Human Capital
DHS Personnel System Design Effort Provides for Collaboration and Employee Participation Gao ID: GAO-03-1099 September 30, 2003The success of the transformation and implementation of the Department of Homeland Security (DHS) is based largely on the degree to which human capital management issues are addressed. Recognizing this, the legislation creating DHS provided it with significant flexibility to design a modern human capital management system. Congressional requesters asked GAO to describe the process DHS has in place to design its human capital system and involve employees, and analyze the extent to which this process reflects elements of successful transformations.
The effort to design a human capital management system for DHS generally reflects important elements of effective transformations. (1) Leadership: One of the strengths of the effort to transform the culture of organizations going into DHS has been the on-going commitment of both DHS and Office of Personnel Management (OPM) leaders to stimulate and support the effort to design a human capital system. (2) Strategic Goals: DHS is currently developing a strategic plan. Although DHS human resource leaders are included on the strategic planning team, it will not be complete until the end of September 2003. Consequently, DHS will need to ensure that the development of the human capital policy options is integrated with the accomplishment of DHS programmatic goals as defined in the forthcoming strategic plan. Such integration is important to ensure that the human capital system enables the department to acquire, develop, and retain the core competencies necessary for DHS to accomplish its programmatic goals. (3) Key Principles: The DHS Secretary and OPM Director outlined four principles to serve as a critical framework for the human capital system. These principles appropriately identify the need to support the mission and employees of the department, protect basic civil service principles, and hold employees accountable for performance. (4) Timeline: Agency officials established an ambitious 9- to 10-month timeline for completing the design process, aiming to issue final regulations in early 2004. Some DHS stakeholders we interviewed expressed concerns about the compressed schedule. Officials leading the design effort report the aggressive schedule is necessary to relieve employee anxiety and maximize the time available for implementation. (5) Design Team: The design team includes staff from multiple organizational units within DHS, OPM, and the three major unions. (6) Communication: DHS recently finalized a communication plan that provides a structured and planned approach to communicate with DHS stakeholders regarding the human capital system. Moving forward, DHS will need to provide adequate opportunities for feedback once the options are released. (7) Employee Involvement: Employees are provided multiple opportunities to be included in the design process, including participation in the Core Design Team, the Town Hall meetings, the field team, the focus groups, and an e-mail mailbox for employee comments. Experience has shown that in making major changes in the cultures of organizations, how it is done, when it is done, and the basis on which it is done can make all the difference in whether it is ultimately successful. The analysis of DHS's effort to design a human capital system can be particularly instructive in light of legislative requests for agency-specific human capital flexibilities at the Department of Defense and the National Aeronautics and Space Administration.
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-03-1099, Human Capital: DHS Personnel System Design Effort Provides for Collaboration and Employee Participation
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Report to Congressional Requesters:
September 2003:
HUMAN CAPITAL:
DHS Personnel System Design Effort Provides for Collaboration and
Employee Participation:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-1099] GAO-03-
1099:
GAO Highlights:
Highlights of GAO-03-1099, a report to congressional requesters
Why GAO Did This Study:
The success of the transformation and implementation of the Department
of Homeland Security (DHS) is based largely on the degree to which
human capital management issues are addressed. Recognizing this, the
legislation creating DHS provided it with significant flexibility to
design a modern human capital management system.
Congressional requesters asked GAO to describe the process DHS has in
place to design its human capital system and involve employees, and
analyze the extent to which this process reflects elements of
successful transformations.
What GAO Found:
The effort to design a human capital management system for DHS
generally reflects important elements of effective transformations.
* Leadership: One of the strengths of the effort to transform the
culture of organizations going into DHS has been the on-going
commitment of both DHS and Office of Personnel Management (OPM)
leaders to stimulate and support the effort to design a human capital
system.
* Strategic Goals: DHS is currently developing a strategic plan.
Although DHS human resource leaders are included on the strategic
planning team, it will not be complete until the end of September
2003. Consequently, DHS will need to ensure that the development of
the human capital policy options is integrated with the accomplishment
of DHS programmatic goals as defined in the forthcoming strategic
plan. Such integration is important to ensure that the human capital
system enables the department to acquire, develop, and retain the core
competencies necessary for DHS to accomplish its programmatic
goals.
* Key Principles: The DHS Secretary and OPM Director outlined four
principles to serve as a critical framework for the human capital
system. These principles appropriately identify the need to support
the mission and employees of the department, protect basic civil
service principles, and hold employees accountable for performance.
* Timeline: Agency officials established an ambitious 9- to 10-month
timeline for completing the design process, aiming to issue final
regulations in early 2004. Some DHS stakeholders we interviewed
expressed concerns about the compressed schedule. Officials leading
the design effort report the aggressive schedule is necessary to
relieve employee anxiety and maximize the time available for
implementation.
* Design Team: The design team includes staff from multiple
organizational units within DHS, OPM, and the three major
unions.
* Communication: DHS recently finalized a communication plan that
provides a structured and planned approach to communicate with DHS
stakeholders regarding the human capital system. Moving forward, DHS
will need to provide adequate opportunities for feedback once the
options are released.
* Employee Involvement: Employees are provided multiple opportunities
to be included in the design process, including participation in the
Core Design Team, the Town Hall meetings, the field team, the focus
groups, and an e-mail mailbox for employee comments.
Experience has shown that in making major changes in the cultures of
organizations, how it is done, when it is done, and the basis on which
it is done can make all the difference in whether it is ultimately
successful. The analysis of DHS‘s effort to design a human capital
system can be particularly instructive in light of legislative
requests for agency-specific human capital flexibilities at the
Department of Defense and the National Aeronautics and Space
Administration.
What GAO Recommends:
As the process to develop and implement a new human capital system at
DHS moves forward, we recommend that the Secretary of DHS and Director
of OPM ensure that the human capital management system is designed to
accomplish the mission, objectives, and goals of the department. In
addition, we are recommending that the Secretary ensure that the
communication strategy used to support the human capital system
maximizes opportunities for employee involvement.
DHS and OPM commented on a draft of this report and generally agreed
with its content. The report was revised to reflect agency comments.
www.gao.gov/cgi-bin/getrpt?GAO-03-1099.
To view the full product, 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]
Contents:
Letter:
Results in Brief:
Background:
Design Process Provides for Collaboration:
DHS and OPM Leadership Stimulates and Supports the Human Capital
Transformation:
DHS Personnel System will Need To Be Integrated with Mission and
Program Goals:
Process Steered by Guiding Principles:
Ambitious Timeline Established:
Design Participants Represent a Mix of DHS and OPM Employees:
Communications Plan Recently Completed:
Design Process Provides for Employee Involvement:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Practices and Implementation Steps for Mergers and
Transformation:
Appendix II: Design Process:
Appendix III: Characteristics of Core Design Team Members:
Appendix IV: Comments from the Office of Personnel Management:
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Acknowledgments:
Tables Tables :
Table 1: Positions Transferred to DHS as of March 8, 2003:
Table 2: Design Team Membership:
Table 3: Who Selected Design Team Member:
Table 4: Subgroup Membership:
Table 5: Human Capital Professional versus Other Experience:
Table 6: Years of Experience of Design Team Members:
Figures:
Figure 1: DHS Personnel System Design Process:
Figure 2: The Three Stages of the Design Process and Their Roles:
Figure 3: Core Design Team Members Who Describe Themselves as Human
Capital Professionals:
Figure 4: Percent of Core Design Team Members with Work Experience
Outside Headquarters:
Figure 5: Key Practices and Implementation Steps for Mergers and
Transformations:
Abbreviations:
AFGE: American Federation of Government Employees:
APHIS: Animal and Plant Health Inspection Service:
CIA: Central Intelligence Agency:
CPDF: Central Personnel Data File:
DHS: Department of Homeland Security:
DOD: Department of Defense:
DOJ: Department of Justice:
FACA: Federal Advisory Committee Act:
FBI: Federal Bureau of Investigation:
FEMA: Federal Emergency Management Agency:
FLETC: Federal Law Enforcement Training Center:
FTE: full-time equivalent:
INS: Immigration and Naturalization Service:
NAAE: National Association of Agricultural Employees:
NASA: National Aeronautics and Space Administration:
NSA: National Security Agency:
NTEU: National Treasury Employees Union:
OMB: Office of Management and Budget:
OPM: Office of Personnel Management:
TSA: Transportation Security Administration:
Letter September 30, 2003:
The Honorable George V. Voinovich
Chairman, Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia
Committee on Governmental Affairs
United States Senate:
The Honorable Jo Ann Davis
Chairwoman, Subcommittee on Civil Service and Agency Organization
Committee on Government Reform
United States House of Representatives:
The creation of the Department of Homeland Security (DHS) represents an
historic moment for the federal government to fundamentally transform
how the nation will protect itself from terrorism. DHS now has an
opportunity--and a responsibility--to transform and integrate a
disparate group of agencies with multiple missions, values, and
cultures into a strong and effective cabinet department. Together with
this unique opportunity, however, also comes significant risk to the
nation that could occur if this transformation is not implemented
successfully. In fact, we designated this implementation and
transformation as high risk in January 2003.[Footnote 1]
We convened a forum in September 2002 to identify useful practices and
lessons learned from major public and private transformations that DHS
and other federal agencies could use to inform transformation
efforts.[Footnote 2] While no two mergers or transformation efforts are
exactly alike and the "best" approach depends on a variety of factors
specific to each context, there was general agreement on a number of
key practices. These practices include:
1. Ensure top leadership drives the transformation. Leadership must set
the direction, pace, and tone and provide a clear, consistent rationale
that brings everyone together behind a single mission.
