Federal Workforce: Improved Supervision and Better Use of Probationary Periods Are Needed to Address Substandard Employee Performance

Federal agencies' ability to address poor performance has been a long-standing issue. Employees and agency leaders share a perception that more needs to be done to address poor performance, as even a small number of poor performers can affect agencies' capacity to meet their missions.

GAO was asked to examine the rules and trends relating to the review and dismissal of federal employees for poor performance. This report (1) describes and compares avenues for addressing poor performance, (2) describes issues that can affect an agency's response to poor performance, (3) determines trends in how agencies have resolved cases of poor performance since 2004, and (4) assesses the extent to which OPM provides guidance that agencies need to address poor performance. To address these objectives, GAO reviewed OPM data, and interviewed, among others, OPM and MSPB officials, selected CHCOs, and selected union officials.

Federal agencies have three avenues to address employees' poor performance:

Day-to-day performance management activities (such as providing regular performance feedback to employees) can produce more desirable outcomes for agencies and employees than dismissal options. However, supervisors do not always have effective skills, such as the ability to identify, communicate, and help address employee performance issues.

Probationary periods for new employees provide supervisors with an opportunity to evaluate an individual's performance to determine if an appointment to the civil service should become final. According to the Chief Human Capital Officers (CHCOs) that GAO interviewed, supervisors often do not use this time to make performance-related decisions about an employee's performance because they may not know that the probationary period is ending or they have not had time to observe performance in all critical areas

Formal procedures —specifically chapters 43 and 75 of title 5 of the United States Code and OPM implementing regulations—require agencies to follow specified procedures when dismissing poor performing permanent employees, but they are more time and resource intensive than probationary dismissals.

Federal employees have protections designed to ensure that they are not subject to arbitrary agency actions. These protections include the ability to appeal dismissal actions to the Merit Systems Protection Board (MSPB) or to file a grievance. If employees are unsatisfied with the final decision of the MSPB or an arbitrator decision, they may seek judicial review.

The time and resource commitment needed to remove a poor performing permanent employee can be substantial. It can take six months to a year (and sometimes longer) to dismiss an employee. According to selected experts and GAO's literature review, concerns over internal support, lack of performance management training, and legal issues can also reduce a supervisor's willingness to address poor performance.

In 2013, agencies dismissed around 3,500 employees for performance or a combination of performance and conduct. Most dismissals took place during the probationary period. These figures do not account for those employees who voluntarily left rather than going through the dismissal process. While it is unknown how many employees voluntarily depart, the CHCOs that GAO interviewed said voluntary departures likely happen more often than dismissals.

To help agencies address poor performance, the Office of Personnel Management (OPM) makes a range of tools and guidance available in different media, including its website, in-person training, and guidebooks. However, CHCOs and other experts said agencies are not always aware of this material and in some cases it fell short of their needs. Going forward, it will be important for OPM to use existing information sources, such as Federal Employee Viewpoint Survey results, to inform decisions about what material to develop and how best to distribute it.

GAO is making four recommendations to OPM to strengthen agencies' ability to deal with poor performers including working with stakeholders to assess the leadership training agencies provide to supervisors. OPM concurred or partially concurred with all but one recommendation noting that GAO's recommendation to explore using an automated process to notify supervisors when a probationary period is about to end is an agency responsibility. GAO agrees and has clarified the recommendation.

A high-performing, effective workforce with the requisite talents,  multidisciplinary knowledge, and up-to-date skills is critical to helping the  federal government address increasingly complex and rapidly evolving  challenges. However, managing employee performance has been a long- standing government-wide issue and the subject of numerous reforms  since the beginning of the modern civil service. Without effective  performance management, agencies risk not only losing (or failing to  utilize) the skills of top talent, they also risk missing the opportunity to  observe and correct poor performance. As even a small number of poor  performers can negatively affect employee morale and agencies’ capacity  to meet their missions, poor performance should be addressed sooner  rather than later, with the objective of improving it. The Office of  Personnel Management (OPM) characterizes poor performance as the  failure of an employee to do his or her job at an acceptable level.

Federal employees and agency leaders share a perception that (1)  supervisors ineffectively address poor performance, and (2) federal  performance management systems are not built to address poor  performance. For example, in the 2014 Federal Employee Viewpoint  Survey (FEVS), 28 percent of respondents said that steps are taken to  deal with a poor performer who cannot or will not improve in his or her  work unit. A recent report analyzing the views of agency chief human  capital officers (CHCO) found their agencies’ respective performance  management systems make it difficult for managers to address poor  performers and that many are doing so inadequately.

We were asked to examine the rules and trends relating to the review and  dismissal of employees for poor performance. Our objectives were to (1)  describe and compare avenues for addressing poor performance,  including the formal procedures required when dismissing employees for  poor performance; (2) describe issues that can affect an agency’s  response to poor performance; (3) determine trends in dismissals and  other agency actions taken for poor performance since 2004; and (4)  assess the extent to which OPM provides the policy, guidance, and  training that agencies say they need to address poor performance.

To address the first objective, we reviewed relevant sections of title 5 of  the United States (U.S.) Code–commonly referred to as title 5–and OPM  regulations to determine the authority agencies have to address poor  performance in the competitive and excepted services and in the senior  executive service, including formal procedural and employee appeal  rights. To describe issues that can affect an agency’s response to poor  performance, we interviewed

OPM officials from the Merit System Accountability and Compliance  Office, Office of Employee Services, and other offices that work with  agencies to address poor performance; officials of the Merit Systems Protection Board (MSPB), including the  Executive Director, and representatives from the Office of Regional  Operations, the Office of Appeals Counsel, and an administrative  judge;  selected CHCOs chosen for their particular expertise in the issue  area, as identified through the Executive Director’s Office of the  CHCO Council and previous GAO work on related topics;

National Treasury Employees Union officials;

American Federation of Government Employees officials; officials from the Federal Managers Association; individual members of the Federal Employees Lawyers Group; officials from the Partnership for Public Service; officials from the Senior Executives Association; and selected individuals with expertise in performance management from  academia and the private sector.

To address the third objective, we analyzed data from OPM’s Enterprise  Human Resources Integration (EHRI) data warehouse to identify trends in  ratings and performance-related personnel actions. This includes the  number of employees dismissed, demoted, or reassigned for  performance reasons and the number of employees who voluntarily  resigned or retired over a three year period after receiving a “less than  fully successful” or lower performance rating.

We also interviewed individuals with extensive experience in federal  performance management issues to better understand the magnitude of  other strategies agencies use to address poor performance, such as  employees voluntarily leaving as a result of supervisory performance  management activities. We reviewed MSPB data on employee appeals  for performance-related actions and interviewed MSPB officials to  determine the number, time to process, and outcomes of those appeals.  We determined the data used in this report to be sufficiently reliable for  our purposes. To determine data reliability, we reviewed our past  analyses of the data maintained by OPM, interviewed OPM and MSPB  officials knowledgeable about the data, and conducted electronic testing  of EHRI to assess the accuracy and completeness of the data used in our  analyses.

To address the fourth objective, we reviewed the guidance and tools that  OPM provides to agencies to assist them in addressing poor  performance. We assessed OPM’s tools and guidance by comparing their  content to what is needed, as determined by CHCOs, key stakeholders,  and experts. For further information on our scope and methodology, see  appendix I.

We conducted this performance audit from February 2014 through  January 2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

How and when federal agencies can dismiss or take action to address  poor performance has been a long-standing personnel issue that dates  back to the creation of the civil service and has been the subject of a  number of reforms since the civil service began. Modern merit principles  state that appointments should be based upon qualifications, employees  should maintain high standards of integrity and conduct, and employees  should operate free of political coercion. However, according to the  MSPB, the mechanisms put in place to ensure merit principle goals are  met have at times been seen as bureaucratic obstructions that reduce  civil service effectiveness. The Civil Service Reform Act of 1978 (CSRA)  was intended, in part, to address the difficulty of dismissing employees for  poor performance. Among other changes, CSRA established new  procedures for taking action against an employee based on poor  performance set forth under chapter 43 of title 5 of the U.S. Code.

Despite CSRA’s enactment, addressing poor performance continues to  be a complex and challenging issue for agencies to navigate. In 1996, we  testified that the redress system that grew out of CSRA and provides  protections for federal employees facing dismissal for performance or  other reasons diverts managers from more productive activities and  inhibits some of them from taking legitimate actions in response to  performance or conduct problems. In 2005, we reported on ways  agencies have sought to better address poor performance, including  more effective performance management and efforts to streamline appeal  processes. In 2014, we testified that opportunities remain for agencies to  more effectively deal with poor performance through enhanced  performance management.

