U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Group Incentive Award Increases Productivity

We've seen a 200 percent increase in productivity!"

A 200 percent increase in productivity! Not possible you say? The Procurement and Support Services Division (PSSD) of the Minerals Management Service (Department of the Interior) has experienced such an increase! How? One method it uses to improve productivity has been implementation of a group incentive award program.

• Background of the Minerals Management Service Program.
• Who Participates?
• How is the Program Funded?
• What are the Benefits?
• Lessons Learned.

Background of the Minerals Management Service Program. PSSD is a fee-for-service acquisition organization that helps managers from all agencies buy information technology products and services. To improve employee productivity and reduce costs, PSSD established a group incentive program that grants awards to employees if group productivity goals are met. PSSD uses the number of contracts awarded and the total number of actions taken in FY96 as its baseline productivity measures for goal setting. Payouts are based on meeting the goals.

Who Participates? Currently, about 20 employees participate in the incentive program. All participating employees must receive a satisfactory (equivalent to Fully Successful) performance rating, and they must provide support for procurement activities. These activities include administering contracts, promoting franchise activities, improving procurement methods, promoting customer participation, and improving customer satisfaction. Incentive awards are paid quarterly to participating employees if group goals are met.

How is the Program Funded? The PSSD incentive program is a self-supporting program, with all funds supplied by franchise activity fees. (Franchise activity fees are the administrative costs that the customer pays for services provided by PSSD.) Management places approximately 10 percent of the monthly franchise fees into a pool. The pool is divided into funds for awards based on group achievement, which are distributed to all participants, and awards based on individuals' exceptional performance.

What are the Benefits? PSSD employees want to improve their performance and productivity because they want to participate in the incentive program. Employees realize that everyone must pull together in order to reach PSSD performance goals. They recognize that sharing experiences and exchanging ideas help not only their clients but themselves as well. Finally, because employees were involved in designing the award program and understand its features, PSSD has had no problems with poor performers.

Lessons Learned. Senior management buy-in and getting employees involved in program design were crucial to the success of the program. Keeping participants fully informed and up-to-date on all aspects of the program also is important to program success. Managers have found that the program keeps employees focused on goals and increases their productivity.

David Sutfin, Chief, Procurement Operations Branch, offered these suggestions for anyone creating a group incentive program:

• Do what you say you are going to do. If payouts are quarterly, then keep to that schedule.
• If the group does not meet its goals, don't make payouts.
• Make sure there is adequate funding of the awards pool to insure payouts.
• Keep the payouts as close to the goal achievement as possible.
• Set realistic performance and productivity goals. Be clear in what goals you expect to be achieved.
• Create the right environment to ensure that employees are successful in reaching their goals. Structure the work environment for productivity and remove any barriers that may hamper it.
• Give employees the necessary latitude they need to get the job done.
• Create and implement appropriate checks and balances to maintain quality and to aid employee productivity.

For more information, you may contact David Sutfin at 703-787-1354.

Originally published on December 1999