Managing for Results
Building on the Momentum for Strategic Human Capital Reform Gao ID: GAO-02-528T March 18, 2002This testimony discusses the federal government's human capital challenges. The basic problem has been a longstanding lack of a consistent strategic approach to marshalling, managing, and maintaining the government's human capital needs. To overcome this problem, GAO has developed a model of strategic human capital management that highlights the importance of a sustained commitment by agency leaders to maximize the value of their workforce. The Office of Personnel Management and the Office of Management and Budget have developed tools to assess human capital management efforts that are conceptually consistent with GAO's model. GAO's model emphasizes two central principles. First, people are assets whose value can be enhanced through investment. As with any investment, the goal is to maximize value while managing risk. Second, an organization's human capital approaches should be designed, implemented, and assessed by how well they help pursue its mission and achieve desired results. GAO has also identified a preliminary list of key practices that will enable agencies to acquire, develop, and retain talent. Successful organizational change depends on a willingness by agency leaders to embrace strategic human capital management and related change management approaches.
GAO-02-528T, Managing for Results: Building on the Momentum for Strategic Human Capital Reform
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United States General Accounting Office:
GAO:
Testimony:
Before the Subcommittee on International Security, Proliferation and
Federal Service Committee on Governmental Affairs, U.S. Senate.
For Release on Delivery:
Expected at 9:30 a.m., EST:
Monday March 18, 2002:
Managing For Results:
Building on the Momentum for Strategic Human Capital Reform:
Statement of David M. Walker:
Comptroller General of the United States:
GAO-02-528T:
Chairman Akaka, Ranking Member Cochran, and Members of the
Subcommittee:
I am pleased to be here today to discuss the progress and next steps
that the federal government needs to take in order to manage its most
important asset”its people, or human capital. My central point today is
that an organization‘s people define its culture, drive its
performance, and embody its knowledge base. As such, effective human
capital approaches must be at the center of efforts to transform the
culture of federal agencies so that they become less hierarchical,
process-oriented, stovepiped, and inwardly focused; and more flat,
results-oriented, integrated, and externally focused. The legislation
you are considering today, both in its basic underlying principles and
in some of its major provisions, would make a positive contribution to
advancing this needed cultural transformation.
The tragic events of September 11 and the continuing efforts at homeland
preparedness dramatically demonstrate what many of us have long
appreciated” public servants at all levels of government play an
essential role in keeping us safe, secure, and free. The response to
September 11 and other recent events also have underscored the urgency
of dealing with federal human capital issues. As you know, Mr.
Chairman, we testified last week before this subcommittee on one aspect
of the human capital implications of September 11”the challenges
agencies face in meeting their needs for staff with foreign language
skills.[Footnote 1] More generally, the Federal Bureau of Investigation
and other federal law enforcement agencies have been forced to rethink
their missions and programs including critical staff needs, skills
mixes, and the geographic distribution of staff. In addition, the newly
formed Transportation Security Administration must deal with a host of
enormous challenges associated with starting a new agency virtually
from scratch, most dramatically shown by the need to hire over 40,000
employees, including about 30,000 screeners that must be deployed by
November 19, 2002.
From an entirely different but also time-sensitive perspective, the
collapse of Enron has highlighted attention to the fact that U.S.
securities markets have grown tremendously in recent years and become
more complex and volatile. As a result, for example, the Security and
Exchange Commission‘s workload has increased in volume and complexity
over the last decade, while its ability to hire and retain skilled
staff has not kept pace.[Footnote 2]
While recent events certainly underscore the need to address the federal
government‘s human capital challenges, the basic problem has been the
longstanding lack of a consistent strategic approach to marshaling,
managing, and maintaining the human capital needed to maximize
government performance and assure its accountability. Serious human
capital shortfalls are eroding the capacity of many agencies, and
threatening the ability of others, to economically, efficiently, and
effectively perform their missions.[Footnote 3] The federal
government‘s human capital weaknesses did not emerge overnight and will
not be quickly or easily addressed. Committed, sustained, and inspired
leadership and persistent attention on the behalf of all interested
parties will be essential if lasting changes are to be made and the
challenges we face successfully addressed.
On the other hand, as a very positive development, we are seeing
increased attention to strategic human capital management and a real and
increasing momentum for change is now evident.
