully successful,"
"minimally satisfactory," or "unsatisfactory" performance based on
the achievement levels assigned for each Summary Ratings
performance element.


•
Outstanding-Achievement levels for all elements are
designated as exceptional.


•
Excellent-Achievement levels for all critical elements
are designated as exceptional. Achievement levels for noncritical
elements are designated as at least fully successful. Some, but not
all, noncritical elements may be designated as
exceptional.


•
Fully successful-The achievement level for at least one
critical element is designated as fully successful. Achievement
levels for other critical and noncritical elements are designated
as at least fully successful or higher.


•
Minimally satisfactory-Achievement levels for all
critical elements are designated as at least fully
successful.


•
Unsatisfactory-The achievement level(s) for one (or more)
critical element(s) is (are) designated as less than fully
successful.


Appendix V VBA's Senior Executive Performance Plans


Revisions to the Fiscal Year 2002
Performance Plans
For fiscal year 2002, VBA revised its performance plans for the
senior executives in the regional offices to improve individual
accountability for performance elements by linking organizational
performance goals and actual performance with meaningful and
measurable performance elements. VBA outlined specific sub-elements
for the service delivery element and replaced the leadership
development element with two additional elements-program integrity
and information security. These revisions include the
following.
Service delivery: This element focuses on the executive's
performance towards the balanced scorecard targets at the regional
office and national levels, in addition to specific performance
priorities with corresponding targets.


•
Achieve monthly rating production goals-The executive
will meet monthly rating production goals in either 9 out of 12
months or meet or exceed overall average monthly production
goals.


•
Improve the timeliness of rating end products
completed-The executive will meet the average days of completion
for specific end products and improve a specified percentage based
on his or her office's performance relative to the national
performance. Also, the executive will improve the cycle times of
claims processing in development, rating, and authorization time as
shown in the Claims Automated Processing System records. In
addition to reducing the cycle time, the executive will establish
70 percent of his or her claims, after December 1, 2001,within 7
days.


•
Reduce total compensation and pension cases pending over
6 months- The executive will improve a specified percentage based
on the percentage of fiscal year 2001 cases pending over 6 months.
For example, if an executive's office has over 50 percent of
compensation and pension cases pending over 6 months as of the end
of fiscal year 2001, the executive will achieve a 5 percent
improvement by the end of the 2002 rating year.


•
Reduce the pending inventory of compensation and pension
claims- The executive will reduce the number of rating and
authorization cases pending by set targets for each office. Meeting
these targets will reduce VBA's inventory of rating-related cases
to a total of 315,586 cases and


Appendix V VBA's Senior Executive Performance Plans
reduce VBA's authorization cases by at least 20 percent by the
end of the rating period.


•
Reduce inventory of appeals and achieve improvement in
remand timeliness-The executive will reduce the total number of
pending appeals by 10 percent and will achieve a 10 percent
improvement in the average number of days a remand is
pending.


•
Achieve established balanced scorecard targets-The
executive's performance on this element will be determined by
comparing the regional office's performance towards the regional
office scorecard targets (weighted 80 percent) and the office's
contribution to VBA's national scorecard targets (weighted 20
percent). The executive must achieve a minimum level of 90 percent
of the composite target.


•
Service delivery network resource center and regional
processing organization functions13-Service delivery network
resource center executives are required to meet specific monthly
production targets either in 9 of 12 months or meet or exceed the
overall average of monthly production goals. Regional processing
organization directors will have an additional standard provided at
a later date.


•
Additional priorities as established by the Secretary for
Veterans Affairs will also be used to evaluate performance in this
element.


Program integrity: The executive will lead his or her regional
office to ensure compliance with VBA's program integrity
directives. The executive is responsible for ensuring that program
integrity initiatives and policies are implemented, assessed
through an effective internal control process, and adjusted as
necessary to achieve appropriate results. The executive will
accomplish this by adhering to VBA's program integrity directives
and the Inspector General recommendations that are applicable and
ensuring that on-site reviews do not reveal critical flaws in
oversight of program integrity issues.
Information security: The executive must exercise due diligence
in efforts to plan, develop, coordinate, and implement effective
information security
13 VBA reorganized its regional office structure from nine
service delivery networks to four areas in May 2002. With the
reorganization, the service delivery network resource centers are
now called resource centers.
Page 45 GAO-02-966 Senior Executive Performance Management
Appendix V VBA's Senior Executive Performance Plans
procedures as identified by the Office of Management and Budget,
the National Institute of Standards and Technology, Veterans
Affairs' policies, and VBA guidance and policy documents. The
executive will have met this element by ensuring that information
system security plans exist and are implemented in accordance with
the National Institute of Standards and Technology and Office of
Management and Budget guidelines; ensuring that annual risk
assessments are conducted for each identified information
security-applications, hardware, software-to ensure that the
identified risks, vulnerabilities, and threats are addressed by
appropriate security controls; and ensuring that all employees
comply with departmental training requirements to understand their
information security responsibilities.
Appendix VI
Comments from the Internal Revenue Service



GAO's Mission
The General Accounting Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and
accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs
and policies; and provides analyses, recommendations, and other
assistance to help Congress make informed oversight, policy, and
funding decisions. GAO's commitment to good government is reflected
in its core values of accountability, integrity, and
reliability.


Obtaining Copies of GAO Reports and Testimony
The fastest and easiest way to obtain copies of GAO documents at
no cost is 
through the Internet. GAO's Web site (www.gao.gov)
contains abstracts and fulltext files of current reports and
testimony and an expanding archive of older products. The Web site
features a search engine to help you locate documents using key
words and phrases. You can print these documents in their entirety,
including charts and other graphics.
Each day, GAO issues a list of newly released reports,
testimony, and correspondence. GAO posts this list, known as
"Today's Reports," on its Web site daily. The list contains links
to the full-text document files. To have GAO e-mail this list to
you every afternoon, go to 
www.gao.govand select "Subscribe to daily E-mail alert
for newly released products" under the GAO Reports heading.

Order by Mail or Phone
The first copy of each printed report is free. Additional copies
are $2 each. A check or money order should be made out to the
Superintendent of Documents. GAO also accepts VISA and Mastercard.
Orders for 100 or more copies mailed to a single address are
discounted 25 percent. Orders should be sent to:
U.S. General Accounting Office 441 G Street NW, Room LM
Washington, D.C. 20548
To order by Phone: Voice: [phone] TDD: [phone]
Fax: [phone]
Contact:
To Report Fraud, Web site: 
www.gao.gov/fraudnet/fraudnet.htm




E-mail: 
[email protected]
Federal Programs Automated answering system: [phone] or
[phone]
Jeff Nelligan, managing director, 
[email protected][phone]


Public Affairs
U.S. GeneralAccounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548

Presorted Standard Postage & Fees Paid GAO Permit No.
GI00
United States General Accounting Office Washington, D.C.
20548-0001
Official Business Penalty for Private Use $300
Address Service Requested