A new report shows agencies started freezing pay and limiting performance awards for senior managers a year before the White House instituted a policy to do so.

The Office of Personnel Management’s look at top officials’ compensation in fiscal 2010 finds agencies did not give raises to Senior Executive Service members, and fewer SES members got performance awards.

That finding comes from a new report highlighting the issues that arise when there isn’t a lot of money to administer a pay-for-performance compensation system.

OPM found no agency gave SES members raises on average. Nearly 4 percent fewer senior executives received performance awards. The awards were less generous too, going from an average of $14,802 in 2009 to $13,081 in 2010.

“This report reflects the reality that we knew was out there,” said John Palguta, vice president for policy at the Partnership for Public Service. “Agencies saw the handwriting on the wall. They knew they needed to start getting prepared.”

The White House froze pay and capped performance awards starting with the 2011 budget.

Of the agencies that reduced awards to senior executives, the Social Security Administration stands out. It gave no performance awards to senior executives in 2010.

“The message that they’re sending, from a management perspective, is that we’re all in this together and our senior executives are sacrificing along with everyone else,” Palguta said.

As agencies became more selective in handing out awards, they also got tougher on senior executives’ performance evaluations. Nearly 3 percent fewer SES members earned their agencies’ highest performance rating.

At the Department of Housing and Urban Development, nearly half of SES members used to get the highest rating and a performance award. That dropped to less than a quarter in 2010.

Successive administrations have pressured agencies to curb what many perceived as grade inflation in senior executives’ performance evaluations, said Senior Executive Association President Carol Bonosaro.

“Clearly that message has taken hold,” she said.

SEA has heard reports of agencies using unofficial quotas to divide senior executives into performance levels, she said.

“What’s demoralizing, frankly, about it is that senior executives can’t feel confident that their individual performance is going to be judged fairly,” she said. SEA has called for ending quotas and increasing transparency in the performance evaluation process.

But others say the economic climate is forcing agencies to hand out awards more judiciously.

“As we move into this austere environment, it’s going to be critical that good performers are retained,” said National Academy of Public Administration president Dan Blair. “Even if you don’t have as much money as you did before, there are ways of targeting these performance awards at those best performers.”

But if agencies misstep, they could send senior executives away and discourage others from joining, he said.

Overall, Blair said, the SES pay-for-performance system outshines the General Schedule, with its fixed pay increases in normal years. But on base pay alone, people at the highest rungs of the General Schedule earn thousands more than some junior SES members. Performance awards are an incentive for joining the SES.

The report “just says to an awful lot of potential applicants that they should think twice about going into the system,” said Bonosaro.

But bends in the federal employee pay ladder usually get straightened out eventually, Palguta said. In the past, Congress has passed laws realigning senior executives’ pay with their increased responsibilities, he added.

“They realize that with great responsibility should come some modicum of financial reward,” Palguta said. “People will remember how much they need federal employees to be engaged and do a good job because, at the end of the day, we need an effective government.”

There may be a more immediate silver lining too: It’s hard for anyone to look at this report and accuse federal executives of getting fat bonuses, experts say.

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