    Human Capital: Senior Executive Performance Management Can Be
    Significantly Strengthened to Achieve Results (26-MAY-04,
    GAO-04-614).

    Congress and the administration have established a new
    performance-based pay system for members of the Senior Executive
    Service (SES) that is designed to provide a clear and direct
    linkage between SES performance and pay. Also, GAO previously
    reported that significant opportunities exist for agencies to
    hold the SES accountable for improving organizational results.
    GAO assessed how well selected agencies are creating linkages
    between SES performance and organizational success by applying
    nine key practices GAO previously identified for effective
    performance management. GAO selected the Department of Education,
    the Department of Health and Human Services (HHS), and the
    National Aeronautics and Space Administration (NASA).
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-614
        ACCNO:   A10187
      TITLE:     Human Capital: Senior Executive Performance Management
    Can Be Significantly Strengthened to Achieve Results
         DATE:   05/26/2004
      SUBJECT:   Performance measures
    	     Compensation
    	     Agency missions
    	     Productivity in government
    	     Personnel evaluation
    	     Personnel management
    	     Employee incentives
    	     Senior Executive Service

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    GAO-04-614

    United States General Accounting Office

                         GAO Report to Congressional Requesters

    May 2004

    HUMAN CAPITAL

      Senior Executive Performance Management Can Be Significantly Strengthened to
                                    Achieve Results

                                           a

    GAO-04-614

    Highlights of GAO-04-614, a report to congressional requesters

    Congress and the administration have established a new performance-based
    pay system for members of the Senior Executive Service (SES) that is
    designed to provide a clear and direct linkage between SES performance and
    pay. Also, GAO previously reported that significant opportunities exist
    for agencies to hold the SES accountable for improving organizational
    results.

    GAO assessed how well selected agencies are creating linkages between SES
    performance and organizational success by applying nine key practices GAO
    previously identified for effective performance management. GAO selected
    the Department of Education, the Department of Health and Human Services
    (HHS), and the National Aeronautics and Space Administration (NASA).

    GAO makes specific recommendations to the agencies to reinforce the key
    practices through their SES performance management systems. NASA concurred
    with the recommendations, and HHS provided no comments. Education
    described specific actions it plans to take to revise its system, which
    are generally consistent with our recommendations. However, GAO disagrees
    that Education has already implemented or does not need to implement two
    of the recommendations.

    www.gao.gov/cgi-bin/getrpt?GAO-04-614.

    To view the full product, including the scope and methodology, click on
    the link above. For more information, contact J. Christopher Mihm at (202)
    512-6806 or mihmj@gao.gov.

    May 2004

    HUMAN CAPITAL

    Senior Executive Performance Management Can Be Significantly Strengthened to
    Achieve Results

    Senior executives need to lead the way to transform their agencies'
    cultures to be more results-oriented, customer focused, and collaborative
    in nature. Performance management systems can help manage and direct this
    process. While Education, HHS, and NASA have undertaken important and
    valuable efforts to link their career SES performance management systems
    to their organizations' success, there are opportunities to use their
    systems more strategically. For example, as indicated below by the
    executives themselves, the agencies can better use their performance
    management systems as a tool to manage the organization or to achieve
    organizational goals.

    As Congress and the administration are reforming SES pay to better link
    pay to performance, valid, reliable, and transparent performance
    management systems with reasonable safeguards are critical. Information on
    the experiences and knowledge of these agencies should provide valuable
    insights to other agencies as they seek to drive internal change and
    achieve external results.

    Percentage of Senior Executives Responding to a "Very Great" or "Great"
    Extent on Their Agencies' Overall Use of Their SES Performance Management
    Systems

    Contents

      Letter

    Results in Brief
    Background
    Performance Management Systems Can Be Used More Strategically

    by Selected Agencies Selected Agencies Can Strengthen the Link between
    Senior

    Executive Performance and Organizational Success Conclusions
    Recommendations for Executive Action Agency Comments and Our Evaluation

    1 4 7

    9

    12 48 49 51

    Appendixes

    Appendix I:

    Appendix II: Appendix III:

    Appendix IV: Appendix V:

    Appendix VI:

    Appendix VII: Objective, Scope, and Methodology

    Analyzed Agency Documents and Bonus and Rating Data, and

    Interviewed Cognizant Agency Officials Assessed a Sample of Career SES
    Individual Performance Plans Surveyed All Career SES at Each Agency

    GAO Senior Executive Survey Data from Education, HHS, and NASA

    Selected Elements of Education's, HHS's, and NASA's SES Performance
    Management Systems

    Education HHS NASA

    Comments from the Department of Education

    Comments from the Department of Health and Human Services

    Comments from the National Aeronautics and Space Administration

    GAO Contacts and Staff Acknowledgments

    GAO Contacts Acknowledgments 54

    54 55 57

    61

    73 73 74 77

    82

    85

    86

    89 89 89

    Tables Table 1:	Percentage of Senior Executives at HHS as Compared to
    Senior Executives Governmentwide Who Received Bonuses for Fiscal Years
    2000 through 2003 34

                                        Contents

    Table 2:	Percentage of HHS Senior Executives Who Received Bonuses and the
    Bonus Amounts as a Percentage of Base Pay for Fiscal Year 2003 34

    Table 3:	Percentage of NASA Senior Executives Who Received Bonuses and the
    Bonus Amounts as a Percentage of Base Pay for the 2002 and 2003
    Performance Appraisal Cycle 36

    Table 4:	Percentage of Education Senior Executives Who Received Bonuses
    and the Bonus Amounts as a Percentage of Base Pay for the 2003 Performance
    Appraisal Cycle 37

    Table 5: Disposition of SES Performance Plan Review, by

    Agency 56 Table 6: Disposition of SES Survey, by Agency 58 Table 7: Number
    of SES Out of Scope and Reason, by Agency 58

    Figures Figure 1:

    Figure 2:

    Figure 3:

    Figure 4:

    Figure 5: Figure 6: Figure 7:

    Percentage of Senior Executives Responding to a "Very
    Great" or "Great" Extent on Their Agencies' Overall Use
    of Their SES Performance Management Systems 10
    Percentage of Senior Executives Responding to a "Very
    Great" or "Great" Extent on Their Agencies' Use of Their
    SES Performance Management Systems to Meet Key
    Objectives 11
    Of Those Senior Executives Who See a Connection
    between Daily Activities and Organizational Goals to a
    "Very Great" or "Great" Extent, Percentage Who FeltThat
    Their System Holds Them Accountable to a "Very Great"
    or "Great" Extent 13
    Of Those Senior Executives Who Collaborate with Others
    to Achieve Crosscutting Goals to a "Very Great" or
    "Great" Extent, Percentage Who Felt They Are
    Recognized to a "Very Great" or "Great" Extent 16
    Percentage of SES Plans in HHS with Performance
    Expectations Related to Collaboration 17
    Percentage of SES Plans in Education with Performance
    Expectations Related to Collaboration 19
    Ofthe Senior Executives WhoFeltTheir Agency Formally
    Provides Performance Information That Allows Them to
    Track Their Work Unit's Performance, Percentage Who
    Felt This Information Was Useful, Available, or Both to a
    "Very Great" or "Great" Extent 21

    Contents

    Figure 8:	Of Those Senior Executives Who Took Action on Areas of
    Improvement to a "Very Great" or "Great" Extent, Percentage Who Felt They
    Are Recognized to a "Very Great" or "Great" Extent 23

    Figure 9:	Of Those Senior Executives Who Felt the Competencies They
    Demonstrate Help Them Contribute to Organizational Goals to a "Very Great"
    or "Great" Extent, Percentage Who Felt They Are Recognized to a "Very
    Great" or "Great" Extent 26

    Figure 10: Percentage of Senior Executives Reporting They "Strongly Agree"
    or "Agree" That They Are Rewarded for Accomplishments 29

    Figure 11: Percentage of Senior Executives Reporting That They Understand
    the Criteria Used to Award Bonuses by Extent 31

    Figure 12: Percentage of NASA Senior Executives by Rating Level in the
    2003 Performance Appraisal Cycle 35

    Figure 13: Of Those Senior Executives Who Said They Had the Opportunity to
    Be Involved, Percentage Who Said They Have Been Involved in Refining Their
    Agency's SES Performance Management System 39

    Figure 14: Of Those Senior Executives Who Said Formal Training Is
    Available, Percentage Who Said They Have Participated in Formal Training
    on Their Agency's SES Performance Management System 40

    Figure 15: Percentage of Senior Executives at HHS Reporting Involvement
    and Training Opportunities by Extent 41

    Figure 16: Percentage of Senior Executives at NASA Reporting Involvement
    and Training Opportunities by Extent 43

    Figure 17: Percentage of Senior Executives at Education Reporting
    Involvement and Training Opportunities by Extent 45

    Figure 18: Percentage of Senior Executives Who Felt Their Agency's SES
    Performance Management System Helped to Maintain a Consistent Focus on
    Organizational Goals during Transitions by Extent 47

    Contents

    Abbreviations

    CDC Centers for Disease Control and Prevention
    EO equal opportunity
    FDA Food and Drug Administration
    GPRA Government Performance and Results Act of 1993
    HHS Department of Health and Human Services
    NASA National Aeronautics and Space Administration
    OMB Office of Management and Budget
    OPM Office of Personnel Management
    PRB performance review board
    SES Senior Executive Service

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    A

    United States General Accounting Office Washington, D.C. 20548

    May 26, 2004

    The Honorable George V. Voinovich

    Chairman

    Subcommittee on Oversight of Government Management, the Federal Workforce,
    and the District of Columbia Committee on Governmental Affairs United
    States Senate

    The Honorable Jo Ann Davis
    Chairwoman
    Subcommittee on Civil Service and Agency Organization
    Committee on Government Reform
    House of Representatives

    High-performing organizations have recognized that effective performance
    management systems can help them drive internal change and achieve
    external results.1 Further, such organizations understand that they need
    senior leaders who are held accountable for results, drive continuous
    improvement, and stimulate and support efforts to integrate human capital
    approaches with organizational goals and related transformation issues.
    We previously reported that significant opportunities exist to strengthen
    agencies' efforts to hold senior executives accountable for results
    through
    their performance management systems.2 In particular, more progress is
    needed in explicitly linking senior executives' performance expectations
    to
    contributing to the achievement of 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.

    Recently, Congress and the administration have sought to modernize senior
    executive performance management systems. Congress established a new
    performance-based pay system for members of the Senior Executive

    1For additional information on the attributes of high-performing
    organizations, see U.S. General Accounting Office, Highlights of a GAO
    Forum on High-Performing Organizations: Metrics, Means, and Mechanisms for
    Achieving High Performance in the 21st Century Public Management
    Environment, GAO-04-343SP (Washington, D.C.: Feb. 13, 2004).

    2U.S. General Accounting Office, Results-Oriented Cultures: Using Balanced
    Expectations to Manage Senior Executive Performance, GAO-02-966
    (Washington, D.C.: Sept. 27, 2002).

    Service (SES) that is designed to provide a clear and direct linkage
    between SES performance and pay. An agency can raise the pay cap for its
    senior executives to $158,100 in 2004, with a senior executive's total
    compensation not to exceed $203,000, if the Office of Personnel Management
    (OPM) certifies and the Office of Management and Budget (OMB) concurs that
    the agency's performance management system, as designed and applied, makes
    meaningful distinctions based on relative performance. OPM and OMB are to
    issue regulations prescribing the requirements agencies must meet to
    obtain certification for these purposes. In a memo to the heads of
    departments and agencies requesting their comments on the draft proposed
    regulations outlining the certification criteria, the Director of OPM
    stated that OPM and OMB plan to fully implement the regulations in time
    for the fiscal year 2004 performance ratings and pay adjustments for the
    senior executives.3 In addition, as part of the administration's
    President's Management Agenda, OPM set a goal for 15 percent of the
    agencies to link performance appraisals for senior executives to the
    organization's mission and goals, and use their senior executive
    performance management systems to make meaningful distinctions and provide
    consequences based on performance by July 2004.

    At your request, this report assesses how well selected agencies are
    creating linkages between senior executive performance and organizational
    success through their career senior executive performance management
    systems. We selected the Department of Education, the Department of Health
    and Human Services (HHS), and the National Aeronautics and Space
    Administration (NASA) based on several factors, including mission, size,
    organizational structure, and use of their performance management systems
    for their career senior executives. Within HHS, we selected the Food and
    Drug Administration (FDA) and the Centers for Disease Control and
    Prevention (CDC) to determine how HHS's senior executive performance
    management system cascades down to these operating divisions.

    To meet this objective, we assessed how these agencies' career senior
    executive performance management systems apply nine key practices for
    effective performance management that we previously identified based on

    3U.S. Office of Personnel Management, "Memorandum for Heads of Departments
    and Agencies, Regulations Implementing the Senior Executive Service (SES)
    Performance-Based Pay System" (Washington, D.C.: Apr. 28, 2004).

    public sector organizations' experiences both here and abroad.4 These
    practices are as follows.

    1. Align individual performance expectations with organizational goals.

    2. Connect performance expectations to crosscutting goals.

    3.	Provide and routinely use performance information to track
    organizational priorities.

    4. Require follow-up actions to address organizational priorities.

    5. Use competencies to provide a fuller assessment of performance.

    6. Link pay to individual and organizational performance.

    7. Make meaningful distinctions in performance.

    8.	Involve employees and stakeholders to gain ownership of performance
    management systems.

    9. Maintain continuity during transitions.

    We found that collectively these key practices create a "line of sight"
    showing how unit and individual performance can contribute to overall
    organizational goals and helping individuals understand the connection
    between their daily activities and the organization's success.

    We analyzed the agencies' SES performance management systems' policies and
    guidance and other related documents; interviewed cognizant agency
    officials; assessed a sample of career senior executives' individual
    performance plans, which outline the performance expectations executives
    are to achieve during the year; analyzed aggregate senior executive
    performance rating and bonus data; and surveyed all career senior
    executives in each agency to gain information on their experiences and
    perceptions with regard to their senior executive performance

    4U.S. General Accounting Office, Results-Oriented Cultures: Creating a
    Clear Linkage between Individual Performance and Organizational Success,
    GAO-03-488 (Washington, D.C.: Mar. 14, 2003).

    management systems.5 We assessed the reliability of the senior executive
    performance rating and bonus data provided by Education, HHS, NASA, and
    OPM and determined that the data were sufficiently reliable for the
    purposes of this report. Information on the experiences and progress of
    the selected agencies should prove helpful to these agencies as well as
    provide valuable insights to other agencies as they seek to use senior
    executive performance management systems as a tool to drive internal
    change and achieve external results. We are using these practices to
    inform our internal senior executive performance management system.

