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entitled 'Human Capital Management: FAA's Reform Effort Requires a More
Strategic Approach' which was released on February 03, 2003.
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Report to Congressional Requesters:
February 2003:
Human Capital Management:
FAAs Reform Effort Requires a More Strategic Approach:
GAO-03-156:
Contents:
Letter:
Results in Brief:
Background:
FAA Initiated Personnel Changes in Three Broad Areas, Some of Which
Required Exemptions from Title 5:
Key Elements of Personnel Reform Have Not Yet Been Fully Implemented:
FAA Had Little Data on Reforms Effects, and Views of FAA Officials
Often Differed from Views of Managers and Employees We Interviewed:
FAA Has Not Fully Incorporated Elements Needed for Effective Human
Capital Management:
Conclusions:
Recommendations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Structured Interview Form and Selected Results:
Appendix III: Elements for Effective Human Capital Management:
Appendix IV: Core Compensation Pay Bands and Grade Conversion for 2002:
Appendix V: FAA Human Resource Management Offices Balanced Scorecard
Performance Measures:
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables Tables:
Table 1: Overview of Human Resource Management Offices Balanced
Scorecard Performance Measures:
Table 2: Chronology of Internal and External Evaluations of FAAs
Personnel Reform:
Figures Figures:
Figure 1: Implementation Status of Selected Initiatives within the
Three
Areas of FAAs Personnel Reform That Did or Did Not Require an
Exemption from Title 5:
Figure 2: Selected FAA Human Capital Reform Initiatives and Their Need
for an Exemption from Title 5:
Figure 3: Career Level Pay Bands for Job Categories under Core
Compensation:
Figure 4: Implementation Status of Selected FAA Personnel Reform
Initiatives:
Figure 5: Compensation Systems Applicable to FAAs Workforce:
Figure 6: Compensation of Air Traffic Controllers in Field Facilities
and Regional and Headquarters Offices, 2002:
Figure 7: Number of FAA Employees Represented by Unions, 1991-2001:
Figure 8: Inspector Generals Comments on the Effects of Personnel
Reform on Hiring Times:
Figure 9: Funding Alternatives Used for Managers PCS Promotional Moves
between Field Facilities, Fiscal Years 1999-2001:
Figure 10: Number of Formal EEO Complaints by Year:
Figure 11: FAA Employees Views on the Model Work Environment:
Figure 12: Volpe Centers Views on Importance of Linkage:
Figure 13: Studys Views on FAAs Implementation of Personnel Reform:
Figure 14: Inspector Generals Views on FAAs Implementation of
Personnel Reform:
Figure 15: Consultants Views on FAAs Implementation of Personnel
Reform:
Figure 16: Eight Critical Success Factors Corresponding with the Four
High-Risk Human Capital Challenges That Can Help Agencies Manage Human
Capital Strategically:
Figure 17: Six Key Practices for Effective Use of Human Capital
Flexibilities:
Abbreviations Abbreviations :
CFR: Code of Federal Regulations:
EEO: Equal Employment Opportunity:
FAA: Federal Aviation Administration:
FAACMA: FAA Conference Managers Association:
FLRA: Federal Labor Relations Authority:
GFT: Guaranteed Fair Treatment:
GS: General Schedule:
NAPA: National Academy of Public Administration:
NATCA: National Air Traffic Controllers Association:
OMB: Office of Management and Budget:
OPM: Office of Personnel Management:
PCS: Permanent Change of Station:
February 3, 2003:
The Honorable John L. Mica
Chairman, Subcommittee on Aviation
Committee on Transportation and
 Infrastructure
House of Representatives:
The Honorable Thomas M. Davis III
Chairman, Committee on Government
 Reform
House of Representatives:
The Honorable David Weldon, M.D.
House of Representatives:
The Federal Aviation Administration (FAA) is managing its personnel
under one of the most flexible human capital management environments in
the federal government. This is a result of 1995 legislation that
granted the agency broad exemptions from laws governing federal
civilian personnel management found in title 5 of the United States
Code. Congress provided these flexibilities in response to FAAs
position that the inflexibility of federal personnel systems was one of
the most important constraints to the agencys ability to be responsive
to the airline industrys needs and to increase productivity in air
traffic control operations. In 1996, FAA announced a sweeping reform of
its personnel management system. As we have reported,[Footnote 1] major
change initiatives generally require a minimum of 5 to 7 years to
provide meaningful and lasting results, and so FAAs implementation of
personnel reform should now be approaching a point where such results
might be discernable. As some other federal agencies, such as the
National Aeronautics and Space Administration, have requested similar
human capital flexibilities, and others, such as the Transportation
Security Administration, are now operating under similar exemptions
from title 5 requirements, FAAs experiences in implementing its
flexibilities could provide valuable information to Congress in
considering whether to grant the use of such flexibilities at other
agencies and in overseeing their use.
You asked us to review the status of FAAs personnel reform. As agreed,
we answered the following questions:
* What changes did FAA initiate after being granted broad flexibilities
in 1995 and to what extent did these changes require exemptions from
title 5?
* What is the status of the implementation of FAAs human capital
reform initiatives, and what factors have affected the pace and extent
of implementation?
* What are the effects of FAAs human capital reform initiatives
according to data collected by FAA and the views of FAA human resource
and labor management officials, managers and employees, and unions?
* To what extent has FAAs reform effort incorporated elements that are
important to effective human capital management in the federal
government?
To answer these questions, we reviewed personnel management
requirements in title 5 and the changes FAA made to its personnel
management system as a part of the agencys reform effort. We collected
and analyzed internal and external evaluations of different aspects of
FAAs personnel reform and the available data on the results of reform.
We discussed reform with agency managers and human resource management
officials and union representatives and conducted 176 structured
interviews of randomly selected managers and employees in 27 field
facilities nationwide, 6 of FAAs 9 regional offices, and FAA
headquarters. Because of limitations inherent in the relatively small
sample size, we did not generalize the views and opinions of those
randomly interviewed to all FAA employees. To augment the views and
opinions collected from the structured interviews, we obtained and
analyzed the data available on the results of the various initiatives
provided by FAAs Office of the Assistant Administrator for Human
Resource Management and the lines of business[Footnote 2] and obtained
the views of FAA senior managers in the five lines of business and
representatives of employee associations. Finally, we considered FAAs
reform effort in light of elements of strategic human capital
management that we developed in 2002 and assessments of human capital
management efforts and agencies use of personnel flexibilities that
we have performed at other agencies.[Footnote 3] Appendix I contains a
more detailed description of the scope and methodology of our work. A
copy of our structured interview questions with selected employee
responses is provided in appendix II. We conducted our work from
November 2001 to October 2002 in accordance with generally accepted
government auditing standards.
Results in Brief:
In its human capital reform effort, FAA initiated changes in three
broad areas--compensation and performance management, workforce
management, and labor and employee relations--some of which required
exemptions from title 5. In the area of compensation and performance
management, FAA introduced two initiatives--a new, more flexible pay
system in which compensation levels are set within broad ranges, called
pay bands, and a new performance management system intended to improve
employees performance through more frequent feedback with no summary
rating. Both new systems required an exemption from title 5. In the
area of workforce management, FAA undertook initiatives in workforce
planning (the process by which an organization plans and manages the
size, capabilities, diversity, and deployment of its workforce),
hiring, training, and relocation of employees. While the planning and
training initiatives generally did not require exemptions from title 5,
other workforce management initiatives did require exemptions. In
particular, exemption from title 5 requirements allowed FAA to
establish its own competitive hiring process and bypass centralized
government hiring system requirements. Finally, initiatives in the area
of labor and employee relations included the establishment of new
groups to represent unions and employees and a new policy initiative to
promote diversity and an open work environment. Neither initiative
required exemption from title 5, which continues to govern FAAs labor
relations.
While FAA has fully implemented some or all initiatives in each of the
three broad areas of the reform effort it began in 1996, some key
initiatives have not yet been fully implemented, and the pace and
extent of implementation have been affected by several factors. In the
area of compensation and performance management, FAAs new compensation
system has not yet been implemented for about one-quarter of the
agencys workforce whose unions have not reached a new pay agreement
with FAA. FAAs new performance management system had been implemented
for about 20 percent of the total workforce (15 percent nonunion
employees and 5 percent union employees) at the time of our review. In
the area of workforce management, FAA implemented most initiatives in
1996 by allowing managers in the lines of business immediate use of new
agencywide flexibilities for hiring and training employees. While FAA
established similar agencywide policies for developing workforce plans
for staff, this initiative has not been fully implemented. In the area
of labor and employee relations, FAA implemented initiatives
establishing new partnership forums for union and nonunion employees
and a new model work environment program. While we did not determine
all of the factors that may have affected the pace and extent of
implementation, FAAs need to implement initiatives among a workforce
with a wide range of skills and workplace environments and to negotiate
changes with 48 bargaining units within FAAs nine unions were among
factors that affected the pace and extent of reform implementation.
Figure 1 shows selected initiatives in each of the three areas of
reform, along with whether they required exemptions from title 5 and
their implementation status.
Figure 1: Implementation Status of Selected Initiatives within the
Three Areas of FAAs Personnel Reform That Did or Did Not Require an
Exemption from Title 5:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
FAA had little data with which to assess the effects of its reform
effort. While FAA human capital officials cited positive effects of
FAAs human capital reform effort, the views of managers and employees
and union representatives were generally less positive. In the area of
compensation and performance management, FAA had not systematically
collected or analyzed data to support human resource management
officials view that compensation changes had increased the agencys
ability to attract and retain employees. At the same time, many FAA
managers and employees we interviewed were critical of the new
compensation system. Nearly two-thirds (110 out of 176) of those we
interviewed disagreed or strongly disagreed that the new pay system is
fair to all employees. We were able to find evidence of specific
concerns regarding unfairness in disparities in pay for air traffic
controllers. In addition, according to representatives of FAAs Office
of Labor Relations and employee unions, a general sense of unfairness
over pay among some FAA employees outside of air traffic services has
led to increased unionization among FAA employees. The number of
employees in unions, as a percentage of the workforce, increased from
63 percent in 1995 to almost 80 percent in 2001. In the area of
workforce management, human resource management officials provided
limited data collected only for air marshals to support their view that
external hiring times had decreased from an average of 6 months to as
little as 6 weeks. In contrast, only 12 of the 46 managers we
interviewed said that the speed of hiring has improved. Finally, FAA
labor management officials cited a limited amount of data that
indicated that the number of grievances filed at the national level by
employees represented by unions had increased as evidence that new
employee-union forums had not improved labor management relations. The
managers and employees we interviewed had mixed views on the impact of
labor and employee relations reform initiatives.
FAAs lack of empirical data on the effects of its human capital
initiatives is one indication that it has not fully incorporated
elements that we and others have identified as important to effective
human capital management into its reform effort. These elements include
data collection and analysis, performance goals and measures, and
linkage of reform goals to program goals. Systems to gather and analyze
relevant data provide a basis against which performance goals and
measures can be applied. FAA human resource management officials said
that the agency should have spent more time to develop baseline data
and performance measures before implementing the broad range of reforms
but that establishing these elements was a complex and difficult task.
They said FAA was under significant pressure to rapidly implement
reforms and that one impact of FAAs incremental approach to
implementing the reforms was that baseline measures tended to change as
more people were brought under the reformed systems. FAA has also not
gone far enough in establishing linkage between reform goals and
overall program goals of the organization, another element we have
identified as important to effective human capital management. We found
that the lack of these elements has been pointed out repeatedly in
evaluations of FAAs human capital reform effort, but FAA has not
developed specific steps and time frames by which these elements will
be established and used for evaluation. Incorporation of these elements
could also help FAA build accountability into its human capital
management approach.
