Office of Personnel Management
OPM Is Taking Steps to Strengthen Its Internal Capacity for Leading Human Capital Reform Gao ID: GAO-06-861T June 27, 2006General recognition exists of a need to continue to develop a governmentwide framework for human capital reform to enhance performance, ensure accountability and position the nation for the future. Potential governmentwide human capital reform and likely requirements that the Office of Personnel Management (OPM) assist, guide, and ultimately certify agencies' readiness to implement reforms, raise important questions about OPM's capacity to successfully fulfill its central role. This testimony addresses management challenges that could affect OPM's ability to lead governmentwide human capital reform efforts. To assess these challenges, GAO analyzed OPM's 2002 and 2004 Federal Human Capital Survey (FHCS) results, data from its 2005 follow-up focus group discussions, OPM's May 2006 action plans to address employee concerns, and OPM's associate directors' fiscal year 2006 executive performance contracts. GAO also conducted interviews with OPM senior officials and Chief Human Capital Officers (CHCO) and human resource directors from CHCO Council agencies. In commenting on a draft of this statement, the OPM Director said that OPM has addressed many of the challenges highlighted from the 2004 FHCS and achieved many meaningful and important results. GAO agrees and believes OPM should continue to build upon its progress to date.
OPM has made commendable efforts towards transforming itself to being a more effective leader of governmentwide human capital reform. It can build upon that progress by addressing challenges that remain in the following areas: Leadership. OPM Federal Human Capital Survey responses and the fall 2005 follow-up focus group discussions suggests that information from OPM leadership does not cascade effectively throughout the organization and that many employees do not feel senior leaders generate a high level of motivation and commitment in the workforce. Agreement with leaders ability was lowest in one of OPM's key divisions--a unit vital to successful human capital reform. OPM is working to address employee concerns and improve perceptions of senior leaders. Talent and resources. To align talent and resources to support its reform role, OPM has made progress in assessing current workforce needs and developing leadership succession plans. However, OPM's workforce planning has not sufficiently identified future skills and competencies that may be necessary to fulfill its role in human capital reform. Customer focus, communication, and collaboration. OPM can improve its customer service to agencies and create more opportunities for dialogue. According to key officials in executive agencies, OPM guidance to agencies is not always clear and timely, OPM's human capital officer structure is often a barrier to efficient customer response, and greater opportunities exist to collaborate with agency leaders. OPM recognizes these shortcomings and has identified improvement actions to address. However, more can be done such as strategically using partnerships it has available to it, like the CHCO Council. Performance culture and accountability. OPM has made progress in creating a "line of sight" or alignment and accountability across Senior Executive Service (SES) expectations and organizational goals. It needs to build on this progress and effectively implement new performance standards for all employees to support the recently issued agency strategic and operational plan and ensure all employees receive the necessary training. To meet OPM's current and future challenge to lead governmentwide human capital reform, Director Springer has shown leadership commitment to OPM's transformation by initiating a number of action plans to address employee concerns. While the steps taken by OPM demonstrate progress in achieving its transformation, it must continue on this path by closely monitoring and communicating with its employees and customers, expanding its workforce and succession planning efforts, and continuing to create a "line of sight" throughout the organization.
GAO-06-861T, Office of Personnel Management: OPM Is Taking Steps to Strengthen Its Internal Capacity for Leading Human Capital Reform
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United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Tuesday, June 27, 2006:
Testimony:
Before the Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia, Committee on Homeland
Security and Governmental Affairs, U.S. Senate:
Office of Personnel Management:
OPM Is Taking Steps to Strengthen Its Internal Capacity for Leading
Human Capital Reform:
Statement of David M. Walker:
Comptroller General of the United States:
GAO-06-861T:
GAO Highlights:
Highlights of GAO-06-861T, a testimony before the Subcommittee on
Oversight of Government Management, the Federal Workforce, and the
District of Columbia, Committee on Homeland Security and Governmental
Affairs, U.S. Senate
Why GAO Did This Study:
General recognition exists of a need to continue to develop a
governmentwide framework for human capital reform to enhance
performance, ensure accountability and position the nation for the
future. Potential governmentwide human capital reform and likely
requirements that the Office of Personnel Management (OPM) assist,
guide, and ultimately certify agencies‘ readiness to implement reforms,
raise important questions about OPM‘s capacity to successfully fulfill
its central role.
This testimony addresses management challenges that could affect OPM‘s
ability to lead governmentwide human capital reform efforts. To assess
these challenges, GAO analyzed OPM‘s 2002 and 2004 Federal Human
Capital Survey (FHCS) results, data from its 2005 follow-up focus group
discussions, OPM‘s May 2006 action plans to address employee concerns,
and OPM‘s associate directors‘ fiscal year 2006 executive performance
contracts. GAO also conducted interviews with OPM senior officials and
Chief Human Capital Officers (CHCO) and human resource directors from
CHCO Council agencies.
In commenting on a draft of this statement, the OPM Director said that
OPM has addressed many of the challenges highlighted from the 2004 FHCS
and achieved many meaningful and important results. GAO agrees and
believes OPM should continue to build upon its progress to date.
What GAO Found:
OPM has made commendable efforts towards transforming itself to being a
more effective leader of governmentwide human capital reform. It can
build upon that progress by addressing challenges that remain in the
following areas:
Leadership. OPM Federal Human Capital Survey responses and the fall
2005 follow-up focus group discussions suggests that information from
OPM leadership does not cascade effectively throughout the organization
and that many employees do not feel senior leaders generate a high
level of motivation and commitment in the workforce. Agreement with
leaders ability was lowest in one of OPM‘s key divisions”a unit vital
to successful human capital reform. OPM is working to address employee
concerns and improve perceptions of senior leaders.
Talent and resources. To align talent and resources to support its
reform role, OPM has made progress in assessing current workforce needs
and developing leadership succession plans. However, OPM‘s workforce
planning has not sufficiently identified future skills and competencies
that may be necessary to fulfill its role in human capital reform.
Customer focus, communication, and collaboration. OPM can improve its
customer service to agencies and create more opportunities for
dialogue. According to key officials in executive agencies, OPM
guidance to agencies is not always clear and timely, OPM‘s human
capital officer structure is often a barrier to efficient customer
response, and greater opportunities exist to collaborate with agency
leaders. OPM recognizes these shortcomings and has identified
improvement actions to address. However, more can be done such as
strategically using partnerships it has available to it, like the CHCO
Council.
Performance culture and accountability. OPM has made progress in
creating a ’line of sight“ or alignment and accountability across
Senior Executive Service (SES) expectations and organizational goals.
It needs to build on this progress and effectively implement new
performance standards for all employees to support the recently issued
agency strategic and operational plan and ensure all employees receive
the necessary training.
To meet OPM‘s current and future challenge to lead governmentwide human
capital reform, Director Springer has shown leadership commitment to
OPM‘s transformation by initiating a number of action plans to address
employee concerns. While the steps taken by OPM demonstrate progress in
achieving its transformation, it must continue on this path by closely
monitoring and communicating with its employees and customers,
expanding its workforce and succession planning efforts, and continuing
to create a ’line of sight“ throughout the organization.
[Hyperlink: http://www.gao.gov/cgi-bin/getrpt?GAO-06-861T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Brenda S. Farrell at
(202) 512-6806 or farrellb@gao.gov
[End of Section]
Chairman Voinovich, Senator Akaka, and Members of the Subcommittee:
I appreciate the opportunity to be here today to discuss the capacity
of the U.S. Office of Personnel Management (OPM) to lead and implement
governmentwide human capital reform. Potential governmentwide human
capital reform, and likely requirements that OPM assist, guide, and
ultimately certify agencies' readiness to implement reforms, raise
important questions about its capacity to successfully fulfill its
central role. Director Springer and her leadership team clearly
recognize that strategic human capital management is a pervasive
challenge facing agencies across the federal government, and overcoming
this challenge will require vigorous and sustained leadership from
multiple parties--OPM as well as other key human capital players, such
as the President; the Office of Management and Budget (OMB); Congress;
and department and agency leaders. Since designating strategic human
capital management as a high-risk area in January 2001,[Footnote 1] our
work and the work of others continue to show that agencies need and
want greater leadership from OPM in helping them to address their human
capital challenges.