Agencies Have Multiple Avenues Available to Address Employee Performance

In general, agencies have three means to address employees’ poor  performance, with dismissal as a last resort: (1) day-to-day performance  management activities (which should be provided to all employees,  regardless of their performance levels), (2) dismissal during probationary  periods, and (3) use of formal procedures. Agencies’ choices will depend  on the circumstances at hand.

Effective Performance Management Can Produce Desirable Outcomes for Agencies and Employees

The first opportunity a supervisor has to observe and correct poor  performance is in day-to-day performance management activities.  Performance management and feedback can be used to help employees  improve so that they can do the work or—in the event they cannot do the  work—so that they can agree to move on without going through the  dismissal process. Agencies invest significant time and resources in  recruiting potential employees, training them, and providing them with  institutional knowledge that may not be easily or cost-effectively  replaceable. Therefore, effective performance management – which  consists of activities such as expectation-setting, coaching and feedback  – can help sustain and improve the performance of more talented staff  and can help marginal performers to become better. According to officials  we interviewed and our literature review, agencies should seek ways to  improve an employee’s performance and only dismiss that employee if he  or she does not reach an acceptable performance level. OPM’s  experience suggests that many employees who are considered to exhibit  performance problems can often improve when action is taken to address  their performance, such as employee counseling, clarification of  expectations, or additional training. Performance improvement is  considered a win-win for both the agency and the employee because it  preserves the investments agencies have already made in that individual  and those investments that the individual has made with the agency.

We have previously reported that day-to-day performance management  activities benefit from performance management systems that, among  other things, (1) create a clear “line of sight” between individual  performance and organizational success; (2) provide adequate training on  the performance management system; (3) use core competencies to  reinforce organizational objectives; (4) address performance regularly;  and (5) contain transparent processes that help agencies address  performance “upstream” in the process within a merit-based system that  contains appropriate safeguards. Implementing such a system requires  supervisors to communicate clear performance standards and  expectations, to provide regular feedback, and to document instances of  poor performance.

In cases where an employee cannot do the work, regular supervisory  feedback may help the employee realize that he or she is not a good fit  for the position and should seek reassignment to a more appropriate  position within the agency or should voluntarily leave the agency, rather  than go through the dismissal process. According to the performance  management experts and labor union officials we interviewed, an  employee voluntarily leaving is almost always preferable to dismissal and  benefits all parties. Experts stated that such an arrangement can produce  the following benefits:

The employee maintains a clean record of performance, allowing him  or her to pursue a more suitable position. Unacceptable performance  scores and dismissal actions can severely limit job prospects for the  employee, within and outside of the federal government. In some  cases, an employee leaves before a poor rating is issued. Other  times, employees and agencies may agree to have the record  expunged. Organizations we interviewed stressed that agreeing to a  clean record of performance as part of a voluntary separation can be  appropriate, particularly in cases when an employee has otherwise  demonstrated professional aptitude. They cautioned, however, that  clean record agreements must be used judiciously, in an effort to  avoid making a low-performing employee another agency’s problem.

The supervisor can focus on fulfilling the agency’s mission, rather  than expending the time and energy associated with the dismissal  process.

The agency and employee avoid costs associated with litigation.

However, effective performance management has been a long-standing  challenge for the federal government and the issue is receiving  government-wide attention. In 2011, the National Council on Federal  Labor-Management Relations (in conjunction with the CHCO Council,  labor unions, and others) developed the Goals-Engagement- Accountability-Results (GEAR) framework. The framework was designed  to help agencies improve the assessment, selection, development, and  training of supervisors. GEAR emphasized that agencies should select  and assess supervisors based on supervisory and leadership  proficiencies rather than technical competencies, and should hold them  accountable for performance of supervisory responsibilities. In June 2014,  OPM officials said that the agency will facilitate the collaboration and  information-sharing between agencies on their approaches to implement  the principles outlined in the GEAR framework. They added that OPM will  continue to provide technical support and expertise on successful  practices for performance management.

Given the critical role that supervisors play in performance management,  it is important for agencies to identify, promote and continue to develop  effective supervisors. However, according to CHCOs we interviewed and  to our literature review, performance management continues to be a  challenge at many agencies for three reasons:

Some employees promoted to supervisory positions because of  their technical skill are not as inclined towards supervision.  According to CHCOs we interviewed, as higher-graded work in the  federal government is typically in managerial and supervisory  positions, career advancement in many agencies requires that  employees take on supervisory responsibilities. However, some  employees critical to meeting the agency’s mission are not  interested in (or as inclined to conduct) supervisory duties, but are  promoted by the agency to increase their pay and to retain them.  As a result, some supervisors are not able to effectively conduct  performance management activities. NASA addresses this  problem by offering a dual career ladder structure: one ladder to  advance employees who may have particular technical skills  and/or education but who are not interested or inclined to pursue a  management or supervisory track, and another for those seeking  managerial responsibilities. One potential benefit to this approach  is that agencies may have more flexibility to promote supervisors  who are better positioned to effectively address poor performance.

Supervisory training may not cover performance management  sufficiently. Under 5 U.S.C. § 4121, agencies, in consultation with  OPM, are required to establish training programs for supervisors  on actions, options, and strategies to use in relating to employees  with unacceptable performance and in improving that  performance, and in conducting employee performance  appraisals, among other things. OPM implementing regulations  state that all agencies are required to have policies to ensure they  provide training within one year of an employee’s initial  appointment to a supervisory position. However, some agencies  include performance management as part of a general new  supervisory curriculum that also includes training on subjects such  as cybersecurity, ethics, and an array of human resource policy  topics. CHCOs told us that receiving training in this way can be  “like drinking from a fire hose” and can be difficult to fully retain,  particularly for topics that can benefit from experiential learning,  such as dealing with poor performance. Some agencies seek to  address this problem by assigning a new supervisor a mentor to  assist with ongoing coaching in performance management and in  other areas where the supervisor may have limited previous  experience.

Agencies may not be using the supervisory probationary period as  intended. A new supervisor is given a 1-year probationary period  to demonstrate successful performance as a supervisor. During  the supervisory probationary period, the agency is to determine  whether to retain that employee as a supervisor or to return the  employee to a non-supervisory position. The MSPB found that  agencies are not consistently using the probationary period to  assess new supervisors’ capabilities and supervisors in general  received varying levels of feedback from management. CHCOs  told us a related issue is that the supervisory probationary period  may not be long enough for the supervisor to conduct many  performance management responsibilities associated with the  agency’s employee appraisal cycle. As a result of these issues,  agencies may not be providing adequate feedback to help new  supervisors understand where further development is needed and  if they are well suited for supervisory responsibilities, and new  supervisors may not have the opportunity to demonstrate  performance management capabilities. MSPB officials told us that  some agencies address these issues by providing details or  rotation opportunities where employees interested in supervisory  positions can observe and, as appropriate, participate in  performance management activities in other parts of the  organization. These rotations not only give the employee more  experience in that role, but can also give the agency time to  observe and assess that employee’s potential for success as a  supervisor. We previously reported that within the Nuclear  Regulatory Commission, where a high number of technical  experts are employed, rotational assignments are encouraged to  build supervisory capacity and to allow interested employees an  opportunity to gain new experiences and responsibilities.

As described above, although effective performance management  continues to be a challenge at many agencies, individual agencies have  taken steps to better identify those employees with an aptitude towards  performance management, to develop related leadership skills, and to  more fully assess those employees before those individuals are given  supervisory responsibilities. According to OPM officials, other agencies  have authority to take similar actions as appropriate for their agency.

Supervisors Need to Make Effective Use of the Probationary Period for Individuals Entering the Competitive Service

When an individual enters the competitive service, he or she is put on a  probationary period which lasts for 1 year. Individuals entering the  excepted service may serve a trial period, often for 2 years. The  probationary period is the last step in the employee screening process  during which time, according to an MSPB report, the individual needs to  demonstrate “why it is in the public interest for the government to finalize  an appointment to the civil service.” The appeal rights of an individual in  the probationary period are limited. If an agency decides to remove an  individual during the probationary period, the agency is not required to  follow the formal procedures for removing an employee (described  below). Rather, the agency’s only obligation is to notify the individual in  writing of its conclusions regarding the individual’s inadequacies and the  effective date of the removal.

