Treasury Inspector General for Tax
Administration
Office of Audit
ADDITIONAL ACTIONS ARE NEEDED TO MEASURE AND EVALUATE
THE IMPACT OF THE PAY-FOR-PERFORMANCE SYSTEM ON RECRUITING, RETAINING, AND
MOTIVATING HIGHLY SKILLED LEADERS
Issued on May 13,
2010
Highlights
Highlights of Report Number: 2010-10-054 to the Internal Revenue Service Human Capital
Officer.
IMPACT ON TAXPAYERS
With an increasingly retirement‑eligible managerial
workforce and the work of the Internal Revenue Service (IRS) becoming more
complex, it will be essential that the Pay‑for‑Performance System
successfully accomplishes its purpose. While the IRS has started the process of
gathering data on managers’ perceptions of the System, it is not gathering all of the data it needs to
fully evaluate the System and its impact, if any, on managers. If the IRS does not identify and adequately
address concerns with the Pay‑for‑Performance System, it may be a
negative factor for current or future leaders who serve in key roles to enable
the IRS to provide American taxpayers with the high‑quality service they
have come to expect.
WHY TIGTA DID THE
AUDIT
The overall objective of this review was to determine
whether the IRS Human Capital Office had established the necessary processes
for assessing and monitoring the progress of the Pay‑for‑Performance
System to ensure the System assists the IRS in recruiting, retaining, and
motivating highly skilled leaders. This
audit was the result of an informal suggestion from the former IRS Human
Capital Officer.
WHAT TIGTA FOUND
While 5 years of data are needed before the impact of
the Pay-for-Performance System can be fully evaluated, the IRS has started the
process of gathering data on manager perceptions of the System. In addition, as part of an interim
evaluation, an IRS contractor has determined the System is not having a negative impact on the
IRS managerial workforce. While
these are positive initial steps, there are several actions the IRS needs to
take to determine if the Pay‑for‑Performance System is helping the
IRS recruit, retain, and motivate a highly skilled managerial workforce.
First, an IRS contractor has noted several concerns
from frontline manager survey responses, such as frontline managers being consistently
less motivated, committed, and involved in the IRS mission than other
managers. The contractor also observed that
a large number of managers had stepped down from management positions. Additional research is needed to determine if
there are explanations for these observations and if these observations are
unintended consequences of the implementation of the Pay-for-Performance
System. Second, the IRS is not gathering
all of the data it needs to fully evaluate the System and its impact, if any,
on managers. Lastly, the IRS does not
have a sufficient structure in place to evaluate and address issues associated
with the Pay-for-Performance System.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the IRS 1) collect
additional data to assess the impact the IRS Pay‑for‑Performance
System is having on recruiting, retaining, and motivating highly skilled
leaders; 2) conduct additional research on two contractor observations; and 3) define a process where Pay‑for‑Performance
System issues are assessed at least annually.
In their response to the report, IRS officials
stated that they agreed with the recommendations in the report. They plan to gather additional information to
evaluate the recruitment and retention of managers in the IRS
Pay-for-Performance System; further define the process to assess, elevate, and
address pay-for-performance issues; and ensure an annual overview is provided
to senior leadership.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2010reports/201010054fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov