Office of Personnel Management
Key Lessons Learned to Date for Strengthening Capacity to Lead and Implement Human Capital Reforms
Gao ID: GAO-07-90 January 19, 2007
As the agency responsible for the federal government's human capital initiatives, the Office of Personnel Management (OPM) must have the capacity to successfully guide human capital transformations necessary to meet the governance challenges of the 21st century. Given this key role, GAO was asked to assess OPM's capacity to lead further reforms. In June 2006, GAO testified on several management challenges that OPM faces. This report--the second in a series--supplements that testimony and, using the new senior executive performance-based pay system as a model for understanding OPM's capacity to lead and implement reform, identifies lessons learned that can inform future reforms. GAO analyzed relevant laws and documents, and obtained views from the Chief Human Capital Officers (CHCO) Council and human resource directors, the Office of Management and Budget (OMB) staff, and OPM officials.
The congressionally authorized senior executive performance-based pay system, implemented in 2004, provides an opportunity to learn from experiences gained and apply those lessons to the design and implementation of future human capital reforms. Under the performance-based system, before an agency can receive the new pay flexibilities, OPM, with concurrence from OMB, must certify that the agency's appraisal system meets certain criteria. OPM is likely to play a similar leadership and oversight role for future reforms.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
GAO-07-90, Office of Personnel Management: Key Lessons Learned to Date for Strengthening Capacity to Lead and Implement Human Capital Reforms
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
January 2007:
Office Of Personnel Management:
Key Lessons Learned to Date for Strengthening Capacity to Lead and
Implement Human Capital Reforms:
Office of Personnel Management:
GAO-07-90:
GAO Highlights:
Highlights of GAO-07-90, a report to congressional requesters
Why GAO Did This Study:
As the agency responsible for the federal government‘s human capital
initiatives, the Office of Personnel Management (OPM) must have the
capacity to successfully guide human capital transformations necessary
to meet the governance challenges of the 21st century. Given this key
role, GAO was asked to assess OPM‘s capacity to lead further reforms.
In June 2006, GAO testified on several management challenges that OPM
faces. This report”the second in a series”supplements that testimony
and, using the new senior executive performance-based pay system as a
model for understanding OPM‘s capacity to lead and implement reform,
identifies lessons learned that can inform future reforms. GAO analyzed
relevant laws and documents, and obtained views from the Chief Human
Capital Officers (CHCO) Council and human resource directors, the
Office of Management and Budget (OMB) staff, and OPM officials.
What GAO Found:
The congressionally authorized senior executive performance-based pay
system, implemented in 2004, provides an opportunity to learn from
experiences gained and apply those lessons to the design and
implementation of future human capital reforms. Under the performance-
based system, before an agency can receive the new pay flexibilities,
OPM, with concurrence from OMB, must certify that the agency‘s
appraisal system meets certain criteria. OPM is likely to play a
similar leadership and oversight role for future reforms.
Table: Lessons Learned from the Performance-based System and Other
Human Capital Initiatives:
Ensure internal OPM capacity to lead and implement reform; Executive
branch agencies noted a lack of knowledge and experience among OPM
staff to design and implement key human capital transformation efforts.
GAO analysis of available OPM employee feedback data suggests that
employees may not be receiving sufficient training to enhance their
skills and competencies. OPM has begun aligning its workforce skills to
meet future needs but has not conducted an agencywide skills assessment
since updating its key strategic management documents. Lesson: Ensure
that OPM‘s workforce is properly aligned to successfully design and
implement human capital reforms, such as knowledge of innovative
classification and pay and compensation approaches, and continue to
prepare the workforce to meet changing demands of the future.
Ensure that executive branch agencies' infrastructures support reform;
OPM‘s approach to certifying agencies‘ senior executive performance-
based systems should more fully promote the building of the
institutional infrastructure, such as robust performance management
systems with adequate safeguards, within agencies needed to effectively
implement the reforms. Lesson: Assist agencies in building the
necessary infrastructure for a performance-based system by providing
front-end and ongoing involvement”building on progress made to date.
Collaborate with CHCO Council;
Executive branch agencies said the certification process was a missed
opportunity for OPM to better collaborate with the CHCO Council. One
agency CHCO said OPM traditionally uses council meetings to present
information to the CHCOs, but does not always encourage discussions or
seek input. Lesson: Cultivate effective partnerships with the CHCO
Council by engaging them to solicit their ideas and suggestions during
system design to build consensus and develop momentum for success.
Develop clear and timely guidance;
The lack of clear and timely guidance from OPM created confusion as
agencies attempted to understand and implement the broadly defined
regulatory criteria for certification. Lesson: Provide agencies with
clear and timely guidance”being sensitive to other ongoing human
capital activities”to reach a common, consistent understanding and
promote efficiency as agencies adjust to new requirements for reforms.
Share best practices;
Executive branch agencies said OPM could have better facilitated
sharing best practices to help them implement senior executive
performance-based systems. Lesson: Facilitate the sharing of best
practices for implementing human capital reforms by providing forums
for agencies to learn from each others‘ experiences, share successful
strategies, and avoid common pitfalls.
Solicit and incorporate feedback;
Executive branch agencies said there was no formal mechanism, such as a
customer survey, for them to provide feedback to OPM on its guidance
and assistance. Lesson: Solicit feedback from executive branch agencies
and incorporate to improve the implementation of human capital reforms.
Track progress to ensure accountability; OPM does not have an
evaluation strategy for tracking the progress of the agencies‘
implementation of the new executive systems. Lesson: Develop a strategy
to allow OPM, other federal agencies, and Congress to monitor progress
toward achieving human capital reform goals.
Source: GAO analysis.
[End of table]
What GAO Recommends:
GAO is making recommendations to the Director of OPM to improve OPM‘s
capacity for future reforms by reexamining agencywide skills, and to
address issues specific to the senior executives‘ pay systems, such as
sharing best practices and tracking progress towards goals. In
commenting on a draft of this report, OPM stated it has made progress
toward achieving its operational and strategic goals, but neither
agreed nor disagreed with GAO‘s recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-90].
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]
Contents:
Letter:
Results in Brief:
Background:
Key Lessons Learned from the Senior Executive Performance-based Pay
System and Other Human Capital Initiatives:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Description of the Senior Executive Performance-based Pay
System Certification Process:
Appendix III: Agency Certification Status for Calendar Years 2004,
2005, and 2006 as of October 2006:
Appendix IV: Comments from the Office of Personnel Management:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Lessons Learned from the Performance-based System and Other
Human Capital Initiatives:
Table 2: Senior Executive Performance Appraisal System Certification
Criteria:
Figure:
Figure 1: Overview of Senior Executive Performance Appraisal System
Certification Process:
Abbreviations:
CHCO: Chief Human Capital Officer:
CPDF: Civilian Personnel Data File:
DHS: Department of Homeland Security:
DOD: Department of Defense:
DOL: Department of Labor:
EEO: Equal Employment Opportunity:
EEOC: Equal Employment Opportunity Commission:
FDIC: Federal Deposit Insurance Corporation:
FHCS: Federal Human Capital Survey:
GSA: General Services Administration:
HCAAF: Human Capital Assessment and Accountability Framework:
HCLMSA: Human Capital Leadership and Merit System Accountability:
HCO: Human Capital Officer:
HR: Human Resources:
HUD: Department of Housing and Urban Development:
NASA: National Aeronautics and Space Administration:
NSPS: National Security Personnel System:
OMB: Office of Management and Budget:
OPM: Office of Personnel Management:
PAAT: Performance Appraisal Assessment Tool:
PMA: President's Management Agenda:
SBA: Small Business Administration:
SES: Senior Executive Service:
SHRP: Strategic Human Resources Policy:
SL: senior-level position:
ST: scientific or professional position:
United States Government Accountability Office:
Washington, DC 20548:
January 19, 2007:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Daniel K. Akaka:
Chairman:
The Honorable George V. Voinovich:
Ranking Minority Member:
Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
Strategic human capital management is the centerpiece of federal
agencies' efforts to transform to meet the governance challenges of the
21st century. Congress has provided agencies with exemptions from the
old rules and with new hiring flexibilities to more strategically
manage their workforces to help meet current and emerging demands, and
the Department of Defense (DOD) and the Department of Homeland Security
(DHS) are implementing legislated human capital reforms affecting
performance-based pay systems, among other things. Strategic human
capital management has become more important as changes in workforce
demographics pose additional challenges. Baby boomers are likely to
begin retiring in large numbers in the near future, while at the same
time the labor force is growing at a much slower rate. Thus, those
leaving jobs will outnumber those seeking jobs, further challenging the
federal government to ensure that it recruits, hires, trains, develops,
and motivates the talent it needs to achieve meaningful results and to
be competitive with the private sector.
Senior executives need to lead the way in transforming their agencies
to become more results oriented, collaborative in nature, and customer
focused. Also, we have reported that the shift to market-based and more
performance-oriented pay must be part of a broader strategy of change
management and performance improvement initiatives and cannot be simply
overlaid on existing ineffective performance management
systems.[Footnote 1] In 2003, Congress authorized a new performance-
based pay system for members of the Senior Executive Service (SES). The
Office of Personnel Management (OPM) has a key leadership role in
leading and implementing this new system as well as other human capital
initiatives and reforms. Thus, the lessons learned from implementing
the new senior executive performance appraisal system (the foundation
of the SES pay reforms) and other governmentwide human capital
initiatives provide valuable insight into OPM's capacity to lead and
implement human capital reforms.
As the federal government's human capital leader, OPM must have the
capacity to effectively assist agencies and to successfully lead and
implement these important human capital management transformations. To
enhance its capacity to do so, OPM is working to transform its own
organization from less of a rulemaker, enforcer, and independent agent
to more of a consultant, toolmaker, and strategic partner. As reform
initiatives move forward, it is increasingly important for OPM to
complete this transformation and clearly demonstrate its capacity to
lead and implement such reforms.
Given the importance of OPM's key role, you asked us to assess the
extent to which OPM has the capacity to lead and implement
governmentwide human capital reform. In June 2006, we testified before
the Subcommittee that while OPM has made progress towards transforming
itself to be a more effective leader of human capital reform, it could
build upon this progress by addressing a number of management
challenges.[Footnote 2] This report supplements the information we
provided in our June 2006 testimony, and as agreed with your offices is
the second in a series of reports, and specifically identifies lessons
that can be learned from OPM's efforts to lead and implement the senior
executive performance-based pay system and other human capital
initiatives that can be applied to ongoing and future human capital
reform efforts. OPM officials agreed that its role in certifying senior
executive performance appraisal systems is illustrative of the
challenges OPM faces related to future human capital legislative
reforms. As you have requested, we will continue to follow up on these
and other issues related to OPM's capacity to lead and implement human
capital reforms including issues raised in our June 2006 testimony on
OPM's (1) leadership; (2) talent and resources; (3) customer focus,
communication, and collaboration; and (4) performance culture and
accountability.
For this report, we reviewed and analyzed key documents related to the
senior executive performance-based pay system, including the
legislation that authorized the pay flexibilities and the OPM and
Office of Management and Budget (OMB) regulations developed to
administer these systems. We also reviewed and analyzed other documents
related to OPM's process for certifying agency performance appraisal
systems and conducted interviews with OPM's five associate directors
and other OPM staff, as well as staff from OMB involved in the
appraisal system certification process. To obtain agency views on their
experiences with the certification process, we interviewed 22 of the 23
members of the Chief Human Capital Officers (CHCO) Council and their
corresponding agency human resource (HR) directors and obtained written
responses from the 1 agency we did not interview. We also drew from our
June 2006 testimony that included data from the Civilian Personnel Data
File (CPDF) and our analysis of the 2004 Federal Human Capital Survey
(FHCS),[Footnote 3] 2005 OPM focus groups, and 2006 OPM action plans to
address problems identified. We also reviewed OPM's March 2006
strategic and operational plan, associated workforce planning
documents, and documentation on other OPM human capital initiatives,
such as the Performance Appraisal Assessment Tool (PAAT) and agency
beta sites for performance management below the senior level. Appendix
I contains a detailed discussion of our scope and methodology. We
conducted our work from October 2005 to September 2006, in accordance
with generally accepted government auditing standards.
