Human Capital: Bonuses to Senior Executives at the Department of
Veterans Affairs (12-JUN-07, GAO-07-985T).
Key practices of effective performance management for the Senior
Executive Service (SES) include the linkage or "line of sight"
between individual performance and organizational success, the
importance of linking pay to individual and organizational
performance, and the need to make meaningful distinctions in
performance. GAO identified certain principles for executive pay
plans that should be considered to attract and retain the quality
and quantity of executive leadership necessary to address 21st
century challenges, including that they be sensitive to hiring
and retention trends; reflect knowledge, skills, and
contributions; and be competitive. This testimony focuses on the
Department of Veterans Affairs' (VA) process for awarding bonuses
to SES members, the amount and percentage of bonuses awarded for
fiscal years 2004 through 2006 based on data reported by VA, and
the Office of Personnel Management's (OPM) and the Office of
Management and Budget's (OMB) roles in certifying federal
agencies SES performance appraisal systems. GAO analyzed VA's
policies and procedures for awarding bonuses and data provided by
VA on the amount and percentages of bonuses and interviewed
knowledgeable VA officials. Information on OPM's and OMB's
certification process was based on our 2007 report on OPM's
capacity to lead and implement reform
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-985T
ACCNO: A70616
TITLE: Human Capital: Bonuses to Senior Executives at the
Department of Veterans Affairs
DATE: 06/12/2007
SUBJECT: Evaluation criteria
Executive compensation
Federal employees
Pay
Performance appraisal
Performance management
Performance measures
Policy evaluation
Policies and procedures
Senior Executive Service
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GAO-07-985T
* [1]Background
* [2]VA's SES Performance Appraisal Process
* [3]VA SES Bonuses
* [4]OPM's and OMB's Roles in the VA Certification Process
* [5]Contacts and Acknowledgments
* [6]GAO's Mission
* [7]Obtaining Copies of GAO Reports and Testimony
* [8]Order by Mail or Phone
* [9]To Report Fraud, Waste, and Abuse in Federal Programs
* [10]Congressional Relations
* [11]Public Affairs
United States Government Accountability Office
GAO Testimony Before the Subcommittee on Oversight
and Investigations, House Committee on Veterans'
Affairs, House of Representatives
For Release on Delivery
Expected at 2:00 p.m. EDT
Tuesday, June 12, 2007
HUMAN CAPITAL
Bonuses to Senior Executives at the
Department of Veterans Affairs
Statement of J. Christopher Mihm
Managing Director, Strategic Issues
GAO-07-985T
HUMAN CAPITAL
Bonuses to Senior Executives at the Department of Veterans Affairs
What GAO Found
VA requires that each senior executive have an executive performance plan
or contract in place for the appraisal year that reflects measures that
balance organization results with customer satisfaction, employee
perspectives, and other appropriate measures. VA uses four performance
review boards (PRB) to review and make recommendations on SES ratings,
awards, and pay adjustments based on these performance plans. VA's
Secretary appoints members of three of the four boards on the basis of the
position held within the agency, and consideration is given to those
positions where the holder would have knowledge about the broadest group
of executives. Members of the fourth board are appointed by VA's Inspector
General. VA's PRBs vary in size, composition, and number of SES members
considered for bonuses, and each PRB, within the scope of VA's policies,
develops its own procedures and criteria for making bonus recommendations.
According to VA policy, bonuses are generally awarded only to those rated
outstanding or excellent and who have demonstrated significant individual
and organizational achievements during the appraisal period.
As for bonuses awarded, the table below shows VA SES member bonus amounts
for fiscal years 2004 through 2006.
Average Bonus Amount and Percentage Receiving Bonuses at VA among Career
SES Members and by Headquarters and Field Locations, 2004-2006
2004 2005 2006
Average Percentage Average Percentage Average Percentage amount receiving amount
receiving amount receiving
All $16,371 85.4 $16,713 79.7 $16,606 87.2
Headquarters 19,195 82.1 18,629 80.2 19,439 81.9
Field 15,089 87.0 15,761 79.4 15,268 90.0
Source: GAO analysis of VA data.
According to data reported by OPM, in fiscal year 2005, VA awarded higher
bonus amounts to its career SES than any other cabinet-level department;
however, according to OPM's data, six other cabinet-level departments
awarded bonuses to a higher percentage of their career SES.
OPM and OMB evaluate agencies' SES performance appraisal systems against
nine certification criteria jointly developed by the two agencies and
determine that agencies merit full, provisional, or no certification. VA
has been granted provisional certification in each of the years 2004
through 2006. Our review of VA's requirements for SES performance plans as
represented in both its 2006 submission and 2007 draft submission to OPM
show that VA made changes to the requirements for its performance plans to
reflect greater emphasis on measurable results.
United States Government Accountability Office
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