Human Capital
OPM Can Better Assist Agencies in Using Personnel Flexibilities Gao ID: GAO-03-428 May 9, 2003Congressional requesters asked GAO to provide information on actions that the Office of Personnel Management (OPM) has taken to facilitate the effective use of human capital flexibilities throughout the federal government and what additional actions OPM might take in this regard. These flexibilities represent the policies and practices that an agency has the authority to implement in managing its workforce.
OPM Has Taken Several Actions to Assist Agencies: OPM has an important leadership role in identifying, developing, applying, and overseeing human capital flexibilities across the federal government. OPM has taken several actions to assist federal agencies in effectively using the human capital flexibilities that are currently available to agencies. For example, OPM has issued a handbook for agencies that identifies the various flexibilities available to help manage their human capital. Also, OPM has initiated some efforts to assist agencies in identifying additional flexibilities that might be helpful to agencies in managing their workforces. Human Resources Directors Gave Mixed Views on OPM's Role: To yield indications of the progress that OPM has made in its important role related to assisting agencies in the use of human capital flexibilities, GAO surveyed the human resources directors of the federal government's 24 largest departments and agencies in fall of 2001 and again in the fall of 2002. There was little change in the directors' level of satisfaction with OPM's role in assisting agencies in using available flexibilities, which remained mixed. For example, one director said OPM had effectively facilitated the use of work-life flexibilities, but others thought that OPM had placed its own restrictive interpretation on the use of other personnel flexibilities. The level of satisfaction with OPM's role in identifying additional flexibilities was greater in 2002 than in 2001, but still remained below the satisfaction level for assistance with existing flexibilities. Several directors said that OPM had not worked diligently enough in supporting authorization of governmentwide use of new flexibilities that have been sufficiently tested and deemed successful. Additional OPM Actions Could Further Facilitate Use of Flexibilities: Although OPM has recently taken numerous actions, OPM could more fully meet its leadership role to assist agencies in identifying, developing, and applying human capital flexibilities across the federal government. In its ongoing internal review of its existing regulations and guidance, OPM could more directly focus on determining the continued relevance and utility of its regulations and guidance by asking whether they provide the flexibility that agencies need in managing their workforces while also incorporating protections for employees. In addition, OPM can maximize its efforts to make human capital flexibilities and effective practices more widely known to agencies by compiling, analyzing, and sharing information about when, where, and how the broad range of flexibilities are being used, and should be used, to help agencies meet their human capital management needs. OPM also needs to more vigorously identify new flexibilities that would help agencies better manage their human capital and then work to build consensus for the legislative action needed.
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-03-428, Human Capital: OPM Can Better Assist Agencies in Using Personnel Flexibilities
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Report to Congressional Requesters:
May 2003:
HUMAN CAPITAL:
OPM Can Better Assist Agencies in Using Personnel Flexibilities:
GAO-03-428:
GAO Highlights:
Highlights of GAO-03-428, a report to Congressional Requesters
Why GAO Did This Study:
Congressional requesters asked GAO to provide information on actions
that the Office of Personnel Management (OPM) has taken to facilitate
the effective use of human capital flexibilities throughout the
federal government and what additional actions OPM might take in this
regard. These flexibilities represent the policies and practices that
an agency has the authority to implement in managing its workforce.
What GAO Found:
OPM Has Taken Several Actions to Assist Agencies:
OPM has an important leadership role in identifying, developing,
applying, and overseeing human capital flexibilities across the
federal government. OPM has taken several actions to assist federal
agencies in effectively using the human capital flexibilities that are
currently available to agencies. For example, OPM has issued a
handbook for agencies that identifies the various flexibilities
available to help manage their human capital. Also, OPM has taken
various actions to assist agencies in identifying additional
flexibilities that might be helpful to agencies in managing their
workforces.
Human Resources Directors Gave Mixed Views on OPM‘s Role:
To yield indications of the progress that OPM has made in its
important role related to assisting agencies in the use of human
capital flexibilities, GAO surveyed the human resources directors of
the federal government‘s 24 largest departments and agencies in fall
of 2001 and again in the fall of 2002. There was little change in the
directors‘ level of satisfaction with OPM‘s role in assisting agencies
in using available flexibilities, which remained mixed. For example,
one director said OPM had effectively facilitated the use of work-life
flexibilities, but others thought that OPM had placed its own
restrictive interpretation on the use of other personnel
flexibilities. The level of satisfaction with OPM‘s role in
identifying additional flexibilities was greater in 2002 than in 2001,
but still remained below the satisfaction level for assistance with
existing flexibilities. Several directors said that OPM had not
worked diligently enough in supporting authorization of governmentwide
use of new flexibilities that have been sufficiently tested and deemed
successful.
Additional OPM Actions Could Further Facilitate Use of Flexibilities:
Although OPM has recently taken numerous actions, OPM could more fully
meet its leadership role to assist agencies in identifying,
developing, and applying human capital flexibilities across the
federal government. In its ongoing internal review of its existing
regulations and guidance, OPM could more directly focus on determining
the continued relevance and utility of its regulations and guidance by
asking whether they provide the flexibility that agencies need in
managing their workforces while also incorporating protections for
employees. In addition, OPM can maximize its efforts to make human
capital flexibilities and effective practices more widely known to
agencies by compiling, analyzing, and sharing information about when,
where, and how the broad range of flexibilities are being used, and
should be used, to help agencies meet their human capital management
needs. OPM also needs to more vigorously identify new flexibilities
that would help agencies better manage their human capital and then
work to build consensus for the legislative action needed.
What GAO Recommends:
To better facilitate the effective use of human capital flexibilities
throughout the federal government and consistent with OPM‘s ongoing
efforts in this regard, GAO recommends that the Director of OPM
* review existing OPM regulations and guidance to determine whether
they provide agencies with needed flexibility,
* more thoroughly research, compile, and analyze information on the
effective and innovative use of flexibilities, and
* identify and build consensus for legislation to authorize new
flexibilities that would help agencies better manage their human
capital.
OPM commented on a draft of this report and agreed with the
conclusions and recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-428.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact J. Christopher Mihm at (202) 512-6806 or
mihmj@gao.gov.
[End of section]
Letter:
Results in Brief:
Background:
OPM Has Taken Several Actions to Assist Agencies in Using
Flexibilities:
Agencies' Human Resources Directors Gave Mixed Views on OPM's Role
Related to Flexibilities:
Additional OPM Actions Could Further Facilitate Agencies' Use of
Flexibilities:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Office of Personnel Management:
Appendix III: GAO Contacts and Staff Acknowledgments:
Table:
Table 1: Human Resources Directors' Responses to GAO Questionnaire on
Human Capital Flexibilities (Fall 2001 and Fall 2002):
Figures:
Figure 1: Key Practices for Effective Use of Human Capital
Flexibilities:
Figure 2: Human Resources Directors' Extent of Satisfaction with OPM's
Role in Helping Their Agencies Use Available Human Capital
Flexibilities (Fall 2001 and Fall 2002):
Figure 3: Human Resources Directors' Extent of Satisfaction with OPM's
Role in Helping Their Agencies Identify Additional Human Capital
Flexibilities That Could Be Authorized (Fall 2001 and Fall 2002):
Abbreviations :
CHCO: chief human capital officer:
DOJ: Department of Justice:
NAPA: National Academy of Public Administration:
OMB: Office of Management and Budget:
OPM: Office of Personnel Management:
Letter May 9, 2003:
The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Governmental Affairs
United States Senate:
The Honorable Daniel K. Akaka
Ranking Minority Member
Subcommittee on Financial Management, the
Budget and International Security
Committee on Governmental Affairs
United States Senate:
The Honorable George V. Voinovich
Chairman
The Honorable Richard J. Durbin
Ranking Minority Member
Subcommittee on Oversight of Government Management,
the Federal Workforce and the District of Columbia
Committee on Governmental Affairs
United States Senate:
The Honorable Thad Cochran
United States Senate:
To deal with the challenges that federal agencies are experiencing in
acquiring and retaining staff to meet current and expected needs,
agencies need effective human capital flexibilities--with appropriate
safeguards--to assist them. In broad terms, human capital flexibilities
represent the policies and practices that an agency has the authority
to implement in managing its workforce to accomplish its mission and
achieve its goals. These flexibilities can include actions related to
recruitment, retention, compensation, position classification,
incentive awards and recognition, training and development, performance
management and appraisals, realignment and reorganization, and work
arrangements and work-life policies. The tailored use of such
flexibilities for acquiring, developing, and
retaining talent is an important cornerstone of our model of strategic
human capital management.[Footnote 1]
As the federal government's human capital agency, the Office of
Personnel Management (OPM) has an important leadership role in
identifying, developing, and applying human capital flexibilities
across the federal government. Given the importance of OPM's role, you
asked us to provide information on the actions that OPM has taken to
facilitate the effective use of human capital flexibilities throughout
the federal government and what additional actions OPM might take in
this regard. This report is the second of two reports responding to
your request for information on the use of human capital flexibilities
in the federal government. In December 2002, we reported on (1) the key
practices that agencies should implement for effective use of human
capital flexibilities and (2) agency and union officials' views related
to the use of human capital flexibilities.[Footnote 2] In addition to
the above addressees, both reports were also done at the request of the
Honorable Fred Thompson, former ranking minority member of the Senate
Committee on Governmental Affairs.
To address the issue of OPM's role in facilitating agencies' use of
human capital flexibilities, we reviewed relevant reports and
interviewed cognizant officials from OPM, the Merit Systems Protection
Board, and the National Academy of Public Administration (NAPA). We
also interviewed the individuals serving in the positions of human
resources directors for the federal government's 24 largest departments
and agencies. We surveyed these 24 human resources directors in the
fall of 2001 and surveyed the individuals in these positions again in
the fall of 2002. In addition, we reviewed previous GAO reports on a
broad range of human capital issues. We conducted our work in
accordance with generally accepted government auditing standards. (See
app. I for additional information on our objectives, scope, and
methodology.):
Results in Brief:
OPM recognizes its important leadership role in assisting federal
agencies in identifying, developing, and applying human capital
flexibilities across the federal government. As noted in its most
recent strategic plan, OPM's strategy in fulfilling its mission is to
provide human resources management leadership and services for all
agencies in a manner that blends and balances flexibility and
consistency. OPM seeks to maintain consistency in the federal
government's human resources management systems for areas such as merit
principles and accountability, while at the same time assist agencies
to facilitate the effective use of available human capital
flexibilities, as well as to identify and develop additional human
capital flexibilities that could be authorized to help agencies manage
their workforces.
OPM has several initiatives underway to assist federal agencies in
effectively using the human capital flexibilities that are currently
available to agencies. For example, OPM has issued a handbook[Footnote
3] for agencies that identifies the various flexibilities available to
help manage human capital and has several initiatives under way to
address key personnel challenges in the area of hiring. OPM has also
developed information on lessons learned for using human capital
flexibilities and implementing change to improve federal human
resources management. OPM has also committed the assistance of its
various internal experts to serve as liaisons with agencies and to
provide expedited services when needed, including assistance in the
implementation of human capital flexibilities. Furthermore, OPM has
reorganized its structure with the expectation that it will be able to
better serve and respond to requests from agency customers and help
ensure that all levels within OPM are supportive of agencies' efforts
to use flexibilities.[Footnote 4]
OPM has also taken some actions to identify legislative options for
additional flexibilities that might be helpful to agencies in managing
their workforces. For example, OPM has suggested the broader
application through legislation of various personnel flexibilities that
have been tested and evaluated through pilot projects and alternative
personnel systems over the past two decades. Also, OPM has been
recently more active in supporting the passage of proposed legislation
that would enhance the
human capital flexibilities already available, including the
governmentwide provisions in the Homeland Security Act of
2002.[Footnote 5]
The views of human resources directors from across the federal
government yield revealing indications of the progress that OPM has
made in its important role related to assisting agencies in the use of
human capital flexibilities. The human resources directors we surveyed
in the fall of 2001 and again in the fall of 2002 gave mixed views on
their satisfaction with OPM's role in assisting agencies in using
available flexibilities. One director we interviewed, for example,
praised OPM for the positive actions it had taken in facilitating work-
life programs for federal employees. On the other hand, several
directors noted, for instance, that OPM often has placed its own
restrictive interpretation on the use of personnel flexibilities,
surrounding them with too many regulations that make the use of such
flexibilities extremely complicated and more difficult than needed.
The human resources directors were generally less satisfied with OPM's
role in identifying additional flexibilities that could be authorized
for agencies to use in managing their workforces, although the level of
satisfaction was greater in 2002 than in 2001. Several directors we
interviewed said, for example, that although OPM had actively listened
to agency officials' views about their various needs for additional
flexibilities, OPM had not worked diligently enough in supporting
efforts to bring about governmentwide authorization and implementation
of innovative human capital practices and flexibilities that have been
sufficiently tested and deemed successful.
Although OPM has recently taken numerous actions, OPM could take
additional steps to assist agencies in identifying, developing,
applying, and overseeing human capital flexibilities across the federal
government. As part of its ongoing internal review of its existing
regulations and guidance, OPM has focused chiefly on reviewing the
clarity and readability of its regulations and guidance. OPM could more
directly focus on determining the continued relevance and utility of
its regulations and guidance by asking whether they provide the
flexibility that agencies need in managing their workforces while also
incorporating protections for employees. In addition, OPM could enhance
its efforts to make human capital flexibilities and effective practices
more widely known to agencies. Although OPM has made efforts to inform
agencies of what flexibilities are generally available and why their
use is important, OPM has yet to take full advantage of its ability to
compile, analyze, and share information about when, where, and how the
broad range of flexibilities are being used, and should be used, to
help agencies meet their human capital management needs. It is also
important for OPM to oversee the use of personnel flexibilities to
ensure not only that the use of flexibilities are being maximized, but
also, along with agencies, ensuring that flexibilities are being used
consistent with the merit principles and other national goals and
include appropriate safeguards. Finally, OPM could play a critical role
in identifying and building a consensus for new flexibilities that
would help agencies better manage their human capital.
These additional OPM actions are consistent with OPM's overall goal of
aiding federal agencies in adopting human resources management systems
that improve their ability to build successful, high-performance
organizations. Because this role is critical to improved governmentwide
strategic human capital management, this report contains
recommendations to the Director of OPM for the more effective use of
existing human capital flexibilities and for the identification of
additional human capital flexibilities that might be needed within the
federal government.
OPM commented on a draft of this report and agreed with the conclusions
and recommendations. OPM pointed out that in future studies that
address OPM leadership issues, in addition to surveying agency human
resource directors, we should also survey agency chief operating
officers. OPM believed that the chief operating officers have the "best
perspective and the widest array of information about recruitment and
retention issues." We agree that such future studies would benefit from
the perspectives of chief operating officers. OPM's complete comments
are shown in appendix II.
Background:
In serving as the federal government's human capital agency, OPM sees
its role to be the President's strategic advisor on human capital
issues, to develop tools and provide support to agencies in their human
capital transformation efforts, and to assist in making the federal
government a high-performing workplace. As such, OPM, in conjunction
with the Office of Management and Budget (OMB), is charged with leading
the federal government's strategic management of human capital
initiative, one of five
governmentwide initiatives of the President's Management
Agenda.[Footnote 6] In carrying out this effort, OPM's strategy is to
provide human resources management leadership and services to all
agencies in a manner that blends and balances flexibility and
consistency. As we noted in our recent report on OPM's management
challenges, OPM carries out its leadership role in a decentralized
environment where both it and the agencies have shared responsibilities
for addressing the human capital and related challenges facing the
federal government.[Footnote 7]
OPM's role in aiding federal agencies represents a considerable
challenge because federal managers have complained for years about the
rigid and elaborate procedures required for federal personnel
administration and have often expressed the need for more flexibility
within a system that has traditionally been based on uniform rules.
Reformers have long sought to decentralize the personnel system and
simplify the rules, arguing that however well the system may have
operated in the past, it is no longer suited to meet the needs of a
changing and competitive world. In 1983, for example, NAPA published a
report critical of excessive restrictions on federal managers,
including constraints on their human resources decisions.[Footnote 8]
In response to these criticisms, OPM has, over time, decentralized and
delegated many personnel decisions to the agencies and has encouraged
agencies to use human capital flexibilities to help tailor their
personnel approaches to accomplish their unique missions. Our strategic
human capital management model also advocates that agencies craft a
tailored approach to their use of available flexibilities by drawing on
those flexibilities that are appropriate for their particular
organizations and their mission accomplishment.[Footnote 9] Because of
this tailoring, the federal personnel system is becoming more varied,
notwithstanding its often-cited characterization as a "single
employer.":
The overall trend toward increased flexibility has revealed itself in a
number of ways, including the efforts of some agencies to seek
congressional approval to deviate from the personnel provisions of
Title 5 of the U.S. Code that have traditionally governed much of the
federal government's civil service system.[Footnote 10] As observed in
a 1998 OPM report,[Footnote 11] federal agencies' status relative to
these Title 5 personnel requirements can be better understood by
thinking of them on a continuum. On one end of the continuum are
federal agencies that generally must follow Title 5 personnel
requirements. These agencies do not have the authority, for example, to
establish their own pay systems. On the other end of the continuum are
federal agencies that have more flexibility in that they are exempt
from many Title 5 personnel requirements. For example, the Congress
provided the Tennessee Valley Authority and the Federal Reserve Board
with broad authority to set up their own personnel systems and
procedures. This trend toward greater flexibility, in fact, has gained
momentum to the extent that about half of federal civilian employees
are now exempt from at least some of the personnel-related requirements
of Title 5. For example, the Federal Aviation Administration, the
Internal Revenue Service, and the new Department of Homeland Security
have exemption from key Title 5 requirements.
In addition to receiving congressional authorizations for exemptions
from the personnel-related requirements of Title 5, other mechanisms
are available to initiate human capital innovations and flexibilities
within federal agencies. OPM has the authority to reassess and make
changes to its existing regulations and guidance to supply agencies
with additional flexibilities. Additionally, a federal agency can
obtain authority from OPM to waive some existing federal human
resources laws or regulations through an OPM-sponsored personnel
demonstration project. The aim of these demonstration projects is to
encourage experimentation in human resources management by allowing
federal agencies to propose, develop, test, and evaluate changes to
their own personnel systems. In some cases, Congress has allowed some
agencies to implement alternatives that have been tested and deemed
successful. For example, more flexible pay approaches that were tested
within the Department of the Navy's China Lake (California)
demonstration project in the early 1980s were eventually adopted by
other federal agencies such as the Department of Commerce's National
Institute of Standards and Technology.
In December 2002, we reported on agency officials' and union
representatives' views regarding various issues related to
flexibilities. According to the agency officials and union
representatives we interviewed, existing flexibilities that are most
effective in managing the workforce are work-life policies and
programs, such as alternative and flexible work schedules, transit
subsidies, and child care assistance; monetary recruitment and
retention incentives, such as recruitment bonuses and retention
allowances; special hiring authorities, such as student employment and
outstanding scholar programs; and incentive awards for notable job
performance and contributions, such as cash and time-off awards. Agency
and union officials also identified five categories of additional human
capital flexibilities as most helpful if authorized for their agencies:
(1) more flexible pay approaches, (2) greater flexibility to streamline
and improve the federal hiring process, (3) increased flexibility in
addressing employees' poor job performance, (4) additional workforce
restructuring options, and (5) expanded flexibility in acquiring and
retaining temporary employees. Furthermore, we reported that the agency
managers and supervisors and human resources officials we interviewed
generally agreed that additional human capital flexibilities could be
authorized and implemented in their agencies while also ensuring
protection of employees' rights. Union representatives, however,
expressed mixed views on the ability of agencies to protect employee
rights with the authorization and implementation of additional
flexibilities. Specifically, several union representatives said that
managers could more easily abuse their authority when implementing
additional flexibilities, and that agency leaders often do not take
appropriate actions in dealing with abusive managers.
Based on our interviews with human resources directors from across the
federal government and our previous human capital work, we also
reported on six key practices that agencies should implement to use
human capital flexibilities effectively. Figure 1 identifies these key
practices.
Figure 1: Key Practices for Effective Use of Human Capital
Flexibilities:
[See PDF for image]
[End of figure]
Lastly, also in our December 2002 report, we noted that agency and
union officials identified several significant reasons why agencies
have not made greater use of the human capital flexibilities that are
available to them. These reported barriers that have hampered agencies
in maximizing their use of available flexibilities included: agencies'
weak strategic human capital planning and inadequate funding for using
these flexibilities given competing priorities; managers' and
supervisors' lack of awareness and knowledge of the flexibilities;
managers' and supervisors' belief that approval processes to use
specific flexibilities are often burdensome and time-consuming; and
managers' and supervisors' concerns that employees will view the use of
various flexibilities as inherently unfair, particularly given the
common belief that all employees must be treated essentially the same
regardless of job performance and agency needs.
As noted in our report, the recently enacted Homeland Security Act of
2002 provided agencies with a number of additional flexibilities
relating to governmentwide human capital management. For example,
agencies will now be permitted to offer buyouts to their employees
without the requirement to reduce their overall number of employees.
The legislation also permits agencies to use a more flexible approach
in the rating and ranking of job candidates (categorical rating) during
the hiring and staffing process. The Act also created chief human
capital officer (CHCO) positions for the largest federal departments
and agencies, an interagency CHCO Council, and a requirement that
agencies discuss their human capital approaches in their annual
performance plans and reports under the Government Performance and
Results Act.
OPM Has Taken Several Actions to Assist Agencies in Using
Flexibilities:
OPM deems that its role related to human capital flexibilities is
broader than merely articulating polices that federal agencies use in
managing their workforces. OPM sees that it has an important leadership
role in identifying, developing, and applying human capital
flexibilities across the federal government. As such, OPM has several
initiatives underway with the goal of assisting federal agencies in
using available flexibilities and identifying additional flexibilities
that might be beneficial for agencies.
OPM Has Initiatives to Assist Agencies in Using Available
Flexibilities:
One of OPM's primary functions related to assisting agencies in the use
of human capital flexibilities is to serve as a clearinghouse for
information through a variety of sources, including its Web site. For
example, OPM prepared and posted on its Web site a handbook on
personnel flexibilities generally available to federal agencies. This
handbook, Human Resources Flexibilities and Authorities in the Federal
Government, describes the flexibilities that agencies can use to manage
their human capital challenges and provides information about the
statutory and regulatory authorities for the specific flexibilities.
OPM has also established Web-based clearinghouses of information on
best practices in two areas of human resources management: employee
performance management and accountability. OPM said that it has
received positive feedback on these two Web-based clearinghouses and
that many of OPM's customers have said that the information has been
useful to them in researching information and when redesigning human
resources-related programs.
OPM is also developing a Preferred Practices Guide that it said would
highlight efficient and effective hiring practices using existing
hiring flexibilities. To assist in developing this guide, OPM in July
2002 asked federal human resources directors to share information with
OPM about their improved results in areas related to hiring by using
newly developed practices, strategies, and methods that could assist
other agencies in addressing similar challenges. According to OPM, the
contents of this Web-based document will likely parallel the steps of
the federal hiring process and encompass areas such as workforce
planning, recruitment, assessment, and retention. The guide is also
expected to include actual examples of agency hiring practices, such as
the Emerging Leaders Program, a 2-year career development intern
program created by the Department of Health and Human Services, and the
Recruitment "Timely Feedback" Executive Tool, a monthly reporting and
accountability system for gauging progress on recruiting initiatives
that was established at the Social Security Administration. This
Preferred Practices Guide, which OPM plans to post on its Web site in
early 2003, would complement other ongoing OPM hiring-related efforts
to encourage agencies to (1) provide interested persons with timely and
informed responses to questions about the federal recruiting process,
(2) develop clear and understandable job announcements, and (3) provide
job applicants with regular updates on the status of their applications
as significant decisions are reached.
OPM has also issued a report entitled Demonstration Projects and
Alternative Personnel Systems: HR Flexibilities and Lessons Learned,
which contains lessons learned about implementing change to improve
federal human capital management. According to OPM, these lessons
learned are based on the testing of several personnel flexibilities in
a wide variety of demonstration projects and alternative personnel
systems at federal agencies over the past 20 years.[Footnote 12] OPM
said that agency officials from the various projects collaborated with
OPM staff in developing the report. The lessons learned in OPM's report
are similar to the key practices that we recently reported on for
effectively using human capital flexibilities.
OPM has also committed the assistance of its various experts to help
agencies with human capital issues and challenges, including use of the
various flexibilities available to agencies. OPM has established a
human capital team of desk officers who serve as liaisons with agencies
and who are to work closely with the agencies to help them in
responding to the President's Management Agenda. For some agencies with
less planning and actions on strategic human capital management, these
desk officers provide coaching and assistance and establish contacts
with OPM's program office experts. OPM said that when working with
their assigned agency representatives, the desk officers take full
advantage of all available OPM resources, including clearinghouse
information, to help agencies identify available flexibilities. For
example, OPM said that its desk officer for the Department of Education
fielded an inquiry that led to on-site assistance in the planning and
implementation of a demonstration project for that department.
OPM has also formed "strike force teams," created on an ad hoc basis,
to provide expedited service to agencies with critical, time-sensitive
human capital needs. These strike force teams are to serve a single
focal point through which agencies can get assistance and advice on a
wide range of topics and issues, including the implementation of human
capital flexibilities. OPM has created strike force teams for several
agencies, including the Department of Housing and Urban Development,
the Department of Justice (DOJ), and the Transportation Security
Administration. For example, at the request of the Assistant Attorney
General, a strike force team worked with DOJ human resources staff to
develop and present a briefing on human resource flexibilities for DOJ
political appointees. OPM is also working jointly with the new
Department of Homeland Security to prescribe regulations for the
department's human resources management system.
OPM also holds conferences, training sessions, and other meetings to
share information with agency officials, including material on the
availability of flexibilities. For example, OPM conducts an annual
conference to provide federal managers and human resources
practitioners with updates and other information about the federal
compensation environment, including topics such as pay and leave
administration, performance management, position classification, and
efforts to improve the compensation tools available to support agency
missions. As an example of its training function, OPM, in collaboration
with OMB, presented a half day of training on personnel authorities
available to agencies as part of transition training for new political
appointees. OPM said that it also held one-on-one meetings with more
than 30 agencies to discuss telework, learn about agency initiatives in
this area, and find out how OPM can assist agencies in expanding
telework opportunities.
In addition, OPM has realigned its own organizational structure and
workforce. OPM's goal was to create a new, flexible structure that will
"de-stovepipe" the agency; enable it to be more responsive to its
primary customers, federal departments and agencies; and allow it to
focus on the agency's core mission. For example, OPM has decided to put
its various program development offices under the control of one
associate director and its product and services functions under another
associate director to ensure that it appropriately and efficiently
responds to its customers. Effective implementation of OPM's latest
organizational and workforce realignment will be crucial to maximizing
its performance as the federal government's human capital leader,
assuring its own and other agencies' accountability, and ultimately
achieving its goals.
OPM Also Has Some Initiatives to Assist in Identifying Additional
Flexibilities:
OPM has furthermore initiated some efforts to assist agencies in
identifying additional flexibilities that might be effective in helping
the agencies manage their workforces. For example, OPM said that it has
actively supported passage of proposed legislation that would enhance
human capital flexibilities and provide more latitude for flexible
implementing regulations. OPM told us, for example, that it developed
and drafted a significant portion of the proposed Managerial
Flexibility Act of 2001,[Footnote 13] a bill intended to give federal
managers tools and flexibility in areas such as personnel, budgeting,
and property management and disposal. This proposed legislation did not
pass the 107th Congress, although several related provisions were
included in the recently enacted Homeland Security Act of 2002. OPM
officials told us that these legislative efforts should serve as
evidence that OPM can and does identify areas where changes to statute
would provide more flexibility to agencies. Moreover, one component of
the proposed legislation, which was not enacted, includes streamlining
the process for implementing demonstration projects and creating a
mechanism to export tested innovations to other federal organizations.
OPM believes that to get a better return on investment from years of
demonstration project evaluations, a method should exist--short of
separate legislation--for converting successfully tested alternative
systems and flexibilities to permanent programs and for making them
available to other agencies.
OPM has taken other actions to assist agencies in identifying
additional flexibilities that they could use to manage their
workforces. For example, in its HR Flexibilities and Lessons Learned
report, OPM identified personnel flexibilities that have been tested
and evaluated through demonstration projects or alternative personnel
systems over the last 20 years. OPM said that during the development of
the Managerial Flexibility Act, the President's Management Council
requested information on existing flexibilities and that OPM created
its report in response to that request in an effort to catalogue these
flexibilities in one document. OPM said that some of the flexibilities
catalogued in its report have been thoroughly tested over time in a
variety of environments, while others have more limited agency
applicability and thus have more limited data to show their success.
Some of these flexibilities outlined in the report correspond to the
types of flexibilities that agency and union officials told us could be
beneficial for their agencies, such as broadbanded pay systems,
categorical rating for hiring, and expanded probationary periods for
new employees.[Footnote 14]
OPM recognizes that additional efforts are needed to address key
personnel challenges within the federal workforce, particularly in the
areas of pay and hiring. In April 2002, OPM released a report that
presents the case for the need for reform of the white-collar federal
pay system under which 1.2 million General Schedule federal employees
are paid.[Footnote 15] Without recommending a specific solution, OPM's
report stresses the importance of developing a contemporary pay system
that is more flexible, market-sensitive, and performance-oriented as
well as a better tool for improving strategic human capital management.
Also, OPM said that in the coming months it will identify additional
projects and proposals that will address systemic problems associated
with the hiring process. These additional initiatives will include
deploying competency-based qualifications, improving entry-level
hiring, and updating and modernizing exam scoring policy. According to
OPM officials, as it moves forward on these pay and hiring initiatives,
OPM will assess what additional flexibilities and tools might be needed
for agencies as they look for ways to better manage their workforces.
Agencies' Human Resources Directors Gave Mixed Views on OPM's Role
Related to Flexibilities:
Although federal agencies have the primary responsibility to maximize
their use of human capital flexibilities, OPM also plays a key role in
facilitating agencies' use of existing flexibilities as well as
identifying new personnel authorities that agencies might need in
managing their workforces. The views of agencies' human resources
directors can help to provide indications of the progress that OPM has
made in its important role related to human capital flexibilities. We
therefore surveyed the human resources directors for the 24 largest
departments and agencies in the federal government to obtain their
views on OPM's role related to flexibilities.
Directors' Views Varied on OPM's Role Related to Using Available
Flexibilities:
In the surveys we conducted in the fall of 2001 and again in the fall
of 2002, the human resources directors for the largest departments and
agencies gave mixed views on their satisfaction with OPM's role in
assisting their agencies in using available human capital
flexibilities. Figure 2 depicts the directors' responses on this issue
for both 2001 and 2002.[Footnote 16] In 2002, 7 of the 24 responding
directors said that they were satisfied to "little or no" or "some"
extent regarding OPM's role in assisting their agencies in using
available flexibilities. Conversely, 7 of the 24 responding directors
in 2002 said that they were satisfied to a "great" or "very great"
extent with OPM's role in assisting their agencies with available
flexibilities. Overall for 2002 on this issue, the average satisfaction
level of the human resource directors was unchanged between 2001 and
2002. Specifically, for 2002 our survey showed that for five agencies,
the director's level of satisfaction was greater than the level of
satisfaction for that agency's human resources director from the
previous year; for five agencies, the directors' level of satisfaction
was less than the level of satisfaction for that agency's human
resources director from the previous year.
Figure 2: Human Resources Directors' Extent of Satisfaction with OPM's
Role in Helping Their Agencies Use Available Human Capital
Flexibilities (Fall 2001 and Fall 2002):
[See PDF for image]
[End of figure]
In our interviews with the human resources directors regarding the
issue of OPM's role in assisting agencies in the use of available
flexibilities, several of the directors said that OPM communicates well
with agencies through e-mails, meetings, workgroups, and its Web site
and has taken some action to disseminate information about existing
flexibilities. One director, for example, commended OPM for effectively
using its Web site to share information about what flexibilities are
generally available to agencies. Another director praised OPM for the
positive actions it had taken with respect to facilitating work-life
programs for federal employees. However, directors frequently commented
that OPM often puts its own restrictive interpretation on the use of
flexibilities, surrounding them with too many regulations that can make
their use unduly complicated and more difficult; regulations and
guidance on implementing the Federal Career Intern Program were
mentioned frequently in this regard, for example. Several directors
argued that their agencies should be able to implement human capital
flexibilities in the most flexible fashion, not the most restrictive.
One director expressed the opinion that, although the upper management
of OPM may support using flexibilities, middle management and lower-
level staff within the agency seemed resistant to change and sometimes
hampered the efforts of agencies in the use of flexibilities. This
director wanted to see OPM play a more facilitative and consultative
role, working in concert with agencies. In addition, directors from
several agencies stated that OPM needs to host additional forums to
share experiences on the use of existing human capital flexibilities,
with OPM more fully serving as a clearinghouse in making flexibilities
and effective practices more widely known to agencies.
Directors Were Somewhat Less Satisfied with OPM's Role Related to
Identifying Additional Flexibilities:
While the human resources directors we surveyed gave mixed views on
their satisfaction with OPM's role related to available flexibilities,
the directors were less satisfied with OPM's role in assisting agencies
in identifying additional human capital flexibilities that could be
authorized. However, the directors' extent of satisfaction on this
issue, as measured in our survey, was greater in 2002 than in 2001.
Figure 3 depicts the directors' responses on this issue for both 2001
and 2002. In 2002, 11 of the 24 responding directors said that they
were satisfied to "little or no" or "some" extent regarding OPM's role
in identifying additional flexibilities that could be authorized for
agencies. Conversely, 6 of the 24 responding directors said that they
were satisfied to a "great" or "very great" extent regarding OPM's role
in identifying additional flexibilities. For seven agencies, the
director's level of satisfaction was greater in 2002 than the level of
satisfaction for that agency's human resources director from the
previous year; for four agencies, the director's level of satisfaction
was less than the level of satisfaction for that agency's human
resources director from the previous year.
Figure 3: Human Resources Directors' Extent of Satisfaction with OPM's
Role in Helping Their Agencies Identify Additional Human Capital
Flexibilities That Could Be Authorized (Fall 2001 and Fall 2002):
[See PDF for image]
[End of figure]
One human resources director we interviewed said, for example, that OPM
has done a commendable job of listening to agencies' concerns about the
need for additional flexibilities, particularly through the Human
Resources Management Council, an interagency organization of federal
human resources directors.[Footnote 17] However, several directors said
that OPM needs to play a more active role in identifying flexibilities
that agencies might use to manage their workforces. Several human
resources directors said that OPM should be doing more to conduct or
coordinate personnel management research on additional flexibilities
that might prove effective for agencies to use in managing their
workforces. Several of these directors also told us that OPM should
work more diligently to support efforts in authorizing and implementing
governmentwide those innovative human capital practices and
flexibilities that have been sufficiently tested and deemed to be
successful, such as those tested in OPM-sponsored personnel
demonstration projects.
According to many of the human resources directors we interviewed, OPM
needs to play a larger role in acting as a change agent to get human
capital legislation passed and implemented. While recognizing that OPM
cannot promote legislation that is inconsistent with the
administration's views of the civil service, human resources directors
said that OPM should be the policy leader in the area of human capital
and, as the leader, should push harder for major civil service reform.
In the human resources directors' opinions, OPM needs to look at
personnel reforms in a new, open, and objective way and develop changes
to current laws and regulations to ensure that agencies can effectively
obtain and manage their workforces. In addition, some directors
expressed frustration about the lack of coordination between OPM and
OMB in responding to OMB's request for agencies to complete workforce
planning and restructuring analyses.[Footnote 18] Further, they said
that OPM, OMB, and Congress need better communication and coordination
in developing budgets and recognizing the costs involved in using human
capital flexibilities.
Additional OPM Actions Could Further Facilitate Agencies' Use of
Flexibilities:
Assisting federal agencies in using available flexibilities and in
identifying additional flexibilities is an important part of OPM's
overall goal of aiding agencies in adopting human resources management
systems that improve their ability to build successful, high-
performance organizations. In testimony before Congress in February of
2001, we suggested two areas in which OPM could make substantial
additional contributions in addressing the federal government's human
capital challenges.[Footnote 19] The first was in reviewing existing
OPM regulations and guidance to determine their continued relevance and
utility by asking whether they provide agencies with the flexibilities
they need while incorporating protections for employees. The second
area was in making existing human capital flexibilities and effective
practices more widely known to the agencies, and in taking fullest
advantage of OPM's ability to facilitate information-sharing and
outreach to human capital managers throughout the federal government.
Although OPM has taken concerted action in some areas to assist
agencies in using flexibilities, OPM has taken limited actions related
to these two areas. Moreover, OPM could do more to assist agencies in
identifying additional human capital flexibilities that could be
authorized and also be actively working to build consensus to support
related legislation that might be needed. Greater attention to these
areas could allow OPM to more fully fulfill its leadership role to
assist agencies in identifying, developing, and applying human capital
flexibilities across the federal government. As we noted in the
previous testimony, as OPM continues to move from "rules to tools," its
more valuable contributions in the future will come less from
traditional compliance activities than from its initiatives as a
strategic partner to agencies.
OPM's Review of Regulations Could Provide Opportunity to Give
Additional Flexibility to Agencies:
Just as agencies need to streamline and improve their own internal
administrative processes to effectively use flexibilities, OPM
similarly needs to ensure that its regulations and guidance provide
adequate flexibility while also recognizing the importance of ensuring
fairness and incorporating employee protections. As we noted in our
December 2002 report, if senior managers within agencies want
supervisors to make effective use of flexibilities, supervisors must
view agencies' internal processes to use the flexibility worth their
time compared to the expected benefit to be gained in implementing the
flexibility. Similarly, if OPM wants agencies to make effective use of
flexibilities, agencies must view OPM's regulatory requirements for
using the flexibility worth the expected benefits that the flexibility
would provide.
In comments that it provided in response to our December 2002 report,
OPM said that it is undertaking a review of its regulations and
guidance. According to OPM, the purpose of this regulatory review,
which began in December 2001, is to restate regulations in plainer
language wherever possible to eliminate redundant or obsolete material
and to revise regulations to make them more easily usable by a variety
of readers. OPM said that because it has focused chiefly on making the
regulations as readable as possible, rather than making substantive
changes, the agency did not anticipate making changes to provide
additional flexibility as part of this effort. OPM said that its Office
of General Counsel, which is leading the regulatory review, has been
carrying it out by working with OPM's program offices to establish
basic protocols, selecting provisions that require elimination or
redrafting, soliciting drafts from the offices, and then reviewing and
revising these drafts in conjunction with the OPM program staff. OPM
said that it amends its regulations to provide flexibility, on an as-
needed basis, in the ordinary course of carrying out the OPM Director's
policies.
In response to our request for examples of regulations that it has
redrafted under this effort, OPM said it was reviewing all of the
regulations in chapter I of Title 5 of the U.S. Code of Federal
Regulations but that it was not yet in a position to supply examples
because it had recently begun to submit some of the redrafted material
to OMB for clearance. Nonetheless, a report we recently issued included
an example of where OPM revised regulations to, at least in part,
provide additional flexibility to agencies.[Footnote 20] In the fall of
2000, OPM amended regulations on evaluating the job performance of
senior executives within the federal government. OPM's goal in
developing these regulations was to help agencies hold their senior
executives accountable by increasing agency flexibility, focusing on
results, emphasizing accountability, and improving links between pay
and performance. These changes were to balance the agencies' desire for
maximum flexibility with the need for a corporate approach that
safeguards merit principles. OPM's changes to the regulations included
paring back many of the previous requirements to those in statute to
give agencies more flexibility to tailor their performance management
systems to their unique mission requirements and organizational
cultures. OPM made these regulatory changes in part because performance
management systems have tended to focus on process over results.
Because providing additional flexibility has not been a fundamental
purpose of its current regulatory review, OPM is not taking advantage
of a crucial opportunity to provide additional flexibility, where
appropriate, on a systematic basis rather than through a piece-meal, ad
hoc approach. Human resources directors we interviewed often said that
OPM should provide agencies with greater delegation to carry out their
human capital programs. For example, some directors commented that
agencies should be able to waive the annuity offsets for reemployed
annuitants without authority by OPM.[Footnote 21] Some directors also
told us that OPM should allow
agencies to extend the probationary periods for newly hired employees
beyond the standard 1-year period.[Footnote 22] Directors also said
that OPM's guidance for implementing human capital programs could
sometimes be overly restrictive and burdensome. For example, some
directors said that OPM's internal approval and evaluation processes
for personnel demonstration projects needed to be streamlined to make
the program more practical.[Footnote 23] One director told us, for
instance, that her agency had considered applying as a demonstration
project but demurred because officials at her agency viewed OPM's
requirements as too burdensome.
It is important to note that human resources directors we interviewed
also expressed interest in gaining increased flexibilities that would
require changes in federal statute and thus are outside of OPM's
authority to change independently. Directors commented on such areas as
decreasing some of the limitations and parameters of allowable
personnel demonstration projects. As we noted in recent testimony, OMB
and the Congress have key roles in improving human capital management
governmentwide, including the important responsibility of determining
the scope and appropriateness of additional human capital flexibilities
agencies may seek through legislation.[Footnote 24] In recent testimony
on using strategic human capital management to drive transformational
change, we noted the potential benefits of providing additional
flexibility in the government's personnel systems by suggesting, for
example, that the Congress may wish to explore the benefits of allowing
agencies to apply to OPM on a case-by-case basis (i.e., case
exemptions) for authority to establish more flexible pay systems for
certain critical occupations or, even more broadly, allowing OPM to
grant governmentwide authority for all agencies (i.e., class
exemptions) to use more flexible pay systems for their critical
occupations.[Footnote 25]
A More Comprehensive Clearinghouse and Increased Information Sharing
about Flexibilities Could Better Assist Agencies:
In our December 2002 report on human capital flexibilities, we noted
that one of the key factors for effectively using flexibilities is
educating agency managers and employees on the availability of these
flexibilities as well as about the situations where the use of those
flexibilities is most appropriate. Ultimately the flexibilities within
the personnel system are only beneficial if the managers and
supervisors who would carry them out are aware of not only their
existence but also the best manner in which they could be used. With a
comprehensive clearinghouse and broad information sharing about
flexibilities, OPM can greatly assist agencies in educating their
managers and supervisors as well as preparing their human capital
managers for their consultative role regarding the best manner in which
the full range of flexibilities should be implemented.[Footnote 26]
This information would also be useful to support OPM's oversight of
agencies' use of personnel flexibilities.
OPM has not, however, fully maximized its efforts to make human capital
flexibilities and effective practices more widely known to agencies.
Although OPM has made efforts to inform agencies of what flexibilities
are generally available and why their use is important, OPM has yet to
take full advantage of its ability to compile, analyze, and distribute
information about when, where, and how the broad range of flexibilities
are being used, and should be used, to help agencies meet their human
capital management needs. Human resources directors we interviewed
frequently brought up that OPM needs to take further determined action
on this issue. One human resources director said, for example, that OPM
should be setting benchmarks and identifying best practices for using
flexibilities. Another director added that OPM should provide agencies
with different scenarios of how flexibilities can be used. Another
director commented that OPM needs to develop more educational and
training aids to inform agency officials about these best practices.
Yet another director added that OPM should evaluate the effectiveness
of many different flexibilities and share the results with other
agencies.
OPM officials told us that they do not generally know which federal
agencies have done effective jobs in using specific flexibilities nor
which practices these agencies employed to produce effective results.
OPM could use its outreach and information-sharing efforts to more
thoroughly identify which federal agencies are specifically using the
various flexibilities in effective ways and reporting on the particular
practices that these agencies are using to implement their
flexibilities. Examination of information from OPM's database of
federal civilian employees, the Central Personnel Data File, could help
OPM in such analysis, including identifying possible correlations
between an agency's use of flexibilities and factors such as employees'
occupations, grade levels, and duty stations. This compilation,
analysis, and distribution of information could also include research
OPM conducts or sponsors that may shed light on effective practices for
implementing existing flexibilities.
OPM could also use this analysis of agencies' use of flexibilities in
its oversight role. OPM's new Human Capital Assessment and
Accountability Framework provides guidance for agencies to maximize
their human capital management and is being used by OPM to evaluate
agencies' progress. For example, under one of the framework's six
standards for success,[Footnote 27] key questions to consider include
the following:
* Does the agency use flexible compensation strategies to attract and
retain quality employees who possess mission-critical competencies?
* Does the agency provide work/life flexibilities, facilities,
services, and programs to make the agency an attractive place to work?
The information gathered on personnel flexibilities could assist OPM in
its assessment of this standard. In addition, OPM has the
responsibility to not only review whether agencies are maximizing the
use of personnel flexibilities, but also, along with agencies, ensure
that flexibilities are being used fairly and are consistent with the
merit principles and other national goals and include appropriate
safeguards.
Additional Efforts to Identify New Flexibilities Needed:
The human resource directors we interviewed said that OPM could do more
to assist agencies in identifying additional human capital
flexibilities that could be authorized. The information gathered on
agencies' use of flexibilities could also be used to gain greater
insight into agencies' needs related to additional flexibilities that
might be helpful for agencies' management of their human capital. In
our discussions with OPM about its efforts in assisting agencies with
flexibilities, OPM officials told us that it was not feasible to
identify or track all agency requests for additional flexibilities
because such requests are received throughout the organization and
range from casual questions to formal requests for exceptions or
demonstration projects. Tracking such requests, however, could assist
OPM in gaining a clearer picture of agency concerns and requests for
additional tools and flexibilities as well as more comprehensively
documenting agency needs for the benefit of policymakers as statutory
and regulatory changes are proposed and considered. The recently
legislated Chief Human Capital Officers Council, chaired by the OPM
Director, could also aid in disseminating information about effective
human capital practices. We have reported that the use of the similar
interagency councils of chief financial officers and chief information
officers to, among other things, share information about effective
practices, was one of the major positive public management developments
over the past decade.[Footnote 28]
Once OPM determines that additional flexibilities are needed, it could
actively work to build consensus to support needed legislation. As
noted earlier, OPM actively supported legislation in the last Congress
to authorize additional flexibilities to agencies. Specifically, OPM
drafted and supported a significant portion of the proposed Managerial
Flexibility Act of 2001. OPM could continue to support such legislation
and identify additional personnel flexibilities that are needed.
Conclusions:
The ineffective use of flexibilities can significantly hinder the
ability of federal agencies to recruit, hire, retain, and manage their
human capital. To deal with their human capital challenges, it is
important for agencies to assess and determine which human capital
flexibilities are the most appropriate and effective for managing their
workforces. As we previously reported, to ensure more effective use of
human capital flexibilities, it is important that agencies (1) plan
strategically and make targeted investments, (2) ensure stakeholder
input in developing policies and procedures, (3) educate managers and
employees on the availability and use of flexibilities, (4) streamline
and improve administrative processes, (5) build accountability into
their systems, and (6) change their organizational cultures. By more
effectively using flexibilities, agencies would be in a better position
to manage their workforces, assure accountability, and transform their
cultures to address current and emerging demands.
OPM provides the necessary link to agencies to accomplish their goals
by making existing human capital flexibilities more widely known and
easier to use and by identifying additional flexibilities that can help
agencies better manage their workforces. While it has taken some
actions to inform agencies about what flexibilities are generally
available and why their use is important, OPM has significant
opportunities to strengthen its role as its moves forward to assist
agencies as an integral part of the administration's human capital
transformation efforts. By taking hold of these opportunities, OPM
could more successfully aid agencies with more comprehensive
information about the tools and authorities available to them for
managing their workforce and the most effective ways that these
flexibilities can be implemented. The new CHCO Council could be an
excellent vehicle to assist in these areas.
Recommendations for Executive Action:
Given the importance of the effective use of flexibilities as a
critical part of improved human capital management within the federal
government and consistent with OPM's ongoing efforts in this regard, we
recommend that the Director of OPM take the following actions.
* Review existing OPM regulations and guidance to determine whether
they provide agencies with needed flexibility while also incorporating
protection for employees.
* Work with and through the new Chief Human Capital Officers Council to
more thoroughly research, compile, and analyze information on the
effective and innovative use of human capital flexibilities and more
fully serve as a clearinghouse in sharing and distributing information
about when, where, and how the broad range of flexibilities are being
used, and should be used, to help agencies meet their human capital
management needs.
* Continue to identify additional personnel flexibilities needed to
better manage the federal workforce and then develop and build
consensus for needed legislation.
Agency Comments:
OPM commented on a draft of this report and agreed with the conclusions
and recommendations. OPM pointed out that in future studies that
address OPM leadership issues, in addition to surveying agency human
resource directors, we should also survey agency chief operating
officers. OPM believed that the chief operating officers have the "best
perspective and the widest array of information about recruitment and
retention issues." We agree that such future studies would benefit from
the perspectives of chief operating officers. OPM's complete comments
are shown in appendix II.
:
As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from its date. At that time, we will send copies to the Chairman,
Senate Committee on Governmental Affairs, and the Chairman and Ranking
Minority Member, House Committee on Government Reform, and other
interested congressional parties. We will also send copies to the
Director of OPM. We also will make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you have any questions about this report, please contact me on (202)
512-6806. Key contributors to this report are listed in appendix III.
[See PDF for image]
[End of figure]
J. Christopher Mihm
Director, Strategic Issues:
Signed by J. Christopher Mihm:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
This report is the second of two reports responding to a request from
the Senate Committee on Governmental Affairs and two of its
subcommittees regarding the use of human capital flexibilities in
managing agency workforces. The objectives of our first report, issued
in December 2002, were to provide information on (1) actions that
federal agencies can take to more effectively implement human capital
flexibilities and (2) agency and union officials' views related to the
use of human capital flexibilities.[Footnote 29] The objectives of this
report were to provide information on actions that the Office of
Personnel Management (OPM) has taken to facilitate the effective use of
human capital flexibilities throughout the federal government as well
as what additional actions OPM might take in this regard. Our work in
responding to this request was conducted in two phases. Phase one of
our work primarily involved surveying and interviewing the human
resources directors from the 24 largest departments and agencies. Phase
two of our work involved conducting semi-structured interviews with
managers and supervisors, human resources officials, and local union
representatives from seven federal agencies we selected for more
detailed review.[Footnote 30] This report was developed primarily from
our work during phase one.
To respond to the objectives of this report, we gathered information
from a variety of sources using several different data collection
techniques. During phase one of our work, we interviewed
representatives from OPM, the federal government's human resources
agency; Merit Systems Protection Board, a federal agency that hears and
decides civil service cases, reviews OPM regulations, and conducts
studies of the federal government's merit systems; and the National
Academy of Public Administration, an independent, nonpartisan,
nonprofit, congressionally chartered organization that assists
federal, state, and local governments in improving their performance.
We interviewed representatives of these three organizations to gather
background information on the federal government's experiences with and
use of human capital flexibilities and OPM's role in assisting agencies
in their use of personnel flexibilities. We also reviewed numerous
reports issued by these organizations on governmentwide human capital
issues, the use of various human capital flexibilities in federal
agencies, and the role of OPM. In addition, we reviewed previous GAO
reports on a broad range of human capital issues.
In the fall of 2001, we also gathered information for our objectives by
conducting semistructured interviews with the human resources directors
of the 24 largest federal departments and agencies. To produce a
general summary of the human resources directors' views, we first
reviewed their responses to the open-ended questions we had posed to
them. Based on our analysis of those responses, we identified a set of
recurring themes and then classified each director's responses in
accord with these recurring themes. At least two staff reviewers
collectively coded the responses from each of the 24 interviews and the
coding was verified when entered into a database we created for our
analysis. In addition, prior to our interviews with the 24 human
resources directors, each of the 24 officials completed a survey of
seven closed-ended questions dealing with agencies' use of human
capital flexibilities, OPM's role related to these flexibilities, and
the federal hiring process.
To update this information, we resurveyed the 24 individuals serving in
the agencies' human resources director positions in the fall of 2002,
asking the same seven questions. During the period between the 2001 and
2002 surveys, 16 of the 24 individuals serving in the positions of
human resources directors had changed. Table 1 shows the questions from
these surveys along with a summary of the answers provided. For each
item, respondents were to indicate the strength of their perception on
a 5-point scale, from "little or no extent" to "very great extent.":
Our audit work on both phases of our review was done from May 2001
through November 2002. We conducted our audit work in accordance with
generally accepted government auditing standards.
Table 1: Human Resources Directors' Responses to GAO Questionnaire on
Human Capital Flexibilities (Fall 2001 and Fall 2002):
1. To what extent are managers and supervisors within your
department/agency aware of the human capital flexibilities available to
them?; Fall 2001; Little or no extent: 1; Some
extent: 2; Moderate extent: 14; Great extent: 7; Very great extent: 0;
No basis to judge/NA: 0.
Fall 2002; Little or no extent: 0; Some extent: 1; Moderate extent:
13; Great extent: 10; Very great extent: 0; No basis to judge/NA: 0.
2. To what extent has the U.S. Office of Personnel Management (OPM)
assisted your department/agency in using human capital flexibilities
that are already available to your department/agency?; Fall 2001;
Little or no extent: 1; Some extent: 5; Moderate extent: 9; Great
extent: 6; Very great extent: 3; No basis to judge/NA: 0.
Fall 2002; Little or no extent: 2; Some extent: 6; Moderate extent: 9;
Great extent: 4; Very great extent: 3; No basis to judge/NA: 0.
3. To what extent are you satisfied with the role that OPM has played
in helping your department/agency use these available human capital
flexibilities?; Fall 2001; Little or
no extent: 0; Some extent: 7; Moderate extent: 8; Great
extent: 7; Very great extent: 0; No basis to judge/NA: 2.
Fall 2002; Little or no extent: 2; Some
extent: 5; Moderate extent: 9; Great
extent: 4; Very great extent: 3; No basis to judge/NA: 1.
4. To what extent has OPM assisted your department/agency in
identifying additional human capital flexibilities that could be
authorized?; Fall 2001; Little or
no extent: 4; Some extent: 10; Moderate extent: 4; Great
extent: 3; Very great extent: 0; No basis to judge/NA: 3.
Fall 2002; Little or no extent: 4; Some
extent: 9; Moderate extent: 5; Great
extent: 3; Very great extent: 1; No basis to judge/NA: 2.
5. To what extent are you satisfied with the role that OPM has played
in helping your department/agency identify additional human capital
flexibilities that could be authorized?; Fall 2001; Little or
no extent: 3; Some
extent: 9; Moderate extent: 6; Great
extent: 3; Very great extent: 0; No basis to judge/NA: 3.
Fall 2002; Little or no extent: 5; Some
extent: 6; Moderate extent: 4; Great
extent: 4; Very great extent: 2; No basis to judge/NA: 3.
6. To what extent is the time needed to fill a position, or "hiring
time," a problem within your department/agency?; Fall 2001; Little or
no extent: 0; Some extent: 2; Moderate extent: 7; Great
extent: 13; Very great extent: 2; No basis to judge/NA: 0.
Fall 2002; Little or no extent: 0; Some
extent: 3; Moderate extent: 8; Great
extent: 10; Very great extent: 3; No basis to judge/NA: 0.
7. Overall, would you say that OPM has helped or hindered the hiring
process in your department/agency?; Fall 2001; Little or
no extent: 0; Some extent: 5; Moderate extent: 5; Great
extent: 11; Very great extent: 2; No basis to judge/NA: 1.
Fall 2002; Little or no extent: 2; Some
extent: 2; Moderate extent: 9; Great
extent: 7; Very great extent: 3; No basis to judge/NA: 1.
Source: GAO survey data.
Note: For the Fall 2001 and Fall 2002 surveys, N=24.
[End of table]
[End of section]
Appendix II: Comments from the Office of Personnel Management:
OFFICE OF THE DIRECTOR:
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT WASHINGTON, DC 20415-1000:
April 24, 2003:
Mr. J. Christopher Mihm Director, Strategic Issues General Accounting
Office Washington DC 20548:
Dear Mr. Mihm:
Thank you for the opportunity to comment on the General Accounting
Office (GAO) draft report OPM Can Better Assist Agencies in Using
Personnel Flexibilities. (GAO-03-428):
Before commenting more specifically on the contents of the report, I
want to bring to your attention one aspect of the fundamental
methodology you employed in exploring how well the Office of Personnel
Management (OPM) has been assisting agencies. We have found that agency
human resources directors are an energetic and important source of
expertise on the human resources operations and opportunities facing
their agencies. We have also found that agency chief operating
officers, the individuals primarily responsible for implementing the
President's Management Agenda, as well as conducting the overall
administration of their organizations, often have the best perspective
and the widest array of information about recruitment and retention
issues across their agencies. For that reason, I urge you to poll their
perceptions in any future studies intended to address broad-based
leadership issues.
Having said that, I do appreciate that the report acknowledges the
considerable work we at OPM have done to exercise our leadership in
promoting the appropriate use of human resources management
flexibilities in federal agencies. It mentions, for example, that our
web site offers a handbook on available flexibilities and provides a
clearinghouse of information on best practices in performance
management and accountability. The report also credits us with working
to bring about additional flexibilities, citing our studies on the pay
system and the hiring process, and our efforts to streamline the
process for implementing demonstration projects and for expanding the
use of flexibilities proven useful in those projects.
It should also be noted that the OPM web site provides numerous
resources on the human resources management flexibilities available to
agencies, such as in-depth guidance, fact sheets, frequently asked
questions, and sample model agency plans. This guidance covers
recruitment and relocation bonuses, retention allowances, the student
loan repayment program, special salary rates, superior qualifications
appointments and other pay-setting flexibilities, and alternative work
schedules.
Still, the report calls on us to do more to determine how these
flexibilities are being used and to disseminate information about their
most effective use. We agree with GAO and
believe that the initiatives we have taken, most importantly our
reorganization, will lay the groundwork for more aggressive and
productive efforts.
We are now restructured, with new leadership and a clear focus on
helping agencies make the best use of their human capital. The newly
formed Division for Human Capital Leadership and Merit Systems
Accountability includes human capital officers, who have been
coordinating closely with the Office of Management and Budget (OMB)
over the past year, to help agencies develop strategic human capital
management plans. Most of those agencies are now beginning to implement
those plans, and we are ready to explore with agencies what personnel
flexibilities work best for them and share our findings with agencies
facing similar challenges. As we work with agencies to develop a more
strategic approach to human capital management, they will be able to
make a business case for additional flexibilities that can help them
meet specific goals. OPM has encouraged and will continue to encourage
agencies to use these business cases to align the use of human
resources management flexibilities with their overall budget
strategies.