    We conducted our work from August 2003 through March 2004 in accordance
    with the generally accepted government auditing standards. Appendix I
    provides additional information on our scope and methodology. Appendix II
    provides the complete survey results for each agency. Appendix III
    provides information on selected elements of Education's, HHS's, and
    NASA's SES performance management systems.

    Results in Brief 	Education, HHS, and NASA have undertaken important and
    valuable efforts to link their career senior executive performance
    management systems to their organizations' success; however, there are
    opportunities to use these systems more strategically to manage their
    organizations and achieve organizational goals. Our review of senior
    executives' performance plans showed that Education, HHS, and NASA have
    begun to implement key practices to develop effective performance
    management systems for their career senior executives. Specifically, we
    found the following.

    o 	All senior executives' performance plans in these agencies identified
    individual performance expectations that aligned with organizational
    goals. As a next step, setting specific levels of performance that are
    linked to these organizational goals can help senior executives see how
    they directly contribute to organizational results. While about 80 percent
    of senior executives in HHS have set specific levels of performance linked
    to organizational goals in their individual performance plans, only about
    5 percent of senior executives in Education and about 1 percent

    5For our review of a sample of SES performance plans, unless otherwise
    noted, the margins of error are within +- 9 percentage points for HHS and
    +- 6 percentage points for NASA. For Education, there is no sampling error
    since we reviewed all the SES plans. For our SES survey, unless otherwise
    noted, the margins of error are within +- 9 percentage points for
    Education and +- 4 percentage points for HHS and NASA.

    of senior executives in NASA have set specific levels of performance
    linked to organizational goals.

    o 	About two-thirds of senior executives' performance plans in HHS and
    about one-third in Education identified a specific programmatic
    crosscutting goal for collaboration. All senior executives' performance
    plans in NASA included a general goal to achieve the mission of the
    organization. As a next step, identifying the relevant internal or
    external organizations with which they would collaborate can reinforce a
    focus across organizational boundaries. About one-third or less of senior
    executives at each of these agencies clearly identified the specific
    internal or external organization(s) with which they would collaborate to
    achieve crosscutting goals.

    o 	All the performance plans of senior executives in NASA and almost all
    in Education included competencies that are to address the achievement of
    organizational results, employee perspectives, and customer satisfaction.
    In HHS, about 94 percent of executives' plans identified competencies
    related to organizational results, about 89 percent related to employee
    perspectives, and about 61 percent related to customer satisfaction.

    o 	At Education, approximately 98 percent of senior executives' plans
    identified a performance expectation related to leading and facilitating
    change, while approximately 25 percent of the executives' plans at HHS and
    almost none at NASA identified such an expectation.

    In addition, the agencies can use their senior executive performance
    management systems to strengthen the link between their senior executives'
    performance and their organizations' success by making meaningful
    distinctions in performance through ratings and performance awards
    (bonuses).

    o 	While about 86 percent of HHS's senior executives received the highest
    rating in fiscal year 2003, HHS has restricted the percentage of senior
    executives who receive bonuses to generally no more than one-third at each
    operating division each year since fiscal year 2001.

    o 	About three-fourths of NASA's senior executives received its highest
    rating, and about 52 percent of its senior executives received bonuses in
    its 2003 performance appraisal cycle.

    o 	Nearly all of Education's senior executives received its highest
    rating, and about 63 percent of senior executives received bonuses in its
    2003 performance appraisal cycle.

    As a point of comparison, across the executive branch, agencies rated
    about 75 percent of senior executives at the highest levels their systems
    permitted, and approximately 49 percent of senior executives received
    bonuses in fiscal year 2002, the most current year for which data are
    available. The Director of OPM stated that while a growing number of
    agencies have improved their distribution of ratings and bonuses, these
    governmentwide data also suggest that more work is needed. In addition,
    executive branch agencies can reward senior executives' performance in
    other ways, such as nominations for Presidential Rank Awards or other
    informal or honorary awards.

    As reported through our survey, senior executives' perceptions underscore
    that their agencies have opportunities to use their systems more
    strategically.

    o 	Generally, less than half of the senior executives at each agency feel
    that their agency uses its performance management system to the fullest
    extent possible, specifically by using the system as a tool to manage the
    organization or to achieve organizational goals to a very great or great
    extent.

    o 	Less than half of the senior executives at each agency feel that their
    performance management system is fully used to provide candid and
    constructive feedback to help them maximize their contributions to
    organizational goals to a very great or great extent.

    o 	Of the senior executives who reported that their agency provided
    performance information to track their work unit's performance, about 39
    percent at NASA, about 33 percent at HHS, and about 31 percent at
    Education found the performance information to be available when they need
    it and useful for making improvements in their work unit's performance to
    a very great or great extent.

    o 	Of the senior executives who indicated that they took action to a very
    great or great extent on areas of improvement based on the performance
    information provided by their agency, about 65 percent at NASA, about 60
    percent at HHS, and about 55 percent at Education felt

    they were recognized to a very great or great extent through their
    performance management systems for taking such actions.

    o 	Senior executives at these three agencies were involved in refining
    their performance management systems or participated in formal training
    when given the opportunity. However, at all three agencies, at least
    onethird of senior executives reported that they had no opportunity for
    such involvement, and about one-fourth reported that no formal training
    was available to them on their agency's performance management system.

    We provided a draft of this report to the Secretaries of Education and HHS
    and the Administrator of NASA for their review and comment. In addition,
    we provided a draft of the report to the Directors of OPM and OMB for
    their information. We received written comments from Education, HHS, and
    NASA, which are presented in appendixes IV, V, and VI. NASA's Deputy
    Administrator stated that NASA concurred with all the recommendations and
    plans to implement the recommendations in its next SES appraisal cycle
    beginning July 1, 2004. HHS's Acting Principal Deputy Inspector General
    stated that HHS had no comments upon review of the draft report.

    In responding to our recommendations, Education's Assistant Secretary for
    Management and Chief Information Officer stated that Education plans to
    revise its existing senior executive performance management system
    dramatically given OPM's draft regulations for the new SES pay for
    performance system and described specific actions Education plans to take.
    These actions are generally consistent with our recommendations and their
    successful completion will be important to achieving the intent of our
    recommendations. While Education's actions are important steps, we
    disagree that Education has fully implemented our recommendation to
    provide performance information to help senior executive decision making
    and does not need to implement our recommendation to require senior
    executives to identify crosscutting goals and relevant internal or
    external organizations to achieve them.

    Background	In November 2003, Congress authorized a new performance-based
    pay system for members of the SES.6 According to OPM's interim
    regulations,

    6National Defense Authorization Act for Fiscal Year 2004, Pub. L. No.
    108-136, November 24, 2003.

    SES members are to no longer receive annual across-the-board or locality
    pay adjustments with the new pay system. Agencies are to base pay
    adjustments for SES members on individual performance and contributions to
    the agency's performance by considering such things as the unique skills,
    qualifications, or competencies of the individual and their significance
    to the agency's mission and performance, as well as the individual's
    current responsibilities.

    Specifically, the revised pay system, which took effect in January 2004,
    replaces the six SES pay levels with a single, open-range pay band and
    raises the pay cap for all SES members to $145,600 in 2004 (Level III of
    the Executive Schedule) with a senior executive's total compensation not
    to exceed $175,700 in 2004 (Level I of the Executive Schedule). If OPM
    certifies and OMB concurs that the agency's performance management system,
    as designed and applied, makes meaningful distinctions based on relative
    performance, an agency can raise the SES pay cap to $158,100 in 2004
    (Level II of the Executive Schedule) with a senior executive's total
    compensation not to exceed $203,000 in 2004 (the total annual compensation
    payable to the Vice President).

    In an earlier step, to help agencies hold senior executives accountable
    for organizational results, OPM amended regulations for senior executive
    performance management in October 2000. These amended regulations
    governing performance appraisals for senior executives require agencies to
    establish performance management systems 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.

    Performance Management Systems Can Be Used More Strategically by Selected
    Agencies

    High-performing organizations have recognized that their performance
    management systems are strategic tools to help them manage on a day-today
    basis and achieve organizational goals. While Education, HHS, and NASA
    have undertaken important and valuable efforts to link their career senior
    executive performance management systems to their organizations' success,
    senior executives' perceptions indicate that these three agencies have
    opportunities to use their career senior executive performance management
    systems more strategically to strengthen that link. Based on our survey of
    career senior executives, we estimate that generally less than half of the
    senior executives at Education, HHS, and NASA feel that their agencies'
    are fully using their performance management systems as a tool to manage
    the organization or to achieve organizational goals, as shown in figure 1.

    Figure 1: Percentage of Senior Executives Responding to a "Very Great" or
    "Great" Extent on Their Agencies' Overall Use of Their SES Performance
    Management

    Systems

    Your agency's SES performance management system is used as a tool to
    manage the organization.

    Percentage of SES 100

    90

    80

    70

    60

    50

    40

    33

    30

    20

    10

    0 Agency

    Education

    HHS NASA Source: GAO.

    Your agency's SES performance management system is used in achieving
    organizational goals.

    Percentage of SES 100

    90

    80

    70

    60

    50 47

    40

    30

    20

    10

    0 Agency

    Notes: Based on GAO survey of career senior executives.

    Senior executives in NASA and HHS who have served for less than 1 year
    were more likely to respond "no basis to judge/not applicable." This was
    not an issue for Education since fewer senior executives have served less
    than 1 year.

    Further, effective performance management systems are not merely used for
    once-or twice-yearly individual expectation setting and rating processes.
    These systems facilitate two-way communication throughout the year so that
    discussions about individual and organizational performance are integrated
    and ongoing. Effective performance management systems work to achieve
    three key objectives: (1) they strive to provide candid and constructive
    feedback to help individuals maximize their contribution and potential in
    understanding and realizing the goals

    and objectives of the organization, (2) they seek to provide management
    with the objective and fact-based information it needs to reward top
    performers, and (3) they provide the necessary information and
    documentation to deal with poor performers. In this regard as well,
    generally less than half of the senior executives felt that their agencies
    are fully using their performance management systems to achieve these
    objectives, as shown in figure 2.

    Figure 2: Percentage of Senior Executives Responding to a "Very Great" or
    "Great" Extent on Their Agencies' Use of Their SES Performance Management
                             Systems to Meet Key Objectives

    Your agency's SES performance management system facilitates discussions
    about your performance as it relates to organizational goals during the
    year.

    Percentage of SES

    100 90 80 70 60

                                           48

    50 40

    30

    20

    10

    0 Agency

    Education

    HHS NASA Source: GAO.

    Your agency provides candid and constructive feedback that allows you to
    maximize your contribution to organizational goals.

    Percentage of SES

    100

    90

    80

    70

    60

    50 45

    40

    30

    20

    10

    0 Agency

    Your agency uses performance information and documentation to make
    distinctions in senior executive performance.

    Percentage of SES

    100

    90

    80

    70

    60

    50 47

    40

    30

    20

    10

    0 Agency

    Notes: Based on GAO survey of career senior executives.

    Senior executives in NASA and HHS who have served for less than 1 year
    were more likely to respond "no basis to judge/not applicable." This was
    not an issue for Education since fewer senior executives have served less
    than 1 year.

    Selected Agencies Can Strengthen the Link between Senior Executive
    Performance and Organizational Success

    High-performing 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. Further, our prior work has identified nine key
    practices public sector organizations both here and abroad have used that
    collectively create this line of sight to develop effective performance
    management systems.7 To this end, while Education, HHS, and NASA have
    begun to apply the key practices to develop effective performance
    management systems for their career senior executives, they have
    opportunities to strengthen the link between their senior executives'
    performance and organizations' success.

    Align Individual Performance Expectations with Organizational Goals

    An explicit alignment of daily activities with broader results is one of
    the defining features of effective performance management systems in
    highperforming organizations. These organizations use their performance
    management systems to improve performance by helping individuals see the
    connection between their daily activities and organizational goals and
    encouraging individuals to focus on their roles and responsibilities to
    help achieve these goals. Education, HHS, and NASA require their senior
    executives to align individual performance with organizational goals in
    order to hold them accountable for organizational results. Our review of
    the senior executives' performance plans showed that all the plans at each
    agency identified individual performance expectations that aligned with
    organizational goals. In addition, nearly all of the senior executives at
    each agency have reported that they communicate their performance
    expectations to at least a small extent to those whom they supervise.
    Cascading performance expectations in this way helps individuals
    understand how they contribute to organizational goals.

    Still, while most senior executives at each agency indicated that they see
    a connection between their daily activities and organizational goals to a
    very great or great extent, fewer of these senior executives felt that
    their agency's SES performance management system holds them accountable
    for their contributions to organizational results to a very great or great
    extent, as shown in figure 3.

    7GAO-03-488.

    Figure 3: Of Those Senior Executives Who See a Connection between Daily
    Activities and Organizational Goals to a "Very Great" or "Great" Extent,
    Percentage Who Felt That Their System Holds Them Accountable to a "Very
    Great" or "Great" Extent

    Notes: Based on GAO survey of career senior executives.

    The 95 percent confidence interval for the 50 percent of SES at Education
    ranges from 40 to 60 percent, and for HHS, the 58 percent of SES ranges
    from 53 to 62 percent.

    These responses are generally consistent with our governmentwide surveys
    on the implementation of GPRA. In particular, governmentwide, senior
    executives have consistently reported that they are held accountable for
    results. Most recently, we reported in March 2004 that 61 percent of
    senior executives governmentwide feel they are held accountable for
    achieving their agencies' strategic goals to a very great or great
    extent.8

    To reinforce the accountability for achieving results-oriented goals, we
    have reported that more progress is needed in explicitly linking senior
    executives' performance expectations to the achievement of these goals.9

    Setting specific levels of performance that are linked to organizational
    goals can help senior executives see how they directly contribute to
    organizational results. While most senior executives at HHS have set
    specific levels of performance in their individual performance plans, few
    senior executives in Education and NASA have identified specific levels.

    HHS requires its senior executives to set measurable performance
    expectations in their individual performance plans that align with
    organizational priorities, such as the department's "One-HHS" objectives
    and strategic goals and their operating divisions' annual performance
    goals or other priorities.10 We found that about 80 percent of senior
    executives' performance plans identified specific levels of performance
    linked to organizational goals. For example, a senior executive in CDC set
    an expectation to "reduce the percentage of youth (grade 9-12) who smoke
    to 26.5%," which contributes to CDC's annual performance goal to "reduce
    cigarette smoking among youth" and the One-HHS program objective to
    "emphasize preventive health measures (preventing disease and illness)."
    However, specifying levels of performance varies across operating
    divisions. We found that approximately 63 percent of senior executives at
    FDA versus 80 percent at CDC identified specific levels of performance
    linked to organizational goals in their individual performance plans.

    Education requires its senior executives to include critical elements,
    each with specific performance requirements, in their individual
    performance plans that align with the department's goals and priorities,
    including the President's Management Agenda, the Secretary's strategic
    plan, the Blueprint for Management Excellence, and the Culture of
    Accountability. We found that approximately 5 percent of senior
    executives' performance plans identified specific levels of performance
    linked to organizational goals.

