The Office of Personnel Management (OPM) published a final rule in the Federal Register on September 15, 2025, titled Assuring Responsive and Accountable Federal Executive Management that makes significant changes to how federal agencies evaluate members of the Senior Executive Service (SES).
The rule removes a longstanding prohibition on the use of “forced distribution” in SES performance ratings. Agencies will now be permitted to cap the number of executives who can receive the highest ratings—Levels 4 (“Exceeds Fully Successful”) and 5 (“Outstanding”)—in the five-tier SES appraisal system.
The rule states, “Forced distribution involves assigning ratings based on pre-determined limits, such as reserving top ratings for a fixed percentage of performers. This approach aligns with performance practices in the private sector, where companies have used forced distribution of some sort in their performance evaluations.”
Additionally, the rule eliminates references to diversity, equity, and inclusion (DEI) in SES performance management regulations. This change is being made as part of President Trump’s Executive Order Ending Radical and Wasteful Government DEI Programs and Preferencing issued on January 20, 2025.
The new rule will take effect on October 15, 2025. Agencies will need to revise their SES appraisal systems accordingly and prepare for a more disciplined approach to executive performance management.
Why OPM Says Reform Is Needed
OPM cited persistent rating inflation across the SES as a key motivator. According to governmentwide data:
- In 2023, 96% of SES members received top ratings.
- From 2010 to 2013, 85% were rated “Outstanding” or “Exceeds Fully Successful,” while fewer than 1% received the lowest rating.
Another example of ratings inflation cited in the rule was the scandal at the Phoenix VA Health Care System in which the VA Office of Inspector General reviewed allegations of “gross mismanagement of VA resources, criminal misconduct by VA senior hospital leadership, systemic patient safety issues, and possible wrongful [patient] deaths.”
The rule noted that “despite a national scandal involving manipulated wait times and mismanagement at the Department of Veterans Affairs (VA), 80% of VA SES members received an ‘Outstanding’ or ‘Exceeds Fully Successful’ rating.”
Despite documented examples of these types of performance problems among some SES members, the ratings system failed to reflect meaningful distinctions in executive performance. OPM argued that this undermines the credibility of the pay-for-performance model established in 2004.
By allowing agencies to impose limits on top ratings, OPM aims to:
- Increase rigor and accountability in SES appraisals
- Normalize the distribution of ratings across agencies
- Ensure that only truly exceptional performers receive the highest marks
In a blog post, OPM Director Scott Kupor explained the new rule in more detail as well as why the agency was working to reform the SES performance rating system. He wrote:
Like most other federal employees, the SES are ranked annually based on performance using a scale of 1 to 5 (1 being the lowest and 5 being the highest). Roughly 96% of them are ranked a 4 or 5 (btw, 64% alone are ranked a 5); 3.5% are ranked a 3; 0.5% are ranked 1 or 2. Grade inflation ala Harvard and Yale, which in turn creates little differentiation among the SES in terms of compensation, promotion opportunities, feedback, etc.
This is not what Congress intended when it created the SES. It set forth the requirements for the SES performance appraisal system with great care, to ensure it created incentives for truly excellent performance and provided the agency head an accurate basis for performance awards and retention in the SES. A system where 96% of SES get the highest grades does not encourage excellence or allow the agency head to determine which SES are truly deserving of performance awards.
Today, however, the Office of Personnel Management has taken steps to end this practice by repealing a prohibition on forced distributions of SES and requiring that no more than 30% of SES receive a grade of 4 or 5 going forward. The rule will be effective starting in FY 2026, the upcoming performance review period. We have also separately issued guidance that this cohort of the 30% top managers should receive at least 60% of annual bonus/other reward, aligning performance and accountability with a matching set of compensation incentives.
Guidance from OPM on the New Rule
OPM issued guidance for agency leaders in conjunction with publication of the new rule. According to the guidance, to ensure fair and objective SES performance management, agencies with five or more career SES members are limited to rating no more than 30% at Levels 4 and 5, unless a presidential waiver is granted. This limitation does not apply to noncareer SES appointees.
The guidance also states that agencies must establish performance review boards (PRBs) to ensure fair performance appraisals and compliance with OPM’s forced distribution requirements. PRBs should be staffed by individuals committed to rigorous performance management and political leadership should be involved.
Reactions to the New Rule
Supporters of the rule say it brings federal performance practices closer to private-sector norms, where forced distribution is often used to differentiate top talent.
Critics warn that it could stifle innovation and morale by forcing managers to underrate deserving executives due to quota constraints.
Notably, OPM revised its initial proposal to exclude political appointees from the forced distribution requirement, responding to concerns that career SES members might be unfairly disadvantaged.
In his blog post, Kupor addressed some of the criticism raised in the comments OPM received on the proposed rule:
Won’t this create competition among SES members? The answer is “maybe,” but healthy competition in furtherance of better serving the American taxpayers is a feature, not a bug, of the new ranking system. We want people to always perform their best and raise the bar for everyone in the organization – their colleagues and subordinates alike.
But won’t this discourage teamwork and collaboration? The answer is no. If we want SES to partner with others and collaborate – which we do – then we simply align performance objectives around this goal. All successful organizations succeed in large part based upon teams working together to achieve a common mission; distinguishing between those executives who do a better job in supporting that mission does not discourage teamwork.
And isn’t this simply unfair? The SES have worked hard to achieve their positions – this is undoubtedly true – so why make them subject to a forced distribution? Because everyone – no matter their level – is accountable to the success of the organization’s mission. Performance rankings that truly reflect differential contributions to the mission only further the mission – great people want to be part of the truly elite class of top performers and will continue to up their game in furtherance of that.
Background on SES and Performance Ratings
The SES was created by the Civil Service Reform Act of 1978 to provide a cadre of senior leaders who bridge the gap between political appointees and career civil servants. In 2004, the SES transitioned to a pay-for-performance system, eliminating automatic pay increases and tying compensation to annual performance evaluations.
Ratings range from Level 1 (“Unsatisfactory”) to Level 5 (“Outstanding”), and agencies must obtain OPM and OMB certification of their appraisal systems to exceed the standard SES pay cap.