This report makes recommendations designed to enable FAA to develop a
more strategic approach to its reform effort. By building these
elements into its approach, FAA will be better able to evaluate the
effects of its reform initiatives, use the evaluations as a basis for
any strategic improvements to its human capital management approach,
and hold agency leadership accountable for the results of its human
capital management efforts. Doing so would also enable the agency to
share its results with other federal agencies and Congress. In
commenting on the draft of this report, the Department of
Transportation and FAA generally agreed with the reports
recommendations. They emphasized the complexity of the reform effort
and said they have been making significant progress in developing
needed elements for measuring the effectiveness of the new programs.
Background:
The FAAs mission is to provide a safe and efficient national aerospace
system. FAAs key aviation functions include regulating compliance with
civil aviation safety standards and air commerce, operating the
national air traffic management system, and assisting in the
development of airports. The achievement of FAAs mission is dependent
in large part on the skills and expertise of its workforce. FAA
consists of nearly 50,000 people, organized into 5 lines of business
and several staff offices. Its workforce provides aviation services
including air traffic control, maintenance of air traffic control
equipment, and certification of aircraft, airline operations and
pilots. FAAs human resource management office is responsible for
managing agencywide implementation of personnel reform and providing
policy and guidance to regional human resource management divisions
that manage the implementation of personnel reform within their areas
of responsibility.
In September 1993, the National Performance Review concluded that
federal budget, procurement, and personnel rules prevented FAA from
reacting quickly to the needs of the air traffic control system for new
and more efficient equipment and flexibilities for attracting and
hiring staff. In May 1994, building on these concerns, Congress
directed the Secretary of Transportation to undertake a study of
management, regulatory, and legislative reforms that would enable FAA
to provide better air traffic control services without changing FAAs
basic organizational structure. The resulting FAA report to Congress,
issued in August 1995,[Footnote 4] concluded that the most effective
internal reform would be to exempt FAA from most federal personnel
rules and procedures.[Footnote 5]
In reporting on FAAs request for these exemptions in October 1995, we
concluded that, if the Congress decided to provide FAA with new
personnel authority, the agency could be used to test changes before
they were applied governmentwide.[Footnote 6] At that time, we
emphasized the importance of establishing goals prior to the
application of the new authority, noting that an evaluation of FAAs
efforts after some experience had been obtained would be important for
determining the success of the effort and its governmentwide
applicability.
On November 15, 1995, Congress, in making appropriations for the
Department of Transportation, directed the FAA Administrator to develop
and implement a new personnel management system.[Footnote 7] The law
exempted FAA from most provisions of title 5 of the United States Code
and other federal personnel laws.[Footnote 8] The law required that
FAAs new personnel management system address the unique demands of the
agencys workforce, and, at a minimum, provide greater flexibility in
the compensation, hiring, training and location of personnel.
Subsequent legislation[Footnote 9] reinstated title 5 requirements
related to labor-management relations, and the Federal Aviation
Reauthorization Act of 1996 placed additional requirements on FAA by
requiring that any changes made to FAAs personnel management system be
negotiated with the agencys unions. Accordingly, compensation levels
became subject to negotiations with employee unions. On April 1, 1996,
FAA introduced its new personnel management system.
In January 2001, we designated strategic human capital management as a
governmentwide high-risk area.[Footnote 10]As our January 2001 High-
Risk Series and Performance and Accountability Series reports make
clear, serious human capital shortfalls are eroding the ability of many
agencies, and threatening the ability of others, to economically,
efficiently, and effectively perform their missions.[Footnote 11] In
2002, our studies of human capital management in the federal government
identified a variety of elements--critical success factors and
practices for effective implementation of flexibilities--that are
important for consideration of federal human capital management
efforts. For example, systems to gather and analyze data, performance
goals and measures, linkage between human capital management goals and
program goals of the organization, and accountability are among the
elements that we have identified as essential for effective strategic
human capital management. Appendix III provides an overview of our
March 2002 model for strategic human capital management[Footnote 12]
and key practices for federal agencies effective use of human capital
flexibilities we identified in December 2002.[Footnote 13]
Many of these elements relate directly to weaknesses we have identified
in our recent reviews of FAA. For example, in July 2001, we reported
that a lack of performance measurement, evaluation, and rewards
hindered the effectiveness of rulemaking reforms.[Footnote 14] In
October 2001, we reported that the overall effectiveness of FAAs
training for air traffic controllers was uncertain and that FAA had not
measured productivity gains from changes in controllers
duties.[Footnote 15] We reported in June 2002 on FAAs difficulties in
acquiring and developing staff to meet agency needs through air traffic
control workforce planning.[Footnote 16] Most recently, we reported in
October 2002 on the inability of air traffic control management to
determine the impact of new relocation policies because of a lack of
baseline data.[Footnote 17]
FAA Initiated Personnel Changes in Three Broad Areas, Some of Which
Required Exemptions from Title 5:
Once exempted from most provisions of title 5, FAA initiated a broad
set of personnel changes. For the purposes of this report, we grouped
them into the areas of compensation and performance management,
workforce management, and labor and employee relations. Figure 2 shows
some of the major initiatives in each area, as well as whether they
required exemptions from title 5 personnel rules.
Figure 2: Selected FAA Human Capital Reform Initiatives and Their Need
for an Exemption from Title 5:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
[A] FAA is not exempt from title 5 requirements governing labor-
management relations.
New Compensation and Performance Management Systems Required Title 5
Exemption:
FAA required exemption from title 5 rules in order to implement its
new, broadbanded pay structure. Before obtaining that exemption, FAA
paid its employees according to the General Schedule (GS) pay system
mandated by title 5.[Footnote 18] In its 1995 report to Congress, FAA
stated that the GS pay system--which rewarded employees for their
length of service, rather than for their competencies, skills, or
accomplishments--resulted in multiple levels of supervisors at the same
grade level and pay range, an inability to grant pay increases until
statutorily mandated time or experience requirements were satisfied,
and the administrative burden of administering about 35 special GS pay
rates that were exceptions to regular pay ranges. The Office of
Personnel Management (OPM) echoed these concerns in an April 2002
report.[Footnote 19] OPM concluded that the GS systems narrow pay
ranges, time-based pay progression rules and across-the-board delivery
of annual increases was not effective in promoting performance-based
pay.
Once exempted from these provisions of title 5, FAA replaced the
traditional grade and step pay system with a broadbanded pay structure
that provides for a wider range of pay and greater managerial
flexibility to attract, retain, and reward employees. The new pay band
system includes plans tailored to specific employee segments: a core
compensation plan for the majority of nonunion employees and negotiated
versions of the core compensation pay plan for employees represented by
unions; a unique pay plan for air traffic controllers and air traffic
managers; and an executive pay plan for nonpolitical executives,
managers, and some senior professionals.
To illustrate the pay band system, under core compensation, the GS 15-
grade pay schedule and step pay increases were replaced with a system
in which employees are placed in a pay band under nine job categories
including a specialized category that comprises eight specialized
occupations. Each career category contains two to five pay bands. Each
pay band represents a minimum and a maximum range of pay. For example,
the base pay for a band D clerical support employee is at least
$23,600 but no more than $35,400. Figure 3 shows the distribution of
pay bands for career level job categories under core compensation. (For
a more detailed comparison of the GS system and core compensation plan,
see app. IV.):
Figure 3: Career Level Pay Bands for Job Categories under Core
Compensation:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Note: Additional pay bands apply to management levels for all of the
job categories with the exception of students.
In its 1995 report to Congress, FAA reported that the federal
performance management system under title 5 limited the ability of
agency managers to reward their best employees. After being exempted
from this system, FAA incorporated performance management elements into
the new compensation system to encourage results-oriented behavior and
to recognize and reward performing employees via permanent annual
salary increases. For example, under its core compensation plan, all
employees are eligible for a permanent pay increase, called an
organizational success increase, based on the Administrators
assessment of the extent to which the entire agency has achieved its
annual agency goals. In addition, notably high-performing individuals
may receive an additional permanent pay increase, called a superior
contribution increase, based on supervisory recommendation.
[Footnote 20] FAA has criteria for awarding superior contribution
increases. These criteria include collaboration, customer service and
impact on organizational success. Additional criteria may be used by
some lines of business and staff offices because of their unique needs.
FAA is not required to grant cost of living allowances or locality pay
increases but elected to continue providing these pay adjustments,
which are generally applicable to the federal pay system.[Footnote 21]
FAAs 1995 report to Congress also stated that the federal performance
management system limited the ability of agency managers to deal with
unacceptable performance. FAAs legislative exemption from title
5[Footnote 22] enabled the agency to establish its new performance
management system. According to human resource management officials,
this system focuses on human capital development by helping to make
individual employees aware of their roles and responsibilities in
helping the agency achieve its program goals and provides ongoing
feedback and written evaluations to improve individual employee
performance. The new performance management system incorporates a
variety of feedback approaches in addition to traditional supervisor-
to-employee feedback, including performance plans that discuss
managers and employees agreements regarding job expectations and
feedback from the employee to the supervisor. At the end of the
performance evaluation cycle, employees receive a narrative performance
summary instead of a year-end rating that defines employees
performance in specific categories.[Footnote 23] The performance
summary reflects an assessment of achievements based on outcomes and
expectations, while professional competencies such as collaboration and
customer service are elements of the new compensation system. As a
result, the performance management system is not directly linked to pay
for performance elements of FAAs new compensation system. While FAAs
program documentation described union involvement and the use of
employee focus groups in the development of the system, FAA did not
systematically validate the final version of the performance management
system with all employees before beginning implementation in 2002.
Human resource officials said they planned to validate the new system
by obtaining employee input through an employee attitude survey in 2003
and through continuing negotiations with employee unions and that these
would allow for continuing refinements.
Some Workforce Management Initiatives Required Exemption from Title 5:
Some of FAAs workforce management reform initiatives required
exemption from title 5 while others did not. For example, FAAs
workforce planning initiative did not require an exemption from title
5. On the other hand, changes in procedures governing hiring and
locating staff, as well as some training initiatives, such as fee-for-
service training programs, did require exemptions from title 5.
In requesting exemption from title 5 requirements governing hiring and
locating staff in 1995, FAA cited inefficiencies of working through OPM
to hire and geographically place qualified staff at key facilities or
to reassign employees in response to changing needs. According to an
FAA staffing task force, the agency had lost highly qualified
candidates because managers could not fill jobs in a timely manner. FAA
estimated that it took an average of 6-8 months to bring a new hire
onboard from outside the federal service using OPM as a hiring source
and that it took, on average, 60 days to permanently fill a position
internally. FAA also considered OPM allocations for executive positions
excessively rigid, as any increases to the allocation provided had to
be supported by the Department of Transportation and approved by
OPM.[Footnote 24] Moreover, FAA stated that the temporary internal
movement process (from one FAA location to another), also governed by
OPM regulation, was equally inflexible because it limited the duration
of temporary assignments, and imposed onerous processing requirements.
The movement process required paperwork to be processed every 120 days
and could require up to seven separate personnel actions for a 2-year
temporary assignment.
FAAs 1995 request for flexibilities in the area of training was based
on perceived redundancies and inefficiencies in its training programs.
According to an FAA personnel reform training task force report in
1996, centralized agency training programs required by title 5[Footnote
25] provided standard training that did not always address specific
business needs. FAA also requested exemption from title 5 in order to
have flexibility to provide unfunded or partially funded moves of
employees to locations where they and their skills are most needed.
According to FAA Air Traffic Services and human resource management
officials, FAA historically interpreted title 5 rules as a requirement
to fully reimburse all Permanent Change of Station (PCS) moves since
the agency considered all such moves to be in the interest of the
federal government.