2. Establish a coherent mission and integrated strategic goals to guide
the transformation. Together, these define the culture and serve as a
vehicle for employees to unite and rally around.
3. Focus on a key set of principles and priorities at the outset of the
transformation. A clear set of principles and priorities serves as a
framework to help the organization create a new culture and drive
employee behaviors.
4. Set implementation goals and a timeline to build momentum and show
progress from day one. Goals and a timeline are essential because the
transformation could take years to complete.
5. Dedicate an implementation team to manage the transformation
process. A strong and stable team is important to ensure that the
transformation receives the needed attention to be sustained and
successful.
6. Use the performance management system to define responsibility and
assure accountability for change. A "line of sight" shows how team,
unit, and individual performance can contribute to overall
organizational results.
7. Establish a communication strategy to create shared expectations and
report related progress. The strategy must reach out to employees,
customers, and stakeholders and engage them in a two-way exchange.
8. Involve employees to obtain their ideas and gain their ownership for
the transformation. Employee involvement strengthens the process and
allows them to share their experiences and shape policies.
9. Build a world-class organization. Building on a vision of improved
performance, the organization adopts the most efficient, effective, and
economical personnel, system, and process changes and continually seeks
to implement best practices.
Building on the forum, we recently identified specific implementation
steps for these key practices.[Footnote 3] (See app. I). Many mergers
do not live up to their potential. Research suggests that the failure
to adequately address a wide variety of people and cultural issues is
at the heart of unsuccessful mergers and transformations. Therefore,
strategic human capital management must be at the center of a
successful transformation effort. The legislation creating DHS provided
it with significant flexibility to design a modern human capital
management system.[Footnote 4] Specifically, the department may deviate
from requirements contained in Title 5 of the United States Code
relating to performance appraisals, classification, pay rates and
systems,[Footnote 5] and adverse actions and appeals. However, the
department may not deviate from other Title 5 provisions including the
merit system principles, prohibited personnel practices, equal
employment opportunity, civil service examination and selection, and
pay administration.[Footnote 6] In addition, for hiring employees, the
department may take advantage of the governmentwide personnel reform
measures contained in the Homeland Security Act of 2002, including
using a category rating system when evaluating applicants for
employment and selecting qualified applicants for positions using
direct hiring procedures.[Footnote 7] Regulations for the DHS human
capital system are to be prescribed jointly by the Secretary of DHS and
the Director of the Office of Personnel Management (OPM). The
legislation also noted that it is the sense of the Congress that
employees be involved in the creation of the new human capital system.
In light of the challenge to transform the organizations joining the
department and establish a modern human capital management system, you
asked that we undertake a series of human capital engagements to assist
DHS in its implementation efforts. As agreed with your office, this is
one of several reports we will issue that will track how DHS begins to
make use of its new human capital authorities. Specifically, this
report (1) describes the process DHS has in place to design its human
capital system and involve employees and (2) analyzes the extent to
which this process reflects what we have found to be important elements
of successful transformations.
To address our objectives, we reviewed documents relevant to DHS's
transformation and personnel system design effort and applicable laws
and regulations. These included the April 2003 Human Resources Systems
Design Team Resource Book, the weekly DHS newsletter, OPM data on DHS
employees and unions, the June 2003 Communications Plan, and others. We
interviewed officials from DHS and OPM headquarters who are involved in
the effort to design the new human capital system. Human resource
leaders from the five largest components within DHS were also
interviewed - the Transportation Security Administration (TSA), Federal
Emergency Management Agency (FEMA), the organizations formerly known as
the Immigration and Naturalization Service (INS) and the U.S. Customs
Service, and the U.S. Coast Guard - to learn their impressions of the
design process. Interviews with officials from the three largest
employee unions at DHS - the American Federation of Government
Employees (AFGE), the National Treasury Employees Union (NTEU), and the
National Association of Agricultural Employees (NAAE) - provided
additional insights. We then analyzed the information gathered in light
of seven of the nine transformation practices. Practice 6 was excluded
from the analysis because the effort to design a human capital system
includes the development of a performance management system and
Practice 9 was excluded because developing an effective human capital
system is one of many efforts required to become a world-class
organization. We conducted our work in accordance with generally
accepted government auditing standards between March and September
2003.
The description and analysis of DHS's effort to design a strategic
human capital management system can be particularly instructive in
light of legislation that requests additional authority for human
capital management at the Department of Defense (DOD) and the National
Aeronautics and Space Administration (NASA). We have consistently
supported the need for government transformation and the concept of
modernizing federal human capital policies, as underscored in recent
testimonies and our January 2003 report which described why we find
that strategic human capital management remains a governmentwide high-
risk area.[Footnote 8] This effort can also prove instructive for
future human capital management and reorganization efforts within
specific units of DHS as the new department is implemented and
transformed over time into a cohesive organization.
Importantly, while the design process used to develop the human capital
system is significant, effective implementation of the system is
similarly crucial to effective human capital management in the new
department. In short, a successful design effort is essential to, but
does not guarantee, effective implementation.
Results in Brief:
DHS's and OPM's effort to design a new human capital system is
collaborative and facilitates participation of employees from all
levels of the department. The process is divided into three stages:
research, outreach, and drafting of initial personnel system options;
review of the options; and development of proposed regulations. First,
the Core Design Team conducted research on human capital approaches,
communicated with and gathered feedback from employees, and developed
options. Second, the Senior Review Advisory Committee will review these
options and forward its recommendations to the DHS Secretary and OPM
Director. Third, the Secretary and Director will then propose draft
regulations for the human capital system, engage in the statutory
collaboration period, and issue final regulations by early 2004. The
stages include employees from DHS and OPM, as well as representatives
from the department's three largest unions. See figure 1.
Figure 1: DHS Personnel System Design Process:
[See PDF for image]
[End of figure]
This effort to design a human capital management system for DHS
generally reflects what we have found to be important elements of
effective transformations.
* Ensure top leadership drives the transformation. One of the strengths
of the effort to transform the culture of organizations going into DHS
has been the on-going commitment of both DHS and OPM leaders to
stimulate and support the effort to design a human capital system.
* Establish a coherent mission and integrated strategic goals to guide
the transformation. DHS is currently developing a strategic plan.
Although DHS human resource leaders are included on the strategic
planning team, the final plan will not be complete until late September
2003. Consequently, DHS will need to ensure that the development of the
human capital policy options by the Core Design Team is integrated with
the accomplishment of DHS programmatic goals as defined in the
forthcoming strategic plan. Such integration is important to ensure
that the human capital system enables the department to acquire,
develop, and retain the core competencies necessary for DHS to
accomplish its programmatic goals. Moving forward, it is essential that
the Senior Review Advisory Committee, the Secretary, and the Director
ensure that the new human capital system is aligned with the DHS
strategic plan.
* Focus on a key set of principles and priorities at the outset of the
transformation. The Secretary and Director outlined four principles
during the first design meeting in April that have served as a
framework for the activities of the Core Design Team.[Footnote 9] These
principles appropriately identify the need to support the mission and
employees of the department, protect basic civil service principles,
and hold employees accountable for performance.
* Set implementation goals and a timeline to build momentum and show
progress. Agency officials established an ambitious 9-to 10-month
timeline for completing the design process, aiming to issue final
regulations in early 2004. Some DHS component human resource directors
and other stakeholders we interviewed expressed concerns about the
compressed schedule. Officials leading the Core Design Team report the
aggressive schedule is necessary to relieve employee anxiety and
maximize the time available for implementation within the 5-year window
outlined in the DHS legislation.
