HUMAN CAPITAL

OPM Needs to 

Improve the Design, 

Management, and 

Oversight of the 

Federal Classification 

System

Report to Congressional Requesters

July 2014

GAO-14-677

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-677, a report to 

congressional requesters.

July 2014

HUMAN CAPITAL 

OPM Needs to Improve the Design, Management, and 

Oversight of the Federal Classification System

What GAO Found

GAO’s analysis of subject matter specialists’ comments, related literature, and 

interviews with Office of Personnel Management (OPM) officials identified a 

number of important characteristics for a modern, effective classification system, 

which GAO consolidated into eight key attributes (see table below). GAO’s 

analysis shows that in concept the current General Schedule (GS) classification 

system’s design incorporates several key attributes including internal and 

external equity, transparency, simplicity, and rank in position. However, as OPM

implemented the system, the attributes of transparency, internal equity, 

simplicity, flexibility, and adaptability are reduced. This occurs, in part, because 

some attributes are at odds with one another so fully achieving one attribute 

comes at the expense of another. Thus, OPM, working with its stakeholders, is 

challenged to determine how best to optimize each attribute.

Attributes of a Modern, Effective Classification System

Internal equity: All employees with comparable qualifications and responsibilities for their 

respective occupations are assigned the same grade level. 

External equity: All employees with comparable qualifications and responsibilities are assigned 

grade levels and corresponding pay ranges comparable to the non-federal sector. 

Transparency: A comprehensible and predictable system that employees, management, and 

taxpayers can understand. 

Flexibility: The ease and ability to modify the system to meet agency-specific needs and mission 

requirements, including modifying rates of pay for certain occupations to attract a qualified 

workforce, within the framework of a uniform government-wide system.

Adaptability: The ease and ability to conduct a periodic, fundamental review of the entire 

classification system that enables the system to evolve as the workforce and workplace changes.

Simplicity: A system that enables interagency mobility and comparisons, with a rational number of 

occupations and clear career ladders with meaningful differences in skills and performance, as well 

as a system that can be cost-effectively maintained and managed.

Rank-in-position: A classification of positions based on mission needs and then hiring individuals 

with those qualifications.

Rank-in person: A classification of employees based on their unique skills and abilities.

Source: GAO analysis of subject matter specialists, OPM interviews, and literature reviews.

While the GS system’s standardized set of 420 occupations, grouped in 23 

occupational familes, and statutorily-defined 15 grade level system incorporates 

several key attributes, it falls short in implementation. For example, the 

occupational standard for an information technology specialist clearly describes 

the routine duties, tasks, and experience required for the position. This kind of 

information is published for the 420 occupations, so all agencies are using the 

same, consistent standards when classifying positions—embodying the attributes 

of transparency and internal equity. However, in implementation, having 

numerous, narrowly-defined occupational standards inhibits the system’s ability 

to optimize these attributes. Specifically, classifying occupations and developing 

position descriptions in the GS system requires officials to maintain an

understanding of the individual position and the nuances between similar 

occupations. Without this understanding, the transparency and internal equity of 

the system may be inhibited, as agency officials may not be classifying positions 

consistently, comparable employees may not be treated equitably, and the 

system may seem unpredictable. Several studies have concluded that the GS 

system was not meeting the needs of the modern federal workforce or supporting 

agency missions, and some studies suggested reductions in the number of 

Why GAO Did This Study

Almost since its inception in 1949, 

questions have been raised about the

ability of the GS system—the federal 

government’s classification system for 

defining and organizing federal 

positions—to keep pace with the 

evolving nature of government work. 

GAO was asked to review the GS 

classification system. 

This report examined: (1) the attributes 

of a modern, effective classification 

system and how the GS system 

compares with the modern systems’ 

attributes; (2) trends in agencies and 

occupations covered by the GS system

and the pay difference for selected 

alternative systems; and (3) OPM’s

administration and oversight of the GS 

system. GAO analyzed personnel data 

from 1988 to 2013, conducted a 

literature review, compared legislation 

to OPM procedures, and interviewed 

subject matter specialists and OPM 

officials, selected to represent public 

policy groups, government employee 

unions, and academia, among others.

What GAO Recommends

GAO recommends that the Director of 

OPM (1) work with stakeholders to 

examine ways to modernize the 

classification system, (2) develop a 

strategy to track and prioritize

occupations for review and updates,

and (3) develop cost-effective methods 

to ensure agencies are classifying 

correctly. OPM partially concurred with

the first and third recommendation but 

did not concur with the second 

recommendation. OPM stated it 

already tracks and prioritizes 

occupations for updates. However, 

OPM did not provide documentation of 

its actions. GAO maintains that OPM 

should implement this action.

View GAO-14-677. For more information, 

contact Robert Goldenkoff at (202) 512-2757 

or goldenkoffr@gao.gov.
Highlights of GAO-14-677 (Continued)

United States Government Accountability Office

occupational series and grade levels to help simplify the system. In addition, over the years agencies have sought 

exceptions to the GS system to mitigate some of its limitations either through demonstration projects or congressionallyauthorized alternative personnel systems—often featuring a broadband approach that provided fewer, broader 

occupational groups and grade levels. By using lessons learned and the results from prior studies to examine ways to 

make the GS system more consistent with the attributes of a modern, effective classification system, OPM could better 

position itself to help ensure that the system is keeping pace with the government’s evolving requirements. 

The proportion of federal employees covered under alternative personnel systems increased from 6 percent to 21 percent 

of the white-collar workforce from 1988 to 2013. Occupational families (i.e., groups of occupations based upon work 

performed) in the science, technology, engineering, and math (STEM) fields are more prevalent in alternative systems. Of 

the GS system’s 23 occupational families, the 6 with the largest increase from GS to an alternative system were mostly 

concentrated in STEM occupations (See figure below). GAO estimated that, in 2013, employees in alternative systems 

were paid about 10 percent more, on average, than GS employees in identical occupations when controlling for factors 

such as tenure, location, and education in the 90 occupations GAO considered. 

Occupational Families with the Greatest Change in Use of Alternative Systems, 1988-2013

a

In 1996, an alternative personnel system was applied to Federal Aviation Administration air traffic controllers at the Department of Transportation. While 

these occupations are not STEM-related, the alternative personnel system implemented accounts for the increase in 1996.

OPM is responsible for establishing new—and revising existing—occupational standards after consulting with agencies. 

From 2003 to 2014, OPM established 14 new occupational standards and revised almost 20 percent of the occupational 

standards. However, there was no published review or update of 124 occupations since 1990. OPM officials said they first 

review occupations identified in presidential memorandums as needing review; however OPM does not systemically track 

and prioritize the remaining occupational standards for review. Therefore, OPM has limited assurance that it is updating 

the highest priority occupations. Further, OPM is required by law to oversee agencies’ implementation of the GS system. 

However, OPM officials said OPM has not reviewed any agency’s classification program since the 1980s because OPM 

leadership at the time concluded the reviews were ineffective and time consuming. As a result, OPM has limited 

assurance that agencies are correctly classifying positions according to standards.
Page i GAO-14-677 Human Capital

Letter 1

Background 4

GS and Alternative Systems Need to More Effectively Balance 

Key Attributes of a Modern, Effective Classification System 13

Agencies Increased Their Use of Alternative Personnel Systems 

to Obtain Greater Pay Flexibilities 21

OPM Is Not Systematically Managing and Overseeing the 

Classification System 25

Conclusions 30

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 31

Appendix I Objectives, Scope, and Methodology 34

Appendix II Interactive Graphic Information 38

Appendix III Comments from the Office of Personnel Management 41

Appendix IV GAO Contact and Staff Acknowledgments 43

Figures

Figure 1: The General Schedule Classification System Influences 

and Intersects with Other Federal Management Policies 

and Practices For Human Capital Resources 6

Figure 2: OPM and Agency Roles in Establishing New and 

Revising Existing Occupations 9

Figure 3: Proportion of Federal Employees Covered by Alternative

Personnel Systems, 1988-2013 22

Figure 4: Occupational Families with the Greatest Change in Use 

of Alternative Personnel Systems, 1988-2013 24

Contents
Page ii GAO-14-677 Human Capital

Abbreviations

CHCO chief human capital officer

CFO chief financial officer

CPDF Central Personnel Data File

DHS Department of Homeland Security

EHRI Enterprise Human Resources Integration

FIRREA Financial Institutions Reform, Recovery and Enforcement

Act

GS General Schedule 

NAPA National Academy of Public Administration

NSPS National Security Personnel System

OPM Office of Personnel Management

STEM science, technology, engineering, and math

TSA Transportation Security Administration

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Page 1 GAO-14-677 Human Capital

441 G St. N.W.

Washington, DC 20548

July 31, 2014

The Honorable Darrell Issa

Chairman

The Honorable Elijah E. Cummings

Ranking Member

Committee on Oversight and Government Reform

United States House of Representatives

The Honorable Blake Farenthold

Chairman

Subcommittee on Federal Workforce, U.S. Postal Service and the

 Census

Committee on Oversight and Government Reform

United States House of Representatives

In 2013, about 1.6 million employees (about 80 percent of the 

government’s civilian white-collar workforce) were covered by the General 

Schedule (GS) classification system—the federal government’s system 

for defining and organizing federal positions, primarily to assign rates of 

pay.1 Almost since its inception in 1949, questions have been raised 

about the GS classification system’s ability to keep pace with the evolving 

complexity and nature of federal work. As one example, the field of 

cybersecurity did not exist when the GS system began 65 years ago. 

Today, cybersecurity is one of a number of mission-critical skill gaps in 

the federal workforce and the GS system does not have a specific 

classification standard for the work performed in this occupation. In 2011, 

we reported that agencies have difficulties filling this critical need.2

Several public policy groups and some Office of Personnel Management 

(OPM) reports have raised questions about the ability of the GS system to 

 1

The GS classification system was established by the Classification Act of 1949 (Pub. L. 