* In January 2001, GAO designated strategic human capital management as
a governmentwide high-risk area.
* In August 2001, President Bush placed human capital at the top of his
management agenda.
* Subsequently, the Office of Management and Budget (OMB) assessed
agencies‘ progress in addressing their individual human capital
challenges as part of its management scorecard in preparation of the
fiscal year 2003 budget.
* As one of its many efforts to help agencies with these issues, the
Office of Personnel Management (OPM) released a human capital balanced
scorecard last December to assist agencies in responding to the OMB
scorecard.
* Finally, Congress, under the leadership of this subcommittee and the
Senate Governmental Affairs Committee, has underscored the consequences
of human capital weaknesses in federal agencies and pinpointed
solutions through oversight and the wide range of hearings held over
the last few years.
As requested by the subcommittee, my statement today will explore how
strategic human capital management can contribute to transforming the
cultures of federal agencies. First, I will highlight the major
components of a new model of strategic human capital management that we
released last week as an exposure draft to assist agencies in making
that transformation. In developing this model, we benefited from the
insights and suggestions of Director James and her staff at OPM, OMB,
and many others both inside and outside of the federal government.
Second, I will discuss some key practices that agencies need to have in
place to effectively use human capital authorities. Both OPM‘s recent
efforts and the legislation under consideration today expand the
flexibilities, authorities, and responsibilities of federal agencies
for the strategic management of their human capital. Third and finally,
I will highlight what I believe to be some of the more promising
provisions of what we understand are the emerging managers‘ amendments
to S. 1603, The Federal Human Capital Act of 2001 (Federal Human
Capital Act).
GAO‘s Model of Strategic Human Capital Management:
Our model of strategic human capital management[Footnote 4] is designed
to help agency leaders effectively lead and manage their people and
integrate human capital considerations into daily decision-making and
the program results they seek to achieve. In so doing, the model
highlights the importance of a sustained commitment by agency leaders
to maximize the value of their agencies‘ human capital and to manage
related risks. Accordingly, it raises the bar for all of us”those in
positions of leadership, federal managers, employees, unions, and human
capital executives and their teams.
In publishing this model, we are aware that GAO is not the only agency
releasing tools for strategic human capital management. As I noted
before, OPM and OMB have developed tools that are being used to assess
human capital management efforts. While GAO‘s human capital model was
developed independently of OPM and OMB, we provided drafts of the
model for their review prior to publication to help ensure that the
three efforts are conceptually consistent. We hope that the perspective
and information provided in our model will help inform agencies‘
efforts to respond to the administration‘s management initiatives, such
as getting to ’green“ on OMB‘s management scorecard, and using the
tools developed by OPM. Over the coming months, we will work with OPM,
OMB, Congress, and others to explore opportunities to develop a more
fully integrated set of guidance and tools for agencies for addressing
their human capital challenges.
Consistent with OPM‘s and OMB‘s views, our model of strategic human
capital management embodies an approach that is fact-based, focused on
strategic results, and incorporates merit principles and other national
goals. As such, the model reflects two principles central to the human
capital idea:
* People are assets whose value can be enhanced through investment. As
with any investment, the goal is to maximize value while managing risk.
* An organization‘s human capital approaches should be designed,
implemented, and assessed by the standard of how well they help the
organization pursue its mission and achieve desired results or outcomes.
The model highlights the kinds of thinking that agencies should apply,
as well as some of the steps they can take, to make progress in managing
human capital strategically. The heart of the model consists of eight
critical success factors, which are organized in pairs to correspond
with four cornerstones of effective strategic human capital management.
Figure 1: Critical Success Factors Organized By Human Capital
Cornerstones:
[Refer to PDF for image]
This figure is an illustration of critical success factors organized by
human capital cornerstones, as follows:
Human Capital Cornerstone: Leadership;
Critical Success Factors:
1) Commitment to Human Capital Management;
2) Role of the Human Capital Function.
Human Capital Cornerstone: Strategic Human Capital Planning;
Critical Success Factors:
3) Integration and Alignment;
4) Data-driven Human Capital Decisions.
Human Capital Cornerstone: Acquiring, Developing, and Retaining Talent;
Critical Success Factors:
5) Targeted Investments in People;
6) Human Capital Approaches Tailored to Meet Organizational Needs.
