Human Capital
DOD's National Security Personnel System Faces Implementation Challenges Gao ID: GAO-05-730 July 14, 2005The Department of Defense's (DOD) new personnel system--the National Security Personnel System (NSPS)--will have far-reaching implications not just for DOD, but for civil service reform across the federal government. The National Defense Authorization Act for Fiscal Year 2004 gave DOD significant authorities to redesign the rules, regulations, and processes that govern the way that more than 700,000 defense civilian employees are hired, compensated, promoted, and disciplined. In addition, NSPS could serve as a model for governmentwide transformation in human capital management. However, if not properly designed and effectively implemented, it could severely impede progress toward a more performance- and results-based system for the federal government as a whole. This report (1) describes DOD's process to design its new personnel management system, (2) analyzes the extent to which DOD's process reflects key practices for successful transformations, and (3) identifies the most significant challenges DOD faces in implementing NSPS.
DOD's current process to design its new personnel management system consists of four stages: (1) development of design options, (2) assessment of design options, (3) issuance of proposed regulations, and (4) a statutory public comment period, a meet and confer period with employee representatives, and a congressional notification period. DOD's initial design process was unrealistic and inappropriate. However, after a strategic reassessment, DOD adjusted its approach to reflect a more cautious and deliberative process that involved more stakeholders. DOD's NSPS design process generally reflects four of six selected key practices for successful organizational transformations. First, DOD and OPM have developed a process to design the new personnel system that is supported by top leadership in both organizations. Second, from the outset, a set of guiding principles and key performance parameters have guided the NSPS design process. Third, DOD has a dedicated team in place to design and implement NSPS and manage the transformation process. Fourth, DOD has established a timeline, albeit ambitious, and implementation goals. The design process, however, is lacking in two other practices. First, DOD developed and implemented a written communication strategy document, but the strategy is not comprehensive. It does not identify all key internal stakeholders and their concerns, and does not tailor key messages to specific stakeholder groups. Failure to adequately consider a wide variety of people and cultural issues can lead to unsuccessful transformations. Second, while the process has involved employees through town hall meetings and other mechanisms, it has not included employee representatives on the working groups that drafted the design options. It should be noted that 10 federal labor unions have filed suit alleging that DOD failed to abide by the statutory requirements to include employee representatives in the development of DOD's new labor relations system authorized as part of NSPS. A successful transformation must provide for meaningful involvement by employees and their representatives to gain their input into and understanding of the changes that will occur. DOD will face multiple implementation challenges. For example, in addition to the challenges of continuing to involve employees and other stakeholders and providing adequate resources to implement the system, DOD faces the challenges of ensuring an effective, ongoing two-way communication strategy and evaluating the new system. In recent testimony, GAO stated that DOD's communication strategy must include the active and visible involvement of a number of key players, including the Secretary of Defense, for successful implementation of the system. Moreover, DOD must ensure sustained and committed leadership after the system is fully implemented and the NSPS Senior Executive and the Program Executive Office transition out of existence. To provide sustained leadership attention to a range of business transformation initiatives, like NSPS, GAO recently recommended the creation of a chief management official at DOD.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-730, Human Capital: DOD's National Security Personnel System Faces Implementation Challenges
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Report to Congressional Committees:
July 2005:
Human Capital:
DOD's National Security Personnel System Faces Implementation
Challenges:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-730]:
GAO Highlights:
Highlights of GAO-05-730, a report to Congressional Committees
Why GAO Did This Study:
The Department of Defense‘s (DOD) new personnel system¾the National
Security Personnel System (NSPS)¾will have far-reaching implications
not just for DOD, but for civil service reform across the federal
government. The National Defense Authorization Act for Fiscal Year 2004
gave DOD significant authorities to redesign the rules, regulations,
and processes that govern the way that more than 700,000 defense
civilian employees are hired, compensated, promoted, and disciplined.
In addition, NSPS could serve as a model for governmentwide
transformation in human capital management. However, if not properly
designed and effectively implemented, it could severely impede progress
toward a more performance- and results-based system for the federal
government as a whole.
This report (1) describes DOD‘s process to design its new personnel
management system, (2) analyzes the extent to which DOD‘s process
reflects key practices for successful transformations, and (3)
identifies the most significant challenges DOD faces in implementing
NSPS.
What GAO Found:
DOD‘s current process to design its new personnel management system
consists of four stages: (1) development of design options, (2)
assessment of design options, (3) issuance of proposed regulations, and
(4) statutory public comment, meet and confer with employee
representatives, and congressional notification. DOD‘s initial design
process was unrealistic and inappropriate. However, after a strategic
reassessment, DOD adjusted its approach to reflect a more cautious and
deliberative process that involved more stakeholders.
DOD‘s NSPS design process generally includes four of six selected key
practices for successful organizational transformations. First, DOD and
OPM have developed a process to design the new personnel system that is
supported by top leadership in both organizations. Second, from the
outset, a set of guiding principles and key performance parameters have
guided the NSPS design process. Third, DOD has a dedicated team in
place to design and implement NSPS and manage the transformation
process. Fourth, DOD has established a timeline, albeit ambitious, and
implementation goals. The design process, however, is lacking in two
other practices. First, DOD developed and implemented a written
communication strategy document, but the strategy is not comprehensive.
It does not identify all internal stakeholders and their concerns, and
does not tailor key messages to specific stakeholder groups. Failure to
adequately consider a wide variety of people and cultural issues can
lead to unsuccessful transformations. Second, while the process has
involved employees through town hall meetings and other mechanisms, it
has not included employee representatives on the working groups that
drafted the design options. It should be noted that 10 federal labor
unions have filed suit alleging that DOD failed to abide by the
statutory requirements to include employee representatives in the
development of DOD‘s new labor relations system authorized as part of
NSPS. A successful transformation must provide for meaningful
involvement by employees and their representatives to gain their input
into and understanding of the changes that will occur.
DOD will face multiple implementation challenges. For example, in
addition to the challenges of continuing to involve employees and other
stakeholders and providing adequate resources to implement the system,
DOD faces the challenges of ensuring an effective, ongoing two-way
communication strategy and evaluating the new system. In recent
testimony, GAO stated that DOD‘s communication strategy must include
the active and visible involvement of a number of key players,
including the Secretary of Defense, for successful implementation of
the system. Moreover, DOD must ensure sustained and committed
leadership after the system is fully implemented and the NSPS Senior
Executive and the Program Executive Office transition out of existence.
To provide sustained leadership attention to a range of business
transformation initiatives, like NSPS, GAO recently recommended the
creation of a chief management official at DOD.
What GAO Recommends:
GAO is making recommendations to improve the comprehensiveness of the
NSPS communication strategy and to evaluate the impact of NSPS. DOD did
not concur with one recommendation and partially concurred with two
others.
www.gao.gov/cgi-bin/getrpt?GAO-05-730.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Derek B. Stewart at (202)
512-5559 or stewartd@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
NSPS Design Process Evolved Into a Phased Approach:
DOD's NSPS Design Process Generally Reflects Practices of Successful
Transformations, but Some Key Practices Are Lacking:
DOD Faces Multiple Challenges in Implementing NSPS:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: DOD Labor Unions, Estimated Number of Employees
Represented, and Membership in the United Defense Workers Coalition:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: DOD Labor Unions, Estimated Number of Employees Represented,
and Membership in the United Defense Workers Coalition (as of June
2005):
Figures:
Figure 1: Key Elements of the NSPS Design Process:
Figure 2: NSPS Design and Implementation Team Organization:
Figure 3: NSPS Timeline and Implementation Goals:
Abbreviations:
DOD: Department of Defense:
NSPS: National Security Personnel System:
OIPT: Overarching Integrated Product Team:
OPM: Office of Personnel Management:
PEO: Program Executive Office:
Letter July 14, 2005:
Congressional Committees:
The Department of Defense (DOD) is designing a new civilian personnel
management system--the National Security Personnel System (NSPS)--that
represents a huge undertaking for DOD, given its massive size and
geographically and culturally diverse workforce. The National Defense
Authorization Act for Fiscal Year 2004[Footnote 1] gave DOD significant
authorities to redesign the rules, regulations, and processes that
govern the way that more than 700,000 defense civilian employees are
hired, compensated, promoted, and disciplined. The Congress provided
these authorities to DOD in response to the department's position that
the inflexibility of federal personnel systems was one of the most
important constraints on its ability to attract, retain, reward, and
develop a civilian workforce to meet the national security mission of
the 21st century. In addition, DOD's new personnel management system
will have far-reaching implications, not just for DOD, but for civil
service reform across the federal government. NSPS could serve as a
model for governmentwide transformation in human capital management.
However, if not properly designed and effectively implemented, NSPS
could severely impede progress toward a more performance-and results-
based personnel management system for the federal government as a
whole.
Implementing large-scale change management initiatives, such as
organizational transformations, can be a complex endeavor. Experience
shows that failure to adequately address--and often even consider--a
wide variety of personnel and cultural issues is at the heart of
unsuccessful transformations. In our prior work, we identified nine key
practices and lessons learned from major public and private sector
organizational mergers, acquisitions, and transformations.[Footnote 2]
These practices are to (1) ensure top leadership drives the
transformation, (2) establish a coherent mission and integrated
strategic goals to guide the transformation, (3) focus on a key set of
principles and priorities at the outset of the transformation, (4) set
implementation goals and a timeline to build momentum and show progress
from day one, (5) dedicate an implementation team to manage the
transformation process, (6) use the performance management system to
define responsibility and assure accountability for change, (7)
establish a communication strategy to create shared expectations and
report related progress, (8) involve employees to obtain their ideas
and gain their ownership for the transformation, and (9) build a world-
class organization.
In recent years, we have examined various aspects of DOD's human
capital management of its civilian workforce. For example, we have
reported on gaps in the defense components' civilian human capital
plans, including the absence of results-oriented performance
measures[Footnote 3] and the need for comprehensive strategic workforce
plans and for data on the skills and competencies needed to
successfully accomplish future missions.[Footnote 4] Prior to the
enactment of NSPS legislation in November 2003, we raised a number of
critical issues about the proposed system in a series of testimonies
before three congressional committees.[Footnote 5] In recent testimony
on DOD's transformation efforts, we indicated that DOD is challenged in
its efforts to affect fundamental business management reform, such as
NSPS, and indicated that our ongoing work continues to raise questions
about DOD's chances of success.[Footnote 6] Our recently released
report on the fiscal challenges the federal government faces in the
21st century identifies several issues regarding DOD's civilian
workforce that are ripe for reexamination, including whether DOD is
pursuing the design and implementation of NSPS in a manner that
maximizes the chance of success.[Footnote 7] To address challenges
inherent in business transformation reforms, such as NSPS, we recently
recommended installing a chief management official at DOD.
