Human Capital
Increasing Agencies' Use of New Hiring Flexibilities Gao ID: GAO-04-959T July 13, 2004Improving the federal hiring process is critical given that the executive branch hired nearly 95,000 new employees during fiscal year 2003 and significant hiring may continue over the next few years. In May 2003, GAO issued a report highlighting several key problems in the federal hiring process. That report concluded that the process needed improvement and included recommendations to address the problems. Last month, GAO issued a follow-up to that report and testified before Congress on the status of recent efforts to improve the federal hiring process. As part of this work, GAO also assessed the extent to which federal agencies are using two new hiring flexibilities: category rating and direct-hire authority. Category rating permits an agency manager to select a job candidate placed in a best-qualified category rather than being limited to three candidates under the "rule of three." Direct-hire authority allows an agency to appoint individuals to positions without adherence to certain competitive examination requirements when there is a severe shortage of qualified candidates or a critical hiring need. Today, GAO's statement highlights the extent to which agencies are using the new hiring flexibilities, points out some likely reasons why agencies are not using or making greater use of them, and suggests approaches that can help increase their use.
Although Congress, the Office of Personnel Management (OPM), and agencies have all recently undertaken efforts to help improve the federal hiring process, agencies report they are making limited use of the two new hiring flexibilities contained in the Homeland Security Act of 2002: category rating and direct-hire authority. These flexibilities could help agencies in expediting and controlling their hiring processes. GAO surveyed members of the interagency Chief Human Capital Officers Council (CHCO) to determine the extent to which their respective agencies were using the new hiring flexibilities and to identify barriers to greater use of these flexibilities. Frequently cited barriers included (1) the lack of OPM guidance for using the flexibilities, (2) the lack of agency policies and procedures for using the flexibilities, (3) the lack of flexibility in OPM rules and regulations, and (4) concern about possible inconsistencies in the implementation of the flexibilities within the department or agency. The federal government is now facing one of the most transformational changes to the civil service in half a century. Today's challenge is to define the appropriate roles and day-to-day working relationships for OPM and individual agencies as they collaborate on developing innovative and more effective hiring systems. Moreover, human capital expertise within the agencies must be up to the challenge for this transformation to be successful and enduring.
GAO-04-959T, Human Capital: Increasing Agencies' Use of New Hiring Flexibilities
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Testimony:
Subcommittee on Civil Service and Agency Organization, Committee on
Government Reform, House of Representatives:
For Release on Delivery Expected at 10: 00 a.m. EDT Tuesday, July 13,
2004:
HUMAN CAPITAL:
Increasing Agencies' Use of New Hiring Flexibilities:
Statement of J. Christopher Mihm:
Managing Director:
Strategic Issues:
GAO-04-959T:
GAO Highlights:
Highlights of GAO-04-959T, a testimony before the Subcommittee on Civil
Service and Agency Organization, Committee on Government Reform, House
of Representatives:
Why GAO Did This Study:
Improving the federal hiring process is critical given that the
executive branch hired nearly 95,000 new employees during fiscal year
2003 and significant hiring may continue over the next few years.
In May 2003, GAO issued a report highlighting several key problems in
the federal hiring process. That report concluded that the process
needed improvement and included recommendations to address the
problems. Last month, GAO issued a follow-up to that report and
testified before this subcommittee on the status of recent efforts to
improve the federal hiring process. As part of this work, GAO also
assessed the extent to which federal agencies are using two new hiring
flexibilities: category rating and direct-hire authority. Category
rating permits an agency manager to select a job candidate placed in a
best-qualified category rather than being limited to three candidates
under the ’rule of three.“ Direct-hire authority allows an agency to
appoint individuals to positions without adherence to certain
competitive examination requirements when there is a severe shortage of
qualified candidates or a critical hiring need.
Today, GAO‘s statement highlights the extent to which agencies are
using the new hiring flexibilities, points out some likely reasons why
agencies are not using or making greater use of them, and suggests
approaches that can help increase their use.
What GAO Found:
Although Congress, the Office of Personnel Management (OPM), and
agencies have all recently undertaken efforts to help improve the
federal hiring process, agencies report they are making limited use of
the two new hiring flexibilities contained in the Homeland Security Act
of 2002: category rating and direct-hire authority. These
flexibilities could help agencies in expediting and controlling their
hiring processes. GAO surveyed members of the interagency Chief Human
Capital Officers Council (CHCO) to determine the extent to which their
respective agencies were using the new hiring flexibilities and to
identify barriers to greater use of these flexibilities. Frequently
cited barriers included (1) the lack of OPM guidance for using the
flexibilities, (2) the lack of agency policies and procedures for using
the flexibilities, (3) the lack of flexibility in OPM rules and
regulations, and (4) concern about possible inconsistencies in the
implementation of the flexibilities within the department or agency.