Human Capital Cornerstone: Results-Oriented Organizational Cultures;
Critical Success Factors:
7) Empowerment and Inclusiveness;
8) Unit and Individual Performance Linked to organizational Goals.
[End of figure]
Leadership:
A critical element of any successful organizational cultural
transformation is the demonstrated commitment of top leaders to change.
[Footnote 5] Specifically, agency leaders, political and career alike,
must embrace strategic human capital management and related change
management approaches. Agency leaders need to see people as vital
assets to organizational success and must invest in this valuable
asset. Agencies can foster this thinking and commitment in their future
leaders through efforts such as succession planning and executive
development. In addition, agencies need to hold managers accountable
for effectively managing people and actively supporting these concepts.
Commissioner Rossotti‘s efforts at the Internal Revenue Service (IRS)
provide one clear example of leadership‘s commitment to change. The
Commissioner has articulated a new mission for the agency, together
with a set of strategic goals that balance customer service and
compliance with tax laws. The Commissioner is personally leading the
effort to realign organizational units, programs, and resources to
achieve the new mission and goals. The Commissioner‘s recent
announcement that he plans to leave IRS in November underscores the
importance of political and career leadership working together to
develop, implement, and sustain transformational change initiatives.
These changes are critical but often take years and span periods far
beyond the tenure of a single political appointee.
Federal leaders must also integrate the human capital function into
agencies‘ core planning and business activities. Human capital
professionals must partner with agency leaders, line managers, and
unions in developing strategic and program plans. In short, top human
capital professionals in agencies across the government must move from
the ’back room to the boardroom.“ Leaders must devote the resources
necessary to retool employees in human capital offices so that they are
prepared and empowered to provide a range of technical and consultative
services. As part of this transition, continuing efforts are needed to
streamline and automate personnel transactions to free up resources so
that the human capital office can devote more time to providing
consultative services to line managers as they seek to integrate human
capital into their management activities.
Strategic Human Capital Planning:
Agencies must establish a clear set of organizational intents,
including a clearly defined mission, core values, goals and objectives,
and strategies, and then integrate their human capital approaches to
support their strategic and programmatic goals. Agencies need to
constantly reevaluate their human capital approaches as program
priorities and strategies change. Agency strategic human capital
planning must be results-oriented and data-driven, including, for
example, information on the appropriate number and location of
employees and their key competencies and skills. Strategic workforce
planning documents should include data on the agency‘s workforce
profile, performance goals and measures for human capital approaches,
and areas requiring agency attention. The Air Force Materiel Command,
for example, has collected important human capital data and used it to
develop human capital strategies to ensure the organization has the
appropriate mix of civilian, military, and contract employees to meet
future business needs.
Acquiring, Developing, and Retaining Talent:
Agencies must identify their current and future human capital needs and
then create strategies for filling the gaps. An important part of these
strategies is targeted investments to provide resources for the
planning, implementation, and evaluation of human capital initiatives.
Agencies that focus on strategic human capital management realize that
as the value of their people increases so does the performance capacity
of the organization. This investment is valuable for both employers and
employees alike. Our ongoing work at the State Department provides an
example of how targeted human capital investments can pay off for an
agency. To enhance its information technology (IT) workforce, State
provides incentives and retention allowances to IT personnel who obtain
job-related degrees and certifications. This program has helped State
increase its information technology skills base and aided in the
recruitment and retention of IT professionals.
Agencies focusing on strategic human capital management develop a
tailored approach to use the personnel authorities that are appropriate
for their particular organization and its needs. Under current laws,
rules, and regulations, agencies have the flexibility to offer
competitive incentives to attract employees with critical skills; to
create the kinds of performance incentives and training programs that
motivate and empower employees; and to build constructive labor-
management relationships that are based on common interests and are in
the public interest. Agencies should develop a sound business case for
using these flexibilities by focusing on how a given flexibility will
address human capital challenges and ultimately improve agency results.
Results-Oriented Organizational Cultures:
Effective human capital strategies require a collaborative environment
where a diverse set of managers, teams, and employees are empowered to
accomplish programmatic goals. A key ingredient to developing a results-
oriented culture is for agencies to involve employees in decision-making
either directly or through employee unions and organizations, as
appropriate. Involving employees in the planning process helps to
develop agency goals and objectives that incorporate insights about
operations from a front-line perspective. Involving employees can also
serve to increase employees‘ understanding and acceptance of
organizational goals and objectives and improve motivation, morale, and
retention.[Footnote 6] Agencies also must promote and achieve a diverse
workplace that meets the needs of workers of all backgrounds. Not only
do effective agencies maintain a ’zero tolerance“ for discrimination;
they also realize that an inclusive workforce is a competitive
advantage.