In 2001, we designated strategic human capital management as a high-
risk area because of the federal government's long-standing lack of a
consistent strategic approach to marshaling, managing, and maintaining
the human capital needed to maximize government performance and ensure
its accountability.[Footnote 8] The strategic management of human
capital was identified as a top priority of the President's Management
Agenda in 2001, and the Congress also has sought to elevate human
capital issues through a wide range of initiatives.[Footnote 9]
Significant changes in how the federal workforce is managed are under
way, but strategic human capital management remains high risk because
federal human capital strategies are still not appropriately
constituted to meet current and emerging challenges. These challenges
include providing the sustained leadership essential to completing
multiyear transformations, developing effective strategic workforce
plans, creating effective hiring processes and using flexibilities and
incentives to retain critical talent and reshape workforces, and
reforming performance management systems so that pay and awards are
linked to performance and organizational results.
We prepared this report under the Comptroller General's authority and
are providing it to you to assist the Congress in evaluating federal
human capital management systems. This report addresses DOD's efforts
to design its new civilian personnel management system. Specifically,
this report (1) describes DOD's process to design its personnel
management system, (2) analyzes the extent to which DOD's process
reflects key practices for successful transformations, and (3)
identifies the most significant challenges DOD faces in implementing
NSPS.
To describe DOD's design process, we interviewed key agency officials
at DOD and the Office of Personnel Management (OPM), as well as design
team participants, DOD employee representatives, and experts in federal
labor relations and federal adverse actions and personnel appeals
systems. We also examined documents relevant to NSPS design efforts
(e.g., focus group reports and town hall meeting schedules,
requirements and other planning documents, and briefings on the results
of various design options), and applicable laws and regulations
governing federal civilian personnel management.[Footnote 10] Using six
of the nine key practices for organizational transformations from our
prior work, we determined the extent to which DOD's NSPS design process
incorporated key practices of successful transformations. The six key
practices that we used are: (1) ensuring that top leadership drives the
transformation, (2) focusing on a key set of principles and priorities,
(3) setting implementation goals and a timeline, (4) dedicating an
implementation team, (5) establishing a communication strategy, and (6)
involving employees. We did not evaluate the key practices
"establishing a coherent mission and integrated strategic goals to
guide the transformation" because in March 2003, we reported on the
department's strategic planning efforts for civilian personnel and
assessed whether DOD and selected defense components' goals and
objectives contained in strategic plans for civilian personnel were
aligned with overarching missions of the organizations.[Footnote 11] In
addition, we did not evaluate the key practices of "using a performance
management system to define responsibility and assure accountability
for change" and "building a world-class organization" because DOD has
considerable work ahead to design and implement NSPS and assess the
overall system. To identify the most significant challenges DOD faced
in developing NSPS, we interviewed key DOD, OPM, and other federal
agency officials and DOD labor union representatives (referred to as
employee representatives throughout this report) and reviewed and
analyzed relevant documents.
We conducted our review from October 2004 through June 2005 in
accordance with generally accepted government auditing standards.
Additional information on our scope and methodology can be found in
appendix I. A list of recent GAO products related to DOD's civilian
personnel management is included at the end of this report.
Results in Brief:
DOD's current process to design its new personnel management system
consists of four stages: (1) development of design options, (2)
assessment of design options, (3) issuance of proposed regulations, and
(4) a statutory public comment period, a meet and confer period with
employee representatives, and a congressional notification period.
DOD's initial process to design NSPS was unrealistic and inappropriate
because of a broad range of legal, policy, and technical issues that,
according to OPM, needed to be addressed. However, after a strategic
reassessment of the assumptions, roles, strategies, and schedules for
the new system, DOD adjusted its approach to reflect a more cautious
and deliberative process that involved more stakeholders, including
OPM. Under the adjusted approach, senior experts representing various
disciplines within DOD, OPM, and the Office of Management and Budget
established a management framework to guide the design and
implementation of NSPS, including a NSPS Senior Executive and a Program
Executive Office (PEO), which was based on DOD's acquisition management
model. In the first stage of the design process, the PEO formed six
multidisciplinary design teams (referred to as working groups) that
reviewed research on human capital approaches, received input from
employees and employee representatives, and developed a range of
potential design options. Second, the design options were assessed by
an advisory group of senior DOD and OPM executives, who made
recommendations for proposed regulations to the NSPS Senior Executive.
The NSPS Senior Executive then submitted his recommendations to the
Secretary of Defense and the Director of OPM for consideration as
proposed NSPS regulations. Third, the Secretary and Director proposed
draft NSPS regulations and jointly released them for public comment in
the Federal Register on February 14, 2005. Fourth, the proposed
regulations were subjected to a statutory 30-day public comment period,
after which DOD held a 30-day meet and confer period with employee
representatives. As allowed by statute, DOD extended the meet and
confer process. Lastly, DOD is to engage in a 30-day congressional
notification period.
DOD's NSPS design process generally reflects four of six selected key
practices for successful transformations. First, DOD and OPM have
developed a process to design the new personnel system that is
supported by top leadership in both organizations. Top leadership that
is clearly involved in transformations provides stability and sets the
direction, pace, and tone for the transformation. Second, from the
outset, a set of guiding principles and key performance parameters have
guided the NSPS design process. These principles and performance
parameters can serve as core values for human capital management at
DOD. Third, DOD has a dedicated team in place to design and implement
NSPS and manage the transformation process. Dedicating an
implementation team is important to ensuring that the day-to-day
management of the transformation receives the focused, full-time
attention needed to be successful. Fourth, DOD has established a
timeline, albeit ambitious, and implementation goals for its new
personnel system. While it is appropriate to develop and integrate NSPS
within the department in a quick and seamless manner, moving too
quickly or prematurely can significantly raise the risk of doing it
wrong. Having an ambitious timeline is reasonable only insofar as it
does not impact the quality of the human capital management system that
is created. The design process, however, is lacking in two other
practices. First, DOD developed and implemented a written communication
strategy document that provides a structured and planned approach to
communicate timely and consistent information about NSPS, but the
strategy is not comprehensive. For example, the written communication
strategy document does not identify all key internal stakeholders and
their concerns. Failure to adequately consider a wide variety of people
and cultural issues can lead to unsuccessful transformations.
Furthermore, the written communication strategy document does not
tailor key messages to specific stakeholder groups of employees, such
as DOD human resource personnel, executives and flag officers, and
supervisors and managers, even though these employee groups may have
divergent interests and specific information needs. Tailoring
information is important because it helps employees feel that their
concerns are specifically addressed. An organization must develop a
comprehensive communications strategy that reaches out to employees,
customers, and stakeholders and seeks to genuinely engage them in the
transformation process. Second, while the process involved employees
through town hall meetings and other mechanisms, it has not included
employee representatives on the working groups that drafted the design
options for the new system. It should be noted that 10 federal labor
unions have filed suit alleging that DOD failed to abide by the
statutory requirements to include employee representatives in the
development of DOD's new labor relations system authorized as part of
NSPS. The composition of the team is important because it helps
employees see that they are being represented and that their views are
being considered in the decision-making process. A successful
transformation must provide for meaningful involvement by employees and
their representatives to, among other things, gain their input into and
understanding of the changes that will occur in the organization.
As DOD implements its new personnel management system, it will face
multiple challenges in both the early and later stages of
implementation.
Early Implementation Challenges:
* Establishing an overall communications strategy. Ensuring an
effective and ongoing two-way communications strategy that creates
shared expectations about, and reports related progress on, the
implementation of the new system is a key practice of a change
management initiative. DOD acknowledges that a comprehensive outreach
and communications strategy is essential for designing and implementing
NSPS, but the proposed regulations do not identify a process for the
continuing involvement of employees during the implementation of NSPS.
* Providing adequate resources for implementing the new system. Another
challenge facing DOD is to allocate necessary resources to ensure
sufficient implementation, training, and evaluation of the new system.
Implementation of NSPS will result in costs for, among other things,
developing and delivering training, modifying automated personnel
information systems, and starting up and sustaining the National
Security Labor Relations Board. DOD estimates that the overall cost
associated with implementing NSPS will be approximately $158 million
through fiscal year 2008. However, it has not completed an
implementation plan for NSPS, including an information technology plan
and a training plan; thus, the full extent of the resources needed to
implement NSPS may not be well understood at this time.
* Involving employees and other stakeholders in implementing the
system. DOD faces a significant challenge in involvingæand continuing
to involveæits employees, employee representatives, and other
stakeholders in implementing NSPS. For example, while providing for
continuing collaboration with employee representatives, DOD does not
identify a process for the continuing involvement of employees in the
implementation of NSPS. High-performing organizations have found that
actively involving employees and stakeholders, such as unions or other
employee associations, when developing results-oriented performance
management systems helps improve employees' confidence and belief in
the fairness of the system and increases their understanding and
ownership of organizational goals and objectives. This involvement must
be active and continuing if employees are to gain a sense of
understanding and ownership of the changes that are being made.
Later Implementation Challenges:
* Ensuring sustained and committed leadership. As DOD implements this
large-scale organizational change, its challenge will be to elevate,
integrate, and institutionalize leadership responsibility for NSPS to
ensure its success. DOD may face a future leadership challenge when the
NSPS Senior Executive and the PEO transition out of existence once NSPS
is fully implemented in 2009. According to a PEO official, at that
time, ongoing implementation responsibility for NSPS would come under
the Civilian Personnel Management Service, which is part of the Office
of the Under Secretary of Defense for Personnel and Readiness. One way
to ensure sustained leadership over NSPS (and all DOD's business
transformation efforts) would be to create the position of Deputy
Secretary of Defense for Management, who would serve as the
department's chief management official. This position would elevate,
integrate, and institutionalize within DOD the high-level attention
essential for ensuring that a strategic business transformation plan
such as NSPS--as well as the business policies, procedures, systems,
and processes that are necessary for successfully implementing and
sustaining overall business transformation efforts--are implemented and
sustained.
* Evaluating the new personnel management system. DOD's ongoing
challenge will be to continually review and revise NSPS based on data-
driven lessons learned and changing needs in the work environment.
Evaluating the impact of NSPS provides DOD managers with more authority
and responsibility for managing the new system. Collecting and
analyzing data will be essential for measuring the effectiveness of
these approaches in support of DOD's mission and goals. Adequate
evaluation procedures of NSPS would facilitate better congressional
oversight; allow for any midcourse corrections; assist DOD in
benchmarking its progress with other efforts; and help document best
practices and lessons learned with employees, stakeholders, other
federal agencies, and the public. DOD is planning to establish
procedures to evaluate the implementation of its new personnel
management system.