After Congress provided FAA with its new flexibilities, FAA developed a
new framework for workforce planning to guide executive, occupational,
and managerial/supervisory workforce planning. This did not require an
exemption from title 5. With regard to hiring, FAA used its exemption
from title 5 to establish hiring policies that allow FAA to hire
applicants directly from outside the government and from other federal
agencies without going through OPM. To do so, FAA established three
hiring approaches: (1) using centralized registers, (2) announcing
vacancies, and (3) authorizing on-the-spot hiring.[Footnote 26]
According to FAA human resource management officials, the agency also
used its exemption from title 5 to streamline staffing by decreasing
the number of appointment types from 14 to 2 (temporary and permanent)
and hiring authorities from approximately 500 to 1.[Footnote 27] FAA
also established a flexible system for adjusting the number of
executive positions in response to shifting agency priorities. This new
system allows the Administrator to establish new executive positions
and reassign and select the top management team.
In the area of training, FAA (1) delegated responsibility for managing
training funds and programs to its lines of business, (2) allowed users
to select training from multiple providers, (3) created fee-for-service
training programs, and (4) provided broader authority to fund degree
programs for employees. The latter two initiatives required exemptions
from title 5.[Footnote 28]
Another area of workforce management for which FAA used its exemption
from title 5 requirements was relocating employees.[Footnote 29] As
part of its reform, FAA delegated the authority to determine
eligibility for and amount of benefits to each line of business and
provided three PCS funding options: (1) full PCS reimbursement, (2)
fixed relocation payments,[Footnote 30] and (3) unfunded moves. As
before reform, if the move is in the interest of the government, FAA
will fully reimburse the individual for costs associated with the
move.[Footnote 31] Under the new PCS rules, if FAA determines that it
will derive some benefit from a move, even though the move is not in
the interest of the government, the agency may offer a fixed relocation
payment of up to $25,000. If a move is not in the interest of the
government and FAA does not determine that it will derive some benefit
from the move, there is no basis for offering PCS funding. However, as
a result of FAAs personnel reform, employees may choose to make
unfunded moves at their own expense for personal reasons, to gain
experience needed for professional advancement, or for promotion.
Most Labor and Employee Relations Initiatives Did Not Require
Exemptions:
FAA was ultimately not exempted from title 5 requirements governing
labor-management relations. As part of its overall reform effort, it
undertook several initiatives in the area of labor relations that did
not require exemption from title 5. For example, FAA and its unions
established a new forum--the National Labor Management Partnership
Council--for union representatives and senior management to exchange
information and ideas. To improve overall employee relations, FAA also
established a new forum for nonunion employees to facilitate
communications between employees and FAA management that also did:
not require an exemption from title 5.[Footnote 32] Similarly, in
consultation with union and nonunion employee groups, FAA developed a
new policy promoting a Model Work Environment to create and maintain an
effective working environment for its employees by managing diversity
and practicing equal employment opportunity and affirmative action. In
addition, on July 1, 1998, FAA established an Accountability Board to
standardize procedures to insure managements uniform and effective
handling of sexual harassment allegations and related misconduct of a
sexual nature. In July 2000, the scope of the Board was expanded to
include harassment and other misconduct that creates or may create an
intimidating, hostile or offensive work environment based on race,
color, religion, gender, sexual orientation, national origin, age and
disability. The establishment of the Board did not require exemption
from title 5.
FAA required exemption from title 5 to establish the Guaranteed Fair
Treatment Program, an alternative dispute resolution method in which a
three-person review panel adjudicates employee grievances. FAA intended
the new program to be the only method by which employees not covered by
a union agreement could seek administrative reviews of grievances and
to replace the traditional approach under title 5 rules involving the
Merit Systems Protection Board.[Footnote 33] (As discussed later, FAA
was later required by Congress to reinstate the traditional title 5
process and now offers employees the choice of the two processes for
resolving disputes.):
Key Elements of Personnel Reform Have Not Yet Been Fully Implemented:
While FAA has completed many of the initiatives that required changes
to policy and procedures, it has not yet completed implementation of
some of the more complex elements of the personnel reform it began in
1996, specifically compensation and performance management systems and
workforce planning initiatives (see fig. 4). FAA officials said that
the diversity of skills and duties of FAAs workforce as well as
negotiations with unions that represented a large number of employees
has slowed somewhat the pace and extent of implementation of
compensation and performance management initiatives.
Figure 4: Implementation Status of Selected FAA Personnel Reform
Initiatives:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
According to the Assistant Administrator for Human Resource Management,
FAAs implementation strategy was to establish a broad policy framework
and then focus incrementally on individual elements of reform to
eventually achieve full implementation. Between April 1996 and October
1998, for certain workforce management and labor and employee relations
initiatives, FAA defined the new flexibilities available through
agencywide corporate policies and then empowered the individual lines
of business to adapt and make use of the new tools as appropriate.
According to human resource management officials, these initiatives
helped FAA jump-start its reform effort, while other reform
initiatives, such as compensation, required varying incremental degrees
of development because of the diverse characteristics of FAAs
workforce. Human resource management officials said other initiatives,
such as workforce planning, were considered to be of a lower priority
in terms of implementation.
Most Employees Are Paid Under New Compensation Systems, but
Implementation of the New Performance Management System Has Been
Limited:
As of September 30, 2002, FAA had fully implemented its broadbanded
compensation plans, including the performance incentive increases, for
about three-quarters of the agencys workforce. About 8,000 nonunion
employees are paid under the core compensation plan, all senior
executives (about 180) are paid under the executive compensation plan,
and about another 9,000 employees represented by three of FAAs
nine[Footnote 34] unions are paid under negotiated versions of the core
compensation plan. Because the performance incentive elements of the
new system were not incorporated until late 2001, fiscal year 2002 will
be the first year in which all employees under core compensation
experience a full cycle with all the elements of its reformed
compensation system fully in place.[Footnote 35] In addition, more than
19,000 air traffic controllers are paid according to a specialized,
negotiated pay plan that includes pay banding[Footnote 36] and superior
contribution increases. The remainder of FAAs workforce (about
13,000),[Footnote 37] most notably those union employees whose union
has not reached a new agreement with FAA, continues to be compensated
under the traditional GS grade and step system under title 5 rules, as
shown in figure 5.
Figure 5: Compensation Systems Applicable to FAAs Workforce:
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Note: Other includes the wage grade plan for employees paid by the
hour.
The implementation of FAAs new performance management system has not
yet been completed for most FAA employees. In 1995, prior to its reform
effort and in response to new performance management regulations issued
by OPM,[Footnote 38] FAA decided to establish a separate way of
managing performance. At this time, it uncoupled its performance
management system from its compensation system, based performance
appraisals on a two-tiered evaluation (meets expectations or does
not meet expectations) of employees performance against performance
standards, provided for year-end summary ratings, and established
supplemental criteria (such as making a significant contribution to the
efficiency, economy, or improvement of government operations) to use as
a basis for merit pay. In 1999, as part of its reform effort, FAA began
development of a new performance management system. This new system
consists of a narrative evaluation of employees performance against
performance standards combined with feedback and coaching. The new
performance management system does not provide for a year-end summary
rating or a basis for merit pay. Instead, the new compensation system
includes criteria that are separate and distinct from the performance
management system (such as collaboration, customer service, and impact
on organizational success) for awarding merit-based pay raises, which
are called superior contribution increases. FAA implemented this new
performance management system on October 1, 2001, for the Office of
Human Resource Management, the Office of Regions and Center Operations,
and the Regulation and Certification line of business. Since October
2001, additional staff in a variety of FAA organizations have been
placed under the new performance management system, bringing the total
under the system to about 20 percent of FAAs total workforce. As with
the compensation system, the new performance management system must be
included in the negotiated agreements with FAAs employee unions.
While Most Workforce Management Initiatives Have Been Completed,
Workforce Planning Is in Progress:
FAA implemented most workforce management initiatives in 1996 by
defining the flexibilities available through agencywide corporate
policies[Footnote 39] and empowering the individual lines of business
to adapt and make use of the new tools as appropriate for their staff.
The individual lines of business adapted agencywide policies detailing
the flexibilities available for hiring, training, and relocating
employees by issuing parallel policies to guide their respective
workforces and address any applications unique to their staff. While
FAA established similar agencywide corporate policies and guidance for
developing workforce plans for three staff levels--executive,
managerial and supervisory, and occupational--this initiative is still
under way.[Footnote 40] FAA began its executive workforce planning in
November 2000. Development of Individual Development Plans for
executives--the final element of the executive workforce planning
effort--was originally scheduled to be finalized in August 2001 but was
still under way at the time of our review. FAA has not yet initiated
its managerial and supervisory workforce planning effort. This effort
is set to begin in fiscal year 2003. FAAs occupational workforce
planning, which was originally scheduled to be completed in September
of 2001, was still under way at the time of our review. Human resource
management officials said that four of the five lines of business--
Airports, Air Traffic Services, Regulation and Certification, and
Research and Acquisitions--had completed their occupational workforce
plans, and the remaining line of business--Commercial Space
Transportation--was still developing a plan.
Labor and Employee Relations Initiatives Have Been Implemented:
FAA announced a series of agencywide policies governing labor and
employee relations in 1996 that established the National Labor
Management Partnership Council, the National Employees Forum, the
Guaranteed Fair Treatment Program, and a policy promoting a Model Work
Environment. FAA required less time to develop and implement these
changes because comparable labor and employee representative groups
were already in place prior to the reform effort and FAA had existing
appeal processes and workplace improvement policies that served as a
basis for the Guaranteed Fair Treatment Program and Model Work
Environment.
Characteristics of FAAs Workforce and the Need to Negotiate Changes
Have Affected the Pace and Extent of Reform Implementation:
The variety of skills and areas of technical expertise represented in
FAAs workforce has affected the implementation of the agencys new
compensation plan. For example, the agency has a unique pay plan for
air traffic controllers in the field based on the complexity of the
facility, while FAAs new core compensation plan is based on the duties
and responsibilities of 16 different types of positions (ranging from
students to pilots to physicians).
The schedule for implementing changes in compensation and performance
management has been dictated, in part, by the timing of negotiations
with employee unions and the ability of FAA and its unions to reach
agreement on the new systems. For example, because FAAs contract with
the National Air Traffic Controllers Association (NATCA), the
organization representing FAAs largest group of unionized employees,
had expired, management had to negotiate a new agreement in 1998 before
it had completed development of its new core compensation pay plan.
While the air traffic pay plan, like the core compensation plan, is
intended to include annual pay increases based on individuals
performance, these performance-based increases have not been
implemented as intended due to an unresolved dispute between NATCA and
FAA management over the details of implementation. As a result, the air
traffic pay plan distributed annual performance-based incentive pay
equally among all union members for fiscal years 1999, 2000, and 2001,
unlike the core compensation plan developed for the rest of the agency
in which only higher performing individuals may receive performance-
based incentive pay. At the time of our review, FAA and the air traffic
controllers union had not yet determined how fiscal year 2002 and
future years incentive pay increases would be allotted.
According to human resource management officials, the new core
compensation has not been negotiated for union employees that represent
about 30 percent of FAAs total workforce, and the need to negotiate
the incorporation of compensation and performance management
initiatives into union contracts has increased the length of time
needed to negotiate some contracts. For example, before 1996, FAA and
the Professional Airways System Specialists union took from 3 to 14
months to negotiate an agreement, but the negotiation time more than
doubled to 29 months for the latest agreement. FAA and the National
Association of Air Traffic Specialists have been attempting to
negotiate a new contract since 1997, and the parties had not yet
reached agreement at the time of our review. Labor relations officials
attributed increases in negotiation times to the expanded scope of
contract negotiations, which now includes negotiating compensation that
historically was not negotiated. The performance management system has
also not yet been implemented for most of the unionized segments of the
agencys workforce. According to FAA officials, 2,324 union employees
in FAAs Office of Regions and Center Operations and Office of Public
Affairs, representing only about 5 percent of FAAs total workforce
represented by unions, were under the new system at the time of our
review.