Generally, a probationary employee may not appeal their removal.  Appeal rights are extended to employees in the competitive service and  to preference eligible employees in the excepted service who have  completed 1 year of current continuous service. Appeal rights are  extended to non-preference eligible excepted service employees after 2  years of current continuous service.

Because dismissing a poorly performing employee becomes more difficult  and time consuming after the probationary period, it is important that  agencies use this time to assess employee performance and dismiss  those that cannot do the work. However, according to our interviews,  supervisors are often not making performance-related decisions about an  individual’s future likelihood of success with the agency during the  probationary period. Interviewees said this can happen for two reasons:  (1) the supervisor may not know that the individual’s probationary period  is ending, and (2) the supervisor has not had enough time to observe the  individual’s performance in all critical areas of the job. Because of these  two possible issues, agencies risk continuing poorly performing  individuals in a position in the civil service, with all the rights that such an  appointment entails.

According to OPM, to remedy the first problem, some agencies are using  a tool, such as an automatic notification issued from the agency’s payroll  system, to remind supervisors that an individual’s probationary period is  nearing its end and to take action as appropriate. While not all agencies  use this tool, OPM officials told us that all Shared Service Centers’  existing HR systems already contain the functionality to notify supervisors  that the probationary period is ending. Because it is the agencies’  decision whether or not to use automated notifications, it is important that  agencies are aware of and understand the potential benefits of this tool.  Other agencies require an affirmative decision by the individual’s  supervisor (or similar official) before deciding whether to retain an  individual beyond the probationary period. By sending a reminder or  requiring an affirmative decision, supervisors know when the probationary  period is ending and are prompted to consider the prospects of the  individual, according to CHCOs we interviewed and to our literature  review. OPM considers an affirmative decision a leading practice and has  implemented it for its supervisors. However, not all agencies have an  automated tool to alert supervisors prior to the expiration of an  employee’s probationary period.

CHCOs also told us supervisors often do not have enough time to  adequately assess an individual’s performance before the probationary  period ends, particularly when the occupation is complex or difficult to  assess. This can happen for a number of reasons, including  the occupation is complex and individuals on a probationary period  spend much of the first year in training before beginning work in their  assigned areas,  the occupation is project based and an individual on a probationary  period may not have an opportunity to demonstrate all of the skills  associated with the position, and   individuals on a probationary period often rotate through various  offices in the agency and supervisors have only a limited opportunity  to assess their performance.

In the past, agencies exempt from provisions of title 5 have sought to  address this by extending the probationary period and limiting appeal  rights during that time. Unless exempt however, a decision to allow  agencies to extend probationary periods beyond 1 year and to limit  appeal rights during that period would require legislative action in certain  circumstances. CHCOs told us such an extension of the probationary  period would provide supervisors with time to make a performance  assessment for those occupations that are particularly complex or difficult  to assess. However, they cautioned that such an extension would only be  beneficial if an agency had effective performance management practices  in place and it used the extra time for the purpose intended.

Formal Procedures Are Required to Dismiss Poor Performing Permanent Employees, but Related Processes Are Time and Resource Intensive

Generally, once an employee has completed a probationary period, if that  employee is a poor performer who does not voluntarily leave, an agency  is required to follow the procedural requirements under either 5 U.S.C.     § 4303 (hereinafter “chapter 43”) or 5 U.S.C. § 7513 (hereinafter “chapter  75”) in order to take an action such as removal. Though the process for  dismissal under both authorities shares several common steps, some key  differences exist. One key difference under chapter 43 is the employee  must be given a formal opportunity to improve.

While the law and OPM implementing regulations establish requirements  and timeframes for certain steps under chapter 43 dismissal actions,  experts representing various agency and employee perspectives told us  that the practical implementation of chapter 43 is time consuming and  resource intensive. For example, based on the experiences of experts we  interviewed, it often takes 50 to 110 days to complete steps associated  with the performance improvement period (PIP). Overall, it can take six  months to a year (and sometimes significantly longer) to dismiss an  employee. Moreover, once an employee is dismissed from his or her  agency, he or she may file an appeal with the MSPB. As we report later, it  took the MSPB an average of 243 days in 2013 to adjudicate an appeal  from start to finish. Figure 1 illustrates an example of the dismissal  process under this procedure. The timeframes cited here are not required  by statute or regulation. The length of time to address performance  problems can vary based on the facts and circumstances of each  situation.

The other option for taking action—chapter 75—is largely similar to  chapter 43, but has no formal improvement period and does not require a  specific standard of performance to be established and identified in  advance. The burden of proof for sustaining a dismissal under chapter 75  is higher than under chapter 43.

Depending on the circumstances, the differences between the two  approaches make one option preferable over the other for supervisors,  according to our interviews and literature research. For example, the  formal opportunity to improve provided by chapter 43 makes this option  preferable when there is a possibility of the employee improving after  receiving additional training or more specific expectations. In contrast,  because chapter 75 has no improvement period, it is generally faster and  therefore is preferable for agencies when it is unlikely an employee will  improve or if the poor performance is in part related to conduct issues.  Supervisors, working with agency human resources and legal counsel,  have discretion to determine the most appropriate option for dismissing  an employee for poor performance. The following table lists examples of  circumstances where the use of one authority may be more appropriate  than the other.

Appendix II provides a full comparison of these two legal authorities for  dismissing employees for performance.

The process for taking action against a career member of the Senior  Executive Service (SES) for a less-than-fully-successful performance  rating differs from that for other civil servants. Career executives are  removed from the SES for poor performance as provided for by 5 U.S.C.  §§ 3592 and 4314(b). Agencies are  required to either reassign, transfer, or remove a senior executive who  has been assigned an unsatisfactory performance rating;  required to remove an executive who has been assigned two  performance ratings at less than fully successful within a three year  period; and  required to remove an executive who receives two unsatisfactory  ratings within five years.

Unlike dismissals for performance for non-SES civil servants, most career  SES members are not removed from the agency, but rather from the SES  only, and they remain employed at a lower grade. Career SES members  serve a 1 year probationary period upon initial appointment. Most career  executives removed during the probationary period for performance  reasons (and all removed after completing it) are entitled to placement in  a GS-15 or equivalent position. Removals from the SES for performance  reasons may not be appealed to the MSPB. However, non-probationary  career executives may request an informal hearing before an official  designated by the MSPB. Additionally, an executive who believes the  removal action was based on discrimination may file a discrimination  complaint with their agency. Or, if an executive believes the removal was  based on a prohibited personnel practice, such as reprisal for  whistleblowing, they may go to the Office of Special Counsel (OSC) to  seek corrective action. From 2009-2013, twelve senior executives were  removed from the SES for performance reasons.

Employees Facing Dismissal for Performance Reasons Have Certain Protections

In addition to the procedural requirements agencies must adhere to,  federal employees have additional protections designed to ensure that  they are not subject to arbitrary agency actions and prohibited personnel  actions, such as discrimination and reprisal for whistleblowing. In the  event that an agency dismisses an employee for performance reasons,  that employee may file an appeal of that agency action with the MSPB.  During this appeal, an employee has a right to a hearing before an MSPB  administrative judge. If the employee or agency is unsatisfied with the  administrative judge’s initial decision, either may request that the full 3- member board review the matter by filing a petition for review. If the  employee is unsatisfied with the final decision of the MSPB, the employee  may seek judicial review of that decision, generally with the United States  Court of Appeals for the Federal Circuit (Federal Circuit). In the  alternative, an employee who is a member of a collective bargaining unit  may instead choose to pursue a grievance under the negotiated  grievance procedure, if the appeal has not been excluded from coverage  by the collective bargaining agreement. If the matter goes to an arbitrator,  judicial review of the arbitration award is also available at the Federal  Circuit. Finally, under certain circumstances, judicial review may be  sought in United States district court. While these protections are  important to ensuring due process, they generally add to the time and  resources agencies commit to addressing poor performance, as well as to  the overall complexity of the process.

Discrimination complaints and allegations of whistleblowing reprisal are  redress options available to employees at any time and are not specific to  the dismissal process. Allegations of discrimination in dismissal actions  may be filed with an agency’s Equal Employment Opportunity office, or  under the negotiated grievance procedure, if applicable. Allegations of  reprisal for whistleblowing can be made with the OSC. Employees may  be more likely to consider such redress options when informed of  performance problems or of the possibility for dismissal or demotion,  according to experts and our literature review. Appendix III provides more  information on appeal avenues available to employees who are dismissed  or demoted for poor performance under chapters 43 or 75.