We are making three recommendations to improve the comprehensiveness of
the NSPS communication strategy and to evaluate the impact of NSPS. DOD
provided written comments on a draft of this report that did not concur
with one recommendation and partially concurred with two others. In not
concurring with our recommendation to identify all key internal
stakeholders and their concerns, the department stated that, among
other things, it adopted a multifaceted communications outreach
strategy to inform and involve key stakeholders. However, our review of
DOD's written communication strategy document showed that not all key
internal stakeholders and their concerns were identified. In partially
concurring with our recommendation to customize key messages to be
delivered to groups of employees to meet their divergent needs, the
department noted that, among other things, it recently released NSPS
brochures tailored to key internal stakeholders. Our review of these
brochures showed that they do in fact tailor and customize key messages
for some, but not all, employee groups. Furthermore, we believe that
DOD's written communication strategy document should serve as the
single, comprehensive source of DOD's key messages, which are tailored
to and customized for all employee groups. In partially concurring with
our recommendation to develop procedures for evaluating NSPS that
contain results-oriented performance measures and reporting
requirements, the department stated that it has begun developing an
evaluation plan and will ensure that the plan contains results-oriented
performance measures and reporting mechanisms. If the department
follows through with this effort, we believe that it will be responsive
to our recommendation.
Background:
The National Defense Authorization Act for Fiscal Year 2004[Footnote
12] provided DOD with authority to establish (1) a pay and performance
management system, (2) an appeals process, and (3) a labor relations
system--which together comprise NSPS. The legislation permits
significant flexibility for designing NSPS, allowing for a new
framework of rules, regulations, and processes to govern how defense
civilian employees are hired, compensated, promoted, and disciplined.
The law granted DOD certain exemptions from laws governing federal
civilian personnel management found in Title 5 of the U.S.
Code.[Footnote 13] The Congress provided these flexibilities in
response to DOD's position that the inflexibility of federal personnel
systems was one of the most important constraints to the department's
ability to attract, retain, reward, and develop a civilian workforce to
meet the national security mission of the 21st century.
Initial NSPS Design Process:
The initial proposals for NSPS were developed by DOD and were based on
a 2002 compilation of best practices generated by demonstration
projects that experimented with different personnel management
concepts. After these proposals were sent to OPM for review, OPM
identified a broad range of legal, policy, and technical concerns, and
also noted that the labor-management relations proposal was developed
without any prior OPM involvement or union input. OPM also indicated
that the initial proposals had been crafted with only token employee
involvement, and it noted a high level of concern expressed by
congressional oversight committees, stakeholders, and constituent
groups. In addition to OPM, assistant secretaries for the military
services' manpower organizations also expressed concerns that NSPS as
designed would not work.
Subsequently, the Secretary of Defense established a 3-week
reassessment of system requirements, process issues, personnel and
communication strategies, and program schedules and milestones. The
Overarching Integrated Product Team (OIPT), an advisory group co-
chaired by the Principal Deputy Under Secretary of Defense for
Personnel and Readiness and OPM, and including the military services'
assistant secretaries for manpower and reserve affairs, oversaw this
reassessment.
Employees Covered by NSPS:
NSPS labor relations provisions will be implemented across the entire
department once final NSPS regulations are issued and effective, and
they will apply to all DOD employees currently covered by the labor
relations provisions of Title 5, U.S. Code, Chapter 71. In contrast,
NSPS regulations governing the new pay and performance management
system and appeals process will be phased in and will not apply to some
employees, as stipulated by law (e.g., intelligence personnel and
employees in DOD's laboratory demonstration organizations). The
authorizing legislation stipulates that these latter regulations may
not apply to organizations with more than 300,000 employees until the
Secretary of Defense determines and certifies that the department has a
performance management system in place that meets the statutory
criteria established for NSPS.
The first phase of implementation--Spiral One--will provide the basis
for this certification prior to the deployment of Spiral Two. Spiral
One includes approximately 300,000 general schedule defense civilian
employees, who will be converted to the new system over a period of 18
months. DOD currently plans to initiate Spiral One, beginning in early
fiscal year 2006. Spiral Two will include the remainder of DOD's
eligible workforce, including wage-grade employees. Spiral Three will
apply to demonstration laboratory employees no earlier than October 1,
2008, and then only to the extent the Secretary of Defense determines
that NSPS provides greater personnel management flexibilities to the
laboratories than those currently implemented.
DOD's Employee Unions:
According to DOD, almost two-thirds of its more than 700,000 civilian
employees are represented by 43 labor unions, including over 1,500
separate bargaining units. Table 1 in appendix II lists current DOD
labor unions, the estimated number of employees represented by each
union, and which unions belong to the United Defense Workers
Coalition.[Footnote 14] According to a DOD official, since 2000,
defense civilian employee membership in DOD's labor unions has remained
about the same; however, the number of unions has dropped from about 60
unions to the current 43 unions, primarily the result of mergers and
consolidation among the unions.
Practices and Implementation Steps for Mergers and Transformations:
In our prior work, we identified key practices and lessons learned from
major public and private sector organizational mergers, acquisitions,
and transformations.[Footnote 15] This work was undertaken to help
federal agencies implement successful cultural transformations in
response to governance challenges. While no two mergers or
transformation efforts are exactly alike and the "best" approach
depends on a variety of factors specific to each context, there was
general agreement on a number of key practices, which are as follows:
1. Ensure top leadership drives the transformation. Leadership must set
the direction, pace, and tone and provide a clear, consistent rationale
that brings everyone together behind a single mission.
2. Focus on a key set of principles and priorities at the outset of the
transformation. A clear set of principles and priorities serves as a
framework to help the organization create a new culture and drive
employee behaviors.
3. Set implementation goals and a timeline to build momentum and show
progress from day one. Goals and a timeline are essential because the
transformation could take years to complete.
4. Dedicate an implementation team to manage the transformation
process. A strong and stable team is important to ensure that the
transformation receives the needed attention to be sustained and
successful.
5. Establish a communication strategy to create shared expectations and
report related progress. The strategy must reach out to employees,
customers, and stakeholders and engage them in a two-way exchange.
6. Involve employees to obtain their ideas and gain their ownership for
the transformation. Employee involvement strengthens the process and
allows them to share their experiences and shape policies.
NSPS Design Process Evolved Into a Phased Approach:
DOD's current process to design NSPS is divided into four stages: (1)
development of options for the personnel system, (2) assessment of the
options and translation into recommended proposals, (3) issuance of
proposed regulations, and (4) a statutory public comment period, a meet
and confer period with employee representatives, and a congressional
notification period. As discussed earlier, DOD's initial process to
design NSPS was unrealistic and inappropriate. However, after a 3-week
reassessment, DOD adjusted its approach and attempted to create a more
cautious and deliberate process that would involve all of the key
stakeholders, including OPM. At this time, DOD adopted a management
framework to guide the design of NSPS based on DOD's acquisition
management model and adopted an analytical framework to identify system
requirements as well as a phased approach to implementing the new
system, also based on the acquisition management model.[Footnote 16]
Figure 1 presents the four stages in DOD's current process in terms of
the key organizational elements, inputs, and outputs.
Figure 1: Key Elements of the NSPS Design Process:
[See PDF for image]
[End of figure]
In the first stage, the NSPS PEO[Footnote 17] convened six
multidisciplinary design teams--called working groups--that were
functionally aligned to cover the following personnel program areas:
(1) compensation (classification and pay banding); (2) performance
management; (3) hiring, assignment, pay setting, and workforce shaping;
(4) employee engagement; (5) adverse action and appeals; and (6) labor
relations. The working groups were co-chaired by DOD and OPM, and they
were largely staffed from the defense components. The working groups
reviewed and analyzed data from alternative federal personnel systems
and laboratory and acquisition demonstration projects, research
materials from the Department of Homeland Security's personnel system
design process, and private industry practices. According to DOD, the
working groups also received input and participation from DOD human
resources practitioners, attorneys, financial management experts, and
equal employment opportunity specialists. The working groups also
reviewed input gathered from DOD employee and employee representatives.
The PEO was responsible for conducting outreach to employees and
employee representatives, in conjunction with NSPS program managers in
the DOD components;[Footnote 18] their efforts included 106 focus
groups, more than 50 town hall meetings worldwide, and 10 meetings with
DOD employee representatives. The working groups provided a broad range
of options for the OIPT in September and October 2004; they did not
prioritize the design options.
In the second stage of the design process, OIPT assessed the design
options, and then submitted them to the NSPS Senior Executive in
November 2004. The Senior Executiveæappointed by the Secretary of
Defense to design and implement NSPS on his behalf--reviewed and
approved the design options and presented them as proposed enabling
regulations to submit to the Secretary of Defense and the Director of
OPM for a decision. Throughout this period, the OIPT, PEO, and working
group members continued to participate, both in drafting and reviewing
the proposed regulations.
In the third stage, the Secretary of Defense and Director of OPM
reviewed the proposals submitted by the NSPS Senior Executive. After
finalizing the proposed regulations, the Secretary and Director jointly
released them for public comment in the Federal Register on February
14, 2005.
In the fourth stage, the NSPS proposed regulations were subjected to a
statutory 30-day public comment period, after which DOD held a 30-day
meet and confer period (which began on April 18, 2005), with employee
representatives to discuss their views; the meetings were facilitated
by the Federal Mediation and Conciliation Service. As allowed by
statute, DOD extended the meet and confer process. Lastly, DOD is to
engage in a 30-day congressional notification period. As called for in
the authorizing legislation, the proposed regulations are subject to
change based on consideration of formal comments received during the 30-
day public comment period and the results of a 30-day meet and confer
process with employee representatives. As provided for in the
authorizing legislation, DOD can immediately implement those parts of
the regulations upon which they have reached agreement with employee
representatives. DOD can implement those parts of the proposed
regulations not agreed to only after another 30 calendar days have
elapsed after (1) notifying the Congress of the decision to proceed
with implementation and (2) explaining why implementation is
appropriate.
DOD's NSPS Design Process Generally Reflects Practices of Successful
Transformations, but Some Key Practices Are Lacking:
DOD's NSPS design process generally reflects four of six key practices
we identified that have consistently been found at the center of
successful transformations. The design process generally reflects the
following four practices. First, DOD and OPM have developed a process
to design the new personnel system that is supported by top leadership
in both organizations. Second, from the outset, a set of guiding
principles have guided the NSPS design process. Third, DOD has a
dedicated team in place to design and implement NSPS and manage the
transformation process, to include program managers from DOD
components. Fourth, DOD has established a timeline, albeit ambitious,
and implementation goals for implementing its new personnel system. The
design process, however, does not fully reflect two other key
practices. First, DOD developed and implemented a written communication
strategy document, but it is not comprehensive. Second, while the NSPS
design has involved employees through town hall meetings and other
mechanisms, it has not included employee representatives on the working
groups that drafted the design options for the new system.