Another success factor of a results-oriented culture is a performance
management system that creates a ’line of sight“ showing how individual
employees can contribute to overall organizational goals. Agencies who
effectively implement such a system must first align agency leaders‘
performance expectations with organizational goals and then cascade
performance expectations to other organizational levels. These employees
are then held accountable for their contributions to desired results.
The performance management systems of leading organizations typically
seek to achieve three key objectives. First, they strive to provide
candid and constructive information to individual employees to enable
those employees to maximize their contributions to the organization‘s
goals and achieve their personal potential. Second, they seek to provide
management with the objective and fact-based information it needs to
reward top performers. Third, the performance management systems
provide the necessary information and documentation to deal with poor
performers.
Leading organizations also use their performance management systems as
a key tool for managing the organization on a day-to-day basis,
facilitating communication throughout the year so that discussions
about individual and organizational performance are ongoing. For
example, the Veterans Health Administration holds key leaders
accountable for results by establishing performance agreements that
consist of ’core competencies,“ agencywide goals, and specific
performance goals that gauge the organization‘s progress toward meeting
the agency mission.[Footnote 7] These performance agreements are used
continuously throughout the year as a basis for monitoring
organizational progress, identifying performance gaps, and making
needed program adjustments.
Finally, agencies should also balance their pay and incentive programs
to encourage both individual and team contributions to achieving
results. Congress and the Administration have repeatedly expressed a
commitment to more fully link resources to results. The American people
expect and deserve this linkage as well. However, we will never achieve
this linkage without modern and effective performance management
strategies. In my view, much greater emphasis needs to be placed on
performance management and its linkage to compensation.
Key Practices Needed to Effectively Use Human Capital Authorities:
I would now like to turn to a more detailed discussion regarding the
third cornerstone of our model”the tailored use of human capital
flexibilities for acquiring, developing, and retaining talent. For
years, the civil service system as a whole has been viewed by many as
burdensome to managers, unappealing to ambitious recruits, hidebound
and outdated, overregulated, and inflexible. While comprehensive civil
service reform may likely be necessary in the coming years, agencies do
not have to wait for legislative reform to occur to make needed
improvements in human capital management. As I have testified
previously, agencies need to make concerted efforts in identifying and
maximizing the flexibilities already available under existing personnel
laws, rules, and regulations.
The Federal Human Capital Act that we are discussing today would
expand the authorities available to agencies to strategically manage
their workforces. A study that we are conducting for this subcommittee
and others is looking at agencies‘ use of the flexibilities currently
available and therefore is informative to the current discussion. As
part of this study, we interviewed major department and agency human
resource directors and on the basis of those discussions and our
related work, we identified a preliminary list of key practices
agencies need to undertake in order to make effective use of personnel
authorities:
* Plan strategically and make targeted investments. Agencies need to
ensure that the use of flexibilities is part of an overall human capital
strategy clearly linked to the program goals of the organization.
Agencies also need a sound business case for how they will use and fund
the authorities.
* Ensure stakeholder input in developing policies and procedures. Agency
leaders, managers, employees, and employee unions must work together
to effectively implement any flexibility or new personnel authority in
order to reach agreement on the need for change, the direction and
scope that change will take, and how progress will be assessed.
* Educate managers and employees on the availability and use of
authorities. Human capital offices need to ensure that they have an
effective campaign not only to inform managers of their personnel
authorities, but also to explain the situations where the use of those
authorities is appropriate. Agencies also need to inform employees about
relevant policies and procedures and about the employees‘ rights related
to the use of these authorities.
* Streamline the administrative processes. Agencies should streamline
administrative processes for using flexibilities and review self-imposed
constraints that may be excessively process-oriented. Human resource
directors said that managers often complain that complicated forms and
multiple approval levels hamper the use of flexibilities. In the
absence of a simple process, busy supervisors and managers may not make
the effort to seek the approval to use a flexibility. Reengineering
self-imposed processes could yield substantial opportunities for the
additional use of flexibilities. To the extent that agencies identify
regulatory or statutory barriers to flexible human capital approaches,
they should work with OPM and OMB to seek the necessary regulatory or
statutory changes.