FAA Had Little Data on Reforms Effects, and Views of FAA Officials
Often Differed from Views of Managers and Employees We Interviewed:
FAA had little or no data on the effects of many of the reform
initiatives. Human resource management officials cited positive effects
of the reform initiatives in the areas of compensation[Footnote 41] and
workforce management, while in the area of labor and employee
relations, labor management officials provided a limited amount of data
suggesting that labor relations had not improved. Managers and
employees with whom we spoke in our interview effort generally cited
less positive views on the effects of reform initiatives.
FAA Lacked Data on Effects of Compensation Changes; Officials Said
Compensation Changes Increased Flexibility, While Managers and
Employees Perceived Inequities in the New Pay System:
FAA had not systematically collected or analyzed data to determine
whether the new compensation system had achieved its objective of
increasing the agencys ability to attract and retain employees. Human
resource management officials said the new compensation system had
achieved this objective. They said the initiative had made the agency
more competitive in hiring because FAA can now offer higher starting
salaries within the wider-range of pay afforded by the pay bands. In
addition, air traffic officials we spoke with said that the air traffic
control pay plan has made it easier to staff hard-to-fill positions at
busier air traffic facilities. They noted, however, that they did not
have a definition for hard-to-fill positions and had not tracked the
extent to which positions they might consider hard to fill had been
filled more or less quickly since the new pay plan was instituted.
In contrast, many FAA managers and employees we interviewed were
critical of the new compensation system. Nearly two-thirds of those
responding to our structured interview (110 of 176) disagreed or
strongly disagreed that the new pay system is fair to all
employees.[Footnote 42] While we did not attempt to evaluate the
concerns raised during interviews, we did find some evidence that helps
explain these perceptions of unfairness. For example, concerns about
air traffic controller pay disparities are supported by a Department of
Transportation Inspector General report. This report found that FAAs
initial implementation of the new compensation system led to inequities
in pay between air traffic managers, supervisors, and specialists in
field facilities, who are covered by the air traffic pay plan that FAA
negotiated with NATCA in October 1998, and a much smaller group of air
traffic managers and supervisors in regional and headquarters
locations, who (together with other FAA managers and employees) are
covered by the new core compensation plan. Because of differences
between the two plans, managers and employees transferring from
regional and headquarters locations to field facilities were not
eligible for the same pay increases as those who were already assigned
to field facilities in October 1998.
To address this situation, FAA issued new guidance in July 2001 that
established consistent rules for setting pay when employees move within
and among the various pay systems in FAA, including movements between
field positions and positions in regional offices and headquarters.
Even so, perceptions of unfairness persist. According to the President
of the FAA Conference Managers Association (FAACMA), the new guidance
created the perception among some managers and employees of a financial
disincentive for air traffic controllers to move from field facilities
to regional offices or headquarters to gain supervisory and managerial
experience. Further, the FAACMA President, as well as some controllers
with whom we spoke, stated that such a move would result in a
significant loss of pay--generally about $10,000 to $20,000. Because
of pay discrepancies, one regional air traffic manager said, we cant
get highly paid employees to move over to management positions. Human
resource management officials said that, while some field employees who
move to positions in regional offices or headquarters would see a pay
reduction of $10,000 or $20,000, not all such moves would result in
such a pay reduction.
According to our review of FAAs July 29, 2001, guidance, an unfair
disparity in pay between air traffic controllers would be created only
when managers and employees were paid above or below established pay
bands. At our request, FAA analyzed the salaries of its air traffic
control staff and determined that 327, or fewer than 2 percent, of
about 20,000 controllers (including supervisors, managers, and
employees) were paid above current pay band maximums. (FAAs analysis
did not identify any staff being paid below established pay band
minimums for their positions.):
When we compared the distribution of 2002 base pay for all air traffic
controllers in field facilities and in regional and headquarters
facilities, we found that the regional and headquarters controllers are
generally paid less under core compensation than the field controllers
are paid under the air traffic pay plan. As shown in figure 6, the
percentage of controllers paid between $100,000 and $130,000 is smaller
in the regions and in headquarters than in the field. This is
consistent with FAAs goal of providing higher levels of pay to
controllers in an operational environment. In addition, the percentage
of controllers paid between $60,000 and $80,000 is greater in the
regions and in headquarters than in the field.
Figure 6: Compensation of Air Traffic Controllers in Field Facilities
and Regional and Headquarters Offices, 2002:
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According to human resource management officials, the pay rates of many
field employees and supervisors can be accommodated within the pay
ranges of regional office and headquarters management positions, as
shown above. Thus, they said that pay discrepancies should not affect
the ability to entice field employees to move into management
positions. However, it is understandable that some air traffic managers
and controllers perceive a financial disincentive for moving from the
field to a regional office or headquarters because, although the range
of pay under both systems is comparable, the number of higher paid
positions is greater in the field than in the regional offices or
headquarters. To the extent that these perceptions persist, FAA may
find it more difficult to place its most experienced air traffic
managers in regional offices and headquarters. However, this disparity
is consistent with FAAs goal of basing pay on the operational
environment and is explicitly stated in FAAs July 2001 pay plan for
air traffic managers and controllers.
A general perception of unfairness regarding FAAs new compensation
system has led to increased unionization among FAA employees outside of
the air traffic services line of business as well as within it,
according to both internal and external sources. FAA human resource
officials said that considerable unionization began before such systems
as core compensation were implemented and that most concerns cited
during unionization efforts were of uncertainty and loss of guarantees,
not of unfairness. However, the introduction of the pay system
corresponded with an acceleration in the increase in employees seeking
union representation after FAA began its reform effort. For example,
employees represented by unions (as a percentage of FAAs total
workforce) increased from 63 percent prior to the reform in 1995 to 66
percent in 1998 and to 79 percent by 2001. FAA labor relations
officials and FAA spokespersons for new unions at FAA told us that a
perceived inequity regarding pay was the prime reason new unions were
formed. A 1999 study by the National Academy of Public Administration
(NAPA) also found that real and perceived inequities in levels of pay
were major contributors to the view among a growing number of [FAA]
employees that you must belong to a union to get your fair
share.[Footnote 43] A more recent FAA study in 2001 likewise
acknowledged that the new pay system may be one possible explanation
for the increase in unionization.[Footnote 44] Between 1998--when FAA
began testing and implementing its new pay system--and 2001, the number
of employees choosing representation by unions increased nearly 20
percent (from about 32,800 to more than 38,800 employees). Figure 7
shows the number of FAA employees represented by unions from 1991
through 2001.
Figure 7: Number of FAA Employees Represented by Unions, 1991-2001:
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Because FAA had not completed a full appraisal cycle for staff under
its new performance management system at the time of our review, FAA
had little data, and we were not able to obtain the views of managers
and employees on the effects of the new system. We noted that FAAs
performance management approach does not use a multi-tiered rating
system to rate performance. We have previously raised concerns that
such approaches may not provide enough meaningful information and
dispersion in ratings to recognize and reward top performers, help
everyone attain their maximum potential, and deal with poor performers.
According to human resource management officials, the compensation
system provides a means of recognizing and rewarding top performers
through separate assessments not directly linked to performance
assessments under the performance management system.
The measurable element related to performance management is the number
of employees that receive superior contribution increases under FAAs
new compensation system. About 20 percent of employees are to receive
the highest superior contribution increases (1.8 percent addition to
base pay) and 45 percent are to receive the next highest level of
superior contribution increases (0.6 percent increase in base pay).
Human Resource Management Officials Had Limited Data to Support Their
Views that Workforce Management Initiatives Had Increased Flexibility,
While Some FAA Managers Were Less Positive:
Whereas human resource management officials provided some limited data
to support their views that reform initiatives had improved the
agencys flexibility in hiring and relocating employees, the managers
we spoke with were less likely to see positive results. According to
human resource management officials, FAAs use of the new hiring
flexibilities, though restricted by hiring freezes, has reduced
external hiring times from an average of 6 months to as little as 6
weeks. They said the examples they provided for air marshal hiring were
intended to provide an illustration that the policies allow positions
to be filled quickly, even in the case of large recruitment efforts.
However, the Department of Transportations Office of Inspector
General, when reviewing FAAs personnel reform in 1998, questioned
FAAs ability to support this assertion in the absence of
data.[Footnote 45] (See fig. 8.):
Figure 8: Inspector Generals Comments on the Effects of Personnel
Reform on Hiring Times:
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[End of figure] - graphic text:
Throughout our review, we asked FAA officials from both the human
resource management office and lines of business for any documentation
or data to support the reduction in hiring times and they were unable
to provide any such data. At the close of our review, however, human
resource management officials cited some limited data resulting from
the Federal Air Marshal Program. According to FAA human resource
management officials, the program following the terrorists attacks on
September 11, 2001, was one of the largest recruitment efforts ever
undertaken by FAA. (FAA received and processed more than 200,000
applications.) According to FAA officials, it would not have been
possible to fill the air marshal positions in the numbers and time
frames required without the flexibilities available under FAAs
personnel system. They provided data reflecting a sample of
approximately 1,000 candidates for the air marshal positions. Of those
candidates hired, about 30 percent (140) were hired and placed within 6
weeks. In total, 70 percent (333) were hired and placed within 8
weeks.[Footnote 46]
In contrast to the positive views of human resource management
officials, FAA managers had less positive views on the effects of
hiring reforms, while employees, who are less involved in the hiring
process, had mixed views. Among the 46 managers we interviewed, only
about a third (15) agreed or strongly agreed that the initiatives have
improved the ability of their line of business or staff office to fill
job vacancies. Furthermore, only 12 of the 46 managers believed the
speed of hiring has improved. These opinions, while not necessarily
representative of all FAA managers today, are similar to the views
expressed by FAA managers in 1998.[Footnote 47] According to a survey
FAA conducted then, 34 percent of managers responding said that FAAs
streamlined staffing procedures had made it easier to fill vacancies in
their organization, and 32 percent said the speed of hiring had
improved.
Human resource management officials also said that new policies
governing the relocation of employees had given managers more
flexibility in relocating employees and employees more flexibility in
making career decisions. Under these new policies, FAA may provide
fixed relocation payments as well as full funding for PCS moves, and it
allows unfunded moves, which were not allowed under FAAs prior policy.
Figure 9 shows that the majority of moves between field offices for
managers from fiscal year 1999 through 2001 (the only years and type of
moves for which data were available) were unfunded.