Results in Brief:
The congressionally authorized senior executive performance-based pay
system, implemented in 2004 as well as OPM's implementation of other
governmentwide human capital initiatives, provides an opportunity to
learn from experiences gained and apply those lessons to the
implementation of future human capital reforms. More specifically, OPM
has a key leadership and oversight role in the design and
implementation of agencies' senior executive performance-based pay
systems and is likely to play a similar role in governmentwide human
capital reform. For example, to qualify for the pay flexibilities under
the statute, OPM must certify and OMB must concur that an agency's
senior executive appraisal system meets specific criteria jointly
developed by OPM and OMB. For lessons learned that can inform the
design and implementation of additional human capital reforms, see
table 1.
Table 1: Lessons Learned from the Performance-based System and Other
Human Capital Initiatives:
Ensure internal OPM capacity to lead and implement reform;
Executive branch agencies noted a lack of knowledge and experience
among OPM staff to design and implement key human capital
transformation efforts. GAO analysis of available OPM employee feedback
data suggests that employees may not be receiving sufficient training
to enhance their skills and competencies. OPM has begun aligning its
workforce skills to meet future needs but has not conducted an
agencywide skills assessment since updating its key strategic
management documents. Lesson: Ensure that OPM's workforce is properly
aligned to successfully design and implement human capital reforms,
such as knowledge of innovative classification and pay and compensation
approaches, and continue to prepare the workforce to meet changing
demands of the future.
Ensure that executive branch agencies' infrastructures support reform;
OPM's approach to certifying agencies' senior executive performance-
based systems should more fully promote the building of the
institutional infrastructure, such as robust performance management
systems with adequate safeguards, within agencies needed to effectively
implement the reforms. Lesson: Assist agencies in building the
necessary infrastructure for a performance-based system by providing
front-end and ongoing involvement--building on progress made to date.
Collaborate with CHCO Council;
Executive branch agencies said the certification process was a missed
opportunity for OPM to better collaborate with the CHCO Council. One
agency CHCO said OPM traditionally uses council meetings to present
information to the CHCOs, but does not always encourage discussions or
seek input. Lesson: Cultivate effective partnerships with the CHCO
Council by engaging them to solicit their ideas and suggestions during
system design to build consensus and develop momentum for success.
Develop clear and timely guidance;
The lack of clear and timely guidance from OPM created confusion as
agencies attempted to understand and implement the broadly defined
regulatory criteria for certification. Lesson: Provide agencies with
clear and timely guidance--being sensitive to other ongoing human
capital activities--to reach a common, consistent understanding and
promote efficiency as agencies adjust to new requirements for reforms.
Share best practices;
Executive branch agencies said OPM could have better facilitated
sharing best practices to help them implement senior executive
performance-based systems. Lesson: Facilitate the sharing of best
practices for implementing human capital reforms by providing forums
for agencies to learn from each others' experiences, share successful
strategies, and avoid common pitfalls.
Solicit and incorporate feedback;
Executive branch agencies said there was no formal mechanism, such as a
customer survey, to provide feedback to OPM on its guidance and
assistance. Lesson: Solicit feedback from executive branch agencies and
incorporate to improve the implementation of human capital reforms.
Track progress to ensure accountability;
OPM does not have an evaluation strategy for tracking the progress of
the agencies' implementation of the new executive systems. Lesson:
Develop a strategy to allow OPM, other federal agencies, and Congress
to monitor progress toward achieving human capital reform goals.
Source: GAO analysis.
[End of table]
Ensure internal OPM capacity to lead and implement reform. Executive
branch agency experiences with implementing the senior executive
performance-based pay systems and other human capital efforts point to
a lack of knowledge and experience among OPM staff, and a majority of
agency CHCOs and HR directors expressed concern with OPM's ability to
generally provide timely and accurate guidance to agencies both now and
in the future. OPM's capacity in technical areas such as pay and
compensation may be dependent upon a few employees skilled in these
areas. Also, our analysis of available OPM data suggests that overall
employees may not be receiving sufficient training to enhance their
skills and competencies. The problem of a lack of knowledge and
experience may be compounded by the potential loss of institutional
knowledge. OPM's succession planning data show that as of July 2006,
nearly half of its 376 supervisors, managers, and executives were
eligible for either early or regular retirement. Based on historical
trend data, OPM projects an overall loss (including retirements) of
roughly 65 to 75 supervisory, managerial, and executive positions per
year.
OPM has begun to align its workforce skills and competencies to meet
additional requirements stemming from future reforms and other
environmental changes. For example, OPM conducted agencywide skills and
competencies assessments in 2001 and 2003, and has conducted skills
assessments for certain targeted occupations. Validating skills and
competencies is important because the workforce skills and competencies
needed to be a strategic partner, toolmaker, or consultant may be
different from those needed in the past to be a rulemaker or enforcer
of regulations. Importantly, OPM has recently updated several of its
key strategic management documents. For example, in March 2006, OPM
issued its Strategic and Operational Plan, 2006-2010--the starting
point and basic underpinning for transformation. In August 2006, OPM
updated its Corporate Leadership Succession Management Plan to include
all of its supervisory, management, and executive positions with
succession planning profiles that contain a list of specific and
general technical competency requirements for each position. At the end
of September 2006, OPM issued its Plan for the Strategic Management of
OPM's Human Capital for fiscal years 2006-2007. A new agencywide skills
assessment would enable OPM to better align its workforce with needed
resources to meet current and emerging demands.
Ensure that executive branch agencies' infrastructures support reform.
OPM's approach to certifying agencies' senior executive performance
appraisal systems could more fully promote the building of the
institutional infrastructure, such as robust performance management
systems with adequate safeguards, within agencies needed to effectively
implement the executive performance and pay reforms. Overall, the
regulations that OPM and OMB developed to administer a performance-
based pay system for executives serve as an important step for agencies
in creating an alignment or "line of sight" between executives'
performance and organizational results. Agencies that are authorized to
implement the new pay flexibilities will receive either a provisional
or full certification. Provisionally certified agencies receive the
same pay flexibilities as those with fully certified systems, even
though agencies with provisional certification do not meet all nine of
the certification criteria. In essence, the provisional category of
certification constitutes a phased approach to implementing performance-
based pay systems by allowing agencies to work toward meeting the full
certification requirements as they are implementing the new
authorities. Of the 33 performance appraisal systems that have been
certified in 2006, only the Department of Labor's SES system received
full certification. OPM has opportunities to build on the progress it
has made and further strengthen its efforts. More specifically,
additional front-end and ongoing OPM involvement appears to be needed
to assist agencies in achieving and maintaining full certification.
Executive branch agency officials said OPM's role in the certification
process focuses more on enforcing rules regarding applications for
certification, rather than guiding and assisting agencies in building
the necessary infrastructure for a performance- based pay system. This
is especially true as the standards for full certification are evolving
and becoming more difficult to meet.
Collaborate with CHCO Council. Executive branch agency officials said
the certification process was a missed opportunity for OPM to better
collaborate with the CHCO Council. One agency CHCO told us that OPM
traditionally uses council meetings to present information to the
CHCOs, but does not always encourage discussions or seek the council's
input. OPM officials indicated that they provided the CHCO Council with
opportunities to discuss the certification process. However, some CHCOs
wanted more involvement in crafting the fundamental design and
applicable issues of the certification process, rather than commenting
on draft regulations after the fact. For example, CHCOs were given a
very short time frame of 24 hours to review and comment on the proposed
certification criteria.
Develop clear and timely guidance. The lack of clear and timely
guidance from OPM created confusion as agencies attempted to understand
and implement the broadly defined regulatory criteria and adjust to the
requirements for certification. Officials at a majority of the CHCO
Council agencies told us they did not have enough initial guidance to
properly prepare for meeting the certification criteria, and this
problem has continued beyond the initial release of the regulations.
OPM officials we spoke with agreed that OPM needs to provide clear and
consistent guidance to agencies and said they are working to improve
this. These officials said the certification of agency pay systems has
been an iterative, learning process, and OPM is positioning itself to
provide more guidance to agencies.
Share best practices. Executive branch agency officials told us that
OPM could have better facilitated the sharing of best practices to help
them implement their performance-based pay systems. For example,
executive branch agency officials said best practices for developing
senior executive performance measures are needed to make their
performance plans more results based, as required for certification.
Recently, OPM has taken steps to share information among agencies. In
September 2006, OPM provided agencies' executive resource directors
with samples of actual agency senior executive performance plans,
though OPM did not specify why these samples were selected and if they
should serve as best practices for other agencies.
Solicit and incorporate feedback. OPM does not actively solicit and act
on feedback from agencies on the implementation of the certification
process. Executive branch agency HR directors said there was not a
formal mechanism, such as a survey instrument, for agencies to provide
feedback to OPM on its guidance and assistance to agencies. An OPM
executive confirmed that OPM does not have a formal feedback mechanism;
however, this official said OPM converses with agencies regularly, so
OPM did not feel the need to obtain information in this way. Also, OPM
does not capture senior executive perceptions of the new performance
appraisal system, and further, OPM does not require agencies to gather
feedback from senior executives who are directly affected by the new
appraisal systems, even though agencies are approaching the fourth year
of implementation.
Track progress to ensure accountability. OPM does not have an
evaluation strategy to track the progress of the overall results of the
senior executive performance-based systems. OPM is taking steps to
monitor how agencies are making meaningful distinctions in senior
executive performance--one of the nine criteria it has developed for
certifying agencies' senior executive performance appraisal systems.
Once agencies have provisional or full certification, OPM monitors this
criterion by measuring the distributions of agencies' performance
ratings and pay. We have reported that agencies seeking human capital
reform should consider doing evaluations that are broadly modeled on
the evaluation requirements of the OPM demonstration projects. Under
the demonstration project authority, agencies must evaluate and
periodically report on results, implementation of the demonstration
project, cost and benefits, impacts on veterans and other equal
employment opportunity groups, adherence to merit system principles,
and the extent to which the lessons from the project can be applied
governmentwide.
In addition to the lessons learned that can be applied to future human
capital reforms, we are making a recommendation to the Director of OPM
to help ensure that OPM has the skills and competencies needed to
effectively assist executive branch agencies with future human capital
reform efforts by reexamining OPM's current agencywide competency
assessment to reflect changes in the human capital environment and
demands of the future. Also, to assist agencies in meeting the
requirements for certification of their senior executive performance
appraisal systems, we are making recommendations to the Director of OPM
to (1) develop and publish a timeline for the issuance of certification
guidance with the input of the CHCO Council; (2) evaluate alternatives
that could remedy the year-end time compression that agencies face when
trying to meet OPM application requirements and avoid a gap in
certification; (3) work with the CHCO Council to develop a formal
mechanism for sharing leading practices for implementing human capital
initiatives, such as the senior executive appraisal system and other
performance management reform initiatives; (4) develop a formal
feedback mechanism to obtain agencies' views on OPM's implementation of
the certification process; (5) work with executive branch agencies to
develop a systematic approach for obtaining employee attitudes towards
human capital reforms; and (6) develop a strategy to allow OPM, other
executive agencies, and Congress to monitor the progress of
implementation of the senior executive performance-based pay system.
We provided OPM a draft of this report for its review and comment and
received a written response from the Director of OPM. Director Springer
said OPM has made progress towards achieving its operational and
strategic goals since she became Director of OPM. The Director provided
information that while beyond the scope of the report, nonetheless is
helpful in understanding the context in which OPM is operating.
