Performance Agreements Lead to Improved Organizational Results

General Accounting Office (GAO) report released in October 2000, found results-oriented performance agreements between agency leaders and senior political and career executives led to improved organizational results. The report, Emerging Benefits from Selected Agencies' Use of Performance Agreements, centered on the implementation of performance agreements in three agencies—Veterans Health Administration, the Department of Transportation, and the Office of Student Financial Assistance within the Department of Education.

Each agency uses performance agreements to define accountability for specific organizational goals and to help its executives align their daily operations with the agency's program goals. Performance agreements, like performance appraisal plans, define individual employee performance expectations and establish results-oriented goals. When the agency aligns executive performance agreements with its goals, executives can better understand the connection between their organization's daily activities and agency goal achievement.

Benefits From Using Agreements

The GAO report listed five common benefits the three agencies gained by using executive performance agreements:

Stronger alignment with results-oriented goals. Performance agreements define executive accountability for specific organizational goals, help executives align daily operations, and clarify how work unit activities contribute to the agency's goals and objectives.
Collaboration across organizational boundaries. Performance agreements encourage executives to work across traditional organizational boundaries to achieve results. When agencies give executives a clear definition of the results they are to achieve, and they are held accountable for those results, then they can eliminate many of the internal barriers that prevent collaboration and cause stovepiping.
Better opportunities to discuss and routinely use performance information to make program improvements. The agreements are an effective vehicle for collecting and communicating performance data on organizational progress. The agreements also highlight the importance of making performance information more accessible and helpful to executives. These agreements use performance information to track results, pinpoint opportunities to improve internal processes, identify performance gaps, and create strategies to achieve better results.
Result-oriented basis for individual accountability. Performance agreements provide a useful vehicle to bring results-oriented performance information into the executive's performance evaluation. The agreements play an important role in determining executive performance ratings and bonuses.
Continuity of program goals during leadership transitions. Performance agreements reinforce accountability for organizational goals during leadership transition. The agreements serve as vehicles for new leadership to identify and maintain focus on the organization's goals.

The GAO report stressed that performance agreements can encourage communication about organizational progress towards agency goals when those agreements are effectively implemented, given to executives in a timely manner, and provide the executives with useful performance information. Just as performance agreements provide a road map for executives to work toward organizational goals, performance appraisal plans provide the same type of guidance for supervisors and employees. Supervisors can make an important impact on the way their employees view how their efforts directly impact the organization's goal. By aligning employee performance appraisal plans with executive performance agreements and directly communicating agreement goals to employees, supervisors can drive home to employees just how their performance impacts organizational goals.

For More Information

You may order a copy of the GAO report, Emerging Benefits from Selected Agencies' Use of Performance Agreements (GAO-01-115), by calling 202-512-6000 or visiting the GAO web site.