Top DOD and OPM Leadership Drives Human Capital Transformation:
DOD and OPM have developed a process to design DOD's new human capital
resources management system that is supported by top leadership in both
organizations. As previously discussed, DOD's initial process to design
NSPS was unrealistic and inappropriate; however, after a strategic
reassessment, DOD adjusted its approach to reflect a more cautious,
deliberative process that involved top DOD and OPM leadership. In our
report on key practices for successful transformations, we noted that
top leadership that is clearly and personally involved in
transformations provides stability and an identifiable source for
employees to rally around during tumultuous times.[Footnote 19] In
addition, we noted that leadership should set the direction, pace, and
tone for the transformation. In our prior reports and testimonies, we
observed that top leadership must play a critical role in creating and
sustaining high-performing organizations.[Footnote 20]
Senior leaders from DOD and OPM are directly involved in the NSPS
design process. For example, the Secretary of Defense tasked the
Secretary of the Navy to be the NSPS Senior Executive overseeing the
implementation of NSPS. Also, the Under Secretary of Defense for
Personnel and Readiness and the NSPS Senior Executive provided an open
letter to all DOD civilian employees stating that DOD is tasked to
design a transformation system for the department's civilian employees
that supports its national security mission while treating workers
fairly and protecting their rights. In addition, the Principal Deputy
Under Secretary of Defense for Personnel and Readiness, the Assistant
Secretaries for Manpower and Reserve Affairs from each military
service, and the OPM Senior Advisor to the Director for the Department
of Defense are members of an integrated executive management teamæthe
OIPTæthat, among other things, provides overall policy and strategic
advice on the implementation of NSPS. Similarly, senior-level
executives from DOD and OPM are members of a group, known as the Senior
Advisory Group, that provides advice on general NSPS conceptual,
strategic, and implementation issues. Finally, senior leaders from DOD
and the military components participated in town hall meetings at DOD
installations worldwide to discuss the concept and design elements of
NSPS.
Experience shows that successful major change management initiatives in
large private and public sector organizations can often take at least 5
to 7 years. This length of time and the frequent turnover of political
leadership in the federal government have often made it difficult to
obtain the sustained and inspired attention to make needed changes. The
development of the position of Deputy Secretary of Defense for
Management, who would act as DOD's Chief Management Officer, is
essential to elevate, integrate, and institutionalize responsibility
for the success of DOD's overall business transformation efforts,
including its new personnel management system.
As DOD embarks on a large-scale change initiative, such as DOD's new
personnel management system, ensuring sustained and committed
leadership is crucial in developing a vision, initiating organizational
change, maintaining open communications, and creating an environment
that is receptive to innovation. Without the clear and demonstrated
commitment of agency top leadership, organizational cultures will not
be transformed and new visions and ways of doing business will not take
root.
Guiding Principles and Key Performance Parameters Steer Design Process:
During the strategic reassessment of the NSPS design process, DOD and
OPM senior leadership developed a set of guiding principles to direct
efforts throughout all phases of NSPS development. We have reported
that in bringing together the originating components, the new
organization must have a clear set of principles and priorities that
serve as a framework to help the organization create a new culture and
drive employee behaviors.[Footnote 21] Principles are the core values
of the new organization and can serve as an anchor that remain valid
and enduring while organizations, personnel, programs, and processes
may change. Focusing on these principles and priorities helps the
organization maintain its drive towards achieving the goals of the new
transformation.
According to DOD, its guiding principles translate and communicate the
broad requirements and priorities outlined in the legislation into
concise, understandable requirements that underscore the department's
purpose and intent in creating NSPS. The NSPS guiding principles are:
* put mission first--support national security goals and strategic
objectives,
* respect the individual--protect rights guaranteed by law,
* value talent, performance, leadership and commitment to public
service,
* be flexible, understandable, credible, responsive, and executable,
* ensure accountability at all levels,
* balance personnel interoperability with unique mission requirements,
and:
* be competitive and cost effective.
Senior DOD and OPM leadership also approved a set of key performance
parameters, which define the minimum requirements or attributes of
NSPS. The key performance parameters are:
* high-performing workforce and management: employees and supervisors
are compensated and retained based on performance and contribution to
mission,
* agile and responsive workforce management: workforce can be easily
sized, shaped, and deployed to meet changing mission requirements,
* credible and trusted: system assures openness, clarity,
accountability, and merit principles,
* fiscally sound: aggregate increases in civilian payroll, at the
appropriations level, will conform to Office of Management and Budget
fiscal guidance, and managers will have flexibility to manage to budget,
* supporting infrastructure: information technology support, and
training and change management plans are available and funded, and:
* schedule: NSPS will be operational and demonstrate success prior to
November 2009.
These principles and key performance parameters can serve as core
values for human capital management at DODævalues that define the
attributes that are intrinsically important to what the organization
does and how it will do it. Furthermore, they represent the
institutional beliefs and boundaries that are essential to building a
new culture for the organization. Finally, they appropriately identify
the need to support the mission and employees of the department,
protect basic civil service principles, and hold employees accountable
for performance.
Team Established to Manage the NSPS Design and Implementation Process:
As previously discussed, DOD established a team to design and implement
NSPS and manage the transformation process. Dedicating a strong and
stable design and implementation team that will be responsible for the
transformation's day-to-day management is important to ensuring that it
receives the focused, full-time attention needed to be sustained and
successful. Specifically, the design and implementation team is
important to ensuring that various change initiatives are sequenced and
implemented in a coherent and integrated way. Because a transformation
process is a massive undertaking, the implementation team must have a
"cadre of champions" to ensure that changes are thoroughly implemented
and sustained over time. Establishing networks can help the design and
implementation team conduct the day-to-day activities of the merger or
transformation and help ensure that efforts are coordinated and
integrated. To be most effective, establishing clearly defined roles
and responsibilities within this network assigns accountability for
parts of the implementation process, helps reach agreement on work
priorities, and builds a code of conduct that will help all teams to
work effectively.
The Secretary of Defense appointed a NSPS Senior Executive to, among
other things, design, develop, and establish NSPS. Under the Senior
Executive's authority, the PEO was established as the central policy
and program office to conduct the design, planning and development,
deployment, assessment, and full implementation of NSPS. Specifically,
its responsibilities include designing the labor relations, appeals,
and human resource/pay for performance systems; developing a
communication strategy and training strategy; modifying personnel
information technology; and drafting joint enabling regulations and
internal DOD implementing regulations. As the central DOD-wide program
office, the PEO provides direction and oversight of the components'
NSPS program managers who are dual-hatted under their parent component
and the NSPS PEO. These program managers also serve as their
components' action officers and participate in the development of NSPS
and plan and implement the deployment of NSPS. Figure 2 shows the
organization of the NSPS design and implementation team.
Figure 2: NSPS Design and Implementation Team Organization:
[See PDF for image]
[A] Includes the U.S. Navy and the U.S. Marine Corps.
[B] Represents defense agencies, DOD field activities, the Joint Chiefs
of Staff, Office of the Inspector General, U.S. Court of Appeals for
the Armed Services, and Office of the Secretary of Defense.
[End of figure]
Ambitious Timeline and Implementation Goals Established:
DOD established an ambitious 18-month timeline and implementation goals
for completing the design process and beginning the phased
implementation of NSPS. We have reported that successful practices of
mergers and transformations have noted that the establishment of a
timeline with specific milestones allows stakeholders to track the
organization's progress towards its goals.[Footnote 22] Figure 3 shows
the current timeline and implementation goals for designing and
implementing NSPS.
Figure 3: NSPS Timeline and Implementation Goals:
[See PDF for image]
[End of figure]
Although DOD established a clear timeline with specific implementation
goals, they have allotted about 6 months for completing the design
process and beginning implementation of NSPS (as shown in the shaded
area of figure 3). Specifically, the authorizing legislation provides
for a meet and confer process for not less than 30 calendar days with
the employee representatives in order to attempt to reach agreement.
However, as allowed by statute, DOD extended the 30-day meet and confer
period with employee representatives. After the meet and confer process
is concluded, the Secretary of Defense must notify the Congress of
DOD's intent to implement any portions of the proposal where agreement
has not been reached, but only after 30 calendar days have elapsed
after notifying the Congress of the decision to implement those
provisions. In addition, DOD and OPM must jointly develop and issue the
final NSPS regulations, which must go through an interagency
coordination process before they are published in the Federal Register.
Also, DOD must develop and conduct in-depth and varied training for its
civilian employees, military and civilian supervisors, and managers.
Moreover, DOD must modify its existing automated human resource
information systems, including personnel and payroll transaction
process systems departmentwide, before NSPS can become operational.
Finally, DOD plans to roll out the NSPS labor relations system and
establish the National Security Labor Relations Board before the
initial roll out of the NSPS performance management system in early
fiscal year 2006. The board must be staffed with both board members as
well as about 100 professional staff, which will support the board.
A large-scale organizational change initiative, such as DOD's new
personnel management system, is a substantial commitment that will take
years before it is completed, and therefore must be carefully and
closely managed. As a result, it is essential to establish and track
implementation goals and establish a timeline to pinpoint performance
shortfalls and gaps and suggest midcourse corrections. While it is
appropriate to develop and integrate personnel management systems
within the department in a quick and seamless manner, moving too
quickly or prematurely can significantly raise the risk of doing it
wrong. Having an ambitious timeline is reasonable only insofar as it
does not impact the quality of the human capital management system that
is created. In recent hearings on the NSPS proposed regulations, we
testified that DOD's new personnel management system will have far-
reaching implications for the management of the department and for
civil service reform across the federal government.[Footnote 23] We
further testified that NSPS could, if designed and implemented
properly, serve as a model for governmentwide transformation. However,
if not properly designed and implemented, NSPS could impede progress
toward a more performance-and results-based system for the federal
government as a whole.
Communication Strategy Not Comprehensive:
DOD developed and implemented a written communication strategy document
that provides a structured and planned approach to communicate timely
and consistent information about NSPS, but this strategy is not
comprehensive. It does not contain some elements that we have
identified as important to successful communication during
transformations. As a result, the written communication strategy
document may not facilitate two-way communication between employees,
employee representatives, and management, which is central to forming
effective partnerships that are vital to the success of any
organization.
Specifically, the strategy does not identify all key internal
stakeholders and their concerns. For example, the strategy acknowledges
that employee representatives play an important role in the design and
implementation of NSPS, but it does not identify them as a key
stakeholder. Instead, DOD's written communication strategy document
characterizes union leadership as a "detractor," in part due to their
criticism of NSPS. Consequently, DOD identified the following four
objectives as its most urgent communications priorities, which are to
(1) demonstrate the rationale for and the benefits of NSPS, (2) express
DOD's commitment to ensuring that NSPS is applied fairly and equitably
throughout the organization, (3) demonstrate openness and transparency
in the design and process of converting to NSPS, and (4) mitigate and
counter any potential criticism of NSPS from such detractors as unions
and their support groups. Experience shows that failure to adequately
consider a wide variety of people and cultural issues can lead to
unsuccessful transformations.
Furthermore, although the written communication strategy document
identified key messages for those internal and external stakeholders
that are identified, it does not tailor these messages to specific
stakeholder groups. For example, the strategy does not tailor key
messages to such groups of employees as human resource personnel, DOD
executives and flag officers, supervisors, and managers, even though
these employees may have divergent interests and information needs.