No. 81-429, 63 Stat. 954 (Oct. 28, 1949)). Federal employees who are not white-collar 

workers are not covered by the GS system, but are instead covered by the Federal Wage 

System, which is a uniform pay-setting system covering federal blue-collar employees. 

These employees are paid a prevailing wage comparable to private sector rates in each 

local wage area.

2

GAO, Cybersecurity Human Capital: Initiatives Need Better Planning and Coordination, 

GAO-12-8 (Washington, D.C.: Nov. 29, 2011).
Page 2 GAO-14-677 Human Capital

meet agencies’ needs for flexible talent management tools that enable 

them to align employees with mission requirements. As a result, over the 

years there have been a number of proposals and demonstration projects 

aimed at addressing limitations with the GS system. Most recently, the 

fiscal year 2015 President’s Budget called for reforms to update the 

classification system—along with hiring and pay—to create a modernized 

personnel system that will allow the federal government to compete for 

and reward top talent.

Given the changing nature of federal work, you asked us to examine 

aspects of the GS system including the extent to which it helps agencies 

address critical skills gaps within the federal civil service. This report 

assesses (1) the attributes of a modern, effective classification system 

and how the GS system compares with the modern systems’ attributes; 

(2) the trends in agencies and occupations covered by the GS system 

and the pay difference for selected alternative systems; and (3) the OPM 

administration and oversight of the GS system.

To assess the attributes of a modern, effective classification system and 

the extent to which the GS system balances those attributes, we 

interviewed more than 25 subject matter specialists. We selected these 

subject matter specialists because they represented various perspectives 

on and experiences with federal classification in the following areas: 

public policy, government employee unions, academia, the Federal 

Managers Association, and former high-level government officials at OPM 

and other agencies that implemented an alternative personnel system. 

We analyzed the results of discussion groups we held with the specialists 

to identify the attributes of a modern, effective classification system. We 

provided the subject matter specialists and OPM officials the opportunity 

to comment on the attributes and modified the attributes or definitions as 

appropriate. In addition, we reviewed relevant literature on the GS 

system, published from 2000 to 2014, from OPM, academic journals, and 

public policy organizations. We also reviewed relevant literature on 

selected alternative personnel systems, applicable federal laws, and 
Page 3 GAO-14-677 Human Capital

OPM’s classification guidance.3

To assess the trends in occupations covered under the GS system and 

characteristics of occupations associated with alternative personnel 

systems, we used OPM’s Enterprise Human Resources Integration 

(EHRI) Statistical Data Mart, which contains information on personnel 

actions and other data for most federal civilian employees.

We used this information along with 

information from our discussion groups to compare the design and 

implementation of the GS system and a notional alternative personnel 

system to determine the extent to which the GS system balances the 

attributes of a modern, effective classification system.

4

 3 When we refer to alternative personnel systems in this section, we refer to systems that 

are broader than alternative pay plans that we analyze in objective 2. The universe of 

alternative personnel systems is unknown and our analysis did not attempt to catalogue all 

of the alternative personnel systems. We reviewed literature on several alternative 

personnel systems and demonstration projects, such as the Department of Commerce’s 

Alternative Personnel System and National Institute of Standards and Technology; the 

Department of Defense Science and Technology Laboratory demonstration project, 

Civilian Acquisition Personnel demonstration project, and Naval Demonstration project at 

China Lake, and the Department of Energy’s National Nuclear Security Administration. 

We analyzed 

EHRI data starting with fiscal year 1988, the first year for which data were 

available, and ending with 2013, the most recent, complete fiscal year of 

data available. To analyze the pay differences between employees on the 

GS system and employees on alternative personnel systems, we 

performed a multivariate regression analysis on EHRI data for fiscal year 

2013. In the regression, we controlled for several factors including 

employees’ years of federal service, age, education, and pay basis 

(hourly, annually). We estimated this model for occupations with at least 

2.5 percent employee representation in both systems and which

contained at least 0.125 percent of the federal government, or about 90 of 

more than 400 possible occupations. We assessed the reliability of EHRI 

data through electronic testing to identify missing data, out of range 

values, and logical inconsistencies. We also reviewed our prior work 

assessing the reliability of these data and interviewed OPM officials 

knowledgeable about the data to discuss the data’s accuracy and steps 

OPM takes to ensure reliability. On the basis of this assessment, we 

4

EHRI (formerly Central Personnel Data File (CPDF)) is the primary government-wide 

source for information on federal employees. The EHRI data we analyzed cover executive 

branch civilian employees and do not cover the U.S. Postal Service, most legislative or 

judicial branch employees, or intelligence agencies. OPM transitioned from CPDF to EHRI 

as of fiscal year 2010.
Page 4 GAO-14-677 Human Capital

believe the EHRI data we used are sufficiently reliable for the purpose of 

this report.

To assess OPM’s administration and oversight of the GS system, we 

reviewed the relevant statutes, particularly Title 5, Chapter 51 of the U.S. 

Code, which defines OPM’s role in administration and oversight of the 

classification system. We also reviewed OPM guidance and standards, 

such as The Classifier’s Handbook and Introduction to the Position 

Classification Standards. We then compared the steps OPM takes with 

regard to administration and oversight of the classification system to 

legislation outlining OPM’s responsibilities. In addition, we interviewed 

OPM officials in the offices of Employee Services and Merit System 

Accountability and Compliance to determine the actions they have taken 

to oversee agencies’ implementation of the classification system. See 

appendix I for a more detailed discussion of our scope and methodology.

We conducted this performance audit from May 2013 through July 2014 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

finding and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The GS classification system is a mechanism for organizing work, notably 

for the purposes of determining pay, based on a position’s duties, 

responsibilities, and qualification requirements, among other things. The 

GS system was created by the Classification Act of 1949 and was later 

codified in Title 5 of the U.S. Code.5

A guiding principle of the GS classification system is that employees 

should earn equal pay for substantially equal work. The classification 

system aligns positions with rates of base pay by establishing a 

The origins of the GS system can be 

traced to the 1880s when merit replaced political patronage as the 

method of filling federal jobs. Classification was seen as a necessary first 

step in the equitable treatment of applicants and employees.

 5

5 U.S.C. §§ 5101-5115.

Background
Page 5 GAO-14-677 Human Capital

standardized schedule, which OPM administers.6 Similarly, the 

classification system is the foundation of many other human capital 

management policies, as shown in figure 1.

 6

OPM sets government-wide regulations and policies on pay setting, including locality 

pay, severance pay, and recruitment, relocation, and retention incentives, among others. 

Annual adjustments to base pay rates are determined pursuant to 5 U.S.C. §5303, and 

see GAO, Federal Workers: Results of Studies on Federal Pay Varied Due to Differing 

Methodologies, GAO-12-564 (Washington, D.C.: June 22, 2012).
Figure 1: The General Schedule Classification System Influences and Intersects with Other Federal 

Management Policies and Practices For Human Capital Resources Interactive graphic

Page 6 GAO-14-677 Human Capital

Print instructions To print text version of this graphic, go to appendix II.

ROLL OVER each personnel activity title below to see more information regarding how the

 General Schedule classification system influences the activity.

Directions:

The GS classification system assigns jobs to specific

occupational groups, series, and rates of pay. The GS 

classification system also influences other human capital 

management practices and policies beyond the 

classification process.

General Schedule Classification System

Source: GAO analysis. | GAO-14-677
Page 7 GAO-14-677 Human Capital

To print a text version of this graphic, see appendix II.

OPM, which is responsible for administering and overseeing the GS 

classification system, organized the work of the government into:

• 23 occupational groups (also referred to as occupational families), 

which are large categories of white-collar occupations, consisting of a 

group of related occupations (for example, the Accounting and Budget 

group has an occupational group number of GS-0500);

• 420 occupational series (also referred to as occupations), which are 

subsets of an occupational group consisting of positions in a similarly 

specialized line of work and with similar qualification requirements (for 

example, the Accounting series has a series number of GS-0510);

• 15 grades, which are the numerical designations based on the 

complexity of the work and knowledge required to do the job, and are 

on a scale of GS-1 to GS-15 as defined by Title 5 (for example, 

Accountant, grade GS-12).7 Generally, grades are assigned by using 

a nine-factor evaluation point system—the Factor Evaluation 

System—based on the position’s degree of difficulty, responsibility, 

and qualifications.8 Each grade has 10 steps which represent periodic 

increases in an employee’s rate of basic pay, if the employee obtains 

a satisfactory performance evaluation, and can be given in the form of 

a within grade increase—typically 52 weeks or longer—or a quality 

step increase—used to reward employees who display high-quality 

performance;9

• position descriptions (also referred to as positions), which are the 

official descriptions of the duties and responsibilities that make up the 

work performed by an employee (for example, an Accountant would 

 7

5 U.S.C. § 5104.

8

5 U.S.C. § 5106(b). The nine factors include knowledge required by the position, 

supervisory controls, guidelines, complexity, scope and effect, personal contacts, purpose 

of contacts, physical demands, and work environment. Although less common, 

classification standards can also be written in a narrative format, where the user grades 

the work by reviewing the work of the position as a whole, and narrative factor format, 

where the user grades the work by reviewing the difficulty of individual factors essential to 

the work.

9

5 U.S.C. § 5332. The rates of GS pay are adjusted in accordance with 5 U.S.C. § 5303. 

Quality step increases are given to employees who receive the highest possible 

performance rating and are used to move an employee through the GS pay range faster 

than by the periodic step increases alone. We previously reported that only a small 

percentage of employees receive a quality step increase. See GAO-12-564.
Page 8 GAO-14-677 Human Capital

perform duties such as recognizing and measuring revenues, and 

matching revenues and expenses by applying methodologies such as 

accrual accounting and depreciation); and

• position titles (also referred to as titles), which are the official names

of the positions within an occupational series (for example, Cost 

Accountant or Accounting Officer). OPM provides titles as part of its 

role in classification, but agencies can develop unofficial titles specific 

to their mission for use within the agency.

