Testimony

Before the National Commission on the Public Service

United States General Accounting Office

GAO

For Release on Delivery

Expected at 2:00 p.m. EDT

Monday, July 15, 2002 MANAGING FOR

RESULTS

Using Strategic Human

Capital Management to

Drive Transformational

Change

Statement of David M. Walker,

Comptroller General of the United States

GAO-02-940T
Page 1 GAO-02-940T

Chairman Volcker and Members of the National Commission on the Public

Service:

I am pleased to be here today to discuss the essential actions that the

federal government needs to take in order to manage its most important

asset—its people, or human capital. An organization’s people define its

culture, drive its performance, embody its knowledge base, and are the

key to successful merger and transformation efforts. As such, strategic

human capital management is the critical element to maximizing

government’s performance and assuring its accountability for the benefit

of the American people.

The early years of the 21st century are proving to be a period of profound

transition for our world, our country, and our government. This transition

is being driven by a number of key trends including: global

interdependence; diverse, diffuse, and asymmetrical security threats;

rapidly evolving science and technology; dramatic shifts in the age and

composition of the population; important quality of life issues; the

changing nature of our economy; and evolving government structures and

concepts. These trends present a range of challenges that have no

boundaries. These trends also contribute to a huge, longer-range fiscal and

budgetary challenge facing the United States. Given these trends and longrange fiscal challenges, the federal government needs to engage in a

comprehensive review, reassessment, and reprioritization of what the

government does, how it does business, and who does the government’s

business. We must re-examine a range of government policies, programs,

and operations. The status quo is simply unacceptable. The long-range

numbers do not add up. We must re-examine the base, including our

current human capital policies and practices. This re-examination will in

turn require federal agencies to transform their cultures and shift their

overall orientation from:

• processes to results,

• stovepipes to matrixes,

• hierarchical to flatter and more horizontal structures,

• an inward focus to an external (citizen, customer, and stakeholder) focus,

• management control to employee empowerment,

• reactive behavior to proactive approaches,

• avoiding new technologies to embracing and leveraging them,

• hoarding knowledge to sharing knowledge,

• avoiding risk to managing risk, and

• protecting turf to forming partnerships.
Page 2 GAO-02-940T

Leading public organizations here in the United States and abroad have

found that strategic human capital management must be the centerpiece of

any serious change management initiative and efforts to transform the

cultures of government agencies. Unfortunately, as the Commission has

made clear, the federal government is not well positioned to make the

needed transformation. GAO designated strategic human capital

management as a governmentwide high-risk area in January 2001 because

of a long-standing lack of a consistent strategic approach to marshaling,

managing, and maintaining the human capital needed for government to

deliver on its promises.1

 We reported then and still find today that serious

human capital shortfalls are eroding the capacity of many agencies, and

threatening the ability of others, to economically, efficiently, and

effectively perform their missions.2

 The federal government’s human

capital weaknesses did not emerge overnight and will not be quickly or

easily addressed. The enormous human capital and other transformation

challenges that need to be addressed to transform the Federal Bureau of

Investigation (FBI) and create a successful Department of Homeland

Security are instructive of the critical and difficult task ahead.3

 Committed,

sustained, highly qualified, and inspired leadership, and persistent

attention by all key parties will be essential if lasting changes are to be

made and the challenges we face across the federal government

successfully addressed.

Fortunately, we are now seeing increased attention to strategic human

capital management and a real and growing momentum for change is now

evident since we placed strategic human capital management on our HighRisk list.

• In August 2001, President Bush placed human capital at the top of his

management agenda.

 1

U.S. General Accounting Office, High-Risk Series: An Update, GAO-01-263 (Washington,

D.C.: January 2001).

2

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). In addition, see the accompanying 21 reports (numbered

GAO-01-242 through GAO-01-262) on specific agencies.

3

 U.S. General Accounting Office, Homeland Security: Proposal for Cabinet Agency Has

Merit, But Implementation Will be Pivotal to Success, GAO-02-886T (Washington, D.C.:

June 25, 2002) and FBI Reorganization: Initial Steps Encouraging but Broad

Transformation Needed, GAO-02-865T (Washington, D.C.: June 21, 2002).
Page 3 GAO-02-940T

• The Office of Management and Budget (OMB) is assessing agencies’

progress in addressing their individual human capital challenges as part of

its management scorecard and mid-point review process.

• As one of its many efforts to help agencies with these issues, the Office of

Personnel Management (OPM) released a human capital scorecard last

December to assist agencies in responding to the OMB scorecard.

• Finally, Congress has underscored the consequences of human capital

weaknesses in federal agencies and pinpointed solutions through the

oversight process and a wide range of hearings held over the last few

years.

Therefore, the key question today is how do we best seize the opportunity

and build on the current momentum? I have often noted that the first step

toward meeting the government’s human capital challenges is for agency

leaders to identify and make use of all the appropriate administrative

authorities available to them to manage their people for results both

effectively and equitably. Much of the authority agency leaders need to

manage human capital strategically is already available under current laws

and regulations. Agency leaders should not wait for comprehensive human

capital legislative reforms to happen. The use of these authorities often

needs to be undertaken as part of, and consistent with, proven change

management practices. The second step is for policymakers to pursue

incremental legislative reforms to give agencies additional tools and

flexibilities to hire, manage, and retain the human capital they need,

particularly in critical occupations. Key provisions of legislative proposals

under consideration in Congress represent an important step to helping

agencies address their human capital management challenges. Many of the

provisions contained in the bills are consistent with authorities we have

been urging for other federal agencies.4

 The third step toward meeting the

federal government’s human capital challenges is for all interested parties

to work together to identify the kinds of comprehensive legislative reforms

in the human capital area that should be enacted over time. These reforms

should place greater emphasis on knowledge, skills, and performance in

connection with federal employment, promotion, and compensation

decisions, rather than on the passage of time, the rate of inflation, or

geographic location, as is often the case today. Shockingly, over 80

 4

U.S. General Accounting Office, Managing for Results: Building on the Momentum for

Strategic Human Capital Reform, GAO-02-528T (Washington, D.C.: Mar. 18, 2002).
Page 4 GAO-02-940T

percent of the cost associated with the annual increases in federal salaries

is due to cost-of-living and locality pay adjustment. This must change.

Today, I will discuss three broad human capital reform opportunities that

are instrumental to agency transformation efforts and that the

Commission may want to consider as its work moves forward. These

broad opportunities include: first, aligning individual and organizational

performance; second and directly related to that, implementing resultsoriented pay reform; and third, sustaining agency transformation efforts. I

will conclude with some comments on how we in GAO are playing a

constructive role in helping the government address its human capital

challenges, including our efforts to “lead by example” in this critically

important area.

Leading organizations use their performance management systems as a

key tool for aligning institutional, unit, and employee performance;

achieving results; accelerating change; managing the organization on a

day-to-day basis; and facilitating communication throughout the year so

that discussions about individual and organizational performance are

integrated and ongoing.5

 Performance management systems in these

leading organizations typically seek to achieve three key objectives. First,

they strive to provide candid and constructive feedback to help individual

employees maximize their potential in understanding and realizing the

goals and objectives of the agency. Second, they seek to provide

management with the objective and fact-based information it needs to

reward top performers. Third, performance management systems provide

the necessary information and documentation to deal with poor

performers. Most federal performance management systems fail to achieve

these objectives. In addition, many federal agencies are just beginning to

recognize that their performance management systems can be strategic

tools to achieve success. In my opinion, modernizing agency performance

appraisal and management systems and linking them to agency strategic

plans and desired outcomes should be a top priority.

Results-oriented performance agreements are one mechanism in a

performance management system that creates a “line of sight” showing

 5

U.S. General Accounting Office, Human Capital: Key Principles From Nine Private

Sector Organizations, GAO/GGD-00-28 (Washington, D.C.: Jan. 31, 2000).

Using Performance

Management Systems

to Help Transform

Agencies
Page 5 GAO-02-940T

how individual employees can contribute to overall organizational goals. 6

Agencies that effectively implement such systems must first align agency

leaders’ performance expectations with organizational goals and then

cascade performance expectations to other organizational levels. These

employees are then held accountable for their contributions to achieve

desired results. Our work has shown that agencies have benefited from

their use of results-oriented performance agreements for political and

senior career executives. The performance agreements

• strengthened alignment of results-oriented goals with daily operations,

• fostered collaboration across organizational boundaries,

• enhanced opportunities to discuss and routinely use performance

information to make program improvements,

• provided a results-oriented basis for individual accountability, and

• maintained continuity of program goals during leadership transitions.

