They tried a system like you suggested with certain GS employees under the Bush administration called the National Security Personnel System which placed employees in Pay Bands. It was a failure as the ones determining who got pay raises were the same administrators that should have been fired. It actually made the “good ole boy” system more secure.
They need to send the entire VA system packing and start over. Libs have been in charge since Clinton, and the majority of the federal workforce is corrupt.
A simple solution would to fire those at the top and the new administrators compensation needs to be tied to performance. Why keep those that created the problems.