As we have noted in our 21ST Century Challenges report, people are
critical to any agency's successful transformation.[Footnote 2]
Transformations have enormous implications for the federal government's
"people" policies and procedures, as well as cultures of government
organizations. Strategic human capital management is at the centerpiece
of this transformation and last fall I testified that OPM should play a
key leadership and oversight role in helping individual agencies work
towards overcoming a broad range of human capital challenges.[Footnote
3]
I have testified previously that a governmentwide framework for
advancing human capital reform is needed to avoid further fragmentation
within the civil service, ensure management flexibility as appropriate,
allow a reasonable degree of consistency, provide adequate safeguards
within the overall civilian workforce, and help maintain a level
playing field among federal agencies competing for talent. Within the
human capital community, there is general recognition of a need to
continue to develop a governmentwide framework for human capital reform
that Congress and the administration can implement to enhance
performance, ensure accountability, and position the nation for the
future.[Footnote 4] Nevertheless, how it is done, when it is done, and
on what basis it is done can make all the difference.
I know from my conversations with Director Springer that she agrees
that OPM needs to continue and even augment the internal transformation
effort underway, and she is putting in place a concerted effort to make
that happen. In 2003, we reported that OPM was undergoing its own
transformation--from less of a rulemaker, enforcer, and independent
agent to more of a consultant, toolmaker, and strategic partner in
leading and supporting executive agencies' human capital management
systems.[Footnote 5] At that time, OPM had taken a number of important
steps and had several initiatives underway or planned to improve its
overall mission and management performance. For example, OPM has
exerted greater human capital leadership through its Human Capital
Scorecard of the President's Management Agenda to assist agencies in
improving strategic management of their human capital. OPM also
developed the governmentwide Federal Human Capital Survey (FHCS) to
assist agencies and OPM in better understanding specific and
governmentwide agency workforce management conditions and practices in
the areas of leadership, performance culture, and talent. Most
recently, Director Springer announced OPM's television campaign to
promote federal employment and has undertaken a greater focus on
succession planning to respond to the forthcoming federal retirement
wave and undertaken steps to further reduce the length of time for the
federal hiring process.
Under Director Springer's leadership this past year, OPM has continued
to transform itself by undertaking a number of internal management
initiatives to build a results-oriented culture. The results of OPM's
2004 FHCS showed that OPM employees expressed a number of concerns
regarding perceptions of agency leadership; talent and resources;
customer focus, communication and collaboration; and performance
culture and accountability. The FHCS was administered before Director
Springer began her term. Also, according to OPM, about half of the
senior leadership started after the survey was administered. However,
we used these results, among other things, to assess some of the issues
that could impede OPM's capacity to lead federal human capital reform.
I call attention to some of these relevant questions throughout my
testimony. We found that OPM is taking actions to address these
concerns in a number of areas. For example, in fall 2005, OPM conducted
a series of employee focus groups in response to its FHCS results to
further understand specific issues underlying the decline and identify
actions it could take to help improve the overall agency work
environment. In May 2006, OPM issued a series of federal human capital
action plans to address employee concerns raised during those focus
group discussions. In addition, in March of this year, OPM issued its
Strategic and Operational Plan, 2006-2010, and identified a number of
activities that OPM plans to implement to improve employee
satisfaction.
As you know, the Senate Committee on Homeland Security and Governmental
Affairs and your Oversight of Government Management, the Federal
Workforce, and the District of Columbia Subcommittee requested that we
conduct a review of OPM to identify management challenges that could
affect its ability to lead human capital reform efforts. In March 2006,
we briefed your staff on our preliminary observations. My remarks today
are based on that briefing. Our forthcoming report will provide
additional information and recommendations to OPM on opportunities to
improve its internal management capacity. We analyzed OPM's 2006-2010
Strategic and Operational Plan to identify activities related to
internal transformation. We analyzed OPM's associate directors' fiscal
year 2006 Senior Executive Service (SES) performance contracts to
identify alignment of strategic goals and individual executive
performance. We also reviewed OPM's most currently available workforce
and succession plans to examine issues related to talent and resources.
We analyzed OPM's 2002 and 2004 FHCS agency results, the most recently
available data that OPM is using to identify employee concerns. In
addition, we reviewed OPM's analysis of its 2004 FHCS results. (For
more information regarding the methodology related to OPM's
administration of the FHCS and our analysis of OPM's survey results,
see app. I). We also reviewed the results from a series of employee
focus groups conducted by OPM in fall 2005 to follow up on its agency
2004 FHCS results, as well as analyzed OPM's May 2006 action plans to
address issues raised by the 2004 FHCS and employee focus groups.
We interviewed OPM's five associate directors and other senior-level
staff to obtain their views of agency management. We interviewed 21 of
the 23 members of the Chief Human Capital Officers Council and their
corresponding agency human resource (HR) directors to gain a customer
perspective of OPM's products and services and their views of OPM
management challenges. Finally, we reviewed our ongoing work and
previous recommendations to OPM on a range of issues related to human
capital and other management challenges. We conducted our work from
June 2005 to June 2006 in accordance with generally accepted government
auditing standards.
We provided a draft of this statement to Director Springer for her
comment. The Director expressed concern that the basis for GAO's
observations relied heavily on outdated information, specifically from
the results of the FHCS administered in 2004. She noted that in many
instances, OPM has addressed the challenges highlighted from the 2004
FHCS and achieved many meaningful and important results. We wish to
point out that OPM has also relied heavily on the results of the 2004
FHCS and conducted focus groups in fall 2005 to understand the factors
contributing to employees' responses on selected items on the 2004 FHCS
and to obtain employees' ideas for addressing top priority improvement
areas. Further, OPM used the results from 2004 FHCS and 2005 focus
group discussions--the most recent data available--and this information
was used to form the basis for its recently released (May 2006) action
plans to address these issues.
Today, I would like to highlight that OPM has made commendable efforts
towards transforming itself to being a more effective leader of
governmentwide human capital reform. OPM's recently issued "Strategic
and Operational Plan" is a significant accomplishment. While the plan's
strength is in its definition of clear, tangible goals and
deliverables, it is not clear if the plan adheres to the goals for a
strategic plan as contained in the Government Performance and Results
Act of 1993.[Footnote 6] We will analyze compliance of the plan with
GPRA and present the results of our analysis in our forthcoming report.
We will examine the extent to which the plan's operational steps are
consistently linked to a larger strategic vision and set of clearly
articulated outcomes. Importantly, in the future, OPM should revisit
its organizational structure to ensure it is aligned with the goals and
objectives in its plan and make any necessary changes. Doing so will
help OPM to improve economy, efficiency, effectiveness, and
responsiveness while enhancing flexibility and improving
accountability. My statement today addresses how OPM can build upon the
progress it has made with its strategic and operational plan by
addressing challenges that remain in four key areas:
Leadership. OPM 2004 employee survey responses and the more recent OPM
employee focus group discussions suggest that information from OPM top
leadership does not cascade effectively throughout the organization.
Survey and focus group data also suggest that many employees do not
feel their senior leaders generate a high level of motivation and
commitment in the workforce. Agreement with leaders' ability to
generate motivation and commitment were lowest in the Human Capital
Leadership and Merit System Accountability (HCLMSA) division, one of
OPM's key divisions--a unit responsible for partnering with agencies
and vital to successful human capital reform efforts.
Talent and resources. In an effort to align talent and resources to
support its reform role, OPM has made progress in its assessment of
current workforce needs and developing leadership succession plans.
However, if OPM is to lead governmentwide human capital reform it
should identify the skills and competencies of the new OPM, determine
any skill and competency gaps, and develop specific steps to fill such
gaps.
Customer focus, communication, and collaboration. Agency views, survey
results, and our previous work show that OPM can improve its customer
service and communication with agencies. Our recent work shows that
guidance to agencies is not always clear and timely, the human capital
officer structure is often a barrier to efficient customer response,
and there are greater opportunities to dialogue and collaborate with
Chief Human Capital Officers (CHCO) and human resource directors.
Communication and collaboration are key aspects of OPM's ability to
support agency efforts at human capital reform and establish a
consistent reform message. OPM has recognized these shortcomings and
has identified improvement actions to address some of them. However,
more can be done such as strategically using the partnerships it has
available to it, like the CHCO Council and others, as well as
developing a culture of collaboration, information sharing, and working
with customers to understand what they will need from the agency.
Performance culture and accountability. OPM has made progress in
creating a "line of sight" or alignment and accountability across
leader expectations and organizational goals. Performance expectations
of senior leaders are clearly aligned with the goals of OPM's strategic
and operational plan. Success in achieving reform objectives will rest,
in part, on OPM's ability to align performance and consistently support
mission accomplishment for all employees of the organization.
Leadership:
The OPM 2004 FHCS results and OPM's 2005 follow-up focus group
discussions suggest that information is not cascading effectively from
top leadership throughout the organization. Further, according to the
summary reports of OPM's follow-up focus group discussions, overall
communication was selected by employees as one of the most important
areas to address. Some focus group participants said that managers and
employees were unaware of what is going on in the organization due to a
lack of internal and cross-divisional communication. Focus group
participants also described not knowing where the agency is heading and
not having a clear understanding of how their activities aligned with
the overall vision and mission of the agency.
As figure 1 shows, fewer employees below the SES level at OPM as well
as the rest of government reported being satisfied with the information
they receive. Further there were significantly fewer employees at OPM,
especially in the GS-1 to GS-12 range, reporting "satisfaction with the
information they receive from management on what's going on in the
organization" when compared with the rest of the government. On the
other hand, significantly more SES employees at OPM indicated
satisfaction with the "information they were receiving from management"
than SES employees at all the other government agencies participating
in the 2004 FHCS.
Figure 1: Employee Responses to Selected 2004 Federal Human Capital
Survey Questions Related to Leadership:
[See PDF for image]
Source: GAO analysis.
[End of Figure].
A similar gap between OPM SES and GS-level employees, as well as for
their relative counterparts from the rest of government, is evident
when employees were asked if they agreed that "managers promote
communication among different work units."
OPM employees also expressed concerns regarding their views of senior
leaders. As shown in figure 1, roughly two-thirds of OPM employees, as
well as employees in the rest of government, indicated that their
immediate supervisors or team leaders are doing a good or very good
job. Employee perceptions of senior level leadership were not as
positive, however. When survey respondents were asked if they agreed
with the statement "I have a high level of respect for my
organization's senior leaders," nearly twice as many OPM SES employees
agreed with this statement as compared with OPM GS-level employees.
Survey respondents were also asked if they were "satisfied with the
policies and practices of your senior leaders" and OPM SES employees
also agreed with this statement more than twice the level of OPM GS-
level employees. For both items, the percent of OPM GS-level
respondents agreeing with these statements tends to be lower than for
their counterparts in the rest of government. A similar pattern of OPM
SES and OPM GS-level response can be seen in Figure 1 for the percent
of employees agreeing with the statement "leaders generate high levels
of motivation and commitment in the workforce." OPM's analysis of
responses to this question by its divisions and offices show that the
Human Capital Leadership and Merit System Accountability (HCLMSA)
division had the lowest positive and largest negative response of any
division at about 28 percent and 51 percent respectively. This issue of
leaders generating motivation and commitment was selected by all six of
the HCLMSA focus groups as one of the most important issues that OPM
needs to address. Because the HCLMSA division is OPM's frontline
organization that partners with agencies to achieve human capital
success by providing oversight and leadership to agencies, it will play
a key role in OPM initiatives to implement human capital reform--so it
will need effective leadership to guide its transformation.
OPM is clearly aware of the most critical issues for its agency leaders
to address, such as the lack of overall and cross-divisional
communication, issues related to employee views of senior management,
and obtaining employee input to individual work plans linked to the
agency strategic plan. Based on OPM's May 2006 action plans, the agency
is planning to improve communication through such means as "visits to
OPM field locations, brown bag lunches with the Director, an email box
where employees can make suggestions on more efficient and effective
ways of doing business, Web Casts, and employee meetings." According to
the May 11, 2006 memo from OPM's CHCO to Director Springer, OPM has
released several messages to employees regarding steps that it will be
taking to improve communications agencywide and to address each of the
specific critical issues within individual organizations of the agency.
OPM officials told us that many of these actions have already occurred,
such as senior executives visiting field locations. To improve its
cross-divisional communication, OPM has developed and posted a
functional organization directory on its internal website, which it has
accomplished almost a month ahead of schedule. To address employee
concerns regarding views of senior leaders, OPM is establishing a
process in all divisions to solicit employee input on various
initiatives and setting aside "open door" time for employees to speak
with their managers. Furthermore, OPM has created an action plan to
help employees better understand how their work fits into the overall
mission of the agency by providing a mechanism to increase employee
input to work plans related to its strategic plan.
As I have testified on many occasions, in recent years GAO has learned
a great deal about the challenges and opportunities that characterize
organizational transformation. Several such lessons are of particular
relevance to today's discussion. For example, GAO has recognized that
soliciting and acting on internal feedback such as that obtained
through employee surveys, provides a key source of information on how
well an organization is developing, supporting, using and leading
staff, as well as how internal operations are functioning and meeting
employee needs as they carry out their mission. OPM's practices in this
area are based in part on GAO's experience and include efforts to gain
insight into employee perceptions of leadership and explicit follow-up
activities to address identified concerns. OPM's planned actions are
important steps in the right direction. Moving forward, as OPM
implements its action plans to address issues of communication and
motivation, it is important that it frequently communicate with
employees on the progress of each of its planned actions and how these
changes will affect them. OPM should also communicate any challenges or
delays faced in its planned actions as soon as possible and the reasons
why any changes to plans might be made. The 2006 FHCS deployed just
last month, will provide an initial indication of the extent to which
the new initiatives are responding to employee concerns.
Talent and Resources:
A high-performance organization needs a dynamic, results-oriented
workforce with the requisite talents, multidisciplinary knowledge, and
up-to-date skills to ensure that it is equipped to accomplish its
mission and achieve its goals. We have reported that acquiring and
retaining a workforce with the appropriate knowledge and skills demands
that agencies improve their recruiting, hiring, development, and
retention approaches so that they can compete for and retain talented
people.[Footnote 7] Similar to other agencies, OPM faces challenges in
recruiting and retaining a high-quality, diverse workforce and these
challenges could limit OPM's capacity to accomplish its current
mission, which includes in part leading other agencies in addressing
their own recruitment and retention challenges. Further, if OPM is to
lead governmentwide human capital reform and transition from less of a
rulemaker, enforcer, and independent agent to more of a consultant,
toolmaker, and strategic partner, it should identify the skills and
competencies of the new OPM, determine any skill and competency gap,
and develop specific steps to fill that gap.
The FHCS shows that OPM employees identified several issues related to
its current workforce:
* Workforce skills. Some OPM employees were concerned about a lack of
skills among OPM's current workforce. Our analysis of the 2004 FHCS
shows that 67 percent of OPM employees agreed that "the workforce has
the job relevant knowledge and skills necessary to accomplish
organizational goals" compared with 74 percent of employees from the
rest of government. Among OPM's divisions, HCLMSA had the lowest rate
of agreement and highest rate of disagreement with the above statement
at, respectively, 25 percent and 59 percent. This division provides
leadership to agencies in their human capital transformation efforts.
If HCLMSA lacks the knowledge and skills necessary to accomplish OPM's
current organizational goals, the division may have difficulty managing
the additional responsibilities of leading and implementing future
governmentwide human capital reform.
Agencies are also concerned with OPM's current workforce capacity. We
spoke with agency CHCOs, HR directors, and their staffs about OPM's
current capacity, and they expressed concern about whether OPM has the
technical expertise needed to provide timely and accurate human capital
guidance and advice. For example, agency officials said that the
perceived lack of federal human resource expertise among some OPM Human
Capital Officers (HCO) makes it difficult for them to assist agencies
when communicating policy questions to appropriate OPM employees. For
example, an HR director told us that their agency contacted the
responsible HCO about the Outstanding Scholars Program and did not get
a response from OPM for two to three weeks. When OPM finally responded,
they said each agency was deciding how to administer the
program.[Footnote 8] In the end, the agency's General Counsel Office
had to contact another agency to learn how they administered the
program.
Many CHCOs and human resource directors told us they believed that
OPM's expertise has declined over the last decade, while noting that
OPM is facing many of the same personnel issues as all federal agencies
regarding the loss of federal human capital talent and institutional
knowledge.
OPM's ability to lead and oversee human capital management policy
changes that result from potential human capital reform legislation
could be affected by its internal capacity and ability to maintain an
effective leadership team, as well as, an effective workforce. CHCOs
and human resource directors expressed concern about the loss of OPM
employees with technical expertise that will be needed to effectively
assist agencies with future human capital efforts. One CHCO believed
OPM's capacity is dependent upon a few key employees, in particular in
the area of innovative pay and compensation approaches, adding that the
potential loss of these employees could create a tipping point that
severely damages OPM's capacity. Moreover, agencies believed that the
Departments of Defense (DOD) and Homeland Security human capital reform
efforts severely taxed OPM technical resources, specifically pay and
compensation employees.
Building the skills and knowledge of its workforce provides OPM with an
opportunity to streamline decision making to appropriate organization
levels. The FHCS includes one question on employee empowerment. The 40
percent of OPM employees who had a "feeling of personal empowerment
with respect to work processes" was close to the response of 43 percent
from the rest of government. Although these results do not differ
markedly from those in the rest of government, this item was selected
by a majority of participants in the focus groups as one of the most
important issues that OPM needs to address. Some participants said
decision making is too centralized at the top without delegating
authority to managers, supervisors, and employees. Taken together,
these survey and focus group results suggest that the majority of OPM
employees do not feel empowered to accomplish their tasks. Having
delegated authorities gives employees the opportunity to look at
customer needs in an integrated way and effectively respond to those
needs and can also benefit agency operations by streamlining processes.
Furthermore, such delegation to frontline employees gives managers
greater opportunities to concentrate on systematic, cross-cutting,
problems or policy-level issues. In April 2006, OPM began taking steps
to delegate more authority to lower-level employees, and Associate
Directors are now currently reviewing redelegations within their
organizations.
* Recruiting. Similar to most federal agencies, OPM may have difficulty
recruiting new talent. For example, 47 percent of OPM employees who
perform supervisory functions agreed with the statement that their
"work unit is able to recruit people with the right skills," which is
similar to the 45 percent of supervisors from the rest of government.
The OPM CHCO told us that HR specialist positions are difficult to fill
now. The work of HR specialists ranges across policy development,
consultation and agency outreach, and operational recruitment and
staffing activities. This is noteworthy because we identified HR
specialist as a mission-critical occupation among the 24 Chief
Financial Officer Act agencies in our 2001 report.[Footnote 9] HR
specialist was also listed as a mission-critical occupation in OPM's
2003 human capital plan.
Mr. Chairman, as you know, longstanding concerns exist regarding DOD's
personnel security clearance program. In fact, we declared DOD's
program a high-risk area in January 2005. We testified last month
before this subcommittee on concerns that slow the process of personnel
clearances.[Footnote 10] OPM continues to experience problems with its
investigative workforce, a problem we first identified in February 2004
when we found that OPM and DOD together needed approximately 3,800
additional full-time-equivalent investigators to reach their goal of
8,000. Although OPM reports that it has reached its goal, it still
faces performance problems due to the inexperience of its domestic
investigative workforce. While OPM reports that it is making progress
in hiring and training new investigators, the agency notes it will take
a couple of years for the investigative workforce to reach desired
performance levels.
* Training. OPM employees cited strengths as well as concerns with
employee development and training, as well as not feeling empowered to
accomplish their tasks. As we have reported, agencies must develop
talent through education, training, and opportunities for growth, such
as delegating authorities to the lowest appropriate level.[Footnote 11]
In the 2004 FHCS, 62 percent of OPM employees agreed that "supervisors/
team leaders in [their] work unit support employee development" which
is close to the agreement level of employees from the rest of
government at 65 percent. OPM employees were not as close to the
employees in the rest of government in agreeing that "I receive the
training I need to perform my job." Fifty-three percent of OPM
employees agreed with this statement as compared with 60 percent of
employees from the rest of government. In the follow-up employee focus
groups, some participants selected this item as one of the most
important issues for OPM to address. Some focus group participants said
OPM's culture does not support training and employees do not have time
to attend training classes. Further, an OPM executive told us that it
can be a struggle to convince managers that people should attend
training. Some focus group participants also said that managers are not
given sufficient and timely training budgets. OPM officials believe
that limited funding for training is an issue at OPM, and added that
OPM is also working to provide managers with more timely training
budgets. In 2003, we reported that OPM was using rotational
assignments, special projects, and details to broaden the skills of
employees.[Footnote 12] OPM officials also told us the agency is taking
steps to address training concerns by offering more online training
courses. In 2004, 57 percent of employees agreed with the statement
that they have electronic access to learning and training programs
readily available at their desk. Although still below the 71 percent
agreement level for the rest of government, this was an 8 percentage
point increase from the 49 percent of employees who agreed with this
statement on the 2002 FHCS. OPM can build upon its current training
initiatives, such as online courses and rotational assignments, to
leverage the available training resources.
* Critical resources. OPM employees have indicated concerns regarding
the availability of critical resources. Although responses from OPM
employees overall are similar to employees from the rest of government,
we noted one group of OPM employees whose responses are not as close to
their counterparts in the rest of government. Among all OPM employees,
51 percent agreed with the statement that they have "sufficient
resources (for example, people, materials, budget) to get my job done"
as did 49 percent of employees from the rest of government. For
employees performing supervisory functions, however, the agreement rate
was 35 percent at OPM and 42 percent for the rest of government.
Participants in the follow-up focus groups selected this item as one of
the most important issues OPM needs to address to make the agency a
better place to work. Focus group participants said the lack of
administrative staff and essential equipment causes specialized
employees to waste time performing administrative functions. This
suggests that OPM needs to take additional steps to ensure that it has
aligned its available resources with its mission needs.
OPM Has Engaged in Workforce and Succession Planning, but Different
Workforce Skills May Be Needed to Meet Future Needs:
OPM's workforce and succession planning efforts may be sufficient for
maintaining the organization's current capacity, but OPM may need more
collaborative workforce skills to lead and implement human capital
reform. We have reported that strategic workforce planning addresses
two critical needs: (1) aligning an organization's human capital
program with its current and emerging mission and programmatic goals,
and (2) developing long-term strategies for acquiring, developing, and
retaining staff to achieve programmatic goals.[Footnote 13]
Almost half (about 46 percent) of OPM's workforce will be eligible to
retire as of September 30, 2010, as compared with 33 percent
governmentwide, according to information in the Central Personnel Data
File (CPDF). Further, about two-thirds (66 percent) of the OPM SES
employees will be eligible to retire at the same time--about the same
as the governmentwide eligibility of 68 percent. We have reported that
without careful planning, SES separations pose the threat of an
eventual loss in institutional knowledge, expertise, and leadership
continuity.[Footnote 14] In light of the impending retirements among
its SES workforce, OPM has engaged in succession planning to ensure
that it has the leadership talent in place to effectively manage OPM's
transformation, as well as ensure that the workforce skill mix is
appropriate to meet its future challenges and transition to more of a
strategic consultant role. This effort is important because leading
organizations engage in broad, integrated succession planning efforts
that focus on strengthening both current and future organizational
capacity. OPM officials told us that the agency has identified 142 key
leadership positions within the SES and GS-15 grade levels that are
classified for succession planning in the near future. Currently, OPM's
succession planning efforts are only focused on SES and GS-15
positions. I understand that OPM is now planning to expand the scope of
its succession management program to include all supervisory,
managerial, and executive positions throughout the agency--
approximately 240 additional positions. I would encourage them to
undertake this broader succession planning effort, given the importance
of maintaining, and in many cases augmenting, critical skills
throughout the organization, as well as the consideration of the future
skills it may need to achieve its own transformation to lead the
executive branch's overall human capital reform effort.
As I noted earlier, in 2003, we reported that OPM's overarching
challenge today is to lead agencies in shaping their human capital
management systems while also undergoing its own transformation. Given
its governmentwide leadership responsibilities, it is particularly
important that OPM seeks to "lead by example" with its own human
capital practices. Leading organizations go beyond simply backfilling
vacancies, and instead focus on strengthening both current and future
organizational capacity. Thus, it is critical that OPM assesses its
mission-critical workforce skills relative to the human capital reform
competencies and needs of the future. OPM officials said they will be
issuing the agency's updated strategic human capital plan later this
summer to include such items as its human capital focus, workforce
plan, leadership and knowledge management, workforce analysis, and
performance goals, among other things. Director Springer has noted that
she envisioned the OPM of the future as having a greater emphasis on
collaboration and consulting capabilities. Given the greater emphasis
on collaboration and consulting skills, I believe that OPM's
forthcoming strategic human capital plan should include thoughtful
strategies for how the agency plans to recruit, train, develop,
incentivize, and reward employees with this important skill set.
Customer Focus, Communication, and Collaboration:
During a transformation, we have reported that a communication strategy
is especially crucial in the public sector where policy making and
program management demand transparency and a full range of stakeholders
and interested parties are concerned not only with what results are to
be achieved, but also which processes are to be used to achieve those
results.[Footnote 15] Our work on high-performing organizations and
successful transformations has shown that communication with customers
and stakeholders should be a top priority and is central to forming the
partnerships needed to develop and implement an organization's
transformation strategies. Specifically, an appropriate customer
communication strategy would include consistency of message and
encourage two-way communication.
A majority of CHCOs and human resource (HR) directors told us that OPM
could improve the clarity, consistency, and timeliness of its guidance
to agencies. Several agency officials commented that OPM conveyed a
"we'll know it, when we see it" method of communicating expectations.
This method of communicating expectations and lack of clear and timely
communications and guidance was clearly illustrated as agencies
conveyed their experiences with the SES performance management system
certification process. In November 2003, Congress authorized a new
performance-based pay system for members of the SES. Under this
authority, SES members are to no longer receive automatic annual across-
the-board or locality pay adjustments with the new pay system. Agencies
are to base pay adjustments for SES members on individual performance
and contributions to the agency's performance by considering such
things as the unique skills, qualifications, or competencies of the
individual and their significance to the agency's mission and
performance, as well as the individual's current responsibilities.
Congress also authorized agencies to raise the maximum rate of pay for
senior executives if their SES performance appraisal system is
certified by OPM and OMB as making meaningful distinctions in relative
performance.
We asked agency CHCOs and HR directors to provide us with their
experiences with OPM's administration of the SES pay-for-performance
process to identify parallel successes and challenges that OPM could
face in a certification role for the implementation of human capital
reforms. We heard a number of concerns from agencies regarding OPM's
ability to communicate expectations, guidance, and deadlines to
agencies in a clear and consistent manner. For example, one official
said, while OPM tries to point agencies in the right direction, it will
not give agencies discrete requirements. This leads to uncertainty
about what agencies must and should demonstrate to OPM. Some CHCOs and
HR directors also told us that, in some cases, OPM changed expectations
and requirements midstream with little notice or explanation.
The late issuance of certification submission guidance to agencies was
especially problematic for agencies and they appeared to have responded
to this circumstance in two different ways. Because OPM did not issue
guidance for calendar year 2006 submissions until January 5, 2006, some
agencies were unable to deliver their submissions to OPM before the
beginning of the calendar year. Further, OPM clarified this guidance in
a January 30, 2006, memorandum to agencies, telling agencies that SES
performance appraisal systems would not be certified for calendar year
2006 if the performance plans did not hold executives accountable for
achieving measurable business outcomes. As a result, agencies had to
revise their submissions, where necessary, to meet OPM's additional
requirements. Some agencies indicated that OPM's late issuance of
guidance also creates an uneven playing field among agencies, as those
that choose to wait until OPM issues guidance before applying for
certification are unable to give their SES members higher pay, while
their counterparts who did not wait for OPM's guidance, could get
certified sooner. Some human resource directors we spoke with expressed
concern that OPM is not certain about their expectations of agencies'
submissions and said they would like more clarity from OPM on the
certification process. For example, one agency director of executive
resources said agencies ended up relying on each other rather than OPM
during the 2004 SES certification process. They said OPM provided
agencies with mixed messages on what would be required for SES
certification. One human resource director requested that, at the very
least, agencies should be given the certification process guidelines
before the end of the calendar year, so they can plan adequately. OPM
officials we spoke with about this agreed that they need to be able to
provide clear and consistent guidance to agencies and said they are
working to improve this. Further, they said their evaluation of
agencies' submissions is evolving as their understanding of the SES
certification criteria is increasing.
In the past, we have reported concerns with OPM's communications
pertaining to their leadership in implementing governmentwide human
capital initiatives and have recommended ways in which OPM could
improve its guidance to federal agencies. For example, in 2003 we
reported that an initial lack of clarity in telework guidance for
federal agencies from OPM led to misleading data being reported on
agencies' telework programs.[Footnote 16] As one of the lead agencies,
along with the General Service Administration (GSA), for the federal
government's telework initiative, OPM issued telework guidance to
agencies in 2001 that did not define a statement that was included in
their guidance that told agencies that eligible employees who wanted to
participate in telework must be allowed that opportunity. As a result,
we found that agencies interpreted this statement differently and
subsequently reported incomparable data to OPM. After discussing this
issue with OPM officials, OPM reacted promptly by issuing new telework
guidelines within weeks that addressed our initial concerns. We
concluded that the steps taken by OPM in response to our findings
showed a ready willingness to address issues that were hindering
implementation of this important human capital initiative. We also
recommended to OPM and GSA that they should use their lead roles in the
federal telework initiative to identify where more information and
additional guidance, guidelines, and technical support could assist
agencies in their implementation of telework.
In May 2006, we reported that communications problems between OPM and
DOD may be limiting governmentwide efforts to improve the personnel
security clearance--an area of high-risk concern that I noted
earlier.[Footnote 17] For example, DOD officials asserted--and OPM
disagreed--that OPM had not officially shared its investigator's
handbook with DOD until recently. DOD adjudicators had raised concerns
that without knowing what was required for an investigation by the
investigator's handbook, they could not fully understand how
investigations were conducted and effectively use the investigative
reports that form the basis for their adjudicative decisions. OPM
indicated that it is revising the investigator's handbook and is
obtaining comments from DOD and other customers.
More recently, our review of oversight of Equal Employment Opportunity
(EEO) related requirements and guidance, found little evidence of OPM
coordination with Equal Employment Opportunity Commission (EEOC)
because an insufficient understanding of their mutual roles, authority,
and responsibilities resulting in lost opportunity to realize
consistency, efficiency, and public value in federal EEO and workplace
diversity human capital management practice.[Footnote 18] Further, a
majority of human capital and EEO officials responding to a survey we
did for that review, reported that OPM's feedback on their agencies'
programs and the guidance they received from OPM was not useful.
Helping to achieve EEO and workplace diversity is another area where
opportunities exist for OPM to increase its coordination and
collaboration with EEOC. Over 80 percent of the respondents to our
survey of federal human capital and EEO officials said that more
coordination between OPM and EEOC would benefit their agency, adding
that the lack of such coordination resulted in added requirements on
them and detracted from the efficiency of their won work. Moreover, in
2005, OMB recommended to OPM that it develop a regular/formal working
relationship with EEOC with respect to those programs where it shares
oversight responsibility with EEOC in order to improve overall
government efficiency.
As changes in governmentwide human capital initiatives begin to address
the changing needs of the 21ST century federal workforce, it will be
especially critical that OPM develops clear and timely guidance for
agencies that can be consistently and easily implemented.
OPM's HCO Structure Is Viewed as a Barrier to Meeting Customer Needs:
CHCOs and human resource directors informed us that, while OPM's HCO
structure is good in theory, it is often a barrier to obtaining timely
technical guidance. Within the HCMLSA division, OPM assigns one HCO as
the main point of contact to each agency of the President's Management
Council and one to each cluster of small agencies. HCOs act as liaisons
and consultants communicating with an agency's human capital
leadership. CHCOs and human resource directors commented that their HCO
has become an advocate for their agencies and has been helpful for
troubleshooting and resolving issues that did not require detailed
technical assistance. However, problems arose for many agencies when
technical questions and issues had to be communicated via their HCO to
the policy experts at OPM. For example, one human resource officer told
us they asked their HCO if they could talk directly to OPM experts on
Voluntary Separation Incentive Pack and Voluntary Early Retirement
Authority, but the HCO insisted on relaying the information to the
agency. The agency official said their HCO was relatively new, so there
were numerous policy nuances that were lost during this process.
One CHCO stated that, while the HCOs at OPM have provided one-stop
shopping for agencies, having the HCO as the only point of contact can
be restrictive. Several human resource directors conveyed instances
where technical nuances of a particular issue, such as the Voluntary
Early Retirement Authority, were lost in the translation between the
HCOs and policy experts at OPM, as the HCO often did not have federal
HR experience or expertise. As one official described it, while the HCO
is helpful, time and context are lost in having to go through the HCO
to obtain technical assistance. Human resource directors expressed a
desire to communicate directly with OPM's policy experts for technical
guidance and some use their personal contacts at OPM for technical
guidance and assistance instead of going through their HCO.
