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The purpose of the Board's Performance Management Program is (1) to continuously improve individual and organizational performance, (2) to develop and motivate employees to become top performers and help the Board achieve its mission and purpose, and (3) to inform various employment decisions.
This section presents information on performance management for the period of our review, including a summary of the Board's process and trend statistics based on the independent analysis performed by an external consulting firm. The consulting firm's analysis indicated statistically significant differences in performance ratings among certain demographic groups on an agency-wide basis. When these demographic groups' performance ratings were evaluated by pay grade category, however, in most cases there was no trend of statistically significant differences.32 The agency-wide differences do not necessarily indicate discrimination and could be due to actual differences in employee performance or other factors. Further analysis of performance ratings may help the Board identify any patterns that may indicate potential unfair or unequal treatment. The Board piloted a new performance management system in 2014; performance management data associated with the new rating system are not reflected in our analysis.
The Board's Performance Management Program policy describes the Board's Performance Management Program, which provides the framework for an employee's annual performance assessment and rating during the period of our review. The Board's performance periods follow a fiscal year (October 1 through September 30) schedule. Supervisors are responsible for creating performance standards, monitoring performance, and providing employees with feedback on their performance. Supervisors are required to conduct an annual, written review of an employee's performance, which should be reviewed by the supervisors' manager before issuance to the employee. In the fiscal year (FY) 2011, FY 2012, and FY 2013 rating periods, employees were assigned one of five possible ratings: extraordinary, outstanding, commendable, marginal, and unsatisfactory.33
According to the Board's policy, the reviewing manager should attempt to resolve any disagreement between an employee and his or her supervisor with respect to the employee's performance rating. Further, Board employees other than a Division Director, an Office Director, or the Chief Operating Officer can, within a certain time frame, appeal their performance rating with the Director of the division or office.34 ER will assist in facilitating this process. However, if the appeal is based on sex, race/ethnicity, or age, the employee must file a separate complaint with the OD&I.35
Annual performance ratings are the basis for determining merit salary increases, which are administered by Compensation, and the ratings may also be considered when determining variable pay, eligibility for additional incentive programs, and promotions.36 Employees with a rating of marginal or unsatisfactory are not eligible for merit increases or other types of performance-based pay.
We used an external consulting firm to conduct an independent analysis of the Board's FY 2011, FY 2012, and FY 2013 employee performance ratings. The consulting firm conducted tests of statistical significance and practical significance to evaluate group differences.37 For analysis purposes, the consulting firm analyzed gender and age differences, as well as race/ethnicity differences among the White, Black/African American, Hispanic/Latino, Asian, and Other groups.38 The consulting firm evaluated performance data for three pay grade categories: senior managers and officers (FR-29 and 00), mid-level professionals (FR-26 to FR-28), and all others39 (FR-16 to FR-25 and WE-41 to WE-47).
The external consulting firm's analysis revealed that overall during the three-year period, approximately 99 percent of Board employees received ratings of commendable or above (table 6).40
|Performance ratings||FY 2011||FY 2012||FY 2013|
|Number of rated employees||% of total rated employees||Number of rated employees||% of total rated employees||Number of rated employees||% of total rated employees|
Source: External consulting firm analysis based on Board-provided data.
The results of the consulting firm's analysis of the Board's FY 2011, FY 2012, and FY 2013 performance ratings indicated statistically significant differences among Board employees across certain demographic groups on an agency-wide basis. However, when these demographic groups' performance ratings were evaluated by pay grade category, in most cases, there was no trend of statistically significant differences. These statistically significant differences do not necessarily indicate discrimination and could be due to a variety of factors either individually or in combination, such as actual differences in employee performance. A statistically significant result does not imply that a difference is good or bad or that it is large or small; it indicates that the observed difference is probably not due to chance.
The external consulting firm did not find statistically significant differences in the gender category. However, the consulting firm found statistically significant differences in the following race/ethnicity and age categories:
The consulting firm's full report on the Board's employee performance ratings is included as appendix E.
In addition to the external consulting firm's statistical analysis of performance ratings for the entire Board, we analyzed performance ratings by division to determine average performance ratings for FY 2011, FY 2012, and FY 2013 by race/ethnicity. We did not evaluate these averages for statistical significance, and we did not conduct analyses by pay grade category.
The results of our analysis by division were similar to the external consulting firm's agency-wide findings discussed above.42 These observations do not necessarily indicate discrimination and could be due to a variety of factors. Appendix F contains our analysis of performance management data by divisions.
According to a Board official, the Board does not consistently conduct a review of the distribution of performance ratings to ascertain how the ratings are distributed across sex, race, or people 40 years of age or older. The Board has periodically analyzed aggregate performance ratings distributions by divisions. Further, in 2012, the Board surveyed employees on the Performance Management Program. The final results report indicates survey participant concerns with effectiveness, fairness, and rater bias.
One government best practice suggests that organizations should gather and analyze statistics on the distribution of performance ratings.43 Uneven ratings distributions across gender and race/ethnicity might raise questions about fairness. If differing treatment is found within the performance appraisal process, efforts should be made to determine whether appraisal design features are causing the lack of balance in the ratings or whether other issues at the organization may be responsible.
As previously noted, the external consulting firm found statistically significant differences in performance ratings among certain demographic groups on an agency-wide basis. When these demographic groups' performance ratings were evaluated by pay grade category, however, in most cases there was no trend of statistically significant differences. Additional analyses of employee performance ratings will allow the Board to better determine whether its performance management system supports the development and retention of a diverse workforce.
The Board acknowledged challenges with the performance management system in place during the review period. In discussions about the performance management framework, employees were in favor of a framework that (1) focused on growth, (2) included ongoing conversations between managers and employees, (3) created a partnership between managers and employees, and (4) potentially had a more effective method to rate performance. The Board decided to adopt a new performance rating system.
The new performance management process was piloted in five divisions and the OIG for performance year 2013–2014, with full implementation in all Board divisions in the 2014–2015 performance year. The purpose of the new process is to align staff to the work of the Board, provide greater accountability, support the growth of staff, improve the value of time spent, and increase the fairness of the process. In addition, the new process involves frequent conversations between employees and their managers that are designed to develop and grow employees' capabilities. The Board contracted for the necessary expertise to assist with the program's implementation, which includes information sessions, tools and guides, training, and other support.
We recommend that the Chief Human Capital Officer
The Board concurs with our recommendation. In its response, the Board notes that a periodic analysis focused on areas in which management has potential concerns may be useful. Management will consider the feasibility of conducting additional analyses on a periodic basis.
The actions described by the Board are generally responsive to our recommendation. We plan to follow up with the Board to determine its final decision in considering our recommendation.