All right, I'm joined today by Scott Kupor, director of the Office of Personnel Management. Director Kupor, thanks for being here today.
Hey, Drew. Great to see you again.
So, there's a new final rule out eliminating what's called time-in-grade. You've described this previously as, quote, a 'gatekeeper.' Can you talk about the goal of removing this restriction?
Yeah. So this is really kind of part and parcel of the broader merit hiring program, obviously, that the president set out back in the original EOs from now, I guess, last year, last calendar year. And the way we think about merit hiring generally is: are we actually assessing people based on their functional skills and their demonstrated performance, in the event obviously that they're already in the employment of the federal government. And what time-in-grade has been historically is it has set what I believe is an arbitrary time limit before we can really evaluate and potentially promote people. So the basic way time-in-grade works is it says you need to be in the seat for at least 12 months before we could consider you for some type of promotion in the role, and then if we give you that promotion, then kind of the 12-month clock starts again basically. So you essentially have this kind of rolling 12-month clock.
And, you know, look, I think like a lot of things, it was probably a well-intentioned idea at one point in time, but to me this is what I would, quite frankly, just consider, you know, an anti-merit-based principle, which is at the end of the day I think you want an environment, and I certainly believe we want this in the federal government, where as people perform, if they truly are performing above and beyond what we expect at that level, we should be able to promote them, you know, as necessary and as appropriate, kind of in whatever time frame the managers deem appropriate. So to me this is kind of the most pro-employee, pro, you know, performance management type rule that we could put in place that enables people to grow in their career, kind of without, you know, as you said, kind of the gatekeeper or the overhang, essentially, of a, you know, ticking clock really being the governor of progression in the organization.
And from the federal employees' perspective, what can they expect to see practically through this change being made?
Look, I hope what this does is just demonstrate, number one, our commitment to having a high-performance culture. So as you well know, you know, we've talked a lot about what that means from a ratings perspective, of course, which is making sure that we are holding people accountable, you know, kind of on the bottom end of the ratings ladder, and then as well kind of limiting the number of people on the top end who can be rated above expectations. And so what I hope people should expect is: look, what this means is we are serious about creating an environment where if you are one of those individuals who truly is going above and beyond, that the organization, you know, you deserve the organization to reward you and recognize you for that. So, you know, that doesn't mean in all cases that, you know, it doesn't mean you automatically get promoted, but I think it now gives managers the flexibility and ability to move people at the pace that is appropriate with their demonstrated skills, again, you know, kind of independent of something like time being effectively the governor on that.
You did just mention that there's this separate OPM rule where you recently removed the prohibition on essentially a forced distribution system and limitations on how many employees can be at level four and five of the performance scale. Can you talk about, you know, as that other change begins to take effect, is that going to impact this new time-in-grade rule? How do those two rules intersect?
Yeah, sure. So, just as a reminder for your listeners, essentially what now will be in place — obviously we're in FY27 now, but we're going through the FY26 performance management cycle for the year that just ended September 30th. But what is now in place for that performance cycle will be these rules around performance management. And the most significant portion of those, as you mentioned, is there is a 40% cap on the number of individuals who can be ranked a four or five in the organization. Some organizations, as you know, have four-point or three-point scales, but essentially think of it as 40% applies to people above the kind of meeting-expectations level in the organization.
And so, look, I think these things dovetail perfectly with them, which is again when you take a step back they're all about, in my mind, creating a culture that rewards performance over, quite frankly, you know, all other things — it rewards it over tenure, it rewards it over time-in-grade and position. And so what I hope people see is that we're not just kind of walking the walk but we're actually talking the talk here and we're putting, you know, putting muscle behind this high-performance culture. So the second piece, by the way, that goes along with that 40% limitation is that we've asked agencies that they should direct at least 60% of their bonus-based compensation towards that 40% of the population. So I think again these are all consistent, which is we recognize outstanding behavior and we reward that, whether that reward is through a bonus system or that reward in the time-in-grade case is through an actual promotion to the next level in the organization.
So you say this is about prioritizing performance, merit, rather than tenure or maybe even seniority. But, you know, looking at some of the public comments on the proposed rule here for time-in-grade, there were concerns about this leading to inconsistent treatment of employees, the potential of favoritism or subjectivity. Even some warned about the erosion of merit. Can you talk about what is, you know, OPM's response to those concerns? Are there ways that you're ensuring that there's not subjectivity or favoritism in this?
Yeah, I mean, first of all, you may not be surprised to hear that we have a different view from those comments, and obviously that's why we go through the process, but ultimately why we decided the rule was appropriate. Look, to me this is about actually managing performance, and the reality is, you know, not all employees perform at the same level. And I think for any organization it's totally fair and reasonable as long as you set the right objectives and expectations and you provide feedback on that. I don't think there's anything nefarious about actually recognizing people differentially for the contributions they make to the organization. If people — you know, this is no different, you know, the argument that I hear about, hey, this is just going to be a loyalty test. Well, first of all, you know, I just don't believe that. But look, if that's happening, then number one, that's managers not doing their job, and we should root out the managers who are doing that. But that's no different whether we have time-in-grade or not.
You know, it's all the same issue. At some point in time, either we believe that managers are capable of actually managing their teams, differentiating performance, rewarding it appropriately, or I think honestly the right answer is, you know, if they're not qualified to do that, they shouldn't be in managerial positions. So I just don't — I don't believe that. Look, I think very highly of the federal workforce. I think we do have managers who are capable of doing that. I think of it as this, as I mentioned, really gives them the ability to exercise what is appropriate, which is their review and discretion of performance of employees. And we should not live in a system where I believe people get lockstep promotions just because they've exhausted a time clock, as opposed to actually demonstrating that they're ready for the next level of promotion.
Some of the commenters also said, you know, even if they are supportive of removing time-in-grade restrictions — they say it is, you know, a positive change — they also point out, some did, that there is a need to replace it with other meaningful standards or safeguards or some level of training. You know, you mentioned that this is about manager flexibility to some extent. So I'm curious, is OPM considering looking at other standards to kind of, you know, guard or decide who gets promoted, or is this really about flexibility at the bottom line?