Tailoring information helps employees to feel that their concerns are
specifically addressed. We have reported that organizations undergoing
a transformation should develop a comprehensive communications strategy
that reaches out to employees, customers, and stakeholders and seeks to
genuinely engage them in the transformation process and facilitate a
two-way honest exchange with and allow for feedback from employees,
customers, and stakeholders.[Footnote 24]
NSPS Design Process has Involved Employees:
While the design process has involved employees through many
mechanisms, including focus groups, town hall meetings, a NSPS Web site
for employee comments, and meetings with employee representatives, it
has not included employee representatives on the working groups that
drafted the design options.[Footnote 25] The composition of the team is
important because it helps employees see that they are being
represented and that their views are being considered in the decision-
making process. A successful transformation must provide for meaningful
involvement by employees and their representatives to, among other
things, gain their input into and understanding of the changes that are
occurring in the organization. Employee involvement strengthens the
transformation process by including frontline perspectives and
experiences. Further, employee involvement helps increase employee's
understanding and acceptance of organizational goals and objectives,
and gain ownership for new policies and procedures. Involving employees
in planning helps to develop agency goals and objectives that
incorporate insights about operations from a front-line perspective. It
can also serve to increase employees' understanding and acceptance of
organizational goals and improve motivation and morale.
The PEO sponsored a number of focus group sessions and town hall
meetings at various sites across DOD and around the world to provide
employees and managers an opportunity to participate in the development
of NSPS. During a 3-week period beginning in July 2004, over 100 focus
groups were held throughout DOD, including overseas locations. The
purpose of the focus groups was to elicit perceptions and concerns
about current personnel policies and practices as well as new ideas
from the DOD workforce to inform the NSPS design process. Separate
focus groups were held for employees, civilian and military
supervisors, and managers and practitioners from the personnel, legal,
and equal employment opportunity communities. According to DOD
officials, bargaining unit employees and employee representatives were
invited to participate. DOD officials stated that over 10,000 comments,
ideas, and suggestions were received during the focus group sessions
and were summarized and provided to NSPS working groups for use in
developing options for the labor relations, appeals, adverse actions,
and personnel design elements of NSPS.
In addition, town hall meetings were held and, according to DOD, are
still being conducted at DOD facilities around the world. According to
DOD officials, these town hall meetings have provided an opportunity to
communicate with the workforce, provide the status of the design and
development of NSPS, and solicit thoughts and ideas. The format for
town hall meetings included an introductory presentation by a senior
leader followed by a question and answer session where any employee in
the audience was free to ask a question or make a comment. To
facilitate the widest possible dissemination, some of the town hall
meetings were broadcast live, as well as videotaped and rebroadcast on
military television channels and Web sites.
DOD's NSPS Web site was available for DOD employees as well as
interested parties to view and comment on the proposed regulations as
well as for the most recent information and announcements regarding
NSPS. After the proposed NSPS regulations were published in the Federal
Register, there was a 30-day public comment period, providing all
interested parties the opportunity to submit comments and
recommendations on the content of the proposal. The proposed
regulations were published on February 14, 2005, and the 30-day comment
period ended on March 16, 2005. During this time period, according to
DOD, it received more than 58,000 comments.
Prior to the publication of the proposed NSPS regulations, DOD and OPM
conducted 10 joint meetings with officials of DOD's 43 labor unions to
discuss NSPS design elements. According to DOD officials, these
meetings involved as many as 80 union leaders at any one time,
addressed a variety of topics, including (1) the reasons change is
needed and the department's interests; (2) the results of
departmentwide focus group sessions held with a broad cross-section of
DOD employees; (3) the proposed NSPS implementation schedule; (4)
employee communications; and (5) proposed design options in the areas
of labor relations and collective bargaining, adverse actions and
appeals, and pay and performance management. According to DOD
officials, these meetings provided the opportunity to discuss the
design elements, proposals under consideration for NSPS, and solicit
employee representative feedback.
According to DOD, the focus group sessions and town hall meetings, as
well as the working groups and union meetings, assured that DOD
employees, managers, supervisors, employee representatives, and other
stakeholders were involved in and given ample opportunity to provide
input into the design and implementation of NSPS.
Opportunities for employee involvement were limited between the
conclusion of the town hall meetings and focus groups in July 2004 and
the publishing of the proposed NSPS regulations in February 2005; the
primary means for employees to provide feedback during this time was
through the NSPS Web site.
DOD Faces Multiple Challenges in Implementing NSPS:
As DOD implements its new personnel management system, it will face
multiple implementation challenges in both the early and later stages
of implementation. At recent hearings on the proposed NSPS regulations,
we highlighted multiple challenges: (1) establishing an overall
communications strategy, (2) providing adequate resources for the new
system, (3) involving employees and other stakeholders in implementing
the system, (4) ensuring sustained and committed leadership, and (5)
evaluating the new personnel management system after it has been
implemented.[Footnote 26]
Early Implementation Challenges:
* Establishing an overall communications strategy. A significant
challenge for DOD is to ensure an effective and ongoing two-way
communications strategy, given its size, geographically and culturally
diverse audiences, and different command structures across DOD
organizations. We have reported that a communications strategy that
creates shared expectations about, and reports related progress on, the
implementation of the new system is a key practice of a change
management initiative. The communications strategy must include the
active and visible involvement of a number of key players, including
the Secretary of Defense, and a variety of communication means and
mediums for successful implementation of the system. DOD acknowledges
that a comprehensive outreach and communications strategy is essential
for designing and implementing its new personnel management system, but
the proposed regulations do not identify a process for continuing
involvement of employees in the planning, development, and
implementation of NSPS.
* Providing adequate resources for implementing the new system.
Experience has shown that additional resources are necessary to ensure
sufficient planning, implementation, training, and evaluation for human
capital reform. According to DOD, the implementation of NSPS will
result in costs for, among other things, developing and delivering
training, modifying automated personnel information systems, and
starting up and sustaining the National Security Labor Relations Board.
Major cost drivers in implementing pay-for-performance systems are the
direct costs associated with salaries and training. DOD estimates that
the overall cost associated with implementing NSPS will be
approximately $158 million through fiscal year 2008. However, it has
not completed an implementation plan for NSPS, including an information
technology plan and a training plan; thus, the full extent of the
resources needed to implement NSPS may not be well understood at this
time.
* Involving employees and other stakeholders in implementing the
system. DOD faces a significant challenge in involvingæand continuing
to involveæits employees, employee representatives, and other
stakeholders in implementing NSPS. DOD's proposed NSPS regulations,
while providing for continuing collaboration with employee
representatives, do not identify a process for the continuing
involvement of employees and other stakeholders in the planning,
development, and implementation of NSPS. The active involvement of all
stakeholders will be critical to the success of NSPS. The involvement
of employees and their representatives both directly and indirectly is
crucial to the success of new initiatives, including implementing a pay-
for-performance system. High-performing organizations have found that
actively involving employees and stakeholders, such as unions or other
employee associations, when developing results-oriented performance
management systems helps improve employees' confidence and belief in
the fairness of the system and increases their understanding and
ownership of organizational goals and objectives. This involvement must
be early, active, and continuing if employees are to gain a sense of
understanding and ownership of the changes that are being made.
Later Implementation Challenges:
* Ensuring sustained and committed leadership. As DOD implements this
massive human capital reform, its challenge will be to elevate,
integrate, and institutionalize leadership responsibility for NSPS to
ensure its success. DOD may face a future leadership challenge when the
NSPS Senior Executive and the PEO transition out of existence once NSPS
is fully implemented. According to a PEO official, at that time,
ongoing implementation responsibility for NSPS would come under the
Civilian Personnel Management Service, which is part of the Office of
the Under Secretary of Defense for Personnel and Readiness. In recent
testimony on the transformation of DOD business operations, we stated
that as DOD embarks on large-scale business transformation efforts,
such as NSPS, the complexity and long-term nature of these efforts
requires the development of an executive position capable of providing
strong and sustained change management leadership across the
department--and over a number of years and various
administrations.[Footnote 27] One way to ensure such leadership would
be to create by legislation a full-time executive-level II position for
a chief management official, who would serve as the Deputy Secretary of
Defense for Management. This position would elevate, integrate, and
institutionalize the high-level attention essential for ensuring that a
strategic business transformation plan--as well as the business
policies, procedures, systems, and processes that are necessary for
successfully implementing and sustaining overall business
transformation efforts, like NSPS, within DOD--are implemented and
sustained. In previous testimony on DOD's business transformation
efforts, we identified the lack of clear and sustained leadership for
overall business transformations as one of the underlying causes that
has impeded prior DOD reform efforts.[Footnote 28]
* Evaluating the new personnel management system. Evaluating the impact
of NSPS will be an ongoing challenge for DOD. This is especially
important because NSPS would give managers more authority and
responsibility for managing the new personnel system. High-performing
organizations continually review and revise their human capital
management systems based on data-driven lessons learned and changing
needs in the work environment. Collecting and analyzing data will be
the fundamental building block for measuring the effectiveness of these
approaches in support of the mission and goals of the department.
* According to DOD, the department is planning to establish procedures
to evaluate the implementation of its new personnel management system.
During testimony on the proposed NSPS regulations, we stated that DOD
should consider conducting evaluations that are broadly modeled on
demonstration projects. Under the demonstration project authority,
agencies must evaluate and periodically report on results,
implementation of the demonstration project, costs and benefits,
impacts on veterans and other equal employment opportunity groups,
adherence to merit system principles, and the extent to which the
lessons learned from the project can be applied governmentwide. We
further testified that a set of balanced measures addressing a range of
results, and customer, employee, and external partner issues may also
prove beneficial. An evaluation such as this would facilitate
congressional oversight; allow for any midcourse corrections; assist
DOD in benchmarking its progress with other efforts; and provide for
documenting best practices and lessons learned with employees,
stakeholders, other federal agencies, and the public.
Conclusions:
DOD's efforts to design and implement a new personnel management system
represent a huge undertaking. However, if not properly designed and
implemented, the new system could severely impede DOD's progress toward
a more performance-and results-based system that it is striving to
achieve. Although DOD's process to design its new personnel management
system represents a phased, deliberative process, it does not fully
reflect some key practices of successful transformations. Because DOD
has not fully addressed all of these practices, it does not have a
comprehensive written communication strategy document that effectively
addresses employee concerns and their information needs, and
facilitates two-way communication between employees, employee
representatives, and management. Without a comprehensive written
communication strategy document, DOD may be hampered in achieving
employee buy-in, which could lead to an unsuccessful implementation of
the system.
In addition, evaluating the impact of NSPS will be an ongoing challenge
for DOD. Although DOD has plans to establish procedures to evaluate
NSPS, it is critical that these procedures be adequate to fully measure
the effectiveness of the program. Specifically, adequately designed
evaluation procedures include results-oriented performance measures and
reporting requirements that facilitate DOD's ability to effectively
evaluate and report on NSPS's results. Without procedures that include
outcome measures and reporting requirements, DOD will lack the
visibility and oversight needed to benchmark progress, make system
improvements, and provide the Congress with the assessments needed to
determine whether NSPS is truly the model for governmentwide
transformation in human capital management.
Recommendations for Executive Action:
To improve the comprehensiveness of the NSPS communication strategy, we
recommend that the Secretary of Defense direct the NSPS Senior
Executive and NSPS Program Executive Office to take the following two
actions:
* Identify all internal stakeholders and their concerns.