OPM welcomes GAO's suggestion to "more thoroughly research, compile,
and analyze information on the effective and innovative use of
flexibilities." We are looking forward to combining our assessments of
human resource flexibilities with the work of the Chief Human Capital
Officers Council established under Title XIII of the Homeland Security
Act of 2002. We will work closely with the new Council to promote the
use of the additional flexibilities provided in the Act.
In addition, the President's budget for FY 2004 includes an additional
$2.5 million to expand and enhance our program evaluation efforts.
Information from improved program evaluation will be applied to
enhancing guidance on the use of flexibilities.
OPM also recognizes the need to communicate with agencies at all levels
and will be focusing our field staff to promote and monitor agency
efforts at the bureau and installation levels, ensuring that managers
throughout the organization are aware of flexibilities and are using
them appropriately. For example, OPM will soon be issuing its report to
Congress on the agencies' use of the Federal student loan repayment
program in Fiscal Year 2002. The report provides a comprehensive
summary of how the student loan repayment program is being used and the
extent to which the program has been successful in helping agencies
achieve their recruitment and retention goals.
OPM recognizes that the federal personnel system must become more
varied and flexible. We will continue reviewing the existing OPM
regulations and guidance with a renewed focus on identifying useful
changes, as well as exploring broader interpretations of regulations.
OPM's newly formed Division for Strategic Human Resources Policy
includes a human resources studies unit that will perform in-depth
planning and analysis
to identify policy needs. At the same time it is critically important
that OPM's regulations be clear, flexible, and relevant to agency needs
and be interpreted in a way that provides needed assistance and
flexibility for agencies' human capital management programs.
Additionally, OPM intends to continue identifying legislative options
for additional flexibilities, as well as encourage efforts to bring
about governmentwide authorization and implementation of innovative
practices and flexibilities that have been sufficiently tested and
considered successful. OPM was gratified to see one of the
flexibilities that it has successfully tested through numerous
demonstration projects, category grouping, enacted governmentwide
through the recent Homeland Security Act of 2002, and will continue to
champion the use of such successful personnel flexibilities. In
addition to actively supporting passage of proposed legislation that
would enhance flexibilities and provide more latitude, OPM will
increase other legislative efforts.
OPM is also aware of the need to educate the agencies. GAO's report
notes that human resources directors for two-thirds of the agencies
contacted had changed during the period between the 2001 and the 2002
surveys. Armed with copies of the documents listed above, our outreach
groups, strike forces, and human capital officers will seek
opportunities to consult with these human resources directors and keep
them abreast of available flexibilities. These OPM representatives will
serve as liaisons to the agencies, facilitating the effective use of
these personnel flexibilities. OPM will also assist agencies in
identifying and developing additional flexibilities to help manage our
greatest asset, human capital, in building successful, high-performance
organizations.
GAO's report makes reference to an ongoing example of OPM's outreach
efforts to educate agencies, i.e., the Department of Education.
However, we would appreciate the opportunity to clarify Education's
current initiatives and OPM's role in them as they are contained in the
GAO report. We have been an active partner in the Department of
Education's agency's comprehensive analysis of its workforce,
personnel, and management issues in an effort to identify ways to
improve its human capital system. While a demonstration project is one
of the flexibilities under consideration, no project is currently being
implemented at the Department of Education.
Finally, OPM appreciates your support for legislative remedies to
buttress our efforts to expand the application of flexibilities that
have proven to be successful in demonstration projects and to enhance
the flexibilities provided for in the Homeland Security Act of 2002. We
acknowledge GAO's vital interest in improving human capital management
and continue to welcome your counsel.
Sincerely,
Coles Kay James
Director:
Signed by Coles Kay James:
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
J. Christopher Mihm or Edward Stephenson, (202) 512-6806:
Acknowledgments:
In addition to the persons above, K. Scott Derrick, Charlesetta Bailey,
Tom Beall, Ridge Bowman, Karin Fangman, Molly K. Gleeson, Judith
Kordahl, Shelby D. Stephan, Gary Stofko, Mike Volpe, and Scott
Zuchorski made key contributions to this report.
(450158):
:
FOOTNOTES
[1] U.S. General Accounting Office, A Model of Strategic Human Capital
Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002).
[2] U.S. General Accounting Office, Human Capital: Effective Use of
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
2 (Washington, D.C.: Dec. 6, 2002).
[3] U.S. Office of Personnel Management, Human Resources Flexibilities
and Authorities in the Federal Government (Washington, D.C.: Updated
July 25, 2001).
[4] For additional information on OPM's restructuring efforts see our
report: Major Management Challenges and Program Risks: Office of
Personnel Management (GAO-03-115, January 2003).
[5] Pub. L. No. 107-296, Nov. 25, 2002.
[6] The President's Management Agenda includes five governmentwide
initiatives: the strategic management of human capital, competitive
sourcing, improved financial performance, budget and performance
integration, and expanded electronic government.
[7] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Office of Personnel Management, GAO-03-115 (Washington,
D.C.: January 2003).
[8] National Academy of Public Administration, Revitalizing Federal
Management: Managers and Their Overburdened Systems (Washington, D.C.:
1983).
[9] GAO-02-373SP.
[10] Title 5 laws (or requirements) refer to those personnel management
laws, procedures, and associated functions generally applicable to
federal employees. Most federal personnel laws governing topics such as
classification, appointment, pay and benefits, and adverse action are
contained in Title 5. Title 5 also contains laws unrelated to federal
personnel issues, such as the Administrative Procedure Act and the
Freedom of Information Act, that are also applicable to federal
agencies.
[11] U.S. Office of Personnel Management, HRM Policies and Practices in
Title 5-Exempt Organizations (Washington, D.C.: August 1998).
[12] U.S. Office of Personnel Management, Demonstration Projects and
Alternative Personnel Systems: HR Flexibilities and Lessons Learned
(Washington, D.C.: 2001).
[13] S. 1612, 107th Cong., 1ST sess.
[14] GAO-03-2.
[15] U.S. Office of Personnel Management, A Fresh Start for Federal
Pay: The Case for Modernization (Washington, D.C.: April 2002).
[16] During the period between the 2001 and 2002 surveys, 16 of the 24
individuals serving in the positions of human resources directors had
changed.
[17] The recently enacted Homeland Security Act of 2002 establishes an
Interagency Chief Human Capital Officer Council, which could replace
the Human Resources Management Council.
[18] This requirement for workforce planning and restructuring analyses
is contained in OMB Bulletin No. 01-07, dated May 8, 2001.
[19] GAO-01-357T.
[20] U.S. General Accounting Office, Results-Oriented Cultures: Using
Balanced Expectations to Manage Senior Executive Performance, GAO-02-
966 (Washington, D.C.: Sept. 27, 2002).
[21] Unless waived by OPM or an agency pursuant to a grant of authority
by OPM, an amount equal to the annuity will be deducted from the
reemployed annuitant's salary when the federal civilian retiree is
reemployed. See 5 U.S.C. 8344 and 8468 and 5 CFR part 553.
[22] See 5 CFR 315, Subpart H.
[23] Guidance on developing, implementing, and evaluating an OPM-
sponsored personnel demonstration project can be found in OPM's
Demonstration Projects Handbook and OPM's Demonstration Projects
Evaluation Handbook.
[24] U.S. General Accounting Office, Human Capital: Meeting the
Governmentwide High-Risk Challenge, GAO-01-357T (Washington, D.C.:
Feb. 1, 2001).
[25] U.S. General Accounting Office, Managing For Results: Using
Strategic Human Capital Management to Drive Transformational Change,
GAO-02-940T (Washington, D.C.: July 15, 2002).
[26] We discussed agency actions to shift their human capital offices
from primarily compliance activities to consulting activities in our
report: Human Capital: Selected Agency Actions to Integrate Human
Capital Approaches to Attain Mission Results (GAO-03-446, April 2003).
[27] The six human capital standards for success in OPM's Human Capital
Assessment and Accountability Framework are strategic alignment,
workforce planning and deployment, leadership and knowledge management,
results-oriented performance culture, talent, and accountability.
[28] U.S. General Accounting Office, Government Management:
Observations on OMB's Management Leadership Efforts, GAO/T-GGD/AIMD-
99-65 (Washington, D.C.: Feb. 4, 1999).
[29] U.S. General Accounting Office, Human Capital: Effective Use of
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
2 (Washington, D.C.: Dec. 6, 2002).
[30] The seven agencies were the Department of the Air Force, General
Services Administration, Internal Revenue Service, International Trade
Administration, U.S. Mint, Department of State, and Veterans Benefits
Administration.
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