[See PDF for image]
[End of figure]
The federal government is now facing one of the most transformational
changes to the civil service in half a century. Today‘s challenge is
to define the appropriate roles and day-to-day working relationships
for OPM and individual agencies as they collaborate on developing
innovative and more effective hiring systems. Moreover, human capital
expertise within the agencies must be up to the challenge for this
transformation to be successful and enduring.
www.gao.gov/cgi-bin/getrpt?GAO-04-959T.
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]
Chairwoman Davis, Mr. Davis, and Members of the Subcommittee:
I appreciate the opportunity to be here today to continue the important
discussion about efforts to improve the federal hiring process. As you
are aware, federal agencies need effective hiring processes to compete
for talented people in a highly competitive job market. Given that the
executive branch hired nearly 95,000 new employees in fiscal year 2003
and may continue significant hiring over the next few years, improving
the government's hiring process is critical. Over the years, there has
been widespread recognition that the federal hiring process all too
often does not meet the needs of agencies in achieving their missions,
the needs of managers in filling positions with the right talent, nor
the needs of applicants for a timely, efficient, transparent, and
merit-based process.
In May 2003, we issued a report highlighting several key problems in
the federal hiring process.[Footnote 1] That report concluded that
federal hiring needed improvements, and we made several recommendations
to address problems with key parts of the hiring process. Specifically,
we recommended that the Office of Personnel Management (OPM) take
additional actions to assist agencies in strengthening the hiring
process. Moreover, we reported that agencies must take greater
responsibility for maximizing the efficiency and effectiveness of their
individual hiring processes within the current statutory and regulatory
framework that Congress and OPM have provided.
Last month, we issued a follow-up report, done at the request of the
Chairwoman and Mr. Davis, that focused on recent governmentwide efforts
to improve federal hiring, and we also provided testimony before this
subcommittee summarizing the work done for that report.[Footnote 2] Our
report last month also addressed your request that we include
information on the extent to which agencies were using two new hiring
flexibilities contained in the Homeland Security Act of 2002.[Footnote
3] One of these hiring flexibilities, known as category rating, permits
an agency to select a job candidate placed in a best-qualified category
rather than being limited to three candidates under the "rule of
three." The other hiring flexibility, often referred to as direct hire,
allows an agency to appoint people to positions without adherence to
certain competitive examination requirements when there is a severe
shortage of qualified candidates or a critical hiring need. Various
agency officials from across the federal government often previously
cited both of these hiring flexibilities as needed tools to help in
improving the federal hiring process.
As agreed with the subcommittee, today I will highlight information
that we gathered and analyzed about the extent to which agencies are
using the new hiring flexibilities and point out some likely reasons
why agencies are not using or making greater use of these new
flexibilities. Our work to address these issues was based on interviews
with officials from OPM and the interagency Chief Human Capital
Officers (CHCO) Council, the results of our April 2004 survey of 22 of
the 23 agency members serving on the CHCO Council, and our review of
OPM documents as well as data from OPM's central database of
governmentwide personnel information. I also will suggest, based on our
prior work, some approaches that agencies and OPM can employ to better
use existing authorities.
Summary:
In summary, our recent work found the following. Although Congress,
OPM, and agencies have all undertaken efforts to help improve the
federal hiring process, agencies report they are making limited use of
the new hiring flexibilities: category rating and direct hire. In our
April 2004 survey of CHCO Council members, 21 of the 22 respondents
cited at least one barrier that they said prevented or hindered their
agencies from using or making greater use of these hiring
flexibilities. Frequently cited barriers included:
* the lack of OPM guidance for using the flexibilities,
* the lack of agency policies and procedures for using the
flexibilities,
* the lack of flexibility in OPM rules and regulations, and:
* concern about possible inconsistencies in the implementation of the
flexibilities within the department or agency.
The follow-up report that we issued last month on the federal hiring
process included no new recommendations. We did, however, underscore
our prior recommendations on which we believe additional attention is
needed. On the basis of our work, OPM's recent efforts and the CHCO
Council members' views do not appear consistent, which suggests that
defining the appropriate roles and day-to-day working relationships for
OPM and individual agencies is essential as they further collaborate on
developing innovative and more effective hiring systems. At the
subcommittee hearing on hiring last month, OPM identified a wide range
of efforts it has undertaken to assist agencies in using the new hiring
authorities, including a number of important initiatives that took
place after we surveyed CHCO Council members. Moreover, since that
hearing, OPM has taken further action with the goal of helping to
ensure that agencies are aware of the hiring flexibilities available to
them and assisting agencies in taking full advantage of these available
flexibilities.