Various Considerations Can Reduce Willingness to Deal with Poor Performance

A number of agency supports and constraints may reduce a supervisor’s  willingness to pursue dismissal or other action against a poor performing  employee. According to representatives from organizations we  interviewed, supervisors may opt against dismissing a poor performer for  a variety of reasons, including  Internal support. Supervisors may be concerned about a lack of internal  support from their supervisors or other internal agency offices involved in  the dismissal process. Specifically,

Upper management may view the supervisor as unable to effectively  manage employees, particularly considering that most employees  have a history of meeting or exceeding expectations in performance  ratings. Our analysis found that employees rarely receive  performance ratings that indicate a problem with performance. In  2013, about 8,000 of the nearly 2 million federal employees received  “unacceptable” or “less than fully successful” performance ratings.  According to one expert we interviewed, senior managers who only  have knowledge of an employee’s work history through past  performance ratings may tell a supervisor, “None of the previous  supervisors had problems with him. Why do you?”

An agency’s personnel office may lack the capacity to provide  guidance or an agency’s general counsel or a senior agency official  may be inclined settle a matter or not pursue a dismissal action  because of concern over litigation. According to CHCOs we  interviewed, agencies are increasingly settling performance-related  actions and discrimination complaints with financial awards, rather  than litigating the cases. According to the CHCOs, such financial  payouts may provide an incentive to file such appeals and claims– even when they are not valid.

Time and resource commitment. As depicted earlier in figure 1, the  time commitment for removing an employee under chapter 43 can be  substantial. After communicating performance problems to an employee,  a supervisor will likely find it necessary to increase the frequency of  monitoring and documentation he or she conducts and of feedback  sessions he or she provides during the performance improvement period.  In turn, this takes time away from other job responsibilities and agency  priorities.

Supervisory skills and training. Supervisors may lack experience and  training in performance management, as well as lacking understanding of  the procedures for taking corrective actions against poor performers.  Specifically, supervisors may lack (a) confidence or experience having  difficult conversations; (b) skills or training on addressing poor  performance, including a basic understanding of the processes under  chapters 43 and 75; and (c) knowledge or an understanding of  requirements for addressing poor performance under collective  bargaining agreements. These factors point to the importance of effective  selection, assessment, and development of new supervisors, as well as  to the importance of providing refresher training for current supervisors.

Legal concerns. Supervisors who take performance-based actions may  need to be involved in providing depositions, witness statements, internal  meetings, and meeting with attorneys and union representatives for an  extended period of time where an employee seeks an avenue of redress  concerning the performance-based action. Supervisors may be  concerned about appeals, grievances, or discrimination complaints if the  topic of poor performance is broached.

Agencies Dismissed Around 3,500 Employees for Performance in 2013, but the Overall Magnitude of Employees Leaving for Performance Reasons Is Unknown

Performance Dismissals Most Often Occur During the Probationary Period

In 2013, agencies dismissed 3,489 employees for performance or a  combination of performance and conduct, representing 0.18 percent of  the career permanent workforce. Agencies most often dismissed  employees for performance reasons during the probationary period. As  noted earlier, dismissing employees during probation is much less time  and resource intensive than doing so once they are made permanent and  the procedural and appeal provisions of chapter 43 or 75 come into play.  As shown in figure 2, dismissals for performance occurred more  frequently for employees in probationary periods.

Over the last ten years (2004-2013), the number of individuals dismissed  for performance or a combination of performance and conduct ranged  from a low of 3,405 in 2006 to a high of 4,840 in 2009. On average,  around 4,000 individuals were dismissed for performance-related reasons  annually. The rate of dismissals for individuals in the career permanent  workforce (2004-2013) range from a low of 0.18 percent in 2013 to a high  of 0.27 percent in 2009.

Trends in performance dismissals since 2004 are associated with  fluctuations in the number of probationary employees. Most employee  dismissals for performance took place during the probationary period in  each year from 2004 to 2013. The general increase in new hires from  2006 through 2010 is associated with the number of probationary  dismissals from 2007 through 2011. As hiring and the number of new  employees slowed after 2010, so too did the number of dismissals during  probation.

As an alternative to dismissal, agencies may demote or reassign  employees for poor performance. Agencies reassigned 652 employees  for performance-related reasons in 2013, with nearly all following an  unacceptable performance rating. (A reassignment is defined as the  change of an employee from one position to another without promotion or  change to lower grade, level or band.) According to our interviews and  literature review, reassignment is considered appropriate when (1) the  employee is willing to improve and does not have conduct or delinquency  issues contributing to their performance issues, and (2) the reasons the  employee failed in one position is not likely to cause him or her to fail on  the next job. There were 168 demotions for performance reasons in 2013,  including 58 for an employee’s failure to successfully complete the  supervisory or managerial probationary period.

Many Poor Performers Leave Their Agencies Voluntarily, but the Magnitude of Those Leaving for Performance Reasons Is Unknown

As noted above, dismissing employees is and should be a last resort in  performance management. Identifying and addressing poor performance  “upstream” in the performance management process may result in  outcomes that are more desirable than dismissal, most notably improved  performance, but also the employee moving to a different position that  might be a better fit or voluntarily leaving the agency. The extent to which  cases of employee poor performance result in these outcomes is not  known.

As mentioned earlier, when the employee cannot perform the work, the  employee voluntarily leaving the agency can be the most favorable  outcome for both the agency and the employee. Our analysis of OPM  data found more than 2,700 cases of employees voluntarily leaving in  2012 after receiving a “less than fully successful” (or lower) performance  rating at any point from 2010 to 2012. These cases most likely  undercount the number of employees voluntarily leaving for performance  reasons because many employees who have performance problems  never receive a “less than fully successful” (or lower) performance rating,  and performance ratings may be expunged as part of an agreement to  voluntarily leave. However, sufficient data does not exist to conclude that  employees have voluntarily left federal service due to performance  reasons.

Because voluntary retirements or resignations result in the employee  leaving without formally having a personnel action taken against him or  her, it is not possible to determine from available OPM data the universe  of employees voluntarily resigning or retiring for performance-related  reasons. However, according to experts we interviewed, such separations  happen “all the time.” One CHCO we interviewed estimated that a large  majority of his agency’s performance-related separations would be  considered voluntary retirements or resignations and other CHCOs  agreed that employees with performance issues are more likely to  voluntarily leave than go through the dismissal process. While an  “unacceptable” performance rating sends a strong signal to the employee  that the agency is going to take action for performance reasons, receiving  an “unacceptable” performance rating is not necessarily an indicator that  an employee will either be formally dismissed or will voluntarily leave. Of  the 2,001 employees receiving an “unacceptable” performance rating in  2009, 1,104 (55 percent) remained employed with the same agency in  2013, while 897 (45 percent) are no longer with the agency. Those  remaining with the agency may have improved their performance or may  have been reassigned within the agency.

Almost Half of All Performance-Related Dismissals under Chapter 43 Were Appealed to the MSPB in 2013; Most Were Settled or Dismissed

While agencies rarely use chapter 43 to dismiss employees, of the 280  employees dismissed under this legal option in 2013, 125 (45 percent)  were processed by MSPB. As noted above, on average, it took 243  days to complete the appeal process for initial appeals of dismissals that  were affirmed. In cases where a decision is rendered, the agency’s  decision to dismiss is usually affirmed. In 2013, 18 cases were affirmed in  the agency’s favor and 4 were reversed in the employee’s favor. Thirty-six  cases were dismissed in 2013. Cases may be dismissed for a variety of  reasons, including lack of jurisdiction, lack of timeliness, withdrawal by the  appellant, or failure to prosecute.

Sixty-seven of the 125 appeals in 2013 were resolved through settlement,  a process whereby both the agency and the employee come to a mutual  agreement prior to the case being heard or decided by the MSPB. If at all  possible, the MSPB encourages settlements between parties. According  to government lawyers we interviewed, employees and agencies have a  number of potential settlement options available related to cases involving  poor performance. They include expunging poor appraisal ratings in  return for the employee separating from the agency and waiving further  appeal rights, provision of employment references that do not provide a  prospective employer with negative information about the employee,  agency payment of the employee’s attorney’s fees, provisions relating to  unemployment compensation, confidentiality clauses, resignation  agreements, and reassignments.

Figure 4 shows how the MSPB resolved initial dismissal appeals taken  under chapter 43 in 2013.