Finally, OPM establishes the basic policies, criteria, and guidance to 

classify occupations and grade jobs on the GS system. Agencies are 

required to place each of their positions in the appropriate class and 

grade, consistent with OPM’s classification standards.

10

 105 U.S.C. § 5107.

OPM’s guidance 

assists agencies in correctly classifying positions, including determining 

the proper occupational series, position title, and grade of each position, 

as shown in figure 2.
Page 9 GAO-14-677 Human Capital

Figure 2: OPM and Agency Roles in Establishing New and Revising Existing Occupations

There has been a long-standing debate about the effectiveness of the GS 

classification system and several studies have concluded that the GS 

system has not kept pace with the changing government workforce. The 

studies also found the work of the federal government has become more 

highly skilled and specialized than the classification system was designed 
Page 10 GAO-14-677 Human Capital

to address, when most of the federal workforce was engaged in clerical 

work. The following reports are examples of such studies:

• In 1991, the National Academy of Public Administration (NAPA) 

reported that the system was not meeting the needs of the modern 

federal workforce, and not supporting agency missions.11

• In 2002, OPM reported that the federal government needed a 

classification system that would enable more strategic human capital 

management. OPM outlined the advantages and disadvantages of the 

GS classification system and concluded that agencies should be 

allowed to tailor their pay practices to better recruit, manage, and 

retain employees to accomplish their mission.

NAPA 

suggested a new classification model to decrease the number of 

occupations and grade levels to three: developmental, full 

performance, and senior/expert.

12

• In 2003 we reported that defining a job and determining the 

appropriate pay was complicated by the classification process and 

standards, which we said were outdated and not applicable to current 

jobs and work.13 More recently, in 2014 we reported that a number of 

federal agencies’ chief human capital officers (CHCO) reported that a 

lack of staff mobility makes it difficult for agencies to align their 

workforce with evolving missions. The CHCOs noted that job 

qualifications often emphasize experience over the underlying skills 

needed; if the occupational structure was broader and more focused 

on skills and competencies, they said it would be easier to transfer 

qualified individuals to where they are most needed.14

• In 2004, we, along with the National Commission on the Public 

Service Implementation Initiative, hosted a forum with selected 

executive branch officials, key stakeholders, and other experts to 

discuss human capital reforms.15

 11National Academy of Public Administration, Modernizing Federal Classification: An 

Opportunity for Excellence (Washington, D.C.: July 1991).

Forum participants agreed that a 

12Office of Personnel Management, A Fresh Start for Federal Pay: The Case for 

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

13GAO, Human Capital: Opportunities to Improve Executive Agencies’ Hiring Processes, 

GAO-03-450 (Washington, D.C.: May 30, 2003).

14GAO, Human Capital: Strategies to Help Agencies Meet Their Mission in an Era of 

Highly Constrained Resources, GAO-14-168 (Washington, D.C.: May 7, 2014).

15GAO, Human Capital: Principles, Criteria, and Processes for Governmentwide Federal 

Human Capital Reform, GAO-05-69SP (Washington, D.C.: Dec. 1, 2004). 
Page 11 GAO-14-677 Human Capital

“one size fits all” approach to human capital management is not 

appropriate for the challenges and demands government faces. 

Additionally, they agreed that there should be a government-wide 

framework to guide human capital reform built on a set of beliefs that 

entail fundamental principles and boundaries that include criteria and 

processes that establish the checks and limitations when agencies 

seek and implement their authorities.

• In 2014, the Partnership for Public Service reported that by treating all 

occupations equally and linking them to the current pay scales, the 

GS system is unable to distinguish between meaningful differences in 

complexity and skill across occupations.16

Congress and OPM have authorized some alternatives to the GS system 

to address a variety of concerns—frequently related to pay. According to 

a report prepared for OPM, agencies moved to alternative personnel 

systems to, among other things:

The Partnership for Public 

Service proposed revising the classification system, among other 

changes to the federal civil service system. Specifically, it

recommended reducing the number of grades from 15 to 5 and, for 

selected occupations, benchmarking the pay to comparable private 

sector, nonprofit, and state and local government occupations to 

ensure pay comparability.

• implement alternative pay schedules, which have wider ranges of pay 

than the General Schedule, to compete with external markets;

• implement performance-based pay systems, which aim to enhance 

and reward performance; and

• simplify classification so that managers have greater flexibility to 

assign employees where they are needed more without having to 

reclassify jobs.17

Over the years, there have been several examples where Congress or 

OPM have authorized alternative systems. In 1996, Congress authorized 

an alternative personnel system for air traffic controllers and other 

Federal Aviation Administration employees that allowed for more pay 

 16The Partnership for Public Service and Booz Allen Hamilton, Building the Enterprise: A 

New Civil Service Framework (Washington, D.C., and Herndon, Va.: April 2014). 

17Human Resources Research Organization, Alternative Job Evaluation and 

Compensation Systems in the United States Government Organizations, a report 

prepared at the request of the U.S. Office of Personnel Management (Alexandria, Va.: 

March 2002).
Page 12 GAO-14-677 Human Capital

flexibilities—specifically, a higher pay scale and performance-based 

pay.18 In 2002, the enabling legislation for the Department of Homeland 

Security (DHS) required that the department operate a “flexible” and 

“contemporary” personnel system to include alternative practices in areas 

such as pay setting, performance evaluation, hiring, job classification, and 

discipline.19 In 2006, the Transportation Security Administration (TSA), 

part of DHS, implemented a pay-for-performance system.20 However, the 

implementation of these alternative personnel systems at DHS was 

controversial, and as a result, the alternative personnel system for DHS 

was defunded in 2009 and the initial pay-for-performance system at TSA 

was eliminated in 2013. An evaluation of the DHS system noted that one 

of the challenges to implementing a new personnel system was ensuring 

stakeholder buy in. In addition, through its demonstration project 

authority, OPM authorized the National Institute of Standards and 

Technology’s demonstration project to consolidate the GS grades into 

broader pay bands, implement a pay-for-performance system, and allow 

for recruitment and retention allowances.21

 18Department of Transportation and Related Agencies Appropriations Act for FY 1996, 

Pub. L. No. 104-50, § 347, 109 Stat. 436 (Nov. 15, 1995)

19The Homeland Security Act of 2002. Pub.L. No. 107-296, § 841, 116 Stat. 2135, 2229 

(Nov. 25, 2002), codified at 6 U.S.C. § 411 and 5 U.S.C. § 9701 and defunded by the 

Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, 

Pub. L. No. 110-329, § 522, 122 Stat. 3574, 3684 (Sept. 30, 2008).

20The Aviation and Transportation Security Act, Pub. L. No. 107-71, §101, 115 Stat. 587, 

601 (Nov. 19, 2001), codified at 49 U.S.C. § 114(n) provided that the personnel 

management system established by the Administrator of the Federal Aviation 

Administration under 49 U.S.C. § 40122, applied to the employees of the TSA, or 

alternately, it allowed the Under Secretary of TSA to make modifications to the personnel 

management system, including adopting aspects of other personnel systems of the 

Department of Transportation. Further, the Under Secretary of Transportation for Security 

has authority to employ, appoint, discipline, terminate, and fix and establish levels of 

compensation, terms, conditions of employment, and other benefits for transportation 

security officers. Pub. L. No. 107-71, § 111(d), as amended, codified at 49 U.S.C. 44935 

note.

21The National Institute of Standards and Technology’s demonstration project was made 

permanent in 1996. National Technology Transfer and Advancement Act of 1995. Pub. L. 

No. 104-113, § 10, 110 Stat. 775, 779 (Mar. 7, 1996). OPM can authorize a demonstration 

project for up to 5 years, with some exceptions. 5 U.S.C. § 4703(d)(1)(B). The 

demonstration project agency must obtain legislative authority for a project to become 

permanent. 
Page 13 GAO-14-677 Human Capital

Our analysis of subject matter specialists’ comments, related literature, 

and interviews with OPM officials identified a number of important 

characteristics for a modern, effective classification system, which we 

consolidated into eight key attributes. While each attribute is important 

individually, the inherent tensions between some will challenge OPM, 

policymakers, and stakeholders to find the optimal balance points so that 

all of the attributes will contribute to an effective system when assembled 

collectively. Importantly, the weight that policymakers and stakeholders 

assign to each attribute—and the trade-offs made among competing 

attributes—are important in evaluating alternative classification designs 

like those found in demonstration projects or the Partnership for Public 

Service’s recent model.

22

Moreover, while the attributes listed below were frequently cited by 

subject matter specialists and the literature we examined, there was no 

consensus in priority or in degree of these attributes. Subject matter 

specialists agreed that any changes to the classification system should 

align with the guiding principle of equal pay for work of substantially equal 

value.

The eight attributes of a modern, effective classification system are as 

follows:

• Internal equity. All employees with comparable qualifications and 

responsibilities for their respective occupations are assigned the same 

grade level.

 22Key stakeholders may include officials representing the Office of Management and 

Budget, federal employee unions, the Chief Human Capital Officers Council, and public 

policy groups.

GS and Alternative 

Systems Need to 

More Effectively 

Balance Key 

Attributes of a 

Modern, Effective 

Classification System

Eight Important Attributes 

of a Modern, Effective 

Classification System
Page 14 GAO-14-677 Human Capital

• External equity. All employees with comparable qualifications and 

responsibilities are assigned grade levels and corresponding pay 

ranges comparable to the nonfederal sector.

• Transparency. A comprehensible and predictable system that 

employees, management, and taxpayers can understand.

• Flexibility. The ease and ability to modify the system to meet agencyspecific needs and mission requirements, including modifying rates of 

pay for certain occupations to attract a qualified workforce, within the 

framework of a uniform government-wide system.

• Adaptability. The ease and ability to conduct a periodic, fundamental 

review of the entire classification system that enables the system to 

evolve as the workforce and workplace changes.

• Simplicity. A system that enables interagency mobility and 

comparisons with a rational number of occupations and clear career 

ladders with meaningful differences in skills and performance, as well 

as a system that can be cost-effectively maintained and managed.

• Rank-in-position. A classification of positions based on mission 

needs and then hiring individuals with those qualifications.

• Rank-in-person. A classification of employees based on their unique 

skills and abilities.

The values policymakers and stakeholders emphasize could have large 

implications for pay, the ability to recruit and retain mission critical 

employees, and other aspects of personnel management. This is one 

reason why—despite past proposals—changes to the current system 

have been few, as finding the optimal mix of attributes that is acceptable 

to all stakeholders is difficult. For example, on the one hand a rank-inperson system classifies individuals based on individual qualifications 

such as performance, education, and seniority. This approach is used by 

the military and Senior Executive Service. On the other hand, a rank-inposition system classifies positions based on factors such as the duties, 

responsibilities, and qualifications the position requires and is widely used 

across the federal government.

The extent to which the design and implementation of the GS 

classification system balances the attributes of a modern, effective 

classification system varies. There are two main design features of the 

GS system: (1) a set of standardized occupations, and (2) statutorily

defined grade levels and steps. We found, in concept, these features 

incorporate several of the key attributes including internal and external 

equity, transparency, simplicity, and rank-in-position. However, as 

agencies implement the GS system the attributes of transparency, 

internal equity, simplicity, flexibility, and adaptability are reduced. This 

Implementation of the GS 

System Could Better 

Balance Attributes of a 

Modern, Effective 

Classification System
Page 15 GAO-14-677 Human Capital

occurs, in part, because as discussed earlier in this report, some 

attributes are at odds with one another, so fully achieving one attribute 

comes at the expense of another.

OPM publishes and defines a set of occupational standards that describe 

and differentiate all of the different types of work performed across the 

government, which agencies then use to develop position descriptions.23

However, in practice having numerous, narrowly-defined occupational 

standards may actually inhibit the system’s ability to optimize these 

attributes for reasons including the following:

Providing standard government-wide occupational standards is an 

example of how transparency and internal equity are built into the 

system. For example, the occupational standard for an information 

technology specialist clearly describes the routine duties and tasks, and 

experience required for the position. This information is published for all 

of the 420 occupations defined in the GS system, so all agencies are 

using the same, consistent standards when writing position descriptions.

At the same time, any occupation with the same education, experience, 

and other requirements should be assigned the same grade level and 

same base pay range, contributing to internal equity. The GS system 

defines occupations narrowly, meaning that different occupational 

definitions may exist even for closely related occupations, like electrical 

engineers and electronics engineers. These two occupations both require 

similar backgrounds in understanding the theories of advanced 

mathematics, economics, and computer science. However, in application, 

electrical engineers tend to concentrate on the electrical systems of 

physical infrastructure, among other areas, while electronics engineers 

tend to concentrate on the electrical systems of devices such as satellites 

and communication systems. The precisely defined occupational 

standards can also enable comparisons to those occupations in the 

private sector, providing some level of external equity.

• Classifying occupations and developing position descriptions in the 

GS system requires officials to maintain an understanding of the 

 23Occupational standards include a definition of the kind of work covered by the standard. 

This includes background information, such as descriptions of typical assignments found 

in an occupation covered, and definitions of terms, official titles, and criteria for 

determining proper grade levels. Agencies comment on draft occupational standards 

before they are made final. 
Page 16 GAO-14-677 Human Capital

potential responsibilities of the individual position and of the nuances 

between similar occupational definitions. Without this understanding, 

having numerous occupations from which to choose may inhibit 

transparency and internal equity. For example, one subject matter 

specialist said that the requirements of a particular position may be 

met by the qualifications of more than one occupational definition. As 

a result, officials may not be classifying positions consistently, 

comparable employees may not be treated equitably, and the system 

may seem unpredictable.

• Having many—more than 400—occupations can limit the simplicity

of the system. For example, since individual occupations may have 

their own career ladders or a set number of grades for potential 

advancement, it can be challenging for agencies to move employees 

according to their core skills within and across agencies to address 

evolving needs. Likewise, qualified employees may be limited in their 

ability to advance in their general fields as related but distinctly 

defined occupations may require specific experiences in that 

occupation.

• Interdisciplinary occupations—those that involve duties and 

responsibilities closely related to more than one professional 

occupational standard, such as those in certain scientific research 

fields like natural resources management and biological sciences—

provide some flexibility to agencies as they allow agencies to 

combine the work of multiple occupations. This is because the 

position could be classified in two or more occupational series and the 

employee with education and experience in either of two or more 

professions may be considered equally qualified to do the work. The 

final classification of the position is determined by the qualifications of 

the employee. However, interdisciplinary occupations decrease the 

simplicity of the system.24

• Finally, a system composed of numerous occupational series can be 

cumbersome to systematically review, limiting the system’s 

adaptability. This is because reviewing and revising occupational 

series can be a time-consuming effort, partially due to analysis 

This is because employees, management, 

and taxpayers may not be able to easily understand how one 

occupation differs from another, especially when position descriptions 

have overlapping responsibilities.

 24Interdisciplinary professional occupations are positions involving duties and 

responsibilities closely related to more than one occupation and, as a result, could be 

classified in two or more occupational series. Interdisciplinary classification is used 

primarily for positions in mathematical, scientific, and engineering disciplines.
Page 17 GAO-14-677 Human Capital

required to understand the differences between and potential effect of

closely related occupations, ensure government-wide applicability and 

gain consensus.

The second key design feature of the GS system is the 15 statutorily 

defined grade levels intended to distinguish the degrees of difficulty within 

an occupation, which are designed to simplify the system and provide 

internal equity.

25 Agency officials assign a grade level to a position after 

analyzing the duties and responsibilities according to the factor evaluation 

system.26 This allows for easy comparisons of employees in the same 

occupation and grade level but in different agencies, providing simplicity

and internal equity to the system, and it may help employees move 

across agencies. Within the 15 grades there are 10 steps27— time-based 

increases that determine a GS employee’s rate of pay—providing 

transparency to the system by creating a clear, predictable process.28

However, in practice the 15 grades and the 10 steps may actually inhibit 

the system’s ability to optimize these attributes for reasons such as the 

following:

This design feature emphasizes the GS system as a rank-in-position

system that focuses on the position and the time spent in that position 

over the specific characteristics or performance of the incumbent, as a 

rank-in-person system would do.

 255 U.S.C. § 5104.

26While most occupational series standards use the factor evaluation system, some 

standards are written in a narrative that describes the nature of work and level of 

responsibility for each grade covered by the standard. This requires users/classifiers to 

look at work as a whole and select the most appropriate overall grade.

275 U.S.C. § 5332.

28For some steps, movement to a new step occurs after 52 weeks, assuming an 

acceptable level of competence and that the employee did not receive an equivalent 

increase in pay from any cause during that period. Initial annual pay increases reward a 

substantial increase in skills, knowledge, and improved performance presumed to occur 

during the first few years in grade (from step 1 to step 3). Pay progression decelerates 

once full mastery is achieved (steps 4 through 6 require 2 years between each increase). 

Finally, skill acquisition is presumed to taper off and the final step increases (steps 7, 8, 

and 9) are granted in 3-year intervals to reward the loyalty, longevity, and continued 

mastery of long-term employees, short of promoting them. 5 U.S.C. § 5335. GS 

employees may also be granted a quality step increase based on outstanding 

performance.
Page 18 GAO-14-677 Human Capital

• The 15 grades require officials to make meaningful distinctions 

between such things as the nature and extent of the skills necessary 

for the work at each level, which may be more difficult in some whitecollar occupations where those differences may not be clear cut. For 

example, officials must be able to determine how the work of a GS-12 

accountant is different from a GS-13 accountant. But making clear 

distinctions between these occupations may be more nuanced, as the 

basis for them hinges on, for example, how agency officials determine 

the degree of complexity of the work or the most important duties of 

the position. As a result, having 15 grade levels may make the system 

seem less transparent, as distinguishing between the levels may not 

be precisely measured by the elements of the factor evaluation 

criteria.29

• Further, having so many grades defined by statute, makes it hard to 

review and revise the grades, thereby limiting the adaptability of the 

GS system. As the nature of work and the workforce changes, the 

system is constrained, since some revisions to the system would 

require legislative action. As we concluded in our 2003 report, for 

example, “...today’s knowledge-based organizations’ jobs require a 

much broader array of tasks that may cross over the narrow and rigid 

boundaries of job classifications. The federal job classification process 

not only delays the hiring process, but more importantly, the resulting 

job classifications and related pay might not match the actual duties of 

the job. This mismatch can hamper efforts to fill the positions with the 

right employees.”

Otherwise, agencies risk having two employees performing 

substantially equal work but receiving unequal pay, which decreases 

the degree to which the system can ensure internal equity.

30

To address some of the issues we found in our 2003 report, among other 

things we recommended that OPM “study how to simplify, streamline, and 

reform the classification process.” In response, OPM published a report 

which outlined several strategic principles to modernize the civil service 

system, while preserving the merit system principles.

 29Not all occupations comprise all 15 grade levels. The occupational category determines 

the grade levels covered by an occupational series. For example, administrative and 

professional occupations typically follow a two-grade interval pattern such as GS-5, GS-7, 

and GS-9.