* Dedicate an implementation team to manage the transformation process.
The membership of the design team includes participants from multiple
organizational units within DHS, OPM, and the three major unions.
* Establish a communication strategy to create shared expectations and
report related progress. DHS recently completed a noteworthy and
substantive communication plan that provides a structured and planned
approach to communicate with DHS stakeholders regarding the human
capital system. The objectives of the plan are to: raise awareness,
disseminate information, and promote a clear understanding of the new
human capital system; manage stakeholder expectations and address their
concerns; and provide opportunities for a two-way dialogue. Building on
its current efforts, DHS will need to continue to provide adequate
opportunities for feedback once the options are released, including
providing an adequate level of detail on how the new system will impact
employees.
* Involve employees to obtain their ideas and gain their ownership.
Employees are provided with multiple opportunities to be included in
the design process, including participation in the Core Design Team,
the Town Hall meetings, the focus groups, the field team, and an e-mail
mailbox for employee comments. Continued employee involvement is
critical as options are identified, regulations are proposed, and the
human capital system is implemented.
As the process to develop and implement a new human capital system at
DHS moves forward, we are recommending that as the DHS strategic
planning effort continues that the Secretary of DHS, in conjunction
with the Director of OPM, ensure that the human capital management
system is fully integrated with the accomplishment of the department's
mission, objectives, and goals. We are also recommending that the
Secretary of DHS build on the progress that has been made and ensure
that the communication strategy used to support the human capital
system maximizes opportunities for employee involvement through the
completion of the design process, the release of the system options,
and implementation, with special emphasis placed on seeking the
feedback and buy-in of frontline employees in the field.
OPM provided written comments on a draft of this report, which are
printed in appendix IV. DHS provided technical comments by e-mail.
DHS and OPM generally agreed with the contents of the report. However,
both DHS and OPM expressed a concern that we misunderstood the role of
the field team in the design process. Each described the role of the
field team as more limited than our original understanding. While
gathering additional information from DHS, NTEU, AFGE, and NAAE to
clarify the role and activities of the field team, we learned that its
role evolved over the course of the design effort, that it had no
decision-making role in the design process, and that it was used as a
recurring focus group. Accordingly, we changed the draft to reflect the
field team's current role. DHS and OPM also provided a number of
technical suggestions that have been incorporated where appropriate.
Background:
The creation of DHS represents enormous leadership challenges,
encompassing opportunities in multiple management areas. Sustained and
inspired political and career leadership will be essential to
successfully implementing the transformation of DHS. Success will also
largely depend on its ability to attract and retain the right people;
set the appropriate priorities for the department; and build effective
partnerships with the appropriate public, private, and not-for-profit
sector entities.
Mission and Organization of DHS:
In establishing the new department, the Congress articulated a seven-
point mission for DHS:
* Prevent terrorist attacks within the United States.
* Reduce the vulnerability of the United States to terrorism.
* Minimize the damage and assist in the recovery from terrorist
attacks.
* Carry out all functions of entities transferred to the department,
including by acting as a focal point regarding natural and man-made
crises and emergency planning.
* Ensure that the functions of the agencies within the department that
are not directly related to securing the homeland are not diminished or
neglected.
* Ensure that the overall economic security of the United States is not
diminished by efforts aimed at securing the homeland.
* Monitor connections between illegal drug trafficking and terrorism,
coordinate efforts to sever such connections, and otherwise contribute
to efforts to interdict illegal drug trafficking.
DHS is generally organized into four mission-related directorates:
Border and Transportation Security, Emergency Preparedness and
Response, Science and Technology, and Information Analysis and
Infrastructure Protection.
* The Border and Transportation Security directorate consolidates the
major border security and transportation operations under one roof,
including the U.S. Customs Service, parts of the Immigration and
Naturalization Service (INS), the Transportation Security
Administration (TSA), the Federal Law Enforcement Training Center
(FLETC), The Federal Protective Service, the Office for Domestic
Preparedness from the Department of Justice (DOJ), and part of the
Animal and Plant Health Inspection Service (APHIS).
* The Emergency Preparedness and Response directorate integrates
domestic disaster preparedness training and government disaster
response and includes the Federal Emergency Management Agency (FEMA),
the Strategic National Stockpile and the National Disaster Medical
System, the Nuclear Incident Response Team, the Domestic Emergency
Support Teams from DOJ, and the National Domestic Preparedness Office
from the Federal Bureau of Investigation (FBI).
* The Science and Technology directorate coordinates scientific and
technological advantages when securing the homeland and will include
CBRN Countermeasures Programs, the Environmental Measurements
Laboratory, the National Bio-Weapons Defense Analysis Center, and the
Plum Island Animal Disease Center.
* The Information Analysis and Infrastructure Protection directorate
accesses and analyzes intelligence, law enforcement data, and other
information involving threats to homeland security and evaluating
vulnerabilities from state and local agencies, the private sector, and
federal agencies such as the Central Intelligence Agency (CIA), FBI,
and the National Security Agency (NSA). It includes the Critical
Infrastructure Assurance Office, the Federal Computer Incident Response
Center, the National Communications System, the National Infrastructure
Protection Center, and the energy security and assurance program
activities of the Department of Energy.
In addition to the four mission-related directorates, the U.S. Secret
Service and the U.S. Coast Guard remain intact as distinct entities in
DHS; INS adjudications and benefits programs report directly to the
Deputy Secretary as the Bureau of Citizenship and Immigration Services;
and the Management Directorate is responsible for budget, human
capital, and other general management issues.
DHS's People:
DHS has approximately 155,000 civilian positions and 54,000 military
positions in the U.S. Coast Guard, for a total of just over
209,000.[Footnote 10] (See table 1.) Of the civilian employees, a vast
majority transferred from seven organizations: TSA, INS, Customs, FEMA,
the U.S. Coast Guard, the U.S. Secret Service, and APHIS. Of the
civilian employees who transferred from these seven organizations,
approximately 90 percent are stationed outside the Washington, D.C.
metropolitan area. DHS employees work in over 300 metropolitan
statistical areas.
Table 1: Positions Transferred to DHS as of March 8, 2003:
Originating Department: Agriculture; Originating Agency: Import and
Entry Inspection[B]; Positions Transferred[A]: 2,655.
Originating Department: Commerce; Originating Agency: Critical
Infrastructure Assurance Office; Positions Transferred[A]: 50.
Originating Department: Defense; Originating Agency: National
Communications System; Positions Transferred[A]: 105.
Originating Department: Department of Energy; Originating Agency:
[Empty]; Positions Transferred[A]: 101.
Originating Department: Federal Emergency Management Agency;
Originating Agency: [Empty]; Positions Transferred[A]: 8,542.
Originating Department: General Services Administration; Originating
Agency: [Empty]; Positions Transferred[A]: 1,713.
Originating Department: Health and Human Services; Originating Agency:
[Empty]; Positions Transferred[A]: 91.
Originating Department: Justice; Originating Agency: Immigration and
Naturalization Service; Positions Transferred[A]: 36,769.
Originating Department: Justice; Originating Agency: Other; Positions
Transferred[A]: 385.
Originating Department: Transportation; Originating Agency: United
States Coast Guard[C]; Positions Transferred[A]: 60,403.
Originating Department: Transportation; Originating Agency:
Transportation Security Administration; Positions Transferred[A]:
68,859.
Originating Department: Transportation; Originating Agency: Other;
Positions Transferred[A]: 40.
Originating Department: Treasury; Originating Agency: United States
Customs Service; Positions Transferred[A]: 22,028.
Originating Department: Treasury; Originating Agency: United States
Secret Service; Positions Transferred[A]: 6,251.
Originating Department: Treasury; Originating Agency: Federal Law
Enforcement Training Center; Positions Transferred[A]: 922.
Originating Department: Treasury; Originating Agency: Other;
Positions Transferred[A]: 191.
Total; Positions Transferred[A]: 209,105.
Source: DHS.
[A] This column reflects positions - full-time, part-time, and vacant -
and does not represent FTE employment or the total number of employees
on board.
[B] This represents a specific function from APHIS that was transferred
to DHS.
[C] This represents both civilian and military U.S. Coast Guard
positions.
[End of table]
These employees serve in positions ranging from inspectors,
investigators, police, and intelligence to attorneys and administrative
services. DHS employees are compensated under multiple pay and benefits
systems, are hired using varied authorities, and undergo performance
appraisals with different rating scales and factors.
According to OPM, just over 49,000, or just under one-third, of DHS
civilian employees are represented by unions. This includes 16
different unions divided into 75 separate bargaining units. The 3
unions representing the largest number of employees are AFGE, NTEU, and
NAAE. AFGE represents almost 33,000 employees who were transferred from
INS, the U.S. Coast Guard, FEMA, and others. NTEU represents over
12,000 employees who were transferred largely from Customs. NAAE
represents just over 2,000 employees who were transferred from APHIS.
Design Process Provides for Collaboration:
DHS's and OPM's effort to design a new human capital system is
collaborative and facilitates participation of employees from all
levels of the department. The process is divided into three stages:
research, outreach, and drafting of initial personnel system options;
review of the options; and development of proposed regulations. First,
the Core Design Team conducted research on human capital approaches,
communicated with and gathered feedback from employees, and developed
options. Second, the Senior Review Advisory Committee will review these
options and forward its recommendations to the DHS Secretary and OPM
Director. Third, the Secretary and Director will then propose draft
regulations for the human capital system, engage in the statutory
collaboration period, and issue final regulations by early 2004. The
stages include employees from DHS and OPM, as well as representatives
from the department's three largest unions. This process is described
in further detail in appendix II.
As figure 2 shows, the Core Design Team, the first stage of the design
process, is responsible for research, outreach, and drafting initial
options for the personnel system. This group is led by an equal number
of DHS and OPM executives. Members of the Core Design Team, which
includes employees from headquarters, the field, and unions, are full-
time participants who work on one of two subgroups: (1) pay and
performance or (2) labor and employee relations--reflecting the areas
of Title 5 from which DHS may deviate.[Footnote 11] The work of the
Core Design Team is to result in a broad range of options for the
Senior Review Advisory Committee by late September 2003.
Figure 2: The Three Stages of the Design Process and Their Roles:
[See PDF for image]
[End of figure]
The second stage of the design process is made of the Senior Review
Advisory Committee. The committee's members include top executives from
DHS, OPM, and the three major unions and they are advised by a team of
external human capital experts. The committee is provided less than a
month to review the system options and forward its iteration for the
Secretary and Director to consider.[Footnote 12] The committee's time
frame for completing this task is October 2003. During the committee's
public deliberations, they may choose to eliminate, create, and/or
prioritize the options, or may recommend implementation strategies.
Once the Secretary and Director receive the list of options from the
Senior Review Advisory Committee, they may edit, remove, or develop
alternatives to the proposed options as the third stage of the design
process. They expect to announce the proposed regulations in November
2003, which will trigger the statutory collaboration process so final
regulations can be issued in early 2004. As called for in the
legislation, employee representatives have 30 calendar days to comment
and make recommendations. The Secretary and Director are then to follow
the provisions of the statutory reconciliation process for no less than
30 days.[Footnote 13]
DHS and OPM Leadership Stimulates and Supports the Human Capital
Transformation:
DHS and OPM leaders have consistently underscored their personal
commitment to the design process and speak openly in support of it.
When the DHS legislation was under consideration, we testified that the
single most important element of successful reorganizations is the
sustained commitment of top leaders.[Footnote 14] In our report that
describes the key practices for successful mergers and transformations,
we note that top leadership that is clearly and personally involved
provides stability and an identifiable source for employees to rally
around during tumultuous times. The role of top leaders is also to
ensure that transformation efforts stay on course by setting
priorities, focusing on critical issues, and demonstrating a commitment
to change.
DHS and OPM leaders are fulfilling these critical roles. For example,
the DHS Under Secretary for Management and OPM's Senior Advisor for
Homeland Security cochair the Senior Review Advisory Committee. Other
committee members are officials in key leadership positions at both OPM
and DHS and the presidents of the three major unions.
Senior officials from DHS, OPM, and DHS's three largest unions are
directly involved in the workings of the Core Design Team. Top leaders
of DHS and OPM addressed employees at the Town Hall meetings,
expressing their support for the transformation, and solicited feedback
from those employees. Specific examples include the Under Secretary for
Management writing to DHS employees in April and May 2003 to express
her support of the design process and participating in a Town Hall
meeting. Additionally, the Under Secretary for Border and
Transportation Security participated in several Town Hall meetings to
express his on-going support of the design process and to respond to
questions from DHS employees. The Under Secretary for Emergency
Preparedness and Response and the Commandant of the U.S. Coast Guard
also participated in Town Hall meetings. At these meetings, union
leaders have stood next to the agency leadership to express their
support for the process, according to agency officials. Similarly,
OPM's Associate Director for Strategic Human Resources Policy and OPM's
Senior Advisor for Homeland Security also addressed DHS employees at
Town Hall meetings, and responded to their questions.
DHS Personnel System will Need To Be Integrated with Mission and
Program Goals:
DHS will need to ensure that the development of the human capital
policy options by the Core Design Team is integrated with the
accomplishment of DHS programmatic goals as defined in the forthcoming
strategic plan. Agency officials indicate that it is their intention
that the personnel system design will be consistent with the strategic
plan. We have reported, and the President's Management Agenda
reiterates, that leading organizations develop their workforce
approaches as part of a strategic human capital plan as strategies for
accomplishing their mission and programmatic goals. In light of this,
we previously stated that the success of the DHS transformation
requires the department to link its human capital strategy with its
homeland security strategy.[Footnote 15]
DHS is currently developing a strategic plan. This effort began in mid-
June and is expected to be completed by the end of September 2003 - a
target set by the Office of Management and Budget (OMB). As explained
previously, the Core Design Team began its work in late April 2003 and
expected to report its proposed options in late September 2003.
According to a DHS official leading the strategic planning effort,
human capital officials are engaged in drafting the strategic plan. DHS
human capital officials confirmed that they have reviewed drafts of the
strategic plan.
Moving forward, it is critical that the Senior Review Advisory
Committee, the Secretary, and the Director make the link between the
new human capital system and the accomplishment of DHS's goals as
outlined in the DHS strategic plan. Once a strategic plan is in place,
DHS can then develop a strategic human capital plan that, in part,
identifies core competencies for staff as a tool for attracting,
developing, and rewarding contributions to mission accomplishment. For
example, these competencies will be critical to creating a performance
management system - a key task of the Core Design Team - that aligns
daily operations with organizational goals and creates a "line of
sight" and shows how team, unit, and individual performance can
contribute to organizational results. We recommended that DHS, in
conjunction with OPM and OMB, create an effective performance
management system in December 2002.[Footnote 16] Furthermore, if DHS
decides to design and implement a pay-for-performance system, a set of
strategic goals and validated competencies will be required so that DHS
can identify the outcomes and results that employees are to be rewarded
for accomplishing.
Process Steered by Guiding Principles:
The Secretary and Director outlined four principles to serve as a
framework for the Core Design Team during their first meeting in April:
* The system has to support both the mission and the people charged
with implementing the mission.
* Design Team members must leave preconceived notions at the door. They
have an opportunity and responsibility to create a 21st century
personnel system that is fair, performance based, and flexible.
* DHS must preserve and protect basic civil service principles.
* DHS must hold people at all levels accountable for performance. The
agency will link individual performance to organizational goals, with
the ability to identify and reward exceptional service and deal with
chronic poor performance. DHS can be a department that stands as a
model of excellence.
These principles can serve as core values for human capital management
at DHS - values that define the attributes that are intrinsically
important to what the new organization does and how it will do it.
Furthermore, they represent the institutional beliefs and boundaries
that are essential to building a new culture for the organization.
Finally, they appropriately identify the need to support the mission
and employees of the department, protect basic civil service
principles, and hold employees accountable for performance.
On July 25, 2003, the Core Design Team presented a set of five
principles to the Senior Review Advisory Committee as a guide for
developing the options to be presented in late September. These
principles were drafted by the Core Design Team and reviewed by the
field team, using the original four principles proposed by the
Secretary and Director as a guide. The five principles are to ensure
that the options developed are (1) mission centered, (2) performance
focused, (3) contemporary and excellent, (4) generate respect and
trust, and (5) based on merit system principles and fairness.
Consistent with the principles outlined by the Secretary and Director
and those presented to the Senior Review Advisory Committee, our
interviews with the human resource leaders in the five largest DHS
components identified two areas that they would like the new human
capital system to address: the new DHS personnel system should provide
for competitive, performance-based pay and should give managers the
ability to quickly hire the right people with the skills the agency
needs. First, individuals we interviewed hoped that the new system
would address their concerns about the disparities in pay rates across
DHS and expressed an interest in implementing performance-based pay,
linked to the accomplishment of
DHS's mission, such that employees are more accountable.[Footnote 17]
Two indicated that they would like the Core Design Team to propose
legislation to address the differences in premium pay that currently
exist. Second, and beyond the immediate task of the Core Design Team,
there was an overwhelming interest in simplifying the hiring
process.[Footnote 18] Officials in one component expressed their
discontent with the amount of time between when a position is announced
and when it is actually filled. One executive expressed an interest in
more flexibility in hiring because the perception is that the current
hiring process is only understandable to those already in the federal
government.[Footnote 19]
Ambitious Timeline Established:
DHS and OPM established a 9-to 10-month timeline for completing the
design process with the expectation that the final regulations will be
issued in early 2004. Agency officials have publicized this timeline at
Town Hall meetings across the country. Our reports on the successful
practices of mergers and transformations have noted that the
establishment of a timeline with specific milestones allows
stakeholders to track the organization's progress towards its goals.