OPM Provides a Range of Tools and Guidance to Address Poor Performance but This Assistance May Not Meet All Agency Needs

Taking action to address poor performance is challenging for agencies,  due to time and resource intensity, lack of supervisory skill and training,  and other factors (as described earlier). As a result, tools and guidance  are needed to help agencies manage employee performance and to  navigate dismissal processes.

To meet its strategic goal of enhancing the integrity of the federal  workforce, OPM provides guidance, tools, and training to help agencies  attain human capital management goals. In addition to its regulations,  OPM makes a range of different tools and guidance available to help  agencies address poor performance through multiple formats, including  through its website, webinars, webcasts, in-person training, guidebooks,  and through one-on-one assistance and consultation with agencies,  according to OPM officials. Appendix IV provides some examples of the  tools and guidance OPM developed to help agencies address poor  performance.

Our interviews with individuals who have expertise in performance  management issues indicated that improvements could be made in the  tools and guidance OPM produces on poor performance to better meet  their needs, including the following areas:  Improvements in Content. Multiple experts we spoke with told us the  content of OPM’s training and guidance seemed to be written for  human resources (HR) officials or lawyers, rather than supervisors.  According to one expert, “An average manager will not be able to  understand what the guidance means if they don’t have time to  continuously go to their HR office for assistance.” According to OPM,  its guidance is often written for HR officials charged with assisting  supervisors in addressing poor performance. We have recently  reported, however, that HR offices often lack the capacity for assisting  in performance management-related activities. Instead, they are  focused on transactional human resource activities such as verifying  benefits and processing personnel actions. Because of this, tools and  guidance developed for HR officials may not be reaching the  supervisors who need them.

Improvements in Outreach. CHCOs and organizations representing  federal employees and supervisors told us they were unaware of the  tools and guidance OPM produces on the topic of managing poor  performance. One group told us that a critical gap in training for  managers exists, and that “none of the individuals we work with know  about .” According to CHCOs we interviewed,  some supervisors may lack awareness in part because they lack  interest in performance management in general and do not seek out  tools. The CHCOs said there is a role for both the agencies and OPM  in reinforcing the critical importance of effective performance  management amongst supervisors.

Improvements in Format. OPM’s tools and guidance are generally  posted online or as hard-copy guide books. Both of these methods  cost-effectively disseminate information to a broad audience and can  be used by employees when their schedule allows. At the same time,  experts we spoke with said addressing poor performance is more  effectively taught in a classroom setting, as it is a sensitive topic  where the most practical information is gleaned from fellow class  participants. According to one expert, “The topic of dealing with poor  performers demands interaction amongst participants.”

OPM told us that developing and promoting tools and guidance can be  costly and that resources available for that purpose are highly  constrained. OPM has previously acknowledged that it could do more to  better assess the tools and guidance it produces. It is also a challenge to  decide what topics to address, particularly as there are frequently  changes in human capital initiatives or in topic areas that take  precedence. Regular meetings with senior OPM officials, use of training  evaluation and feedback forms, and informal feedback from the CHCO  Council will help to inform OPM of the tools and guidance to provide.  However, agencies are not always aware of this material and in some  cases it falls short of their needs. Going forward, it will be important for  OPM to fully leverage existing information sources (such as survey  results) to inform decisions on what material to develop and how best to  distribute it.

According to OPM, the Employee Services group will deploy a  comprehensive strategic human capital management needs survey that  will be distributed to the CHCO Council. The survey will be designed to  directly solicit information from human capital professionals about what  relevant tools, guidance, and resources will benefit their human capital  management processes. This tool is also intended to help OPM with  developing/providing suggested tools. Deployment is planned for the  summer of 2015.

While these plans are an important step in helping to ensure agencies get  the tools and guidance they need, OPM is not fully leveraging information  provided by two existing sources to help prioritize the tools and guidance  it develops: the 2014 Federal Employee Viewpoint Survey (FEVS) and  the Performance Appraisal Assessment Tool (PAAT), a voluntary self- assessment tool agencies can use to assess the strength of their  performance appraisal system.

In FEVS, performance management-related questions receive some of  the lowest positive scores in the survey, but OPM told us respondents  may not have sufficient information to answer the question. These  questions cover topics such as the extent to which employees believe  their supervisors are effectively addressing poor performers and whether  differences in performance are recognized in a meaningful way.

With respect to the PAAT, agencies identified areas of strength and  weakness in their performance appraisal programs. For example, the  PAAT includes information on topics such as how often supervisors are  required to hold feedback sessions with employees, an important avenue  for dealing with poor performance. It also includes information about how  agencies deal with unacceptable performance, including the number of  PIPs, performance-based dismissals, reassignments, and reductions-in- grade. Agencies’ responses provide some insight into their own strengths  and weaknesses as well as into to the topics where additional tools and  guidance could be more effectively targeted government-wide. Agencies  may submit their PAAT results to OPM. However, OPM told us that it  was not using these responses to inform the development of resources  that would help agencies better address poor performers.

The process for dismissing an employee after the probationary period  ends can be complex and lengthy. But many of these process challenges  can be avoided or mitigated with effective performance management.  Supervisors who take performance management seriously and have the  necessary training and support can help poorly performing employees  either improve or realize they are not a good fit for the position. We found  that a number of employees voluntarily resign after receiving negative  performance feedback.

The probationary period for individuals entering the federal service is the  ideal time to remove those who cannot do the work required of the  position, but this period could be more effectively used by agencies.  Given the number of issues agencies can encounter when addressing  poor performance after the probationary period ends, improving how the  probationary period is used could help agencies more effectively deal with  poor performers.

Effectively addressing poor performance has been a long-standing  government-wide challenge. OPM has a role in ensuring that agencies  have the tools and guidance they need to effectively address poor  performance and to maximize the productivity of their workforces. Though  OPM already provides a variety of tools, guidance, and training to help  agencies address performance management issues, more can be done to  leverage priority information and to make tools and guidance available for  agencies when and where they need it.

To help strengthen the ability of agencies to deal with poor performers,  we recommend that the Director of OPM, in conjunction with the CHCO  Council and, as appropriate, with key stakeholders such as federal  employee labor unions, take the following four actions:  1.  To more effectively ensure that agencies have a well-qualified cadre  of supervisors capable of effectively addressing poor performance,  determine if promising practices at some agencies should be more  widely used government-wide. Such practices include (1) extending  the supervisory probationary period beyond 1-year to include at least  one full employee appraisal cycle; (2) providing detail opportunities or  rotational assignments to supervisory candidates prior to promotion,  where the candidate can develop and demonstrate supervisory  competencies; and (3) using a dual career ladder structure as a way  to advance employees who may have particular technical skills and/or  education but who are not interested in or inclined to pursue a  management or supervisory track.  2.  To help ensure supervisors obtain the skills needed to effectively  conduct performance management responsibilities, assess the  adequacy of leadership training that agencies provide to supervisors.  3.  To help supervisors make effective use of the probationary period for educate agencies on the benefits of using automated notifications  to notify supervisors that an individual’s probationary period is  ending and that the supervisor needs to make an affirmative  decision or otherwise take appropriate action, and encourage its  use to the extent it is appropriate and cost-effective for the  agency; and determine whether there are occupations in which—because of  the nature of work and complexity—the probationary period  should extend beyond 1-year to provide supervisors with sufficient  time to assess an individual’s performance. If determined to be  warranted, initiate the regulatory process to extend existing  probationary periods and, where necessary, develop a legislative  proposal for congressional action to ensure that formal procedures  for taking action against an employee for poor performance (and a  right to appeal such an action) are not afforded until after the  completion of any extended probationary period.  4. To help ensure OPM’s tools and guidance for dealing with poor  performers are cost-effectively meeting agencies’ and supervisors’ needs,  use SHCM survey results (once available), FEVS results, PAAT  responses, and other existing information, as relevant, to inform decisions  on content and distribution methods. The importance of effective  performance management and addressing poor performance may need  to be reinforced with agency supervisors so that they more routinely seek  out tools and guidance.

We provided a draft of this product to the Director of OPM and Chairman  of MSPB for comment. Written comments were provided by OPM’s  Associate Director for Employee Services, and are reproduced in  appendix V. Of our four recommendations, OPM concurred with one  recommendation, partially concurred with two recommendations, and  partially concurred with part of a third recommendation. OPM did not  concur with the first part of this latter recommendation. For those  recommendations OPM concurred or partially concurred with, OPM  described the steps it planned to take to implement them. OPM and the  Executive Director of MSPB also provided technical comments, which we  incorporated as appropriate.

