on Sep 6th, 2010 in Labor | 99 comments
What’s the best way to encourage good performance? Employers have always struggled with this question. One answer is to pay employees based on how well they perform their jobs. Many private sector employers have adopted pay-for-performance (PFP) programs, and several federal agencies have also experimented with PFP. Some federal PFP programs have operated successfully for many years; others have been more controversial. Last year, Congress terminated a PFP program at the Defense Department. Employees complained that the program was arbitrary and lacked transparency. Clearly, designing a successful PFP program is not always easy. The Postal Service adopted an annual PFP program in 2003. PFP is the only source of annual pay adjustments for Postal Service non-bargaining employees. Employees and their managers review targets and expectations at the beginning of the year. During the year, managers provide feedback to employees through mid-year performance reviews. Then, at the end of the year, employees receive a rating. For most employees, the rating is based on a combination of their individual accomplishments and how well certain targets have been met by the unit, district, area, or the Postal Service as a whole. The employee’s position determines the choice of targets included. For example, the rating for a postmaster of a small Post Office would be based on factors such as how well Post Offices in his or her group met revenue and expense targets and how well the district met delivery performance goals. The Postal Service’s PFP program has won awards and been cited by other organizations as a model to emulate, but there have been some criticisms. Some of the factors on which an employee is evaluated may be outside the employee’s immediate control. Given the Postal Service’s current financial condition and the drop in mail volume, it can be difficult for even high-performing employees to receive an increase. What do you think? What makes for a good system of rewarding performance? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC). Please remember we do not post comments that contain vulgar language or include the names of individuals. See our Comment Policy for further information.


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Why is it that only management gets these bonuses? They earn in off the backs of the people who actually touch the mail. And for a business that is losing money every quarter, you would think they would do away with it.
The way this article reads, you would think that ALL employees get a bonus, tell the truth!

The problem with PFP is people who do not touch the mail get bonuses. This leads to strictly awarding PFP based on who can crunch and manipulate numbers the best, not necessarily who's doing the best job for the american public.

The biggest flaw with PFP is that personal greed continues to lead to overall poor business decisions at all levels... from local, to districts, to areas, and to hq's

Managers routinely violate the contract to increase their PFP bonuses because they are not held accountable for the hundreds of millions paid out each year in grievance settlements

The USPS likes to claim that their two most important goals are ensuring employee safety and improving customer service. BALONEY! The PFP system rewards really one thing: Beating SPLY (same period last year) and "Making the numbers." Those numbers to beat are last years, so eventually something has to break down. So "The beatings will continue until morale improves." Any ex-serviceman will tell you that without positive morale, and the cooperation of your subordinates, no officer will ever be successful in achieving their goals. The way management reacts to low or high mail volume days tells the whole story of why this is a dysfunctional organization, caused in large part by PFP. Low volume day: "GREAT! We'll make our numbers today! No overtime, and we can cut loose the T.E.'s and PTF's early!!!! High volume day: They all have scowls on their faces as they march in goose-step fasion crowing "C'mon! Let's Go! Move it!" They see their PFP going "POOF". Let's see that same behavior work in a Pizza Place or ANY OTHER business. "Hey Jonny, hows business today?" Jonny: "GREAT! Look around! No customers! Easy day! I can send all the workers home! No overtime to pay! Or the opposite: "Hey Jonny, how's business? "Terrible! Look at that line out the door, and every table is full! I have to pay overtime today! I'll never make my numbers!" How about an Oil Change Garage suggesting that since business is slow, they should raise rates and stop performing oil changes on Saturdays? Good idea, or suicidal business model? But that's what these "Management Morons" are proposing. Scrap PFP, NOW. Eliminate either the District or Area level, since they are redundant and one is obviously not needed. Get rid of the micro-managing from those levels and return autonomy to the local PM's. Let them do what they're paid to do: MANAGE THEIR OFFICE. Set worker compliment, route configuration, customer service requirements, and THEN evaluate each office as a group. Replace the under-achievers and promote the winners. Does that sound drastic, or is it just common sense?

PFP is not a bonus. This is what also makes PFP not work, the perception that Management is getting bonuses. Management personnel due not have collective bargaining agreements that guarantees them a raise every year like craft employees; PFP is supposed to be a way to earn a raise not a bonus. The only time it would be like a bonus is if you're at top pay then you would get a check for a specific amount not a raise. Get your facts straight before making ignorant statements. A craft employee will get 2 to 3 times as much just in their annual contractual raises and COLA's, so stop whining.

Any reputable business school would classfy PFP as a bonus......attainable {in the USPS}by manipulation and exploitation of the real work force.......

