Performance Based Organizations

Performance Based Organizations (PBO's) represent an initiative developed to help the Government operate more efficiently. "PBO's encourage a group of Government executives in an organization to bear responsibility for its level of performance. These executives commit to meet tough annual performance goals..."¹ These organizations set forth clear measures of performance, hold the head of the organization clearly accountable for achieving results, and grant the head of the organization authority to deviate from Governmentwide rules if this is needed to achieve agreed-upon results. PBO's are characterized by:

• separating service operations from their policy components and placing them in separate organizations reporting to the agency or department head;
• negotiating a 3- to 5-year framework document between the PBO and the departmental secretary to set out the explicit goals, measures, relationships, flexibilities, and limitations for the organization; and,
• creating the position of chief operating officer to head the service operation functions, where the chief operating officer would be appointed or hired on contract through a competitive search for a fixed term such as 5 to 6 years, with a clear agreement on services to be delivered and productivity goals to be achieved.

To assist developing candidate PBO's, the Office of Personnel Management has worked with OMB and others to develop model legislation for establishing a PBO. The model legislation, which would be applied for each separate PBO, includes authorities for certain personnel flexibilities, as well as a clear statement of the general Governmentwide interests and values, such as the merit system principles and effective labor-management relations, that any Government organization should support.

In addition, OPM has published Human Resource Flexibilities in the Federal Government, which is available in both PDF and Text formats. This comprehensive handbook identifies:

• Governmentwide interests that all Federal agencies need to preserve,
• existing personnel flexibilities and authorities that can be pursued without waiver of law or Governmentwide regulation, and
• existing SES personnel flexibilities and authorities that apply to members of the Senior Executive Service.

The handbook provides general information on a wide variety of flexibilities and authorities, as well as organizational contacts.

Of course, agencies that are not candidates to become a PBO, and for whom existing flexibilities are not sufficient, can pursue personnel system changes through demonstration projects.

We are prepared to assist agencies as they examine where and how their human resource management systems need to be adapted to leverage performance results effectively and achieve their goals.

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