Many agencies have performance award programs. However, performance incentives like bonuses, when used, are often given to so many employees they quickly lose their financial significant and power as positive incentives. Worse, because moderate and even poor performers get awards of similar or even equal value to higher performers, the award system may actually discourage high performers and make them feel unappreciated.
Given these problems, agencies should be required to develop new incentive programs that encourage and reward employees for identifying savings and efficiencies in federal programs. Agencies should periodically solicit ideas for savings and efficiency. The best ideas should be selected and implemented. Employees who submit winning proposals should get significant financial rewards. Further, agencies that achieve significant savings should set aside a small fraction of the savings to enhance their other performance award programs. Such a system could lead to rapid identification of significant savings and efficiencies, while encouraging high performance and rewarding high performers.