Specifically, she commented that OPM associates have worked together
and with agencies to achieve the objectives that are tied to OPM's
Strategic and Operational Plan, 2006-2010, and since March 2006, OPM
has achieved its plan's objectives, on time or ahead of schedule. While
OPM neither agreed nor disagreed with our recommendations, the agency
provided a number of technical comments and, where appropriate, we have
made changes to the report language to reflect these comments. Director
Springer's letter on our draft report is found in appendix IV.
Background:
OPM's mission and responsibilities are found in Title 5 of the U.S.
Code, which provides for the effective implementation of civil service
laws, rules, and regulations. OPM also evaluates the effectiveness of
personnel policies, agency compliance with laws, rules, regulations and
office directives, and agency personnel management evaluation systems.
Overall, OPM manages the federal government's human capital and is
charged with helping agencies shape their human capital management
systems and holding them accountable for effective human capital
management practices. OPM does this in such a way to help ensure that:
(1) the federal government acquires, develops, manages, and retains
employees with the knowledge, skills, and abilities needed to deliver
services that the American public want and deserve; and (2) agencies
consistently uphold governmentwide values, such as merit system
principles, veteran's preference, and workforce diversity. OPM is also
responsible for administering retirement, health benefits, and other
insurance services to government employees, annuitants, and
beneficiaries.
In January 2001, we added strategic human capital management to our
list of federal programs and operations identified as high
risk.[Footnote 4] In a July 2001 report, we evaluated OPM's goals and
measures for assessing the state of human capital at federal
departments and agencies and found weaknesses in OPM's measures of
workforce skills and employee accountability and made recommendations
to help address these issues, among other things.[Footnote 5] OPM has
since taken action on our recommendations. In a January 2003 report, we
examined OPM's progress towards its own transformation, as OPM shifts
its role from less of a rule maker and enforcer to more of a consultant
and strategic partner in leading and supporting agencies' human capital
initiatives. We concluded that OPM should exert greater leadership to
prepare the way for human capital reform.[Footnote 6]
In June 2006, we testified before the Subcommittee that OPM has made
commendable efforts towards transforming itself to being a more
effective leader of governmentwide human capital reform. We noted
however, that it could build upon that progress by addressing
challenges that remain in four key areas: (1) leadership; (2) talent
and resources; (3) customer focus, communication, and collaboration;
and (4) performance culture and accountability.[Footnote 7] First, in
the area of leadership, we reported that information from OPM employees
based on our analysis of the 2004 FHCS suggests that information from
their top leadership does not cascade effectively throughout the
organization and that many employees do not feel their senior leaders
generate a high level of motivation and commitment in the workforce.
These views on leadership were more strongly expressed by employees in
OPM's Human Capital Leadership and Merit System Accountability (HCLMSA)
division--one of OPM's key divisions and a unit responsible for
partnering with agencies and vital to successful human capital reform
efforts. In May 2006, OPM developed a series of action plans to address
issues raised in the 2004 FHCS, including a number of planned actions
to improve overall and cross-divisional communication and employee
views of senior management.
Second, we reported that in the area of talent and resources, OPM has
made progress in assessing current workforce needs and developing
leadership succession plans; however, if OPM is to lead governmentwide
human capital reform it can do more to identify the skills and
competencies of the new OPM, determine any skill and competency gaps,
and develop specific steps to fill such gaps. Third, we reported that
the views of agency CHCOs and HR directors as well as OPM employees
show that OPM can improve its customer service and communication with
agencies and that guidance to agencies is not always clear and timely.
Executive branch agency officials also pointed to OPM's Human Capital
Officer (HCO) structure as a frequent barrier to efficient customer
response and felt there are greater opportunities for OPM to dialogue
and collaborate with CHCOs and HR directors. Fourth, with respect to
performance culture and accountability, we reported that OPM has made
progress in creating a "line of sight" or alignment and accountability
across its leaders' expectations and organizational goals in its
strategic and operational plan; however, success in achieving
governmentwide reform objectives will rest, in part, on OPM's ability
to align performance and consistently support mission accomplishment
for all employees of the organization.
As Congress and other stakeholders have recognized the importance of
strategic human capital management, several legislative changes have
occurred. In November 2002, Congress passed the Homeland Security Act
of 2002,[Footnote 8] which created DHS and provided the department with
significant flexibility to design, in consultation with OPM, a modern
human capital management system affecting approximately 180,000
personnel. Specifically, the legislation granted DHS certain exemptions
from the laws governing federal civilian personnel management in Title
5 of the U.S. Code--providing DHS with certain human capital
flexibilities to establish a contemporary human capital system that
will enable it to attract, retain, and reward a workforce able to meet
its critical mission.[Footnote 9]
To address governmentwide human capital management challenges, Title
XIII of the Homeland Security Act, also cited as the Chief Human
Capital Officers Act of 2002, established CHCO positions in 23 agencies
to advise and assist the heads of agencies and other executive branch
agency officials in their strategic human capital management efforts.
The act also created the CHCO Council to advise and coordinate the
activities of members' agencies on such matters as the modernization of
human resources systems, improved quality of human resources
information, and legislation affecting human resources operations and
organizations.[Footnote 10] The act also included significant
provisions related to direct hire authority, the use of categorical
ranking in the hiring of applicants instead of the "rule of three,"
expansion of voluntary early retirement and "buy-out" authority, a
requirement to discuss human capital approaches in Government
Performance and Results Act reports and plans, and a provision raising
the total annual compensation limit for senior executives and other
senior professionals in agencies with performance appraisal systems
that have been certified by OPM and OMB as making meaningful
distinctions in relative performance.
In November 2003, the National Defense Authorization Act for Fiscal
Year 2004[Footnote 11] provided DOD--the largest federal employer--with
authority, in conjunction with OPM, to establish a flexible and
contemporary human resources system, including a new (1) pay and
performance management system, (2) appeals process, and (3) labor
relations system--which together comprise the National Security
Personnel System (NSPS). Like the Homeland Security Act, this
legislation granted DOD certain exemptions from Title 5 of the U.S.
Code and provided significant flexibility for designing NSPS, allowing
for a new framework of rules, regulations, and processes to govern how
defense civilian employees are hired, compensated, promoted, and
disciplined. The NSPS would cover approximately 700,000
employees.[Footnote 12]
Also, in the National Defense Authorization Act for Fiscal Year 2004,
Congress authorized a new performance-based pay system for members of
the SES.[Footnote 13] Under the new system, which took effect in
January 2004, senior executives no longer receive annual across-the-
board or locality pay adjustments. Executive branch agencies must now
base pay adjustments for senior executives on individual performance
and contributions to agency performance through an evaluation of their
unique skills, qualifications, or competencies, as well as the
individual's current responsibilities. The new pay system raises the
cap on base pay and total compensation. For 2006, the caps are $152,000
for base pay (Level III of the Executive Schedule) with a senior
executive's total compensation not to exceed $183,500 (Level I of the
Executive Schedule). If an agency's senior executive performance
appraisal system is certified by OPM and OMB concurs, the caps are
increased to $165,200 for base pay (Level II of the Executive Schedule)
and $212,100 for total compensation (the total annual compensation
payable to the Vice President).
In addition to SES employees, many agencies use senior employees with
scientific, technical, and professional expertise, commonly known as
senior-level (SL) and scientific or professional (ST) positions. SL/ST
positions have a lower maximum rate of basic pay than SES employees,
and unlike the SES, their individual rate of pay does not necessarily
have to be based on individual or agency performance. However, an
agency may apply to OPM and OMB for certification of its SL/ST
performance appraisal system, and if the system is certified as making
meaningful distinctions in relative performance, an agency may raise
the total annual compensation maximum for SL/ST employees to the salary
of the Vice President.[Footnote 14] However, certification does not
affect the maximum rate of basic pay of SL/ST employees.
To qualify for these pay flexibilities, OPM must certify and OMB must
concur that an agency's senior executive performance appraisal system
meets certification criteria jointly developed by OPM and OMB. Two
levels of performance appraisal system certification are available to
agencies: full and provisional. To receive full certification, which
lasts for 2 calendar years, the design of agency systems must meet nine
certification criteria and agencies must provide documentation of prior
performance ratings to demonstrate compliance with the criteria.
Agencies can receive provisional certification, which lasts for 1
calendar year, if they have designed but not yet fully implemented a
senior executive performance appraisal system, or do not have a history
of performance ratings that meets the certification criteria. In
September 2006, we testified before the Subcommittee that the
certification criteria are generally consistent with our body of work
identifying key practices for effective performance management
systems.[Footnote 15] In addition, we testified that these senior
executive and senior-level employee performance-based pay systems serve
as an important step for agencies in creating alignment or "line of
sight" between executives' performance and organizational results. A
detailed description of the certification criteria and process is
provided in appendix II.
Key Lessons Learned from the Senior Executive Performance-based Pay
System and Other Human Capital Initiatives:
The congressionally authorized senior executive performance-based pay
system, implemented in 2004, as well as OPM's implementation of other
governmentwide human capital initiatives, provides an opportunity to
learn from experiences gained and apply those lessons to the
implementation of future human capital reforms. As OPM is likely to
play a similar leadership and oversight role in future reforms, the
following lessons learned may also assist OPM as it moves forward in
the design and implementation of other human capital reforms and
initiatives.
Ensure Internal OPM Capacity to Lead and Implement Reform:
To successfully transform or implement a large-scale change initiative
such as governmentwide human capital reform, an organization must
fundamentally reexamine its processes, organizational structures, and
management approaches--including its workforce capacity. 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. As mentioned previously, in 2003, we reported that OPM was
undergoing its own transformation--from less of a rulemaker to more of
a consultant in leading and supporting executive agencies' human
capital management systems.[Footnote 16] As the organization transforms
and OPM works to balance rules and tools and change its organizational
culture, it is critical that OPM examine its internal capacity to
ensure its workforce has the competencies to meet the multiple demands
of the future and successfully implement human capital reforms. In
particular, we have reported that a one-size-fits-all approach to human
capital management is not appropriate for the challenges and demands
government faces and that there should be a governmentwide framework to
guide human capital reform.[Footnote 17] Thus, it is particularly
important that OPM's workforce have the knowledge, skills, and
abilities to understand how to balance the need for consistency across
the federal government with the desire for flexibility, so that they
can assist individual agencies in tailoring their human capital systems
to best meet their needs. Striking this balance will not be easy to
achieve, but is necessary to maintain a governmentwide system that is
responsive enough to adapt to agencies' diverse missions, cultures, and
workforces.
Executive branch agency experiences with implementing the senior
executive performance-based pay systems and other human capital efforts
point to a lack of knowledge and experience among OPM staff. Several
executive branch agency officials commented that OPM conveyed a "we'll
know it when we see it" method of communicating expectations, and was
thus unable to effectively communicate to agencies their expectations
regarding the senior executive performance appraisal system
certification process. In addition, executive branch agency officials
told us they believe the DOD and DHS human capital reform efforts
severely taxed OPM technical resources, specifically pay and
compensation employees. One CHCO surmised that OPM's capacity is
dependent upon a few key employees skilled in these areas, particularly
innovative pay and compensation approaches. An OPM senior executive
confirmed this, telling us that turnover and retirement were
problematic for pay and compensation experts at OPM. Also, a majority
of agency CHCOs, HR directors, and their staffs expressed concern about
whether OPM generally has the technical expertise needed to provide
timely and accurate human capital guidance and advice both now and in
the future. We previously reported that problems arose for many
agencies when technical questions had to be communicated via OPM HCOs
to the policy experts at OPM.[Footnote 18] This issue may have been
magnified for some agencies by the frequent turnover or reassignments
among HCOs. The HCO position was established in 2003 at OPM as part of
its transformation efforts to help improve customer service to
agencies.[Footnote 19] An executive branch agency official told us that
her agency was assigned four different HCOs in the last 18 months.
According to OPM's most recent strategic human capital plan, OPM
recognizes that HCO staff will need to develop greater familiarity with
areas beyond each individual's technical expertise and plans for its
staff to gain "cross-functional knowledge" through means such as staff
participation on cross-functional work groups that address various
initiatives, training opportunities, and other developmental
assignments that lend themselves to professional growth and
development.
Further, our analysis of OPM's agency results from the 2004 FHCS and
2005 follow-up focus group data suggest that OPM employees may not be
receiving sufficient training to enhance their skills and competencies.
OPM employees were not as close to the employees in the rest of
government in agreeing with the statement "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. Focus group participants selected this item as one
of the most important issues for OPM to address--expressing the view
that OPM's culture does not support training, employees do not have
time to attend training classes, and managers are not given sufficient
and timely training budgets. An OPM executive supported these views,
stating that it can be a struggle to convince managers that people
should attend training. A former senior OPM official told us that he
did not have an overall budget, including training, for his department
while at OPM.
OPM has begun to align its workforce skills and competencies to meet
additional requirements stemming from future reforms and other
environmental changes. For example, OPM conducted agencywide skills and
competencies assessments in 2001 and 2003, and has conducted skills
assessments for certain targeted occupations--information technology,
human resource management, and selected mission-critical positions.
Validating skills and competencies is important because the workforce
skills and competencies needed to be a strategic partner, toolmaker, or
consultant may be different from those needed in the past to be a
rulemaker or enforcer of regulations. Importantly, OPM has also updated
several of its key strategic management documents. First, in March
2006, OPM issued its Strategic and Operational Plan, 2006-2010--the
starting point and basic underpinning for transformation. The plan's
strength is in its definition of clear, tangible goals and
deliverables. However, the plan does not include a description of the
relationship between the long-term goals and annual goals.
Second, in August 2006, OPM updated its Corporate Leadership Succession
Management Plan to include all of its supervisory, management, and
executive positions with succession planning profiles that contain a
list of specific and general technical competency requirements for each
position. This is important because the problem of a lack of knowledge
and experience at OPM may be compounded by the potential loss of
institutional knowledge. In June 2006, we testified that without
careful planning, employee attrition, including senior executives,
could pose the threat of an eventual loss in institutional knowledge,
expertise, and leadership continuity at OPM.[Footnote 20] OPM's
succession planning data show that as of July 2006, nearly half of its
376 supervisors, managers, and executives were eligible for either
early or regular retirement. Based on historical trend data, OPM
projects an overall loss (including retirements) of roughly 65 to 75
supervisory, managerial, and executive positions per year. Even more
recently, at the end of September 2006, OPM issued its Plan for the
Strategic Management of OPM's Human Capital for fiscal years 2006-2007.
According to OPM's strategic human capital plan, voluntary attrition
among employees overall at OPM has averaged approximately 11 percent
over a 3-year period and voluntary retirements comprised approximately
25 percent of separations from 2003 to 2006.
OPM has developed strategies to help support its succession planning
objectives, such as providing resources to improve and develop the
competence of internal candidate pools to develop deep "bench
strength." In addition, OPM plans to target recruitment efforts around
the critical and core competencies it has identified for each position
and to use recruitment incentives and flexibilities to attract the most
desirable candidates. These succession planning efforts are important
because leading organizations engage in broad, integrated succession
planning efforts that focus on strengthening both current and future
organizational capacity.
OPM's ability to lead and oversee human capital management policy
changes that result from potential human capital reform could be
affected by its internal capacity and ability to maintain the right
skills and competencies of its workforce, as well as an effective
leadership team. The steps taken by OPM demonstrate progress in
achieving its transformation and it must continue on this path by
closely monitoring its actions to align its workforce to meet current
and emerging demands. A new agencywide skills assessment would enable
OPM to better align its workforce with needed resources to meet such
demands. Building and maintaining expertise in areas that will be
critical to future reforms, such as classification and pay and
compensation policy, and ensuring that OPM employees receive
opportunities for training and development that will help them in
assisting agencies with the implementation of reforms, are critical for
future reform success. These workforce and training goals and
objectives also should be included in the means and strategies
developed in OPM's strategic planning process. Moving forward, OPM can
continue to monitor implementation of long-term strategies to better
prepare its workforce for change and continue to build its workforce
capacity to meet the demands of the future.
Ensure That Executive Branch Agencies' Infrastructures Support Reform:
We have reported that the federal government should follow a phased
approach towards human capital reforms that meets a "show me"
test.[Footnote 21] That is, each agency should be authorized to
implement a reform only after it has shown it has met certain
conditions, including having the institutional infrastructure in place
necessary for success. This infrastructure includes, at a minimum, a
modern, effective, credible, and validated performance management
system that provides a clear linkage between institutional, unit, and
individual performance-oriented outcomes, as well as providing for
adequate internal and external safeguards to ensure fairness, and
prevent abuse, and is nondiscriminatory. The absolutely critical role
that a solid infrastructure plays has been amply demonstrated by our
own and other organizations' experiences in shifting to market-based
and more performance-oriented pay. These experiences have shown that
market-based and performance-oriented pay reforms cannot be simply
overlaid on existing ineffective performance management systems, but
must be part of a broader strategy of change management and performance
improvement initiatives. As the leader of the federal government's
human capital strategies, OPM plays a key role in fostering and guiding
improvements in all areas of strategic human capital management across
the executive branch. As part of its key leadership role, OPM can
assist--and as appropriate, require--the building of the
infrastructures within agencies needed to successfully implement and
sustain human capital reforms and related initiatives. OPM can do this
in part by encouraging continuous improvement and providing appropriate
assistance to support agencies' efforts.
As we testified in September 2006, overall, the regulations that OPM
and OMB developed to administer a performance-based pay system for
executives serve as an important step for agencies in creating an
alignment or "line of sight" between executives' performance and
organizational results.[Footnote 22] However, OPM's approach to
certifying agencies' senior executive performance appraisal systems
could more fully promote the building of the institutional
infrastructures needed to effectively implement the senior executive
performance and pay reforms.
Under OPM and OMB regulations, agencies that are authorized to
implement the new pay flexibilities will receive either a provisional
or full certification. Provisionally certified agencies receive the
same pay flexibilities as those with fully certified systems, even
though agencies with provisional certification do not meet all nine of
the certification criteria. In essence, the provisional category of
certification constitutes a phased approach to implementing performance-
based pay systems by allowing agencies to work toward meeting the OPM
and OMB full certification requirements as they are implementing the
new authorities. Of the 33 performance appraisal systems that have been
certified in 2006, only the Department of Labor's system for its senior
executives received full certification.[Footnote 23] The remaining 32
systems received provisional certification, the majority of which were
provisionally certified for the third straight year. (See app. III for
the list of agencies that have received certification of their
performance appraisal systems since 2004.)
An agency that is provisionally certified must reapply annually rather
than the every 2 years that is required of agencies with full
certification. This annual reapplication process for agencies with
provisional certification is important in order to help ensure
continued progress in fully meeting congressional intent in authorizing
the new performance-based pay system. Moreover, continuing scrutiny
from OPM and OMB is important because there is no required time frame
under which a provisionally certified agency must demonstrate it meets
all the OPM and OMB criteria and thereby receive full certification. In
that regard, OPM's January 2006 guidance required agencies with
provisional certification to submit information to OPM and OMB showing
improvements the agency has made in response to comments from those
agencies. This requirement was underscored in OPM's October 31, 2006,
guidance for calendar year 2007, that asked agencies to highlight in
their certification request any description or evidence of improvements
made as a result of comments from OPM or OMB in response to the
agency's 2006 certification submission.
As noted, OMB and OPM's efforts represent an important step in
fostering "lines of sight" within the agencies. Nonetheless, OPM has
opportunities to further strengthen its efforts. More specifically,
additional front-end and ongoing OPM involvement appears to be needed
to assist agencies in achieving and maintaining full certification.
Executive branch agency officials said OPM's role in the certification
process focuses more on enforcing rules regarding applications for
certification, rather than guiding an agency to build the necessary
infrastructure for a performance-based pay system. In addition, these
executive branch agency officials said OPM has helped them improve
their pay systems, but they also said OPM should provide more active
assistance during the design and implementation of the system rather
than waiting to evaluate the end results. Further, an agency CHCO said
OPM is not prepared to interact with agencies to progressively develop
and sustain their senior executive performance-based pay systems over
time once they get through the certification process.
Since the certification process started in 2004, OPM has raised the bar
for certification by placing a greater emphasis on measurable business
outcomes. Raising the bar in the spirit of continuous improvement is
appropriate, but agencies can not achieve the higher standards unless
they are continually building the foundations essential to support
augmented requirements and new improvements. The only two agencies that
were fully certified in 2004, the General Services Administration (GSA)
and the Pension Benefit Guarantee Corporation, were unable to retain
full certification when they reapplied in 2006. An official from one of
these agencies said they applied for full certification in 2006, but
received provisional certification because OPM had raised the bar for
meeting full certification. The agency official stated that upon
receiving full certification in 2004, OPM stopped communicating with
the agency about new developments in the certification process. In
addition, this official said they were "left in the dark" about how
OPM's certification standards were potentially changing, and how the
process for certification was evolving. It was not until 4 months after
they submitted their application to recertify their system that OPM
raised concerns regarding "weak" executive performance measures, though
this agency believed that it had achieved the requirement according to
OPM's guidance. The agency opted to accept provisional certification
rather than redo its senior executive performance plans and wait for
full certification.
In general, OPM has recognized that agencies need more assistance and
guidance developing an infrastructure to support performance management
systems for executive branch employees below the senior executive
level. OPM developed the Performance Appraisal Assessment Tool (PAAT)
and has promoted performance management beta sites to address this
need.[Footnote 24] The PAAT provides agencies with an assessment tool
that focuses on the design and implementation of performance management
systems, the training and development of supervisors, and the agency's
accountability for the system. The PAAT helps agencies identify
weaknesses in their performance management systems and provides
agencies an opportunity to develop a comprehensive strategy for
revising its performance management practices to better support a
results-focused performance culture. The beta sites give agencies an
opportunity to test their nonexecutive performance management systems
on a small scale before expanding them agencywide.
Agencies and OPM use the PAAT to evaluate the progress of the beta
sites. This approach of evaluating and testing allows agencies to build
internal capacity, gain experience, and demonstrate that they are
prepared to link pay to performance for all employees. However, as one
executive branch agency official noted, the PAAT is used more by OPM to
ensure accountability than to build agency infrastructure. Similar to
concerns expressed about the senior executive system certification
process, an agency HR director said OPM does not provide "up-front"
implementation plans to agencies that outline the required agency
investment and infrastructure needed to successfully meet new human
capital requirements.
Going forward, OPM can help agencies build this infrastructure by
designing its human capital reform efforts to promote and support
continuous agency improvement. OPM will need to expand the focus of its
efforts to help identify the obstacles that are impeding agencies from
achieving desirable human capital outcomes, and then take appropriate
measures to address them and set mutually agreed-upon goals for
improvement. These actions will help ensure that agencies continue to
make substantive progress toward modernized, credible performance
management systems, and that provisional certifications do not become
the norm. OPM can also take steps to define what it will take in terms
of fact-based and data-driven analyses for agencies to demonstrate that
they are ready to receive this certification, and then help agencies
develop the infrastructure necessary to produce these results.
Collaborate with CHCO Council:
Our prior work has found that high-performing organizations
strategically use partnerships and that federal agencies, such as OPM,
must effectively manage and influence relationships with organizations
outside of their direct control. High-performing organizations
strengthen accountability for achieving crosscutting goals by placing
greater emphasis on collaboration, interaction, and teamwork across
organizational boundaries, to achieve results that often transcend
specific boundaries. Communicating with stakeholders 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 used to achieve those
results.[Footnote 25] Our prior work has identified a number of
opportunities where OPM could improve its collaboration with
stakeholders. In 2003, we reported that the lack of coordination
between OPM and GSA, the lead agencies for the governmentwide telework
initiative, created confusion for federal agencies in implementing
their individual telework programs.[Footnote 26] More recently, our
review of oversight of Equal Employment Opportunity (EEO) requirements
and guidance found little evidence of OPM coordination with the Equal
Employment Opportunity Commission (EEOC). Insufficient understanding of
OPM and EEOC's mutual roles, authority, and responsibilities resulted
in a lost opportunity to realize consistency, efficiency, and public
value in federal EEO and workplace diversity human capital management
practice.[Footnote 27] We have also reported that using interagency
councils has emerged as an important leadership strategy in both
developing policies and gaining consensus and consistent follow-
through within the executive branch.[Footnote 28] With respect to human
capital reforms, we have reported that the CHCO Council should be a key
vehicle for this needed collaboration and is vital to addressing
crosscutting federal government strategic human capital
challenges.[Footnote 29]
Executive branch agency officials said the senior executive performance
appraisal certification process was a missed opportunity for OPM to
better collaborate with the CHCO Council. One agency CHCO said OPM
traditionally uses council meetings to present information to the
CHCOs, but does not encourage discussions or seek the council's input.
Another agency CHCO said the council has rarely been used to debate new
human capital policies. This one-way communication does not provide a
forum for agency CHCOs to contribute ideas or discuss their
experiences. 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; however, they also
told us that OPM misses opportunities to partner more effectively with
agencies. An agency CHCO said that more robust policy discussion on the
council would promote community building and collaboration among
agencies and OPM.
According to OPM officials, OPM provided the CHCO Council with
opportunities to discuss the certification process. However, some CHCOs
wanted more involvement in crafting the fundamental design and
applicable issues of the certification process, rather than commenting
on draft regulations after the fact. While the new interim final
regulations were being developed and issued in 2004, OPM provided two
presentations to the full CHCO Council on the new requirements for
senior executive performance appraisal systems along with periodic
updates. The CHCO Council minutes show that one presentation focused on
the design of the new performance appraisal system and the second on
the process for obtaining certification. Agency CHCOs were able to ask
questions about the proposal and make suggestions. For example, one
CHCO suggested that OPM reconsider the timing of the recertification
process since it coincided with agencies' annual performance appraisal
cycle, and this has proven to be a key issue for the certification
process. Further, CHCOs were given a very short time frame of 24 hours
to review and comment on the proposed certification criteria. Executive
branch agency officials overwhelmingly reinforced a need for OPM to do
more to collaborate and facilitate information sharing with the council
and HR directors. More collaboration with the CHCO Council during the
design phase of human capital initiatives would enable OPM to
incorporate agency suggestions and build a governmentwide consensus for
reform.
OPM staff involved with the certification process told us that in 2004,
OPM sought input on the certification criteria from OMB and members of
the CHCO Council. There were also opportunities for agency comments
when the draft regulations were released and through the CHCO Council.
In addition, the CHCO Council Subcommittee of Performance Management
reviewed the process as well. However, most comments focused on pay
flexibilities and not the certification process.
OPM has taken some steps to improve the effectiveness of the council by
expanding the membership to include deputy CHCO positions. Some deputy
CHCOs are also the agencies' HR directors, but others perform different
deputy roles. Including deputy CHCOs will bring additional HR expertise
and provide more leadership continuity to the council. An agency CHCO
said OPM is taking other steps to improve collaboration with agencies,
such as promoting more CHCO Academy[Footnote 30] meetings on the
certification process and reinstituting executive resource forums,
which help keep agency executive resources staff current on OPM's
certification policies. A recent executive resource forum gave agency
executive resource staff an opportunity to discuss common concerns
about the certification process.
Moving forward, collaboration will be critical as human capital reforms
begin to take hold across government. If OPM is to lead reform
successfully, it will need to strategically use the partnerships it has
available to it, such as the CHCO Council and other key stakeholders.
OPM can continue to build upon its expansion of the CHCO Council and
promotion of CHCO Academies and executive resource forums. These are
important steps toward building a collegial environment for debating
and collaborating on future human capital reforms.
Develop Clear and Timely Guidance:
Our work on high-performing organizations and successful
transformations has shown that communication with customers should be a
top priority and is central to forming the partnerships needed to
develop and implement transformation strategies. This communication is
most effective when done early, clearly, and often. Providing agencies
with clear and timely guidance is one way of effectively communicating
with OPM's customers. 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. As a result, we recognized the
need for OPM to provide agencies with consistent, inclusive, and
unambiguous support and guidance.[Footnote 31]
The initial lack of clear and timely guidance has hindered agency
implementation of senior executive performance appraisal systems. When
the certification process began in 2004, OPM provided agencies with
limited guidance for implementing the new regulations. Officials at a
majority of the CHCO Council agencies told us they did not have enough
guidance to properly prepare for meeting the certification criteria.
With the release of the regulations in 2004, OPM's initial guidance
consisted of a list of documents required for provisional and full
certification and a sample cover letter to accompany each application.
The lack of more specific guidance created confusion as agencies
attempted to understand the broadly defined regulatory criteria and
adjust to the requirements for certification. Agencies did not fully
understand what the regulations required in order to receive
certification, thus resulting in an inefficient process and increasing
the workload of agency human resource staffs unnecessarily.
According to executive branch agency officials, when contacting OPM for
clarification or assistance with requirements, they received
conflicting answers and advice. Executive branch agency HR directors
said that they sometimes received mixed messages on the certification
process from OPM, and it appeared that answers would change depending
on the individual an agency was working with at OPM. One agency CHCO
said that rather than providing agencies with guidance, OPM tends to
wait to receive the agency submission and then determine if it meets
requirements. While OPM directs agencies to its Web site and online
resources, an agency CHCO said they found this information useful, but
this did not fulfill all of their information needs. OPM officials we
spoke with about this agreed that they need to provide clear and
consistent guidance to agencies and said they are working to improve
this. They said the certification of agency performance appraisal
systems has been an iterative, learning process, and OPM is positioning
itself to provide more guidance to agencies. For example, OPM has
continued to update its annual certification guidance to provide
agencies with more assistance when developing their senior executive
appraisal systems for certification. The guidance for calendar year
2006 includes explicit examples from executive performance plans that
comply with the certification criteria.
The continued late issuance of certification guidance in the years
since the 2004 regulations were released has plagued the process by
delaying the certification of agency systems. Since certification of
appraisal systems runs on the calendar year, an agency's provisional
certification expires on December 31st unless they submit an
application and receive certification for the next calendar year. To
avoid a gap in certification between calendar years, applications for
appraisal system certification need to be approved before January 1st.
However, OPM did not issue guidance for calendar year 2006 until
January 5, 2006, causing agencies to lose time in developing their 2006
applications for review and certification. This delay was compounded
when OPM clarified its guidance in a January 30, 2006, memorandum
telling agencies that senior executive 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. Some agencies had to revise their submissions, where
necessary, to meet OPM's additional requirements, causing further
delays.
Untimely guidance has been a recurring problem with OPM's
implementation of the certification process, beginning when OPM
initially developed the regulations for certifying appraisal systems.
In late November 2003, Congress passed legislation to create the new
senior executive performance-based pay system to take effect in January
2004; however, it took 8 months for OPM to publish the certification
criteria included in the interim regulations when jointly released with
OMB in July 2004. As a result, agencies that were certified in 2004
were unable to operate under the higher executive pay caps until late
in the calendar year. In December 2004, OPM issued guidance for
calendar year 2005. The guidance was issued before the start of the
calendar year, but only by a few weeks. On November 1, 2006, OPM posted
a memorandum to heads of departments and agencies from the Director of
OPM, notifying them of guidance for agencies seeking certification for
calendar year 2007.
These delays and late revisions exacerbate the time crunch agencies
face when applying for certification. According to executive branch
agency officials, after agencies' performance cycles end on September
30, they essentially have 90 days until the end of the calendar year
when their current certification expires if they are provisionally
certified or in their final year of full certification. Within this
time frame, agencies must conduct senior executive performance
assessments and reviews, develop performance plans for the next
performance year, and compile agency and senior executive performance
data for the certification application. The late release of
certification guidance adds a level of uncertainty to the process that
can delay an agency's submission of its application until after the
start of the calendar year. Some agencies delay preparing their
certification applications because they do not know when OPM will
release its annual guidance or if there will be any changes in
requirements from the previous year. This creates a gap in
certification after an agency's current certification expires. Until
the agency's senior executive performance appraisal system is
recertified, it must operate under the lower "uncertified" executive
pay cap of $152,000 in 2006 ($13,200 less than for certified systems),
while the cap on total compensation is $183,500 ($28,600 less than for
certified systems).[Footnote 32]
OPM has acknowledged that the pay limitations in this certification gap
can negatively impact an agency's ability to recruit, reassign, and
retain qualified senior executives. Executive branch agency officials
expressed similar concerns about how the certification gap limits their
ability to attract and hire new executives. They also said the
certification gap creates an uneven playing field between agencies with
certified systems and agencies that are still awaiting recertification.
In July 2006, OPM issued regulations to alleviate one of the concerns
with the certification gap. The regulations now allow agencies to
increase the pay rates of senior executives once the agency is
certified, even if it happens after the start of the calendar year.
These regulations resolve a symptom of the certification gap, but do
not address the underlying causes of the time crunch agencies face when
applying for certification. Also, according to OPM officials, the
administration has submitted a legislative proposal to Congress to
eliminate the calendar year basis for certification. However, such
legislation has not been introduced.
Moving forward, OPM could alleviate confusion, delays, and
inefficiencies by providing agencies with clear and timely guidance for
implementing human capital reforms. OPM needs to clearly communicate
its expectations and provide agencies with adequate time to adjust to
any changes in requirements. When designing new human capital
initiatives, OPM could work with agencies to identify what guidance
agencies will need and develop a timeline for when OPM will release
such guidance. A different time frame for certifying performance
appraisal systems could also help alleviate the time crunch agencies
face when applying for certification.
Share Best Practices:
We have reported that leading practices and benchmarking are important
to supporting agency transformation efforts, and often include case
illustrations of leading practices in our reports. In May 2003, we
recommended that OPM work to more thoroughly research, compile, and
analyze information on the effective and innovative use of human
capital flexibilities and more fully serve as a clearinghouse in
sharing and distributing information.[Footnote 33] OPM began working
with a contractor in the summer of 2005 to review hiring flexibilities
and authorities to better determine which ones are used and not used,
who is using them, and when and how they are being used; however, it is
still unclear if OPM has created a "clearinghouse" of information to
help agencies meet their human capital needs. In 2004, we stated that
agencies need to provide OPM with timely and comprehensive information
about their experiences in using various approaches and flexibilities
to improve their hiring processes, and that OPM could serve as a
facilitator in the collection and exchange of information about
agencies' effective practices and successful approaches.[Footnote 34]
Executive branch agency officials told us that OPM could have better
facilitated the sharing of best practices for developing and
implementing senior executive appraisal systems. According to OPM, in
the last 3 years, it has reviewed and certified about 100 applications
for appraisal system certification. OPM could use this archive of
information to identify some best practices for developing certified
systems, but OPM has not fully shared this information with agencies.
Director Springer said OPM has met with officials from the only agency
currently with full certification, the Department of Labor (DOL), to
study what they have done right. However, Director Springer did not
know if other agencies had taken the initiative to contact DOL to learn
from their success. A senior OPM official said OPM did not provide
agencies with examples of "best practices" for certification
applications because OPM did not want agencies to think there was only
one "right way" to get certified. We have reported that a "one size
fits all" approach to human capital management is not appropriate, but
we also recognized the value of documenting a range of best practices
which agencies can tailor to their specific needs. One agency HR
director said agencies were anxious to learn about what was going on at
other agencies and did not understand why OPM was reluctant to share
information. Without sufficient guidance from OPM, agencies relied on
each other where possible to develop an understanding of the
certification requirements. One CHCO also took the initiative to use
CHCO Academy meetings to engender information sharing among agencies
about the application process. However, agencies were unable to resolve
uncertainties and disagreements about the regulatory requirements
without clearer guidance from OPM. Executive branch agency officials
said best practices for certification could help them improve the
design of their performance appraisal systems. For example, executive
branch agency officials said best practices for developing senior
executive performance measures would help them make their performance
plans more results based, as required for certification. Recently, OPM
has taken steps to share information among agencies. In September 2006,
OPM provided agencies' executive resource directors with samples of
agency senior executive performance plans, though OPM did not specify
why these samples were selected and if they should serve as best
practices for other agencies.
