EFFICIENCY RATING SYSTEM FOR FEDERAL EMPLOYEES

FRIDAY, MAY 21, 1948

UNITED STATES SENATE,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D. C.

The committee met at 2:30 p. m. in room 138, Senate Office Building, Senator Raymond E. Baldwin presiding.

Present: Senator Raymond E. Baldwin (chairman).

Also present: Dr. Rensis Likert, director, survey research center, University of Michigan, Ann Arbor, Mich.; Glendon A. Scoboria, personnel director, State of Connecticut; Thomas R. Reid, vice president in charge of human relations, McCormick & Co., Inc., Baltimore, Md.; H. N. Muller, manager, educational department, Westinghouse Electric Corp., East Pittsburgh, Pa.; Herbert L. Rhoades, third vice president and personnel officer, Metropolitan Life Insurance Co., New York City; Mrs. Kathryn A. McDonald, personnel officer, Macy's Department Store, New York City; E. V. Russ, office of the vice president, United States Steel Corp. of Delaware, Pittsburgh, Pa.; John A. Overholt, Chief, Efficiency Ratings Administration Section, Personnel Classification Division, United States Civil Service Commission; George D. Riley, staff director, Senate Post Office and Civil Service Committee; and Costas D. Chrissos, secretary, Senate Post Office and Civil Service Committee.

The CHAIRMAN. The meeting will come to order.

Mr. RILEY. Mr. Chairman, this matter relates to Senate Resolution 105 and Senate Resolution 124. A number of witnesses have been good enough to come in today to give their thinking on efficiency ratings.

The CHAIRMAN. For the purpose of the record, this is a hearing on Senate Resolution 105 and Senate Resolution 124, and I think because of their nature they both can be considered together, before a subcommittee of the Senate Post Office and Civil Service Committee.

We will hear as the first witness Dr. Rensis Likert, of the University of Michigan.

Will you identify yourself for the record, Dr. Likert?

STATEMENT OF DR. RENSIS LIKERT, DIRECTOR, SURVEY RESEARCH CENTER, UNIVERSITY OF MICHIGAN

Dr. LIKERT. Rensis Likert, director, survey research center, University of Michigan.

Mr. Chairman, ladies and gentlemen, it is a pleasure to testify on the operation of the present efficiency-rating plan used by the Federal Government. This is a matter of importance, for it affects the morale and working effectiveness of Federal employees.

From 1939 to 1946 I was head of a division in the Bureau of Agricultural Economics. During that time I used efficiency ratings and had ample opportunity to observe how they functioned in some of the different bureaus and departments.

The fact that there is something fundamentally unsound about the present efficiency-rating system is clearly demonstrated by the differences that exist between the way the system is supposed to work and the way that it is actually operated. Let me illustrate by citing an example.

The directions for making efficiency ratings state that each person is to be rated on the basis of his actual performance. Whenever a supervisor endeavors to do this, however, and rates excellent people as "Excellent," very good people as "Very Good," he immediately encounters difficulty if he has too many "Excellent" or "Very Good" employees. He is told by the bureau or department that it makes no difference whether or not he has carefully selected his personnel and has trained them to do an outstanding job. He is told that he can have only such and such a percentage of "Excellent" and of "Very Good" ratings and that is all. He is told directly, or by inference, that the supervisor who has a poorly selected and poorly trained staff can rate practically the same percentage of staff "Excellent" as he can. The percentage distribution of "Excellents," "Very Goods," and so forth, is set at substantially the same levels for all bureaus, divisions, sections, and so forth.

Another illustration involves the procedure for rating employees who have been in a given position less than a year. The plan states that such employees should be rated on the basis of their actual performance. In practice, however, some bureaus and departments insist that these persons shall not receive "Excellent." It is assumed that no one who has been in a position for as short a period as a year can do the work well enough to rate "Excellent." This overlooks two facts: (1) that many jobs are easily learned and (2) that the most able persons are the individuals who are most likely to be promoted and hence occupy positions for shorter periods of time.

There is obviously something seriously wrong when plan and practice differ so substantially. If the present plan were sound and practical these differences would not exist.

During the past 15 years there have been a number of studies in which employee morale has been measured and the relative influence of the different factors affecting morale has been studied. These studies have yielded a series of psychological and managerial principles from which it is possible to predict that the present efficiency-rating system will have a seriously depressing effect upon employee morale and productivity.

These principles indicate that employee morale and motivation is increased when supervisors display a genuine interest in the wellbeing of each employee and focus recognition on his successes rather than his failures. Consistent with these principles, supervisors should expect each employee to perform to the best of his capacity. The efficiency-rating system, in plan and in operation, tends to focus attention on the inadequacies and failures of the employee being rated. This is especially true when a top-notch supervisor is restricted in the number of persons that he can rate "Excellent" or "Very Good." He is then compelled to tell some of those who receive

"Good" that they should really receive "Very Good" but that he can only rate such and such a number "Very Good." He then has to explain to each person who receives "Good" in what way his performance is below those who received "Very Good." The same kind of explanations must be made to those who are given "Very Good" instead of "Excellent."

In all these discussions, the supervisor is compelled to emphasize, necessarily, the failures and inadequacies of each employee. The same situation occurs also when an employee who is eager and trying hard to do the best possible job is rated "Good" or "Very Good" because his innate ability is less than some of the other members of the staff whose actual performance may be better even though they are doing their work in an indifferent manner.

Obviously, when supervisors, in discussions with their employees, dwell on the failures and inadequacies of their employees, there is a serious slump in morale, motivation, and productivity. After working hard and enthusiastically, to be told primarily of our deficiencies, causes most of us humans to say, "Oh, what the thunder! There is no point working hard. I'll just take it easy from now on."

To summarize, Mr. Chairman, as a Federal employee for 7 years I observed at first hand the adverse effect that the present efficiencyrating plan has on the morale, motivation, and productivity of Government employees. Moreover, on the basis of scientific studies of factors affecting employee morale, I would predict that the present system costs the taxpayers tens of millions of dollars each year because of its adverse effect upon employee morale and productivity.

The failure and unsoundness of the present system in practice and in theory are sufficiently clear to require a scientific study of the problem. On the basis of fundamental principles of management which have been derived from scientific research, it is possible to suggest a plan which will achieve the objectives of the present efficiency-rating plan with an increase rather than decrease in employee morale. It would be inadvisable, however, to attempt to put any suggested plan into effect through law or Executive order. A far sounder approach would be to derive the best possible plan through scientific study and experimentation. To study this problem scientifically will cost money. This clearly becomes a wise expenditure of funds when it is recognized that any rating plan which increases or decreases employee productivity by as much as 1 percent affects the cost of government by tens of millions of dollars.

The Congress, the executive branch, and the Civil Service Commission are to be commended for their serious efforts to provide efficient government at the lowest possible cost. The need for a scientific study of the present efficiency-rating system as an essential step toward this objective is clear. The study should obtain quantitative measures of the effect of the present system upon employee morale and where possible on employee productivity. Data should be obtained also which shows the reasons for any changes in morale and productivity that are observed. On the basis of these results, plans for one or more experimental rating systems should be developed. These experimental systems should then be tried in one or more agencies or bureaus. As they are tried, measures of the effect of each plan on morale and productivity should be obtained and each plan should be modified, improved, or discontinued on the basis of the

results obtained. When a plan has been developed which is thoroughly satisfactory, it should then be adopted on a Government-wide basis.

Federal employees, as a group, are conscientious and hard working. I believe they deserve the best management and working conditions that it is possible to give them. Substantial economies and better government can be obtained through a scientific approach to these problems.

The CHAIRMAN. Thank you very much, Dr. Likert. You have presented a very excellent statement.

Dr. LIKERT. Thank you, Mr. Chairman.

The CHAIRMAN. The next witness will be Mr. Glendon A. Scoboria, personnel director for the State of Connecticut.

It's good to see you again, Mr. Scoboria.

Mr. SCOBORIA. Thank you, Mr. Chairman. I am glad to be here. Some of the things that the previous witness

The CHAIRMAN. May I add that having served with you when I was Governor of Connecticut I found you to be an excellent director of personnel.

STATEMENT of glendon A. SCOBORIA, PERSONNEL DIRECTOR, STATE OF CONNECTICUT

Mr. SCOBORIA. Thank you, sir.