Human resources directors also said that they sometimes received mixed
messages on the SES certification process from OPM, and it appeared
that answers would change depending on with whom an official was
working. From their perspective, agencies thought that OPM did not
effectively communicate among its internal divisions and that OPM could
greatly improve its customer service by clarifying its internal
structure and making it more customer-oriented. Human resource
directors commented about the lack of a formal mechanism, such as a
survey instrument, to provide feedback to OPM on their guidance and
assistance to agencies. We asked an executive within the HCLMSA
division about this and were told that while OPM does not have a formal
feedback mechanism, they talk to agencies all the time, so OPM does not
feel that a formal mechanism is needed.
Employee responses to FHCS questions relating to OPM's customer focus
show employees are also concerned about the service OPM provides to
agencies. OPM's results for the two FHCS questions relating to customer
focus show a decline from 2002 to 2004 in its employee's satisfaction
with OPM's focus on customer needs. In 2002, 66 percent of OPM
employees agreed that "products and services in their work unit are
improved based on customer/public input." However in 2004, 53 percent
of OPM employees agreed with the same statement, a 13 percentage point
decline. A similar decline occurred in response to a FHCS question
concerning performance rewards. In 2002, 51 percent of OPM employees
agreed that "employees are rewarded for providing high quality products
and services to customers," whereas in 2004, 35 percent of OPM
employees agreed with the same statement, a decline of 16 percentage
points.
While the employee focus group discussions did not directly address
customer focus, some participants raised concerns during their
discussions that could affect OPM's client focus. Focus group
participants from HCLMSA said OPM provides poor service to external
customers due to unnecessary delays and a lack of communication. They
said the HCO structure makes it difficult to connect customers with OPM
employees who can provide them with accurate information and advice.
The HCO structure was introduced in 2003, therefore it could have
contributed to the decline in positive responses to the customer focus
questions in the 2004 FHCS.
In an OPM briefing to GAO, officials described OPM's structure in
support of strategic human capital management, and part of that
structure includes "targeting capability to implement strategic
management of human capital on an agency-by-agency basis" through its
HCLSMA division. According to OPM documents, each agency center in
HCLMSA has staff to provide human resources technical assistance to
agencies. OPM has a number of goals and activities in its Strategic and
Operational Plan intended to improve its customer service and focus on
customer needs. For example, OPM plans to develop performance standards
for OPM common services by July 2006, and implement them by October
2006.
As OPM works to address its customer issues, it should consider other
ways to more quickly respond to inquires from agencies for specific
technical expertise. In addition, OPM should develop a customer
feedback survey to identify issues related to timeliness, customer
needs, satisfaction, and take action accordingly.
OPM Needs to Take Full Advantage of Opportunities to Collaborate and
Facilitate Information Sharing with the CHCO Council and Agency Human
Resource Directors:
Our prior work has found that high-performing organizations strengthen
accountability for achieving crosscutting goals by placing greater
emphasis on collaboration, interaction, and teamwork, both within and
across organizational boundaries, to achieve results that often
transcend specific organizational boundaries. In addition, we have
found that high-performing organizations strategically use partnerships
and that federal agencies must effectively manage and influence
relationships with organizations outside of their direct control. An
effective strategy for partnerships includes establishing knowledge-
sharing networks to share information and best practices.
To collaborate and share information, CHCOs said that OPM could make
better use of the CHCO Council. Human resource directors said that OPM
could facilitate more communities of practice at the implementation
level among them. We have reported often on the need to collaborate and
share information as a way to improve agency human capital approaches,
processes, and systems. Specifically, we have made several
recommendations to OPM to work more closely with the CHCO Council to
(1) share information on the effective use of retirement flexibilities,
(2) act as a clearinghouse of information for the innovative use of
alternative service delivery for human capital services, and (3) more
fully serve as a clearinghouse in sharing and distributing information
about when, where, and how the broad range of human capital
flexibilities are being used to help agencies meet their human capital
management needs.[Footnote 19] Further, we have recommended that OPM,
in conjunction with the CHCO Council, help facilitate the coordination
and sharing of leading practices related to efficient administration of
the student loan repayment program by conducting additional forums,
sponsoring training sessions, or using other methods.[Footnote 20] For
example, our work on the federal hiring process identified areas where
OPM could target its efforts.[Footnote 21] OPM has since taken a number
of actions to help agencies improve their hiring processes. With
respect to improving agency hiring processes and use of human capital
flexibilities, we reported that the CHCO Council should be a key
vehicle for this needed collaboration. For example, OPM, working
through the CHCO Council, can serve as a facilitator in the collection
and exchange of information about agencies' effective practices and
successful approaches to improved hiring.[Footnote 22] To address the
federal government's crosscutting strategic human capital challenges,
we have testified that an effective and strategic CHCO Council is
vital. We have also reported that using interagency councils, such as
the Chief Financial Officers' and Chief Information Officers' Councils,
has emerged as important leadership strategy in both developing
policies that are sensitive to information concerns and gaining
consensus and consistent follow-through within the executive
branch.[Footnote 23]
Agency officials overwhelmingly reinforced a need for OPM to do more to
collaborate and facilitate information sharing with the CHCO Council
and HR directors. A former department-level CHCO described the CHCO
Council as "a lost opportunity with little opportunity for dialogue."
Another CHCO stated that the Council has rarely been used to debate new
human capital policies and has been excluded from major policy debates.
Although, some CHCOs and HR directors pointed to OPM's successful
collaborative efforts through the CHCO Council, such as its assistance
to agencies in the aftermath of Hurricane Katrina, they told us that
OPM misses opportunities to more effectively partner with agencies.
While some human resource directors believed the CHCO Council did
provide a means of sharing information, which is especially useful for
the CHCOs who lack human resources backgrounds, several officials
described ways in which OPM could more effectively use the Council.
A majority of human resource directors we met with told us they would
like to see OPM facilitate the sharing of information and best
practices among HR professionals, as well as CHCOs. Some officials said
that OPM frequently communicates with agencies via fax and e-mail, but
does not bring agencies together as often to share information. Some
CHCOs said they would like to see the CHCO Council interact more with
other governmentwide interagency councils. Also, most HR directors, as
well as, several CHCOs, responded positively to more involvement of
agency HR directors on the CHCO Council. Director Springer said that
membership on the CHCO Council has been expanded to include a deputy
CHCO position. The inclusion of deputies is an important step toward
building a collegial environment for sharing best practices.
Several agency officials used the SES performance management system
certification process to illustrate what they considered a missed
opportunity for OPM to facilitate agency sharing of information and
best practices, particularly during the certification application
submission process. However, an OPM official told us that it does not
provide agencies with examples of "best practice" certification
submissions because OPM does not want to convey to agencies that there
is only one "right" way to become certified. While OPM is certainly
correct about no one right way, several agencies nevertheless indicated
having difficulty understanding OPM's expectations for agency
certification submissions. In response, one CHCO took the initiative to
use one of the CHCO Academy[Footnote 24] meetings to engender
information sharing among agencies with the application process.
Collaboration and information sharing will be critical as human capital
reforms begin to take hold across government. If OPM is to successfully
lead reform, it will need to strategically use the partnerships it has
available to it, such as the CHCO Council and others, as well as
develop a culture of collaboration, information sharing, and working
with customers to understand what they will need from the agency.
OPM's Strategic and Operational Plan Includes a Number of Efforts
Intended to Improve Its Customer Focus:
It is clear from the OPM Strategic and Operational Plan, 2006-2010 that
issues of customer satisfaction and timeliness in the provision of OPM
common services is an important and compelling customer need. OPM
management has indicated that operational goals and activities are
organized as steps in its internal activities or processes to better
support external products and services for its customers and
stakeholders. For instance, OPM intends to develop and implement a new
common services methodology, to employ performance standards for
measuring the delivery of common services to customers, and to operate
under a fully implemented set of internal delegated authorities and
protocols by the end of fiscal year 2006. OPM management has pointed
out that these activities are also presented in a timeline tracking
sheet that is used to make "real time" changes through continual update
of accomplishments. It is OPM's intent to then inform customers of the
agency's success in meeting the stated customer goals found in the plan
within two weeks of each success, thereby establishing a means of
transparency and accountability. OPM officials told us that to date,
the agency is meeting this intent.