Governmentwide, agencies need to place increased emphasis on holding

senior executives accountable for organizational goals. OPM amended

regulations that change the way agencies evaluate the members of the

Senior Executive Service (SES). While agencies will need to tailor their

performance management systems to their unique organizational

requirements and climates, they nonetheless are to: hold executives

accountable for results; appraise executive performance on those results

balanced against other dimensions, including customer satisfaction and

employee perspective; and use those results as the basis for performance

awards and other personnel decisions. Agencies were to implement the

new policies for the SES appraisal cycles that began in 2001.

Ultimately, an effective performance management system must link pay

and incentive programs to individual knowledge, skills, and contributions

to achieving organizational results. The affect of poor performers on

agencies’ performance and morale can far exceed their small numbers.

Still, while important, dealing with poor performers is only part of the

challenge; agencies need to create additional incentives and rewards for

valuable and high-performing employees who represent the vast majority

of the federal workforce. Congress and the administration have repeatedly

expressed a commitment to more fully link resources to results. The

American people expect and deserve this linkage as well. However, we

 6

 U.S. General Accounting Office, Managing for Results: Emerging Benefits From Selected

Agencies’ Use of Performance Agreements, GAO-01-115 (Washington, D.C.: Oct. 30, 2000).
Page 6 GAO-02-940T

will never achieve this linkage without modern and effective performance

management strategies. Additional information on the performance

management programs in use in agencies and the relative strengths and

weaknesses of those programs, along with best practice information,

would prove very helpful as agencies seek to link pay to individual

knowledge, skills, and performance.

Efforts to link federal pay to knowledge, skills, and performance should be

part of a broader effort to align resource decisions to results. As I noted,

fostered in part by the Government Performance and Results Act (GPRA),

there has been an increasing interest within the executive branch and the

Congress in linking performance and results to resource allocation and

other decisions. Consistent with that view, we need to continue efforts to

shift agency accountability—with appropriate safeguards and oversight—

to budgeted resources and results and away from other inputs and

processes. The work of the recently completed Commercial Activities

Panel, which I had the privilege of chairing, is illustrative in this regard.7

One of the sourcing principles adopted by the Panel was that the federal

government’s sourcing policy should avoid arbitrary full-time equivalent

(FTE) or other numerical goals. The principle is based on the unarguable

point that the success of government programs should be measured by the

results achieved in terms of providing value to the taxpayer, not the size of

the in-house or contractor workforce. I believe that the Panel’s principle

should also apply to resource allocation generally. We need to continue—

and even augment—efforts to shift the focus of management, resource

allocation, and decisionmaking from inputs and process to a greater focus

on results and outcomes and to provide management reasonable flexibility

while incorporating appropriate safeguards to prevent abuse. In this

regard, holding managers accountable for results based on a specific

dollar allocation versus FTE caps would be a major step in the right

direction.

As you know, I believe that a greater emphasis should be placed on

knowledge, skills, and performance in connection with federal

employment promotion and compensation decisions at all levels, rather

than the passage of time, the rate of inflation, or geographic location, as so

often is the case today. In recent years, widespread concern has been

 7

 Commercial Activities Panel, Improving the Sourcing Decisions of the Government:

Final Report (Washington, D.C.: April 2002).

Creating a ResultsOriented Approach to

Federal Pay
Page 7 GAO-02-940T

expressed about the methodology and results of the procedures to

determine the federal pay gap. These concerns are among the reasons that

the pay gap has never been fully addressed. I believe that careful study is

needed to develop more realistic and workable methodologies and

solutions to federal pay issues. Part of that assessment should focus on

options for moving away from a compensation system that contains

governmentwide pay increases with locality adjustments, and toward a

system that is based to a greater degree on the knowledge, skills, and

performance of the individuals involved.

I fully appreciate that much work may be needed before agencies’

respective performance management systems are able to support a more

direct link between pay and individual knowledge, skills, and

performance. OPM certainly has a continuing and vital role to play in

connection with these issues. OPM’s recently released white paper on

federal pay provides a good foundation for the results-oriented pay reform

discussion that must now take place.8

 The greater use of “broadbanding” is

one of the options that deserves to be discussed. In the short term,

Congress may wish to explore the benefits of (1) providing OPM with

additional flexibility that would enable it to grant governmentwide

authority for all agencies (i.e., class exemptions) to use broadbanding for

certain critical occupations and/or (2) allowing agencies to apply to OPM

(i.e., case exemptions) for broadbanding authority for their specific

critical occupations. However, agencies should be required to demonstrate

to OPM’s satisfaction that they have modern, effective, and validated

performance management systems before they are allowed to use

broadbanding.

The nature and scope of the cultural transformation that needs to take

place in many agencies across the federal government will take years to

accomplish—easily outrunning the tenures of most political appointees. At

the same time, GAO’s work over the years, most prominently in our HighRisk and Performance and Accountability Series, has amply documented

that many agencies suffer from a range of long-standing management

challenges and a lack of attention to basic stewardship responsibilities,

 8

Office of Personnel Management, A White Paper: A Fresh Start for Federal Pay: The Case

for Modernization (Washington, D.C.: April 2002).

Ensuring Leadership

and Accountability for

Agencies’

Transformation

Efforts
Page 8 GAO-02-940T

requiring concerted action and sustained top-level attention if they are to

be addressed.9

One option for addressing the issues agencies face is to create a Chief

Operating Officer (COO) position for selected agencies that would provide

the sustained management attention essential for addressing key

stewardship responsibilities in an integrated manner while helping to

facilitate the transformation process within an agency.10 These long-term

responsibilities are professional and nonpartisan in nature. They cover a

range of “good government” responsibilities that are fundamental to

effectively executing any administration’s program agenda. Statutory

COOs would differ from—but hopefully complement—the roles often

assumed by the current Deputy Secretaries in assisting the Secretaries in

executing the administration’s policy and program agenda and achieving

an agency’s mission. The good government responsibilities that could be

led by a COO include:

• strategic planning,

• organizational alignment,

• core values stewardship,

• human capital strategy,

• performance management (aligning institutional, unit, and individual

measurement and reward systems to achieve overall organizational goals),

• communications and information technology management,

• financial management,

• acquisition management,

• risk management,

• knowledge management,

• matrix management, and

• change management.

 9

For example, see U.S. General Accounting Office, Energy Markets: Concerted Actions

Needed by FERC to Confront Challenges That Impede Effective Oversight, GAO-02-656

(Washington, D.C.: June 14, 2002); HUD Management: Progress Made on Management

Reforms, but Challenges Remain, GAO-02-45 (Washington, D.C.: Oct. 31, 2001); Major

Management Challenges and Program Risks: Department of Energy, GAO-01-246

(Washington, D.C.: January 2001); and Medicare: 21st Century Challenges Prompt Fresh

Thinking About Program’s Administrative Structure, GAO/T-HEHS-00-108 (Washington,

D.C.: May 4, 2000).

10See U.S. General Accounting Office, Architect of the Capitol: Management and

Accountability Framework Needed to Lead and Execute Change, GAO-02-632T

(Washington, D.C.: Apr. 17, 2002); and GAO-02-528T.
Page 9 GAO-02-940T

While various models for structuring such a position could be used, one

option would be to have a COO who is appointed, subject to Senate

confirmation, to a term of 5 to 7 years (generally considered to be the

minimum time needed for major change initiatives to provide meaningful

and sustainable results). The COO should be at an organizational level

equivalent to the current deputies in major departments and agencies in

order to help assure the effectiveness of this position. A term appointment

would help to provide continuity that spans the tenure of the political

leadership to ensure that long-term stewardship issues are addressed and

change management initiatives are successfully completed. The individual

would be selected without regard to political affiliation based on (1)

demonstrated leadership skills in managing large and complex

organizations, and (2) experience achieving results in connection with a

number of the above responsibilities. To further clarify accountability, the

COO could be subject to a clearly defined, results-oriented performance

contract with appropriate incentive, reward, and accountability

mechanisms.

If Congress and the executive branch decide to move forward with the

COO approach, it may make sense to use a pilot in a select number of

agencies using a value and risk-based approach. For example, an agency

that is experiencing particularly significant challenges in integrating

disparate organizational cultures (such as the proposed Department of

Homeland Security) may be an especially appropriate first phase

candidate. Agencies engaged in major transformation efforts, like the FBI,

the Internal Revenue Service (IRS), and the National Aeronautics and

Space Administration (NASA) could also benefit from such an approach.

Similarly, a “challenged agency’’—one that has longstanding management

weaknesses and high-risk operations or functions, such as the Department

of Defense (DOD)—may also be a good first phase candidate.11 The point

would be for the Congress, executive branch leadership in OMB and OPM,

agencies, and others to gain experience with the COO approach before

deciding how and where it should be applied across the government.

More generally, we need to comprehensively examine opportunities for

better using the federal government’s career SES leadership. This

examination should focus on a number of issues that have been suggested

 11U.S General Accounting Office, DOD Financial Management: Integrated Approach,

Accountability, Transparency, and Incentives Are Keys to Effective Reform, GAO-02-497T

(Washington, D.C.: Mar. 6, 2002).
Page 10 GAO-02-940T

to strengthen the SES and thereby improve federal performance and foster

transformation efforts. These issues include, for example, concerns over

SES compensation and pay compression. I believe that the issue of

whether and how much to increase SES pay must be discussed within the

context of how to make any pay increases variable and performance-based

rather than across-the-board and fixed. We also must carefully examine

the composition of the SES. It seems to me that, in general, current

members of the SES fill three broad roles: executive leadership, program

management, and senior technical and specialists positions. We need to

look at the implications that these differing roles have for a range of

issues, such as SES core competencies, performance standards,

recruitment sources, mobility, and training and development programs.

We also need to look at whether the number of levels within the SES (i.e.

ES 1 through 6) are necessary and appropriate.

As the federal government’s leading accountability organization, we have

made a concerted effort to identify and encourage the implementation of

human capital practices that improve the efficiency, effectiveness, and

accountability of the federal government. Over the last few years, we have

issued numerous reports with practical recommendations on the steps

individual agencies can take to address their specific human capital

challenges.12 In addition, we have reported on governmentwide trends and

lessons learned by successful organizations.13 We also understand that we

have a responsibility to “lead by example” and “practice what we preach”

in all key management areas, including strategic human capital

management.

 12For example, see U.S. General Accounting Office, Human Capital: Practices That

Empowered and Involved Employees, GAO-01-1070 (Washington, D.C.: Sept. 14, 2001);

Human Capital: The Role of Ombudsmen in Dispute Resolution, GAO-01-466

(Washington, D.C.: Apr. 13, 2001); Human Capital: A Self-Assessment Checklist for

Agency Leaders, GAO/OCG-00-14G (Washington, D.C.: September 2000); Human Capital:

Design, Implementation, and Evaluation of Training at Selected Agencies,

GAO/T-GGD-00-131 (Washington, D.C.: May 18, 2000); Human Capital: Using Incentives to

Motivate and Reward High Performance, GAO/T-GGD-00-118 (Washington, D.C.: May 2,

2000); and Management Reform: Elements of Successful Improvement Initiatives,

GAO/T-GGD-00-26 (Washington, D.C.: Oct. 15, 1999).

13U.S. General Accounting Office, Federal Employee Retirements: Expected Increase Over

the Next 5 Years Illustrates Need for Workforce Planning, GAO-01-509 (Washington, D.C.:

Apr. 27, 2001); and Senior Executive Service: Retirement Trends Underscore the

Importance of Succession Planning, GAO/GGD-00-113BR (Washington, D.C.: May 12,

2000).

GAO’s Constructive

Efforts to Help

Agencies Address

Their Human Capital

Challenges
Page 11 GAO-02-940T

On March 15, 2002, we released A Model of Strategic Human Capital

Management, the latest in a series of tools designed to assist agency

leaders in effectively managing their people.14 Our model is designed to

help agency leaders effectively lead and manage their people and integrate

human capital considerations into daily decision making and the program

results they seek to achieve. In so doing, the model highlights the

importance of a sustained commitment by agency leaders to maximize the

value of their agencies’ human capital and to manage related risks.

Accordingly, it raises the bar for all of us—those in positions of leadership,

federal managers, employees, unions, and human capital executives and

their teams.

Consistent with OPM’s and OMB’s views, our model of strategic human

capital management embodies an approach that is fact-based, focused on

strategic results, and incorporates merit principles and other national

goals. As such, the model reflects two principles central to the human

capital idea:

• People are assets whose value can be enhanced through investment. As

with any investment, the goal is to maximize value while managing risk.

• An organization’s human capital approaches should be designed,

implemented, and assessed by the standard of how well they help the

organization pursue its mission and achieve desired results or outcomes.