OPM concurred with our recommendation to assess the adequacy of  leadership training for supervisors. Specifically, OPM noted that it will  evaluate how agencies are training new supervisors and provide  agencies guidance on evaluating the effectiveness of leadership training.

OPM partially concurred with our recommendation to determine if  promising practices at some agencies should be more widely used  government-wide. Importantly, OPM agreed to work with the CHCO  Council to (1) determine if technical guidance is needed to help agencies  more effectively use the supervisory probationary period, (2) explore  more government-wide use of rotational assignments, and (3) discuss  options for employees to advance without taking on supervisory or  managerial duties. In each of these cases, OPM noted that agencies  already have authority to take these actions. We acknowledge OPM’s  point and have clarified the report accordingly. We maintain, however,  that OPM can still play a leadership role and encourage agencies to take  these steps.

Our recommendation for OPM to take steps to help supervisors make  effective use of the probationary period for new employees contained two  parts. OPM partially concurred with the part of the recommendation  calling on OPM to determine if certain occupations require a probationary  period longer than 1-year to allow supervisors sufficient time to assess an  individual’s performance. In particular, OPM agreed to consult with  stakeholders to determine, among other things, if an extension to the  probationary period for certain complex occupations is needed and, if  necessary, pursue the established Executive Branch deliberation process  for suggesting legislative proposals. OPM noted that it has authority to  provide for longer probationary periods under certain circumstances and  we have modified the recommendation so that it also calls on OPM to  initiate the regulatory process to do so if warranted. As stated in our  report, however, extending the probationary period and concurrently  limiting appeal rights during that time would require legislative action  under certain circumstances.

At the same time, OPM did not concur with the part of the   recommendation for OPM to determine the benefits and costs of  providing automated notifications to supervisors that an individual’s  probationary period is ending and that the supervisor needs to make an  affirmative decision. OPM stated that choosing the best method to ensure  that supervisors are aware that the probationary period is ending and  appeal rights will accrue is an agency responsibility. We agree.

OPM also wrote that HR systems at all Shared Service Centers have the  functionality to notify supervisors when an employee’s probationary  period is ending. However, as our report notes, even though OPM  considers having a tool in place to notify supervisors that a probationary  period is ending to be a leading practice, not all agencies have  implemented that practice. Accordingly, we have clarified the  recommendation so that it calls on OPM to educate agencies on the  benefits and availability of automated notifications to alert supervisors.

OPM partially concurred with our recommendation to use the results of  various surveys such as the FEVS and other information sources to help  determine the extent to which its tools and guidance for dealing with poor  performers are cost-effectively meeting agencies’ needs. Specifically,  OPM said it would use relevant data from these resources to inform  decisions about content and distribution methods for the material OPM  makes available to agencies. At the same time, OPM noted that the  information contained in these surveys and other data sources had  certain limitations and may not always be relevant. We agree and have  clarified the recommendation accordingly.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Director of the Office  of Personnel Management, the Chairman of the Merit Systems Protection  Board, as well as to the appropriate congressional committees and other  interested parties. In addition, the report will be available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report please contact  me at (202) 512-2757 or goldenkoffr@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

To describe and compare avenues for addressing poor performance,  including the formal procedures required when dismissing employees for  poor performance, we reviewed relevant sections of title 5 of the United  States Code (title 5) and Office of Personnel Management (OPM)  regulations to describe the process for addressing poor performance in  the competitive, excepted, and Senior Executive services. We analyzed  the process for taking personnel actions for poor performance under  chapter 43 and chapter 75 of title 5, including when use of one authority  over the other may be preferable in certain circumstances.

To determine how agencies are addressing poor performance and to  understand the practical issues various agency employees consider when  addressing poor performance, we interviewed OPM officials from the  Merit System Accountability and Compliance Office, Office of Employee  Services, and other offices that work with agencies to address poor  performance; the Merit Systems Protection Board (MSPB) including the  Executive Director, representatives from the Office of Regional  Operations, the Office of Appeals Counsel, and an administrative judge;  selected chief human capital officers (CHCO) chosen for their particular  expertise in the issue area as identified through the Executive Director’s  Office of the CHCO Council and previous GAO work on related topics, the  National Treasury Employees Union, American Federation of  Government Employees, the Federal Managers Association, individual  members of the Federal Employees Lawyers Group, the Partnership for  Public Service and the Senior Executives Association. Additionally, we  interviewed selected experts from academia and the private sector,  including Dr. Dennis Daley, Professor of Public Administration, North  Carolina State University, School of Public and International Affairs; Dr.  Ellen Rubin, Assistant Professor at Rockefeller College of Public Affairs &  Policy, University at Albany, State University of New York; Stewart Liff,  author of Improving the Performance of Government Employees: A  Manager’s Guide (2011) and The Complete Guide to Hiring and Firing  Government Employees (2010); and Robin Wink, Esq., who teaches a  seminar “Managing the Federal Employee: Discipline and Performance  Process.” Their expertise was determined by a review of their published  materials or training they provide on the topics of performance  management and addressing poor performance. We also conducted a  literature review.

To determine trends in dismissals and other agency actions taken for  poor performance since 2004, we analyzed data from OPM’s Enterprise  Human Resources Integration (EHRI) data warehouse for fiscal years  2004 through 2013, the most recent year available. We analyzed EHRI  data starting with fiscal year 2004 because personnel data for the  Department of Homeland Security (which was formed in 2003) had  stabilized by 2004. Personnel actions, such as separations, demotions,  and reassignments are assigned Nature of Action (NOA) and legal  authority codes that describe the action and the legal or regulatory  authority for the action. We reviewed OPM’s “The Guide to Processing  Personnel Actions” to determine which NOA/legal authority combinations  are associated with performance-related dismissals, demotions, or  reassignments, and with conduct-related dismissals and we confirmed  these codes with OPM. In some cases, NOA/legal authority combinations  could cover both performance and conduct. In these cases, we counted  the action as performance-related only so that a) we would most  accurately capture the magnitude of actions taken for performance in the  government, and b) avoid double counting dismissals. Thus, some cases  counted exclusively as a performance action may have elements of  conduct as well.

To identify individuals with poor performance who voluntarily retired or  resigned before action was taken against them, we counted separation  actions for voluntary retirement or resignations and retirements or  resignations in lieu of involuntary action where there was a corresponding  unacceptable performance rating within the separation year or year prior  to separation. To examine attrition patterns for employees who received  unacceptable performance ratings, we tracked the status of employees  who received an unacceptable performance rating in 2008 to determine  how many were dismissed and when, how many voluntarily left the  government and when and how many remained in the government as of  2013. There are some data reliability limitations with the rating field. While  ratings generally reflect recent performance, there can be some variation.  Not all rating periods are the same across the agencies and they may not  align with the fiscal year, there may be lags in agencies’ updates of  ratings, and some ratings are never updated. Consequently, we looked at  recorded ratings for the past three years to develop a somewhat more  comprehensive picture of employees’ performance ratings. To assess the  reliability of EHRI data, we reviewed past GAO assessments of EHRI  data, interviewed OPM officials knowledgeable about the data, and  conducted electronic testing of EHRI to assess the accuracy and  completeness of the data used in our analyses. We reviewed MSPB data  and interviewed officials to determine the number of employee appeals  for actions based on performance, the outcomes of the cases, and how  long it took to resolve those cases. We determined the data used in this  report to be sufficiently reliable for our purposes.

To assess the extent to which OPM provides policy, guidance, and  training to help agencies address poor performance, we reviewed  guidance and tools that OPM provides to agencies to assist them in  addressing poor performance. We compared the content of OPM tools  and guidance to what CHCOs, key stakeholders, and experts said is  needed. We reviewed documentation of guidance and tools that OPM  provides to agencies to the challenges articulated by CHCOs, key  stakeholders, and experts. We interviewed OPM officials about  mechanisms they use to (1) collect information to develop tools and  guidance, and (2) collect feedback from agencies about the usefulness of  existing guidance and tools. We also reviewed documentation and  interviewed OPM officials on its Performance Appraisal Assessment Tool.

We conducted this performance audit from February 2014 through  January 2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Appendix II: Chapters 43 and 75 Similarities and Differences

Agency must prove the performance deficiency is in  a critical element. chapter 75  Agency is not required to prove the performance  deficiency is in a critical element.

When the employee’s performance in one or more  critical elements is unacceptable, the employee will  (1) be notified of the deficiency; (2) be offered the  agency’s assistance to improve; and (3) be warned  that continued poor performance could lead to a  change to lower grade or removal. (This is commonly  referred to as the PIP, an abbreviation for both  performance improvement plan and for performance  improvement period.)