* Tailor and customize key messages to be delivered to groups of
employees to meet their divergent interests and information needs.
To evaluate the impact of DOD's new personnel management system, we
recommend that the Secretary of Defense direct the NSPS Senior
Executive and NSPS Program Executive Office to take the following
action:
* Develop procedures for evaluating NSPS that contain results-oriented
performance measures and reporting requirements. These evaluation
procedures could be broadly modeled on the evaluation requirements of
the OPM demonstration projects.
Agency Comments and Our Evaluation:
DOD provided written comments on a draft of this report. The department
did not concur with our recommendation to identify all key internal
stakeholders and their concerns. The department partially concurred
with our recommendation to tailor and customize key messages to be
delivered to groups of employees to meet their divergent interests and
information needs. Also, the department partially concurred with our
recommendation to develop procedures for evaluating NSPS that contain
results-oriented performance measures and reporting requirements.
DOD did not concur with our recommendation that the department identify
all key internal stakeholders and their concerns. The department stated
that, among other things, it adopted a broad-based, event-driven
approach to the design and implementation of NSPS that included a
multifaceted communications outreach strategy to inform and involve key
stakeholders, and that it took great care to ensure that materials and
messages addressed stakeholders' concerns, both known and anticipated.
However, our review of DOD's written communication strategy document
showed that not all key internal stakeholders and their concerns were
identified. For example, the written communication strategy document
does not identify employee representatives as a key stakeholder but,
instead, characterizes union leadership as "NSPS' biggest detractor."
Since the development and implementation of the written communication
strategy document, DOD notes that specific plans were developed to
identify key internal and external stakeholders and provided key
messages and communications products to inform those groups. DOD
provided us with these plans after we provided the department with our
draft report for comment. Our review of these plans shows that they are
not comprehensive. For example, the plans for the most part do not
identify employee representatives as a key stakeholder or identify
their concerns. Consequently, we continue to believe that our
recommendation has merit and should be implemented.
DOD partially concurred with our recommendation that the department
tailor and customize key messages to be delivered to groups of
employees to meet their divergent interest and information needs. The
department stated that it believes that it has been successful so far
in developing, customizing, and delivering key messages to employees
and provided us with several examples to illustrate its efforts.
Although DOD's written communication strategy document contained key
messages for some employee groups, the messages were general in content
and not tailored to specific employee groups. DOD acknowledges that
each stakeholder group has a unique focus and recently released NSPS
brochures tailored to such groups of employees as human resource
personnel, senior leaders, supervisors and managers, and employees. DOD
provided us with these brochures after we provided the department with
our draft report for comment. Our review of these brochures shows that
they do in fact tailor and customize key messages for some, but not
all, employee groups. Furthermore, we believe that DOD's written
communication strategy document should serve as the single,
comprehensive source of DOD's key messages, which are tailored to and
customized for groups of employees. Consequently, we continue to
believe that this recommendation has merit and should be implemented.
DOD partially concurred with our recommendation to develop procedures
for evaluating NSPS that contain results-oriented performance measures
and reporting requirements that could be broadly modeled on the
evaluation requirements of the OPM demonstration projects. The
department stated that it has begun developing an evaluation plan and
will ensure that the plan contains results-oriented performance
measures and reporting mechanisms. If the department follows through
with this effort, we believe that it will be responsive to our
recommendation.
DOD's comments are reprinted in appendix III. DOD also provided
technical comments, which we have incorporated in the final report
where appropriate.
We are sending copies of this report to the Chairman and Ranking
Member, Senate Committee on Armed Services; the Chairman and Ranking
Member, Senate Committee on Homeland Security and Governmental Affairs;
the Chairman and Ranking Member, Subcommittee on Oversight of
Government Management, the Federal Workforce, and the District of
Columbia, Senate Committee on Homeland Security and Governmental
Affairs; the Chairman and Ranking Member, House Committee on Armed
Services; the Chairman and Ranking Member, Subcommittee on the Federal
Workforce and Agency Organization, House Committee on Government
Reform; and other interested congressional parties. We also are sending
copies to the Secretary of Defense and Director of the Office of
Personnel Management. We will make copies available to other interested
parties upon request. This report also will be made available at no
charge on GAO's Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-5559 or by e-mail at [Hyperlink,
stewartd@gao.gov]. For further information on governmentwide human
capital issues, please contact Eileen R. Larence, Director, Strategic
Issues, at (202) 512-6512 or [Hyperlink, larencee@gao.gov]. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of the report. GAO staff who made major
contributions to this report are listed in appendix IV.
Signed by:
Derek B. Stewart, Director:
Defense Capabilities and Management:
List of Congressional Committees:
The Honorable John W. Warner:
Chairman:
The Honorable Carl Levin:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Susan M. Collins:
Chairman:
The Honorable Joseph I. Lieberman:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable George V. Voinovich:
Chairman:
The Honorable Daniel K. Akaka:
Ranking Member:
Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Duncan Hunter:
Chairman:
The Honorable Ike Skelton:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Jon C. Porter:
Chairman:
The Honorable Danny K. Davis:
Ranking Member:
Subcommittee on the Federal Workforce and Agency Organization:
Committee on Government Reform:
House of Representatives:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
In conducting our review of the Department of Defense's (DOD) National
Security Personnel System (NSPS), we met with officials in key offices
within DOD and the Office of Personnel Management (OPM) that have
responsibility for designing and implementing DOD's new performance
management system. We also met with DOD employee representatives, whose
members are affected by the transformation. We conducted our work in
Washington, D.C., at DOD, including the NSPS Program Executive Office
(PEO) and NSPS Program Management Offices in the Army, the Navy, the
Marine Corps, the Air Force, and Washington Headquarters Service. We
also met with members of the NSPS Overarching Integrated Product Team
(OIPT) and Senior Advisory Group.
At OPM, we met with the Senior Advisor to the Director for the
Department of Defense and Senior Policy Advisor and Chief Human Capital
Officer in the Office of the Director. We also met with key officials
in OPM's Office of Congressional Relations, Division for Strategic
Human Resources Policy, Homeland Security and Intelligence Group in the
Division for Human Capital Leadership and Merit System Accountability,
and the Office of the Chief Financial Officer. In addition, we met with
the OPM co-chairs of each of the DOD working groups that designed NSPS.
We met with representatives from the United Defense Workers Coalition,
which represents 36 DOD employee unions, as well as employee
representatives for the Fraternal Order of Police and National
Association of Independent Labor, which are not members of the
Coalition. We contacted the other non-Coalition unions, but their
representatives told us that they had not been actively involved in the
NSPS design process and, therefore, declined our offer to meet with
them. Finally, we met in Washington, D.C., with key officials in other
federal agencies that are statutorily involved in the NSPS design
process: Federal Labor Relations Authority, Federal Mediation and
Conciliation Service, and U.S. Merit Systems Protection Board.
To describe DOD's design process, we examined the authorizing
legislation and other applicable laws and regulations and collected and
analyzed documentary and testimonial information from key sources. We
met with the Director and Deputy Director of the NSPS PEO and the DOD
and OPM co-chairs of all six working groups; members of the OIPT,
including the OPM co-chair, and Senior Advisory Group; DOD employee
representatives; and experts in federal labor relations and federal
adverse actions and personnel appeals systems. We also examined NSPS
policy guidance, directives, draft regulations, instructions, manuals,
and memorandums related to the design process and NSPS charters
outlining the roles and responsibilities of the OIPT and PEO.
To evaluate the extent to which DOD's process reflects elements of
successful transformations, we reviewed prior GAO reports, testimonies,
and forums on mergers and organizational transformations to identify
assessment criteria, and we applied those criteria to the descriptive
information collected for the first objective. Although there are a
total of nine key practices of successful transformations, our
evaluation focused on six key practices: (1) ensure top leadership
drives the transformation, (2) focus on a key set of principles and
priorities at the outset of the transformation, (3) set implementation
goals and a timeline to build momentum and show progress from day one,
(4) dedicate an implementation team to manage the transformation
process, (5) establish a communication strategy to create shared
expectations and report related progress, and (6) involve employees to
obtain their ideas and gain their ownership for the transformation.
We did not evaluate the key practice "establishes a coherent mission
and integrated strategic goals to guide the transformation" because we
have previously reported on the department's strategic planning efforts
for civilian personnel and assessed whether DOD and selected defense
components' goals and objectives contained in strategic plans for
civilian personnel were aligned with overarching missions of the
organizations. We did not apply two other key practices, "uses a
performance management system to define responsibility and assure
accountability for change" and "builds a world-class organization"
because it would be premature to apply them to the NSPS design process
given that DOD has considerable work ahead to design and implement NSPS
and assess the overall system.
To identify the most significant challenges DOD faced in developing
NSPS, we interviewed officials from DOD, OPM, and other federal
agencies as well as representatives from DOD unions. We also examined
related documentation, previously identified, and reviewed prior GAO
reports, testimonies, and observations related to these challenges.
Data on DOD labor unions and the number of employees associated with
each union were compiled by DOD from three sources: (1) the OPM book,
entitled Union Recognition in the Federal Government, (2) data from the
Defense Civilian Personnel Data System, and (3) a DOD survey of the
military departments and defense agencies. The data are current as of
June 2005. To assess the reliability of these data, we interviewed the
DOD official responsible for compiling the data and performed some
basic reasonableness checks of the data against other sources of
information (e.g., previous DOD reports that identified DOD labor
unions in past years and information directly from unions). However, we
were unable to determine the reliability of the precise numbers of
employees represented by each union. Because of this, and since some of
the data are not current, these data are only sufficiently reliable for
use as estimates rather than precise numbers of union employees. We use
these data in appendix II to identify current DOD labor unions, an
estimate of the number of employees represented by each union, and
which unions belong to the United Defense Workers Coalition.
We conducted our review from October 2004 through June 2005 in
accordance with generally accepted government auditing standards. We
include a comprehensive list of related GAO products on DOD's civilian
personnel management at the end of this report.
[End of section]
Appendix II: DOD Labor Unions, Estimated Number of Employees
Represented, and Membership in the United Defense Workers Coalition:
Table 1 lists current DOD labor unions, the estimated number of
employees represented by each union, and which unions belong to the
United Defense Workers Coalition.
Table 1: DOD Labor Unions, Estimated Number of Employees Represented,
and Membership in the United Defense Workers Coalition (as of June
2005).
Members of the United Defense Workers Coalition:
DOD labor unions[A]:
1. American Federation of Government Employees (AFGE);
Estimated number of employees represented: 260,521.
2. American Federation of Teachers (AFT);
Estimated number of employees represented: 734.
3. American Federation of State, County and Municipal Employees
(AFSCME)[ B];
Estimated number of employees represented: 367.
4. American Nurses Association (ANA);
Estimated number of employees represented: 18.
5. Antilles Consolidated Education Association (ACEA);
Estimated number of employees represented: 463.
6. Association of Civilian Technicians (ACT);
Estimated number of employees represented: 22,173.
