Can pay-for-performance systems work in government?


As this article by Staff Writer Steve Losey reminds us, the federal sector’s record of success in using pay-for-performance systems has been pretty dismal.

Agencies that have tried it (Defense Department, Homeland Security Department, intelligence agencies, and others) have been criticized for botching the way these systems are executed and managed. Performance ratings and bonuses are often viewed as unfair, even discriminatory. Many feds covered by these systems often quotas regulate the performance ratings and payouts. Often, ratings are overturned by managers who have never worked with the employees being rated. Transparency is often in short supply.

So does all that mean that pay-for-performance systems simply cannot work in the federal sector? Or does it mean that agencies simply need to keep working to perfect the way they are managed and executed until they are perceived as fair and transparent? Please tell us what you think in our discussion forum.


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  1. James S. Bowman on

    Readers may be interested in this recent article:

    “The Success of Failure: The Paradox of Performance Pay,” Review of Public Personnel Administration 30 (1), 2010,
    pp. 70-88.

  2. I think a better question is: Is there evidence that PFP works anywhere? Even the recently completely NAPA study examining DCIPS has conceded that there are not “strong research results that link performance-based compensation systems to improved individual or organizational performance. NAPA cites research, including some from experiments within the federal government showing that PFP systems have had no demonstrated impact on improving organizational performance. So why go forward? As NAPA says, USD(I) is still in favor of the system.

  3. The answer is probably not! This is a system designed for production workers, NOT admin and support workers. Each pay pool is also funded a certain amount for the entire pool. Which means if in reality every worker is a 4 and a 5… lots of workers will automatically be refused increase or bonus because the pot is only so big. Then there is the transparancy of the pay pool itself. The spend days behind locked doors and come out… ZERO oversight and just about zero information on what happened… and there is no way an employee can know what is fair and what is not. There is little an employee can do to object, let alone show abuse if everything is secret.

    The GS was the best thing the federal govt implemented. If management was trained more on the GS system, they would learn actually how great it is.

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