Bonuses are only for management. Craft people get zip.

The reason that PFP is not fair is because we have no input in setting the goals. So many things are beyond our control. I cannot control my monthly rent. But if they set my budget for less than my rent, I cannot make that budget. My office is open for 4 hours on Saturday. If they only budget me 3 hours, I cannot make that budget. If the office is open for 44 hours a week and they tell you that you have to reduce hours to get a good score on your PFP, what are you supposed to do? Close the office and go home? They make it impossible for you to be successful. The only thing that saved me is that I managed to increase my revenue nicely every year. Now they have made the revenue goal into a district number but only included the offices they wanted to include. We are set up for failure on the local level. They set a goal on scanning. In a small office, if you miss ONE scan in a year, it ruins your percentage for scanning for the year. And they cannot prove that you missed a scan. It could just as easily be a missing label or a label that is covered up by another label. The goals are set impossibly high as they strive to force perfection from imperfect humans. And if you do make the goal, they raise it. Your supervisor is supposed to meet with you to discuss your goals. You get a 2 minute telephone call while you are trying to take care of your window customers. I have never gotten a face to face meeting. Yes, I have gotten some of these fabled lucrative bonuses that all the craft people complain about (and I DO work all the mail in my office every day thank you very much and I make less money than carriers do). I would much rather have a raise that actually bumps up my salary to increase my high 3 for retirement purposes. I hope this information helps.

"Employees and their managers review targets and expectations at the beginning of the year. During the year, managers provide feedback to employees through mid-year performance reviews"
That is the crux of the PFP problem -- when MPOOs have to manage well over 100 EAS employees, they do not have the time to actually agree on goals, instead you get a cut and paste cookie cutter list of goals that are not realistic for your office.
On top of that, the bulk of a Postmaster's unit score is TOE, which is a joke as HQ has no way to realistically set a work hour rate for a specific office. So we end up with a goal that is not accurate from the start, and then some districts manipulate that goal trying to fix it, while other districts ignore it completely. This is supposed to be a NATIONAL pay program?

A craft employee will get 2 to 3 times as much just in their annual contractual raises and COLA’s, so stop whining.

Haven't gotten a cola for almost 2 years now smartie pants

carriers used to get a nice bonus.... i remember using it to buy Christmas gifts..... have not seen one of those 'bonuses' in years..... carriers used to get safety award bonuses...... haven't seen those in years..... have watched an office of high moral a family-like attitude deminish to no moral and back stabbing..... but in case you're wondering .... our office made our numbers...... and the management got their bonuses.....

Last year HQ people lowered supervisors and managers scores intentionally to give themselves big bonuses. Like most of other things in this company, PFP is also a hoax. Needs to go away.

EAS do not receive COLA, and DO NOT get any yearly pay raises. The only current method to increase your salary every year is through PFP. (Craft raises and COLA provide a higher percent raise than EAS has received over the last 5 years.)

The PFP system is broken. It has been heavily, arbitrarily manipulated, many times after the fact. Districts, Areas, and HQ have decreed that even though certain goals were attained, we can't afford to pay the earned PFP, so ratings are cut across the board.

True shining stars should be rewarded, and slugs along for the ride should not. But the current PFP goal setting process doesn't allow for enough differentiation. Pick any plant, and look at the Mgr, Distribution Operations. PFP goals and artificially lowered ratings don't vary much, if at all, between individuals.

The tool is hopelessly broke, and should be replaced with a pay raise system similar to the rest of the federal government. If over the last five years, I received the pay raise percent that my GS counterparts did, I would have been much better off.

Ideally, PFP would be the right thing, but we don't live or work in an ideal world.

USPS PFP's biggest problem is that the merit increase for contribution ratings has never been adjusted, and it is written into the policy.

The percentages for pay increases were set in FY2003, a favorable year from a financial standpoint, when the USPS ended the year with a net income of $3.9B.

The correct approach would move the percentages with the financial capability to offer raises, still offering the few "highest-contributors" the opportunity to receive that rating, even though the result may not be the maximum 12%.

Instead, the employees get an organizational rating that is artificially set to a very low contributor rating (because of the financial state of the USPS) and have very little flexibility (especially in smaller groups) to adequately reward higher performing employees.

This becomes a bigger issue (created intentionally?) if/when the employee seeks other federal employment, as the rating, while still in a contributor categorization, is depicted towards the lower end of the scale on the review, which the federal employer requests from applicants.

In most years, the spread from 2.5% to 12% just doesn't make sense. And, the rate it increases from score to score may need rethinking. Does a rating difference of 6 to 7 really deserve an additional 1.5% increase? With the rounding and subjectivity involved, it seems a bit odd.