    8U.S. General Accounting Office, Results-Oriented Government: GPRA Has
    Established a Solid Foundation for Achieving Greater Results, GAO-04-38
    (Washington, D.C.: Mar. 10, 2004).

    9GAO-02-966.

    10The One-HHS management and program objectives reflect the goals and
    priorities of the Secretary.

    NASA requires its senior executives to include seven critical elements,
    each with specific performance requirements that focus on the achievement
    of organizational goals and priorities, in their individual performance
    plans. For example, senior executives' performance plans include the
    critical element "meets and advances established agency program objectives
    and achieves high-quality results," and specifically "meets appropriate
    GPRA/NASA Strategic Plan goals and objectives." Senior executives may
    modify the performance requirements by making them more measurable or
    specific to their jobs; however, only about 23 percent of senior
    executives added performance requirements that are specific to their
    positions in their individual performance plans.11 Also, about 1 percent
    of senior executives have performance expectations with specific levels of
    performance that are related to organizational goals in their individual
    plans.

    Connect Performance Expectations to Crosscutting Goals

    As public sector organizations shift their focus of accountability from
    outputs to results, they have recognized that the activities needed to
    achieve those results often transcend specific organizational boundaries.
    Consequently, organizations that focus on collaboration, interaction, and
    teamwork across organizational boundaries are increasingly critical to
    achieve results. In a recent GAO forum, participants agreed that
    delivering high performance and achieving goals requires agencies to
    establish partnerships with a broad range of federal, state, and local
    government agencies as well other relevant organizations.12
    High-performing organizations use their performance management systems to
    strengthen accountability for results, specifically by placing greater
    emphasis on collaboration to achieve results.

    While most senior executives in each agency indicated that they
    collaborate with others to achieve crosscutting goals, fewer of these
    senior executives felt that their contributions to crosscutting goals are
    recognized through their agency's system, as shown in figure 4.

    11The 95 percent confidence interval for NASA ranges from 16 to 33
    percent. 12GAO-04-343SP.

    Figure 4: Of Those Senior Executives Who Collaborate with Others to
    Achieve Crosscutting Goals to a "Very Great" or "Great" Extent, Percentage
    Who Felt They Are Recognized to a "Very Great" or "Great" Extent

    Percentage of SES

    100

    90

                                                     90 80 70 60 50 40 30 20 10 0

    Education HHS Agency

    You collaborate with others to achieve crosscutting goals.

                                          NASA

    Of those who collaborate, you feel you are recognized through your
    performance management system for contributing to crosscutting goals.

    Source: GAO.

    Note: Based on GAO survey of career senior executives.

    We reported that more progress is needed to foster the necessary
    collaboration both within and across organizational boundaries to achieve
    results.13 As a first step, agencies could have senior executives identify
    specific programmatic crosscutting goals that would require collaboration
    to achieve in their individual performance plans. As a next step, agencies
    could have senior executives name the relevant internal or external
    organizations with which they would collaborate to reinforce a focus
    across organizational boundaries. HHS, Education, and NASA are connecting
    performance expectations to crosscutting goals to varying degrees.

    13GAO-02-966.

    While HHS does not require executives to identify programmatic
    crosscutting goals specific to the individuals in their performance plans,
    according to an agency official, it holds all senior executives
    accountable for the crosscutting One-HHS program objectives, such as to
    increase access to health care. We found that about 67 percent of senior
    executives' performance plans identified a programmatic crosscutting goal
    that would require collaboration to achieve, as shown in figure 5. The
    extent to which the senior executives' performance plans identified
    crosscutting goals varied across operating divisions. For example, 60
    percent of the senior executives' plans in FDA identified crosscutting
    goals compared with 50 percent of the plans in CDC. Few HHS senior
    executives clearly identified the specific organization(s) either internal
    or external with which they would collaborate.

    Figure 5: Percentage of SES Plans in HHS with Performance Expectations
    Related to Collaboration

    Percentage of SES

    100

    90

    80

    70 67

    60

    50

    40

    30

    20

    10

    0

    Identified crosscutting goals

    Identified internal organization Identified external organization Source:
    GAO.

    Note: GAO analysis based on review of career senior executives'
    performance plans.

    Positive examples of senior executives' plans at HHS that included
    crosscutting goals, as well as either the internal or external
    organizations with which they would collaborate to achieve these goals,
    include the following:

    o 	A senior executive in the National Institutes of Health set an
    expectation to work with FDA and other agencies and organizations to
    accelerate drug development by specifically working on the National Cancer
    Institute/FDA task force to eliminate barriers and speed development.

    o 	A senior executive in the Substance Abuse and Mental Health Services
    Administration set an expectation to work collaboratively with the Office
    of National Drug Control Policy, the Department of Energy, and the Office
    of Juvenile Justice and Delinquency Prevention to increase the use of the
    National Registry of Effective Programs in other federal agencies to
    identify and provide for early intervention for persons with or who are at
    risk for mental health or substance abuse problems.

    As required by Education, all senior executives' performance plans
    included the general performance expectation: "promotes collaboration and
    teamwork, including effective union-management relations, where
    appropriate." However, only about 32 percent of senior executives'
    performance plans identified programmatic crosscutting goals on which they
    would collaborate and few executives clearly identified the specific
    organizations with which they would collaborate, as shown in figure 6.

    Figure 6: Percentage of SES Plans in Education with Performance
    Expectations Related to Collaboration

    Percentage of SES

    100

    90

    80

    70

    60

    50

    40

    32

                                                                       30 20 10 0

    Identified crosscutting goals Identified internal organization

    Identified external organization Source: GAO. Note: GAO analysis based on
    review of career senior executives' performance plans.

    As required by NASA, all senior executives' performance plans included a
    general expectation: "integrates One-NASA approach to problem-solving,
    program/project management, and decision making. Leads by example by
    reaching out to other organizations and NASA centers to collaborate on
    work products; seeks input and expertise from a broad spectrum ...." This
    expectation is designed to contribute to achieving NASA's mission. Only
    about 1 percent of the executives clearly identified specific centers in
    NASA and none of the executives clearly identified specific organizations
    outside of NASA that they need to collaborate with to achieve crosscutting
    goals.

    Provide and Routinely Use Performance Information to Track Organizational
    Priorities

    High-performing organizations provide objective performance information to
    executives to show progress in achieving organizational results and other
    priorities, such as customer satisfaction and employee perspectives, and
    help them manage during the year, identify performance gaps, and pinpoint
    improvement opportunities. We reported that disaggregating performance
    information in a useful format could help executives track their
    performance against organizational goals and compare their performance to
    that of the organization.14

    HHS, NASA, and Education took different approaches to providing
    performance information to their senior executives in order to show
    progress toward organizational goals or priorities. While all three
    agencies give their components the flexibility to collect and provide
    performance information to their senior executives, Education also
    provides performance information agencywide. Of the senior executives in
    Education, HHS, and NASA who reported that their agency provided
    performance information to track their work unit's performance, generally
    less than half found the performance information to be useful for making
    improvements, available when needed, or both to a very great or great
    extent, as shown in figure 7.

    14GAO-02-966.

    Figure 7: Of the Senior Executives Who Felt Their Agency Formally Provides
    Performance Information That Allows Them to Track Their Work Unit's
    Performance, Percentage Who Felt This Information Was Useful, Available,
    or Both to a "Very Great" or "Great" Extent

    Education HHS NASA

    Your agency formally provides performance information that is useful for
    making improvements in your work unit's performance.

    Your agency formally provides performance information that is available to
    you when you need it.

    Your agency formally provides performance information that is both
    available and useful.

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    These responses are based on the 88 percent of senior executives at
    Education, 84 percent at HHS, and 93 percent at NASA who reported that
    their agencies provided performance information that allows them to track
    their work unit's performance. Senior executives in HHS who have served
    for less than 1 year were more likely to respond "no basis to judge/not
    applicable."

    Education provides various types of performance information to senior
    executives intended to help them see how they are meeting the performance
    expectations in their individual performance plans. A tracking system
    monitors how Education is making progress toward its annual performance
    goals and supporting action steps. Each action step has milestones that
    are tracked and reported each month to the officials who developed and
    have "ownership" for them. Education also collects performance information
    on customer service and employee perspectives. For example, Education uses
    an automated performance feedback process, whereby customers, coworkers,
    and employees provide feedback at midcycle and the end of the performance
    appraisal cycle on how the senior executives are meeting their individual
    performance expectations and areas for improvement.15

    15Agency officials indicated that they plan to reevaluate the use of this
    system in the future given the changes occurring with the new SES pay
    system.

    HHS conducts an annual departmentwide quality of work life survey and
    disaggregates the survey results for executives and other employees to
    use. HHS compares the overall high or low results of its survey for HHS as
    a whole to each operating division and to the component organizations
    within operating divisions. In the 2003 survey, HHS added questions about
    the President's Management Agenda, and each operating division had the
    opportunity to add specific questions focusing on issues that it believed
    were important to its employees, such as flexible work schedules or
    knowledge management issues. In addition, HHS gives operating divisions
    the flexibility to use other means of collecting and providing performance
    information, and in turn, FDA and CDC give their centers and offices the
    flexibility to collect and provide performance information. For example,
    according to a CDC official, senior executives receive frequent reports,
    such as the weekly situation reports, to identify priorities and help
    communicate these priorities among senior executives.16 In addition, CDC
    conducts a "pulse check" survey to gather feedback on employees'
    satisfaction with the agency and disaggregates the results to the center
    level. According to an agency official, CDC plans to conduct this survey
    quarterly.

    An official at NASA indicated that while NASA does not systematically
    provide performance information to its senior executives on a NASA-wide
    basis, the centers have the flexibility to collect and provide performance
    information to their senior executives on programs' goals and measures and
    customer and employee satisfaction. This official indicated that NASA uses
    the results of the OPM Human Capital survey to help identify areas for
    improvement throughout NASA and its centers. NASA provides the OPM Human
    Capital survey data to its centers, showing NASA-wide and centerspecific
    results, to help centers conduct their own analyses and identify areas for
    improvement and best practices.

    Require Follow-up Actions to Address Organizational Priorities

    High-performing organizations require individuals to take follow-up
    actions based on the performance information available to them. By
    requiring and tracking such follow-up actions on performance gaps, these
    organizations underscore the importance of holding individuals accountable
    for making

    16For more information on CDC's tracking of performance information, see
    U.S. General Accounting Office, Centers for Disease Control and
    Prevention: Agency Leadership Taking Steps to Improve Management and
    Planning, but Challenges Remain, GAO-04-219 (Washington, D.C.: Jan. 30,
    2004).

    progress on their priorities. Within Education, only the senior executives
    who developed the action steps for the annual performance goals are to
    incorporate expectations to demonstrate progress toward the goal(s) in
    their individual plans. HHS and NASA do not require senior executives to
    take follow-up actions agencywide, but they encourage their components to
    have executives take follow-up actions to show progress toward the
    organizational priorities. Of the senior executives at each agency who
    indicated that they took follow-up actions on areas of improvement,
    generally less than two-thirds felt they were recognized through their
    performance management systems for such actions, as shown in figure 8.

    Figure 8: Of Those Senior Executives Who Took Action on Areas of
    Improvement to a "Very Great" or "Great" Extent, Percentage Who Felt They
    Are Recognized to a "Very Great" or "Great" Extent

    Notes: Based on GAO survey of career senior executives. For Education, the
    55 percent of SES has a margin of error of +-12 percent. For HHS, the 60
    percent of SES who said they feel recognized for taking follow-up actions
    has a margin of error of +-5 percent. Senior executives in NASA and HHS
    who have served for less than 1 year were more likely to respond "no basis
    to judge/not applicable." This was not an issue for Education since fewer
    senior executives have served less than 1 year.

    At Education, senior executives who developed the action steps for
    Education's annual goals are required to set milestones that are tracked
    each month using a red, yellow, or green scoring system; assess how they
    are progressing toward the action steps and annual goals; and revise
    future milestones, if necessary. According to agency officials, these
    senior executives are to incorporate these action steps when developing
    their individual performance plans. Senior executives are also to address
    the feedback that their supervisors provide about their progress in
    achieving their performance expectations.

    HHS as a whole does not require senior executives to take follow-up
    actions, for example, on the quality of work life survey results, or
    incorporate the performance information results into their individual
    performance plans. In addition, FDA and CDC do not require their senior
    executives agencywide to take any type of follow-up actions. However, FDA
    centers have the flexibility to require their senior executives to
    identify areas for improvement based on the survey results or other types
    of performance information. Similarly, CDC encourages its executives to
    incorporate relevant performance measures in their individual performance
    plans. For example, those senior executives within each CDC center
    responsible for issues identified at emerging issues meetings are required
    to identify when the issues will be resolved, identify the steps they will
    take to resolve the issues in action plans, and give updates at future
    meetings with the CDC Director and other senior officials.

    NASA does not require its senior executives to take follow-up actions
    agencywide on the OPM Human Capital Survey data or other types of
    performance information, rather it encourages its centers to have their
    executives take follow-up action on any identified areas of improvement.
    However, an agency official stated that NASA uses the results of the
    survey to identify areas for improvement and that managers are ultimately
    accountable for ensuring the implementation of the improvement
    initiatives.

    Use Competencies to High-performing organizations use competencies to
    examine individual Provide a Fuller Assessment contributions to
    organizational results. Competencies, which define the of Performance
    skills and supporting behaviors that individuals are expected to

    demonstrate to carry out their work effectively, can provide a fuller
    picture of individuals' performance in the different areas in which they
    are appraised, such as organizational results, employee perspectives, and
    customer satisfaction. We have reported that core competencies applied

    organizationwide can help reinforce behaviors and actions that support the
    organization's mission, goals, and values and can provide a consistent
    message about how employees are expected to achieve results.17 Education
    and NASA identified competencies that all senior executives in the agency
    must include in their performance plans, while HHS gave its operating
    divisions the flexibility to have senior executives identify competencies
    in their performance plans.

    Most of the senior executives in each agency indicated that the
    competencies they demonstrate help them contribute to the organization's
    goals to a very great or great extent. However, fewer of these executives
    felt that they were recognized through their performance management system
    for demonstrating these competencies, as shown in figure 9.

    17U.S. General Accounting Office, Human Capital: Implementing Pay for
    Performance at Selected Personnel Demonstration Projects, GAO-04-83
    (Washington, D.C.: Jan. 23, 2004).

    Figure 9: Of Those Senior Executives Who Felt the Competencies They
    Demonstrate Help Them Contribute to Organizational Goals to a "Very Great"
    or "Great" Extent, Percentage Who Felt They Are Recognized to a "Very
    Great" or "Great" Extent

    Percentage of SES

    100

                                           94

    90

    80

    70

    60

    50

    40

    30

    20

    10

    0 Education HHS NASA

                                         Agency

    The competencies you demonstrate help you contribute to the organization's
    goals.