Publicizing the timeline and meeting its milestones can illustrate
building momentum and demonstrate that real progress is being made.
The design process officially began in early April 2003 when the Core
Design Team convened for a 2-week leadership conference to learn about
the various human capital management systems within the component
agencies as well as those in other federal agencies and private firms.
The Core Design Team began its research full time in late April. This
team is expected to present its broad range of options to the Senior
Review Advisory Committee in late September 2003. The Senior Review
Advisory Committee is allotted less than a month to develop its set of
options in October 2003. The Secretary and Director will then select
the options that will be submitted as officially proposed regulations
available for comment. They expect to announce the proposed regulations
in November 2003, which will trigger the statutory collaboration
process so final regulations can be issued in early 2004.
Although the establishment of a clear timeline is positive, a majority
of DHS stakeholders we interviewed expressed concerns about its
compressed schedule. There is some understanding that the timeline
reflects an effort to take into account the final regulations in
preparing the fiscal year 2005 budget that is submitted to the Congress
in early 2004. However, a number of human resource directors said the
"self-imposed, short" timeline would pose significant challenges for
the Design Team. One director commented that the timeline was
"ambitious" considering the amount of information that needs to be
collected and analyzed. Most directors agreed that the lack of
sufficient time to perform these tasks could prevent the Design Team
from completing its work or cause it to propose options that had not
been thoroughly researched. Furthermore, another stakeholder suggested
that the timeline appears to allocate too much time to the development
of options and not enough time to the consideration of which options to
adopt. On the other hand, DHS and OPM leaders of the design effort
agree that the timeline is aggressive, but said that a shorter time
frame will serve to minimize employee anxiety. In addition, they said a
tight design time frame is needed to provide adequate time for
implementation, evaluation, and modification within the 5-year
statutory window available for establishing the new system.
While it is appropriate to develop and integrate the human capital
systems within the department in a quick and seamless manner so that
the department can begin to function as a cohesive entity, moving too
quickly or prematurely can significantly raise the risk of doing it
wrong. Having an ambitious timeline is reasonable only insofar as it
does not impact the quality of the human capital system that is
created.
Design Participants Represent a Mix of DHS and OPM Employees:
Overall, the members of the Core Design Team represent multiple
organizational components and the three major unions. The composition
of the team is important because of the visual sign it communicates
regarding which components are dominant and subordinate or whether the
new organization is a "merger of equals." It also helps employees see
that they are being represented and that their views are being
considered in the decision-making process.
The 48 participants of the Core Design Team include personnel experts
from OPM, DHS and its component agencies, line employees and managers
from DHS headquarters and field offices; and professional staff from
the three major unions.[Footnote 20] Specifically, the Core Design Team
is composed of 24 DHS employees, 16 employees from OPM, and 8
professional staff from the unions. This includes 27 staff members, 5
supervisors, 12 managers, and 3 executives.[Footnote 21] Additionally,
just over 60 percent of the members consider themselves human capital
professionals,[Footnote 22] and about two-thirds have experience
outside headquarters.[Footnote 23] (See figs. 3 and 4.) The majority of
human resource officials we interviewed consider themselves to be
adequately represented on the Core Design Team. Other characteristics
of the team members are described in appendix III.
Figure 3: Core Design Team Members Who Describe Themselves as Human
Capital Professionals[A]:
[See PDF for image]
[A] Based on complete data for 46 participants.
[End of figure]
Figure 4: Percent of Core Design Team Members with Work Experience
Outside Headquarters[A]:
[See PDF for image]
[A] Based on complete data for 39 participants.
[End of figure]
According to DHS officials, DHS-specific slots on the Core Design Team
were filled by individuals chosen by agency executives after
determining the number of seats to be allocated to the different agency
components. In selecting team members, officials sought representation
from across the organizational components of the department,
individuals with field experience, and individuals with some expertise
in human resources management. Race, gender, and occupational diversity
were other factors considered when selecting participants.
Additionally, NAAE selected one DHS employee to participate on the team
and AFGE and NTEU each selected four professional staff members to
participate.
Communications Plan Recently Completed:
DHS recently completed a noteworthy communications strategy that
provides a structured and planned approach to communicate with DHS
stakeholders regarding the human capital system. The objectives of the
plan are to: raise awareness, disseminate information, and promote a
clear understanding of the new human capital system; manage stakeholder
expectations and address their concerns; and provide opportunities for
a two-way dialogue. We have recently reported that organizations
undergoing a transformation should establish a communication strategy
that ensures a consistent message is delivered and seeks to genuinely
involve stakeholders in the process.
The communications plan, completed in June 2003, represents an
important and substantive effort and contains four broad pieces that
are consistent with the key practices we have identified as important
to successful communication during transformations. First, the plan
identifies internal and external stakeholders, the concerns of each
stakeholder group, and the specific communication channels to be used
to communicate to that stakeholder group. Second, the plan articulates
the key messages to be delivered to each stakeholder group. Third, an
action plan identifies the communication channel to be used, the
timeline for its use, and the DHS and OPM staff responsible for
implementation. Finally, the plan identifies the feedback mechanisms to
be used to ensure there is a two-way dialogue.
Moving forward, DHS faces some challenges in successfully implementing
its communications plan. First, in addition to the key messages
articulated in the plan, DHS will need to provide information to
clarify areas of confusion that were identified during our interviews.
These include:
* the roles OPM, DHS, and the Senior Review Advisory Committee have in
the process;
* the factors that will influence the Secretary and Director's final
decisions on which options to propose;
* the role of the contractor in the design process;
* the likelihood of the Core Design Team drafting legislative proposals
for areas DHS does not have authority to change (i.e., premium pay and
hiring);
* the possibility of there being multiple personnel systems instead of
one; and:
* the implementation process.
A second challenge will be to ensure that preexisting communication
channels within each departmental component deliver a message that is
consistent in tone and content with the central communication strategy.
We learned from three of the five components we interviewed that they
use additional vehicles for providing and receiving information from
employees. It may be appropriate to coordinate the messages sent to
employees through these additional vehicles to minimize the perception
that certain groups of employees are getting the "real" story.
Building on the current effort, DHS will need to provide adequate
opportunities for feedback once the options are released, including
providing an adequate level of detail on how the new system will impact
employees. The feedback mechanisms identified in the communications
plan focus on gathering employee feedback prior to the options being
released. For example, two of the three feedback mechanisms outlined in
the communications plan will be completed before the system options are
publicized. DHS also needs to ensure effective communication to
employees and stakeholders after the options are released. For example,
DHS should consider describing to employees how the comments collected
during the Town Hall meetings and focus groups informed the design
process. Furthermore, once options are selected, DHS will be faced with
communicating how the changes will impact specific jobs, rights and
protections, and daily responsibilities. DHS may find it necessary to
further tailor and customize the details of the new human capital
system to meet the specific needs of employees.
Design Process Provides for Employee Involvement:
Employee perspectives on the design of the DHS human capital system are
sought through many mechanisms, including the Core Design Team with its
members from multiple DHS components, Town Hall meetings, focus groups,
the field team, and an e-mail mailbox for employee comments. This
reflects the Congress' desire that employees be allowed to participate
in a meaningful way in the creation of the new human capital system.
Involving employees in planning helps to develop agency goals and
objectives that incorporate insights about operations from a front-line
perspective. It can also serve to increase employees' understanding and
acceptance of organizational goals and improve motivation and morale.
The design process attempts to include employees by creating multiple
opportunities for employees to provide feedback. While activity updates
were provided in the DHS weekly newsletter and an e-mail mailbox for
employees to submit their suggestions and comments was used, multiple
Town Hall meetings and focus groups conducted between the end of May
and the beginning of July 2003 were held in ten cities across the
United States.[Footnote 24] According to DHS and OPM officials, these
cities were chosen to ensure adequate representation of major DHS
components and geographic diversity. The goal of the events was to
promote two-way communication between management and employees and to
gather employee perspectives on the personnel practices that exist in
their agency and any proposed changes they would like to see. Each
meeting hosted up to 200 DHS employees from the surrounding cities.
At a typical Town Hall meeting, there was a general question and answer
segment in which local employees had the opportunity to ask questions
about the new system and express their overall concerns about DHS. If
participants' questions could not be addressed during the meeting due
to time constraints, they could write their questions on note cards and
give them to cognizant DHS and OPM officials in attendance. After the
meeting, the Core Design Team held a series of six focus group sessions
in each city to obtain their input and suggestions for the new human
resource system. In most cities, five of the six sessions were devoted
to hear employees' views while the remaining session heard the views of
supervisors and managers. Participants in the focus groups included
both Town Hall meeting attendees and those who were not able to attend
the Town Hall session.
The degree to which the information gathered in these sessions was used
to inform the design process is not yet evident. On one hand, the Town
Hall meetings and focus groups gathered suggestions and concerns from
large numbers of employees from multiple organizational components in
geographically diverse locations. However, once options for the human
capital system are proposed it will be particularly important that
employees have adequate opportunities to make a worthwhile
contribution.
In addition to the Town Hall meetings and focus groups, a field team
made of 32 front-line DHS managers and staff, some of whom were
selected by the major unions, was formed. During the design process,
the field team provided insights about the department's human capital
challenges from a front-line perspective. These insights were gathered
during the three meetings of the group --the field team was convened
during the first week of the 2-week April leadership conference, 2 days
in July to react to the subgroups' research, and for 2 days again in
mid-September to react to the draft personnel system options before
their submission to the Senior Review Advisory Committee in late
September.
According to documents drafted before the April leadership conference,
provided by AFGE and NAAE, it was originally expected that the field
team would review the work of the Core Design Team on a "regular basis"
and then be used to "test the options against workplace realities." One
stakeholder added that it was his initial impression that the field
team would serve as an "extension of the Core Design Team," empowered
to provide input throughout the entire design process. However, over
time, the expected role of the field team evolved to that of a
recurring focus group that had no formal decision-making role in the
design process. Likewise, as the role for the field team evolved, so
did its membership - additional nonunionized DHS employees were added
to the team. One DHS official acknowledged that the field team has not
had a great deal of involvement in the process, and that the expected
role of the team changed over time. Officials in NTEU, AFGE, and NAAE
additionally confirmed that the role of the field team changed over
time. One union president described the diminished role as a "missed
opportunity." This official added that the lack of involvement and
minimal communication with the Core Design Team has made it difficult
for the field team to make a worthwhile contribution.
Conclusions:
DHS and OPM have developed a process to design the new personnel system
that is stimulated and supported by top leadership in both
organizations and is generally inclusive, both in terms of the
membership of the Core Design Team and multiple opportunities to
provide input. The process is also guided by core principles and an
ambitious timeline. Our research shows that these key attributes are
indispensable to successful transformations. This design process
provides a model for DHS to consider as it makes other important
decisions about the implementation and transformation of the
department.
Building on this progress, DHS will need to ensure that the development
of the human capital policy options by the Core Design Team is
integrated with the accomplishment of DHS programmatic goals as defined
in the forthcoming strategic plan. Such a linkage can ensure that the
new human capital approaches support and facilitate the accomplishment
of DHS's goals and objectives - a fundamental principle of the human
capital idea. It will also assist the Core Design Team in identifying
human capital programs that support the DHS mission, including the
development of a performance management system which creates a "line of
sight" that shows how team, unit, and individual performance can
contribute to overall organizational goals.
Additionally, DHS has acknowledged that work lies ahead for
implementing better, more effective ways to communicate with and
receive feedback from its employees. The development of the
communications plan is an important and positive step. As DHS
implements this plan it will need to provide information on areas of
confusion that were identified during our interviews, including
clarifying the role of DHS versus OPM in the system development. DHS
will also need to ensure that a consistent message is communicated
across DHS components. Finally, effective communication, characterized
by a two-way dialogue, will be central to engaging employees in the
remainder of the design process and ensuring it is transparent.
Ultimately, an effective two-way communication strategy can ease
implementation efforts. Once options for the human capital system are
proposed it will be particularly important that employees have adequate
opportunities to make a worthwhile contribution. Substantial
involvement of field staff in the development and implementation of the
new human capital system is essential given that over 90 percent of DHS
civilian employees are in the field. Continued employee involvement
will help to strengthen employee buy-in to the new human capital
system. It is important to consider and use the solicited employee
feedback to make any appropriate changes once this feedback is
received.
Recommendations for Executive Action:
DHS has developed an effective process to begin the formation of its
new human capital system. Moving forward, it is critical that the new
human capital system be linked to the DHS strategic plan and that DHS
continue to communicate with and involve its employees. Accordingly, we
are recommending that once the strategic plan is completed the
Secretary of DHS and the Director of OPM ensure that the options
selected for the new human capital system support and facilitate the
accomplishment of the department's strategic goals and objectives, as
identified in the new strategic plan. In addition, we recommend that
the Secretary of DHS clarify the role of the participants in the design
effort and other areas of confusion identified by stakeholders during
our interviews. Furthermore, consistent with the DHS communications
plan, we recommend the Secretary ensure the message communicated across
DHS components is consistent, and maximize opportunities for two-way
communication and employee involvement through the completion of the
design process, the release of the system options, and implementation,
with special emphasis placed on seeking the feedback and buy-in of
front-line employees in the field.
Agency Comments and Our Evaluation:
OPM provided written comments on a draft of this report, which are
printed in appendix IV. DHS provided technical comments by e-mail.
DHS and OPM generally agreed with the contents of the report. However,
both DHS and OPM expressed a concern that we misunderstood the role of
the field team in the design process. Each described the role of the
field team as more limited than our original understanding. While
gathering additional information from DHS, NTEU, AFGE, and NAAE to
clarify the role and activities of the field team, we learned that its
role evolved over the course of the design effort, that it had no
decision-making role in the design process, and that it was used as a
recurring focus group. Accordingly, we changed the draft to reflect the
field team's current role. DHS and OPM also provided a number of
technical suggestions that have been incorporated where appropriate.
We are sending copies of this report to the Chairman and Ranking
Minority Member, Senate Committee on Governmental Affairs; the Chairman
and Ranking Minority Member, House Committee on Government Reform; the
Chairman and Ranking Minority Member, House Select Committee on
Homeland Security; and other interested congressional parties. We will
also send copies to the Secretary of the Department of Homeland
Security and the Director of the Office of Personnel Management. Copies
will be made available at no charge on the GAO Web site at [Hyperlink,
http://www.gao.gov] http://www.gao.gov.
If you have any questions about this report, please contact me or Ed
Stephenson on (202) 512-6806. Key contributors to this report are
listed in appendix V.
Signed by:
J. Christopher Mihm
Director, Strategic Issues:
[End of section]
Appendixes:
Appendix I: Practices and Implementation Steps for Mergers and
Transformation:
Implementing large-scale change management initiatives, such as mergers
and organizational transformations, is not a simple endeavor and
requires the concentrated efforts of both leadership and employees to
realize intended synergies and to accomplish new organizational goals.
At the center of any serious change management initiative are people--
people define the organization's culture, drive its performance, and
embody its knowledge base. Experience shows that failure to adequately
address--and often even consider--a wide variety of people and cultural
issues is at the heart of unsuccessful mergers and transformations.
Recognizing the "people" element in these initiatives and implementing
strategies to help individuals maximize their full potential in the new
organization, while simultaneously managing the risk of reduced
productivity and effectiveness that often occurs as a result of the
changes, is the key to a successful merger and transformation. Thus,
mergers and transformations that incorporate strategic human capital
management approaches will help to sustain agency efforts and improve
the efficiency, effectiveness, and accountability of the federal
government.
GAO convened a forum on September 24, 2002, to identify and discuss
useful practices and lessons learned from major private and public
sector organizational mergers, acquisitions, and transformations. This
was done to help federal agencies implement successful cultural
transformations, including DHS. The invited participants were a cross
section of leaders who have had experience managing large-scale
organizational mergers, acquisitions, and transformations, as well as
academics and others who have studied these efforts. We reported the
key practices participants identified that can serve as the basis for
subsequent consideration as federal agencies seek to transform their
cultures in response to governance challenges. Since convening the
forum, our additional work has identified specific implementation steps
for these practices.[Footnote 25] (See fig. 5.):
Figure 5: Key Practices and Implementation Steps for Mergers and
Transformations:
[See PDF for image]
[End of figure]
[End of section]
Appendix II: Design Process:
The process for creating a DHS human capital management system, jointly
developed by DHS and OPM, calls for a design team made up of DHS and
OPM employees and union representatives. The process is divided into
three stages: research, outreach, and drafting of initial personnel
system options; review of the options; and development of proposed
regulations. Early 2004 is the expected date for the issuance of the
personnel system's final regulations.