Agencies Appear to Be Making Limited Use of New Hiring Flexibilities:
Despite agency officials' past calls for hiring reform, agencies appear
to be making limited use of category rating and direct-hire authority,
the two new hiring flexibilities created by Congress in November 2002
and implemented by OPM in June 2003. Data on the actual use of these
two hiring flexibilities are not readily available, but most CHCO
Council members responding to our April 2004 survey indicated that
their agencies are making little or no use of either flexibility.
Indeed, all but one of the 22 CHCO Council members responding to our
recent survey identified at least one barrier to using the new hiring
flexibilities. OPM officials also confirmed with us that based on their
contacts and communications with agencies, it appeared that the
agencies were making limited use of the new hiring flexibilities. The
limited use of category rating is somewhat unexpected given the views
of human resources directors we interviewed 2 years ago. As noted in
our May 2003 report, many agency human resources directors indicated
that numerical rating and the rule of three were key obstacles in the
hiring process. Category rating was authorized to address those
concerns.
CHCO Council Members Offered Various Reasons for Limited Use of
Category Rating:
Category rating is an alternative rating and selection procedure that
can provide agency managers with a larger pool of qualified job
candidates from which to select than numerical ranking and the rule of
three, while also protecting veterans' preference. Under category
rating, job candidates are assigned to quality categories--such as
"best qualified" or "highly qualified"--following an assessment of
their knowledge and skills against job-related criteria. The names of
all candidates in the highest quality group are then sent to the
selecting official and are available for selection. If the highest
quality group contains a veteran, the veteran must be hired unless an
objection to hiring the veteran is sustained by OPM. If the number of
candidates falling into the highest quality group is inadequate,
applicants from the next highest quality group of eligible candidates
can also be referred to the agency manager for selection.
Given the lack of available data on the extent to which agencies were
using the newly authorized category rating flexibility, we asked about
this issue in our April 2004 survey of the CHCO Council members. A
majority (13 of 22) of the officials responding to our survey said that
their agencies were using category rating to "little or no extent" (see
fig. 1). In narrative responses to our survey questions about category
rating, several respondents said that their agencies were not using
category rating but were considering options, developing procedures, or
establishing pilot programs. For example, a CHCO Council member from a
cabinet-level department said that his department had developed
procedures for implementing category rating and had included this
flexibility as a tool in the department's hiring plan for fiscal year
2004. Another Council member representing a department said that the
department had drafted a policy on the use of category rating and was
establishing a program to pilot the use of this hiring flexibility with
at least one occupation.
Figure 1: CHCO Council Members' Responses on the Extent to Which Their
Agencies Are Using Category Rating:
[See PDF for image]
[End of figure]
We also surveyed CHCO Council members about the most significant
barriers, if any, preventing or hindering their agencies from using or
making greater use of the newly authorized category rating flexibility
in their hiring processes. Although the responses provided by the
Council members varied (see fig. 2), the most frequently cited barriers
to using category rating were (1) the lack of policies and procedures
within the department or agency for using the flexibility, (2) the lack
of OPM guidance for using the flexibility, (3) a need to reprogram the
agency's automated systems to handle the new process, (4) rigid OPM
rules and regulations, and (5) concern about possible inconsistencies
in implementation. In narrative responses to our survey questions about
category rating, a few CHCO Council members said that their agencies
were not using or making greater use of category rating because of key
stakeholders' lack of understanding about the application of veterans'
preference and the Luevano consent decree.[Footnote 4] One respondent
said that each agency has had to research best practices and lessons
learned prior to implementing this alternative rating system. Another
Council member from a major department said that agencies need a
governmentwide champion to advance the use of category rating in their
hiring processes.
Figure 2: CHCO Council Members' Responses on the Most Significant
Barriers Preventing or Hindering Their Agencies' Use of Category
Rating:
[See PDF for image]
Note: Respondents could select up to three barriers.
[End of figure]
In our April 2004 survey of CHCO Council members, we also asked about
the extent to which OPM had assisted their agencies in using category
rating and their level of satisfaction or dissatisfaction with that
assistance. In narrative responses to our survey questions about
category rating, a CHCO Council member representing a major department
said, for example, that the department was reluctant to use category
rating until OPM provided further guidance on use of the flexibility.