    Of those who feel the competencies help contribute to organizational
    goals, you feel recognized through your performance management system for
    your demonstration of the competencies.

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    Senior executives in NASA and HHS who have served for less than 1 year
    were more likely to respond "no basis to judge/not applicable." This was
    not an issue for Education since fewer senior executives have served less
    than 1 year.

    Education requires all senior executives to include a set of competencies
    in their individual performance plans. Based on our review of Education's
    senior executives' performance plans, we found that all of the plans,
    unless otherwise noted, included the following examples of competencies.18

    18See app. III for more information on selected elements of Education's,
    HHS's and NASA's SES performance management systems.

    o 	Organizational results-"sets and meets challenging objectives to
    achieve the Department's strategic goals."

    o 	Employee perspectives-"fosters improved workforce productivity and
    effective development and recognition of employees."19

    o 	Customer satisfaction-"anticipates and responds to customer needs in a
    professional, effective, and timely manner."

    NASA requires all senior executives to include a set of competency-based
    critical elements in their individual performance plans. Based on our
    review of NASA's senior executives' performance plans, we found all of the
    plans included the following examples of competencies.

    o 	Organizational results-Understands the principles of the President's
    Management Agenda and actively applies them; capitalizes on opportunities
    to integrate human capital issues in planning and performance and to
    expand e-government and competitive sourcing; and pursues other
    opportunities to reduce costs and improve service to customers.

    o 	Employee perspectives-Demonstrates a commitment to equal opportunity
    and diversity by proactively implementing programs that positively impact
    the workplace and NASA's external stakeholders and through voluntary
    compliance with equal opportunity laws, regulations, policies, and
    practices.

    o 	Customer satisfaction-Provides the appropriate level of high-quality
    support to peers and other organizations to enable the achievement of the
    NASA mission; results demonstrate support of One-NASA and that stakeholder
    and customer issues were taken into account.

    According to an HHS official, the HHS senior executive performance
    management system, while not competency based, is becoming more outcome
    oriented. However, operating divisions may require senior executives to
    include competencies. For example, senior executives in FDA and CDC
    include specific competencies related to organizational results, employee
    perspectives, and customer satisfaction in their

    19About 98 percent of the senior executives at Education included a
    competency related to employee perspectives.

    individual performance plans. Based on our review of HHS's senior
    executives' performance plans, we found that all of the plans at FDA and
    CDC and nearly all across HHS identified competencies that executives are
    expected to demonstrate.

    o 	Organizational results-About 94 percent of HHS senior executives' plans
    identified a competency related to organizational results. For example,
    all senior executives' plans in FDA included a competency to "demonstrate
    prudence and the highest ethical standards when executing fiduciary
    responsibilities."

    o 	Employee perspectives-About 89 percent of HHS senior executives' plans
    identified a competency related to employee perspectives. For example,
    senior executives in CDC are required to include a competency to exercise
    leadership and management actions that reflect the principles of workforce
    diversity in management and operations in such areas as recruitment and
    staffing, employee development, and communications.

    o 	Customer satisfaction-About 61 percent of HHS senior executives' plans
    identified a competency related to customer satisfaction. For example, all
    senior executives' plans in FDA included a competency to "lead in a
    proactive, customer-responsive manner consistent with agency vision and
    values, effectively communicating program issues to external audiences."

    Link Pay to Individual and Organizational Performance

    High-performing organizations seek to create pay, incentive, and reward
    systems that clearly link employee knowledge, skills, and contributions to
    organizational results. These organizations recognize that valid,
    reliable, and transparent performance management systems with reasonable
    safeguards for employees are the precondition to such an approach. To this
    end, Education's, HHS's, and NASA's performance management systems are
    designed to appraise and reward senior executive performance based on each
    executive's achievement toward organizational goals as outlined in the
    executive's performance plan. Overall, the majority of senior executives
    at each agency either strongly agreed or agreed that they are rewarded for
    accomplishing the performance expectations in their individual performance
    plan or helping their agency accomplish its goals, as shown in figure 10.
    These responses are similar to those from our governmentwide survey on the
    implementation of GPRA. We reported that about half of senior executives
    governmentwide perceive to a very great or great extent

    that employees in their agencies received positive recognition for helping
    their agencies accomplish their strategic goals.20

    Figure 10: Percentage of Senior Executives Reporting They "Strongly Agree"
    or "Agree" That They Are Rewarded for Accomplishments

    Accomplishing the performace expectations
    identified in my individual performance plan. Helping my agency accomplish
    its goals.

                     Percentage of SES Percentage of SES 100 90 80

                                         68 70

                                         70 60

                                           50

                                           40

                                           30

                                           20

                                   10 0 Agency Agency

    Education HHS NASA

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    Senior executives in NASA and HHS who have served for less than 1 year
    were more likely to respond "no basis to judge/not applicable." This was
    not an issue for Education since fewer senior executives have served less
    than 1 year.

    We have observed that a performance management system should have adequate
    safeguards to ensure fairness and guard against abuse. Such

    20GAO-04-38.

    safeguards will become especially important under the new performancebased
    pay system for the SES. Education, HHS, and NASA have built the following
    safeguards required by OPM into their senior executive performance
    management policies.

    o 	Each agency must establish one or more performance review boards (PRB)
    to review senior executives' initial summary performance ratings and other
    relevant documents and to make written recommendations to the agency head
    on the performance of the agency's senior executives. The PRBs are to have
    members who are appointed by the agency head in a way that assures
    consistency, stability, and objectivity in senior executive performance
    appraisals. For example, HHS specifically states that each operating
    division will have one or more PRBs with members appointed by the
    operating division head. HHS's PRB members may include all types of
    federal executives, including noncareer appointees, military officers, and
    career appointees from within and outside the department. In addition,
    NASA's PRB is to evaluate the effectiveness of the senior executive
    performance management system and report its findings and any appropriate
    recommendations for process improvement or appropriate policy changes to
    NASA management. For example, the PRB completed a study on NASA's senior
    executive bonus system in 2003.

    o 	A senior executive may provide a written response to his or her initial
    summary rating that is provided to the PRB. The PRB is to consider this
    written response in recommending an annual summary rating to the agency
    head.

    o 	A senior executive may ask for a higher-level review of his or her
    initial summary rating before the rating is provided to the PRB. The
    higherlevel reviewer cannot change the initial summary rating, but may
    recommend a different rating to the PRB that is shared with the senior
    executive and the supervisor. Upon receiving the annual summary rating,
    senior executives may not appeal their performance appraisals and ratings.

    We have observed that a safeguard for performance management systems is to
    ensure reasonable transparency and appropriate accountability mechanisms
    in connection with the performance management process. Agencies can help
    create transparency in the performance management process by communicating
    the overall results of the performance appraisal cycle to their senior
    executives. Education, NASA, and HHS officials

    indicated that they do not make the aggregate distribution of performance
    ratings or bonuses available to their senior executives.

    In addition, agencies can communicate the criteria for making
    performance-based pay decisions and bonus decisions to their senior
    executives to enhance the transparency of the system. Generally, less than
    half of the senior executives at each agency reported that they understand
    the criteria used to award bonuses to a very great or great extent, and
    some senior executives at each agency reported that they do not understand
    the criteria at all, as shown in figure 11.

    Figure 11: Percentage of Senior Executives Reporting That They Understand
    the Criteria Used to Award Bonuses by Extent

    Percentage of SES

    100

    80

    60

    40

    20

    0 Education HHS NASA Agency

    No

    Moderate and small

    Very great and great

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    For Education, the percentage of senior executives does not equal 100
    percent due to rounding, and for HHS and NASA, due to the senior
    executives who responded "no basis to judge/not applicable." Senior
    executives in HHS who have served for less than 1 year were more likely to
    respond "no basis to judge/not applicable."

    Make Meaningful Distinctions in Performance

    High-performing organizations make meaningful distinctions between
    acceptable and outstanding performance of individuals and appropriately
    reward those who perform at the highest level. Executive agencies can
    reward senior executives' performance in a number of ways: through
    performance awards or bonuses, nominations for Presidential Rank Awards,
    or other informal or honorary awards. With the new performancebased pay
    system for senior executives, agencies are required to have OPM certify
    and OMB concur that their performance management systems are making
    meaningful distinctions based on relative performance in order to raise
    the pay for their senior executives to the highest available level.

    Recently, the Director of OPM stated that agencies' SES performance
    management systems should rely on credible and rigorous performance
    measurements to make meaningful distinctions based on relative performance
    in order for the new SES performance-based pay system to succeed.21 She
    also noted that while a growing number of agencies have improved in their
    distributions of SES ratings and awards based on agencies' fiscal year
    2002 rating and bonus data, these data also suggest that more work is
    needed. Specifically, see the following:

    o 	Executive branch agencies rated about 75 percent of senior executives
    at the highest level their systems permit in their performance ratings in
    fiscal year 2002, the most current year for which data are available from
    OPM-a decrease from about 84 percent the previous fiscal year.

    o 	When disaggregating the data by rating system, approximately 69 percent
    of senior executives received the highest rating under five-level systems
    in fiscal year 2002 compared to about 76 percent in fiscal year 2001, and
    almost 100 percent of senior executives received the highest rating under
    three-level systems in both fiscal years 2001 and 2002.

    o 	Approximately 49 percent of senior executives received bonuses in
    fiscal year 2002 compared to about 52 percent the previous fiscal year.22

    21U.S. Office of Personnel Management, "Memorandum for Heads of
    Departments and Executive Agencies, Reporting SES Performance Ratings and
    Awards for FY 2003" (Washington, D.C.: Feb. 12, 2004).

    22By law, bonus amounts paid to individual career senior executives are
    limited to from 5 to 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.

    At HHS, about 86 percent of senior executives received the highest
    possible rating in fiscal year 2003 compared with approximately 99 percent
    in fiscal year 2002. While HHS gives its operating divisions the
    flexibility to appraise their senior executives' performance using a
    three-, four-, or five-level performance management system, most of HHS's
    operating divisions, including FDA and CDC, rate their senior executives
    under a three-level system. Almost all of HHS's senior executives rated
    under a three-level system received the highest rating of "fully
    successful" in fiscal years 2002 and 2003.23 Approximately 23 percent of
    senior executives rated under a five-level system received the highest
    rating of "outstanding" in fiscal year 2003 compared with approximately 94
    percent in fiscal year 2002.24

    According to its Chief Human Capital Officer, HHS recognizes that its
    rating systems do not always allow for distinctions in senior executives'
    performance, and it has chosen to focus on the bonus process as the method
    for reflecting performance distinctions. Senior executive bonuses are to
    provide a mechanism for distinguishing and rewarding the contributions of
    top performers, specifically for circumstances in which the individual's
    work has substantially improved public health and safety or citizen
    services. Since the fiscal year 2001 performance appraisal cycle, HHS has
    restricted the percentage of senior executives' bonuses to generally no
    more than one-third of each operating division's senior executives. HHS,
    including FDA and CDC, is making progress toward distinguishing senior
    executive performance through bonuses compared to the percentage of senior
    executives governmentwide who received bonuses, as shown in table 1.

    23Under HHS's three-level system senior executives may be rated at "fully
    successful," "minimally satisfactory," or "unsatisfactory," and under a
    five-level system, senior executives may be rated at these rating levels
    as well as at "excellent" and "outstanding."

    24In fiscal year 2002, only the Centers for Medicare and Medicaid Services
    used a five-level rating system. In fiscal year 2003, the Indian Health
    Service also used a five-level rating system.

    Table 1: Percentage of Senior Executives at HHS as Compared to Senior
    Executives Governmentwide Who Received Bonuses for Fiscal Years 2000
    through 2003

                         Agency FY 2000 FY 2001 FY 2002 FY 2003

    HHS (including CDC and FDA) 58 34 37

    CDC 865239

    FDA 723637

                         Governmentwide 51 52 49 Not available

    Sources: HHS and OPM.

    Note: The percentage of senior executives governmentwide who received
    bonuses in fiscal year 2003 is not yet available.

    Additionally, HHS generally limited individual bonus amounts to no more
    than 12 percent of base pay for top performers in fiscal year 2003. Most
    of the senior executives who received a bonus were awarded less than a 10
    percent bonus in fiscal year 2003, as shown in table 2.

    Table 2: Percentage of HHS Senior Executives Who Received Bonuses and the
    Bonus Amounts as a Percentage of Base Pay for Fiscal Year 2003

                  Bonus amount Senior executives who received bonuses

                                          12 3

                                          11 0

                                          10 6

                                           95

                                           84

                                           75

                                           62

                                           54

    Total

    Source: HHS.

    Lastly, senior executive responses to our survey indicated that they did
    not feel HHS was making meaningful distinctions in ratings or bonuses to a
    very great or great extent. Approximately 31 percent of senior executives
    felt that their agency makes meaningful distinctions in performance using
    ratings; approximately 38 percent felt that their agency makes meaningful
    distinctions in performance using bonuses.

    NASA uses a five-level system to appraise senior executive performance.
    More than three-fourths of the senior executives received the highest
    rating of "outstanding" for the 2003 performance appraisal cycle (July
    2002-June 2003), as shown in figure 12. The distribution of senior
    executives across the rating levels was similar to the previous
    performance appraisal cycle.

    Figure 12: Percentage of NASA Senior Executives by Rating Level in the
    2003 Performance Appraisal Cycle

    0%

    Unsatisfactory

    1%

    Minimally satisfactory

    Fully successful

    Highly successful

    Outstanding

    Source: NASA.

    Note: Percentage of senior executives exceeds 100 percent due to rounding.

    NASA's senior executive bonus recommendations are to be based solely on
    exceptional performance as specified and documented in senior executives'
    performance plans. While NASA established a fixed allocation of bonuses
    for its organizations based on the total number of senior executives, an
    organization can request an increase to its allocation. Sixty percent of
    eligible senior executives within the organization's bonus allocation may
    be recommended for bonuses larger than 5 percent of base pay.

    For the 2003 appraisal cycle, the percentage of senior executives who
    received bonuses increased from the previous year, as shown in table 3. An
    agency official indicated that this increase resulted from a study NASA's
    PRB conducted on the senior executive bonus system. The PRB reviewed
    NASA's bonus system in the context of OPM's data on senior executive
    bonuses across federal agencies and recommended that NASA revise its bonus
    system to move NASA into the upper half of the number and average amount
    of bonuses given across federal agencies. According to the PRB study, NASA
    made this change to meet its management's need to reward more senior
    executives while recognizing that bonus decisions must be based on
    performance.

