RALEIGH -- Rest assured taxpayers: State employees, almost to a person, meet or exceed expectations.
A 2008 report and a follow-up audit released Thursday claim that the state's system of performance reviews is often pointless since ratings are inflated and offer no real incentive to spur improvement.
The 2-year-old report from the Office of State Personnel, presented to the legislature, found that less than 1 percent of some 98,000 workers subject to personnel laws were rated as working below expectations. The report concluded those results were "inflated." And since the legislature has awarded raises on an across-the-board basis in recent years, the reviews are irrelevant when it comes to pay.
But the real problem, said an audit report released Thursday by State Auditor Beth Wood, is that no one has listened to the personnel office's assessment of the reviews, which was delivered to the legislature in 2008. Meanwhile, supervisors in state government are spending hundreds of thousands of hours completing near-useless performance reviews.
Wood's office sampled appraisals and found that among 697 reviews examined in the Department of Correction, none included measurable criteria upon which to judge employees. And in the few cases when employees fell below expectations, reviews included no plans for improvement or consequences for continued substandard performance, auditors found.
In 2008, the state personnel office studied all employees covered by the State Personnel Act. It did not include public school teachers. The audit released Thursday took a closer look at three agencies.
In a written statement, Gov. Bev Perdue noted that any reforms to the review process wouldn't change the fact that a big budget shortfall facing the state next year means there won't be any raises for employees regardless of what their reviews said.
"State employees haven't received raises in years but, if you ask most of them, I believe they'll tell you that they are thankful to have stable employment in today's economy," said Perdue, a Democrat. "Of course our employees want to be recognized for their hard work, and they deserve it. But it's difficult to see the benefit right now to linking evaluations to incentives when there simply are no incentives to offer."
State employees last received a raise two years ago, when lawmakers granted an across-the-board raise that was the greater of $1,100 or 2.74 percent, according to the legislature's Fiscal Research Division. Teachers got a bigger raise that averaged 5 percent. It was the fifth consecutive year that lawmakers awarded an across-the-board increase.
The last raise based on merit was approved in fiscal 1991.
To further 'excellence'
According to state law, the performance review system was created in the early 1990s to "recruit and retain a competent work force" and to "encourage excellence of performance."
"The state may not achieve these goals because the current performance management system and the practice of legislative across-the-board pay increases are not compatible," Wood wrote in the audit.
Sen. Ed Jones, a Halifax Democrat and a retired state trooper, said he would prefer a system that rewards employees for what they do.
"I want to make sure we got people that are deserving of what they get and that's the bottom line," Jones said.
In 2008, Jones was a member of one of the legislative committees that received the personnel report highlighting review inflation. According to Wood's report, members of two legislative committees told auditors that they did not read the report because it was one of many they receive. The audit did not say which lawmakers were too busy.
Dana Cope, executive director of the 55,000-member State Employees Association of North Carolina, said that was a "dereliction of duty."
"For any member of the legislature, especially one that's in charge of state personnel issues, ... to say they can't read a report, that person needs to be replaced," Cope said.
The 2008 report covered all employees. The audit released Thursday studied three agencies: the Department of Transportation, the Department of Correction and the Department of Health and Human Services. Those agencies employ 48 percent of the 98,000 state workers subject to personnel laws.
The agencies' managers spent a combined 200,000 hours writing up reviews in fiscal 2008. Wood estimated those hours as worth more than $5 million in salaries, although the agencies said that figure was too high.
DOT has since changed its review system. The old one was subjective; bosses just said what they thought about employees, said James Bridges, a project development engineer and a 19-year employee at the department.
"Our ratings system had become inflated. We had too many 'outstandings,' " he said. "Everyone was 'outstanding.' "
DOT's new system includes specific metrics for all employees, said Bridges, who writes reviews for four employees. The new system isn't perfect, but it's an improvement, he said.
"I think the pendulum has swung from almost being entirely subjective to being entirely objective," he said.
Cope said inflation may be caused by managers not having any real method of rewarding employees.
That's exactly what HHS officials told auditors. Managers at the agency have not had many options for rewarding employees who are doing more because of reduced budgets and staffing.
"Their only tool has been to give employees non-monetary recognition for doing their work," HHS Secretary Lanier Cansler wrote in his agency's response to the audit.
Auditors offered alternatives to inflated reviews.
"Good examples of non-monetary recognition include employee of the month programs, keepsakes, letters of appreciation, honorary awards, or a simple pat on the back and a 'thank you,' " they wrote.