The model highlights the kinds of thinking that agencies should apply, as

well as some of the steps they can take, to make progress in managing

human capital strategically. The concepts presented in the model are

arranged around eight critical success factors, which are organized in

pairs to correspond with four cornerstones of effective strategic human

capital management. (See Fig. 1.)

 14U.S. General Accounting Office, A Model of Strategic Human Capital Management,

GAO-02-373SP (Washington, D.C.: Mar. 15, 2002).
Page 12 GAO-02-940T

Figure 1: Critical Success Factors Organized by Human Capital Cornerstones

As I noted before, OPM and OMB also have developed tools that are being

used to assess human capital management efforts. We provided drafts of

our human capital model to OPM and OMB for their review prior to

publication to help ensure that the three efforts are conceptually

consistent. We hope that the perspective and information provided in our

4 Human Capital

Cornerstones 8 Critical Success Factors

Leadership Commitment

to Human Capital

Management

Role of the

Human Capital Function

Targeted

Investments in

People

Human

Capital Approaches

Tailored to Meet

Organizational Needs

Acquiring,

Developing, and

Retaining Talent

ResultsOriented Organizational

Cultures

Empowerment

and Inclusiveness

Unit and

Individual Performance

Linked to Organizational

Goals

Strategic

Human Capital

Planning

Integration

and Alignment

Data-Driven

Human Capital

Decisions
Page 13 GAO-02-940T

model will help inform agencies’ efforts to respond to the administration’s

management initiatives, such as “getting to green” on OMB’s management

scorecard and using the tools developed by OPM. While we remain

sensitive of the need to maintain our institutional independence, we are

working constructively with OPM, OMB, and others to explore

opportunities to develop a more fully integrated set of guidance and tools

for agencies to address their human capital challenges.15

In addition to providing tools to help agencies help themselves, we believe

it is our responsibility to lead by example. We are in the vanguard of the

federal government’s efforts to modernize existing human capital

strategies and we are committed to staying in this position. Our people are

our most valuable asset and it is only through their combined efforts that

we can effectively serve our clients and our country. By managing our

workforce strategically and focusing on results, we are helping to

maximize our own performance and ensure our own accountability. By

doing so, we also hope to demonstrate to other federal agencies that they

can make similar improvements in the way they manage their people.

We have identified and made use of a variety of tools and flexibilities,

some of which were made available to us through the GAO Personnel Act

of 1980 and our 2000 legislation, but most of which are available to federal

agencies.

The most prominent change in human capital management that we

implemented as a result of the GAO Personnel Act of 1980 was a

broadbanded pay-for-performance system. The primary goal of this system

is to base employee compensation primarily on the knowledge, skills, and

performance of individual employees. It provides managers flexibility to

assign employees in a manner that is more suitable to multi-tasking and

the full use of staff. Under our current broadbanded system, analyst and

analyst-related staff in Grades 7 through 15 were placed in three bands. We

expect to modify our banded system in the future based on our experience

to date.

 15U.S. General Accounting Office, Managing for Results: Next Steps to Improve the Federal

Government’s Management and Performance, GAO-02-439T (Washington, D.C.: Feb. 15,

2002).

GAO’s Efforts to Lead

by Example
Page 14 GAO-02-940T

In January 2002, we implemented a new competency-based performance

management system that is intended to create a clear linkage between

employee performance and our strategic plan and core values. It includes

12 competencies that our employees overwhelmingly validated as the keys

to meaningful performance at GAO. (See Fig. 2.)

Figure 2: GAO’s Competency-Based Model

Our October 2000 legislation gave us additional tools to: realign our

workforce in light of mission needs and overall budgetary constraints;

correct skills imbalances; and reduce high-grade, managerial, or

supervisory positions without reducing the overall number of GAO

employees. This legislation allowed us to create a technical and scientific

career track at a compensation level consistent to the SES. It also allowed

us to give greater consideration to performance and employee skills and

Achieving Results

Maintaining Client and Customer Focus

Developing People

Thinking Critically

Improving Professional Competence

Collaborating with Others

Presenting Information Orally

Presenting Information in Writing

Facilitating and Implementing Change

Representing GAO

Investing Resources

Leading Others
Page 15 GAO-02-940T

knowledge in any Reduction-in-Force actions. We believe that other

agencies could benefit from these additional authorities.