Successful organizations establish a communication strategy that allows
for the creation of common expectations and reports on related
progress. Activities intended to provide for better means of
communication and collaboration are also clearly found in the OPM plan.
As noted earlier, OPM is taking steps to improve its internal
communication by recently developing and posting a functional
organization directory on its internal website. OPM also plans to
redesign its public website to improve communication and customer focus
by the close of fiscal year 2006. The OPM plan further states, as a
strategic objective, that OPM "will have constructive and productive
relationships with external stakeholders," such as Congress, veterans,
unions, media and employee advocacy groups.
To better meet external client needs, OPM has an ongoing key related
effort to modernize its retirement systems program. Through this
program, OPM expects to reengineer the various processes that provide
services to retirement program participants that include about 5
million federal employees and annuitants. One of OPM's objectives is to
standardize applications for coverage and eligibility determinations
and benefits calculations, making them specific to customer needs and
accessible to federal agencies and program participants. OPM's
Strategic and Operational Plan contains operational goals related to
this modernization effort. We believe that such a modernization effort
is clearly needed. At the same time, as we have noted in our prior
work, OPM has lacked needed processes for developing and managing
requirements and related risks, while providing sound information to
investment decision makers in order to effectively complete
modernization of this program.[Footnote 25] We made recommendations to
OPM regarding establishment of management processes needed for
effective oversight of the program. OPM agreed that the processes we
identified were essential and noted it is taking steps to address our
recommendations to strengthen these processes.
Performance Culture and Accountability:
Leading organizations have recognized that a critical success factor in
fostering a results-oriented culture is an effective performance
management system that creates a "line of sight" showing how unit and
individual performance can contribute to overall organizational goals
and helping them understand the connection between their daily
activities and the organization's success.[Footnote 26] Effective
performance management systems can drive organizational transformation
by encouraging individuals to focus on their roles and responsibilities
to help achieve organizational outcomes. Our analysis shows that OPM's
executive performance management system aligns the performance
expectations of OPM's top leaders with the organization's goals. OPM
sets forth the organization's goals in its 2006-2010, Strategic and
Operational Plan and directly connects these goals to the performance
expectations of top leaders using performance contracts. Clearly
defined organizational goals are the first step toward developing an
effective performance management system.
OPM uses performance contracts to link organizational goals to
performance expectations for senior leaders and holds them accountable
for achieving results. As we have reported, high performing
organizations understand that they need senior leaders who are held
accountable for results, drive continuous improvement, and stimulate
and support efforts to integrate human capital approaches with
organizational goals and related transformation issues.[Footnote 27]
These organizations can show how the products and services they deliver
contribute to results by aligning performance expectations of top
leadership with organizational goals and then cascading those
expectations down to lower levels. We assessed how well OPM is creating
linkages between executive performance and organizational success by
reviewing the performance contracts (Fiscal Year 2006 Executive
Performance Agreements) of the five associate directors of OPM's major
divisions. We evaluated these performance contracts by applying
selected key practices we have previously identified for effective
performance management.[Footnote 28] We chose these practices because
they are especially relevant to OPM's current strategic management
efforts. These practices, collectively with others we have identified
in prior work, create a "line of sight" showing how unit and individual
performance can contribute to overall organizational goals.
We found that OPM has implemented several key practices to develop an
effective performance management system for its senior executives:
* Align individual performance expectations with organizational goals.
An explicit alignment of daily activities with broader results is one
of the defining features of effective performance management systems in
high-performing organizations. OPM executive performance contracts
explicitly link individual performance commitments with organizational
goals. Executives are evaluated on their success toward achieving goals
that are drawn directly from the OPM Strategic and Operational Plan.
Measures of these achievements account for 75 percent of executives'
annual performance ratings. For example, one associate director's
performance contract includes a commitment to achieve OPM's operational
goal of having "80 percent of initial clearance investigations
completed within 90 days."
* Connect performance expectations to crosscutting goals. High-
performing organizations use their performance management systems to
strengthen accountability for results, specifically by placing greater
emphasis on collaboration to achieve results. OPM's executive
performance contracts achieve this objective by making executives
accountable for OPM-wide goals. In addition to specific divisional
goals, each executive performance contract includes a common set of
"corporate commitments" that transcend specific organizational
boundaries and that executives must work together to achieve. These
commitments are directly linked to the OPM Strategic and Operational
Plan. For example, each executive contract includes a commitment to
"Implement an employee recognition program at OPM by July 1, 2006."
* Provide and routinely use performance information to track
organizational priorities. High-performing organizations provide
objective performance information to executives to show progress in
achieving organizational results and other priorities.[Footnote 29] OPM
is taking a tactical approach to implementing its Strategic and
Operational Plan. Activities supporting the strategic objectives are
listed on an "Operational Timeline" or tracking sheet that OPM uses,
and "real time" changes are made through continual updates of
accomplishments. According to Director Springer, each OPM division has
a tracking sheet for the specific goals for which they are accountable.
She told us that OPM leadership meets monthly to review the timeline
and to determine if goals have been met or what progress OPM is making
toward achieving their objectives.
* Require follow-up actions to address organizational priorities. High-
performing organizations require individuals to take follow-up actions
based on the performance information available to them. OPM's
performance contracts include commitments for executives to respond to
results from the FHCS. Each associate director is committed to
"Implement [an] action plan to ensure OPM is rated in the top 50% of
agencies surveyed in the 2006 FHCS and the top five agencies in the
2008 FHCS." To achieve this goal, each associate director developed a
FHCS action plan for their division to address employee concerns
identified in the 2004 FHCS and the follow-up focus group discussions.
* Use competencies to provide a fuller assessment of performance. High-
performing organizations use competencies, which define the skills and
supporting behaviors that individuals need to effectively contribute to
organizational results. Each OPM executive performance contract
includes core competency requirements for effective executive
leadership, which account for 25 percent of annual performance ratings.
For example, executives are responsible for building "trust and
cooperative working relationships both within and outside the
organization."
OPM's executive performance contracts incorporate these key practices
of performance management, and the agency must build on this progress
and ensure that its SES performance management system is used to drive
organizational performance.
OPM Can Build upon Strong Accountability to Address Employee Concerns
with its Performance Culture:
OPM can build on its strong system of executive accountability to
address employee concerns with its overall performance culture, as well
as support its internal transformation. OPM has plans to implement new
performance elements and standards for all OPM employees to support the
new agency Strategic and Operational Plan. As we have reported, high-
performing organizations use their performance management systems to
strengthen accountability for results.[Footnote 30] In the 2004 FHCS,
the percent of OPM employees who agreed that "I am held accountable for
achieving results" was 81 percent; essentially the same as the 80
percent of employees in the rest of the government agreeing with this
statement. OPM employees' positive view of "being held accountable for
achieving results" can be used to help address employee concerns
regarding its performance culture. For example, a significant decrease
occurred between OPM's 2002 and 2004 FHCS results on a question that
measures employee perceptions of management's focus on organizational
goals. The percentage of OPM employees who agreed that "managers review
and evaluate the organization's progress toward meeting its goals and
objectives," declined by 17 percentage points from 2002 (69 percent) to
2004 (52 percent). This question was only discussed in a few of the
focus groups, so it is unclear why fewer employees agreed with this
statement in 2004. Although limited, these discussions suggest that
some employees do not feel their performance appraisal is a fair
reflection of their performance due to inadequate goals and performance
standards, and a lack of alignment between employee goals and OPM's
mission.
OPM plans to address these employee performance concerns to ensure
there is a clear linkage between the OPM Strategic Operational Plan,
Division/Office Plans, and individual employee-level work plans. By
July 2006, OPM plans to implement new performance elements and
standards for all employees that support the OPM Strategic and
Operational Plan. Already underway, is an OPM beta site (the HCLMSA
division) to test its performance management system to link pay to
performance. OPM officials informed us that as of June 1, 2006, all
HCLMSA employees are now working under new performance plans,
consistent with the OPM beta site requirements.
To maximize the effectiveness of a performance management system, high
performing organizations recognize that they must conduct frequent
training for staff members at all levels of the organization.[Footnote
31] OPM plans to develop and implement a core curriculum for
supervisory training to ensure all managers and supervisors are trained
in performance management. Also, OPM is developing a proposal to
enhance the relationships between the human resources function and
managers to assist them in dealing with their human resource issues. If
effectively implemented, these actions should address many of the
concerns raised by focus group participants.