Having agreed with the majority of the testimony given by the previous speaker, I will refrain from any repetition. I would like to review very briefly what has been done in Connecticut because I think it applies equally well to the Federal Government.

We attempted in 1937 to have a service-rating system-an objective method of rating. It resulted in complaints not only from the supervisory staff but from the entire personnel of the State, so that at the end of each rating period instead of dealing with just a few people, we dealt with the entire personnel in the State on complaints or criticisms; and the time involved was a tremendous amount. We then called together the supervisors, the employees, and the educators, to ascertain whether we could devise a system that would be satisfactory. This system went by the board, likewise, and for the same reasons.

We then attempted through educational means to have the objective ratings used properly and in January of this year, we abandoned the service-rating system that was in effect and adopted a rating system of simply stating that an employee is "Satisfactory" or "Unsatisfactory." Now, that has resulted in a tremendous saving to the State in the cost of paper, in the cost of making out the ratings, but primarily it has saved us between 6 weeks to 2 months of reviewing service ratings with each individual. True, there is criticism of that particular system because the person who is doing an excellent job is probably not given due credit, but instead of devoting our energies toward the overcoming of tremendous objections, we are now in the process of attempting to train our supervisory staff to keep sufficient data on each employee and to review at least once yearly, or preferably once every 6 months, that employee's progress in State service. Again, that is difficult, but I find that the feeling of the employees and the feeling of the supervisory staff-and I include in that organized labor and also State employee associations-I find for the first time that there seems

to be a spirit of "Let's get at this rating"-in such a way that we are going to get something out of it, and that the employee who is not a satisfactory employee is arbitrarily dropped and the one who is satisfactory is advanced. I believe that we will have to come back to some type of rating system before we get through in order to put that really down in black and white, but I will say that for morale purposes the dropping of the service rating system was probably the greatest boost that has happened in the State of Connecticut.

The CHAIRMAN. Mr. Scoboria, under the system that you have in Connecticut suppose you have a department in which there are 50 employees and at the end of a certain period you rate those employees, and that is the only written record of rating, "Satisfactory" or "Unsatisfactory"?

Mr. SCOBORIA. That's right.

The CHAIRMAN. If an individual gets an "Unsatisfactory" rating, is that the basis upon which he may be dropped from the service entirely or transferred to another department where his qualifications and his efforts might be used to better advantage? Does that happen under your system?

Mr. SCOBORIA. It does, but before the individual is dropped, the filing of an "Unsatisfactory" service rating by the department head, this rating must be shown to the employee and a copy is given to the director of personnel, and at that time the employee, the representative of the supervisory staff, and the representative of the personnel department, are brought together and it is found that many times although the individual may receive an "Unsatisfactory" rating service and is a misfit in that particular department, he may be put in some other department where he may do an excellent job.

The CHAIRMAN. Is there any appeal from that decision?

Mr. SCOBORIA. There is no appeal from the rating except the appeal that we honor by giving him the right of that hearing.

The CHAIRMAN. And you say that a man who gets an "Unsatisfactory" rating the personnel department gets a copy of that "Unsatisfactory" rating?

Mr. SCOBORIA. That's right.

The CHAIRMAN. And if he wants to accept that "Unsatisfactory" rating and leave that is up to him?

Mr. SCOBORIA. That's right.

The CHAIRMAN. And if he demands a hearing he can have one, in which the representatives from the Personnel Department and supervisory staff are present and the man or woman is also present?

Mr. SCOBORIA. Yes.

The CHAIRMAN. And then they all thrash out the reason why his or her services are unsatisfactory?

Mr. SCOBORIA. That's right.

The CHAIRMAN. Have there been any occasions where an "Unsatisfactory" record has been changed as a result of such a conference? Mr. SCOBORIA. Oh, yes. There was one changed last week. An individual was transferred from the particular department that he was in and was put in another department where his previous training would indicate he would be successful.

The CHAIRMAN. In addition, at this particular hearing he has an opportunity of saying, "Well, in the first place, I don't consider myself qualified for this position and in the second place, I don't like this kind of work. I would like to try something else." Is that right?