Since the legislation was enacted, we have established agency regulations

and conducted and completed our first offering of voluntary early

retirement opportunities. Once employees registered their interest in

participating in the program, we considered a number of factors including:

employee knowledge, skills, performance, and competencies; the

organizational unit or subunit in which an employee worked; an

employee’s occupational series, grade, or band level, as appropriate; and

the geographic location of the employee. As authorized by the 2000

legislation, employee performance was just one of many factors we

considered when deciding which employees would be allowed to receive

the incentives. However, let me assure you, we did not use performance to

target certain individuals.

We are also using many recruiting flexibilities that are available to most

agencies, including an extensive campaign to increase our competitiveness

on college campuses and extending offers of employment during the fall

semester to prospective employees who will come on board the following

spring and summer. We are also using our internship program in a

strategic fashion and we often offer permanent positions to GAO interns

with at least 10 weeks of highly successful work experience. Moreover, we

are building and maintaining a strong presence of both senior executives

and recent graduates on targeted college campuses. We have also taken

steps to streamline and expedite our hiring process. In this regard, the

current length of time that it takes to hire a person in most other federal

agencies is much too long and must be addressed.

Even after we hire good people, we need to take steps to retain them. We

have taken a number of steps to empower and invest in our employees.

For example, we have active employee feedback and suggestion programs.

In addition, we are in the midst of implementing our first student loan

repayment assistance program for about 200 employees who have

indicated interest and are willing to make a three-year commitment to

staying with the agency.
Page 16 GAO-02-940T

Overall, we have implemented the following initiatives and targeted

investments, some of which are relatively recent and some of which are

longstanding:16

• Prepared a human capital profile and needs assessment to understand

employee demographics and distribution.

• Conducted an employee survey in 1999 and 2002 to understand the status

and progress of the agency and the areas in which we need to improve.

• Completed a knowledge and skills inventory for all employees.

• Conducted an employee preference survey so that employees could be

given the opportunity to work in the areas that interest and energize them

in light of our institutional needs.

• Implemented an Executive Candidate Development Program to prepare

candidates for assignments in the SES.

• Initiated a Professional Development Program for newly hired GAO

analysts to help them transition and progress.

• Initiated a redesign of our training curriculum to directly link and support

our validated core competencies.

• Established an Employee Advisory Council to facilitate open

communication and direct input from line employees to the Comptroller

General and other GAO senior leadership.

• Provided an on-site child care center called “Tiny Findings” and the

Wellness and Fitness Center.

• Implemented additional employee-friendly benefits such as business

casual dress, flextime, and public transportation subsidies.

• Used recruitment bonuses, retention allowances, and student loan

repayment assistance to attract and retain employees with specialized

skills.

• Implemented a new “state of the art” performance appraisal system that is

linked to our strategic plan and based on key competencies.

As we engage in these changes, we also know that we are not perfect and

we never will be. This is a work-in-progress for us as it is for others. Our

approaches are not the only way for agencies to proceed, but they can

help others identify ways to address their individual human capital

challenges. In this regard, we have shared our lessons and experiences

with others, and are happy to do so.

 16 For more information on these efforts, see Human Capital: Taking Steps to Meet

Current and Emerging Human Capital Challenges, GAO-01-965T (Washington, D.C.: July

17, 2001).
Page 17 GAO-02-940T

In summary, Mr. Chairman, I believe that there is no more important

management reform than for agencies to transform their cultures to

respond to the transition that is taking place in the role of government in

the 21st century. Strategic human capital management must be at the

center of this transformation effort. We all need to seize the momentum

that has recently emerged—agencies must use existing authorities to

strategically manage their people; Congress needs to consider some

statutory changes in the short term; and all interested parties need to work

together toward enactment of more comprehensive civil service reform

over time. I look forward to continuing to work with Congress, OPM,

OMB, agencies, the National Commission on the Public Service, and other

interested parties as we jointly seek to ensure that the federal government

modernizes its human capital strategies in order to maximize performance,

assure accountability, transform itself, and prepare for the future.

Chairman Volcker and members of the Commission, this concludes my

statement. I would be pleased to respond to any questions that you may

have.

For further information regarding this statement, please contact J.

Christopher Mihm, Director, Strategic Issues, on (202) 512-6806 or at

mihmj@gao.gov. Individuals making key contributions to this testimony

included Amy Choi, Rebecka Derr, Judith Kordahl, Ellen Rubin, Lisa

Shames, and Ed Stephenson.

Contact and

Acknowledgments

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