August 1997

Case Study: Leaving Pass/Fail Behind

The National Security Agency (NSA), established in 1952 as a separately organized agency within the Department of Defense, has evaluated its experiences using pass/fail appraisal and concluded that it needs to use more than two levels to appraise and summarize employee performance.

• History of NSA's Pass/Fail Appraisal Program
• Findings of NSA's Appraisal Program
• Redesigning Performance Management at NSA
• For More Information

History of NSA's Pass/Fail Appraisal Program. Since 1992, the NSA has used a pass/fail appraisal program to evaluate its employees. (NSA is not covered by chapter 43 of title 5 of the United States Code and thus is not subject to that appraisal law and regulations and could use pass/fail before the Office of Personnel Management revised the performance management regulations in 1995.) NSA's pass/fail program includes these design features:

• each employee has a performance plan with up to six key duties that define the employee's significant responsibilities;
• the final rating is measured as pass or fail;
• feedback is given at the mid-cycle review and the final appraisal the program also encourages continuous feedback by supervisors throughout the cycle (although in many cases this did not happen).

Findings of NSA's Appraisal Program. After several years under this program, NSA has found that:

• employees are not receiving enough feedback on their performance;
• in the majority of cases, it has become a valueless paperwork exercise because managers were merely checking the "pass" box on the form and not using effective methods and techniques to measure and communicate with employees about their performance;
• their promotion board does not have enough information regarding performance with which to make decisions; and
• more distinctions in performance levels are needed so that NSA can identify and help those employees who need to improve as well as reward its high performers.

Redesigning Performance Management at NSA. As a result, NSA established a task force in May 1995 to redesign its performance management program. From February to May 1996, it conducted a pilot of a revised program. Based on an evaluation of that pilot, NSA's proposed appraisal program contains the following design features:

• employee performance plans contain objectives that are measurable, tied to the Agency's mission, and in concert with Agency values;
• 3 to 5 objectives are recommended, but the program allows a maximum of 10;
• each objective is weighted in importance for determining a final rating with a minimum weight of 10, a maximum weight of 60, and with the weights totaling 100;
• overall performance on objectives is summarized using five levels;
• behavioral expectations will be addressed through a 360-degree behavior assessment tool that initially will be used for feedback and career development purposes only not for determining performance ratings;
• two standardized objectives are required for managers and supervisors that hold them accountable for subordinate appraisals and coaching activities;
• at mid-cycle review and the final evaluation, employees provide supervisors a list of their accomplishments matched against their objectives; and
• all employees are required to have an Individual Development Plan.

For More Information. NSA's experience illustrates some of the very real limitations that can occur with a pass/fail appraisal. It also illustrates the need to be able and willing to adapt appraisal programs as changes are needed.

NSA's proposed performance appraisal program will be implemented gradually, with full implementation scheduled by June 1998. For more information about the NSA program, you may contact the Personal Performance Evaluation Team at 410-684-7486.