* Build accountability into the system. To ensure accountability,
agencies should delegate authority to use flexibilities to appropriate
levels within the agency. Agencies must develop clear and transparent
guidelines for using flexibilities. Agencies must then hold managers
and supervisors accountable for their fair and effective use.
* Change the organizational culture. While accountability is essential,
agencies need to address managers‘ and supervisors‘ concerns that
employees will view the use of some flexibilities, such as recruiting
incentives or rewarding high performers, as unfair, and the belief that
all employees must be treated essentially the same regardless of
performance and agency needs. Managers should be encouraged to
selectively use flexibilities based on clearly defined, well
documented, and transparent guidelines.
While we will continue our work in this area, our preliminary view is
that agencies need to employ these practices to effectively take
advantage of the new authorities that are proposed in the legislation
under consideration today. Working with the subcommittee and agencies,
we are doing additional work to validate the list of practices and to
identify specific examples of where an agency has successfully
developed and employed each listed practice. Our hope is that this work
will be helpful to agencies as they seek to maximize the use of
personnel authorities”both those available under current law and
regulation, and those additional authorities that may be granted in the
future.
Proposed Legislation Makes Positive Steps to Addressing Human Capital
Challenges:
Key provisions of the Federal Human Capital Act represent an important
next step to helping agencies address their human capital management
challenges. I appreciate the opportunity that the subcommittee provided
to my staff and me to offer input as the legislation was being initially
crafted. Many of the provisions contained in the bill are consistent
with authorities GAO already has or has been urging for other federal
agencies. Key provisions would make a positive contribution to each of
the human capital management cornerstones I discussed earlier:
leadership; strategic human capital planning; acquiring, developing,
and retaining talent; and results-oriented organizational cultures.
Since we provided detailed comments in earlier discussions with the
subcommittee on the proposed bill as it was being crafted, this morning
I will just comment on those provisions that I believe are particularly
valuable in fostering the needed cultural transformation within
agencies.
Leadership – The Federal Human Capital Act contains several provisions
to strengthen leadership over human capital. We believe that federal
agencies need to have a senior official responsible for the
organization‘s strategic human capital management. The broad range of
responsibilities for the chief human capital officer listed in the
legislation are generally consistent with those that I have placed with
GAO‘s chief human capital officer. GAO‘s chief human capital officer,
as a key member of our executive team, provides human capital services
to all headquarters and field staff in support of GAO‘s strategic
direction and key efforts. While designating a chief human capital
officer is a very positive step, it should not in any way be seen as
reducing the responsibilities that the agency‘s highest leadership has
for human capital issues. In knowledge-based organizations, including
most federal agencies, where people are the organization‘s most
important asset, attention to the organization‘s human capital is one
of the primary responsibilities of the head of that organization.
Creating a chief human capital officer council, modeled on the chief
financial officer and the chief information officer councils, also is
a very good idea in my view. We have reported in the past that the use
of councils to develop and implement initiatives to address federal
management issues and to serve as ’communities of interest“ to, among
other things, share best practices, was one of the major positive public
management developments over the past decade.[Footnote 8]
As a next step, the subcommittee may wish to consider creating statutory
chief operating officers (COO) within major executive branch agencies.
While various models for structuring such a position could be used, the
basic idea is to create a position that would be responsible for major,
long-term management, cultural transformation, and stewardship
responsibilities within the agency. These long-term responsibilities are
professional and nonpartisan in nature. They cover a range of ’good
government“ responsibilities that are fundamental to effectively
executing any administration‘s program agenda. The nature and scope of
the cultural transformation that needs to take place in many agencies
across the federal government will take years to accomplish”easily
outrunning the tenures of most political appointees. For example, the
business transformation efforts that are underway at the Department of
Defense may take a decade or more to be fully and effectively
implemented. Secretary Rumsfeld and his leadership team are clearly
committed to making the necessary changes. A COO at Defense and
elsewhere, subject to a clearly-defined, results-oriented performance
contract, could provide the continuity that spans the tenure of the
political leadership and help ensure that long-term stewardship issues
are addressed and change management initiatives are successfully
completed. In this sense, these statutory COOs would differ from”but
hopefully complement”the role often assumed by the deputy secretaries
in the agencies. We would be pleased to work with the subcommittee
should you wish to explore this idea.