The extent to which an employee is on notice of  the agency’s expectations is a factor in  determining the appropriateness of the penalty.  Also, an agency cannot require that an employee  perform better than the standards that have been  communicated to the employee.

If the employee’s performance improves during the  PIP, and remains acceptable for 1 year, a new PIP is  necessary before taking an action under this  chapter.

There is no obligation to offer a period of  improvement at any point.

Agency is not required to prove that the personnel  action will promote the efficiency of the service.

Agency must prove that the personnel action will  promote the efficiency of the service.

Action must be supported by substantial evidence:  that a reasonable person might find the evidence  supports the agency’s findings regarding the poor  performance, even though other reasonable persons  might disagree.

Action must be supported by a preponderance of  the evidence: that a reasonable person would find  the evidence makes it more likely than not that the  agency’s findings regarding the poor performance  are correct.

The agency must provide a notice of proposed action 30 days before any action can be taken, and must  provide the employee with a reasonable opportunity to reply before a decision is made on the proposal.

The notice must state the specific instances of  unacceptable performance that are the basis for the action  and also the critical performance element involved.

The notice must state the specific instances of  poor performance that are the basis for the action.

A person higher in the chain of command than the person  who proposed the action must concur.

The deciding official does not have to be a person  higher in the chain of command than the person  who proposed the action.

Agency must issue a final decision within an  additional 30 days of the expiration of the 30 day  advance notice period.

Agency is under no particular time constraint,  other than there cannot be a delay so extensive  that it constitutes an error that harms the  employee.

Once the agency meets the requirements to take an  action, the MSPB cannot reduce the agency’s  penalty.

After finding that the agency meets the  requirements to take a chapter 75 action, the  MSPB may reduce the agency’s penalty.

The agency must consider the relevant Douglas  factors when reaching a decision on the  appropriate penalty. Douglas factors are  established criteria that supervisors must consider  in determining an appropriate penalty to impose to  address problems with an employee.

Affirmative Defenses  The agency action will not be sustained if the employee was harmed by the agency’s failure to follow  procedures, if the agency decision was reached as a result of the commission of a prohibited personnel  practice, or if the decision is otherwise not in accordance with the law.

Appendix III: Appeal of Removal or Demotion Actions

Set forth below are the basic appeal avenues available to employees who  are removed or demoted for poor performance pursuant to chapters 43 or  75.

In addition to the appeal avenues discussed below, other appeal options  are available to employees removed or demoted for poor performance.  For example, while probationary employees are generally unable to  appeal a removal or demotion to the Merit Systems Protection Board  (MSPB), those in the competitive service may do so if they believe the  agency action was based on partisan political reasons or due to the  employee’s marital status. Furthermore, any employee may file an Equal  Employment Opportunity (EEO) complaint with his or her agency if the  employee believes that the removal or demotion was motivated by  unlawful employment discrimination, regardless of whether the employee  has due process or appeal rights. Similarly, any employee who believes  his or her demotion or removal was the result of a prohibited personnel  practice, such as retaliation for whistleblowing, may go to the Office of  Special Counsel (OSC) to seek corrective action.

Appeal Avenues: Chapter 43 and 75 Removal or Demotion Actions

Chapters 43 and 75 provide that an employee with appeal rights who  wants to contest an agency decision to remove or demote may file an  appeal of that agency decision with the MSPB. If that employee is a  member of a collective bargaining unit, the employee also has the option  of pursuing a grievance under negotiated grievance procedure if the  appeal has not been excluded from coverage by the collective bargaining  agreement. The employee may pursue either option, but not both.

If an employee chooses to appeal his or her removal or demotion to the  MSPB, the employee must do so within 30 days after the effective date of  the agency action or receipt of the agency’s decision (to remove or  demote), whichever is later. An employee who files an appeal with the  MSPB has a right to a hearing.

In a performance-based removal or demotion taken under chapter 43, an  agency must establish that (1) OPM approved the agency’s performance  appraisal system, (2) the agency communicated to the employee the  performance standards and critical elements of his or her position, (3) the  employee’s performance standards are valid (performance standards  are not valid if they do not set forth the minimum level of performance that  an employee must achieve to avoid removal for unacceptable  performance), (4) the agency warned the employee of the inadequacies  of his or her performance during the appraisal period and gave the  employee a reasonable opportunity to improve, and (5) the employee’s  performance remained unacceptable in at least one critical element.  White v. Department of Veterans Affairs, 120 M.S.P.R. 405 (2013).

In a removal or demotion action taken under chapter 75, an agency must  establish that the action will “promote the efficiency of the service.” A  specific standard of performance does not need to be established and  identified in advance for the employee; rather, an agency must prove that  its measurement of the employee’s performance was both accurate and  reasonable. Shorey v. Department of the Army, 77 M.S.P.R. 239 (1998);  Graham v. Department of the Air Force, 46 M.S.P.R. 227 (1990) (agency  contention that “basic medical care” was performance standard for  physician was not unreasonable).

While it is within an agency’s discretion to take an action under chapter  75 rather than chapter 43, an agency taking an action under chapter 75  may not circumvent chapter 43 by asserting that an employee should  have performed better than the standards communicated to the  employee. Lovshin v. Department of the Navy, 767 F.2d 826 (Fed. Cir.  1985), cert.denied, 475 U.S. 1111 (1986), reh. denied, 476 U.S. 1189  (1986).

An employee subject to a removal or demotion action under chapter 75  has no right to a performance improvement period and the failure to  afford an employee one is not grounds for reversing the agency action.  However, an agency’s failure to provide such a period is relevant to the  consideration of whether the penalty (removal or demotion) is reasonable;  specifically, whether or not the employee was on notice that the deficient  performance might be the basis for an adverse action.; Fairall v.Veterans  Administration, 844 F.2d 775 (Fed. Cir. 1987); Madison v. Defense  Logistics Agency, 48 M.S.P.R. 234 (1991).

In an initial decision issued by the MSPB administrative judge, a removal  or demotion taken under chapter 43 will be sustained if the agency’s  decision is supported by substantial evidence or, in a case brought under  chapter 75, is supported by a preponderance of the evidence. However,  even where the burden of proof is met, if the employee shows harmful  error in the agency procedure used in arriving at the decision, or that the  decision was based on a prohibited personnel practice, the agency  decision may not be sustained.

The initial decision becomes final 35 days after issuance, unless a party  requests the full 3-member board (the Board) review the matter by filing a  petition for review. OPM may also file a petition for review but only if  OPM believes the opinion is erroneous and will have a substantial impact  on civil service law, rule, or regulation. If the Board grants the petition for  review (for example, where new and material evidence is available or the  decision is based on erroneous interpretation of law) the Board may  affirm, reverse, or vacate the initial decision (in whole or in part), may  modify the decision, or may send the matter back to the administrative  judge for further processing.

An employee (but not the agency) may obtain judicial review of a final  MSPB decision with the United States Court of Appeals for the Federal  Circuit (hereinafter referred to as the Federal Circuit) by filing a petition for  review within 60 days of the final Board action. Under certain limited  circumstances, OPM may also obtain review at the Federal Circuit.   However, if OPM did not intervene in the matter before the MSPB, then  OPM must first petition the MSPB for a reconsideration of its decision  before petitioning the Federal Circuit for review.

The Federal Circuit reviews and sets aside agency action, findings or  conclusions found to be (1) arbitrary, capricious, an abuse of discretion,  or otherwise not in accordance with law, (2) obtained without procedures  required by law, rule or regulation being followed, or (3) unsupported by  substantial evidence. 5 U.S.C. § 7703(c).

If the employee files a grievance under negotiated grievance procedure,  and the parties are not able to resolve the matter, the exclusive  representative or the agency may invoke binding arbitration. The  employee cannot invoke arbitration. An arbitrator is to adhere to the  same burdens of proof for sustaining agency actions under chapter 43 or  75 as are required if appealed at the MSPB. Judicial review of an  arbitrator award, as with a final MSPB decision, may be obtained at the  Federal Circuit. The Federal Circuit review is conducted in the same  manner and under the same conditions as if the matter had been decided  by the MSPB.