Figure 9: Funding Alternatives Used for Managers PCS Promotional Moves
between Field Facilities, Fiscal Years 1999-2001:
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[End of figure] - graphic text:
In contrast to the positive views of FAA human resource management
officials, FAACMA representatives raised concerns about the impact of
the new policies in the air traffic services line of business,
suggesting that they might have unintended consequences, including a
reduction in the number of qualified applicants, a reduction in the
diversity of potential applicant pools and subsequent discrimination in
filling positions, and a negative impact on employee morale if
fluctuations in the annual funding for relocation payments led to
disparities in the payments for comparable moves over time.[Footnote
48] Air traffic officials said they were still reviewing these concerns
and planned to comment in the near future.[Footnote 49]
FAA Had Some Data Suggesting Mixed Effects of Labor and Employee
Relations Initiatives, While Officials, Managers, and Employees Held a
Variety of Views:
Although FAAs Office of Labor Relations did not have historical,
agencywide data to quantify an increase in grievances, FAA labor
management officials said the number of grievances[Footnote 50] filed
at the national level by employees represented by unions had increased
and this increase was a sign that the initiatives had not achieved the
reform objective of establishing a collaborative labor-management
relations environment that would minimize the traditional adversarial
relationship. They said that the number of grievances filed began to
increase following personnel reform changes the agency had made. For
example, they noted that in 1999, the core compensation plan was
implemented and grievances increased. However, human resource officials
said that grievances by union employees could not have pertained to
implementation of the compensation pilot because the pilot test only
applied to nonunion employees, not to union employees. The Office of
Labor Relations implemented a new system for tracking grievance data in
October 2001 and began systematically collecting information on the
sources (such as headquarters, regions, and unions) and subject (such
as compensation, use of leave, and discipline) of grievances filed
across the agency.
While limited data suggested that FAAs introduction of an alternative
dispute resolution program for employees not represented by unions did
reduce the processing times for resolving appeals, employees reactions
to the new system suggest that many employees did not see this
initiative as an improvement. FAA introduced its internal alternative
dispute resolution approach--the Guaranteed Fair Treatment Program--in
April 1996 in an effort to streamline the appeals process. This
approach met with resistance from employees and led Congress, in 2000,
to reinstate the traditional title 5 process that uses the Merit
Systems Protection Board.[Footnote 51] As a result, FAA now offers
employees the choice of using either the guaranteed fair treatment
program or the traditional title 5 process. The only data human
resource officials were able to provide on appeals dated back to fiscal
year 1997. Although these data are old, they indicated that for fiscal
year 1997, appeals went through the guaranteed fair treatment process
more quickly (5 to 7 months) than through the Protection Board process
(10 months). Even so, the Deputy Assistant Administrator for Labor
Relations said that employees, who have been able to choose between the
two processes, have generally not chosen to use the guaranteed fair
treatment process. He said that one reason employees have not used the
guaranteed fair treatment process is because its potential benefits,
such as the employees right to help select the arbitrator, have not
been effectively communicated to them. In addition, according to the
Deputy Assistant Administrator, both FAA managers and union leaders
have complained about having to pay the cost of the arbitrator, while
employees have complained about having to pay their own legal fees for
attorneys regardless of the outcome of the appeal. FAA reimburses an
employees legal fees if the employee wins his/her appeal when using
the Protection Boards process.
Most FAA managers and employees we interviewed said that labor and
employee relations had changed in the last 5 years. For example, 130 of
the 176 managers and employees we interviewed agreed or strongly agreed
that labor-management relations had changed in the last 5 years. Of
those 130, 75 said that labor-management relations had declined.
Similarly, 130 of the 176 managers and employees we interviewed said
employee morale had changed in the last 5 years, and of those 130, 99
said that employee morale had declined. While employees perceptions
regarding the changes in labor and employee relations cannot be linked
directly to FAAs personnel reform, some employees cited specific
reform initiatives, such as compensation and the Model Work Environment
established to improve employee relations, when discussing the decline
of labor-management relations and morale.
Union representatives for three of FAAs nine unions said that a
complaint filed against FAA by the Federal Labor Relations Authority
(FLRA) in March 2001 had reduced collaboration between labor and
management. FLRA charged FAA with bargaining in bad faith because it
had refused to sign an agreement negotiated with the American
Federation of State, County and Municipal Employees, a union that
represents employees at FAA headquarters. FAA management did not sign
the agreement and submitted it instead to the Office of Management and
Budget (OMB) for review. OMB subsequently disapproved some portions of
the contract. Following an investigation of the circumstances, FLRA
directed FAA management and the union to sign and implement the
contract. However, in September 2002, an administrative law judge
recommended that FLRA dismiss the unions complaint, finding that FAA
clearly gave notice to the union of the OMB approval condition and that
the union agreed to that condition.
In the area of employee relations, FAA provided us with some data that
may support the views of FAA officials that the Model Work Environment
has had a positive effect. A recent decline in the number of equal
employment opportunity (EEO) complaints may, to an unknown extent,
reflect the effects of FAAs Model Work Environment. These complaints
are concerns expressed by employees about legally prohibited
discrimination on the basis of race, color, religion, sex, national
origin, age, or handicap. An analysis by FAAs Office of Civil Rights
of data it had collected on the number and types of formal EEO
complaints showed that while such complaints increased in the years
immediately following the implementation of the Model Work Environment
in 1996, they began to decline 3 years later. As figure 10 shows, the
number of EEO complaints increased from 412 in 1996 to 635 in 1998 and
then declined to 485 in 2001.
Figure 10: Number of Formal EEO Complaints by Year:
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[End of figure] - graphic text:
Note: The most frequently filed complaints between 1997 and 2001 were
for promotion/nonselection and nonsexual harassment, followed by
complaints about terms or conditions of employment, assignment of
duties, and training.
About three-quarters of the FAA managers and employees we interviewed
(134 of 176) agreed or strongly agreed that they understood the goals
of the Model Work Environment. These goals include reflecting diversity
and eliminating discrimination and harassment in the workplace, which
are common causes of equal employment opportunity complaints. While
some employees cited positive effects of the program, other employees
were skeptical of its impact. Figure 11 illustrates FAA employees
divergent views on the Model Work Environment.
Figure 11: FAA Employees Views on the Model Work Environment:
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[End of figure] - graphic text:
Note: Quotations are from an FAA employee in headquarters and an air
traffic employee in a regional office, respectively.
Even though the decrease in the number of EEO complaints cannot be
directly linked to the Model Work Environment initiative, the
availability of data and analysis on EEO complaints could provide one
objective basis for FAA to discuss the effects and assess the efficacy
of this policy and address the concerns of those employees who view its
impact less positively.
FAA Has Not Fully Incorporated Elements Needed for Effective Human
Capital Management:
FAAs lack of empirical data on the reform efforts effects is one
indication that it has not fully incorporated elements that we and
others have identified as important to effective human capital
management into its reform effort. Systems to gather and analyze
relevant data provide a basis against which performance goals and
measures can be applied. FAA human resource management officials said
that the agency should have spent more time to develop baseline data
and performance measures before implementing the broad range of reforms
but that establishing these elements was a complex and difficult task.
They said FAA was under significant pressure to rapidly implement
reforms and that one impact of FAAs incremental approach to
implementing the reforms was that baseline measures tended to change as
more people were brought under the reformed systems. FAA also has not
gone far enough in establishing linkage between reform goals and
program goals of the organization, another element we have identified
as important to effective human capital management. We found that the
lack of these elements has been pointed out repeatedly in evaluations
of FAAs human capital reform effort, but FAA has not developed
specific steps and time frames by which these elements will be
established and used for evaluation. Incorporation of these elements
could also help FAA build accountability into its human capital
management.
FAAs Human Capital Reform Effort Lacks Needed Data Collection and
Analysis, Performance Goals and Measures, and Linkage of Reform Goals
to Program Goals of the Organization:
The lack of baseline and comparative data for analysis and the lack of
performance goals and measures has made it difficult to objectively
evaluate the effects or success of FAAs reform effort. Systems to
gather and analyze relevant data provide a basis against which
performance goals and measures can be applied. FAA human resource
management officials agreed that the agency should have spent more time
to develop baseline data and performance measures before implementing
the broad range of reforms but said that establishing measures and
goals and reaching consensus on their use was a complex and difficult
task with which all federal agencies struggle. They said the agency was
under significant pressure to rapidly implement reforms, and that one
impact of FAAs incremental approach to implementing the reforms was
that baseline measures tended to change as more people were brought
under the reformed systems.
Human resource management officials also said that, while FAA has not
systematically collected data and analyzed results to identify the
benefits of all of the reform initiatives, the Office of Human Resource
Management has taken a number of steps since 1998 to increase
evaluation and measurement of some human resource management activities
and outputs. Actions they cited (in addition to the previously
discussed evaluations of compensation implementation) included meeting
with consultants, human resource managers and intergovernmental groups
and providing briefings to FAA management. While we were in the final
stages of our review, they prepared, in response to our request, an
informal report[Footnote 52] that described the type of measures they
were planning to, or had recently begun to apply as part of a Balanced
Scorecard approach[Footnote 53] to assessing human resource management
activities. The measures in the scorecard approach are based on
existing sources of data--customer surveys conducted by the Department
of Transportation and FAA employee attitude surveys--as well as new
data related to the hiring process, such as the Time to Fill (a
vacancy) questionnaire, results from employment selection feedback
questionnaires, a survey for new recruits and, since December 1999, a
separation survey for employees leaving the agency. Human resource
officials said they had been strategically refining the employee
attitude survey since 1995 to address key human capital issues, such as
clarity of performance expectations and workforce planning.
Our work on strategic human capital management in the federal
government has found that many federal agencies have difficulties in
defining goals and measures and developing and using performance
information to evaluate the effectiveness of human capital management
efforts but that high-performing organizations do so. In cases where
evaluations show that sufficient progress is not being made, high-
performing organizations use data to identify opportunities for
improvement. Similarly, the National Association of Public
Administration (NAPA) has reported the need for performance data,
goals, and evaluation to determine progress, make midcourse
corrections, and assign accountability for achieving the desired
outcomes in federal human capital management efforts.[Footnote 54] NAPA
reported that, in the absence of such systematic evaluation
information, the human capital management process will be driven by
anecdotal information that may, or may not, reflect the condition of
human capital management in the organization.
Elements we have identified[Footnote 55] as facilitating the success of
improvement initiatives include establishing:
* clear goals and objectives for the improvement initiative,
* concrete management improvement steps that will be taken,
* key milestones that will be used to track the implementation status,
and:
* cost and performance data that will be used to gauge overall
progress.
In addition to the lack of performance data, the performance goals and
measures for personnel reform in FAAs human resource management and
strategic mission plans are qualitative and do not consistently lend
themselves to measurement or assessment, as they are not specific,
measurable, and time-based. For example, the goal related to reform in
FAAs 1999 human resource management strategic plan is to ensure that
FAA has the right people doing the right work at the right time at the
right cost and has the following measures associated with it:
* increased flexibility to pay competitive salaries;
* increased ability to attract and retain high performers;
* increased managerial flexibility to assign, locate, and manage the
performance of employees more effectively; and:
* decreased hire cycle time.
This goal and its associated measures do not lend themselves to
specific, quantitative, and time-based evaluation. For example, while
decrease hire cycle time implies that hire cycle time will be
measured as part of evaluating the achievement of this goal, it does
not establish a quantitative basis for assessment or specify a period
of assessment. A more specific, quantitative, and time-based measure
might be to decrease median or average hire cycle time by September
2003 by X percent (from median or average cycle time for fiscal year
2002) for Y percent of all new hires.:
We reported on FAAs weaknesses in developing and using performance
information in our report on the results of governmentwide surveys of
performance management issues in May 2001.[Footnote 56] In that report,
we found that FAA managers we surveyed reported they did not
consistently use performance measures or data and that FAA was worse
than the rest of the federal government on multiple aspects of
performance measurement and the use of performance information. For
example, we found that the agency was statistically significantly lower
than the rest of the government in the percentage of managers who
reported that they had outcome, customer service, or quality
performance measures; and in the percentage of managers who reported
that they used performance information to set program priorities,
allocate resources, adopt new approaches, or coordinate program
efforts.