Human Capital Planning – The legislation also addresses key strategic
human capital planning issues. It underscores the need for agencies to
clearly and directly link their human capital planning efforts with
their strategic and program plans developed under the Government
Performance and Results Act. Moreover, I believe that the early
retirement and buy-out authorities are important provisions. The
changes make appropriate recognition of the need to consider employee
skills and abilities”in addition to longevity”when making such
decisions as a part of overall workforce planning. As our own
experience in GAO has shown, such authorities can and should be used to
help ’get agencies in shape“ to respond to current and emerging needs
rather than as a blunt instrument for downsizing. Over time, Congress
may wish to consider adding employee performance as a factor that can
be considered in making rightsizing decisions, consistent with the
authorities that were provided to GAO. However, before performance
could be included as a factor, agencies would need to ensure that they
have modern effective and validated performance management systems in
place that are able to support such decisions.
Attracting, Developing, and Retaining Talent ” Several provisions
strengthen agencies‘ abilities to attract, develop, and retain talent.
The increased flexibility in the amount and timing of the payments for
recruiting, relocation, and retention bonuses is particularly
noteworthy. Agency human resource directors told us that these
flexibilities were among the most effective. The provisions that
authorize agencies to pay for academic training for employees should
have a positive influence in addressing recruitment and retention
challenges as well as helping to build the knowledge and skills of the
organizations‘ people.
I have often noted that much of what needs to be done in regard to
federal human capital management can be done now under agencies‘
existing authorities. Thus, while we should continue to seek
appropriate regulatory and statutory changes that would help streamline
the federal hiring process, the agencies need not and should not wait.
For example, they need to make sure that they have the recruitment
programs in place to compete effectively for needed talent. This
includes having well defined and creative recruiting strategies and
appropriate processes in place to communicate with applicants and
prospective employees in a timely manner.
I agree with the legislation‘s efforts to instill a more strategic
approach to federal employee training efforts. Agencies‘ training and
development programs should be based on the skills and competencies
agencies need and be directly linked to program goals and desired
results. Agreeing on expected results and associated performance
measures at the outset for training and development efforts can also
help ensure that credible evaluation results will be available to
provide feedback on performance. A systematic evaluation of training
and development efforts can help show how such efforts contribute to
individual and organizational performance and suggest opportunities for
further improvement.
Results-Oriented Culture – As you know, I believe that a much greater
emphasis should be placed on skills, knowledge, and performance in
connection with federal employment and compensation decisions at all
levels, rather than the passage of time and rate of inflation, as so
often is the case today. In fact, over 80 percent of the cost
associated with the annual increases in federal salaries is due to
longevity and the annual pay adjustment. In recent years, widespread
concern has been expressed about the methodology and results of the
procedures to determine the federal pay gap. These concerns are among
the reasons that the pay gap has never been fully addressed. I believe
that careful study is needed to develop more realistic and workable
methodologies and solutions to federal pay issues. Part of that
assessment should focus on options for moving away from a compensation
system that contains governmentwide pay increases with locality
adjustments, and toward a system that is based to a greater degree on
knowledge, skills, abilities, and performance of the individuals
involved. Additional information on the performance management programs
in use in various departments and agencies and the relative strengths
and weaknesses of those programs, along with best practice information,
would also prove very helpful as agencies seek to link pay to
individual knowledge, skills, abilities, and performance. Congress may
wish to consider amending the legislation to require that these studies
be undertaken; specifically, (1) a professional, objective, and
independent assessment of the pay gap and (2) a survey and assessment of
performance management systems and programs across the government
with a view toward identifying lessons learned and best practices in
linking pay to employees‘ knowledge, skills, abilities, and
performance.
I fully appreciate that much work may be needed before agencies‘
respective performance management systems are able to support a more
direct link between pay and individual knowledge, skills, abilities, and
performance. OPM certainly has a continuing and vital role to play on
these issues. I understand that OPM is working on a white paper that
should help inform the needed discussions. I expect that the greater
use of ’broad banding“ is one of the options under consideration. In
fact, as it considers the legislation, Congress may also wish to
explore the benefits of (1) providing OPM with additional flexibility
that would enable it to grant a governmentwide authority for agencies
(that is, class exemptions) to use broad banding for certain critical
occupations and/or (2) allowing agencies to apply to OPM (that is, case
exemptions) for broad banding authority for their specific critical
occupations. However, agencies should be required to demonstrate to
OPM‘s satisfaction that they have modern, effective, and validated
performance management systems before they are allowed to use broad
banding.
