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The Office of Personnel Management has proposed the most significant rewrite of the federal employee performance management system in decades, setting the stage for limits on how many civil servants can be rated above average in annual reviews.
Under a rule set for formal release Tuesday, OPM would require agencies to adopt a forced distribution model for performance ratings, allowing quotas for top scores across the civil service workforce of more than two million employees. The proposal reflects the Trump administration’s view that current ratings are inflated and fail to distinguish meaningfully between levels of performance.
Federal performance ratings face caps
The rule would lift OPM’s longstanding rule against forced distribution, a practice the agency previously described as inconsistent with sound performance management. OPM now argues that the approach would strengthen accountability and better identify underperformance.
“The ability to measure and assess employee performance enables agencies to reward excellence, address skill gaps, and strengthen accountability,” OPM said. “If relative performance is not accurately measured in an employee’s rating of record, then the entire performance management system across the government is compromised.”
Agencies would be required to impose caps only on top ratings, specifically fours and fives under the current five-point scale used for most federal employees. Ratings below that threshold would not be subject to limits.
The proposal would also reduce the rating structure from five levels to four by eliminating the “minimally satisfactory” level two category. Supervisors could issue a level one “unacceptable” rating without the higher-level review currently required.
Political appointees hired under Schedules C and the newly created G in the excepted service would be exempt, a move OPM said would ensure they are not overrepresented among top-rated employees.
From fiscal 2022 to 2024, nearly two-thirds of non-Senior Executive Service employees received a four or five rating, while just 0.6% received below a three, according to OPM. A 2016 Government Accountability Office report similarly found 99% of employees earned at least a level three, or “fully successful,” rating.
“The distribution of these ratings suggests there is inflation of non-SES employee ratings and poor performing employees are likely not being identified or held accountable through a rigorous appraisal process,” OPM said.
Agencies push back on forced distribution
OPM cited a 2010 study published in Management Science to argue that forced distribution can counter “leniency bias,” in which supervisors rate employees too generously. The study found short-term performance gains under such systems, but researchers cautioned that the effect may not last.
“Most importantly, in our within-subjects design we find that the introduction of a forced distribution leads to a short-term performance increase which is followed by a rather sharp drop in performance,” the researchers wrote. “Apparently, while the participants initially understand that they need to work harder under a forced distribution, they are soon demotivated as they cannot attain the good grades and high bonuses they have earned before.”
Agency representatives tasked with reviewing the draft proposal criticized it in internal discussions, warning it could undermine performance and merit system principles. Three weeks after those comments were reported, agencies said through an OPM spokesperson that the views expressed were those of individual employees rather than official agency positions.
“The comments attributed to our respective agencies do not reflect official agency positions and should not be characterized as such,” the agencies said.
OPM acknowledged concerns that competition for limited top ratings could weaken collaboration. It suggested that agencies emphasize teamwork and related competencies in performance plans.
“OPM believes that any such concerns may be addressed by making competencies like teamwork, problem-solving, collaboration and mentoring critical elements in individual performance plans,” the rule states. “These concerns may also be addressed by including specific, measurable, achievable and meaningful goals in individual performance plans, and ensuring such goals align with broader organizational and team objectives.”
The rule would require agencies to obtain OPM approval of their appraisal systems every two years. Agencies failing to meet forthcoming criteria could face a recommendation to the Office of Management and Budget to restrict spending on performance awards.
After a request from the White House, OPM added a provision barring union grievances over perceived unfair ratings, describing the process as burdensome and expensive. The agency also stated that cash bonuses could be distributed more fairly under forced distribution and added language affirming compliance with existing civil service and civil rights laws.
Implementation costs have risen from about $200,000 in a December draft to roughly $3.5million, largely tied to HR and IT system changes across government.