At the time of our review, human resource management officials were
still in the process of developing baseline data, performance goals and
measures and were still working to identify potential linkages between
its human capital management reforms and program goals of the
organization. The types of data and measures proposed by human resource
management officials are comparable to those that have been
historically suggested--many of them since FAA initiated development of
its personnel reform in 1995--and their implementation is an important
effort. However, the balanced scorecard measurement approach proposed
by human resource management officials focuses primarily on the work
environment and processes within the Office of Human Resource
Management and the hiring process rather than on the many other human
capital management reform initiatives being implemented across the
agency. According to FAA human resource management officials, the
office had been working for more than a year to expand the scope of the
scorecard to incorporate measures with wider implications for all of
FAA in response to discussions with human resource managers and based
on information from FAA customers and employees. Table 1 provides an
overview of the balanced scorecard measures proposed by the human
resource management office, highlighting those that focus on the
activities and output of the Office of Human Resource Management. An
expanded overview of these performance measures that includes areas of
measurement and proposed data sources is provided in appendix V.
Table 1: Overview of Human Resource Management Offices Balanced
Scorecard Performance Measures:
Measurement perspectives: Customer; Performance measures: Human
Resource Management Office service excellence; Performance measures:
Human Resource Management Office consultation and expertise valued;
Performance measures: Human Resource Management Office innovation and
leadership.
Measurement perspectives: Performance; Performance measures: Human
Resource Management Office results meet goals; Performance measures:
Efficient use Of Human Resource Management Office resources;
Performance measures: Improved practices within Lines of Business.
Measurement perspectives: Internal processes; Performance measures:
Consistent human resource management policy interpretation;
Performance measures: Effective labor-management relationships;
Performance measures: Attract and retain high caliber employees.
Measurement perspectives: Human Resource Management Office employee;
Performance measures: Empowered Human Resource Management Office
employees; Performance measures: Satisfied Human Resource Management
Office employees; Performance measures: Rewarding Human Resource
Management Office work environment.
Measurement perspectives: Learning and growth; Performance measures:
Capitalize on Human Resource Management Office talent; Performance
measures: Increase Human Resource Management Office capacity to
improve; Performance measures: Leverage Human Resource Management
Office data/information.
[End of table]
Source: FAA.
Note: Shaded areas indicate measures focused internally on the Office
of Human Resource Management.
Clearly linking an agencys overall human capital management strategy
to its program goals is another element we have identified as key to
effective human capital management. In a 1997 review of FAAs personnel
reform, the Volpe National Transportation Systems Center highlighted
this issue of linkage, as shown in figure 12.[Footnote 57]
Figure 12: Volpe Centers Views on Importance of Linkage:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
While FAA has taken some steps to link its human capital reform
initiatives to its program goals, these steps do not go far enough to
help the agency measure the reforms success. Specifically, FAA
incorporated various aspects of personnel reform into its 1999
strategic human resource management plan,[Footnote 58] which stated
that performance measurement was to focus on attaining organization
goals but did not establish the measures with which to do so.
Similarly, FAAs 2001 strategic plan, prepared under the Government
Results and Performance Act, includes a goal for the agency to
fundamentally change the way it operates by implementing personnel
reform but does not explicitly link this goal for personnel reform to
organizational program goals of aviation safety and system efficiency.
Human resource management officials said that organizational and
individual incentive goals established under the compensation system
explicitly linked individual performance to agency goals including
safety and system efficiency and that the standards for performance
under FAAs new performance management system directly reflect agency
and organizational programmatic goals. Nonetheless, linkage between
FAAs personnel reform goals and the agencys programmatic goals
continues to be weakened by a lack of specific, quantitative, and time-
based measures and goals.
FAAs lack of relevant data, analysis, and performance goals and
measures has been repeatedly articulated since 1995 by other internal
and external reviews of the reform effort. While these reviews have
called for FAA to incorporate these elements into its reform effort,
and several recent studies have also highlighted the issue of linkage,
FAA has not established and carried out a plan with specific steps and
time frames for doing so. A chronology of these studies is provided in
table 2.
Table 2: Chronology of Internal and External Evaluations of FAAs
Personnel Reform:
Date: October 1995; Evaluation: Exempting FAA From Procurement and
Personnel Rules, U.S. General Accounting Office; Result: In reporting
on FAAs request for legislative flexibilities, GAO emphasized the
importance of establishing goals prior to the application of the new
authority, noting that an evaluation of FAAs efforts after some
experience had been obtained would be important for determining the
success of the effort and its governmentwide applicability..
Date: December 1995; Evaluation: Best Practices in HRM: Briefing to FAA
Personnel Reform Task Forces, FAA; Result: An evaluation briefing
prepared for FAAs personnel reform task forces identified measurement
of human resource practices and processes as an essential element for
creating a strategic context for personnel reform..
Date: March 1996; Evaluation: Proposed Personnel Reform Evaluation
Strategy, FAA; Result: This report identified evaluation measures for
FAAs personnel reform and strategies for engaging stakeholders in
measuring the results of reform initiatives..
Date: April 1997; Evaluation: FAA Personnel Reform Evaluability
Assessment, Volpe National Transportation Systems Center; Result: The
Center conducted an assessment to evaluate potential performance
indicators for measuring the effectiveness of reform efforts and
concluded that reform principles were not stated in terms of tangible
outcomes that could be easily measurable and there was no clear sense
of priority among them..
Date: September 1997; Evaluation: The FAA Human Resource Management
System Evaluation Plan: Interim Report, Human Resources Research
Organization; Result: This study linked the reform initiatives with
proposed indicators of reform implementation, and potential
intermediate and final outcomes to facilitate program evaluation..
Date: January 1998; Evaluation: FAA Personnel Reform: Implementation
Status Report, Human Resources Research Organization; Result: This
report identified a lack of baseline set of data and concluded there
has been no effort to establish systematic measurement systems over the
remaining course of personnel reform implementation. Without baseline
data and the ability to measure current status it is difficult to
assess whether or not objectives are being met..
Date: September 1998; Evaluation: Personnel Reform: Recent Actions
Represent Progress But Further Effort Is Needed to Achieve
Comprehensive Change, Department of Transportation Office of Inspector
General; Result: This report concluded that FAA had not identified the
specific results it expects to achieve from these programs or
established outcome goals and measures to accurately demonstrate that
its personnel reform initiatives were effective in resolving the
original problems that led to reform..
Date: September 1998; Evaluation: The FAA Personnel Reform Evaluation
Plan, Human Resources Research Organization; Result: This report
presented a general framework for evaluation of personnel reform
initiatives and concluded, it is critical for the agency to develop
and implement evaluation and measurement systems to assess the results
and success of these large-scale HRM [human resource management] change
efforts..
Date: April 1999; Evaluation: FAA Manager Satisfaction with Personnel
Reform Implementation and HR Customer Service, Human Resources Research
Organization; Result: This study recommended that FAA develop a
strategy for personnel reform to identify long-term objectives and
outcomes, address how reforms would support accomplishment of mission
goals, assess the current status of implementation, develop performance
measures, and develop a comprehensive schedule for implementing reform
initiatives..
Date: July 1999; Evaluation: Personnel Reform Evaluation Database:
Baseline Report, FAA; Result: This report provides a framework for the
development of a database to evaluate personnel reform measures..
Date: August 1999; Evaluation: Personnel Reform in the Federal Aviation
Administration: Three Year Status Report, National Academy of Public
Administration; Result: The Academy concluded that the lack of baseline
data and specific measures to assess the effectiveness of personnel
reform and establish a basis for continuous improvement was a major
issue for FAA that must be resolved if personnel reform is to achieve
its full potential..
Date: November 1999; Evaluation: A Communication Strategy for Improved
HRM Evaluation and Measurement, FAA; Result: This report provides a
framework for encouraging the evaluation and measurement of human
resource management programs and services and cultivating,
understanding, and using evaluation tools, data, reports and
recommendations to improve the quality of human resources products and
services..
Date: January 2002; Evaluation: Human Resource Performance Measures for
the FAA, Booz-Allen-Hamilton; Result: This briefing recommends
expanding the focus of the Office of Human Resource Managements
balanced scorecard to additional measures dealing with attracting and
retaining a talented workforce, as well as linking the outputs/outcomes
of human resource initiatives to the agencys mission goals..
Date: September 2002; Evaluation: Federal Aviation Administration:
Five-Year Review of Personnel Reform and Strategies for the Future,
Deloitte & Touche, LLP; Result: This most recent study of the agencys
progress in personnel reform found that the reform effort had suffered
from a shortage of baseline data and metrics to measure the impact of
various initiatives on agency operation and strategic objectives.
Accordingly, the report recommended that the Office of Human Resource
Management expand the collection of hard data and the use of objective
metrics to evaluate the effectiveness of personnel reform initiatives..
[End of table]
Source: GAO.
Several of these studies also attributed problems related to a lack of
ownership for the reform effort or a lack of accountability for
implementation or results. For example, in 1999, the National Academy
of:
:
Public Administration identified the lack of ownership for personnel
reform as a challenge that must be resolved.[Footnote 59] (See fig.
13.):
Figure 13: Studys Views on FAAs Implementation of Personnel Reform:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
As shown in figure 14, a 1998 departmental review found that FAA had
not clearly established accountability for implementation of the reform
initiatives.[Footnote 60]
Figure 14: Inspector Generals Views on FAAs Implementation of
Personnel Reform:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
According to the most recent assessment of the status of FAAs
personnel reform, published by a consultant in September 2002 and shown
in figure 15, a lack of ownership and inconsistent support for
personnel reform by FAAs executive management team has impaired reform
implementation efforts.[Footnote 61]
Figure 15: Consultants Views on FAAs Implementation of Personnel
Reform:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Our work on effective human capital management at federal agencies has
found that building accountability into an agencys human capital
approach is important to the effective use of human capital
flexibilities. Furthermore, we have found that in high performing
organizations, managers are held accountable for achieving strategic
goals, and clearly defined performance expectations are in place to
hold employees and teams at all levels accountable. Establishing
systems for gathering performance data and incorporating specific,
time-based performance measures and goals that are linked to the
agencys program goals into the reform effort would improve the
agencys ability to set more meaningful strategic goals for its human
capital reform effort and more clearly defined performance expectations
for its human capital management. Together, this would help the agency
build accountability into the reform effort and its overall human
capital management approach.
Conclusions:
Congress granted FAA flexibilities in its human capital management so
that the agency could more effectively manage its workforce and achieve
its mission. Yet, more than 7 years after the agency received broad
exemptions from laws governing federal civilian personnel management,
it is not clear whether and to what extent these flexibilities have
helped FAA to do so. It is clear that FAA has faced significant
challenges in implementing its human capital reform initiatives and
evaluating the success of its effort. Challenges, including
implementing reform initiatives throughout its workforce with a wide
range of skills and negotiating agreements with employee unions,
reflect difficulties that may be faced by other federal agencies that
seek to implement human capital management flexibilities.
FAA is not able to determine the effectiveness of its human capital
reform initiatives because it has not incorporated key elements of
effective human capital management into its effort thus far. While FAA
has established preliminary linkages between its reform goals and the
agencys program goals, the lack of explicit linkage will make it
difficult to assess the effects of the reform initiatives on the
program goals of the organization even after data, measurable goals,
and performance measures for human capital management efforts are
established. FAA has acknowledged the importance of establishing these
elements. It has repeatedly said that it is working to collect and
analyze data and develop performance goals and measures, but it has not
completed these critical tasks, nor has it established specific steps
and time frames by which it will do so. As FAA moves forward, a more
strategic approach to its reform effort would allow it to better
evaluate the effects of its reform initiatives, use the evaluations as
a basis for any strategic improvements to its human capital management
approach, and hold agency leadership accountable for the results of its
human capital management efforts. Doing so would also enable the agency
to share its results with other federal agencies and Congress.
Recommendations:
In order to acquire the information needed to make more informed
strategic human capital decisions and better ensure that FAAs
personnel reforms achieve their intended results in a timely fashion,
we recommend that the Secretary of Transportation direct the FAA
Administrator to:
* develop empirical data and establish specific, measurable, time-based
goals and performance measures related to these goals; and use them to
evaluate the effects of the reforms on the agencys human capital
management, programs, and mission so that the agency can make any
needed improvements. Developing these evaluation tools is particularly
urgent for those initiatives, such as FAAs new compensation system for
air traffic employees, for which possible negative effects have been
raised by employees; and FAAs new performance management system.
* define and describe explicit linkages between human capital
management reform initiatives and program goals of the organization.
* establish time frames by which data will be collected and analyzed
and by which goals, performance measures, and explicit linkage will be
established and used to evaluate the success of the reform initiatives
and hold agency leadership accountable for the results of its human
capital management efforts.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Department of Transportation
for its review and met with Department of Transportation officials,
including FAAs Assistant Administrator for Human Resource Management,
to obtain their comments. The department officials generally agreed
with the reports recommendations and indicated that the findings
presented in the audit report would be useful as FAA moves forward with
its human capital reforms. They also noted issues in three areas.
First, these officials emphasized that implementing a new human capital
system within an existing workforce presented FAA with a significant
challenge, given the size of FAAs workforce, the large unionized
population, and the variety of occupations and functions within the
agency. Second, while these officials agreed that establishing more
definitive measures and baseline data, as identified in our
recommendations, are important in determining the effectiveness of the
new human capital programs, they stated that they have been making
significant progress in developing those measures.
Third, in responding to our concern that FAA is not able to determine
the effectiveness of its human capital reform initiatives because it
has not incorporated key elements of effective human capital management
into its effort, these officials told us that FAA used the results of
its pilot testing and phased implementation approach to modify systems
to ensure effectiveness before full implementation and that subsequent
assessments were conducted to determine whether the programs were
accomplishing the intended goals. They said that FAA already has
substantial information to indicate that its new programs and
initiatives are on the right track and should be effective in meeting
the reform efforts intent. As examples, they referred to reviews by
NAPA and the consulting firm Deloitte & Touche, which they said had
characterized FAAs human capital reforms as state-of-the-art. The
officials stated that FAAs design process had been characterized in
the NAPA review as yielding high-quality policies, and FAAs reform
effort had been characterized in the NAPA review as heading in the
right direction and as a change management issue that is unparalleled
in the federal sector. They further stated that Deloitte & Touches
review had found that the guiding principles and objectives of FAAs
personnel reform were sound, and that some programs have already been
largely successful, such as streamlined recruitment and staffing
processes. Notwithstanding the characterizations in these assessments,
both NAPA and Deloitte & Touche raised concerns about issues we found
in our review, particularly FAAs lack of baseline data and specific
performance measures to assess the effectiveness of its reform effort
and establish a basis for continuous improvement.
Department officials also said that FAAs new human capital system is
consistent with the Presidents Management Agenda and the
Administrations Human Capital Plan, and that other federal officials
have touted the types of programs FAA developed and implemented as the
wave of the future for the rest of the federal government. FAA
emphasized that its agency is unique among federal agencies in
implementing a performance-based and market-based pay system applicable
to both nonunion and union employees, which clearly links annual pay
adjustments to key agency programs and to individual employee
performance and contributions. We agree that other federal agencies
considering human capital reform may find FAAs programs and
experiences useful to consider, as FAA was granted human capital
flexibilities in 1995 and has been working since to implement its human
capital reform effort. In fact, we feel that this increases the
importance of FAAs efforts to effectively evaluate its reform.
However, based on our prior work on human capital management, we found
in our review that FAAs efforts to link its human capital reform
initiatives to its program goals do not go far enough to help the
agency measure the reforms success and that linkage between FAAs
personnel reform goals and the agencys programmatic goals continues to
be weakened by a lack of specific, quantitative, and time-based
measures and goals.
FAA also provided technical clarifications, which we included in the
report where appropriate.
We are sending copies of this report to the Administrator, Federal
Aviation Administration. We also will make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please call
me at (202) 512-3650. Key contacts and major contributors to this
report are listed in appendix VII.
Signed by Gerald L. Dillingham:
Gerald L. Dillingham, Ph.D.
Director, Physical Infrastructure Issues:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To determine the human capital changes that FAA initiated after being
granted broad flexibilities in 1995 and the extent to which these
reform initiatives required exemptions from title 5, we reviewed
federal personnel management requirements under title 5, agency
documents identifying personnel reform initiatives, and reports by OPM
on personnel management flexibilities already available under title 5.
We also discussed the changes with officials from FAAs Office of the
Assistant Administrator for Human Resource Management and OPM.
To determine the status of implementation of FAAs personnel reform and
factors that have affected reform implementation, we collected and
analyzed internal and external evaluations--including those conducted
by the Department of Transportations Office of Inspector General and
NAPA--of different aspects of FAAs personnel reform and the available
data on the results. We also discussed the status of, and barriers to,
implementation of personnel reform initiatives with FAA human resource
management officials and representatives from the lines of business.
To determine the views of FAA managers and employees on the effects of
FAAs personnel reform initiatives we conducted a series of structured
interviews with 176 randomly selected FAA managers and employees. Our
structured interview included questions about how the agency manages
its employees, compensation and performance management, and labor and
employee relations. We discussed the design of these questions with
officials from FAA and with representatives from FAAs five largest
unions--the National Air Traffic Controllers Association (about 19,500
members), the Professional Airways Systems Specialists (about 11,600
members), the National Association of Air Traffic Specialists (about
2,300 members), the American Federation of State, County and Municipal
Employees (about 2,000 members), and the American Federation of
Government Employees (about 1,500 members). We then pre-tested the
structured interview with managers and employees in FAAs Southern
Region and made appropriate revisions.
To maximize our chances of obtaining the views of managers and
employees across the different segments of FAAs workforce, we applied
a judgmental stratification to our random sample (therefore, it may not
be representative of the actual composition of FAAs workforce): 25
percent managers, and 75 percent employees; and 60 percent Air Traffic
Services/air traffic control staff, 40 percent from the rest of FAA. In
addition, for non-headquarters respondents, we selected 70 percent of
our respondents from field facilities and 30 percent from regional
offices. Our respondents were randomly selected from electronic lists
of names provided by FAA.
We conducted our structured interviews at FAA headquarters in
Washington, D.C.; FAAs Mike Monroney Aeronautical Center in Oklahoma
City, Oklahoma; and field facilities and regional offices in six of
FAAs nine geographic regions, including offices in the immediate
vicinity of Anchorage, Alaska; Atlanta, Georgia; Chicago, Illinois;
Dallas, Texas; Los Angeles, California; and New York City, New York.
Field facilities we visited included air traffic control towers, en
route centers, automated flight service stations, terminal radar
approach control centers, airports district offices, and flight
standards district offices. A total of 176 FAA staff participated in
our survey throughout the months of May, June, July, and August 2002.
The information obtained through this survey pertains to only these 176
respondents and cannot be generalized to any other population. However,
because we selected interview respondents at random, we have increased
the chances of capturing the breadth of opinions across the agency. A
copy of our structured interview and the summary results for our close-
ended questions is provided in appendix II. To augment the views and
opinions collected from the structured interviews, we also obtained the
views of FAA senior managers or representatives of all five lines of
business and representatives of employees associations.
To determine the extent to which FAA management and employees views
were supported by data, we examined the results from FAAs employee
attitude surveys conducted between 1997 and 2000, as well as other
internal surveys of executives, managers, and supervisors related to
various aspects of FAAs personnel reform effort. In addition, we
collected available data from FAAs Office of Human Resource Management
and Office of Civil Rights.
To determine how FAAs experiences compared with our findings from our
human capital management work at other agencies, we reviewed our human
capital management audit work that focused on federal agencies efforts
to implement improvement initiatives and human capital flexibilities,
as well as work conducted by other organizations involved in assessing
federal agencies reform efforts including OPM and NAPA, and we
compared our findings on FAAs experiences with these findings.
We conducted our work in accordance with generally accepted government
auditing standards from November 2001 through October 2002.
[End of section]
Appendix II: Structured Interview Form and Selected Results:
[See PDF for image]
[End of figure]
Appendix III: Elements for Effective Human Capital Management:
In March 2002, we issued a model for strategic human capital management
that incorporates lessons learned in our reviews of other agencies
human capital management practices, as well as our own
experiences.[Footnote 62] The model identifies eight critical success
factors and highlights some of the steps agencies can take to make
progress in managing human capital strategically. These eight factors,
shown in figure 16, are organized in pairs to correspond with the four
governmentwide high-risk human capital challenges that our work has
shown are undermining agency effectiveness.
Figure 16: Eight Critical Success Factors Corresponding with the Four
High-Risk Human Capital Challenges That Can Help Agencies Manage Human
Capital Strategically:
[See PDF for image]
[End of figure]
In November 2002, we issued a report that identified six key practices
for federal agencies effective use of human capital flexibilities that
incorporate the concepts and critical factors of our model.[Footnote
63] Based on our interviews with human resource management directors
from across the federal government, we identified the following key
practices that agencies should implement to use human capital
flexibilities effectively, as shown in Figure 17.
Figure 17: Six Key Practices for Effective Use of Human Capital
Flexibilities:
[See PDF for image]
[End of figure]
[End of section]
Appendix IV: Core Compensation Pay Bands and Grade Conversion for 2002:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Note: Does not include locality pay.
Note: Blank cells indicate no old grade equivalent to new pay band for
manager levels.
[End of section]
Appendix V: FAA Human Resource Management Offices Balanced Scorecard
Performance Measures:
Measurement perspectives: Customer; Performance measures:  Areas of
measurement: (proposed data sources): Human Resource Management Office
service excellence; ; Customer perceptions regarding human resource
management office service quality and timeliness; (employee surveys);
Performance measures: Human Resource Management Office consultation and
expertise valued; ; Customer perceptions regarding human resource
management office consultation & staff expertise; (employee surveys);
Performance measures: Human Resource Management Office innovation and
leadership; Customer perceptions regarding personnel reform; Human
resource management office & line of business human capital management
efforts; (employee surveys).
Measurement perspectives: Performance; Performance measures:  Areas of
measurement: (proposed data sources): Human Resource Management Office
results meet goals; ; Percentage of human resource management office
projects completed on time; ; (human resources office reporting
system); Performance measures: Efficient use of Human Resource
Management Office resources; ; Human resource management office
spending; (budget & accounting data); Human resource management office
labor distribution; (cost accounting system); Performance measures:
Improved practices within Lines of Business; ; Knowledge transfer;
Improved line of business processes & practices; Meet unique needs; ;
(employee surveys).
Measurement perspectives: Internal processes; Performance measures:
 Areas of measurement: (proposed data sources): Consistent human
resource management policy interpretation; ; ; ; (Personnel management
evaluations, human resource management office policy training
evaluations); Performance measures: Effective Labor-Management
Relationships; ; Consolidation in bargaining units; Partnership Council
meeting attendance; ; (data on grievances and unauthorized labor
practices); Performance measures: Attract and retain high caliber
employees; ; Timeliness of automated/nonautomated selections;
Percentage of voluntary & involuntary attrition; ; (Selecting official
interview data).
Measurement perspectives: Human Resource Management Office employee;
Performance measures:  Areas of measurement: (proposed data sources):
Empowered Human Resource Management Office employees; ; Human Resource
Management Office employee perceptions of empowerment; ; (employee
surveys); Performance measures: Satisfied Human Resource Office
Management employees; Human Resource Management Office employee
perceptions of job satisfaction and perceptions regarding commitment to
service; ; (employee surveys); Performance measures: Rewarding Human
Resource Management Office work environment; Human Resource Management
Office employee perceptions regarding communication; Performance
rewarded; ; (employee surveys).