    Table 3: Percentage of NASA Senior Executives Who Received Bonuses and the
    Bonus Amounts as a Percentage of Base Pay for the 2002 and 2003
    Performance Appraisal Cycle

                         Senior executives who received bonuses

                        Bonus amount       2002 cycle                  2003 cycle
                                  20                      6                     8
                                  15                      6                    11
                                  10                      6                     7
                                   5                     22                    26
                               Total                     40

    Source: NASA.

    During NASA's 2003 appraisal cycle, the Space Shuttle Columbia accident
    happened. We reviewed the aggregate senior executive performance rating
    and bonus data for that cycle; however, we did not analyze individual
    senior executives' performance appraisals or bonus recommendations or
    determine if those who received ratings of outstanding, bonuses, or both
    were involved with the Columbia mission.

    Lastly, senior executive responses to our survey indicated that about half
    of the executives felt NASA was making meaningful distinctions in ratings
    or bonuses to a very great or great extent. Approximately 46 percent of
    senior executives felt that their agency makes meaningful distinctions in
    performance using ratings; approximately 48 percent felt that their agency
    makes meaningful distinctions in performance using bonuses.

    Education uses a three-level rating system.25 About 98 percent of senior
    executives received the highest rating of "successful" in the 2003
    performance appraisal cycle (July 2002-June 2003), a slight decrease from
    the previous performance appraisal cycle when all senior executives
    received this rating. Education's senior executive bonus recommendations
    are to be based on senior executives' demonstrated results and
    accomplishments toward the department's strategic goals and organizational
    priorities. About 63 percent of senior executives received bonuses in the
    2003 appraisal cycle, compared to approximately 60 percent in the previous
    appraisal cycle. The majority of the senior executives who received
    bonuses were awarded 5 percent bonuses in the 2003 appraisal cycle, as
    shown in table 4.

    Table 4: Percentage of Education Senior Executives Who Received Bonuses
    and the Bonus Amounts as a Percentage of Base Pay for the 2003 Performance
    Appraisal Cycle

                  Bonus amount Senior executives who received bonuses

                                          20 7

    15-19

    10-14

                                         6-9 15

                                          5 37

    Total

    Source: Department of Education.

    Lastly, senior executive responses to our survey indicated that they did
    not feel Education was making meaningful distinctions in ratings or
    bonuses to a very great or great extent. Specifically, about 10 percent of
    senior executives felt that their agency makes meaningful distinctions in
    performance using ratings; about 33 percent felt that their agency makes
    meaningful distinctions in performance using bonuses.

    25Under Education's three-level system, senior executives may be rated at
    "successful," "minimally satisfactory," and "unsatisfactory."

    Involve Employees and Stakeholders to Gain Ownership of Performance
    Management Systems

    High-performing organizations have found that actively involving employees
    and stakeholders when developing or refining results-oriented performance
    management systems helps improve employees' confidence and belief in the
    fairness of the system and increase their understanding and ownership of
    organizational goals and objectives. Further, to maximize the
    effectiveness of their performance management systems these organizations
    recognize that they must conduct frequent training for staff members at
    all levels of the organization.26

    Generally, at Education, HHS, and NASA senior executives became involved
    in refining the performance management system or participated in formal
    training on those systems when provided the opportunities. Of the senior
    executives at each agency who reported that they have been given the
    opportunity to be involved in refining their agency's performance
    management system to at least a small extent, most of these senior
    executives said they took advantage of this opportunity, as shown in
    figure

    13.

    26For more information on how to assess agencies' training and development
    efforts, see U.S. General Accounting Office, Human Capital: A Guide for
    Assessing Strategic Training and Development Efforts in the Federal
    Government, GAO-04-546G (Washington, D.C.: March 2004).

    Figure 13: Of Those Senior Executives Who Said They Had the Opportunity to
    Be

    Involved, Percentage Who Said They Have Been Involved in Refining Their
    Agency's

    SES Performance Management System

    Percentage of SES

    100

    90

    80

    70

    60 56

    50

    40

    30

    20

    10

    0 Education HHS NASA

                                         Agency

    You have been given the opportunity to be involved in refining your
    agency's system.

    Of those who had the opportunity, you have been involved in refining your
    agency's system.

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    The 95 percent confidence interval for the 76 percent of SES at Education
    ranges from 63 to 87 percent.

    Similarly, while less than three-fourths of the senior executives at each
    agency said formal training on their agency's performance management
    system is available to them, most of these senior executives said they
    participated in the training, as shown in figure 14.

    Figure 14: Of Those Senior Executives Who Said Formal Training Is
    Available,

    Percentage Who Said They Have Participated in Formal Training on Their
    Agency's

    SES Performance Management System

    Percentage of SES

    100

    90

    80

    70 65

    60

    50

    40

    30

    20

    10

    0 Education HHS NASA

                                         Agency

    Formal training on your agency's system is available to you.

    Of those who said formal training is available, you have participated in
    formal training on your agency's system.

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    The 95 percent confidence interval for the 83 percent of SES at Education
    ranges from 73 to 91 percent. For the question on the availability of
    training, senior executives in HHS who have served for less than 1 year
    were more likely to respond "no basis to judge/not applicable."

    At all three agencies, a proportion of senior executives reported that
    they had no opportunity to become involved with or trained on their
    performance management systems. At HHS, about 38 percent of senior
    executives said they did not have the opportunity to be involved in
    refining their agency's system, while about 24 percent of senior
    executives said formal training on their agency's system was not available
    to them, as shown in figure 15.

    Figure 15: Percentage of Senior Executives at HHS Reporting Involvement
    and Training Opportunities by Extent

    You have been given the opportunity
    to be involved in refining your agency's Formal training on your agency's
    system
    system. is available to you.

    Percentage of SES Percentage of SES

    100

    80

    60

    40

    20

    0

    No

    Moderate and small

    Very great and great

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    Percentages do not add up to 100 percent due to senior executives who
    responded "no basis to judge/not applicable." For the question on
    training, senior executives who have served for less than 1 year were more
    likely to respond "no basis to judge/not applicable."

    According to an HHS official, the Office of the Secretary developed the
    One-HHS objectives, the basis of its senior executive performance
    management system, with input from the leadership of all HHS staff offices
    and operating divisions. This official indicated that HHS conducted
    extensive interviews to develop and validate the goals. All career senior
    executives were briefed on the goals and offered training on development
    of outcome-oriented individual performance objectives derived from those
    goals. The agency official said that the operating divisions had the

    flexibility to involve their senior executives in customizing the new
    individual performance plans for their operating divisions.

    According to HHS's guidance, the operating divisions are to develop and
    provide training on the performance management system to their senior
    executives on areas such as developing performance plans, conducting
    progress reviews, writing appraisals, and using appraisals as a key factor
    in making other management decisions. For example, according to an FDA
    official, the Human Resources Director briefed all of the senior executive
    directors on how to cascade the FDA Commissioner's performance plan into
    their fiscal year 2002 individual plans and incorporate the One-HHS
    objectives. FDA does not provide regular training to the senior executives
    on the performance management system; rather the training is provided as
    needed and usually on a one-on-one basis when a new senior executive joins
    FDA. The agency official also stated that because few senior executives
    are joining the agency, regular training on the system is not as
    necessary.

    About half of NASA's senior executives reported that they did not have the
    opportunity to be involved in refining their agency's system, while about
    21 percent of senior executives said formal training on their agency's
    system was not available to them, as shown in figure 16.

    Figure 16: Percentage of Senior Executives at NASA Reporting Involvement
    and Training Opportunities by Extent

    You have been given the opportunity
    to be involved in refining your agency's Formal training on your agency's
    system
    system. is available to you.

    Percentage of SES Percentage of SES

    100

    80

    60

    40

    20

    0

    No

    Moderate and small

    Very great and great

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    Percentages do not add up to 100 percent due to senior executives who
    responded "no basis to judge/not applicable."

    According to an agency official, the NASA Administrator worked with the
    top senior executives to develop a common set of senior executive critical
    elements and performance requirements that reflect his priorities and are
    central to ensuring a healthy and effective organization. The
    Administrator then instructed the senior executives to review the common
    critical elements and incorporate them into their individual performance
    plans. When incorporating the elements into their individual plans, the
    senior executives have the opportunity to modify the performance
    requirements for each element to more clearly reflect their roles and
    responsibilities.

    According to NASA's guidance, the centers and offices are to provide
    training and information on the performance management system to their
    senior executives. In addition, an official at NASA said that most centers
    and offices provide training to new senior executives on aspects of the
    performance management system, such as developing individual performance
    plans. Also, NASA provides training courses for all employees on specific
    aspects of performance management, such as writing performance appraisals
    and self-assessments.

    Approximately half of Education's senior executives reported that they did
    not have the opportunity to be involved in refining their agency's system,
    while about one-fourth of the senior executives reported that formal
    training on their agency's system was not available to them, as shown in
    figure 17.

    Figure 17: Percentage of Senior Executives at Education Reporting
    Involvement and Training Opportunities by Extent

    You have been given the opportunity
    to be involved in refining your agency's Formal training on your agency's
    system
    system. is available to you.

    Percentage of SES Percentage of SES

    100

    80

    60

    40

    20

    0

    No

    Moderate and small

    Very great and great

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    Percentages do not add up to 100 percent due to senior executives who
    responded "no basis to judge/not applicable."

    An official at Education indicated that senior executives have the
    opportunity to comment on changes proposed to the performance management
    system by the Executive Resources Board. In addition, according to
    Education's guidance, training for all senior executives on the
    performance management system is to be provided periodically. An agency
    official said that Education provided training for all managers, including
    senior executives, on how to conduct performance appraisals and write
    performance expectations near the end of the performance appraisal cycle
    last year.

    Maintain Continuity during Transitions

    The experience of successful cultural transformations in large public and
    private organizations suggests that it can often take 5 to 7 years until
    such initiatives are fully implemented and cultures are transformed in a
    substantial manner. We reported that among the key practices consistently
    found at the center of successful transformations is to use the
    performance management system to define responsibility and assure
    accountability for change.27 The average tenure of political leadership
    can have critical implications for the success of those initiatives.
    Specifically, in the federal government the frequent turnover of the
    political leadership has often made it difficult to obtain the sustained
    and inspired attention required to make needed changes. We reported that
    the average tenure of political appointees governmentwide for the period
    1990-2001 was just under 3

    28

    years.

    Performance management systems help provide continuity during these times
    of transition by maintaining a consistent focus on a set of broad
    programmatic priorities. Individual performance plans can be used to
    clearly and concisely outline top leadership priorities during a given
    year and thereby serve as a convenient vehicle for new leadership to
    identify and maintain focus on the most pressing issues confronting the
    organization as it transforms. We have observed that a specific
    performance expectation in senior executives' performance plans to lead
    and facilitate change during transitions could be critical as
    organizations transform themselves to succeed in an environment that is
    more results oriented, less hierarchical, and more integrated.29

    While many senior executives at each agency reported that their agency's
    senior executive performance management system helped to maintain a
    consistent focus on organizational goals during transitions, the majority
    of senior executives felt this occurred to a moderate extent or less, as
    shown in figure 18.

    27U.S. General Accounting Office, Results-Oriented Cultures:
    Implementation Steps to Assist Mergers and Organizational Transformations,
    GAO-03-669 (Washington, D.C.: July 2, 2003).

    28U.S. General Accounting Office, High-Risk Series: Strategic Human
    Capital Management, GAO-03-120 (Washington, D.C.: January 2003).

    29GAO-03-488.

    Figure 18: Percentage of Senior Executives Who Felt Their Agency's SES
    Performance Management System Helped to Maintain a Consistent Focus on
    Organizational Goals during Transitions by Extent

    Percentage of SES

    100

    80

    60

    40

    20

    0 Education HHS NASA Agency

    No

    Moderate and small

    Very great and great

    Source: GAO.

    Notes: Based on GAO survey of career senior executives.

    Percentages do not add up to 100 percent due to senior executives who
    responded "no basis to judge/not applicable." Senior executives in NASA
    and HHS who have served for less than 1 year were more likely to respond
    "no basis to judge/not applicable." This was not an issue for Education
    since fewer senior executives have served less than 1 year.

    According to an agency official, HHS as a whole struggles with transitions
    between secretaries as with each change in leadership comes a change in
    initiatives. Approximately 25 percent of HHS senior executives' plans
    identified performance expectations related to leading and facilitating
    change in the organization. For example, several senior executives' plans
    identified actions the executives were going to take in terms of
    succession planning and leadership development for their organizations.
    Specifically, a senior executive in the National Institutes of Health set
    the expectation to develop a workforce plan that supports the future needs
    of the office,

    including addressing such things as succession and transition planning.
    About 33 percent of senior executives' plans in FDA and 15 percent in CDC
    identified performance expectations related to leading and facilitating
    change. To help address this issue of continuity in leadership and
    transitions, HHS identified as part of its One-HHS objectives a goal to
    "implement strategic workforce plans that improve recruitment, retention,
    hiring and leadership succession results for mission critical positions."

    Education requires all senior executives to include a general performance
    expectation in their performance plans related to change: "initiates new
    and better ways of doing things; creates real and positive change."
    Approximately 98 percent of the senior executives' plans included this
    expectation.

    Almost none of the NASA senior executives' performance plans identified an
    expectation related to leading and facilitating change during transitions.
    An agency official indicated that while NASA did not set a specific
    expectation for senior executives to include in their individual
    performance plans, leading and facilitating change is addressed through
    several of the critical elements. For example, for the "Health of NASA"
    critical element, senior executives are to demonstrate actions that
    contribute to safe and successful mission accomplishment and facilitate
    knowledge sharing within and between programs and projects. We have
    reported that NASA recognizes the importance of change management through
    its response to the Columbia Accident Investigation Board's findings.30
    NASA indicated that it would increase its focus on the human element of
    change management and organizational development, among other things, to
    improve the agency's culture.

    Conclusions	Senior executives need to lead the way for federal agencies to
    transform their cultures to be more results oriented, customer focused,
    and collaborative in nature to meet the challenges of the 21st century.
    Performance management systems can help manage and direct this
    transformation process. Education, HHS, and NASA have undertaken important
    and valuable efforts, but these agencies need to continue to make
    substantial progress in using their senior executive performance
    management systems to strengthen the linkage between senior executive

    30U.S. General Accounting Office, NASA: Shuttle Fleet's Safe Return to
    Flight Is Key to Space Station Progress, GAO-04-201T (Washington, D.C.:
    Oct. 29, 2003).

    performance and organizational success through the key practices for
    effective performance management.

    Consistent with our findings and OPM's reviews across the executive
    branch, these agencies must use their career senior executive performance
    management systems as strategic tools. In addition, as the administration
    is about to implement a performance-based pay system for the SES, valid,
    reliable, and transparent performance management systems with reasonable
    safeguards are critical. The experiences and progress of Education, HHS,
    and NASA should prove helpful to those agencies as well as provide
    valuable information to other agencies as they seek to use senior
    executive performance management as a tool to drive internal change and
    achieve external results.

    Recommendations for Executive Action

    Overall, we recommend that the Secretaries of Education and HHS and the
    Administrator of NASA continue to build their career senior executive
    performance management systems along the nine key practices for effective
    performance management. Specifically, we recommend the following.

    The Secretary of Education should reinforce these key practices by taking
    the following seven actions:

    o 	Require senior executives to set specific levels of performance that
    are linked to organizational goals to help them see how they directly
    contribute to organizational goals.

    o 	Require senior executives to identify in their individual performance
    plans programmatic crosscutting goals that would require collaboration to
    achieve and clearly identify the relevant internal or external
    organizations with which they would collaborate to achieve these goals.

    o 	Provide disaggregated performance information from various sources to
    help facilitate senior executive decision making and progress in achieving
    organizational results, customer satisfaction, and employee perspectives.

    o 	Require senior executives to take follow-up actions based on the
    performance information available to them in order to make programmatic
    improvements, and formally recognize executives for these actions.

    o 	Build in additional safeguards when linking pay to performance by
    communicating the overall results of the performance management decisions.

    o 	Make meaningful distinctions in senior executive performance through
    both ratings and bonuses.

    o 	Involve senior executives in future refinements to the performance
    management system and offer training on the system, as appropriate.

    The Secretary of HHS should reinforce these key practices by taking the
    following seven actions:

    o 	Require senior executives to clearly identify in their individual
    performance plans the relevant internal or external organizations with
    which they would collaborate to achieve programmatic crosscutting goals.

    o 	Provide disaggregated performance information from various sources to
    help facilitate senior executive decision making and progress in achieving
    organizational results, customer satisfaction, and employee perspectives.

    o 	Require senior executives to take follow-up actions based on the
    performance information available to them in order to make programmatic
    improvements, and formally recognize executives for these actions.

    o 	Build in additional safeguards when linking pay to performance by
    communicating the overall results of the performance management decisions.

    o 	Make meaningful distinctions in senior executive performance through
    ratings.

    o 	Involve senior executives in future refinements to the performance
    management system and offer training on the system, as appropriate.

    o 	Set specific performance expectations for senior executives related to
    leading and facilitating change management initiatives during ongoing
    transitions throughout the organization that executives should include in
    their individual performance plans.

    The Administrator of NASA should reinforce these key practices by taking
    the following eight actions:

    o 	Require senior executives to set specific levels of performance that
    are linked to organizational goals to help them see how they directly
    contribute to organizational goals.

    o 	Require senior executives to identify in their individual performance
    plans programmatic crosscutting goals that would require collaboration to
    achieve and clearly identify the relevant internal or external
    organizations with which they would collaborate to achieve these goals.

    o 	Provide disaggregated performance information from various sources to
    help facilitate senior executive decision making and progress in achieving
    organizational results, customer satisfaction, and employee perspectives.

    o 	Require senior executives to take follow-up actions based on the
    performance information available to them in order to make programmatic
    improvements, and formally recognize executives for these actions.

    o 	Build in additional safeguards when linking pay to performance by
    communicating the overall results of the performance management decisions.

    o 	Make meaningful distinctions in senior executive performance through
    both ratings and bonuses.

    o 	Involve senior executives in future refinements to the performance
    management system and offer training on the system, as appropriate.

    o 	Set specific performance expectations for senior executives related to
    leading and facilitating change management initiatives during ongoing
    transitions throughout the organization that executives should include in
    their individual performance plans.

    Agency Comments and 	We provided a draft of this report to the Secretaries
    of Education and HHS and the Administrator of NASA for their review and
    comment. We also

    Our Evaluation	provided a draft of the report to the Directors of OPM and
    OMB for their information. We received written comments from Education,
    HHS, and

    NASA, which are presented in appendixes IV, V, and VI. NASA's Deputy
    Administrator stated that the draft report is generally positive and that
    NASA concurred with all the recommendations and plans to implement them in
    its next SES appraisal cycle beginning July 1, 2004. HHS's Acting
    Principal Deputy Inspector General stated that HHS had no comments upon
    review of the draft report.

    In responding to our recommendations, Education's Assistant Secretary for
    Management and Chief Information Officer stated that Education plans to
    revise its existing senior executive performance management system
    dramatically given OPM's draft regulations for the new SES pay for
    performance system and described specific actions Education plans to take.
    These actions are generally consistent with our recommendations and their
    successful completion will be important to achieving the intent of our
    recommendations.

    However, Education stated that it does not plan to require the specific
    identification of the internal/external organizations with which the
    executives collaborate, as we recommended. We disagree that Education does
    not need to implement this recommendation. Education is taking important
    steps by requiring senior executives to include a general performance
    expectation related to collaboration and teamwork in their individual
    performance plans, but placing greater emphasis on this expectation is
    especially important for Education. We reported that Education will have
    to help states and school districts meet the goals of congressional
    actions such as the No Child Left Behind Act.31 Consequently, Education
    should require senior executives to identify the crosscutting goals and
    relevant organizations with which they would collaborate to achieve them
    in order to help reinforce the necessary focus on results.

    Lastly, Education stated that it has fully implemented our recommendation
    for providing senior executives disaggregated performance information from
    various sources to help facilitate decision making and progress in
    achieving organizational priorities. We disagree that Education has fully
    implemented this recommendation. While we recognize Education's two
    sources of agencywide performance information for its senior executives,
    we also reported that only about one-third of the senior executives who

    31U.S. General Accounting Office, Major Management Challenges and Program
    Risks: Department of Education, GAO-03-99 (Washington, D.C.: January
    2003).

    reported that the agency provided performance information felt that the
    performance information was useful for making improvements and available
    when needed to a very great or great extent. Consequently, Education
    should provide all of its senior executives performance information from
    various sources that is disaggregated in a useful format to help them
    track their progress toward achieving organizational results and other
    priorities, such as customer satisfaction and employee perspectives.

    As agreed with your offices, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days
    after its date. At that time, we will provide copies of this report to
    other interested congressional parties, the Secretaries of Education and
    HHS, the Administrator of NASA, and the Directors of OPM and OMB. We will
    also make this report 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 (202) 512-6806 or at mihmj@gao.gov or shamesl@gao.gov. Other
    contributors are acknowledged in appendix VII.

    J. Christopher Mihm Managing Director, Strategic Issues

    Appendix I

                           Objective, Scope, and Methodology

    To meet our objective to assess how well selected agencies are creating
    linkages between senior executive performance and organizational success
    through their performance management systems, we applied the key practices
    we previously identified for effective performance management.1 We focused
    on agencies' career Senior Executive Service (SES) members, rather than
    all senior-level officials, because the Office of Personnel Management
    (OPM) collects data on senior executives across the government. In
    addition, career senior executives are common to all three of the selected
    agencies and typically manage programs and supervise staff.

    We selected the Department of Education, the Department of Health and
    Human Services (HHS), and the National Aeronautics and Space
    Administration (NASA) for our review to reflect variations in mission,
    size, organizational structure, and use of their performance management
    systems for career senior executives. Within HHS, we selected two of the
    operating divisions-the Food and Drug Administration (FDA) and the Centers
    for Disease Control and Prevention (CDC)-to determine how HHS's SES
    performance management system cascades down to the operating division
    level. We selected these two operating divisions after reviewing HHS's
    strategic plan and its operating divisions' annual performance plans to
    identify two agencies that contributed to the same HHS strategic goal(s)
    through their annual performance goals. We then reviewed the SES
    population data from OPM's Central Personal Data File to verify that the
    two operating divisions each had a relatively large number of senior
    executives.

    To assess the agencies' senior executive performance management systems,
    we did the following: Analyzed Agency We collected and analyzed each
    agency's senior executive performance

    management system policy manual; personnel policies and
    memorandums;Documents and Bonus strategic plan and annual performance
    plan; employee and customer and Rating Data, and satisfaction survey
    instruments and analyses, as appropriate; and aggregate Interviewed
    Cognizant trend data for senior executive performance ratings and bonus

    distributions. In addition, we reviewed OPM's draft proposed
    regulationsAgency Officials prescribing the criteria agencies must meet to
    obtain certification of their

    1GAO-03-488.

                      Appendix I Objective, Scope, and Methodology

    systems, which OPM provided for review and comment to the heads of
    departments and agencies, including GAO, on April 28, 2004.

    We also assessed the reliability of the senior executive performance
    rating and bonus data provided by Education, HHS, NASA, and OPM to ensure
    that the data we used for this report were complete and accurate by (1)
    performing manual and electronic testing of required data elements; (2)
    comparing the data to published OPM data, when applicable; and (3)
    interviewing agency officials knowledgeable about the data. We determined
    that the data provided by the agencies and OPM were sufficiently reliable
    for the purposes of this report.

    We also interviewed the chief human capital officers at Education and HHS
    as well as officials at all three agencies responsible for managing human
    capital; implementing the strategic and annual performance plans; and
    administering agencywide employee and customer satisfaction surveys, as
    appropriate, and other agency officials identified as having a particular
    knowledge about issues related to senior executive performance management.
    In addition, we met with the President of the Senior Executives
    Association to obtain her thoughts on the new SES performance-based pay
    structure and performance management in general.

    Assessed a Sample of Career SES Individual Performance Plans

    We assessed a probability sample of SES individual performance plans at
    HHS and NASA and all the SES plans at Education using a data collection
    instrument we prepared in order to identify how senior executives were
    addressing certain practices-aligning individual performance expectations
    with organizational goals, connecting performance expectations to
    crosscutting goals, using competencies, and maintaining continuity during
    transitions-through their individual performance plans.

    To randomly select the plans, we collected a list of all current career
    senior executives as of August/September 2003 from each agency. Since
    HHS's operating divisions develop their own SES performance plans and
    implement their performance management systems, we drew the sample such
    that it would include each operating division and be representative of all
    of HHS. In addition to the stratified sample for HHS overall, we reviewed
    all senior executives plans at FDA and CDC to ensure that estimates could
    be produced for these operating divisions. For all three agencies, we
    reviewed the individual performance plans most recently collected by the
    human resources offices. We reviewed plans from the performance

                      Appendix I Objective, Scope, and Methodology

    appraisal cycle for HHS covering fiscal year 2003, for Education covering
    July 2002-June 2003, and for NASA covering July 2003-June 2004.

    Sample Design	We selected and reviewed all senior executives' individual
    performance plans from Education, a simple random sample from NASA, and a
    stratified sample from HHS. The sample of SES performance plans allowed us
    to estimate characteristics of these plans for each of these three
    agencies. For each agency, the SES population size, number of SES plans in
    sample, and number of plans reviewed are shown in table 5.

             Table 5: Disposition of SES Performance Plan Review, by Agency

    Number of plans in Number of out of Number of plans Agency SES population
    sample scope plans reviewed

    HHS 334 125 7

    - CDC (stratum 1) 20 20 0

    -FDA (stratum 2) 40 40 0

    - Rest of HHS (stratum 3) 274 65 7

    Education 59 59 0

    NASAa 397 86 0

    Source: GAO.

    aFor NASA, 5 of the 86 SES performance plans were not provided by the
    agency; hence NASA's response rate is 94 percent.

    We excluded out of scope cases from our population and sample, which
    included senior executives who had retired or resigned, were not career
    senior executives, or did not have individual performance plans because
    they were either new executives or on detail to another agency. For HHS,
    excluding CDC and FDA, we do not know the number of out of scope SES plans
    in the entire senior executive population; however, there were seven out
    of scope SES plans in our sample of performance plans. For this review, we
    only estimate to the population of in scope SES plans.

    Estimation and Sampling All population estimates based on this plan review
    are for the target

    Error	population defined as SES performance plans for the most recent year
    available from each of the three agencies. For Education, we report actual
    numbers for our review of individual performance plans since we reviewed
    all the plans. For HHS and NASA, we produced estimates to the population

                      Appendix I Objective, Scope, and Methodology

    of all SES performance plans in those agencies for the relevant year.
    Estimates are produced using appropriate methods for simple random
    sampling for NASA and for stratified random sampling for HHS. For NASA and
    for each stratum for HHS, we formed estimates by weighting the data by the
    ratio of the population size to the number of plans reviewed. For NASA, we
    considered the 81 plans obtained and reviewed to be a probability sample.

    The HHS and NASA performance plan samples are subject to sampling error.
    There was no sampling error for the census review of senior executives'
    performance plans for FDA, CDC, and Education. The effects of sampling
    errors, due to the selection of a sample from a larger population, can be
    expressed as confidence intervals based on statistical theory. Sampling
    errors occur because we use a sample to draw conclusions about a larger
    population. As a result, the sample was only one of a large number of
    samples of performance plans that might have been drawn. If different
    samples had been taken, the results might have been different. To
    recognize the possibility that other samples might have yielded other
    results, we express our confidence in the precision of our particular
    sample's results as a 95 percent confidence interval.

    The 95 percent confidence intervals are expected to include the actual
    results for 95 percent of samples of this type. We calculated confidence
    intervals for this sample using methods that are appropriate for the
    sample design used. For HHS estimates in this report, we are 95 percent
    confident that when sampling error is considered, the results we obtained
    are within +9 percentage points of what we would have obtained if we had
    reviewed the plans of the entire study population, unless otherwise noted.
    For NASA, the 95 percent confidence intervals for percentage estimates are
    no wider than +6 percentage points, unless otherwise noted.

                                  Surveyed All Career
                                   SES at Each Agency

    We administered a Web-based questionnaire to the study population of all
    career senior executives at Education, HHS, and NASA to obtain information
    on their experiences with and perceptions of their performance management
    systems. We collected a list of all career senior executives and e-mail
    addresses from each agency as of August/September 2003 to identify the
    respondents for our survey. We structured the questionnaire around the key
    practices we identified for effective performance management and included
    some questions about senior executives' overall perceptions of their
    performance management systems. The questions were nearly identical across
    the agencies, though some

    Appendix I Objective, Scope, and Methodology

    introductory language and terminology varied. The complete questionnaire
    and results are shown in appendix II.

    Although all senior executives were sampled, in the implementation of the
    survey, we found that some executives were out of scope because they
    retired or resigned, were not career senior executives, or otherwise did
    not respond. Table 6 contains a summary of the survey disposition for the
    surveyed cases at the three agencies.

                     Table 6: Disposition of SES Survey, by Agency

                              Number of SES    Education        HHS          NASA
                             SES population               59    329           397
                           SES out of scope                2    12
                               SES in scope               57    317           393
                         Survey respondents               41    214           260
                       In scope respondents               41    213           260
                   Out of scope respondents                0     1
                              Response rate              72%    67%           66%

    Source: GAO.

    Table 7 summarizes why individuals originally included in the target
    population by each agency were removed from the sample.

    Table 7: Number of SES Out of Scope and Reason, by Agency

                            Reason out of scope   Education      HHS         NASA
                 Noncareer SES (e.g., political
                     appointee or limited term)              0    1
                                  No longer SES              0    2             0
                            Retired or resigned              2    8             3
                       Not an SES member (e.g.,
                     General Schedule position)              0    1             0
                                  On sick leave              0    0             1
                             Total out of scope              2    12            4

    Source: GAO.

                      Appendix I Objective, Scope, and Methodology

    For Education, we surveyed a total of 57 career senior executives and
    received completed questionnaires from 41 senior executives for a response
    rate of 72 percent. For HHS, we surveyed a total of 317 career senior
    executives and received completed questionnaires from 213 senior
    executives for a response rate of 67 percent. For NASA, we surveyed a
    total of 393 career senior executives and received completed
    questionnaires from 260 senior executives for a response rate of 66
    percent.

    Estimation and Sampling Error

    We obtained responses from across Education and from all subentities
    within HHS and NASA and had no reason to expect that the views of
    nonrespondents might be different from the respondents. Consequently, our
    analysis of the survey data treats the respondents as a simple random
    sample of the populations of senior executives at each of the three
    agencies.

    We also reviewed whether senior executives who have served less than 1
    year at an agency tended to respond differently than those with more than
    1 year of experience. We did find some differences on certain questions
    for which individuals who served as senior executives for less than 1 year
    were more likely to answer "no basis to judge/not applicable" and noted
    these differences in the report. The estimated percentage of the senior
    executives responding "no basis to judge/not applicable" to questions
    ranged from 0 to 24 percent. Since this range is relatively wide, we have
    reported "no basis to judge/not applicable" as a separate response
    category for each question in appendix II.

    The particular sample of senior executives (those who responded to the
    survey) we obtained from each agency was only one of a large number of
    such samples of senior executives that we might have obtained. Each of
    these different samples might have produced slightly different results. To
    recognize the possibility that other samples might have yielded other
    results, we express our confidence in the precision of our particular
    sample's results as a 95 percent confidence interval. For Education,
    unless otherwise noted, the survey responses have a margin of error within
    +- 9 percent with a 95 percent level of confidence. For HHS and NASA,
    unless otherwise noted, the survey responses have a margin of error within
    +- 4 percent with a 95 percent level of confidence.

    Nonsampling Error	In addition to sampling error, other potential sources
    of errors associated with surveys, such as question misinterpretation, may
    be present.

    Appendix I Objective, Scope, and Methodology

    Nonresponse may also be a source of nonsampling error. We took several
    steps to reduce these other sources of error.

    We conducted pretests of the questionnaire both with appropriate senior
    executives in GAO and senior executives in the three agencies surveyed to
    ensure that the questionnaire (1) was clear and unambiguous, (2) did not
    place undue burden on individuals completing it, and (3) was independent
    and unbiased. We pretested a paper copy of the survey with three senior
    executives in GAO who did not work in the human capital area. We then had
    a human resources professional with each agency review the survey for
    agency-specific content and language. We conducted six pretests overall
    with senior executives in the audited agencies-one at Education, three at
    HHS, and two at NASA. The first four were conducted using a paper version
    of the questionnaire and the final two were conducted using the Web
    version.

    To increase the response rate for each agency, we sent a reminder e-mail
    about the survey to those senior executives who did not complete the
    survey in the initial time frame and conducted follow-up telephone calls
    to persons who had not completed the survey following the reminder e-mail.
    The HHS and NASA surveys were available from October 22, 2003, through
    January 16, 2004, and the Education survey was available from November 3,
    2003, through January 16, 2004.

    We performed our work in Washington, D.C., from August 2003 through March
    2004 in accordance with generally accepted government auditing standards.

    Appendix II

    GAO Senior Executive Survey Data from Education, HHS, and NASA

    We administered a Web-based questionnaire to the study population of all
    career senior executives at Education, HHS, and NASA to obtain information
    on their experiences with and perceptions of their performance management
    systems.1 We structured the questionnaire around key practices we
    identified for effective performance management.2 The response rates and
    margins of error for each agency are as follows.

    o 	For Education, we surveyed a total of 57 career senior executives and
    received completed questionnaires from 41 senior executives for a response
    rate of 72 percent. Unless otherwise noted, the survey responses have a
    margin of error within +- 9 percent with a 95 percent level of confidence.

    o 	For HHS, we surveyed a total of 317 career senior executives and
    received completed questionnaires from 213 senior executives for a
    response rate of 67 percent. Unless otherwise noted, the survey responses
    have a margin of error within +- 4 percent with a 95 percent level of
    confidence.

    o 	For NASA, we surveyed a total of 393 career senior executives and
    received completed questionnaires from 260 senior executives for a
    response rate of 66 percent. Unless otherwise noted, the survey responses
    have a margin of error within +- 4 percent with a 95 percent level of
    confidence.

    The information below shows the senior executives' responses for each
    question by agency.3

    1For HHS, when the question refers to "my agency" or "my organization," we
    asked senior executives to respond regarding their operating divisions
    within HHS. For the questions on performance information, we asked NASA
    senior executives to respond on the extent that NASA or their center
    formally provides performance information.

    2GAO-03-488.

    3Percentages for each question may not add to 100 due to rounding.

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    1. Align individual performance expectations with organizational goals.

    You see a connection between your daily activities and the achievement of
    organizational goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        45         43           8          5         0          0
    HHS              52         28          15          4         0          1
    NASA             64         27           8          2         0          0

    You communicate your performance expectations to the individuals who
    report to you to help them understand how they can contribute to
    organizational goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        30         50          10          0         0         10
    HHS              36         32          20         10         1          1
    NASA             48         42           8          1         0          2

        You see a connection between your daily activities and HHS's priorities.

                                                                      No basis to
              To a very To a great To a moderate To a small           judge / Not
                            extent        extent     extent   To no    applicable
           great extent                                      extent
              (percent)  (percent)     (percent)  (percent) (percent)   (percent)
    HHS           48         35            11          2         0           4

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    2. Connect performance expectations to crosscutting goals.

    You collaborate with others to achieve crosscutting goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        37         39          22          0         0          2
    HHS              52         35           9          3         0          1
    NASA             53         38           9          1         0          0

     You identify strategies for collaborating with others to achieve crosscutting
        goals. You are recognized through your performance management system for
                          contributing to crosscutting goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        24         49          24          0         0          2
    HHS              42         43          10          3         1          1
    NASA             42         44          12          1         0          0

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        32         20          17         20         7          5
    HHS              30         27          19         11         6          7
    NASA             35         32          20          7         5          1

    Education's survey questions:
    Do you collaborate with other offices within Education to achieve
    crosscutting goals?

                                     Does not apply
                                   given my current
    Yes (percent) No (percent)         position.
                                          (percent)
    93                       2                 5

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    Do you collaborate with other agencies or organizations outside of
    Education to achieve crosscutting goals?

                                                             Does not apply given
                                                             my current position.
                                             Yes (percent) No (percent) (percent)

    83 125

    HHS's survey questions:

    Do you collaborate with other operating divisions within HHS to achieve
    crosscutting goals?

                                    Does not apply
                                  given my current
    Yes (percent) No (percent)        position.
                                         (percent)
    87                       5                8

    Do you collaborate with other agencies or organizations outside of HHS to
    achieve crosscutting goals?

                                     Does not apply
                                   given my current
    Yes (percent) No (percent)         position.
                                          (percent)
    83                       7                10

    NASA's survey questions:

    Do you collaborate with other centers within NASA to achieve crosscutting
    goals?

                                     Does not apply
                                   given my current
    Yes (percent) No (percent)         position.
                                          (percent)
    97                       2                 1

    Do you collaborate with other agencies or organizations outside of NASA to
    achieve crosscutting goals?

                                                                   Does not apply
                                                                 given my current
                                   Yes (percent) No (percent) position. (percent)

    87 85

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    3. Provide and routinely use performance information to track
    organizational priorities.

    Your agency formally provides performance information that allows you to
    track your work unit's performance.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        15         25          30         18         5          8
    HHS              18         24          28         14        11          5
    NASA             25         31          27         11         4          3

    Your agency formally provides performance information that allows you to
    compare the performance of your work unit to that of other work units.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         5         13          18         35        18         13
    HHS               9         13          16         29        23         10
    NASA              6         23          31         20        13          7

    Your agency formally provides performance information that allows you to
    compare the performance of your work unit to that of your agency.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         8         13          20         23        25         13
    HHS               9         16          21         22        20         12
    NASA              6         20          29         22        16          8

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    Your agency formally provides performance information that is available to
    you when you need it.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        10         23          15         30        13         10
    HHS              13         23          23         17        16          8
    NASA             16         30          26         17         8          3

    Your agency formally provides performance information that is useful for making
                     improvements in your work unit's performance.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        10         25          20         20        18          8
    HHS              13         20          28         15        18          7
    NASA             15         28          27         17         9          5

    4. Require follow-up actions to address organizational priorities.

    You identified areas for improvement based on performance information
    formally provided by your agency.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        15         21          33         18         5          8
    HHS              17         26          22         12        11         13
    NASA             19         35          23          9         8          6

                You took action on any identified areas of improvement.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        23         33          23          8         5          8
    HHS              25         35          14          6         7         12
    NASA             29         45          11          4         4          7

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    You documented areas for improvement in your individual performance plan.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        21         18          26          8        15         13
    HHS              18         25          23          9        13         13
    NASA             15         32          24         11         9          9

    You are recognized through your performance management system for taking
    follow-up actions.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        15         18          26         13        18         10
    HHS              16         23          23         10        11         18
    NASA             15         36          23         10         7         10

    5. Use competencies to provide a fuller assessment of performance.

    The competencies you demonstrate help you contribute to the organization's
    goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        49         36          10          3         0          3
    HHS              68         26           4          1         0          1
    NASA             62         30           6          1         0          0

    You are recognized through your performance management system for your
    demonstration of the competencies.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        28         26          18         18         3          8
    HHS              31         31          20          9         3          6
    NASA             36         36          16          7         3          2

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    6. Link pay to individual and organizational performance.

    I am rewarded for accomplishing the performance expectations identified in
    my individual performance plan.

                                                                      No basis to
                                        Neither
                                        agree               Strongly  judge / Not
                   Strongly       Agree    or     Disagree  disagree   applicable
                    agree               disagree
                    (percent) (percent) (percent) (percent) (percent)   (percent)
    EDUCATION           28        28        15        13         8           8
    HHS                 27        32        14        12        10           6
    NASA                38        30        12         8         7           5

      I am rewarded for helping my agency accomplish its goals. You understand the
    criteria used to award bonuses (e.g., cash awards). You understand the criteria
    used to award pay level adjustments (e.g., an increase from SES level 1 to level
                                          2).

                                                                      No basis to
                                        Neither
                                        agree               Strongly  judge / Not
                   Strongly       Agree    or     Disagree  disagree   applicable
                    agree               disagree
                    (percent) (percent) (percent) (percent) (percent)   (percent)
    EDUCATION           23        31        21        13         8           5
    HHS                 28        32        13        13         8           7
    NASA                40        31        11         7         6           5

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        18         26          21         15        21          0
    HHS              19         28          21         17        13          2
    NASA             15         29          20         23        12          2

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        18         24          11         16        29          3
    HHS              17         22          23         16        19          3
    NASA             14         23          27         19        15          2

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    Pay level adjustments are dependent on an individual's contribution to the
     organization's goals. Bonuses are dependent on an individual's contribution to
                               the organization's goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         8         18          21         13        15         26
    HHS              15         25          26         13         8         14
    NASA             16         34          18         15         6         11

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         5         26          15         21        13         21
    HHS              18         31          18         13         6         14
    NASA             26         28          20         13         4          9

    7. Make meaningful distinctions in performance.

    Your agency's SES performance management system uses performance ratings
    to make meaningful distinctions between acceptable and outstanding
    performers.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         0         10          26         31        18         15
    HHS               6         25          25         10        15         19
    NASA             14         32          30         11         3         10

    Your agency's SES performance management system uses bonuses to make
    meaningful distinctions between acceptable and outstanding performers.

                                                               No basis to
                              To a great To a To a small
                    To a very moderate                         judge / Not
                 great extent   extent extent     extent To no extent applicable
                    (percent) (percent)        (percent)   (percent) (percent)
                              (percent)
    EDUCATION           10           23 10         21          15 21
          HHS              11           27 22         11           7 23
         NASA              19           29 20         14           4 15
                                                                   GAO-04-614 SES
                                  Page 69                  Performance Management

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    Your agency uses performance information and documentation to make
    distinctions in senior executive performance.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         3         21          13         23        15         26
    HHS               8         26          24         12         5         25
    NASA             14         33          21         13         3         15

    Your agency provides candid and constructive feedback that allows you to
    maximize your contribution to organizational goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         5         18          18         28        23          8
    HHS              10         26          28         13        17          6
    NASA             18         27          27         15        10          3

    8. Involve employees and stakeholders to gain ownership of performance
    management systems.

    You have been given the opportunity to be involved in refining your
    agency's SES performance management system.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         8         13          10         15        49          5
    HHS              10         13          20         13        38          5
    NASA              6          7          15         15        51          6

    You have been involved in refining your agency's SES performance
    management system.

                                                               No basis to
                              To a great To a To a small
                    To a very moderate                         judge / Not
                 great extent   extent extent     extent To no extent applicable
                    (percent) (percent)        (percent)   (percent) (percent)
                              (percent)
    EDUCATION            8            11 5         11           61 5
          HHS               9           13 17         14           43 5
         NASA               5            5 13         14           58 5
                                                                   GAO-04-614 SES
                                  Page 70                  Performance Management

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    Formal training on your agency's SES performance management system is available
                                        to you.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         5         11          26         21        26         11
    HHS               8         12          25         14        24         17
    NASA              7         21          24         13        21         14

    You have participated in formal training on your agency's SES performance
    management system.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         8          8          16         22        41          5
    HHS               8          7          23         16        42          4
    NASA              4         11          22         17        43          2

    Your overall involvement in the SES performance management system has
    increased your understanding of it.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        10         13          13         26        28         10
    HHS              11         16          21         16        21         15
    NASA              8         19          27         16        17         13

    9. Overall perceptions of the SES performance management system.

    Your agency's SES performance management system is used as a tool to
    manage the organization.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         3         23          13         31        18         13
    HHS               6         23          35         15         8         12
    NASA              9         24          33         19         8          7

    Appendix II GAO Senior Executive Survey Data from Education, HHS, and NASA

    Your agency's SES performance management system is used in achieving
    organizational goals.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION         8         21          21         31        10         10
    HHS               9         27          32         11         7         12
    NASA             13         33          28         13         7          5

    Your agency's SES performance management system holds you accountable for
    your contributions to organizational results.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        16         26          21         24         8          5
    HHS              22         27          27         12         3          8
    NASA             20         39          22         10         6          4

    Your agency's SES performance management system facilitates discussions
    about your performance as it relates to organizational goals during the
    year.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        10         26          18         18        21          8
    HHS              12         27          26         20         8          8
    NASA             18         31          22         15        10          5

    Your agency's SES performance management system helps to maintain a
    consistent focus on organizational goals during transitions, such as
    changes in leadership (at any level) and change management initiatives.

