Managers are the linchpins to improved performance

The recently issued mandate, “Performance Management for Federal Employees,” requires agencies to “provide a firm benchmark towards which employees must aim their performance.” It’s on point but fails to address what is likely to be problematic – manager and employee behavior patterns are deeply rooted.

The opening paragraph refers to “a workplace culture where excellent performance is celebrated and rewarded” but then it states to be “fully successful . . . the employee is achieving all expectations for their position.” The emphatic references to “standards” that tell employees “how well they have to do it” send a very different message then in the many books and reports on improving performance. 

The reports include several released by the Government Accountability Office along with a 2006 report, “Performance Leadership: 11 Better Practices That Can Ratchet Up Performance,” by Robert Behn, a prominent senior lecturer at the Kennedy School of Government. The need to improve performance has been a concern for decades.

Behn opens his report with a chapter, “Helping Managers Manage” – an issue forgotten in the OPM memo. The helping now is the support to redefine manager/employee working relationships. Behn’s report was released almost 20 years ago. Today’s experts add the understanding that leaders play an important role in broad change initiatives. 

GAO has discussed the core problem in several reports: agencies “lack organizational cultures that promote high performance and accountability … that are critical to successful organizations.”  

Two levels of performance management

It’s not clear when or why it started but the passage of the Government Performance and Results Act in 1993 created a new focus for performance management at the agency level, with reporting of agency goals and results. The traditional focus, going back decades, was on front-line workers, which historically were administered under Office of Personnel Management policies.

Both arguments focus on improving performance, but the approaches are different and that affects how agencies address performance problems. GPRA focuses on agency-level results, using metrics and data to monitor progress. It’s a “system” focus consistent with the approach to management that emerged decades ago, “scientific management,” where industrial engineers define performance “standards” for workers. The discussions of GPRA and GPRA modernization are silent on the role of front-line managers and workers.

In contrast, the focus of “best” practices in workforce management is on creating a work environment where workers are empowered to use their knowledge and skills to address operating problems. Gallup’s research introduced the construct “engagement” and over time made employee engagement the “answer” for improved performance. It makes a manager’s supervisory skills a priority. 

Behn alludes to the distinction, “Traditionally we have asked the systems question. Rather than develop public managers with the leadership capacity … we have sought to create government-wide schemes that will somehow require performance …”  He goes on to state, “This systems approach is unlikely to prove very effective.” He concludes in the introduction that “Administrative requirements are not designed to elicit discernment and adaptation. They are created to impose obedience and conformity.” That bureaucratic work environment has resisted change efforts for decades. 

Managers and employee performance

Gallup’s analyses show that “engaged” employees perform at significantly higher levels. That’s documented in a series of performance metrics, including productivity, absenteeism, customer satisfaction, safety and wellbeing. 

The key point from their research: “managers account for at least 70% of the variance in employee engagement scores.” The key is the way employees are managed.

Significantly, Gallup has documented the impact at higher management levels as well. When managers are engaged, it’s far more likely their team will be engaged. The evidence also shows that engaged executives boost the engagement of everyone in the organization. 

But in government, raising performance levels requires change – and change, especially by front line employees, is contrary to the culture in bureaucratic organizations. A 2017 survey found even members of the Senior Executive Service feel they lack the autonomy and support to drive meaningful change. The problem is compounded by the multiple layers of management. 

Notably, Clinton’s “reinventing government” initiative focused on what needed to change. The NPR principle, “Empowering Employees to Get Results,” inspired more than 1,200 Hammer Awards to recognize employee-initiated changes.  The “equivalent of 640,000 pages of internal agency rules” were eliminated. In the traditional environment, however, workers know where problems exist but too often are reluctant to voice their ideas.

The COVID crisis and working remotely triggered new interest in the role of managers. A recent McKinsey column focused on “creating the right atmosphere for middle managers to be the ‘force multipliers’ they are meant to be . . .” They argue for categorizing manager tasks “based on whether they add value or not” so managers can spend time on what matters. Every employer should eliminate unproductive tasks.

McKinsey contends that the performance management system, “from goal setting to continuous feedback to consequence management,” is the “greatest formal mechanism.” At its best, it prompts ongoing feedback and coaching. It also reinforces the linkage to an employer’s mission and goals. The idea of “standards” is contrary to driving for improved performance.

Companies, large and small, now rely on S.M.A.R.T. goals to link executives and managers to their business plans. The practice gained prominence when workers started working remotely but for years it’s been widely used by leading companies.

Pay is a problem

It’s a serious problem. The cap on SES salaries, $225,700 for 2025, compresses pay at all levels of management. Plus, President Carter and the Civil Service Reform Act was right – both pay increases and cash awards should be linked to improved performance. In business, incentives start for the managers of white-collar workers at 20% of salary and increase at higher executive levels. 

The cap holds federal executive salaries well below private sector levels. Salary.com reports top engineering executives earn on average $294,919. Top financial executives average $296,378. Many corporate executives gain added income from stock ownership. In larger companies – those similar to federal agencies – managers two or three levels down are paid more than SESrs.

The compression is known to deter workers from applying for manager vacancies. The pay increases do not offset the stress of being a manager. Sometimes less inexperienced, lower paid workers are the only applicants. The problem was discussed as far back as 1990 in planning meetings for pay reform but it’s locked in the GS system grade structure.

The argument that federal executives are badly underpaid is obviously not new. It was last studied almost 40 years ago when Reagan appointed a commission to address the problem. In light of Reagan’s commitment to reduce costs, the report’s conclusion stands out: 

“The Federal Government needs to be competitive for the best talent available, and compensation plays a significant role in that competition…. An SES beset by retention and recruitment problems results in the will of the people …being seriously impaired….  It is clear the SES compensation system provides neither the reward for performance nor the flexibility for competitively recruiting and retaining the best quality talent available…”

Implicit in the commission’s report is the recognition that the quality of SES talent is important to agency performance.  

The SES salary system is practically the same today as created under the Civil Service Reform Act of 1978. Then a stated goal was “To hold executives accountable for individual and organizational performance.” However, possibly the last presidential statement on the subject, Obama’s 2015 “Strengthening the Senior Executive Service,” is silent on the subject.  

In business, executives and managers are rewarded as a team. Incentives are universal, with awards based on a combination of company performance and individual goal achievement. That’s the practice in health care as well. The new Senior Executive Service Performance Appraisal System and Performance Plan is not remotely similar. 

Investing in government’s management corps

McKinsey’s research reinforces the argument Gallup has repeated for years – “Investing in middle managers pays off - literally.”  But in government, the argument would quickly become political. 

An idea that would serve to minimize resistance would be to create an independent commission to assess best management practices. That was the thinking when Congress created the Commission on Executive, Legislative and Judicial Salaries in 1967. Two years earlier, Congress also created the Quadrennial Review of Military Compensation. This past January, the Defense Department released the 14th Commission report. Several states and cities also form groups periodically to study similar problems.

Here, the problems affecting federal executives and managers are broader than pay. The current focus on government performance makes this an ideal time to initiate a review and make recommendations on the steps to create a high performing cadre of executives and managers. A new commission could go further and consider broader civil service issues. It’s badly needed.

An alternative is the Baldrige Performance Excellence Program promoted for years by NIST. It’s produced multiple success stories across the spectrum of employers, including state and local government. Their approach could benefit federal agencies.

If not a new commission or the Baldrige program, to maintain independence, the review could be undertaken by one (or a combination) of experts in management from the leading business schools. They maintain relationships with the best managed companies. 

However structured, the recommendations would benefit all public employers. The cost – the investment – would be nominal but the payoff in improved performance could be substantial.