Few incentive systems are credible

From the Washington Post:

The Veterans Affairs Department could recoup awards and bonuses already paid to its employees largely at the department secretary’s discretion, under a bill that could come to a House vote as soon as Monday evening.

A Congressional Budget Office analysis said that the VA pays roughly $400 million each year for awards and bonuses, about $4 million of that going to senior employees.

The bill would give the VA secretary broad discretion to claw back cash payments simply by determining that action would be “appropriate.” The affected employee would be given a notice and an opportunity for a hearing by another, unspecified, department or agency of the federal government. Its decision could not be appealed.

I’m not making a value statement about the employees in question here. Some may have engaged in wrongdoing. Few systems, though, are immune to ex post revisions of performance standards.