                                                                         No basis
                                                                               to
                                      To a        To a small              judge /
                 To a very To a great moderate                                Not
                   great       extent      extent     extent   To no   applicable
                  extent                                      extent
                 (percent)  (percent)   (percent)  (percent) (percent)  (percent)
    EDUCATION        10         15          26         18        21         10
    HHS              10         28          24         17        10         12
    NASA             13         24          24         20        11          9

    Appendix III

    Selected Elements of Education's, HHS's, and NASA's SES Performance
    Management Systems

                                       Education

    Defining SES Performance Expectations

    Education required all of its senior executives to include three critical
    elements in their individual performance plans for the 2003 performance
    appraisal cycle (July 2002-June 2003). The critical elements and examples
    of the related individual and organizational performance requirements
    include the following.

    o 	Leadership, management, and coaching: Takes leadership in promoting and
    implementing the department's mission, values, and goals; develops and
    communicates a clear, simple, customer-focused vision/direction for the
    organization and customers that is consistent with the department's
    mission and strategic goals; fosters improved workforce productivity and
    effective development and recognition of employees; and promotes
    collaboration and teamwork, including effective union-management
    relations, where appropriate.

    o 	Work quality, productivity, and customer service: Produces or assures
    quality products that are useful and succinct, that identify and address
    problems or issues, and that reflect appropriate analysis, research,
    preparation, and sensitivity to department priorities and customer needs;
    anticipates and responds to customer needs in a professional, effective,
    and timely manner; initiates new and better ways of doing things; and
    creates real and positive change.

    o 	Job specifics: Senior executives are to include performance
    expectations that are applicable to their individual positions and support
    their principal offices' goals as well as the department's strategic goals
    and priorities, including the President's Management Agenda, the Blueprint
    for Management Excellence, and the Culture of Accountability.

    Appraising Performance	Education sets guidelines for its offices to follow
    in appraising performance and recommending senior executives for bonuses.
    The senior executive performance appraisals are to be based on
    demonstrated results related to Education's goals and priorities,
    including the President's Management Agenda, the Blueprint for Management
    Excellence, the Culture of Accountability, and the Secretary's strategic
    plan. In addition,

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES Performance
                                   Management Systems

    the senior executive's appraisal is to be based on both individual and
    organizational performance, taking into account

    o 	results achieved in accordance with the department's strategic plan and
    goals, which are developed in accordance with the Government Performance
    and Results Act of 1993 (GPRA);

    o  customer satisfaction;

    o  employee perspectives;

    o 	the effectiveness, productivity, and performance quality of the
    employees for whom the senior executive is responsible; and

    o 	equal employment opportunity and diversity and complying with merit
    systems principles.

    In addition, the responses of the customers, coworkers, and employees
    through the automated performance feedback process are to be considered in
    determining the senior executive's performance rating.

    Senior executives must receive a performance rating of "successful" to be
    eligible for a bonus. Bonus recommendations are to be based on the senior
    executive's demonstrated results and accomplishments toward the
    department's strategic goals and organizational priorities.
    Accomplishments should demonstrate how Education's achievements could not
    have been possible without the senior executive's leadership and
    contribution.

    HHS

    Defining SES Performance HHS required its senior executives to set
    measurable, specific performance

    Expectations	expectations in their fiscal year 2003 individual performance
    plans (or performance contracts) that align with HHS's strategic goals,
    the "One-HHS" management and program objectives, and their operating
    divisions' annual performance goals. According to agency officials, senior
    executives are to choose the One-HHS objectives and strategic and annual
    performance goals that relate to their job responsibilities, and tailor
    their

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES
    Performance Management Systems

    individual performance expectations to reflect these responsibilities in
    their performance plans.

    The One-HHS objectives, which reflect the program and management
    priorities of the Secretary, include the following.

    Management objectives: The purpose of the objectives is to better
    integrate HHS management functions to ensure coordinated, seamless, and
    results-oriented management across all operating and staff divisions of
    the department.

    1. Implement results-oriented management.

    2. Implement strategic human capital management.

    3. Improve grants management operation and oversight.

    4. Complete the fiscal year 2003 competitive sourcing program.

    5. Improve information technology management.

    6. Administrative efficiencies.

    7. Continue implementation of unified financial management system.

    8. Consolidate management functions.

    9. Achieve efficiencies through HHS-wide procurements.

    10. Conduct program evaluations and implement corrective strategies for
    any deficiencies identified.

    Program objectives: The purpose of the objectives is to enhance the health
    and well-being of Americans by providing for effective health and human
    services and by fostering strong, sustained advances in the sciences
    underlying medicine, public health, and social services.

    1. Increase access to health care (Closing the Gaps in Health Care).

    2. Expand consumer choices in health care and human services.

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES Performance
                                   Management Systems

    3.	Emphasize preventive health measures (Preventing Disease and Illness).

    4.	Prepare for and effectively respond to bioterrorism and other public
    health emergencies (Protecting Our Homeland).

    5. Improve health outcomes (Preventing Disease and Illness).

    6. Improve the quality of health care (21st Century Health Care).

    7. Advance science and medical research (Improving Health Science).

    8.	Improve the well-being and safety of families and individuals,
    especially vulnerable populations (Leaving No Child Behind).

    9. Strengthen American families (Working Toward Independence).

    10. Reduce regulatory burden on providers, patients, and consumers of
    HHS's services.

    In addition to the annual performance goals, operating divisions may have
    their senior executives include specific individual performance
    expectations in their performance plans. According to an agency official,
    the senior executives in FDA have set expectations in their plans that are
    relevant to the work in their centers. For example, the senior executives
    who work on issues related to mad cow disease in the Center for Veterinary
    Medicine have included goals related to this type of work in their
    individual performance plans.

    Appraising Performance	HHS sets general guidance for operating divisions
    to follow when appraising senior executive performance and recommending
    senior executives for bonuses and other performance awards, such as the
    Presidential Rank Awards. Overall, a senior executive's performance is to
    be appraised at least annually based on a comparison of actual performance
    with expectations in the individual performance plan. The operating
    divisions are to appraise senior executive performance taking into account
    such factors as

    o  measurable results achieved in accordance with the goals of GPRA;

    o  customer satisfaction;

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES Performance
                                   Management Systems

    o  employee perspectives;

    o 	the effectiveness, productivity, and performance quality of the
    employees for whom the executive is responsible; and

    o 	meeting affirmative action, equal employment opportunity, and diversity
    goals and complying with the merit systems principles.

    In recommending senior executives for bonuses, operating divisions are to
    consider each senior executive's performance, including the rating and the
    extent of the executive's contributions to meeting organizational goals.
    Senior executives who receive ratings of "fully successful" are eligible
    to be considered for bonuses. For fiscal year 2003, bonuses generally were
    to be recommended for no more than one-third of the operating division's
    senior executives and awarded to only the exceptional performers.
    Operating divisions were to consider nominating only one or two of their
    very highest contributors for the governmentwide Presidential Rank Awards.
    The greatest consideration for bonuses and Presidential Rank Awards was to
    be given to executives in frontline management positions, with direct
    responsibility for HHS's programs.

    NASA

    Defining SES Performance Expectations

    NASA requires its senior executives to include seven critical elements,
    which reflect the Administrator's priorities and NASA's core values of
    safety, people, excellence, and integrity, in their individual performance
    plans for the 2004 performance appraisal cycle (July 2003-June 2004).
    Senior executives may modify the related performance requirements by
    making them more specific to their jobs. These seven critical elements and
    the related performance requirements are as follows.

    o 	The President's Management Agenda: Understands the principles of the
    President's Management Agenda and actively applies them; assures maximum
    organizational efficiency, is customer focused, and incorporates
    presidential priorities in budget and performance plans; capitalizes on
    opportunities to integrate human capital issues in planning and
    performance and expand electronic government and competitive sourcing; and
    pursues other opportunities to reduce costs and improve service to
    customers.

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES
    Performance Management Systems

    o 	Performance requirement: Applicable provisions of the agency human
    capital plan are implemented; financial reports are timely and accurate;
    clear measurable programmatic goals and outcomes are linked to the agency
    strategic plan and the GPRA performance plan; and human capital,
    e-government, and competitive sourcing goals are achieved.

    o 	Health of NASA: Actions contribute to safe and successful mission
    accomplishment and/or strengthen infrastructure of support functions;
    increases efficient and effective management of the agency; facilitates
    knowledge sharing within and between programs and projects; and displays
    unquestioned personal integrity and commitment to safety.

    o 	Performance requirement: Demonstrates that safety is the organization's
    number one value; actively participates in safety and health activities,
    supports the zero lost-time injury goals, and takes action to improve
    workforce health and safety; meets or exceeds cost and schedule milestones
    and develops creative mechanisms and/or capitalizes on opportunities to
    facilitate knowledge sharing; and achieves maximum organizational
    efficiency through effective resource utilization and management.

    o 	Equal opportunity (EO) and diversity: Demonstrates a commitment to EO
    and diversity by proactively implementing programs that positively impact
    the workplace and NASA's external stakeholders and through voluntary
    compliance with EO laws, regulations, policies, and practices; this
    includes such actions as ensuring EO in hiring by providing, if needed,
    reasonable accommodation(s) to an otherwise qualified individual with a
    disability or ensuring EO without regard to race, color, national origin,
    sex, sexual orientation, or religion in all personnel decisions and in the
    award of grants or other federal funds to stakeholder recipients.

    o 	Performance requirement: Actively supports EO/diversity efforts;
    consistently follows applicable EO laws, regulations, Executive Orders,
    and administration and NASA policies, and the principles thereof, in
    decision making with regard to employment actions and the award of federal
    grants and funds; cooperates with and provides a timely and complete
    response to NASA's Discrimination Complaints Division, the U.S. Equal
    Employment Opportunity Commission, and the courts during the
    investigation, resolution, and/or litigation of

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES
    Performance Management Systems

    allegations of illegal discrimination under applicable EO laws and
    regulations.

    o 	Collaboration: Integrates One-NASA approach to problem solving,
    program/project management, and decision making; leads by example by
    reaching out to other organizations and NASA centers to collaborate on
    work products; seeks input and expertise from a broad spectrum; and
    demonstrates possession of organizational and interpersonal skills.

    o 	Performance requirement: Provides the appropriate level of highquality
    support to peers and other organizations to enable the achievement of the
    NASA mission; results demonstrate support of One-NASA and that stakeholder
    and customer issues were taken into account.

    o 	Professional development: Has a breadth of experience in different
    organizations, agencies, functional areas, and/or geographic locations;
    demonstrates continual learning in functional and leadership areas, for
    example, through advanced education/training or participating in seminars;
    encourages and supports development and training of assigned staff; and
    where feasible, seeks, accepts, and encourages opportunities for
    developmental assignments in other functional areas and elsewhere in NASA,
    with a focus on broadening agencywide perspective.

    o 	Performance requirement: Participates in training/learning experiences
    appropriate to position responsibilities and to broaden agencywide
    perspective and actively plans for and supports the participation of
    subordinate staff in training and development activities.

    o 	Meets program objectives: Meets and advances established agency program
    objectives and achieves high-quality results; demonstrates the ability to
    follow through on commitments; and individual fits into longterm human
    capital strategy and could be expected to make future contributions at a
    higher level or in a different capacity at the same level.

    o 	Performance requirement: Meets appropriate GPRA/NASA strategic plan
    goals and objectives; customers recognize results for their highquality
    and responsiveness to requirements/agreements.

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES Performance
                                   Management Systems

    o 	Implements a fair and equitable performance-based system within
    organizational component (applicable only for supervisory positions):
    Implements/utilizes a fair, equitable, and merit/performance-based
    process/system for the evaluation of individuals for bonuses, promotions,
    career advancements, and general recognition.

    o 	Performance requirement: System reflects the key leadership, teamwork,
    and professional excellence on which decisions are based; results have
    credibility with supervisors, subordinates, and peers.

    Appraising Performance	NASA provides guidance for the centers and offices
    to follow in appraising senior executive performance and recommending
    executives for bonuses or other performance awards, such as Presidential
    Rank Awards or incentive awards. The senior executive's performance
    appraisal is to focus on results toward the performance requirements
    specified in the individual performance plan, specifically the
    achievements that address the agency's goals rather than the quality of
    effort expended. In addition, senior executive appraisals are to be based
    on individual and organizational performance, taking into account such
    factors as

    o  results achieved in accordance with the goals of GPRA;

    o  the effectiveness, productivity, and performance of assigned employees;

    o  meeting safety and diversity goals;

    o  complying with merit system principles;

    o 	customer perspective focusing on customer needs, expectations, and
    satisfaction;

    o 	employee perspective focusing on employee needs, such as training,
    internal processes, and tools to successfully and efficiently accomplish
    their tasks; and

    o 	business perspective focusing on outcomes and the social/political
    impacts that define the role of the agency and the business processes
    needed for organizational efficiency and effectiveness.

    Appendix III Selected Elements of Education's, HHS's, and NASA's SES
    Performance Management Systems

    In considering customer, employee, and other stakeholder perspectives for
    senior executive appraisals, rating officials may use formal mechanisms,
    such as surveys, or less formal mechanisms, such as unsolicited customer
    and employee feedback, and analysis of personnel data, such as turnover
    rates, diversity reports, grievances, and workforce awards and
    recognition.

    All senior executives with annual summary ratings of "fully successful" or
    higher are eligible to be considered for bonuses. Bonus recommendations
    are to be based solely on exceptional performance as specified and
    documented in the senior executive's performance plan.

                                      Appendix IV

                       Comments from the Department of Education

    Appendix IV
    Comments from the Department of
    Education

    Appendix IV
    Comments from the Department of
    Education

    Appendix V

    Comments from the Department of Health and Human Services

    Appendix VI

    Comments from the National Aeronautics and Space Administration

    Appendix VI
    Comments from the National Aeronautics
    and Space Administration

    Appendix VI
    Comments from the National Aeronautics
    and Space Administration

    Appendix VII

                         GAO Contacts and Staff Acknowledgments

    GAO Contacts	J. Christopher Mihm, (202) 512-6806 or mihmj@gao.gov Lisa
    Shames, (202) 512-6806 or shamesl@gao.gov

    Acknowledgments	In addition to the individuals named above, Janice Lichty
    Latimer, Erik Hallgren, Ronald La Due Lake, Mark Ramage, Nyree M. Ryder,
    and Jerry Sandau made key contributions to this report.

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