Sometimes the gold and silver stars received in elementary school meant more than the less than deserved numeric rating that resulted in a small raise that would have been more appreciatively received with a more deserving score.

This last year there were too many smaller level postmasters that had their revenue tied into MPOO Group total. It was out of their control and while they may have done okay they suffered the lower score. Giving NPA of ZERO when postmasters worked hard is wrong. I agree that slugs desire ZERO but hard working postmasters that tried to attain goals should not have.

With the economy, most goals that are set in revenue are unacheivable. The moral from last year's low NPA scores is very bad this year. Too many EAS with the attitude I didn't get anything last year when I worked my b--- off - so why try harder this year for the same zero. I like the concept of higher acheivers getting rewarded - but the goals should be set based on the office and not just a blanket goal.

Do away with it.

You don’t know your exact goals until sometime in November-December. Your office receives “flexes” 6-7 times during the course of a year so even if you were making it in March you’re not going to make in April. Your office is only good for 30% of the total, Corporate is 50% and then you Manager will give you your ratings equaling 20% based on what??? How well he/she likes you.

Great system……

No law enforcement agency should be under pay for performance system. There are other management tools which can be used to deal with underperformers. Also, the system keeps changing and we are like the dog chasing our tail on what is important this year.

A number of factors with the the PFP are team-driven. There are on occasions a few employees who don't carry their weight and thus those team-driven results become your results. Should one suffer at the expense of another? It takes an act of Congress for management to act on a poor-performing employee.

The reality is many workplaces just give everyone the average and you end up with bad feelings all around. If you do give the derserving party a good score the rest feel like they weren't given a fair shake. Your better off with steps and some sort of awards program that provides cash incentive for specific instances of superior work that are hard for anyone to argue with.

I can't speak for HQ employees, but EAS employees in the field deplore PFP. But since it's the only way to get any kind of pay increase we're not only stuck with it, we end up playing the games. [At least with the MPOO average revenue score we're no longer pirating revenue from our neighboring offices--I hated that particular game.] The recent trend is hilarious--or, more accurately, ludicrous. Those who clearly meet our objective targets are rated subjectively at a substantially lower rate than what our objective accomplishment has been. Last year the AVP even let it be known that we couldn't receive a higher score on our core requirements than what our district got for the corporate goals. In other words, while lots of us can be below average, none of us can possibly be above average. Maybe that's meant to be symbolic of all management in today's Postal Service. I suppose that those of us who like to think we're above average will just continue to look for inventive ways to play the PFP games.

Lou-"A craft employee will get 2 to 3 times as much just in their annual contractual raises and COLA’s, so stop whining."
Those who can't do, become bosses. Those who can't be bosses become managers. Nobody forces anybody to accept a "promotion" to the managerial ranks. If the sole premise of accepting a EAS position is financial, one should have stayed in PS craft.
If holding a EAS position with PFP dissatisfies one, contact your Human Resources manager and request to downgrade to a PS craft position.
No whining necessary.

Supervisors and managers are rewarded for what the craft employee does. They squeze an harress to get more work out of their employees. They do not care about service. The employees doing the actual work gets nothing.[except maybe an addition to their route].This causes promblems between workers and management. One of the worst progams the postal service ever came up with.

Its your job to perform well.If you dont perform find someone that will.

The USPS Pay For Performance is a failure.
Congress should follow suit of the Defense Dept and terminate the USPS PFP program.
It stifles individualism and ones opportunities for high achievement. It reenforces group thinking and is used to force conformity.

The program is only designed to give large payouts to the execs and nothing more.

It pits management against management and management against employees.

The program is also manipulated by senior management to reduce pay-out to field managers and supervisors.

The program needs to go. it is too self serving for the execs.

they make their salary and its pretty good that should be it. they don't even touch the mail its against their contract. the ratio is 7-1 managers to employees.that is why we are going out of business.

Several problems with PFP.

1) It is misunderstood. Craft empoyees & the general public think PFP is a "bonus" system.

2) PFP is graded on things way beyond the manager's control. I get a budget for 7.2 hours per full time employee per day. There is no way to make that budget unless I can talk each employee to take .8 LWOP per day. I also can do nothing about my employees being on FMLA sick leave for child birth, surgeries & dependent care. Add one more to the list. I can't help that the transmission goes out of an LLV but it negatively impacts my TOE. If I am going to be held accountable for that then give me full control of LLV maintenance. I can get an oil change cheaper than the $450 round trip towing bill I get for every LLV every few months just for routine service.

