Summary

This testimony discusses the role of incentive programs in motivating and rewarding federal employees to achieve high performance in support of agency missions and goals. GAO found that federal agencies have broad statutory and regulatory authority to design and implement various incentive programs, including monetary and nonmonetary incentives. No one incentive program is optimal for all situations. Second, the use of monetary incentive programs has varied over time and across agencies. During the last five years, agencies have made less use of their performance awards and greater use of other monetary incentives. The proportion of employees who received monetary performance awards ranged from less than one percent to as much as 75 percent of an agency's workforce. Little is known about the use of nonmonetary incentives because they are harder to measure and generally not documented. Finally, some agencies regularly monitor and evaluate the effectiveness of their incentive programs; however, many others have reported that they did not know whether their incentive programs were effective in motivating their employees to exceed expectations in support of missions and goals.

GAO noted that: (1) federal agencies have broad statutory and regulatory authority to design and implement a variety of incentive programs, including monetary incentives (such as performance and other cash awards) and nonmonetary incentives (such as plaques, trophies, and personal expressions of gratitude and support from superiors) to directly support their unique missions, goals, and organizational cultures; (2) no one incentive program is optimal for all situations; (3) the use of monetary incentive programs has varied over time and across agencies; (4) over the past 5 years, agencies have decreased their use of performance awards and increased their use of other monetary incentives; (5) the proportion of employees who received monetary performance awards varied by individual agency, ranging from less than 1 percent to as much as 75 percent of an agency's workforce; (6) little is known about the use of nonmonetary incentives, because they are more difficult to measure and are generally not adequately documented across the government; (7) the variation in monetary incentive awards may be attributed to such factors as differing budgetary limitations and leadership support for these programs; (8) some agencies regularly monitor and evaluate the effectiveness of their incentive programs; however, many others have reported that they did not know whether their incentive programs were effective in motivating their employees to exceed expectations in support of missions and goals; (9) in doing such an assessment, agencies may wish to consider the programs used by high-performing organizations; and (10) these elements include leadership support; clearly defined and transparent criteria; use of multiple awards for both individuals and teams; targeting only high-performing teams and employees; publicizing awards; and regularly monitoring, evaluating, and if needed, updating incentive programs on a periodic basis.