7. Communications Workers of America (CWA)[C];
Estimated number of employees represented: 104.
8. Fairchild Federal Employees Union (FFEU);
Estimated number of employees represented: 646.
9. Federal Education Association, Inc. (FEA);
Estimated number of employees represented: 7,240.
10. Hawaii Council of Defense Commissary Unions (HCDCU);
Estimated number of employees represented: 454.
11. International Association of Firefighters (IAFF);
Estimated number of employees represented: 39.
12. International Association of Machinists and Aerospace Workers
(IAMAW);
Estimated number of employees represented: 16,875.
13. International Association of Tool Craftsman (IATC);
Estimated number of employees represented: 17.
14. International Brotherhood of Boilermakers (IBB)[D];
Estimated number of employees represented: Information not available.
15. International Brotherhood of Electrical Workers (IBEW);
Estimated number of employees represented: 3,066.
16. International Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America (IBT);
Estimated number of employees represented: 2,960.
17 International Federation of Professional and Technical Engineers
(IFPTE);
Estimated number of employees represented: 13,131.
18. International Guard Union of America (IGUA);
Estimated number of employees represented: 34.
19. International Organization of Masters, Mates and Pilots (IOMMP);
Estimated number of employees represented: 433.
20. International Union of Operating Engineers (IUOE);
Estimated number of employees represented: 99.
21. International Union of Painters and Allied Trades (BPAT);
Estimated number of employees represented: 33.
22. Laborers International Union of North America (LIUNA);
Estimated number of employees represented: 7,381.
23. Marine Engineers Beneficial Association (MEBA);
Estimated number of employees represented: 611.
24. Metal Trades Department/Council (MTD/MTC);
Estimated number of employees represented: 18,260.
25. National Air Traffic Controllers Association (NATCA);
Estimated number of employees represented: 36.
26. National Association of Aeronautical Examiners (NAAE);
Estimated number of employees represented: 242.
27. National Association of Government Employees (NAGE);
Estimated number of employees represented: 22,614.
28. National Association of Government Inspectors (NAGI);
Estimated number of employees represented: 161.
29. National Federation of Federal Employees (NFFE);
Estimated number of employees represented: 8,449.
30. Professional Airways Systems Specialists (PASS);
Estimated number of employees represented: 43.
31. Retail, Wholesale and Department Store Union (RWDSU);
Estimated number of employees represented: 857.
32. Seafarers International Union of North America (SIUNA);
Estimated number of employees represented: 3,675.
33. Service Employees International Union (SEIU);
Estimated number of employees represented: 3,875.
34. Sport Air Traffic Controllers (SPORT);
Estimated number of employees represented: 16.
35. United Association of Plumbing and Pipe Fitting Industry of the
United States and Canada (UA);
Estimated number of employees represented: 83.
36. United Power Trades Organization (UPTO);
Estimated number of employees represented: 490.
Non-Coalition members:
37. Fraternal Order of Police (FOP);
Estimated number of employees represented: 449.
38. Graphic Communications International Union (GCIU);
Estimated number of employees represented: 232.
39. Hotel Employees and Restaurant Employees International Union
(HERE);
Estimated number of employees represented: 781.
40. International Chemical Worker's Union (ICWU);
Estimated number of employees represented: 20.
41. National Association of Independent Labor (NAIL);
Estimated number of employees represented: 2,500.
42. National Conference of Firemen and Oilers (SEIU) (Formerly
International Brotherhood of Firemen and Oilers (IBFO);
Estimated number of employees represented: 47.
43. United Food Commercial Workers Union (UFCW);
Estimated number of employees represented: 24,376.
Total;
Estimated number of employees represented: 424,605.
Source: DOD.
[A] Data on DOD labor unions and the number of employees associated
with each union was compiled by DOD from the Office of Personnel
Management (OPM) book entitled Union Recognition in the Federal
Government, data from the Defense Civilian Personnel Data System, and a
DOD survey of the military departments and defense agencies. The data
are current as of June 2005 and the numbers of employees should be
considered as estimates rather than precise numbers.
[B] The American Federation of State, County, and Municipal Employees
union represents two DOD unions. The Federation of Physicians &
Dentists/Alliance of Health Care & Professional Employees represents
269 employees, while the United Nurses Association of California (UNAC)
and Balboa RN Association (BNA) represent 98 employees.
[C] This includes the United Telegraph Workers Union (UTWU), which
merged with the Communications Workers of America in 1987.
[D] The International Brotherhood of Boilermakers (IBB) is affiliated
with the Metal Trades Department. IBB representatives attended the
meetings between the United Defense Workers Coalition and
representatives from DOD and OPM.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
DEPARTMENT OF DEFENSE:
PROGRAM EXECUTIVE OFFICE:
NATIONAL SECURITY PERSONNEL SYSTEM:
1400 KEY BOULEVARD:
ARLINGTON, VA 22209-5144:
June 29, 2005:
Mr. Derek Stewart:
Director, Defense Capabilities & Management:
U.S. Government Accountability Office:
441 G Street, N.W.:
Washington, DC 20548:
Dear Mr. Stewart,
This is the Department of Defense (DoD) response to the Government
Accountability Office (GAO) draft report, "Human Capital: DoD's
National Security Personnel System Faces Implementation Challenges,"
dated June 8, 2005 (GAO Code 350575/GAO-05-730). On behalf of the
Department, I want to thank you for the opportunity to review and
comment on the draft report.
Generally, we believe that the report accurately portrays our design
process for the National Security Personnel System (NSPS), and we
appreciate the thorough and professional job performed by you and your
team. We appreciate your recognition of the importance and significance
of the improvements in human capital management that NSPS will achieve,
as well as the challenges we face in implementing this system. We have
noted some technical issues in the report that we would like to clarify
or correct, and we are also providing responses to your specific
recommendations. The enclosure contains those comments and responses.
Again, thank you for the opportunity to comment and respond, and we
appreciate the hard work that went into researching and drafting this
report. The Department and the Program Executive Office benefited from
the experience. If you have any questions regarding this response,
please do not hesitate to contact me.
Sincerely,
Signed by:
Brad Bunn:
Deputy Program Executive Officer:
Enclosure:
ENCLOSURE:
GAO DRAFT REPORT - DATED June 8, 2005 GAO CODE 350575/GAO-05-730:
"HUMAN CAPITAL: DoD's National Security Personnel System Faces
Implementation Challenges"
DOD RESPONSES TO RECOMMENDATIONS:
RECOMMENDATION 1: The draft GAO report (page 35) recommends that the
Secretary of Defense direct the NSPS Senior Executive and NSPS Program
Executive Office to identify all internal stakeholders and their
concerns.
DOD RESPONSE: Nonconcur. The Program Executive Office and the Component
Program Management Offices recognize the importance of reaching out to
and engaging all stakeholders, both internal and external. Following
the strategic engagement and under the leadership of Secretary England
as the Senior Executive for NSPS, we adopted a broad based, event-
driven approach to the design and implementation of NSPS. This included
a multi-faceted communications outreach strategy to inform and involve
key stakeholders. The internal stakeholders are:
* Employees;
* Employee representatives (unions):
* Senior leaders;
* Civilian managers and supervisors:
* Military leaders;
* Practitioners (human resources, EEO, legal, financial).
In developing communications products and opportunities, we took great
care to ensure that the materials and messages addressed their
concerns, both known and anticipated. In addition, the DoD Components
identified their key internal stakeholders at a more refined level and
targeted messages and products to them. This was in line with the
overall communications strategy, under which the Program Executive
Office developed high level products and messages, and the Components
tailored those products for their specific environments.
The communications plan drafted in spring of 2004 (provided to GAO
during its research) presented a broad, overarching strategy. Since
then, specific plans were developed for major milestone events,
including: (1) Announcement of Spiral One organizations in December
2004; (2) "Rollout" of the proposed NSPS regulations in February 2005;
and (3) the "Way Ahead" for NSPS, announcing schedule adjustments and
next steps in the design and implementation process in June 2005. In
each of these plans, we identified key internal and external
stakeholders and provided key messages and communications products to
inform those groups.
In light of this information, we respectfully recommend that the draft
report be revised to reflect these facts.
RECOMMENDATION 2: The draft GAO report (page 35) recommends that the
Secretary of Defense direct the NSPS Senior Executive and NSPS Program
Executive Office to tailor and customize key messages to be delivered
to groups of employees to meet their divergent interest and information
needs.
DOD RESPONSE: Partially concur. We agree with the change management
principle that you can never communicate enough when attempting to
implement a major transformation initiative. The diversity of the
Department's organization and workforce coupled with the significance
of change that NSPS brings makes that principle particularly important
to the NSPS communications strategy. For that reason, we concur that we
can expand our efforts in this area, and have been planning to do so as
the NSPS design matures and we begin to enter the implementation phase
of this program. We have found that our key internal stakeholders,
particularly employees, are anxious to learn more of the details of
NSPS, and we have been unable to satisfy that desire because many of
those details were not yet developed. As that changes, we will be able
to more effectively tailor key messages and communications products to
meet their needs.
Nevertheless, we believe we have been successful so far in developing,
customizing, and delivering key messages to employees. The Program
Executive Office works collaboratively with the DOD Components to
develop strategies, methods, and products that incorporate overall,
consistent messages and information, while providing for customization
and supplementation by Components. There are a variety of examples to
illustrate these efforts.
* Focus Groups: Over 100 focus groups were conducted to engage internal
stakeholders in the early design process. Over a thousand employees
participated in these focus groups, including employees (bargaining
unit and non-bargaining unit), supervisors, managers, and human
resources practitioners. These focus groups provided us the opportunity
to talk directly to employees about NSPS, as well as provide a
mechanism to gather employee input on key design issues.
Town Hall Meetings: Over 50 town hall meetings have been held and
continue to be held worldwide and are directed at employees and other
internal stakeholders. These have been particularly effective because
employees hear about NSPS from senior leaders within their chain of
command, demonstrating leadership commitment to the process.
NSPS website: The NSPS website is available to both internal and
external stakeholders. The website is a primary communications tool
that is regularly updated with current NSPS information. The "Contact
Us" feature on the website allows visitors to submit questions
concerning NSPS, which are answered by the NSPS Communications Team.
Approximately 100 questions are received each week, and each question
is answered in a timely manner. We have found that the vast majority of
these inquiries come from DOD employees, and we use these questions to
continually update the Frequently Asked Questions (FAQ) portion of the
website.
* Spiral 1.1 Conference: In January 2005, the PEO NSPS sponsored the
NSPS Spiral 1.1 Conference, held at MacDill AFB, Tampa, Florida. The
conference was targeted for senior leaders, supervisors and managers,
human resource practitioners, and labor attorneys. Over 500 attendees
participated in the conference, which included guest speakers, panels
of officials with experience in alternative personnel systems, and
breakout sessions. We tailored the information and messages to these
stakeholders, who represent the first group of organizations that will
take advantage of the NSPS human resources flexibilities.