Concluding Remarks:
OPM faces many challenges as it seeks to achieve its organizational
transformation and become a high-performing organization. To meet its
current and future challenge to lead human capital across government,
Director Springer has shown leadership commitment to its transformation
by initiating a number of action plans to address employee concerns.
While the steps taken by OPM demonstrate progress in achieving its
transformation, it must continue on this path by closely monitoring and
communicating with its employees and customers, expanding its workforce
and succession planning efforts, and continuing to improve its
performance culture and accountability for results. As I have testified
on many occasions, in recent years GAO has learned a great deal about
the challenges and opportunities that characterize organizational
transformation. From both our own experiences and from reviewing
others' efforts, I look forward to working closely with Director
Springer and assisting Congress as it moves toward the implementation
of governmentwide human capital reform.
Chairman Voinovich, Senator Akaka, and Members of the subcommittee,
this completes my prepared statement. I would be pleased to respond to
any questions that you may have.
Contact and Acknowledgments:
For further information regarding this statement, please contact Brenda
S. Farrell, Acting Director, Strategic Issues, at (202) 512-6806 or
farrellb@gao.gov. Individuals making key contributions to this
statement include Julie Atkins, Thomas Beall, Carole Cimitile, William
Colvin, S. Mike Davis, Charlene Johnson, Trina Lewis, and Katherine H.
Walker.
[End of section]
Appendix I:
Federal Human Capital Survey, Focus Groups, and Action Plans:
We used the Federal Human Capital Survey (FHCS) and summaries of the
Office of Personnel Management (OPM) focus groups to assess employee
views of OPM's organizational capacity. OPM conducted the FHCS during
fall 2004. The survey sample included 276,000 employees and was
designed to be representative of the federal workforce. OPM had 1,539
respondents to the survey. The survey included 88 items that measured
federal employee perceptions about how effectively agencies are
managing their workforces. For more information about the 2004 FHCS
survey see http://www.fhcs2004.opm.gov/. We reviewed OPM's analysis of
its 2004 FHCS results and conducted our own analyses of survey results
using 2002 and 2004 FHCS datasets provided to us by OPM. On the basis
of our examination of the data and discussions with OPM officials
concerning survey design, administration and processing, we determined
that the data were sufficiently reliable for the purpose of our review.
In fall 2005, OPM contracted with Human Technology, Inc. to conduct
focus groups to understand factors contributing to employees' responses
on selected items from the 2004 FHCS and to obtain employees' ideas for
addressing top priority improvement areas. Employees were randomly
selected to participate in 33 focus groups with participants from all
major divisions, headquarters and the field, employees and supervisors,
and major OPM installations. The participants in each focus group
decided which topics to discuss by voting for the FHCS questions that
"are most important for OPM to address in order to make the agency a
better place to work." Questions were divided into three categories:
leadership, performance culture, and other dimensions. Participants
voted for three questions in each category and the questions that
received the most votes were discussed by the group. We analyzed
summaries of these focus groups and used the participant comments to
illustrate employee perspectives. We also analyzed recently issued
action plans developed by OPM to address issues identified in the focus
groups. These action plans were approved by OPM's Director in May 2006
and they list specific actions OPM and each internal division will take
along with suggested due dates for completion.
[End of Section]
FOOTNOTES
[1] GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.:
January 2001).
[2] GAO, 21ST Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: Mar. 4, 2005).
[3] GAO, Human Capital: Preliminary Observations on the
Administration's Draft Proposed "Working for America Act," GAO-06-142T
(Washington, D.C.: Oct. 5, 2005).
[4] GAO, Human Capital: Principles, Criteria, and Processes for
Governmentwide Federal Human Capital Reform, GAO-05-69SP (Washington,
D.C.: Dec. 1, 2004).
[5] GAO, Major Management Challenges and Program Risks, Office of
Personnel Management, GAO-03-115, (Washington, D.C.: January 2003).
[6] The Government Performance and Results Act of 1993 (GPRA) requires
federal agencies to focus on achieving results and to provide
objective, performance-based information intended to improve
congressional and agency decision-making by providing comprehensive and
reliable information on the extent to which federal programs are
fulfilling their statutory intent.
[7] GAO, High-Risk Series: Strategic Human Capital Management, GA0-03-
120 (Washington D.C.: January 2003).
[8] The Outstanding Scholars Program is a special hiring authority for
GS-5 and GS-7 positions that allows agencies to appoint college
graduates with high grade point averages or class standing. The use of
the authority is currently being litigated before the Merit Systems
Protection Board.
[9] GAO, Federal Employee Retirements: Expected Increases Over the Next
5 Years Illustrates Need for Workforce Planning, GAO-01-509
(Washington, D.C.: Apr. 27, 2001).
[10] GAO, DOD Personnel Clearances: New Concerns Slow Processing of
Clearances for Industry Personnel, GAO-06-748T (Washington, D.C.: May
17, 2006).
[11] GAO, Human Capital: A Self-Assessment Checklist for Agency
Leaders, GAO/OCG-00-14G (Washington, D.C.: September 2000); GAO, Human
Capital: Practices That Empowered and Involved Employees, GAO-01-1070
(Washington, D.C.: Sep. 14, 2001).
[12] GAO-03-115.
[13] GAO, Human Capital: Key Principles for Effective Strategic
Workforce Planning, GAO-04-39 (Washington, D.C.: Dec.11, 2003).
[14] GAO, Human Capital: Insights for U.S. Agencies from Other
Countries' Succession Planning and Management Initiatives, GAO-03-914
(Washington, D.C.: Sep. 15, 2003).
[15] GAO, 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).
[16] GAO, Human Capital: Further Guidance, Assistance, and Coordination
Can Improve Federal Telework Efforts, GAO-03-679 (Washington, D.C.:
Jul. 18, 2003).
[17] GAO-06-748T.
[18] GAO, Equal Employment Opportunity: Improved Coordination Needed
between EEOC and OPM in Leading Federal Workplace EEO, GAO-06-214
(Washington, D.C.: Jun. 16, 2006).
[19] GAO, Human Capital: Agencies Are Using Buyouts and Early Outs with
Increasing Frequency to Help Reshape Their Workforces, GAO-06-324
(Washington, D.C.: Mar. 31, 2006); GAO, Human Capital: Selected
Agencies' Use of Alternative Service Delivery Options for Human Capital
Activities, GAO-04-679 (Washington, D.C.: Jun. 25, 2004); GAO, Human
Capital: OPM Can Better Assist Agencies in Using Personnel
Flexibilities, GAO-03-428 (Washington, D.C.: May 9, 2003).
[20] GAO, Federal Student Loan Repayment Program: OPM Could Build on
Its Efforts to Help Agencies Administer the Program and Measure
Results, GAO-05-762 (Washington D.C.: Jul. 22, 2005).
[21] GAO, Human Capital: Opportunities to Improve Executive Agencies'
Hiring Processes, GAO-03-450 (Washington, D.C.: May 30, 2003).
[22] GAO, Human Capital: Additional Collaboration Between OPM and
Agencies Is Key to Improved Federal Hiring, GAO-04-797 (Washington,
D.C.: Jun. 7, 2004).
[23] GAO, Human Capital: Building on the Current Momentum to Transform
the Federal Government, GAO-04-976T (Washington, D.C.: Jul. 20, 2004).
[24] The CHCO Academy was established as a forum for Council members
only, to discuss human resources issues, learn from one another in an
informal setting, and share best practices in the strategic management
of human capital. Academy sessions are scheduled throughout the year on
the third Thursday of the month at the Office of Personnel Management.
[25] GAO, Office of Personnel Management: Retirement Systems
Modernization Program Faces Numerous Challenges, GAO-05-237
(Washington, D.C.: Feb. 28, 2005).
[26] GAO, Results-Oriented Cultures: Using Balanced Expectations to
Manage Senior Executive Performance, GAO-02-966 (Washington, D.C.: Sep.
27, 2002).
[27] GAO, Human Capital: Senior Executive Performance Management Can Be
Significantly Strengthened to Achieve Results, GAO-04-614 (Washington,
D.C.: May 2004).
[28] GAO, Results-Oriented Cultures: Creating a Clear Linkage between
Individual Performance and Organizational Success, GAO-03-488,
(Washington, D.C.: Mar. 14, 2003).
[29] GAO-04-614.
[30] GAO-03-488.
[31] GAO-03-488
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