Moving forward, OPM should facilitate the sharing of best practices for
human capital reforms among federal agencies. Director Springer has
said she wants the CHCO Council to develop a best practices initiative
to collect and share information on the certification process. The CHCO
Council could be used to facilitate best practices for other human
capital initiatives as well. Providing a forum for agencies to learn
from each others' experiences will allow agencies to share effective
strategies and avoid common pitfalls.
Solicit and Incorporate Feedback:
We have reported that communication during a transformation is not
about just "pushing the message out."[Footnote 35] Given the
uncertainties that performance-based pay systems may generate for
agencies and employees accustomed to receiving more standardized pay
increases, two-way communication is especially important in an
environment of human capital reform. Creating opportunities for
employees and customers to communicate concerns and experiences
surrounding a transformation allows them to feel that their experiences
are important and acknowledged. Once this employee and customer
feedback is received, it is important to use this solicited feedback to
make any appropriate changes to the implementation of the
transformation. For example, OPM uses its FHCS as an important method
of gathering its own employee feedback and has used this information to
take actions to improve its organization. In addition, OPM recognizes
that it is important to notify and involve the employees affected by
personnel demonstration projects, which are similar to the senior
executive performance-based pay system, though OPM does not require
those implementing such demonstration projects to obtain feedback.
However, according to its Demonstration Projects Evaluation Handbook,
OPM suggests that a survey is one method that could be used to obtain
employees' views on the impact of the demonstration project to help
develop lessons learned that could be shared with the affected agency,
as well as governmentwide. We have also reported that high-performing
organizations understand they need to continuously review and revise
their performance management systems through monitoring their systems,
informally and formally, including listening to employees' and
stakeholders' views.[Footnote 36]
OPM does not actively solicit and act on feedback from agencies on the
implementation of the certification process. Executive branch agency HR
directors said there was not a formal mechanism, such as a survey
instrument, for agencies to provide feedback to OPM on its guidance and
assistance to agencies. An OPM executive within the HCLMSA division
confirmed that OPM does not have a formal feedback mechanism; however,
this executive said OPM converses with agencies regularly so they did
not feel the need to obtain information in this way. Informal feedback
from agencies is primarily communicated through the HCOs. OPM holds
regular meetings of the HCOs to discuss agency concerns. However,
executive branch agency officials said OPM does not always act to
address these concerns. OPM also gathers agency feedback through the
CHCO Council and executive resource forums. OPM's current feedback
mechanisms are important and valuable, but they could be supplemented,
though not replaced, with more formal outreach. Formal feedback
mechanisms can ensure that OPM gathers a full range of views by giving
everyone an opportunity to comment. Formal feedback also provides a
mechanism for collecting the views of clients and employees in one
place, allowing OPM to track and report progress over time.
Also, OPM does not gather feedback from senior executives who are
directly affected by the new performance appraisal systems and does not
require agencies to survey senior executives, even though agencies are
approaching the fourth year of implementation. Director Springer said
OPM has not surveyed members of the SES about their attitudes towards
the new system. In September 2006, she said it would be premature to
conduct a survey before the system takes hold, but she did not say when
the timing might be appropriate. Also, the 2006 FHCS, OPM's most recent
survey that gathers employees' perceptions of federal human capital
practices in their agencies, did not include any questions specifically
designed to gather feedback on changes to senior executive performance
systems. However, Director Springer said OPM plans to analyze a recent
survey of SES members conducted by the Senior Executive Association to
obtain the experience and views of SES members on the new executive
systems.[Footnote 37]
Going forward, OPM should recognize the usefulness of agencies' and
senior executive employees' views on the certification process and
identify a systematic approach to obtain feedback on this and future
human capital reforms. Feedback mechanisms, such as survey or focus
groups, could help OPM identify what its customers think OPM is doing
well, and where OPM needs to improve. Once obtained, feedback
information should be considered in developing new agency guidance and
OPM should take steps to address any specific agency concerns, as
appropriate.
Track Progress to Ensure Accountability:
High-performing organizations understand they need to continuously
review and revise their performance management systems to achieve
results and accelerate change. These organizations continually review
and revise their human capital management systems based on data-driven
lessons learned and changing needs in the environment. We have reported
that agencies seeking human capital reform should consider doing
evaluations that are broadly modeled on the evaluation requirements of
the OPM demonstration projects.[Footnote 38] Under the demonstration
project authority, agencies must evaluate and periodically report on
results, implementation of the demonstration project, cost and
benefits, impacts on veterans and other equal employment opportunity
groups, adherence to merit system principles, and the extent to which
the lessons from the project can be applied governmentwide. Such an
evaluation could ensure accountability, facilitate congressional
oversight, allow for any midcourse corrections, and assist the agency
in benchmarking its progress with other efforts.
Also, monitoring the implementation of new pay systems is important
because unintended consequences may arise. Organizations have found
they should be open to refining their systems. For example, we have
reported that in order to spread the pay increases among as many
employees as possible, the Federal Deposit Insurance Corporation (FDIC)
found that managers tended not to award merit pay increases to top-
performing employees when they were to be promoted in the career ladder
and as a result, these high-performing employees were not getting the
merit pay increases they deserved. FDIC recognized that this unintended
consequence needed to be corrected in future iterations of the pay
system and managers needed help in learning how to make the necessary
distinctions in employees' contributions.[Footnote 39]
As we noted in our September 2006 testimony, OPM needs to carefully
monitor the implementation of agencies' senior executive performance
management systems, especially those that have provisional
certification.[Footnote 40] This is because, as also noted earlier in
this report, agencies with provisional certification have only met four
of nine required criteria for certification and can still receive the
pay flexibilities of the new system. In other words, agencies can
receive the benefits of the new pay-for-performance system without
meeting all of its requirements and having safeguards in place. We
testified in October 2005 that in our view such provisional
certifications should not be an option under any broad-based
classification and compensation reform proposal.[Footnote 41]
Although OPM does not have an evaluation strategy, it is taking steps
to monitor how agencies are making meaningful distinctions in senior
executive performance. Such distinctions are required by statute and
are one of the nine criteria for certifying agencies' senior executive
performance appraisal systems (as shown in app. II). Once agencies have
provisional or full certification, OPM monitors this criterion by
measuring the distributions of agencies' performance ratings and pay.
This information helps OPM determine if agencies are making meaningful
distinctions among the performance of their senior executives. Such
distinctions as part of an effective performance management system are
important because they allow the organization's leadership to
appropriately reward those who perform at the highest level.
In its Report on Senior Executive Pay for Performance for Fiscal Year
2005, OPM stated that the data indicate that federal agencies are
taking seriously the requirement to develop rigorous appraisal systems
and to make meaningful distinctions in performance ratings and pay. All
reporting agencies have moved away from pass/fail appraisal systems and
now have at least one performance level above "fully successful." In
fiscal year 2005, 43 percent of career SES governmentwide were rated at
the highest performance level, compared to 75 percent in 2003 prior to
the implementation of the SES pay-for-performance system. Further, OPM
reported for fiscal year 2005 that the percentage of SES rated at the
highest performance level declined 16 percent from the prior year. OPM
also reported that the largest increases in salary went to SES rated at
the highest performance level. Although SES pay and performance award
amounts vary by agency based on factors such as compensation strategy,
funding, and agency performance levels, OPM believes these general
trends suggest a further refinement may be occurring in the process of
distinguishing outstanding performers.
Developing an evaluation strategy that works within OPM's existing
required systems--such as the Human Capital Assessment and
Accountability Framework (HCAAF)[Footnote 42]--is one approach that OPM
can take to track agencies' progress in implementing their senior
executive performance systems as well as hold them accountable for
meeting OPM's certification criteria. For example, DOD officials
suggested that OPM could work with agencies to develop metrics under
the HCAAF to determine whether agency performance management systems
were making meaningful distinctions based on relative performance or
other such important criteria. These metrics could be reported in
current systems, such as the President's Management Agenda
(PMA).[Footnote 43]
Because OPM carries out its role in a decentralized environment where
the results of its efforts largely take place at federal agencies
outside its direct control, it is particularly important that OPM
develop a strategy to track agencies' progress in meeting its human
capital reform goals. OPM could require evaluations that are broadly
modeled on the evaluation requirements of the OPM demonstration
projects. It can work within its currently required systems to make
reporting requirements less onerous and part of agencies' routines. As
we testified in September 2006, in the future, OPM should maintain a
focus on continuous improvement of agency systems by monitoring the
certification process, determining whether any obstacles are impeding
agencies from receiving full certification, and taking appropriate
measures to address them.[Footnote 44]
Conclusions:
Significant reforms are already underway to modernize the federal
government's human capital management systems to better position
agencies to meet the challenges of the 21st century. OPM is taking
steps to better prepare itself and agencies for governmentwide human
capital reform through the implementation of the senior executive
performance appraisal system certification process, other performance
management initiatives, such as its PAAT and beta sites, and other
governmentwide human capital initiatives. These reform efforts present
an opportunity for OPM to evaluate and learn from its approach to
implementing these initiatives--lessons that can be applied to ongoing
and future human capital reforms. OPM's workforce and succession
planning efforts are also vital to ensuring it has the internal
capacity to lead and implement reforms. This includes building and
maintaining the needed skills and competencies for OPM's evolving role
in assisting agencies. While OPM has taken steps through its planning
efforts to assess its workforce needs, it can better prepare its
workforce by reexamining its competencies in light of its updated
strategic management framework in order to meet future demands.
Agencies have raised concerns with OPM's workforce capacity in general,
and more specific concerns with OPM's implementation of the senior
executive performance appraisal system. These include the lack of clear
and timely guidance, the need for more sharing of best practices, and
the year-end time crunch agencies face gathering the required
information for OPM to certify their systems. Further, OPM does not
obtain formal feedback from agencies on the implementation of the
executive systems to assist OPM in better understanding agency concerns
and the difficulties they face with implementation. Although OPM
recognizes the value of obtaining employees' views on reform efforts,
as it encouraged with past demonstration projects, it has not
encouraged obtaining such feedback for the executive performance
system. In addition, having an evaluation strategy to monitor agencies'
overall results of the senior executive performance system could help
ensure accountability and provide transparency for Congress, other
agencies, and stakeholders.
Recommendations for Executive Action:
To better align OPM's workforce skills and competencies for future
human capital reform efforts, we recommend that the Director of OPM:
* Reexamine OPM's agencywide skills and competency assessment in light
of its updated strategic management documents.
To assist executive branch agencies in meeting the requirements for the
certification of their senior executive performance appraisal systems,
we recommend that the Director of OPM:
* Develop and publish a timeline for the issuance of certification
guidance. This timeline should be developed with the input of the CHCO
Council and provide agencies with adequate time to adjust to any
changes in guidance.
* Evaluate alternatives that could remedy the year-end time compression
that agencies face when trying to meet OPM application requirements and
avoid a gap in certification.
* Work with the CHCO Council to develop a formal mechanism for sharing
leading practices for implementing human capital initiatives, such as
the senior executive performance appraisal certification and other
performance management reform initiatives. This forum should include an
adequate range of examples and best practices so as not to promote one-
size-fits-all solutions.
* Develop a formal feedback mechanism to obtain agencies' views on
OPM's implementation of the certification process. OPM should utilize
this feedback to identify common agency concerns and develop action
plans to address these concerns.
