Analysis of OPM's Report on Pay for Performance in the Federal Government

In response to a congressional request, GAO analyzed an Office of Personnel Management (OPM) report on pay for performance in the federal government. In reviewing the report, GAO compared it with information it developed in a 2-year analysis of merit pay in three government departments.

GAO generally disagreed with the OPM conclusions. It found that the studies and analyses OPM cited as the basis for its conclusions were either not current or could not be projected to a government-wide merit pay program. The attitudinal survey used for the OPM study took place before merit pay was fully implemented and the actual merit pay experiences cited by OPM were either from agencies that implemented merit pay a year earlier or from OPM merit pay experience. GAO identified many areas of the merit pay system that need management attention as well as negative employee perceptions and attitudes toward the systems in effect. GAO found that, while merit pay may provide greater rewards for employees rated above average in a particular merit pay pool, these rewards are not always equitable and proportionate when comparing increases between pools. In the agencies which GAO reviewed, 7 percent or fewer employees wanted to retain the merit pay system as implemented. GAO stated that it may take a few more years of operation, evaluation, and adjustment before the positive and negative aspects of a merit pay system and the feasibility of extending it to all federal employees can be adequately determined.