Postal Service Merit Program Should Provide More Incentive for Improving Performance

The Postal Service was a pioneer in implementing merit pay in the Federal Government. In 1972, it initiated its program to stimulate improved productivity by replacing the old, almost guaranteed, salary step increase system with one which evaluated employees and made raises contingent on performance. The Service has made many changes over the years to improve the program's soundness, and it has added several elements that are characteristic of an effective merit program.

The Postal Service's size and the legislative mandates it must follow have made the transition to merit pay difficult. The GAO review of the fiscal year 1978 and 1979 programs indicated that more could be done to improve the program's administration. Appraisals and ratings have not always been accurate and fair assessments of employee performance, and the merit program has not been as effective as possible in rewarding and improving performance. Appraisals do not specifically or accurately describe performance results, because they are not adequately tied to duties and responsibilities or developed by using specific assessment criteria. Overall ratings are influenced by nonperformance factors, inadequately documented, and changed by managers above the employee's supervisor without adequate explanation. The supervisor-subordinate dialogue concerning the evaluation process has not been effectively carried out. Training is needed in how to carry out the evaluation process. Evaluation is needed to ensure procedures are appropriate and properly administered. The Postal Service's practice of awarding merit increases to low as well as high performers and providing general salary increases to all employees detracts from the recognition given to high performers and lessens the incentive for continued good or improved performance. For many employees, there is a long time between merit increases and the performance for which they were awarded. Employees at or above the maximum of their grade levels are ineligible for merit increases regardless of their performance.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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