* Video: In May 2005, the NSPS released a 17 minute video entitled
"NSPS: Towards a Mission-Centered Workforce." The video highlights the
NSPS design process through the development of the proposed
regulations. It also includes commentary from numerous participants in
ongoing personnel demonstration projects within DOD, and is targeted
primarily for interested employees, but will also be effective for
other stakeholders.
* "Preparing for NSPS" Brochures: In May 2005, the PEO NSPS released
four brochures to help employees, supervisors, senior leaders, and
human resource practitioners prepare for the transition to NSPS. While
everyone needs general information, each group has a unique:
focus so the brochures were designed for a specific stakeholder.
In addition to these PEO sponsored products, the Components actively
engage in communications outreach to their employees, with a variety of
tools, for example:
* Component NSPS websites that contain Component-specific information
on NSPS;
* Regular NSPS newsletters that are widely distributed to employees
that give updates on NSPS status and information;
* Standing senior leadership meetings with major command level
organizations to advise the chain of command on NSPS matters;
* Command-sponsored informational briefings for employees, so they
learn about NSPS from their direct chain of command;
* Designation of command NSPS "change agents" (Department of the Navy)
responsible for preparing for NSPS at the command level;
* Integration of NSPS speakers and content into Component-sponsored
conferences and events.
These examples illustrate the overarching communications strategy of
developing core and consistent products, information, and messages, and
using the chain of command and existing organizational infrastructures
to cascade information to employees and other internal stakeholders. We
respectfully recommend the draft report be modified to reflect these
successful efforts.
RECOMMENDATION 3: The draft GAO report (page 35) recommends that the
Secretary of Defense direct the NSPS Senior Executive and NSPS Program
Executive Office to develop procedures for evaluating NSPS that contain
results-oriented performance measures and reporting requirements. These
evaluation procedures could be broadly modeled on the evaluation
requirements of the OPM demonstration projects.
DOD RESPONSE: Partially concur. The NSPS Senior Executive chartered the
Program Executive Office (PEO) to establish a program evaluation
process for NSPS, and the PEO has initiated that process as part of
implementation activities. The initial draft plan and key measures
provided to GAO in January 2005 have been revised by an intra-
Departmental working group and are being reviewed by senior officials.
The draft plan cannot be finalized until the NSPS design is complete.
The plan, measures, and initial evaluation activities will be adjusted
to reflect the final NSPS regulations and implementing issuances. The
Department has drawn upon our experience with demonstration projects
and Office of Personnel Management evaluation methods and metrics; as a
result, much of our approach is modeled on the evaluation requirements
of the previous demonstration projects, as suggested by the draft GAO
report recommendation. In addition, we have partnered with OPM
throughout our design process, and have included OPM representatives in
initial planning efforts for evaluating NSPS. We also expect to
continue working with OPM in NSPS evaluation efforts, in conjunction
with ongoing evaluation and accountability programs. The DOD plan
addresses a variety of sources and analytic methods for in-progress and
summary evaluative reports, and we are in the process of gathering
baseline data. This comprehensive evaluation effort, consisting of
formative and summation studies, has been developed jointly between DOD
Components and the Program Executive Office to assess whether NSPS
satisfies the requirements set out in the NSPS Guiding Principles, Key
Performance Parameters, and the governing statute. To that end, we will
ensure that our final evaluation plan contains results-oriented
performance measures, as well as robust reporting mechanisms.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Derek B. Stewart, (202) 512-5559:
Acknowledgments:
In addition to the contact named above, Sandra F. Bell, Renee S. Brown,
Rebecca L. Galek, Barbara L. Joyce, Julia C. Matta, Mark A. Pross,
William J. Rigazio, John S. Townes, and Susan K. Woodward made key
contributions to this report.
[End of section]
Related GAO Products:
Questions for the Record Related to the Department of Defense's
National Security Personnel System.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-771R]
Washington, D.C.: June 14, 2005.
Questions for the Record Regarding the Department of Defense's National
Security Personnel System.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-770R]
Washington, D.C.: May 31, 2005.
Post-hearing Questions Related to the Department of Defense's National
Security Personnel System.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-641R]
Washington, D.C.: April 29, 2005.
Defense Management: Key Elements Needed to Successfully Transform DOD
Business Operations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-629T]
Washington, D.C.: April 28, 2005.
Human Capital: Preliminary Observations on Proposed Regulations for
DOD's National Security Personnel System.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-559T]
Washington, D.C.: April 14, 2005.
Human Capital: Preliminary Observations on Proposed Department of
Defense National Security Personnel System Regulations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-517T]
Washington, D.C.: April 12, 2005.
Human Capital: Preliminary Observations on Proposed DOD National
Security Personnel System Regulations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-432T]
Washington, D.C.: March 15, 2005.
Department of Defense: Further Actions Are Needed to Effectively
Address Business Management Problems and Overcome Key Business
Transformation Challenges.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-140T]
Washington, D.C.: November 18, 2004.
DOD Civilian Personnel: Comprehensive Strategic Workforce Plans Needed.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-753]
Washington, D.C.: June 30, 2004.
Results-Oriented Cultures: Implementation Steps to Assist Mergers and
Organizational Transformations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-669]
Washington, D.C.: July 2, 2003.
Human Capital: Building on DOD's Reform Efforts to Foster
Governmentwide Improvements.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-851T]
Washington, D.C.: June 4, 2003.
Human Capital: DOD's Civilian Personnel Strategic Management and the
Proposed National Security Personnel System.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-493T]
Washington, D.C.: May 12, 2003.
Defense Transformation: DOD's Proposed Civilian Personnel System and
Governmentwide Human Capital Reform.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-741T]
Washington, D.C.: May 1, 2003.
Defense Transformation: Preliminary Observations on DOD's Proposed
Civilian Personnel Reforms.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-717T]
Washington, D.C.: April 29, 2003.
DOD Personnel: DOD Actions Needed to Strengthen Civilian Human Capital
Strategic Planning and Integration with Military Personnel and Sourcing
Decisions.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-475]
Washington, D.C.: March 28, 2003.
(350575):
FOOTNOTES
[1] Pub. L. No. 108-136, § 1101 (Nov. 24, 2003).
[2] See GAO, Highlights of a GAO Forum: Mergers and Transformation:
Lessons Learned for a Department of Homeland Security and Other Federal
Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002) and Results-
Oriented Cultures: Implementation Steps to Assist Mergers and
Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2,
2003).
[3] GAO, DOD Personnel: DOD Actions Needed to Strengthen Civilian Human
Capital Strategic Planning and Integration with Military Personnel and
Sourcing Decisions, GAO-03-475 (Washington, D.C.: Mar. 28, 2003).
[4] GAO, DOD Civilian Personnel: Comprehensive Strategic Workforce
Plans Needed, GAO-04-753 (Washington, D.C.: June 30, 2004).
[5] See GAO, Defense Transformation: Preliminary Observations on DOD's
Proposed Civilian Personnel Reforms, GAO-03-717T (Washington, D.C.:
Apr. 29, 2003); Defense Transformation: DOD's Proposed Civilian
Personnel System and Governmentwide Human Capital Reform, GAO-03-741T
(Washington, D.C.: May 1, 2003); and Human Capital: Building on DOD's
Reform Effort to Foster Governmentwide Improvements, GAO-03-851T
(Washington, D.C.: June 4, 2003).
[6] GAO, Department of Defense: Further Actions Are Needed to
Effectively Address Business Management Problems and Overcome Key
Business Transformation Challenges, GAO-05-140T (Washington, D.C.: Nov.
18, 2004).
[7] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).
[8] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.:
January 2005), pp. 41-42.
[9] For example, the Congress has taken the following four steps to
improve the federal government's human capital management systems: (1)
created Chief Human Capital Officer positions in 24 federal agencies
and a Council to advise and assist agency leaders in their human
capital efforts; (2) provided several agenciesæmost notably the
Departments of Homeland Security and Defenseæwith authorities to design
and manage their human capital systems; (3) provided agencies across
the executive branch with additional human capital flexibilities, such
as specific hiring authorities; and (4) in conjunction with the
administration, reformed the performance management and compensation
systems for senior executives to better link the institutional, unit,
and individual performance and reward systems.
[10] Pub. L. No. 108-136, § 1101 (Nov. 24, 2003) and relevant
provisions of Title 5, U.S. Code.
[11] GAO-03-475.
[12] Pub. L. No. 108-136, § 1101 (Nov. 24, 2003).
[13] The Congress did not exempt DOD from provisions of Title 5, U.S.
Code, pertaining to veterans' preference, merit systems principles,
prohibited personnel practices, and equal employment opportunity.
[14] The United Defense Workers Coalition currently represents 36 of
the 43 DOD labor unions. The Coalition was formed in February 2004 to
more effectively represent the interests of its members during NSPS
design meetings with DOD officials. The remaining unions, for various
reasons, decided to remain independent of the Coalition.
[15] GAO-03-293SP and GAO-03-669.
[16] The acquisition management model is contained in DOD Directive
5000.1 and DOD Instruction 5000.2, Operation of the Defense Acquisition
System (May 12, 2003).
[17] The PEO is the policy and program management office responsible
for conducting the design, planning development, implementation, and
assessment of NSPS.
[18] Component program managers are dual-hatted under their parent
components and the NSPS PEO.
[19] GAO-03-669.
[20] See GAO Managing for Results: Federal Managers' Views Show Need
for Ensuring Top Leadership Skills, GAO-01-127 (Washington, D.C.: Oct.
20, 2000); Management Reform: Using the Results Act and Quality
Management to Improve Federal Performance, GAO/T-GGD-99-151
(Washington, D.C.: July 29, 1999); and Management Reform: Elements of
Successful Improvement Initiatives, GAO/T-GGD-00-26 (Washington, D.C.:
Oct. 15, 1999).
[21] GAO-03-669.
[22] GAO-03-669.
[23] GAO, Human Capital: Preliminary Observations on Proposed
Regulations for DOD's National Security Personnel System, GAO-05-559T
(Washington, D.C.: Apr. 14, 2005); Human Capital: Preliminary
Observations on Proposed Department of Defense National Security
Personnel System Regulations, GAO-05-517T (Washington, D.C.: Apr. 12,
2005); and Human Capital: Preliminary Observations on Proposed DOD
National Security Personnel System Regulations, GAO-05-432T
(Washington, D.C.: Mar. 15, 2005).
[24] GAO-03-669.
[25] It should be noted that 10 federal labor unions have filed suit
alleging that DOD failed to abide by the statutory requirements to
include employee representatives in the development of DOD's new labor
relations system authorized as part of NSPS. See American Federation of
Government Employees, AFL-CIO et al v. Rumsfeld et al, No. 1:05cv00367
(D.D.C. filed Feb. 23, 2005).
[26] GAO-05-432T, GAO-05-517T, and GAO-05-559T.
[27] GAO, Defense Management: Key Elements Needed to Successfully
Transform DOD Business Operations, GAO-05-629T (Washington, D.C.: Apr.
28, 2005).
[28] GAO-05-140T.
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