30GAO-03-450.
Page 19 GAO-14-677 Human Capital

Over the years, agencies, either through the use of demonstration 

projects or congressionally authorized alternative personnel systems, 

have sought exceptions to the GS system to mitigate some of its 

limitations. Understanding the benefits and challenges of the design 

features tested in these alternatives can assist in understanding and 

evaluating options to improve the GS system. By using lessons learned 

from the alternative systems and results from prior studies of the GS 

system to examine ways to make the GS system more consistent with the 

attributes of a modern, effective classification system, OPM could better 

position itself to help ensure that the system is keeping pace with the 

government’s evolving requirements. Further, stakeholders like the 

CHCO Council, unions and others can provide insight into the design and 

implementation of these alternatives. According to the subject matter 

specialists and OPM and agency evaluations of alternative personnel 

systems, most of the alternative systems either retained GS occupations 

and grades but with higher pay rates to address difficulties in recruiting or 

retaining well-qualified employees or implemented a broad-banded 

approach to pay and classification. Broadband systems can provide fewer 

occupations and fewer grade levels which align with fewer, but broader 

ranges of pay for that occupation.

Broader bands that combine groups of GS-equivalent occupations into 

larger occupational families may have broadly defined occupational 

definitions, increasing agency flexibility to use employees according to 

their skills and competencies—thereby embodying an element of rank-inperson. For example, in 1996, the Department of Defense authorized the

Civilian Acquisition Workforce Personnel demonstration project to provide 

employees and management flexibility concerning work assignments.31

Employees in acquisition occupations with similar characteristics were 

grouped together into three career paths and assigned broader bands 

that provided both a broader range of pay and broader spectrum of 

duties. For example, employees were assigned to projects, tasks, or 

functions, but did not have their in-position descriptions changed.32

 31Initially authorized by the National Defense Authorization Act for Fiscal Year 1996, Pub.

L. No. 104-106, Title XLIII, Subtitle A, § 4308, 110 Stat. 186, 669 (Feb. 10, 1996), as 

codified at 10 U.S.C. § 1701 note, and repealed by Pub. L. No. 111-383, § 872(a)(2), 124 

Stat. 4302, (Jan. 7, 2011), as codified at 10 U.S.C. § 1762(g) which as a conforming 

repeal, repealed the initial authorization and extended the demonstration project under § 

872(a)(1).

On 

32The 2011 National Defense Authorization Act extended the demonstration project 

through September 30, 2017.

Extent to Which 

Broadband Systems 

Incorporate Attributes of a 

Modern, Effective 

Classification System Is 

Mixed
Page 20 GAO-14-677 Human Capital

the other hand, broader occupational definitions can provide less 

transparency to the specific skills required of a position and can make it 

more challenging to monitor internal equity—as employees in a single 

broad band may vary widely in their qualifications and responsibilities. In 

addition, broad-banded systems can combine multiple GS grade 

equivalents into a smaller range of bands, often between three and five. 

Just as the bands represent a broader range of grade levels, broadbanded systems often align with broader ranges of pay than the GS 

system. Broad ranges of grades and pay can enable greater external

equity by giving agencies more latitude in matching market pay rates. In 

addition, having fewer broad bands can increase the simplicity of the 

system because broad bands do not require such a precise analysis of 

the degree of difficulty of an occupation.

While fewer occupational bands are designed to create a more simple

system, as implemented this may also decrease transparency because

two employees in the same occupation may have a variety of different 

responsibilities, thus limiting cross-agency and government comparisons.

While increasing agency flexibility to use employees according to their 

skills and competencies, in practice it may limit the transparency of the 

system, because employees and others (e.g., Congress and taxpayers) 

may be less certain of career-path options. Agencies with numerous, 

distinctly different occupations may not be able to combine occupations 

into a single occupational band, thereby limiting the simplicity of the 

system.
Page 21 GAO-14-677 Human Capital

The proportion of federal white-collar employees covered by alternative 

personnel systems increased from 6 percent in 1988 to 21 percent in 

2013, as shown in figure 3.33 Some of the movement away from the GS

system is a result of the implementation of several alternative personnel 

systems. For example, the Financial Institutions Reform, Recovery and 

Enforcement Act of 1989 (FIRREA) granted certain federal financial 

regulatory agencies, which had been taken out of the GS classification 

system, the flexibility to establish their own compensation systems.34

FIRREA allowed these agencies the flexibility to establish alternative 

systems, recognizing that the GS system could impede these agencies’

ability to recruit and retain employees critical to meeting their 

organizational missions.35

 33EHRI (formerly Central Personnel Data File (CPDF)) is the primary government-wide 

source for information on federal employees. The EHRI data we analyzed cover executive 

branch civilian employees, and do not cover the U.S. Postal Service, legislative or judicial 

branch employees, or intelligence agencies. OPM transitioned from CPDF to EHRI as of 

fiscal year 2010. Our analysis did not include members of the Senior Executive Service.

Additionally, Congress directed most of the 

financial regulatory agencies to seek to maintain pay comparability and to 

consult with each other to limit the degree to which agencies are 

competing with each other for employees.

34For example, some of the covered financial regulatory agencies include the Federal 

Deposit Insurance Corporation, the Comptroller of the Currency, the National Credit Union 

Administration Board, and the Federal Housing Finance Agency, among others. FIRREA, 

Pub. L. 101-73 § 1206, 103 Stat. 183 (Aug. 9, 1989), as amended, and codified at 12 

U.S.C. § 1833b.

35See GAO, Financial Regulators: Agencies Have Implemented Key Performance 

Management Practices, but Opportunities for Improvement Exist, GAO-07-678 

(Washington, D.C.: June 18, 2007).

Agencies Increased 

Their Use of 

Alternative Personnel 

Systems to Obtain 

Greater Pay 

Flexibilities
Page 22 GAO-14-677 Human Capital

Figure 3: Proportion of Federal Employees Covered by Alternative Personnel Systems, 1988 - 2013

Note: Authorized in 2004 by the National Defense Authorization Act for Fiscal Year 2004, the National 

Security Personnel System (NSPS) was a management system for the Department of Defense that 

was designed to improve efficiency in the performance of civilian personnel management and to be 

flexible, contemporary, and consistent with the public employment principles of merit and fitness. One 

component of this system intended to reward agencies’ highest performing and most valuable 

employees. Pub. L. No. 108-136, §§ 1101, 1111, 1126-1129, 117 Stat. 1392, 1621-32, 1634, 1640-45 

(Nov. 24, 2003). Over the lifetime of the system, which was repealed in 2010, by the National 

Defense Authorization Act of Fiscal Year 2010, approximately 226,000 civilian employees were taken 

off the GS system, put into NSPS, and subsequently returned to the GS system. This accounts for the 

dip beginning in 2009 in figure 3. Pub. L. 111-84, § 1113, 123 Stat. 2190, 2498-2504, (Oct. 28, 2009).

During this time, six agencies (the Departments of Commerce, Defense, 

Energy, Transportation, and Treasury, and the National Science 

Foundation) saw the proportion of employees in alternative personnel 

systems increase by at least 10 percentage points. In 2013, more than 

140,000 employees, or about 9 percent of the entire federal white-collar 

workforce, worked in alternative personnel systems at one of these six 

agencies. Despite the increase in the use of alternative personnel 

systems in selected agencies, we found that most agencies had a mix of 

both—some employees were in the GS system and some were in 

alternative systems.

The literature we reviewed on alternative personnel systems suggests 

that agencies’ alternative systems were designed with their own purpose 

and goals, and agencies moved to alternative classification systems to 
Page 23 GAO-14-677 Human Capital

attempt to offer market-based pay rates, pay-for-performance, and certain 

other flexibilities in an attempt to be more competitive in a labor market.36

While 22 of the 24 Chief Financial Officers Act agencies had a majority of 

their employees in the GS system in 2013, we found that occupational 

families requiring employees with advanced degrees, and in particular 

occupations in science, technology, engineering, and math (STEM) fields 

and other technical areas were more likely to be in alterative systems 

than other types of occupational families.37

 36Not all alternative personnel systems have been evaluated for how well they achieve 

these goals, and there is disagreement over how successful some have been at 

increasing recruiting and retaining goals. Results on the success of those studies are 

mixed.

Indeed, of the GS system’s 23 

occupational families, the 6 with the largest increase from GS to an 

alternative system were mostly concentrated in STEM occupations, as 

shown in figure 4.

37The Chief Financial Officers Act agencies are the executive branch agencies listed at 31 

U.S.C. § 901(b).
Page 24 GAO-14-677 Human Capital

Figure 4: Occupational Families with the Greatest Change in Use of Alternative Personnel Systems, 1988 - 2013

a

The demonstration project covering veterinarians at the U.S. Department of Agriculture, Food Safety 

and Inspection Service was terminated in February 2014.

b

In 1996, an alternative personnel system was applied to Federal Aviation Administration air traffic 

controllers at the Department of Transportation. While these occupations are not STEM-related, the 

alternative personnel system implemented accounts for the increase in 1996.

We estimated that in 2013 employees in alternative personnel systems 

were paid about 10 percent more, on average, than GS employees in 

identical occupations when controlling for factors such as tenure, location, 
Page 25 GAO-14-677 Human Capital

and education in the 90 occupations we considered.38 However, there 

was a significant range among the occupations in the difference in pay 

between those in the GS and those in alternative systems—going both 

ways. For example, an employee in the medical officer occupational 

family in an alternative personnel system earned about 18 percent more 

than a similar employee working in the GS system. In a few cases, we 

found that employees working in the GS system were paid more than 

those working in alternative personnel systems after controlling for 

characteristics.

Evaluating the current GS system and identifying whether changes to it 

are warranted should be informed by how effectively the system is 

currently administered. OPM is required by law to create and update 

occupational standards and oversee agencies’ implementation of the GS 

system.39

 38We performed this analysis on fiscal year 2013 EHRI data using a multivariate 

regression that also controlled for tenure, age of the employee, agency, occupation, 

education, geographic location, veterans preference, whether the employee was on 

excepted service, permanent status, full- or part-time schedule, and whether the employee 

was paid per hour. When not adjusting for the factors above, in 2013 employees on the 

alternative pay system earned, on average, about 31 percent more, than those on the GS 

pay system. We selected 90 occupations for review. We chose occupations that had at 

least 2.5 percent in both GS and alternative personnel systems and contained at least 

0.125 percent of the federal government, to minimize the chances that we would be 

investigating occupations that had insufficient numbers to evaluate differences. For 

example, the occupation with the smallest number of employees, Dietitian and Nutritionist, 

had roughly 2,300 employees.