* Work with executive branch agencies to develop a systematic approach
for obtaining employee attitudes towards human capital reforms.
* Develop a strategy to allow OPM, other executive agencies, and
Congress to monitor the progress of implementation of the senior
executive performance-based pay system.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Director of OPM for review
and comment. We received a written response from the Director, which is
reprinted in appendix IV. The Director stated that OPM has made
progress toward achieving its operational and strategic goals, but
neither agreed nor disagreed with our recommendations.
Director Springer provided a number of informative comments describing
progress OPM has made towards achieving its planned goals, and
initiatives undertaken to assist federal agencies with meeting their
hiring demands of the future. Director Springer said OPM has made
progress towards achieving its operational and strategic goals since
she became Director of OPM. The Director provided information that
while beyond the scope of the report, nonetheless is helpful in
understanding the context in which OPM is operating. Specifically, she
commented that OPM associates have worked together and with agencies to
achieve the objectives that are tied to OPM's Strategic and Operational
Plan, 2006-2010, and since March 2006, OPM has achieved its plan's
objectives, on time or ahead of schedule. Also, OPM provided a number
of technical comments and, where appropriate, we have made changes to
the report language to reflect these comments.
We are sending copies of this report to the Director of OPM, the
Director of OMB, and other interested parties. Copies will be made
available to others upon request. This report is also available at no
charge on GAO's Web site at [Hyperlink, http://www.gao.gov].
If you or your staffs have any questions concerning this report, please
contact me at (202) 512-6806. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this
report are listed in appendix V.
Sincerely yours,
Signed by:
Brenda S. Farrell:
Acting Director, Strategic Issues:
[End of section]
Appendix I: Scope and Methodology:
To identify lessons learned to inform the Office of Personnel
Management's (OPM) capacity to lead and implement human capital reform,
we reviewed OPM's implementation of the senior executive performance
appraisal system certification process. We reviewed and analyzed key
documents including the legislation that authorized the new senior
executive performance-based pay system and the regulations for the
appraisal system certification process that were jointly issued by OPM
and the Office of Management and Budget (OMB). We also reviewed and
analyzed the subsequent guidance issued by OPM to agencies to prepare
their certification applications, policy memos from OPM to agencies,
and other documentation related to the certification process. To gain
an agency perspective of the certification process and to a limited
degree on other performance management initiatives, such as the
Performance Appraisal Assessment Tool (PAAT) and the performance
management beta sites, we interviewed 22 of the 23 members of the Chief
Human Capital Officers Council and/or their corresponding agency HR
directors. The one agency that was not available for an interview
provided us with written responses to our questions. In addition, we
conducted interviews with OPM's five associate directors and other
senior-level staff, such as the Chief Financial Officer and Chief Human
Capital Officer, to obtain their views of OPM's management practices.
We were briefed by the OPM Director and other OPM officials on the OPM
Strategic and Operational Plan, 2006-2010 and aspects of OPM's human
capital strategies and initiatives. We also interviewed staff from OMB
related to their role in the performance appraisal system certification
process.
To evaluate OPM's workforce capacity, we interviewed OPM's former and
current Chief Human Capital Officers and analyzed the OPM Strategic and
Operational Plan, 2006-2010. To understand how OPM's workforce is
aligned to support the implementation of potential reforms, we analyzed
a number of internal OPM documents such as its August 2006 Corporate
Leadership Succession Management Plan and A Plan for the Strategic
Management of OPM's Human Capital fiscal years 2004-2007. As the Plan
for the Strategic Management of OPM's Human Capital fiscal years 2006-
2007 was issued at the conclusion of our review, we were not able to
analyze this document.
To evaluate OPM's efforts to build agency infrastructure, we reviewed
documents related to OPM's PAAT and the performance management beta
site initiatives. We selected these initiatives because of similarities
to the certification process and their likelihood to yield tangible
lessons related to OPM's capacity to lead future reforms.
To evaluate OPM's feedback mechanisms, we reviewed survey questions
included in the 2004 and 2006 Federal Human Capital Survey (FHCS). The
2006 survey was launched in June 2006 and results are not yet
available.
To assess OPM's measures for tracking progress, we analyzed operational
goals in the OPM Strategic and Operational Plan, 2006-2010. We also
reviewed OPM's measures of senior executive performance ratings and pay
in its Report on Senior Executive Service Pay for Performance for
Fiscal Year 2005.
We leveraged our work that resulted in our June 2006 testimony on OPM's
internal capacity.[Footnote 45] We used the 2004 FHCS, the latest
available survey data, and summaries of OPM's 2005 focus groups to
assess employee views of OPM's organizational capacity. We reviewed
OPM's analysis of its 2004 FHCS results and conducted our own analyses
of survey results using 2002 and 2004 FHCS data sets 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. We analyzed summaries of OPM employee focus groups that
OPM conducted in fall 2005 to understand factors contributing to
employees' responses on the 2004 FHCS. We used the participant comments
from these focus groups to illustrate employee perspectives. We also
analyzed the May 2006 action plans developed by OPM to address issues
identified in the focus groups.
Other documents reviewed included our previous work related to OPM,
high-performing organizations, organizational transformation, and human
capital management reforms. We also reviewed GAO's previous
recommendations on a range of issues related to OPM's human capital
leadership role and internal management challenges.
We conducted our work from October 2005 to September 2006 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Description of the Senior Executive Performance-based Pay
System Certification Process:
The new senior executive pay system raises the cap on base pay and
total compensation. For 2006, the caps are $152,000 for base pay (Level
III of the Executive Schedule) with a senior executive's total
compensation not to exceed $183,500 (Level I of the Executive
Schedule). If an agency's senior executive performance appraisal system
is certified by the Office of Personnel Management (OPM) and the Office
of Management and Budget (OMB) concurs, the caps are increased to
$165,200 for base pay (Level II of the Executive Schedule) and $212,100
for total compensation (the total annual compensation payable to the
Vice President).
To qualify for senior executive pay flexibilities, agencies'
performance appraisal systems are evaluated against nine certification
criteria. As shown in table 2, the certification criteria jointly
developed by OPM and OMB are broad principles that position agencies to
use their pay systems strategically to support the development of a
stronger performance culture and the attainment of the agency's
mission, goals, and objectives.
There are two levels of performance appraisal system certification
available to agencies: full and provisional. To receive full
certification, the design of the systems must meet the nine
certification criteria and agencies must provide documentation of prior
performance ratings to demonstrate compliance with the criteria. Full
certification lasts for 2 calendar years. Agencies can receive
provisional certification if they have designed but not yet fully
implemented a senior executive performance appraisal system, or do not
have a history of performance ratings that meets the certification
criteria. Provisional certification lasts for 1 calendar year.
Table 2: Senior Executive Performance Appraisal System Certification
Criteria:
Summary of certification criteria for senior executive appraisal
systems: Alignment;
Individual performance expectations must be linked to or derived from
the agency's mission, strategic goals, program/ policy objectives,
and/or annual performance plan.
Summary of certification criteria for senior executive appraisal
systems: Consultation;
Individual performance expectations are developed with senior employee
involvement and must be communicated at the beginning of the appraisal
cycle.
Summary of certification criteria for senior executive appraisal
systems: Results;
Individual expectations describe performance that is measurable,
demonstrable, or observable, focusing on organizational outputs and
outcomes, policy/program objectives, milestones, etc.
Summary of certification criteria for senior executive appraisal
systems: Balance;
Individual performance expectations must include measures of results,
employee and customer/stakeholder satisfaction, and/or competencies or
behaviors that contribute to outstanding performance.
Summary of certification criteria for senior executive appraisal
systems: Assessments and guidelines;
The agency head or a designee provides assessments of the performance
of the agency overall, as well as each of its major program and
functional areas, such as reports of agency's goals and other program
performance measures and indicators, and evaluation guidelines based,
in part, upon those assessments to senior employees, appropriate senior
employee rating and reviewing officials. The guidance provided may not
take the form of quantitative limitations on the number of ratings at
any given rating level.
Summary of certification criteria for senior executive appraisal
systems: Oversight;
The agency head or designee must certify that (1) the appraisal process
makes meaningful distinctions based on relative performance; (2)
results take into account, as appropriate, the agency's performance;
and (3) pay adjustments and awards recognize individual/organizational
performance.
Summary of certification criteria for senior executive appraisal
systems: Accountability;
Senior employee ratings (as well as subordinate employees' performance
expectations and ratings for those with supervisor responsibilities)
appropriately reflect employees' performance expectations, relevant
program performance measures, and other relevant factors.
Summary of certification criteria for senior executive appraisal
systems: Performance differentiation;
Among other provisions, the agency must provide for at least one rating
level above Fully Successful (must include an Outstanding level of
performance), and in the application of those ratings, make meaningful
distinctions among executives based on their relative performance.
Summary of certification criteria for senior executive appraisal
systems: Pay differentiation;
The agency should be able to demonstrate that the largest pay
adjustments and/or highest pay levels (base and performance awards) are
provided to its highest performers, and that, overall, the distribution
of pay rates in the SES rate range and pay adjustments reflects
meaningful distinctions among executives based on their relative
performance.
Source: GAO analysis of OPM and OMB regulations.
[End of table]
OPM's role in the certification process begins when an agency submits a
certification application to OPM. If fully certified, the certification
is good for the remainder of the calendar year in which the agency
applied, as well as all of the following calendar year. If
provisionally certified, an agency's certification is only good for the
calendar year in which it applied. For example, if an agency is
provisionally certified in October 2005, its certification would expire
in December 2005.
To ensure the agency's submission is complete, the agency's OPM
contact--the Human Capital Officer (HCO)--first verifies that the
application contains the required materials and documents. If complete,
the HCO sends copies to the two OPM divisions responsible for reviewing
the application, the Human Capital Leadership and Merit System
Accountability (HCLMSA) division and the Strategic Human Resources
Policy (SHRP) division, and an additional copy to OMB. The agency's
submission is reviewed independently by representatives within HCLMSA
and SHRP to bring different perspectives to the review.
The submissions are evaluated against the nine certification criteria,
but each review team has its own method for analyzing the application.
After an initial review, the reviewers from HCLMSA and SHRP hold an
informal meeting to discuss the submission. After a more thorough
review, the reviewers meet again in a formal panel along with the
agency's HCO and decide whether they have enough information to reach a
certification decision about the agency. If the panel concludes there
is not enough information to reach a decision, the HCO will request
that the agency provide any missing or additional supporting
information. If the panel decides there is sufficient information to
reach a decision, it will either certify or reject the application.
When an application is rejected, the HCO works with the agency to help
modify its performance appraisal system so that it meets the criteria.
If the application is approved by OPM, the HCO contacts OMB for
concurrence. OMB uses the same nine criteria to evaluate agency
applications, but primarily focuses on measures of agency performance.
If OMB concurrence is not achieved, the HCO works with the agency to
address OMB's concerns until resolution is reached. Once OMB concurs,
the Director of OPM certifies the agency's performance appraisal system
and the agency is formally notified with a letter. The HCO also
provides additional comments to the agency on their system and
identifies any improvement needs. For example, these comments may
direct the agency to focus more on making meaningful distinctions in
performance. Figure 1 provides an overview of the certification
process.
Figure 1: Overview of Senior Executive Performance Appraisal System
Certification Process:
[See PDF for image]
Source: GAO analysis.
[End of figure]
[End of section]
Appendix III: Agency Certification Status for Calendar Years 2004,
2005, and 2006 as of October 2006:
Agency/board: Agency for International Development;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Broadcasting Board of Governors;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Consumer Product Safety Commission;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Agriculture;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Commerce;
System: (SES or SL/ST): SES;
1- year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Defense;
System: (SES or SL/ST): SES;
1- year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: [A];
2006: P.
Agency/board: Department of Defense;
System: (SES or SL/ST): SL/ST;
1- year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: [A];
2006: P.
