Rule limiting ‘outstanding’ performance ratings for agency senior executives finalized

The Office of Personnel Management on Monday finalized a rule that would permit agencies to use forced distribution to rate the performance of members of the Senior Executive Service. 

Under such a system, only a pre-determined number of senior executives could receive the highest performance levels of 5 and 4, which respectively are “outstanding” and “exceeds fully successful.” Agencies are required, according to OPM guidance released in February, to limit the distribution of 5 and 4 ratings to no more than 30% of their SES members. The president could, however, waive that restriction. 

The Trump administration argued that too many senior executives receive the highest ratings, pointing out that for the 2023 performance cycle about 96% of them were ranked at levels 5 and 4. 

“Agencies will no longer be able to rate virtually all of their senior executives at the highest performance ratings, thus encouraging SES members to strive for increased levels of performance and ultimately provide better results for the government and the American public,” according to the rulemaking. 

Noncareer members of the SES, however, can be exempted from such preset rating limits. Officials wrote that this exception is in response to concerns that political appointees would get special treatment. 

“This provision helps alleviate a concern described in the public comment section — that noncareer SES appointees might receive preferential consideration for high rating levels at the expense of career SES members’ ratings,” they wrote.  

OPM also contended that the forced distribution system would not impair performance bonuses, as agencies are permitted to grant awards equal to 5% of a senior executive’s salary for receiving at least a level 3 “fully successful” rating. Bonuses higher than 5%, however, are reserved for those rated at levels 4 or 5, according to OPM’s February guidance. 

The Trump administration has sought to make several changes to the SES. 

That February guidance also puts more weight in SES performance reviews on whether officials “faithfully administered the law and the president’s policies” and experienced results that "align with and advance the president’s specific policy agenda.” Additionally, OPM has called on agencies to redesignate more of their SES positions as being open to political appointees. 

Marcus Hill, president of the Senior Executives Association, said that the organization supports performance management reform for the senior officials but that there’s “minimal evidence” that forced distribution is an “effective or sustainable performance management practice.”  

“Ultimately, this leads to executives competing amongst themselves for favor from leaders, versus focusing on demonstrating performance that exceeds expectations,” he said in a statement. “By the very nature of their selection and advancement, senior executives represent the top tier of leadership talent, and any system that presumes otherwise in lieu of rating actual performance of SES leaders risks undermining both trust and effectiveness.”

Monday’s rulemaking also removes “leadership effectiveness in promoting diversity, inclusion and engagement” as a criteria for rating senior executives and strikes a requirement that agency heads consider diversity and inclusion when establishing performance review boards, which evaluate an SES member’s initial performance appraisal. 

At the start of his second term, Trump issued an executive order to remove diversity, equity and inclusion activities across government. The president argued that DEI undermines merit principles. 

Data in 2023 showed that the SES was disproportionately white and male compared with the broader civil service.