A 2-Year Appraisal of Merit Pay in Three Agencies

Gao ID: GGD-84-1 March 26, 1984

In response to a congressional request, GAO assessed the merit pay systems at the Departments of Agriculture, Housing and Urban Development, and the Navy during 1981 and 1982.

In fiscal year 1982, about 108,000 federal employees were covered by the merit pay system, which was established by the Civil Service Reform Act of 1978. About half of the merit pay employees that GAO surveyed were dissatisfied with the system because they were not guaranteed the full annual adjustment and within-grade increases granted to other federal employees. GAO found that non-performance-related factors adversely affected merit pay practices and employees' perceptions of the system. Although the act requires that the Office of Personnel Management (OPM) analyze the system's cost and effectiveness and annually publish the results, OPM evaluations have not met the act's requirements. GAO noted that the objectivity of the performance standards and their appropriateness to the job being evaluated improved slightly over the 2-year period. OPM regulations which sought to correct flaws in the merit pay system were declared null and void by a U.S. district court and OPM was enjoined from implementing them. However, GAO stated that the court decision does not preclude OPM from sponsoring legislation or drafting new regulations to address merit pay system problems.


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