Another respondent said that OPM responded to ad hoc questions related
to the technical application of category rating, but generally defers
to the agency to make the final determination. This respondent
suggested that it would be beneficial for OPM to broadly address
technical issues for agencies rather than on an ad hoc basis. Another
respondent remarked that unresolved questions around the use of
category rating may be common to all agencies and that OPM should
provide additional implementation guidance in question and answer
format.
CHCO Council Members Cited Several Barriers to Use of Direct-Hire
Authority:
Direct-hire authority allows agencies to appoint candidates directly to
positions where OPM determines there is a severe shortage of candidates
or a critical hiring need. When making appointments under the newly
authorized direct-hire authority, agencies are not required to
numerically rate and rank applicants nor apply the rule of three or
veterans' preference. Agencies would still provide public notice of the
vacancies and screen all applicants to ensure that they meet the basic
qualification requirements of the position to be filled.
Given the lack of available data on the extent to which agencies were
using the new direct-hire authority, we asked about this issue in our
April 2004 survey of the CHCO Council members. A majority (17 of 22) of
the officials responding to our survey said that their agencies were
using direct hire to "some extent" or to "little or no extent" (see
fig. 3). In narrative responses to our survey questions about direct
hire, several respondents stated that their agencies had used direct-
hire authority to fill various medical positions and small numbers of
information technology security positions. Several respondents also
said that their agencies had not yet used direct-hire authority but
were assessing the options for doing so. For example, a CHCO Council
member representing an independent agency said that the agency had not
thus far decided if it still had positions in a shortage category and
would make such a determination after completing its workforce analysis
and strategic assessments. A Council member from a cabinet-level
department said that it had determined a need for direct-hire authority
for acquisition specialists and was developing a request to OPM.
Another Council member representing a large department said that the
department's components were aware of the newly authorized direct-hire
authority but they had not yet identified situations for which they
would request OPM's approval to use the authority.
Figure 3: CHCO Council Members' Responses on the Extent to Which Their
Agencies Are Using Direct Hire:
[See PDF for image]
[End of figure]
Additionally, we surveyed CHCO Council members about the most
significant barriers, if any, preventing or hindering their agencies
from using or making greater use of the newly authorized direct-hire
authority in their hiring processes. Although the responses provided by
the Council members varied (see fig. 4), the most frequently cited
barriers to using direct hire were (1) rigid OPM rules and regulations,
(2) concern about possible inconsistent implementation with the
department or agency, (3) limited number of occupations for which the
authority could be used, and (4) the lack of policies and procedures
within the agency for using direct hire. In narrative responses to our
survey questions about direct hire, a CHCO Council member representing
a large department said, for example, that recently OPM officials
informally told the department that OPM would likely disapprove a
proposed request for direct-hire authority that the department desired
for a specified occupation, even though at least one other agency had
direct-hire authority for that same occupation. Another Council member
representing an independent agency commented that the governmentwide
direct-hire authorities that OPM has issued cover occupations generally
not applicable to the agency or in which the agency has an extremely
limited number of positions. In contrast, a CHCO Council member
representing a cabinet-level department responded that no barriers
exist for using direct-hire authority.
Figure 4: CHCO Council Members' Responses on the Most Significant
Barriers Preventing or Hindering Their Agencies' Use of Direct Hire:
[See PDF for image]
Note: Respondents could select up to three barriers.
[End of figure]
In our April 2004 survey of CHCO Council members, we also asked about
the extent to which OPM had assisted their agencies in using direct
hire and their level of satisfaction or dissatisfaction with that
assistance. In narrative responses to our survey questions about direct
hire, one respondent from a cabinet-level department said, for example,
that the department had attempted to use direct-hire authority for
information technology security positions but received inconsistent
guidance on the application of veterans' preference from OPM. A Council
member from a large department said that OPM should delegate authority
to approve direct hire requests to the agencies as permitted by the
Homeland Security Act of 2002. A respondent from another department
said that the department had surveyed its components to determine if it
should petition OPM for direct-hire authority, but that most of the
positions identified to date could not be justified based on the OPM
criteria.
Moving Forward to Improve Federal Hiring:
In December 2002, we issued a comprehensive report on the effective use
of human capital flexibilities in the federal government, including
flexibilities related to hiring.[Footnote 5] We reported that agencies
were often not maximizing their use of the human capital flexibilities
already available to them, and we identified key practices that
agencies can implement to effectively use such flexibilities (see fig.
5). For example, agencies need to plan strategically and make targeted
investments for how they will use and fund these authorities. As we
emphasized in our report, the insufficient and ineffective use of
flexibilities can significantly hinder the ability of federal agencies
to recruit, hire, retain, and manage their human capital.