Appeal Avenues When Discrimination is Alleged

Where an employee with appeal rights under chapter 43 or 75 believes  that unlawful discrimination motivated his or her removal or demotion, the  employee may choose to file a discrimination complaint with his or her  agency (referred to as a “mixed-case complaint”) – or may file an appeal  with the MPSB (referred to as a “mixed-case appeal”). If the employee is  a member of a collective bargaining unit, the employee also has the  option of pursuing a grievance alleging discrimination under the  negotiated grievance procedure where such appeals have not been  expressly excluded from coverage by the collective bargaining  agreement. The employee may either pursue a mixed case (complaint or  appeal) or a negotiated grievance procedure, but not both.

Where an employee chooses to pursue a mixed-case complaint and has  filed a complaint of discrimination, an agency has 120 days from the  filing of the complaint to issue a final decision on that complaint of  discrimination. If the decision is not issued timely, the employee may  appeal to the MSPB at any time after the expiration of the 120 days. Or,  if the employee is dissatisfied with a final agency decision, the employee  may appeal to the MSPB within 30 days of receipt of the decision.  Instead of filing an appeal with the MSPB, the employee also has the  option of filing a civil action in district court. Filing an action in district  court results in a de novo review.

Where an employee chooses to pursue a mixed case appeal, the  employee must file with the MSPB within 30 days after the effective date  of the removal or demotion action.

If the employee appeals to the MSPB—either under a mixed case  complaint or a mixed case appeal—the appeal is to be processed in  accordance with MSPB’s appellate procedures (including a right to a  hearing) and a decision must be rendered by MSPB within 120 days after  the appeal is filed. Within 30 days after receiving a final MSPB decision,  an employee has the choice of petitioning the U.S. Equal Employment  Opportunity Commission (EEOC) to consider the MSPB decision or filing  a civil action in district court.

If the employee petitions the EEOC, the EEOC shall determine within 30  days whether to consider the MSPB decision. If the EEOC determines  to do so, it has 60 days to consider the MSPB record of the proceedings  and either (1) concur in the Board decision or (2) issue an EEOC decision  which finds that the Board decision incorrectly interpreted applicable  discrimination law or that the decision is not supported by the evidence.

If the EEOC concurs with the MSPB decision, the employee may file a  civil action in district court.

If the EEOC issues its own decision, the matter is then immediately  referred back to the MSPB which has 30 days to consider the decision.  The MSPB may either (1) concur with EEOC’s decision or (2) find that  the EEOC decision incorrectly interprets civil service provisions or that the  record does not support the EEOC’s decision as to such provisions, and  reaffirm its initial decision.

If the MSPB reaffirms its decision, the matter goes to a special panel  which has 45 days in which to issue a final decision. The employee may  file a civil action in district court if dissatisfied with the special panel  decision.

Where an employee chooses to pursue a negotiated grievance procedure  which results in an arbitration decision, if unsatisfied with the arbitrator’s  decision the employee (but not the agency) may request, within 35 days  of the decision, the MSPB conduct a review of that decision. The Board  may require additional development of the record, through submissions of  evidence or a hearing. If not satisfied with the results of the MSPB  review decision, the employee may continue on with the administrative  and judicial appeal process provided for mixed case appeals under 5  U.S.C. § 7702, described above.

Appendix IV: Examples of Tools and Guidance the Office of Personnel Management Provides to Help Agencies Address Poor Performance

Format  Hard copy guide and  online at Human  Resources University  (free)

Description  This guidebook for supervisors describes the legal process for taking action  against an employee for poor performance, provides answers to frequently  asked questions, and provides samples of documents provided by a  supervisor to an employee at different stages in the process of addressing  performance problems.

This course provides an overview and tools for dealing with poor performing  employees. The course material includes information on communicating  performance matters to employees, developing a performance improvement  plan, and how to take corrective and legal action when performance  continues to decline.

The goal of this course is to provide supervisors with the necessary skills to  have the difficult conversation that is inherent when dealing with poor  performance and to provide a safe environment to practice delivering difficult  conversations.

This course is intended to enhance Merit System Principles awareness and  understanding among managers throughout the Federal Government.

OPM’s website provides agencies with guidance on addressing poor  performance, including a glossary of terms and concepts used when taking  performance based actions, an overview of employee appeal options for  performance based actions, and guidance on how to write valid performance  standards for employees, among other topics.

OPM provides assistance in response to inquiries on how to address and  resolve poor performance. OPM does not become involved in the details of  specific cases but will provide agency HR officials or managers with  assistance regarding commonly asked questions that arise during the  process.

The PAAT is designed to help agencies develop and manage performance  appraisal programs. To participate in the PAAT, agencies answer questions  on their appraisal programs and OPM scores agencies on a scale from 1- 100. The PAAT has three questions related to poor performance.

The FEVS measures employees’ perceptions of whether, and to what extent,  conditions characterizing successful organizations are present in their  agencies. Agencies are to use this information to make strategic decisions  about management. The FEVS includes several questions on performance  management and dealing with poor performers.

Appendix V: Comments from the Office of Personnel Management

Appendix VI: GAO Contact and Staff Acknowledgments

In addition to the individual named above, Tom Gilbert, Assistant Director;  Shea Bader, Analyst-in-Charge; Sara Daleski; Jeffrey DeMarco; Karin  Fangman; Colleen Marks; Donna Miller; Cristina Norland; and Rebecca  Shea made major contributions to this report.

Question: Why is removal of poor-performing permanent employees difficult?

Answer: The time and resource commitment needed to remove a poor performing permanent employee can be substantial.

Question: What challenges must be considered in the removal of permanent employees?

Answer: According to selected experts and GAO's literature review, concerns over internal support, lack of performance management training, and legal issues can also reduce a supervisor's willingness to address poor performance.

Agencies Have Multiple Avenues Available to Address Employee Performance

Formal Procedures Are Required to Dismiss Poor Performing Permanent Employees, but Related Processes Are Time and Resource Intensive

Various Considerations Can Reduce Willingness to Deal with Poor Performance

Appendix I: Objectives, Scope, and Methodology

Question: What level of dismissals from government agencies was seen in 2013?

Answer: In 2013, agencies dismissed around 3,500 employees for performance or a combination of performance and conduct.

Question: What was the status of the dismissed employees?

Answer: Most dismissals took place during the probationary period.

Question: Why may this not be a true measure of dismissal measures?

Answer: These figures do not account for those employees who voluntarily left rather than going through the dismissal process. While it is unknown how many employees voluntarily depart, the CHCOs that GAO interviewed said voluntary departures likely happen more often than dismissals.

Agencies Dismissed Around 3,500 Employees for Performance in 2013, but the Overall Magnitude of Employees Leaving for Performance Reasons Is Unknown

Performance Dismissals Most Often Occur During the Probationary Period

Many Poor Performers Leave Their Agencies Voluntarily, but the Magnitude of Those Leaving for Performance Reasons Is Unknown

Question: How does OPM help agencies address poor performance?

Answer: To help agencies address poor performance, the Office of Personnel Management (OPM) makes a range of tools and guidance available in different media, including its website, in-person training, and guidebooks.

Question: To what extent are agencies aware of this information?

Answer: However, CHCOs and other experts said agencies are not always aware of this material and in some cases it fell short of their needs.

Question: How should OPM make decisions about future material distribution?

Answer: Going forward, it will be important for OPM to use existing information sources, such as Federal Employee Viewpoint Survey results, to inform decisions about what material to develop and how best to distribute it.

OPM Provides a Range of Tools and Guidance to Address Poor Performance but This Assistance May Not Meet All Agency Needs

Question: What was GAO asked to evaluate?

Answer: GAO was asked to examine the rules and trends relating to the review and dismissal of federal employees for poor performance.

Question: What does this report address?

Answer: This report (1) describes and compares avenues for addressing poor performance, (2) describes issues that can affect an agency's response to poor performance, (3) determines trends in how agencies have resolved cases of poor performance since 2004, and (4) assesses the extent to which OPM provides guidance that agencies need to address poor performance.

Question: How did GAO collect data for these reports?

Answer: To address these objectives, GAO reviewed OPM data, and interviewed, among others, OPM and MSPB officials, selected CHCOs, and selected union officials.

Question: What recommendations did GAO make to OPM?

Answer: GAO is making four recommendations to OPM to strengthen agencies' ability to deal with poor performers including working with stakeholders to assess the leadership training agencies provide to supervisors.

Question: How did OPM respond to these recommendations?

Answer: OPM concurred or partially concurred with all but one recommendation noting that GAO's recommendation to explore using an automated process to notify supervisors when a probationary period is about to end is an agency responsibility.

Question: How has GAO addressed this disagreement?

Answer: GAO agrees and has clarified the recommendation.