To carry out these responsibilities, OPM provides guidance to 

agencies through handbooks and policy manuals, training, individual 

meetings with agency officials, quarterly classification forums, and a 

dedicated e-mail address for specific questions and advice. The guidance 

395 U.S.C. §§ 5106 and 5110-5112. 

OPM Is Not 

Systematically 

Managing and 

Overseeing the 

Classification System

OPM Provides Guidance, 

Training, and Technical 

Assistance to Agencies in 

Implementing the GS 

System
Page 26 GAO-14-677 Human Capital

to agencies includes, for example, Introduction to the Position 

Classification Standards, which provides basic definitions and a 

description of the principles and policies necessary to apply the 

classification standards, and The Classifier’s Handbook, which describes 

how to develop position descriptions and how to determine the 

occupational series and grade of the positions.

OPM also offers classification training through its HR Solutions and HR 

University.40

OPM officials said they also assist agencies with classification issues 

through OPM’s quarterly classification forum and direct inquiries. Officials 

said common topics discussed at the forums are related to updates to 

occupational standards and implementation challenges to classifying 

positions. OPM also uses these forums to update managers and human 

resource specialists about ongoing classification system-related projects. 

For example, at the March 2014 classifiers’ forum, which we observed, 

OPM officials discussed the establishment of a new occupational series 

and solicited feedback from the forum participants. Participants also 

discussed difficulties they faced in using outdated standards to classify 

positions in a rapidly changing environment, such as when a position 

requires knowledge of a new technology (e.g., the use of social media in 

a public affairs position).

These classes train human resource specialists on basic and 

advanced classification techniques and are offered in a number of 

different media: in-person and self-paced online courses.

OPM is responsible for establishing new—and revising existing—

occupational standards after consulting with agencies; however, OPM 

does not know the extent to which it is meeting the needs of agencies 

with regard to updating occupational standards. From 2003 to 2014, OPM 

established 14 new occupational standards (new occupations in the 

federal government), and revised almost 20 percent of the occupational 

standards.41

 40HR Solutions is one of OPM’s revolving fund activities used to provide training, 

consulting, and other services to other agencies. HR University provides training for 

government human capital specialists and career guidance to achieve a high level of 

technical, consulting, business, and professional competency. HR University was 

established through the CHCOs with the goal to address competency and skills gaps 

within the human capital community government-wide.

However, there was no published review or update of 124 

41OPM had 25 more revisions to occupational series in draft as of June 2014.

OPM Could Benefit from a 

More Strategic Approach 

to Creating and Updating 

Occupational Standards
Page 27 GAO-14-677 Human Capital

occupations, roughly 30 percent of the total GS system occupations, 

since 1990. For example, the air traffic controller occupational standard 

has not been updated since June 1978 and the food safety inspector 

occupational standard has not been updated since June 1971.

OPM officials said that they first address occupations identified in 

presidential memorandums. Three of the reviews from 2003 to 2014 were 

in response to a presidential memorandum.42 For example, in 2013, OPM 

established a formal records management occupation to define the roles, 

responsibilities, and skill sets for agency records management specialists 

to comply with the Presidential Memorandum on Managing Government 

Records.43 However, OPM does not systematically track and prioritize the 

remaining occupational standards. OPM officials told us the other 

occupational standards that they either created or updated were in 

response to working with agencies or other stakeholders to determine 

government-wide or specific agency needs and analysis of occupational 

trends. OPM officials were unable to provide us with documentation of 

this prioritization criteria. Further, OPM officials could not provide the 

near- or long-term prioritization for reviewing occupations. OPM officials 

said that they do not track all of the agency requests they receive 

because, in some cases, an agency requested an occupational review 

from OPM, but after speaking with the agency and evaluating the need for 

a review, OPM officials determined that no review was necessary. OPM 

officials said at times they conduct a study to establish an occupation, but 

find the work is appropriately addressed by an existing occupation and 

that a new occupation is not warranted. For example, OPM officials said 

they studied whether a new occupation was needed for positions related 

to implementing the GPRA Modernization Act of 2010.

44

 42The updates based on presidential memorandums were for the occupational series: 

government information, records management and information technology management.

However, OPM 

officials said they determined that the position responsibilities fell under 

the current duties of management and program analysis occupations.

43Memorandum on Managing Government Records, Daily Comp. Pres. Docs. 2011 DCPD 

No. 201100904 (Nov. 28, 2011), 76 Fed. Reg. 75423 (Dec. 1, 2011).

44Pub. L. No. 111-352, 124 Stat. 3866 (Jan. 4, 2011). The GPRA Modernization Act 

significantly enhanced the Government Performance and Results Act of 1993, Pub. L. No. 

103-62, 107 Stat. 285 (Aug. 3, 1993).
Page 28 GAO-14-677 Human Capital

Because OPM does not systematically track all agency requests it 

receives and its subsequent decision on whether or not to review 

occupational standards, it is unclear whether OPM’s decisions are 

meeting agency needs. In our previous work looking at strategies that 

help agencies meet their missions, CHCOs said if the position description 

and job announcements are based on outdated standards, they are less 

likely to reflect the specific skills needed, making it challenging for 

agencies to recruit and hire the right individuals.45

OPM officials also said that updating the standard for a specific 

occupation is a resource-intensive process that often takes 6 months to a 

year to complete. Officials also said reviewing an occupational family, 

which includes a number of individual occupations, can take multiple 

years to complete. Further, officials said that some occupations are more 

dynamic than others and may need to be reviewed more frequently. For 

example, an emerging occupation or one in the information technology 

field may need to be updated more frequently as the nature of the work is 

clarified or changes.

OPM does not know if it is keeping pace with agencies’ needs to meet the 

evolving nature of government work. Without a more strategic approach 

for systemically tracking and prioritizing updates to occupational 

standards, especially for more dynamic and emerging occupations, OPM 

does not have reasonable assurance that it is fulfilling its responsibilities 

to establish new or revise existing occupational standards based on the 

highest priorities.

OPM has not reviewed agency classification programs since the 1980s. 

Therefore, OPM is not in the best position to know how well or how 

consistently agencies are complying with classification standards, policy, 

or guidance. OPM is required by law to review “from time to time” a 

number of positions in each federal agency to determine whether the 

agency is correctly placing positions in classes and grades according to 

OPM-published standards.46

 45

While the law does not indicate a minimum 

number of positions and occupations that OPM should review, nor 

GAO-14-168.

465 U.S.C. § 5110. Agencies are also responsible for classifying their own positions 

consistent with OPM guidance. 5 U.S.C. § 5106.

OPM Is Not Conducting 

Oversight of Agency 

Classification Programs
Page 29 GAO-14-677 Human Capital

specific time frames for review, OPM said it is not currently conducting 

this oversight at any federal agency. OPM is also authorized to revoke or 

suspend an agency’s classification authority if OPM finds that an agency 

is not following classification guidance; however, it has not done so in 

more than two decades.47

OPM officials said the agency stopped conducting oversight reviews in 

the 1980s because OPM determined that the reviews were ineffective at 

overseeing agency compliance with the occupational standards. 

Specifically, officials said the reviews were time consuming and agencies 

did not agree with how OPM selected the position descriptions to review. 

OPM officials said agencies frequently contested the results of the 

reviews leading to another time- and resource-intensive review process 

for both OPM and the agencies. Further, OPM officials said revoking an 

agency’s classification authority requires OPM to provide classification 

support to the agencies, another time- and resource-intensive process.

OPM officials said in 2014 they had 6 full-time classification policy 

specialists tasked with maintaining the classification standards, compared 

to 16 in 2001, and many more in the 1980s. OPM officials said that lower 

staffing levels limit the agency’s ability to perform oversight. However, 

OPM, like all agencies, must make tradeoffs between competing 

demands with its limited resources during an era of constrained 

resources. According to OPM officials, the reduction in employees with 

classification experience has declined government-wide. In our 2013 

high-risk update, we found that an OPM-led working group identified the 

human resources specialist series—which includes classifiers—as a 

mission-critical skills gap.48

OPM officials said they rely on agencies’ internal oversight programs to 

ensure proper application of the classification policies. However, OPM 

officials told us they do not review agency oversight efforts to ensure 

consistency, nor do they know which agencies, if any, have robust 

The decrease in classifiers within the human 

resources specialist series can be traced back to the mid-1990s.

 475 U.S.C. § 5111.

48In 1990, we began reporting on government operations that we identified as “high risk.”

Our high-risk list calls attention to the agencies and program areas that are high risk due 

to their vulnerability to fraud, waste, abuse, and mismanagement or are most in need of 

broad reform. See, GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C. 

Feb. 14, 2013).
Page 30 GAO-14-677 Human Capital

internal oversight mechanisms. Agencies are responsible for classifying 

positions consistent with OPM occupational standards and guidance.

According to OPM officials, oversight functions for classification vary by 

agency.

OPM officials told us that employees have the right to appeal 

classification decisions regarding their position if they believe that their 

position has not been correctly classified by an agency. OPM officials 

said the appeals published in the Digest of Significant Classification 

Decisions and Opinions provide interpretative guidance to agencies to 

assist them in applying standards. According to OPM officials, employees 

commonly appealed the assigned grade level of a position when the job 

duties described in a position description were not consistent with 

classification standards. OPM officials said that they may require 

agencies to conduct classification consistency reviews as a result of a 

classification appeals decision. While reviewing classification appeals can 

give OPM a sense of an agency’s ability to classify individual positions, it 

does not address OPM’s responsibility to oversee the classification 

process. Without a strategic approach to oversight, OPM has limited 

assurance that agencies are correctly classifying positions according to 

the standards. This may be especially important as the number of 

occupations and agencies moving to alternative systems continue to 

increase.