Measurement perspectives: Learning and growth; Performance measures:
 Areas of measurement: (proposed data sources): Capitalize on Human
Resource Management; Office talent; Identify and close skill gaps;
(skills/training assessment for human resources office); Implement
Human Resource Management Office workforce planning; (human resource
management office reporting system); Performance measures: Increase
Human Resource Management; Office capacity to improve; Increase in
professional credentials; (skills/training assessment for Human
Resource Management Office); Percentage of personnel, compensation, and
benefits funding spent on training; (budget & accounting data);
Performance measures: Leverage Human Resource Management Office data/
information; Availability and quality of data; (human resource
management office information system audit); Timeliness and
responsiveness to internal Human Resource Management Office requests;
(employee survey).
[End of table]
Source: FAA.
Note: Shaded areas indicate measures focused internally on the Office
of Human Resource Management.
[End of section]
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Gerald L. Dillingham, Ph.D. (202) 512-3650
Christopher A. Keisling (404) 679-1917:
Staff Acknowledgments:
In addition to those individuals named above, William Doherty, Michele
Fejfar, David Hooper, Jason Schwartz, E. Jerry Seigler, Margaret Skiba,
Tina Smith, Alwynne Wilbur, and Kristy Williams made key contributions
to this report.
FOOTNOTES
[1] U.S. General Accounting Office, Managing for Results: Using
Strategic Human Capital Management to Drive Transformational Change,
GAO-02-940T (Washington, D.C.: July 15, 2002).
[2] FAA is composed of five separate organizations or lines of
business: Air Traffic Services, Research and Acquisitions, Regulation
and Certification, Airports, and Commercial Space Transportation.
[3] U.S. General Accounting Office, A Model of Strategic Human Capital
Management, GAO-02-373SP (Washington, D.C., March 15, 2002); U.S.
General Accounting Office, Human Capital: Effective Use of
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
02 (Washington, D.C.: Dec. 6, 2002).
[4] Federal Aviation Administration, Background Paper: Personnel
Management Reform for the Federal Aviation Administration (Washington,
D.C.: August 1995).
[5] Unless explicitly exempted by law, all federal agencies must follow
federal personnel rules and regulations under title 5 U.S.C., including
rules governing how agencies (1) pay and reward employees; (2) hire,
train, and transfer personnel; and (3) conduct labor and employee
affairs.
[6] U.S. General Accounting Office, Exempting FAA From Procurement and
Personnel Rules, GAO/RCED-96-27R (Washington, D.C.: Oct. 27, 1995).
[7] P. L. 104-50, Fiscal Year 1996 Department of Transportation
Appropriations Act.
[8] Congress did not exempt FAA from provisions of title 5 pertaining
to veterans preference; antidiscrimination; federal retirement,
unemployment and insurance coverage; and limitations on the right to
strike.
[9] P. L. 104-122, Further Continuing Appropriations, Fiscal Year 1996,
March 29, 1996.
[10] U.S. General Accounting Office, High-Risk Series: An Update, GAO-
01-263 (Washington, D.C.: January 2001).
[11] U.S. General Accounting Office, Performance and Accountability
Series--Major Management Challenges and Program Risks: A Governmentwide
Perspective, GAO-01-241 (Washington, D.C.: January 2001).
[12] GAO-02-373SP.
[13] GAO-03-02.
[14] U.S. General Accounting Office, Aviation Rulemaking: Further
Reform Is Needed to Address Long-standing Problems, GAO-01-821
(Washington, D.C.: July 9, 2001).
[15] U.S. General Accounting Office, Air Traffic Control: FAA Enhanced
the Controller-In-Charge Program, but More Comprehensive Evaluation Is
Needed, GAO-02-55 (Washington, D.C.: Oct. 31, 2001).
[16] U.S. General Accounting Office, Air Traffic Control: FAA Needs to
Better Prepare for Impending Wave of Controller Attrition, GAO-02-591
(Washington, D.C.: June 14, 2002).
[17] U.S. General Accounting Office, Air Traffic Control: Impact of
Revised Personnel Relocation Policies Is Uncertain, GAO-03-141
(Washington, D.C.: Oct. 31, 2002).
[18] The GS pay system, as defined in title 5 U.S.C. 5332, consists of
15 grades and 10 steps within each grade--each grade representing a
salary range and each step indicating the level of pay an employee
receives in that salary range. Over time, an employees pay increases
as the employee progresses through the steps within the grade or is
promoted. An agency must determine that an employees performance is at
least acceptable (i.e., fully successful) before the employee is
granted the within grade step increase.
[19] Office of Personnel Management, A Fresh Start for Federal Pay: The
Case for Modernization (Washington D.C.: April 2002).
[20] Under core compensation, employees that do not meet minimum
requirements do not receive either of the permanent pay increases.
[21] Cost of living allowances are base pay differentials paid to
employees working in locations outside the contiguous United States
that have substantially different local economies. Federal pay rules
provide locality pay for approximately 30 metropolitan areas and one
area covering the rest of the United States.
[22] 5 U.S.C. 4302(b) and 5 C.F.R. 430.201.
[23] Title 5 requires the development and submission of a summary
rating; since FAAs new system does not include a summary rating, the
agencys exemption from title 5 enabled FAA management to adopt the new
system.
[24] 5 U.S.C. 3392, 3393.
[25] 5 U.S.C. 4107.
[26] FAA uses on-the-spot hiring for specific occupations designated as
hard-to-fill (such as engineers at certain levels) and for special
appointing authorities such as outstanding scholar and welfare-to-work.
[27] According to the Accompanying Report to the National Performance
Review, HRM01: Create a Flexible and Responsive Hiring System Office of
the Vice President, (Washington, D.C.: 1993): the federal hiring
system is overly constrained by statute and regulation; over 300
appointing authorities provide little useful management information and
require interpretation by personnel specialists.
[28] While FAA was granted an exemption from title 5 training
requirements by Congress, the President also has the authority to
exempt federal agencies from title 5 training requirements (5 U.S.C.
4102(b)).
[29] 5 U.S.C. 5724 and 5724a.
[30] For a more detailed discussion of FAAs use of PCS benefits, see
GAO-03-141.
[31] Under title 5 rules, federal agencies may elect to pay for the
expenses of transportation of immediate family and of household goods
and personal effects to and from the assignment location for a PCS move
when it is in the interest of the federal government.
[32] 5 C.F.R. 251.
[33] OPM has recognized the need to reduce costly and time-consuming
formal complaints and grievances and encourages federal agencies to
resolve disputes at the lowest possible level through a variety of
alternative dispute resolution methods (60 Federal Register 47039,
September 11, 1995).
[34] Nine different unions represent various employee segments at FAA.
Bargaining units within each union represent a specific employee
segment based on profession or technical area. For example, NATCA has a
bargaining unit called NATCA-AT for air traffic controllers, as well as
five separate bargaining units collectively known as NATCA-AF, which
represents engineers and architects that manage the maintenance of
equipment at air traffic control facilities and perform other air
traffic-related operations. In total, there are 48 different bargaining
units at FAA.
[35] The research and acquisition organization and the office of the
chief information officer participated in a pilot of the complete Core
Compensation Plan, which included assessment and payout under the
organizational and individual performance-based pay elements.
[36] Air traffic control pay bands are based on the amount of air
traffic and complexity of airspace controlled by its field facilities,
rather than solely on the roles and responsibilities of the air traffic
control position description.
[37] In addition, approximately 330 FAA employees are paid under a
prevailing rate, locality-based system similar to that applicable to
federal blue-collar employees.
[38] Office of Personnel Management, Deregulation of Performance
Management and Incentive Awards: Final Rule, 5 C.F.R. 430 et al., 60
Federal Register 43936, August 23, 1995.
[39] Agencywide policies governing travel were published in 1998.
[40] Workforce planning is the process by which an organization plans
and manages the size, capabilities, diversity, and deployment of its
workforce. It should include developing strategies for integrating
hiring, recruiting, training, and other human capital activities in a
manner that meets the agencys long-term objectives to ensure that
appropriately skilled employees are available when and where they are
needed to meet an agencys mission. Workforce plans should include the
collection of valid and reliable data on such indicators as
distribution of employee skills, retention rates, and retirement
eligibility by occupation and organizational unit.
[41] Because 2001 was the first year of implementation for the new
performance management system, we did not obtain views on its effects.
[42] In our interview, we did not specifically ask whether managers
and employees perception of the fairness of the new compensation
system was based on its treatment of protected categories such as sex
or race, but no interviewees mentioned this issue in their elaboration
of their views.
[43] Personnel Reform in the Federal Aviation Administration, National
Academy of Public Administration, August 1999.
[44] Phase II Evaluation: A Snapshot of Core Compensation Plan
Implementation in FAA, Assistant Administrator for Human Resource
Management Evaluation Staff, FAA, September 2001.
[45] Department of Transportation, Office of Inspector General,
Personnel Reform: Recent Actions Represent Progress But Further Effort
Is Needed To Achieve Comprehensive Change, Sept. 30, 1998.
[46] GAO is conducting a separate review of the hiring and recruitment
program for federal air marshals.
[47] FAA Personnel Reform: Implementation Status Report, prepared for
FAA by the Human Resources Research Organization, January 1998.
[48] FAACMA, Legislative Briefing Book, 107th Congress-Second Session,
March 2002.
[49] For more information about FAAs new PCS policies and FAACMAs
concerns, see GAO-03-141.
[50] Grievances are concerns expressed by an employee or the union
about a condition of employment or an allegation that a contract has
not been properly interpreted and applied.
[51] P.L. 106-181, sec. 307.
[52] Office of the Assistant Administrator for Human Resources
Management, An Informal Discussion of the FAAs Human Resource
Management Balanced Scorecard August 21, 2002.
[53] A scorecard approach is a framework for measuring and managing
performance also used by OMB and OPM to track how well departments and
agencies are executing management initiatives.
[54] National Academy of Public Administration, Implementing Real
Change in Human Resources Management: The Case for Transforming Public-
Sector Human Resources Management, July 2000.
[55] U.S. General Accounting Office, Management Reform: Elements of
Successful Improvement Initiatives, GAO/T-GGD-00-26 (Washington, D.C.:
Oct. 15, 1999).
[56] U.S. General Accounting Office, Managing For Results: Federal
Managers Views on Key Management Issues Vary Widely Across Agencies,
GAO-01-592, (Washington, D.C. May 25, 2001).
[57] Volpe National Transportation Center, FAA Personnel Reform
Evaluability Assessment, April 1997.
[58] Federal Aviation Administration, Human Resources Strategic Plan
1999-2002, April 1999.
[59] National Academy of Public Administration, Personnel Reform in the
Federal Aviation Administration: Three Year Status Report, August 1999.
[60] Department of Transportation, Office of Inspector General,
Personnel Reform: Recent Actions Represent Progress But Further Effort
Is Needed To Achieve Comprehensive Change, Sept. 30, 1998.
[61] Deloitte & Touche, LLP, Federal Aviation Administration: Five-Year
Review of Personnel Reform and Strategies for the Future, (McLean, VA.,
Sept. 2002.) p. 6.
[62] U.S. General Accounting Office, A Model of Strategic Human Capital
Management, GAO-02-373SP (Washington, D.C.: March 15, 2002).
[63] U.S. General Accounting Office, Human Capital: Effective Use of
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
02, (Washington, D.C.: Nov. 2002).
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