3)Manipulation - PFP goals are manipulated with the target sometimes moving during the year.

PFP would be a great thing if the objectives were reasonable and within the control of the manager. As long I have 7.2 hours budgeted for every 8 hour guarantee employee I am going to be in the hole.

District & Area executives (PCES) manipulate system for their benefit & make it extremely difficult for EAS to reach goals. Goals are made unrealistic. Many manager/supervisors are dead in the water before day one of the FY. They also change goals in midstream. No consultation with effected employees.

Pay for Performance is a joke because only supervisors and Managers get the "Bonus", not the carriers are craft workers who are actually doing the work. The system is designed to benefit those who work hard and do excellent work, that does not apply to upper Management at all as they are only Mis-managing. That only creates an atmosphere of Violence in The Workplace where Management is dictating orders & harrasing people to meet there PFP goal. The craft workers are doing the "real" work, they are the ones who need to be rewarded. Eliinate the waste in Management and the Postal Service will never be in debt again!

From the very beginning of Pfp, EVA, the backstabbing of one supervisor to another really got bad. I believe tha this is why Vinnie had disagreed with the other Associations but he did not take it any farther, What this has done upto this date is opened up the good Ole Boys and Girls club, who even as shown did nothing to deserve their ratings but yet got better ratings than others who worked their butts off.

The most important thing that it did was to take away a livelyhood of some EAS employees. They took money away from them that they really didn't deserve happen to them. The loss of this money could never be made up and ruin many EAS's retirement. It actually lowered their retirement fund by taking away the step increases.

EVA/PFP in other Federal Agency was strictly a year end bonus and did not have any effect on their step increases, thus their retirement was exactly what it should have been. I could go on but you all get the drift of what I am saying.

How can there be pay for performance when there is no performance!! Absolutely no accountability to begin with , given instructions from the next level of no performance who received instructions from the next upper level of no performance , etc . Management/Supervisor is an absolute JOKE !! A recent article in a local newspaper addressed how Federal workers receive raises based on seniority and not because they actually know what they are doing . Every day I walk by my Stupavisors desk and say " There's $156,000 that could be saved " 2 positions to watch max. 4 FSM nachines at a time . Nothing but glorified babysitters that sign leave slips and warn you about your sick leave .Both have been "Supervisors" for over 25 years and still can't figure out how to give out overtime !They are totally clueless about their operations but what I have finally come to grips with is that "It just does'nt matter"

Rules and goals are changed without any discussion. These changes take place months after the goals are set with only a few months left in the year.

Since the inception of NPA/PFP I have never, I repeat "NEVER", had a one-on-one meeting. Rather, I have been "given" goals. And "EVERY" year I have had blocks arbitrarily lowered. I have utilized e-Recourse, which is another joke, to no avail as USPS HQ refuses to address the inequities perpetrated by its managers. USC Title 39 has several sections dealing with equitable pay for EAS. USC Title 39 has been willfully violated by the USPS in regards to NPA/PFP in the Southwest Area, which is a violation of Federal Law, and certain portions of higher management need to be charged in criminal court for violating Federal Law. And USPS HQ needs to face criminal prosecution for failing to meet with NAPS as per USC Title 39.

PFP is an insult to the "grunts" who really "pull the lead wagon." Same ole, same ole, that's the new American way in industry, there are those who do the work, and those who get dispprotionately rewarded, and they ain't the same..................Now, get back the work!

PFP is a scam. Not a bonus? Whatever tag is put on it, it remains that it is extra pay for others' performance. First management should be required to do a day's work for a day's pay. The PO would not be in the hole that it is in if that were required. Sitting at a computer playing games, leaving early, etc should NOT be tolerated, let alone rewarded. The only way to get a raise in pay? Try the rural carrier system -- getting less pay after each mail count which amounts to thousands of dollars. See what that does to your high 3 for retirement. Management does less work for more pay and then grumbles that it is still not enough.

Sirs, I think that "Pay for Performance" has been an unmitigated disaster. The system for reporting has no accountability factor and the numbers are are falsified from the bottom up. If everyone from the initial level supervisor to the Area Manager gets raises based on a given set of figures, what incentive is there for anyone to challenge them if they believe the numbers are wrong. The human factor says that you must reach a saturation at some point, where the figures table off as the carriers and the clerks are at their most efficient and can not beat SPLY.
Also, there is something else to consider. If all the areas are working at approximately the same rate of speed and efficiency, whatever the average, how can one Area Manager get a bonus that is far above the average; as in the case of the Western Area? Either he/she is an extraordinary individual with superior leadership and motivational skills or there are other factors not being considered.
As for the employees, the P4P program has drivien morale and the work atmosphere down dramatically. Nothing, is ever good enough. Managers now live for their bonuses, service standards have dropped to the point where many of the senior employees do not recognize the job they started with.
If you want to redress this situation start with managerial non-accountability.