The GS system was designed to uphold the key merit system principle of 

equal pay for work of substantially equal value and other important goals. 

However, our work and that of other organizations have shown how the 

GS system has not kept pace with the government’s evolving 

requirements. Indeed, federal agencies have taken on additional roles 

and responsibilities, the missions they face have become increasingly 

complex, and the employees they need must possess a range of 

expertise and skills.

While there is no one right answer or single way to design a classification 

system, the eight attributes of a modern, effective classification system 

that we identified—internal equity, external equity, transparency, 

flexibility, adaptability, simplicity, rank-in-position, and rank-in-person—

provide policymakers and stakeholders the criteria to assess the many 

proposed options and alternatives. Collectively they provide a useful 

framework for informing discussions of whether refinements to the current 

system or wholesale reforms are needed. Indeed, the value placed on 

Conclusions
Page 31 GAO-14-677 Human Capital

each of the attributes and how they are optimized will largely drive the 

design of any approach to classification.

Going forward, OPM could improve its management and oversight of the 

GS system. OPM, like all agencies, must consider cost-effective ways to 

fulfill its responsibilities in an era of constrained resources. Using a more 

strategic approach to track and prioritize reviews of occupational 

standards—that perhaps better reflect more evolving occupations—could 

help OPM better meet agencies’ evolving needs and the changing nature 

of government work. Further, a strategic approach to oversight could help 

OPM better fulfill its responsibility to ensure agencies are correctly 

implementing the classification process.

To improve the classification system and to strengthen OPM’s 

management and oversight, we recommend that the Director of OPM 

take the following three actions:

• Working through the CHCO Council, and in conjunction with key 

stakeholders such as the Office of Management and Budget, unions, 

and others, should use prior studies and lessons learned from 

demonstration projects and alternative systems to examine ways to 

make the GS system’s design and implementation more consistent 

with the attributes of a modern, effective classification system. To the 

extent warranted, develop a legislative proposal for congressional 

consideration.

Develop cost-effective mechanisms to oversee agency implementation of 

the classification system as required by law.

• Develop a strategy to systematically track and prioritize updates to 

occupational standards.

• Develop a strategy that will enable OPM to more effectively and 

routinely monitor agencies’ implementation of classification standards.

We provided a draft of this product to the Director of OPM for comment. 

In written comments, which are reprinted in appendix III, OPM partially 

concurred with two of the three recommendations and did not concur with 

one. OPM also provided technical comments on our draft report, which 

we incorporated as appropriate.

OPM stated that it partially concurred with our recommendation to work 

with key stakeholders to use prior studies and lessons learned to examine 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 32 GAO-14-677 Human Capital

ways to make the GS more consistent with the attributes of a modern, 

effective classification system. OPM agreed that the system needs reform 

but OPM noted several efforts to assist agencies with classification 

issues, including its interagency classification policy forum and partnering 

with agencies to address challenges related to specific occupational 

areas. While these examples of assisting agencies to better implement 

the GS on a case-by-case basis are helpful, they are not fully addressing 

the fundamental challenges facing the GS system, which we and others 

have said is not meeting the needs of federal agencies. For example, as 

noted in this report, at the March 2014 interagency classification forum 

that we observed, OPM provided status reports on classification projects 

such as its study on pay equity and closing critical skills gaps. OPM also 

discussed its new procedures for collecting agency comments during 

occupational reviews. OPM stated that the studies and lessons learned of 

alternative personnel systems and demonstration projects focused on pay 

rather than classification. However, as we noted in the report, 

classification and pay are closely related, and we continue to believe that 

the lessons learned from these efforts should be used to examine ways to 

make the GS system more consistent with the attributes of a modern, 

effective classification system. OPM also discussed its new procedures 

for collecting agency comments during occupational reviews. We are 

encouraged at OPM’s plan to leverage partnerships with key stakeholders 

to inform future strategies and action plans, and continue to recommend 

that OPM uses these efforts examine ways to make the design and 

implementation of the GS system more in line with the attributes of a 

modern, effective classification system. 

OPM stated that it did not concur with our recommendation to develop a 

strategy to systematically track and prioritize updates to occupational 

standards. Specifically, OPM noted that occupational standards are 

updated in response to a systematic, prioritized process informed by 

working with agencies and other stakeholders and analysis of 

occupational trends. However, OPM officials were unable to provide us 

with the documentation of their efforts. As noted in our report, OPM has 

not published a review or update of 124 occupations, roughly 30 percent 

of the total number of occupations on the GS system, since 1990. 

Further, OPM officials could not provide the near- or long-term 

prioritization of occupations schedule for review. As a result, OPM cannot 

demonstrate whether it is keeping pace with agencies’ needs nor does it 

have reasonable assurance that it is fulfilling its responsibilities to 

establish new, or revise existing occupational standards based on the 

highest priorities. We continue to believe that OPM should take action to 

fully address this recommendation.
Page 33 GAO-14-677 Human Capital

OPM stated that it partially concurred with our recommendation to 

develop a strategy to more effectively and routinely monitor agencies’ 

implementation of classification standards. OPM stated that it will 

continue to leverage the classification appeals program to provide 

interpretative guidance to agencies to assist them in classifying positions. 

OPM also stated it will direct consistency reviews as appropriate, 

however as we note in the report, OPM does not review agencies’ internal 

oversight efforts. We are encouraged to see that OPM stated it will look 

for opportunities to further expand their monitoring and oversight activities 

and we will continue to monitor OPM’s efforts in that regard. However, 

OPM did not state whether it would develop a strategy to assist it in doing 

so as we recommended. We continue to believe that OPM should 

develop a strategy to fully address the recommendation and we will 

continue to monitor OPM’s efforts in that regard.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Committee on 

Oversight and Government Reform. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report please contact 

me at (202) 512-2757 or goldenkoffr@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix IV.

Robert Goldenkoff

Director

Strategic Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-14-677 Human Capital

Given the changes in the federal workforce and the ongoing attention to 

federal civil service skills gaps, there has been a growing interest in 

reexamining the federal classification system to ensure agencies are 

equipped with the tools to maintain or acquire the skills and talent 

needed. Our objectives were to assess (1) the attributes of a modern, 

effective classification system and how the General Schedule (GS) 

classification system compares with the modern systems’ attributes; (2) 

the trends in agencies and occupations covered under the GS system 

and the pay difference for selected alternative systems; and (3) the Office 

of Personnel Management’s (OPM) administration and oversight of the 

GS system.

To assess the attributes of a modern, effective classification system, we 

held discussion groups with subject matter experts and conducted a 

literature review. Our discussion groups included over 25 subject matter 

specialists. We selected these subject matter specialists because they 

represented various perspectives on and experiences with federal 

classification. Specifically, we conducted sessions covering the following 

areas: (1) the public policy arena, with representatives such as the 

Partnership for Public Service, Project on Government Oversight, 

American Enterprise Institute, Booz Allen Hamilton, the Federal Salary 

Council, Human Resources Research Organization, and American 

Society for Public Administration; (2) federal employee organizations, with

representatives such as the American Federation of Government 

Employees, National Treasury Employees Union, International Federation 

of Professionals and Technical Engineers, and the National Federation of 

Federal Employees; (3) academia with representatives from American 

University and Rutgers University; (4) an official from the Federal 

Managers Association; (5) former employees of OPM, including highranking officials and prior OPM directors; and (6) officials who were 

formerly in personnel positions at federal agencies that have employees 

on alternative personnel systems, such as the Departments of Defense, 

Energy, and Homeland Security. We collaboratively analyzed major 

themes through repeated review and discussion of detailed notes of the 

discussion groups to identify the attributes of a modern, effective 

classification system along with other themes for consideration. We 

provided the subject matter experts and OPM officials the opportunity to 

comment on the attributes, and modified the attributes or definitions as 

appropriate. For additional perspectives on the attributes of a modern, 

effective system we reviewed relevant literature on the GS system 

published from 2000 to 2014 from OPM, academic journals, and public 

policy organizations. In addition, we reviewed relevant literature on 

selected alternative personnel systems, applicable federal laws, and 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-14-677 Human Capital

statutes pertaining to classification, and OPM’s classification guidance, 

such as The Classifier’s Handbook and The Introduction to the Position 

Classification Standards. Because OPM is not responsible for the 

oversight of alternative personnel systems, it does not have a listing of all 

alternative personnel systems. Therefore, the universe of alternative 

personnel systems is unknown and our analysis did not attempt to 

catalogue all of the alternative personnel systems. When we refer to 

alternative personnel systems in this section, we refer to systems that are 

broader than alternative pay plans that we analyze in objective 2. We 

reviewed literature on several alternative personnel systems and 

demonstration projects, such as the Department of Commerce’s 

Alternative Personnel System and National Institute of Standards and 

Technology; the Department of Defense Science and Technology 

Reinvention Laboratory demonstration project, Civilian Acquisition 

Workforce Personnel demonstration project, and Naval Demonstration 

project at China Lake, and the Department of Energy’s National Nuclear 

Security Administration. We used this information, along with information 

from our discussion groups and the literature review, to compare the 

design features of the GS classification system and a notional alternative 

personnel system to determine the extent to which the GS system 

balances the attributes of a modern, effective classification system.

