Performance Management

Evaluation of the Personnel management
DEMONSTRATION project

Project Description

The Department of Commerce (Commerce) initiated a 10-year Personnel Management Demonstration Project designed to test whether a series of alternative personnel practices could be more successful than traditional personnel practices.  Success in the first 5 years of the Demonstration Project prompted Commerce to extend the Demonstration Project for an additional 5 years, beginning in October 2003, for two reasons: (1) to allow for the opportunity to test the sustainability of the interventions over a longer period of time, and (2) to add additional organizational units, thereby allowing the opportunity to test the interventions with employees in different occupations and organizations within Commerce.

Commerce contracted with Booz Allen to formally evaluate the effectiveness of 15 interventions, which are focused on improving recruitment and retention of high performers, streamlining HR processes, and improving individual and organizational performance.  For example, we evaluate the design, effectiveness, and employee perceptions of—

• Broad Pay Bands:  Pay bands were created by collapsing the traditional GS salary grades (including locality rates) into five broad groups with much larger ranges (i.e., pay bands), which allows for greater pay flexibility such as flexibility with setting entry salaries.
• Pay-for-Performance:  Pay-for-performance links pay raises directly to job performance and is intended, along with the pay bands, to improve performance and retain high-quality employees.  Funds that were applied to within-grade increases, quality step increases, and promotions were applied to performance-based pay increases.
• Performance Appraisal System:  In conjunction with pay-for-performance, a new 100-point, 2-tier performance appraisal system was adopted.

To perform each annual assessment of the Demonstration Project, Booz Allen uses a variety of data collection and analysis techniques to address a series of specified research questions.  Booz Allen elicits the perceptions of Demonstration Project participants using focus groups, interviews, and surveys.  Booz Allen also analyzes individual-level objective data (e.g., salary data, performance data) and aggregated HR data (e.g., number of hires).  To capture the context, Booz Allen collects information from site historians.  Booz Allen’s analyses test both differences between Demonstration Group and Comparison Group participants and changes over time to assess whether the interventions have had the desired effect.  At the conclusion of each year, Booz Allen prepares a report that assesses the status of the interventions and recommended actions needed to continue successful operations of the Demonstration Project.

Intended or Achieved Results

Results stemming from this task thus far include the following:

• Booz Allen’s annual evaluation reports, which have been informally recognized at Commerce and OPM as best practice examples of Demo Project evaluation reports, have helped to provide data-driven results that support the current movement away from Title 5.
• Based on the evaluations conducted to date, Booz Allen has concluded that a number of interventions have shown promising results, such as pay-for-performance, broad banding, flexible entry salaries, and flexible pay-setting upon promotion.
• In particular, tangible positive results associated with the application of pay-for-performance in the Federal Government setting have influenced the current shift from a tenure-based to a performance-based performance management system.  This shift is soon to have greater applicability government-wide, with the advent of the Department of Homeland Security’s MAXHR and the Department of Defense’s National Security Personnel System (NSPS), and pending legislation relating to the Working for America Act.

In addition, Booz Allen’s role as an independent evaluator was valued by Commerce because it promoted a sense of independence and objectivity, which has enhanced the credibility of the findings.  Moreover, our use of a range of data collection methods and statistically appropriate data analyses gave Commerce confidence that the results were data-driven, thereby allowing Commerce to take action based on hard data.  Finally, the results of the evaluations have had a strong impact within Commerce by influencing some Commerce organizations to become part of the Demonstration Project expansion.

360-Degree Performance Management System

Project Description

For a large, international investment bank, Booz Allen redesigned a 360-degree performance management system to incorporate a competency-based mid-year performance development process.  This engagement was integral to the organization’s efforts to move toward a competency-based HR system that benefited individual and organizational performance and results.  Booz Allen began by baselining the current appraisal process to gain an understanding of its status and utility.  Baseline information was weighed against findings from best practices in the performance management arena to determine the best-fit design for a performance development process at the organization.   

Intended or Achieved Results

Based on the findings, Booz Allen revised the process and also identified changes that should be made in the year-end process to effectively integrate with the mid-year performance development process.  Booz Allen also redesigned the associated formats and templates and developed communication/marketing strategies, and coordinated the automation and web-based access of the 360-degree assessment tools.