Can the Postal IG honestly show where there is one person in management who has actually made the right choice where it was the best one and not one where it affected his bottom line? Management wouldn't care if the mail was thrown away as long as the person wasn't caught or got hurt doing it. When we are told to delay mail to make cutoff, yeah the right choice is made. Where our start times are changed because the same amount of clerks can't get us the mail on time(since the volume has supposedly dropped), yeah safety isn't important. When HQ thinks a Postmaster needs a 5 star room in Aspen, give me a break.

The rating is not set on individual accomplishments, but rather facility or district. For the most part supervisor are told what their individual cores are and not allowed to choose or discuss their individual core with their evaluator. Most supervisors do not receive a midyear or end of year discussion. Most supervisors do not understand the PFP rules and do not know how to defend their positions. This program has ran its course and has been a grave injustice for most EAS employees.
Every year I have to fight for less and less of a pay increase, and I am aware there are people who have not received a pay increase for years. They do not speak up due to the lack of understanding of the PFP program. This year I had to bring to the attention of my MDO, Plant Manager, and NAPS representative an error in the calculation of a unit core effecting all SDO, because in violation of the PFP rules we were all give the same core. To keep a long story short the number was adjusted at midyear.

Budget adjustments are made in the Western Area for the sole purpose of ensuring that no District makes TOE and total work hours goals. This has been going on for years. Totally unethical, dishonest, and probably illegal.

It is a broken system. I have seen many deserving and competent EAS employees get little or nothing year after year, while those who 'apple polish' and do nothing get rewarded.

On top of that, in some areas it causes problems for craft employees. A former co-worker moved to a new facility after 20+ years. Hard working, pleasant man with good work, safety and leave record. New supervisor threatened him with removal because 'he didn't learn the job fast enough and if her PFP suffered for it, he would too by not having a job.' I really don't think that was the whole idea behind PFP, now was it?

PFP is a joke! Upper management uses uses it as a carrot to get more from less out of EAS. Then, when you work your butt off, you are rewarded with a big goose egg. I've always said that PFP does not drive my performance, I work hard, do the best that I can do to be successful, for my own satisfaction and integrity. I'd be ok if everyone got a zero considering the dire straits we're in, but to see upper management and cronies get rewarded for the hard work of the field, is unethical and just plain wrong.

I recieved a letter of warning because I didn't want to partisapate in the PFP as it was completely unfair.

i have been a post worker for the post office for over 12 years, a retired army 1st sgt. in the elite units( 101st airborne ,2nd ar cav unit) and never have i seen such a joke in my life . the window clerks are your front liners and dont get the credit they should get. they get a 100 on the mystery shopper and the post manager and their puppets get the glory. no programs for improvement as employees of the us post office. the supervisor that have been at this post office has done nothing to benifit the post office. they do clerks jobs to make them look good and if you file a complaint they make your life ( well we wont use that word) how much money has the post office lost becuase of managment doing the wrong thing. and employyess losing time and money becuase of this. the oig is a joke because most of them are sleeping with the postmasters. they go out and eat with them and talk and joke and talk about how to ( do wrong to employess that they dont like). if they really are watching all employess why are post master and their puppets getting away with stealing from the workers.

PFP has resulted in working towards the numbers, not to giving better service. Goals are not within our control, so we can't work harder to get higher pay as was the intention. Even if you do achieve the goals, the ratings are changed or manipulated so you get less of a raise than the people you supervise.

pfp is not a fair system esp when its changed mid stream

My supervisor fell asleep at his desk every morning while the work got out all around him. He got into trouble by fudging a pet employee's time and he had some thing on the pm so they gave him a pm position to keep him quiet. The man should have never been in this position let alone not fired (I still don't believe the postal inspectors were notified, and if so..why nothing was done when we have had employees walked out the door for far less violations) Integrity needs to start at the top.

This is supposed to be a discussion of PFP, take your griping about management as a whole to Postal Reporter or some other blog. If carriers and clerks had to use a PFP system they'd find their pay was stagnant at best, as it depends on the performance of the entire district, not individual efforts. Except for PCES, there haven't been "bonuses" for years, try working without a raise for two years, PFP is the only raise EAS get, they don't get more money just for showing up like the craft do.

RUKiddingme with this question? Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. PFP has a fundamental flaw....you have to make money to pay a BONUS.

The real question should have been how much they should have to give back to save their employer and is that fair.