To assess the trends in agencies and occupations covered under the GS 

system and the pay difference for alternative systems, we analyzed 

personnel data from OPM’s Enterprise Human Resources Integration 

(EHRI) Statistical Data Mart for fiscal years 1988 through 2013.1 Our 

analysis included nonsenior executive, white-collar occupations in the 24 

Chief Financial Officers (CFO) Act agencies, which represent the major 

departments, such as the Department of Defense and most of the 

executive branch workforce. 2

 1 EHRI (formerly Central Personnel Data File (CPDF)) is the primary government-wide 

source for information on federal employees. The EHRI data we analyzed cover executive 

branch civilian employees, and do not cover the U.S. Postal Service, most legislative or 

judicial branch employees, or intelligence agencies. OPM transitioned from CPDF to EHRI 

as of fiscal year 2010.

Our trend analysis begins with fiscal year 

1988 because it was the first year for which data were available, and 

ends with 2013 because it was the most recent, complete fiscal year of 

2

The CFO Act agencies are the executive branch agencies listed at 31 U.S.C. § 901(b).

We excluded senior executive and blue collar occupations because they have never been 

a part of, and are not comparable to the General Schedule system.
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-14-677 Human Capital

data available during our review. To determine trends in the proportion of 

the federal nonexecutive, white collar workforce covered by alternative 

personnel systems, we analyzed for each fiscal year the proportion of 

those employees—government-wide and within CFO Act agencies and 

occupational families—covered under general schedule pay plans (GS, 

GL, GM) compared to all other pay plans.

To analyze the pay differences between employees on the GS system 

and employees on alternative personnel systems, we performed a 

multivariate regression analysis on EHRI data for fiscal year 2013. 

Consistent with standard practice in studies of the determinants of 

earnings, we attempted to explain the differences by predicting the 

logarithm of annual adjusted pay on characteristics of federal workers. In 

the regression, we controlled for employees’ years of federal experience, 

age, education, type of service (competitive or excepted), type of 

appointment (permanent or nonpermanent), veterans’ preference, 

schedule (full or part-time), and pay basis (hourly, annually). We also 

included a set of indicator variables for agency of employment, 

occupational series, and geography. By including these indicator 

variables, we controlled for the possibility that agencies might have higher 

pay rates and occupations might earn different rates of pay regardless of 

whether they were in the GS or an alternative system. We estimated this 

model for occupations with at least 2.5 percent employee representation 

in both systems, and which contained at least 0.125 percent of the federal 

government, or about 90 of more than 400 possible occupations.

We assessed the reliability of the EHRI data through electronic testing to 

identify missing data, out of range values, and logical inconsistencies. We 

also interviewed OPM officials about our use of the data and reviewed our 

prior work assessing the reliability of these data.3

 3

For example, see GAO, Federal Workforce: Recent Trends in Federal Civilian 

Employment and Compensation, 

On the basis of this 

GAO-14-215 (Washington, D.C.: Jan. 29, 2014) and 

Federal Workers: Results of Studies on Federal Pay Varied Due to Differing 

Methodologies, GAO-12-564 (Washington, D.C.: June 22, 2012).
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-14-677 Human Capital

assessment, we believe the EHRI data we used are sufficiently reliable 

for the purpose of this report.4

To assess how OPM administers the GS classification system and 

oversees agency implementation of the classification standards, we 

reviewed relevant statutes, agency policies and guidance, and 

interviewed OPM officials. Specifically, we reviewed Title 5, Chapter 51 of 

the U.S. Code, which establishes the role of OPM and the agencies in 

oversight of the GS classification system, among other things.5

We conducted this performance audit from May 2013 to July 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

We also 

reviewed OPM’s guidance to agencies on how to classify positions and 

determine the proper grade, title, and category in which to place the 

positions. This guidance was included in documents such as The 

Introduction to the Position Classification Standards, The Classifier’s 

Handbook, Handbook of Occupational Groups and Families, Qualification 

Standards, and the Digests of Significant Classification Decisions and 

Opinions. In addition, we conducted interviews with relevant OPM officials 

in the offices of Merit System Accountability and Compliance, and 

Employee Services to determine the actions they have taken to oversee 

agencies’ implementation of the classification system, and we compared 

these actions to legislation outlining OPM’s responsibilities. To 

understand the administration and oversight issues agencies encounter 

with regard to the classification system, we observed OPM’s quarterly 

classification forum with human capital specialists and attended the 

Classification Refresher Training.

 4

We previously concluded that government-wide data from the Central Personnel Data 

File were 96 percent or more accurate. See GAO, OPM’s Central Personnel Data File: 

Data Appear Sufficiently Reliable to Meet Most Customer Needs, GAO/GGD-98-199 

(Washington, D.C.: Sept. 30, 1998). Also, in a document dated February 28, 2008, an 

OPM official confirmed that OPM continues to follow the CPDF data quality standards and 

procedures contained in our 1998 report.

5

5 U.S.C §§ 5101-5115.
Appendix II: Interactive Graphic Information

Page 38 GAO-14-677 Human Capital

Text on Graphic Rollover Text on Graphic

General Schedule Classification System The GS classification system assigns jobs to specific occupational groups, series, and 

rates of pay. The GS system also influences other human capital management practices 

and policies beyond the classification process.

Appendix II: Interactive Graphic Information
Appendix II: Interactive Graphic Information

Page 39 GAO-14-677 Human Capital

Text on Graphic Rollover Text on Graphic

Recruitment, Retention, Relocation 

Incentives

The GS classification system contains grade levels, which determine base pay rate. This, 

in turn, establishes a cap on the amount of recruitment, retention, and relocation 

incentives.

Recruitment. An agency may pay a recruitment incentive to a newly-hired employee if it 

has determined the position will be difficult to fill without an incentive. A recruitmentincentive payment generally may not exceed 25 percent of the employee’s base pay rate.

Retention. An agency may pay a current employee a retention incentive if it determines 

that an employee possesses unusually high or unique qualifications, or if its special need 

for the employee’s services makes it essential to retain that employee. In such cases, the 

employee would be likely to leave the agency without an incentive. Retention incentives 

may also apply to a group or category of employees. Total retention bonuses generally 

may not exceed 25 percent of the base pay for an individual employee or 10 percent for a 

group or category of employees.

Relocation

Pay Setting

. An agency may pay a relocation incentive to a current employee who must 

relocate—permanently or temporarily—to accept a position if it determines that position 

will be difficult to fill without the incentive. Total relocation-incentive payments generally 

may not exceed 25 percent of the employee’s annual base pay.

A position’s classification includes a grade level, which—together with the step level—

corresponds to base pay rate. These base pay rates:

• determine the amount of some payments (e.g., within grade, quality-step, and salary 

increases resulting from promotion);

• define the dollar value of certain personnel actions (e.g., overtime and severance 

pay);

• are the base from which percentages are calculated for a variety of allowances (e.g., 

recruitment, retention, and relocation incentives); and

• are factors in formulas used to calculate various pay entitlements (e.g., retirement 

benefits).

Training A position’s classification influences the training and developmental opportunities 

available to an employee (e.g., classroom training, rotation to another agency or program). 

Training needs are the difference between the competencies required to perform the job 

and an employee’s current capability. Managers use the position classification to establish 

performance expectations. 

Performance Management The GS classification system informs the standards used to evaluate an employee’s 

performance via position descriptions, which identify the employee’s responsibilities and 

manager’s expectations.

Performance rewards and corrective actions are also linked to GS. For example, superior 

performance can lead to a quality step increase, while poor performance can result in a 

demotion to a lower grade. Also, base pay rates serve to cap performance-based awards 

which may not exceed 20 percent of base pay.

Career Ladder The GS classification system establishes a road map for employees and determines how 

far they may advance in the same position as long as their performance is satisfactory. A 

promoted employee must be placed at the step of the higher grade that represents at least 

a two-step increase from the employee’s previous grade. The system automatically 

delivers the two-grade rise and accompanying pay raise.

The GS system sets promotion expectations for both the employee and the supervisor. 

Federal regulations require an employee to spend 52 weeks in a grade before becoming 

eligible for advancement resulting in a higher grade or higher rate of basic pay. 
Appendix II: Interactive Graphic Information

Page 40 GAO-14-677 Human Capital

Text on Graphic Rollover Text on Graphic

Budget Planning The GS classification system informs future planning and budgeting for salaries and 

expenses. Because a position’s grade corresponds to an already established base pay 

rate, a budget manager can forecast the number and types of positions that can be filled 

or terminated should the budget environment change. 

Workforce Planning/Management The GS classification system is a work-management tool that allows agencies to align 

their work with their human resources to perform the work. The agencies use the GS 

system to identify the mix of occupations and skills needed to fulfill their mission goals, 

conduct analyses to identify and close skills gaps, develop strategies to address human 

capital needs, and ensure that the agency is appropriately structured.

Other Use and Purposes Since 1949, the GS classification system has been used for additional human resources 

management practices. For example:

• GS is an unofficial system that equates military rank with civilian grade, screening 

systems for certain employee benefits, and deciding who gets prime office space.

• The Federal Deposit Insurance Corporation uses GS classification standards to 

establish occupational groups and grades for its positions, but sets pay based on 

market surveys and negotiations with unions.

• The Central Intelligence Agency classifies most of its positions using the GS structure 

and a modified evaluation system to determine grades.

Source: GAO analysis.
Appendix III: Comments from the Office of 

Personnel Management

Page 41 GAO-14-677 Human Capital

Appendix III: Comments from the Office of 

Personnel Management
Appendix III: Comments from the Office of 

Personnel Management

Page 42 GAO-14-677 Human Capital
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 43 GAO-14-677 Human Capital

Robert Goldenkoff, (202) 512-2757 or goldenkoffr@gao.gov.

In addition to the individual named above, Chelsa Gurkin, Assistant

Director; Trina Lewis, Assistant Director; Robyn Trotter, Analyst-inCharge; Ulyana Panchishin; Jeffrey Schmerling; Ben Bolitzer; Jehan 

Chase; Sara Daleski; Karin Fangman; Steven Putansu; Robert Robinson; 

Rebecca Shea; and Stewart Small made major contributions to this 

report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact:

Staff 

Acknowledgments:

(451048)
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