Core Design Team Is to Draft Options for the Personnel System:
As the first stage of the design process, the Core Design Team engaged
in efforts that serve as the basis for the work of the other two
components. The 48 team participants included personnel experts from
OPM, DHS, and its component agencies; line employees and managers from
DHS headquarters and field offices; and professional staff from the
three major unions.[Footnote 26] Members were assigned to one of two
subgroups focusing on (1) pay and performance or (2) labor and employee
relations. The management consulting firm Booz Allen Hamilton assisted
the teams in their efforts.
Pay and Performance and Labor and Employee Relations Subgroups:
Each subgroup had two coleaders, one from OPM and one from DHS, to
guide them. The subgroups performed their duties both collectively and
separately. They convened jointly when there were common issues to
discuss or to listen to presentations on human capital systems. For
example, the teams heard presentations on the performance management
and performance-based pay system at Internal Revenue Service (IRS); the
human capital management systems at FBI and NSA; and the performance
management, pay banding, and employee appeals process used at GAO.
The pay and performance subgroup focused its work on the three chapters
of Title 5 covering performance appraisal, classification, and pay
rates and systems. According to the subgroup's leaders, they identified
25 researchable areas and assigned small teams to explore each.
Subgroup members were assigned to work on multiple teams. Research
areas included the structure of pay ranges, methods for categorizing
types of work, and different appraisal and rating methods, for example.
When asked about the initial findings of their research, the leaders of
the pay and performance subgroup indicated they identified many pay
systems to consider and evaluate.
The labor and employee relations subgroup focused on the three chapters
of Title 5 covering labor-management relations, adverse actions, and
appeals, to narrow its research. To gain a better understanding of
these issues, the group invited agencies such as the Merit Systems
Protection Board and the Federal Labor Relations Authority to make
presentations. Areas that were researched included different levels of
employee, union, and management rights; negotiation models; and how the
success of labor relations programs, adverse action systems, and
appeals systems is evaluated, for example. According to the subgroup
leaders, they also researched both leading and failed practices in
their subject areas. The group created interview guides to collect
information in a consistent format. When asked about the initial
findings of the research, the subgroup reported difficulty in
identifying innovative labor relations models that can be applied to
the federal system.
Contractor Assistance:
To help facilitate its efforts in the design of the personnel system,
DHS contracted with management-consulting firm Booz Allen Hamilton to
provide support in project management, research, writing, staff
support, and communications/publicity. In addition, it was responsible
for planning the Town Hall meetings and facilitating the focus groups.
According to the subgroup leaders, the contractor was expected to help
design the format for the option papers but would not likely be
involved in drafting the substance of the options.
Senior Review Advisory Committee Is to Develop Final Set of Options:
The Senior Review Advisory Committee, the second stage of the design
process, will receive the broad set of options from the Core Design
Team. From this set of options the committee is expected to develop its
final list of options for the Secretary and Director to
consider.[Footnote 27] Committee members are permitted to eliminate,
create, or prioritize the options. In communicating its list of options
to the Secretary and Director, it may present the strengths and
weaknesses of each. This committee could potentially make
recommendations related to implementation strategies. Meetings of the
Senior Review Advisory Committee will be governed by the Federal
Advisory Committee Act,[Footnote 28] which requires meetings to be open
to the public.[Footnote 29]
The Under Secretary for Management at DHS and the OPM Senior Advisor
for Homeland Security cochair the Senior Review Advisory Committee.
Committee members are officials in key leadership positions at both OPM
and DHS. OPM representatives include the Senior Advisor for Homeland
Security, the Associate Director for Strategic Human Resources Policy,
the Associate Director for Human Capital Leadership and Merit System
Accountability, and the Senior Policy Advisor to the Director and Chief
Human Capital Officer. DHS representatives include the Commissioner of
Customs and Border Protection, the Director of TSA, Director of the
U.S. Secret Service, Director of the Bureau of Citizenship and
Immigration Services, and the Director of Administration. Union
representatives are the presidents from AFGE, NTEU, and NAAE. External
experts with particular knowledge and experience in human capital
management will serve as advisors.
DHS Secretary and OPM Director Are to Propose Regulations for the
Personnel System:
The Secretary of DHS and the OPM Director make up the final stage of
the design process. Once they receive the list of options from the
Senior Review Advisory Committee, they may edit, remove, or develop
alternatives to the proposed options. The Secretary and the Director
will then issue proposed personnel rules for the department. As called
for in the DHS legislation, individuals affected by the proposed rules
have 30 calendar days to comment and make recommendations. The
Secretary and Director are then to follow the provisions of the
statutory reconciliation process for no less than 30 days.[Footnote 30]
[End of section]
Appendix III: Characteristics of Core Design Team Members:
Characteristics of the 48 members of the Core Design Team are described
in further detail in tables 2 through 6 below. The tables summarize
data for those members on board as of July 11, 2003. Since that date,
membership of the Core Design Team has changed.
Table 2: Design Team Membership:
Agency: DHS; Legacy Unit/Union: APHIS; Total: 1.
Legacy Unit/Union: Coast Guard; Total: 2.
Legacy Unit/Union: Customs; Total: 3.
Legacy Unit/Union: FEMA; Total: 3.
Legacy Unit/Union: FLETC; Total: 2.
Legacy Unit/Union: INS; Total: 5.
Legacy Unit/Union: Secret Service; Total: 2.
Legacy Unit/Union: Treasury; Total: 3.
Legacy Unit/Union: TSA; Total: 3.
Agency: DHS Total; Total: 24.
Agency: OPM; Total: 16.
Agency: Union Professional Staff; Legacy Unit/Union: AFGE; Total: 4.
Legacy Unit/Union: NTEU; Total: 4.
Agency: Total Union Professional Staff; Total: 8.
Agency: Total Design Team; Total: 48.
Source: GAO.
[End of table]
Table 3: Who Selected Design Team Member:
Current Employer: DHS; Organization that Selected Member: NAAE; Total:
1.
Organization that Selected Member: DHS; Total: 23.
Current Employer: DHS Total; Total: 24.
Current Employer: OPM; Total: 16.
Current Employer: Union Professional Staff; Organization that Selected
Member: AFGE; Total: 4.
Organization that Selected Member: NTEU; Total: 4.
Current Employer: Total Union Professional Staff; Total: 8.
Current Employer: Total Design Team; Total: 48.
Source: GAO.
[End of table]
Table 4: Subgroup Membership:
Subgroup: Pay and Performance; DHS: 12; OPM: 9; Union: 4; Total: 25.
Subgroup: Labor and Employee Relations; DHS: 11; OPM: 6; Union: 4;
Total: 21.
Subgroup: No data; DHS: 1; OPM: 1; Union: 0; Total: 2.
Subgroup: Total; DHS: 24; OPM: 16; Union: 8; Total: 48.
Source: GAO.
[End of table]
Table 5: Human Capital Professional versus Other Experience:
Organization: DHS; Human Capital Professional: 12; Other Experience:
12; No Data: 0; Total: 24.
Organization: OPM; Human Capital Professional: 12; Other Experience: 4;
No Data: 0; Total: 16.
Organization: Union; Human Capital Professional: 4; Other Experience:
2; No Data: 2; Total: 8.
Organization: Total; Human Capital Professional: 28; Other Experience:
18; No Data: 2; Total: 48.
Source: GAO.
[End of table]
Table 6: Years of Experience of Design Team Members:
Agency: DHS; Average Years of Federal Experience[A]: 21.7; Average
Years of Experience Outside Headquarters[B]: 9.9.
Agency: OPM; Average Years of Federal Experience[A]: 21.5; Average
Years of Experience Outside Headquarters[B]: 6.5.
Agency: Union; Average Years of Federal Experience[A]: 12.8; Average
Years of Experience Outside Headquarters[B]: 4.0.
Agency: Total; Average Years of Federal Experience[A]: 21.0; Average
Years of Experience Outside Headquarters[B]: 8.4.
Source: GAO.
[A] Based on complete data for 41 participants.
[B] Based on complete data for 39 participants.
