Federal Downsizing

Although buyouts of up to $25,000 helped federal agencies shrink the federal workforce by almost 230,500 employees (10.5 percent) between January 1993 and March 1996, some agencies report that the downsizing has stretched them too thin, causing work backlogs, a loss of institutional memory, and skill imbalances. Such consequences could have been avoided had agencies done adequate strategic and workforce planning, which would have increased the likelihood that employees with needed skills and training were retained. In general, agency officials viewed the buyouts as an effective downsizing tool, allowing them to reach their downsizing goals with minimal use of reductions-in-force. The buyouts also permitted agencies to downsize without disproportionately affecting the representation of women and minorities. The largest share of the buyouts was paid to employees who took regular or early retirements. GAO's analysis of separation trends suggests that some employees may have delayed their departures in order to receive buyouts.

GAO found that: (1) between January 1993 and March 1996, non-postal executive civilian employment decreased by 230,500 employees; (2) employee buyouts have minimized the use of reductions in force (RIF); (3) agencies have not met NPR restructuring goals, since the percentage of management positions has not significantly changed; (4) agencies often set lower downsizing goals for management positions, since they do not specifically target buyouts to these positions; (5) agencies that plan their buyouts have more successful outcomes; (6) buyouts have allowed agencies to increase the representation of minorities and women in the workforce, who likely would have been adversely affected by RIF; (7) 72 percent of buyouts have gone to employees taking regular or early retirement, and some employees may have delayed their separation so they could receive buyouts; (8) most agencies believe buyouts have been an effective downsizing tool, but downsizing has caused operational problems such as the loss of corporate memory and expertise, increased workloads and backlogs, skill imbalances, and more overtime; (9) some agencies believe that downsizing has hindered their ability to carry out their missions; (10) agencies have used reengineered work processes and automation to offset personnel reductions, but a few agencies are using contract employees, some of whom are buyout recipients; (11) outsourcing work may offset some downsizing benefits and be inconsistent with the act's purpose; and (12) agencies could have mitigated some of the adverse impacts of downsizing through better strategic and workforce planning.

Recommendations

Our 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.

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