The Federal Human Capital Act recognizes the importance of a results-
oriented culture by focusing attention on poor performers, whose affect
on agencies‘ performance and morale can far exceed their numbers. Still,
while important, dealing with poor performers is only part of the
problem; agencies need to create additional incentives and rewards for
valuable and high-performing employees, who represent the vast majority
of the federal workforce. As I have just noted, to achieve this
objective, more fundamental change will need to be considered.
In summary, Mr. Chairman, I believe that there is no more important
management reform than strategic human capital management. We all need
to seize the momentum that has recently emerged”agencies must use
existing authorities to strategically manage their people; Congress, as
it is doing with the proposed legislation, needs to consider statutory
changes in the short term; and all interested parties need to consider
more transformational changes for the longer term. Our model of
strategic human capital management and our related work are designed to
assist Congress and agencies in this regard. I look forward to
continuing to work with Congress, OPM, OMB, the agencies, and others as
we jointly seek to address the human capital challenges that are
undermining agencies‘ effectiveness now and as they prepare for the
future.
Thank you again for your continuing attention to human capital reform.
The leadership shown by this subcommittee, by holding this and related
hearings and in its oversight generally, has both helped to create and
increase the needed momentum for change and highlight the need for, and
direction of, possible solutions. I would be pleased to respond to any
questions you or other Members of the subcommittee may have.
Contact and Acknowledgments:
For further information regarding this testimony, please contact J.
Christopher Mihm, Director, Strategic Issues, on (202) 512-6806 or at
mihmj@gao.gov. Individuals making key contributions to this testimony
included Ridge Bowman, Scott Derrick, Ellen Rubin, Shelby D. Stephan,
Edward Stephenson, and Jamie Whitcomb.
[End of section]
Footnotes:
[1] U.S. General Accounting Office, Foreign Languages: Workforce
Planning Could Help Address Staffing and Proficiency Shortfalls,
[hyperlink, http://www.gao.gov/products/GAO-02-514T] (Washington, D.C.:
Mar. 12, 2002).
[2] U.S. General Accounting Office, SEC Operations: Increased Workload
Creates Challenges, [hyperlink, http://www.gao.gov/products/GAO-02-302]
(Washington, D.C.: Mar. 5, 2002).
[3] U.S. General Accounting Office, Performance and Accountability
Series”Major Management Challenges and Program Risks: A Governmentwide
Perspective, [hyperlink, http://www.gao.gov/products/GAO-01-241]
(Washington, D.C.: Jan. 2001). In addition, see the accompanying 21
reports (numbered GAO-01-242 through GAO-01-262) on specific agencies.
[4] U.S. General Accounting Office, A Model of Strategic Human Capital
Management, Exposure Draft, [hyperlink,
http://www.gao.gov/products/GAO-02-373SP] (Washington, D.C: Mar. 2002).
The model and other General Accounting Office products discussed in
this statement are available at [hyperlink, http://www.gao.gov].
[5] U.S. General Accounting Office, Management Reform: Elements of
Successful Improvement Initiatives, [hyperlink,
http://www.gao.gov/products/GAO/T-GGD-00-26] (Washington, D.C.: Oct.
15, 1999).
[6] U.S. General Accounting Office, Human Capital: Practices that
Empowered and Involved Employees, [hyperlink,
http://www.gao.gov/products/GAO-01-1070] (Washington, D.C.: Sept. 14,
2001).
[7] U.S. General Accounting Office, Managing for Results: Emerging
Benefits From Selected Agencies‘ Use of Performance Agreements,
[hyperlink, http://www.gao.gov/products/GAO-01-115] (Washington, D.C.:
Oct. 30, 2000).
[8] U.S. General Accounting Office, Government Management: Observations
on OMB‘s Management Leadership Efforts, [hyperlink,
http://www.gao.gov/products/GAO/T-GGD/AIMD-99-65] (Washington, D.C.:
Feb. 4, 1999).
[End of section]
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