Figure 5: Key Practices for Effective Use of Human Capital
Flexibilities:
[See PDF for image]
Source: GAO.
[End of figure]
In a report we issued in May 2003 related to OPM's role in assisting
federal agencies in using human capital flexibilities, we recommended
that OPM work with and through the new CHCO Council to more thoroughly
research, compile, and analyze information on the effective and
innovative use of these flexibilities.[Footnote 6] We noted that
sharing information about when, where, and how the broad range of
personnel flexibilities is being used, and should be used, could help
agencies meet their human capital management challenges. As we recently
testified, OPM and agencies need to continue to work together to
improve the hiring process, and the CHCO Council should be a key
vehicle for this needed collaboration.[Footnote 7] Such communication
and collaboration is especially important given the apparent widely
different views between OPM and at least some agencies regarding the
amount and adequacy of guidance and assistance that OPM has provided.
In order for this collaboration to be effective, agencies need to
provide OPM with timely and comprehensive information about their
experiences in using various approaches and flexibilities to improve
their hiring processes. OPM--working through the CHCO Council--can, in
turn, help by being a facilitator in the collection and exchange of
information about agencies' effective practices and successful
approaches to improved hiring. Such additional collaboration between
OPM and agencies could go a long way in helping the government as a
whole and individual agencies to improve federal hiring efforts.
Since our June 2004 testimony on these issues, OPM has taken some
additional actions in providing further guidance to agencies in using
hiring flexibilities. For example, on June 15, 2004, OPM issued final
regulations on the use of category rating and direct-hire authority,
providing some clarification in response to various comments it had
received on interim regulations. On June 29, 2004, OPM conducted a
training symposium to provide federal agencies with further instruction
and information on ways to improve the quality and speed of the hiring
process. According to OPM, 230 officials from over 30 federal agencies
attended this training session and were encouraged to make better use
of available flexibilities to improve the hiring process. In addition,
OPM recently hosted a briefing to inform various interest groups about
the results of a survey that OPM conducted on federal hiring.
In conclusion, the federal government is now facing one of the most
transformational changes to the civil service in half a century. This
change is illustrated in the new personnel systems for the Department
of Homeland Security and the Department of Defense and in new hiring
flexibilities provided to all agencies. For this transformation to be
successful and enduring, human capital expertise within the agencies
must be up to the challenge.
Madam Chairwoman and Mr. Davis, this completes my statement. I would be
pleased to respond to any questions that you might have.
Contacts and Acknowledgments:
For further information on this testimony, please contact J.
Christopher Mihm, Managing Director, Strategic Issues, (202) 512-6806
or at [Hyperlink, mihmj@gao.gov]. Individuals making key contributions
to this testimony include K. Scott Derrick and Trina Lewis.
(450341):
FOOTNOTES
[1] U.S. General Accounting Office, Human Capital: Opportunities to
Improve Executive Agencies' Hiring Processes, GAO-03-450 (Washington,
D.C.: May 30, 2003).
[2] U.S. General Accounting Office, Human Capital: Additional
Collaboration Between OPM and Agencies Is Key to Improved Federal
Hiring, GAO-04-797 (Washington, D.C.: June 7, 2004) and U.S. General
Accounting Office, Human Capital: Status of Efforts to Improve Federal
Hiring, GAO-04-796T (Washington, D.C.: June 7, 2004).
[3] These hiring flexibilities are contained in the Chief Human Capital
Officers Act of 2002, Title XIII of the Homeland Security Act of 2002.
Pub. L. No. 107-296 (Nov. 25, 2002).
[4] The Luevano consent decree is a 1981 agreement that settled a
lawsuit alleging that a written test, Professional and Administrative
Careers Examination (PACE), had an adverse impact on African Americans
and Hispanics. See Luevano v. Campbell, 93 F.R.D. 68 (D.D.C. 1981). The
consent decree called for the elimination of PACE and required
replacing it with alternative examinations. In response to the consent
decree, OPM developed the Administrative Careers with America
examination. The consent decree also established two special hiring
programs, Outstanding Scholar and Bilingual/Bicultural, for limited use
in filling former PACE positions.
[5] 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).
[6] U.S. General Accounting Office, Human Capital: OPM Can Better
Assist Agencies in Using Personnel Flexibilities, GAO-03-428
(Washington, D.C.: May 9, 2003).
[7] U.S. General Accounting Office, Human Capital: Observations on
Agencies' Implementation of the Chief Human Capital Officers Act, GAO-
04-800T (Washington, D.C.: May 18, 2004).