[End of table]
[End of section]
Appendix IV: Comments from the Office of Personnel Management:
OFFICE OF THE DIRECTOR:
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT WASHINGTON, DC 20415-1000:
September 16, 2003:
The Honorable David M. Walker Comptroller General:
General Accounting Office Washington, DC 20548:
Dear Mr. Walker:
I welcome the opportunity to respond to GAO's draft report entitled DHS
Personnel System Design Effort Provides for Collaboration and Employee
Participation. As you can well imagine, I am very pleased that GAO
chose to title its report as you have since it reflects the success I
believe we have had in ensuring that the process established to develop
a new human capital system for the Department of Homeland Security was
both collaborative and inclusive. I also very much appreciate the fact
that GAO acknowledges that one of the strengths of our design effort
has been the on-going commitment of both DHS and OPM leaders to
stimulate and support the design effort.
I am sure you are aware that OPM was in the forefront of the effort to
assure that the legislation creating DHS provided for the opportunity
to create a human capital system that is no longer mired in the long
outdated practices of the past-one that is modern and responsive to the
needs of today and one that provided to the managers of DHS the
flexibility to manage more than 180,000 employees in a manner
consistent with the unique mission requirements of the department. I
believe it essential that we be able to pay and reward employees for
their contributions and not primarily for their longevity and that we
be able to create a labor-management program that focuses on
collaboration and cooperation rather than on process. We also must have
a disciplinary and appeals system that is fair to employees and
management alike by allowing for swift and equitable resolution of
performance and disciplinary problems rather than a system that
typically leads to months and often years of unresolved, costly, and
disruptive acrimony. The Homeland Security Act gives us the opportunity
to address these concerns, and I am excited about the prospect of
creating a system, along with Secretary Ridge, that will make the DHS
human capital program a model for good management everywhere.
We have attached a few comments on the draft report that we believe
will serve to clarify a few aspects of our effort. Several of our
comments focus on portions of your report that relate to the Field
Team. Frankly, we believe there is a basic misunderstanding on the part
of GAO about the intended role of the Field Team, and several of our
comments are specifically targeted to that misunderstanding. In
essence, it is important to keep in mind that the members of the Field
Team were never intended to be fully participating members of the
design effort. Indeed, their role was always intended to be limited in
nature and to only reflect our desire to get a field reaction to
proposals that were developed by the core design team a couple times
during the process and shortly before those proposals were to be
submitted to the Senior Review Committee. The Field Team
was and is intended to serve as a "reality check" along the way-nothing
more, nothing less-and that is how it has served.
We defer to the Department of Homeland Security to provide comments
regarding the issues raised by GAO that pertain specifically to the
department.
Once again, I appreciate the opportunity to comment on this draft
report.
Sincerely,
Kay Coles James
Director:
Signed by Kay Coles James
Attachment:
[End of section]
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
J. Christopher Mihm or Edward Stephenson, (202) 512-6806:
Acknowledgments:
In addition to the persons named above, Ellen V. Rubin, Tina Smith,
Eric Mader, and Lou V.B. Smith made key contributions to this report.
(450224):
FOOTNOTES
[1] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Homeland Security, GAO-03-102 (Washington,
D.C.: January 2003).
[2] U.S. General Accounting Office, Highlights of a GAO Forum: Mergers
and Transformation: Lessons Learned for a Department of Homeland
Security and Other Federal Agencies, GAO-03-293SP (Washington, D.C.:
Nov. 14, 2002).
[3] U.S. General Accounting Office, Results-Oriented Cultures:
Implementation Steps to Assist Mergers and Organizational
Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003).
[4] Public Law 107-296, Nov. 25, 2002.
[5] The department may not however modify Senior Executive pay or fix
employee pay in excess of the limitation on aggregate compensation
payable under 5 U.S.C. 5307.
[6] Pay administration provisions include premium pay rules.
[7] Interim regulations implementing these authorities were issued by
OPM in the Federal Register on June 13, 2003. 68 Fed. Reg. 35265.
[8] U.S. General Accounting Office, Human Capital: Building on DOD's
Reform Effort to Foster Governmentwide Improvements, GAO-03-851T
(Washington, D.C.: June 4, 2003); High-Risk Series: Strategic Human
Capital Management, GAO-03-120 (Washington, D.C.: January 2003); and
Managing for Results: Using Strategic Human Capital Management to Drive
Transformational Change, GAO-02-940T (Washington, D.C.: July 15, 2002).
[9] On July 25, 2003, the Core Design Team presented a set of five
principles to the Senior Review Advisory Committee as a guide for
developing the options to be presented in late September, building on
the original four principles.
[10] Based on positions transferred to DHS as of March 8, 2003,
according to DHS, and GAO calculations using data from the Central
Personnel Data File (CPDF) as of March 31, 2003. Additional positions
were scheduled to transfer to the department after this date. Positions
include full-time, part-time, and vacant, and do not represent full-
time equivalent (FTE) employment or the total number of employees on
board. The DHS-provided data are based on determination orders, but one
DHS official acknowledged that the data were compiled differently by
the various components. Furthermore, these data are preliminary and are
expected to be adjusted based on continuing negotiations between DHS
and other federal agencies. DHS was authorized 144,901 civilian FTEs
and 37,074 military FTEs in the fiscal year 2003 budget, according to
DHS. As of March 31, 2003, DHS had 160,201 full-and part-time civilian
employees on board, according to CPDF.
[11] The Homeland Security Act of 2002 gives DHS authority to deviate
from the requirements of: Chapter 43 - performance appraisal; Chapter
51 - classification; Chapter 53 - pay rates and systems (except certain
provisions); Chapter 71 - labor-management and employee relations;
Chapter 75 - adverse actions; and Chapter 77 - appeals.
[12] An informal "planning committee," or small working group of DHS,
OPM, and union senior executives was assembled to provide staff
support, highlight issues for discussion during public meetings, and
potentially to set the meeting agendas for the Senior Review Advisory
Committee.
[13] Section 841 of the Homeland Security Act establishes a process for
collaboration with employee representatives to provide notice of the
proposed human resources management system, the opportunity to submit
comments, and consultation over the recommendations made.
[14] U.S. General Accounting Office, Homeland Security: Proposal for
Cabinet Agency Has Merit, But Implementation Will be Pivotal to
Success, GAO-02-886T (Washington, D.C.: June 25, 2002).
[15] GAO-03-102; and U.S. General Accounting Office, Homeland Security:
Management Challenges Facing Federal Leadership, GAO-03-260
(Washington, D.C.: Dec. 20, 2002).
[16] GAO-03-260. We recently outlined key practices for effective
performance management systems in Results-Oriented Cultures: Creating a
Clear Linkage Between Individual Performance and Organizational
Success, GAO-03-488 (Washington, D.C.: Mar. 14, 2003).
[17] We have recently reported on leading practices in performance
management and performance-based pay. For example, see U.S. General
Accounting Office, Human Capital: Building on the Current Momentum to
Address High-Risk Issues, GAO-03-637T (Washington, D.C.: Apr. 8, 2003);
and GAO-03-488.
[18] As stated previously, the department may not deviate from the
Title 5 provisions regarding civil service examination and selection
procedures. However, DHS has the opportunity to address some of its
hiring concerns through governmentwide human capital reform provisions
in the Homeland Security Act of 2002, which allow for category-based
rating and selection procedures and the ability to use direct-hire
procedures.
[19] We have recently reported on major challenges in the federal
hiring process. For more information, see U.S. General Accounting
Office, Human Capital: Opportunities to Improve Executive Agencies'
Hiring Processes, GAO-03-450 (Washington, D.C.: May 30, 2003).
[20] This summarizes data for those members on board as of July 11,
2003. Since that date, membership has changed.
[21] Based on complete data for 47 participants.
[22] Based on complete data for 46 participants.
[23] Based on complete data for 39 participants.
[24] The ten cities were Atlanta, Georgia; Detroit, Michigan; El Paso,
Texas; Los Angeles, California; Miami, Florida; New York, New York;
Norfolk, Virginia; Seattle, Washington; Washington, D.C.; and
Baltimore, Maryland.
[25] GAO-03-669.
[26] As noted previously, this summarizes data for those members on
board as of July 11, 2003. Since that date, membership has changed.
[27] An informal "planning committee," or small working group of DHS,
OPM, and union senior executives was assembled to provide staff
support, highlight issues for discussion during public meetings, and
potentially to set the meeting agendas for the Senior Review Advisory
Committee.
[28] 5 U.S.C. App. 2, section 10.
[29] Notice of the official establishment of the Senior Review Advisory
Committee was posted in the Federal Register on June 11, 2003. 68 Fed.
Reg. 34994.
[30] Section 841 of the Homeland Security Act establishes a process for
collaboration with employee representatives to provide notice of the
proposed human resources management system, the opportunity to submit
comments, and consultation over the recommendations made.
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