Agency/board: Department of Education;
System: (SES or SL/ST): SES;
1- year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Energy;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Health And Human Services;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Homeland Security;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Housing and Urban Development (HUD);
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: HUD Office of the Inspector General;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Interior;
System: (SES or SL/ST): SES;
1- year provisional (P): P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Justice;
System: (SES or SL/ST): SES;
1- year provisional (P): P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Labor;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: F (2006/2007).
Agency/board: Department of State;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Department of Transportation;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Treasury;
System: (SES or SL/ST): SES;
1- year provisional (P): P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Department of Veterans Affairs;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Environmental Protection Agency;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Equal Employment Opportunity Commission;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Federal Communications Commission;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Federal Energy Regulatory Commission;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Federal Trade Commission;
System: (SES or SL/ST): SES;
1- year provisional (P): P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: General Services Administration;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: F (2004/2005);
or 2-year full (F) certification received: 2005: [Empty];
2006: P.
Agency/board: Merit Systems Protection Board;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: National Aeronautics and Space Administration (NASA);
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: NASA;
System: (SES or SL/ST): SL/ST;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: NASA Office of the Inspector General;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: [A];
2006: P.
Agency/board: National Endowment for the Arts;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: National Labor Relations Board;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: National Science Foundation;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: National Transportation Safety Board;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: [A];
2006: P.
Agency/board: Nuclear Regulatory Commission;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Office of Government Ethics;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Office of Management And Budget;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Office of National Drug Control Policy;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Office of Navajo and Hopi Indian Relocation;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Office of Personnel Management;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Patent and Trademark Office/Commerce;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Pension Benefit Guarantee Corporation;
System: (SES or SL/ST): SL/ST;
1-year provisional (P): 2004: F (2004/2005);
or 2-year full (F) certification received: 2005: [Empty];
2006: P.
Agency/board: Railroad Retirement Board;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: P.
Agency/board: Small Business Administration (SBA);
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: SBA Office of the Inspector General;
System: (SES or SL/ ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Social Security Administration;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: P;
or 2-year full (F) certification received: 2005: P;
2006: [A].
Agency/board: Surface Transportation Board;
System: (SES or SL/ST): SES;
1-year provisional (P): 2004: [A];
or 2-year full (F) certification received: 2005: [A];
2006: P.
Source: GAO analysis based on OPM data.
[A] Agency did not submit an appraisal system application, submitted an
application but was not approved, or withdrew an application for OPM's
review.
[End of table]
[End of section]
Appendix IV: Comments from the Office of Personnel Management:
United States Office Of Personnel Management:
Washington, DC 20415:
The Director:
November 9, 2006:
The Honorable David Walker:
Comptroller General:
U.S. Government Accountability Office:
Washington, DC:
Dear General Walker:
Thank you for the opportunity to provide comments in response to the
Government Accountability Office draft report entitled Human Capital
Reform: New Executive Performance-based Pay System Provides Key Lessons
Learned for OPM's Leadership of Future Reforms (GAO-07-90).
Since I became Director of the Office of Personnel Management (OPM), my
management objective has been to raise the agency's performance level
by instituting business disciplines and practices that would enable us
to reach my ultimate goals for OPM - operational excellence and
strategic creativity. I am confident that we have made demonstrable
progress and are beginning to realize those goals.
Changes of this type do not happen overnight. OPM took steps to
revitalize our senior leadership and engage our staff in a way that had
not been done in the past. We also set a new course - through the
collaborative development of a new set of strategic and operational
goals.
OPM's 2006-2010 Strategic and Operational Plan is distinctive in its
clarity and specificity. It is dominated by an action-oriented to-do
list of approximately 170 deliverables, each with a due date. OPM
associates have worked together and with agencies throughout Government
to achieve objectives that are tied in some measure to the plan_ This
direct linkage has created a level of accountability and ownership -
particularly for the senior executives whose compensation is a function
of performance - that has given greater assurance that goals will be
achieved and creates an "esprit de corps" environment.
Since its introduction in March, we have achieved every plan objective,
on time or ahead of schedule. By achieving these tangible and important
deliverables, we are creating a success culture at OPM - one that we
reinforce monthly when each new group of goals is accomplished.
OPM is delivering on our responsibility to lead Federal workforce human
capital planning and reform efforts. Releasing installments of our
planning guidance for a possible pandemic influenza event in advance of
President Bush's August deadline is just one example of our enhanced
service approach. It is indicative of our commitment to timely, as well
as accurate, guidance to the human capital management community and has
been well-received across the executive branch.
While proceeding on the path to organizational excellence, OPM has
broken new ground in leading the Federal Government's efforts to ensure
there is an effective civilian workforce into the future. We have
introduced Federal agencies to concepts for reaching and hiring the
next generation of civilian employees, and have initiated a three-
pronged approach for bringing workers to the Government, including a
media campaign to raise awareness of the wide range of Federal civilian
job opportunities, the new Career Patterns approach for recruiting and
hiring, and the development of a hiring toolkit to help speed the
Federal hiring process. With these initiatives, OPM has positioned
Federal agencies to meet the hiring demands of the future - demands
that will increase dramatically as we face the retirement eligibility
of 60 percent of our workforce over the next ten years.
Although there is more to be done, the work to date is a significant
accomplishment. As we look to the future, OPM will continue to improve
our guidance to agencies, to strengthen our leadership and oversight of
agency human capital practices, and to learn and share the lessons from
both existing and new personnel systems as we chart the course for the
future of the civil service.
I am providing specific technical corrections to the draft report and
would ask for your consideration of these changes. In addition, I look
forward to providing to the Congress specific responses to your key
findings.
Sincerely,
Signed by:
Linda M. Springer:
Director:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Brenda S. Farrell, (202) 512-6806 or farrellb@gao.gov.
Acknowledgments:
In addition to the contact named above, Trina Lewis, Assistant
Director; Thomas Beall; Carole J. Cimitile; William Colvin; Elizabeth
Curda; S. Mike Davis; William Doherty; Charlene Johnson; Jeffrey
McDermott; Michael Volpe; Katherine H. Walker; and Gregory H. Wilmoth
made major contributions to this report.
FOOTNOTES
[1] GAO, Human Capital: Symposium on Designing and Managing Market-
Based and More Performance-Oriented Pay Systems, GAO-05-832SP
(Washington, D.C.: July 27, 2005).
[2] GAO, Office of Personnel Management: OPM is Taking Steps to
Strengthen Its Internal Capacity for Leading Human Capital Reform, GAO-
06-861T (Washington, D.C.: June 27, 2006).
[3] OPM developed the governmentwide Federal Human Capital Survey 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.
[4] GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.:
January 2001).
[5] GAO, Office of Personnel Management: Status of Achieving Key
Outcomes and Addressing Major Management Challenges, GAO-01-884
(Washington, D.C.: July 9, 2001).
[6] GAO, Major Management Challenges and Program Risks, Office of
Personnel Management, GAO-03-115 (Washington, D.C.: January 2003).
[7] GAO-06-861T.
[8] Pub. L. 107-296, Nov. 25, 2002.
[9] Full implementation of the DHS personnel system has stalled due to
an appeals court decision invalidating portions of the personnel
regulations that deal with labor management relations. DHS has begun to
transition nonunion employees to the new pay system and to train
employees about the new system.
[10] The 25-member CHCO Council is composed of the Director OPM, who
serves as chairman; the Deputy Director for Management of OMB, who acts
as vice chairman; the CHCOs of the 15 executive departments; and the
CHCOs of 8 additional agencies designated by the OPM Director.
[11] Pub. L. No. 108-136, Nov. 24, 2003.
[12] As with the DHS personnel system, full implementation of the NSPS
has stalled due to a federal district court decision invalidating the
labor relations and adverse action portions of the regulations. DOD has
already placed 11,000 nonunion employees under the new system and began
transitioning another 66,000 employees to the system in October 2006.
[13] Prior to passage of the act authorizing the pay flexibilities, in
October 2000, OPM amended regulations for senior executive performance
management to help agencies hold senior executives accountable for
organizational results, a mandate that originates in the Civil Service
Reform Act of 1978.
[14] This authority was granted under the Homeland Security Act of
2002, Pub. L. 107-296, Nov. 25, 2002.
[15] GAO, Human Capital: Aligning Senior Executives' Performance with
Organizational Results Is an Important Step Toward Governmentwide
Transformation, GAO-06-1125T (Washington, D.C.: Sept. 26, 2006).
[16] GAO-03-115.
[17] GAO and the National Commission on the Public Service
Implementation Initiative, Human Capital: Principles, Criteria, and
Processes for Governmentwide Federal Human Capital Reform, GAO-05-69SP
(Washington, D.C.: Dec. 1, 2004).
[18] GAO-06-861T.
[19] 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.
[20] GAO-06-861T.
[21] GAO, Human Capital: Preliminary Observations on the
Administration's Draft Proposed "Working for America Act", GAO-06-142T
(Washington, D.C.: Oct. 5, 2005).
[22] GAO-06-1125T.
[23] The Department of Labor's SL/ST system has not reached full or
provisional certification.
[24] In June 2006, OPM established its beta site for its HCLMSA
division to align employee performance expectations with agency
strategic goals. In fiscal year 2007, OPM told us it plans to expand
its beta site to other divisions, which will then cover approximately
70 percent of the agency.
[25] 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).
[26] GAO, Human Capital: Further Guidance, Assistance, and Coordination
Can Improve Federal Telework Efforts, GAO-03-679 (Washington, D.C.:
July 18, 2003).
[27] GAO, Equal Employment Opportunity: Improved Coordination Needed
between EEOC and OPM in Leading Federal Workplace EEO, GAO-06-214
(Washington, D.C.: June 16, 2006).
[28] GAO-06-861T.
[29] GAO, Human Capital: Observations on Agencies' Implementation of
the Chief Human Capital Officers Act, GAO-04-800T (Washington, D.C.:
May 18, 2004).
[30] 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 OPM.
[31] GAO-03-679.
[32] A senior executive whose rate of basic pay is higher than the rate
for uncertified systems may not suffer a reduction in pay as a result
of transferring to an agency with an uncertified system or as the
result of a decision to suspend a system's certification. Senior
executives will continue to receive their current SES rate, but are not
eligible for a pay adjustment until they are assigned to a position
under a certified system.
[33] GAO, Human Capital: OPM Can Better Assist Agencies in Using
Personnel Flexibilities, GAO-03-428 (Washington, D.C.: May 9, 2003).
[34] GAO, Human Capital: Additional Collaboration Between OPM and
Agencies Is Key to Improved Federal Hiring, GAO-04-797 (Washington,
D.C.: June 7, 2004).
[35] GAO-03-669.
[36] GAO, Human Capital: Symposium on Designing and Managing Market-
Based and More Performance-Oriented Pay Systems, GAO-05-832SP
(Washington, D.C.: July 27, 2005).
[37] The Senior Executive Association (SEA) is a nonprofit professional
association that promotes public service and advocates the interests of
career federal executives (both active and retired). SEA conducted a
voluntary survey to solicit SES members' experience with the new SES
system and involvement in its implementation, how the new system
affected the member, perceptions of how the system affected the SES
members' colleagues, and views on how the new system might affect the
future of human resources management in the federal government.
[38] GAO-05-1048T.
[39] GAO-05-1048T.
[40] GAO-06-1125T.
[41] GAO-06-142T.
[42] The HCAAF is a framework that OPM has developed over the last
several years to help agencies develop and implement effective human
capital management systems and improve their human capital management
practices. The HCAAF fuses strategic human capital management to merit
system principles and other civil service laws, rules, and regulations.
[43] The PMA has identified five governmentwide initiatives that are
interrelated and support each other--improved financial performance,
strategic management of human capital, budget and performance
integration, electronic government, and competitive sourcing. OPM is
responsible for monitoring agency progress of the human capital
initiative.
[44] GAO-06-1125T.
[45] GAO-06-861T.
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