U.S. GOVERNMENT PRINTING OFFICE

64–552 cc WASHINGTON : 2000

S. Hrg. 106–547

MANAGING HUMAN CAPITAL IN THE 21ST

CENTURY

HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT,

RESTRUCTURING AND THE DISTRICT OF COLUMBIA

SUBCOMMITTEE

OF THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 9, 2000

Printed for the use of the Committee on Governmental Affairs

(

For sale by the Superintendent of Documents, Congressional Sales Office

U.S. Government Printing Office, Washington, DC 20402

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COMMITTEE ON GOVERNMENTAL AFFAIRS

FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ARLEN SPECTER, Pennsylvania

JUDD GREGG, New Hampshire

JOSEPH I. LIEBERMAN, Connecticut

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

JOHN EDWARDS, North Carolina

HANNAH S. SISTARE, Staff Director and Counsel

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel

DARLA D. CASSELL, Administrive Clerk

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT,

RESTRUCTURING, AND THE DISTRICT OF COLUMBIA

GEORGE V. VOINOVICH, Ohio, Chairman

WILLIAM V. ROTH, Jr., Delaware

JUDD GREGG, New Hampshire

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

Kristine I. Simmons, Staff Director

Marianne Clifford Upton, Minority Staff Director and Chief Counsel

Julie L. Vincent, Chief Clerk

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C O N T E N T S

Opening statements: Page

Senator Voinovich ............................................................................................. 1

Senator Akaka .................................................................................................. 3

Senator Durbin ................................................................................................. 18

WITNESSES

THURSDAY, MARCH 9, 2000

David M. Walker, Comptroller General of the United States, General Accounting Office ............................................................................................................... 4

Janice R. Lachance, Director, Office of Personnel Management ......................... 8

ALPHABETICAL LIST OF WITNESSES

Lachance, Janice R.:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 49

Walker, David M.:

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 27

APPENDIX

Deidre A. Lee, Acting Deputy Director for Management, Office of Management and Budget, prepared statement .............................................................. 71

Questions and responses from Mr. Walker to Senator Voinovich ....................... 74

Questions and responses from Ms. Lachance to Senator Voinovich .................... 77

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MANAGING HUMAN CAPITAL IN THE 21ST

CENTURY

THURSDAY, MARCH 9, 2000

U.S. SENATE, OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE, OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, DC.

The Subcommittee met, pursuant to notice, at 10:02 a.m., in

room SD–342, Dirksen Senate Office Building, Hon. George V.

Voinovich, Chairman of the Subcommittee, presiding.

Present: Senators Voinovich, Durbin, and Akaka.

OPENING STATEMENT OF SENATOR VOINOVICH

Senator VOINOVICH. Good morning. The hearing will come to

order. I want to thank all of you for coming.

Today, the Subcommittee on Oversight of Government Management holds a hearing entitled, ‘‘Managing Human Capital in the

21st Century.’’ We will examine whether the Federal Government

is positioning itself to address the human capital challenges of this

decade. This hearing underscores the importance of my larger

agenda of empowering Federal employees and changing the culture

of the Federal workforce.

I think attention to our workforce, what I refer to as the ‘‘A

team,’’ is one of the most valuable uses of this Subcommittee’s

time. We simply cannot have the efficient, effective, and streamlined government we all seek if we do not take care of our people.

In his recent book, The New Public Service, respected government analyst Paul Light of the Brookings Institute states that,

‘‘The Federal Government’s current hiring system for recruiting talent top to bottom overwhelms at almost every task it undertakes.

It is slow in the hiring, almost useless in the firing, overly permissive in the promoting, out of touch with actual performance in the

rewarding, and penurious in training.’’ That is a pretty strong

statement.

He goes on to say that the government should declare a human

capital crisis, and I think that is what we do have, a human capital

crisis, and that it is a crisis of staggering importance and one that

merits immediate action among legislators and executives alike.

I think Mr. Light says it well, and I want everyone to know that

the Subcommittee is responding to the human capital crisis he

identifies. The Subcommittee intends to fully address the situation

over at least the next 2 to 3 years because that is what it will take

to start to make a real difference in the lives of Federal workers.

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The General Accounting Office, Congress’ nonpartisan auditing

agency, observes in its 1999 draft strategic plan that, ‘‘While financial management, information management, and contracting and

performance management have all been the subject of major reform

legislation in the 1990’s, no consensus has emerged on the

fundamental structure or policy changes that may be needed to address the agency’s management of their human capital.’’

The report goes on to say that human capital management requires a well-grounded analysis that continually links are agencies’

human capital policies and practices through its missions and

strategies, but that many agencies fail to make this linkage. The

predictable result is that agencies are lacking the right people with

the proper skills.

As part of the 2001 budget, which was submitted to Congress

just over a month ago, the Office of Management and Budget

placed human capital challenges on its list of priority management

objectives to be implemented by the Office of Personnel Management. Although many have said, ‘‘It’s about time.’’ I believe it is a

shame that it came in the last year of the administration. I would

have hoped that it would have come sooner, because I know how

long it takes to get things done. I know from my own experience

in Ohio, it took us about 7 years to fully implement the strategies

to deal with our human capital challenges.

Among its objectives, the Office of Personnel Management ‘‘will

work with agencies to ensure labor-management initiatives to empower executives, line managers, and especially employees to improve customer service get mission results.’’ I have to tell you, this

sounds exactly like what we implemented in Ohio with Quality

Services Through Partnership. The end goal of QSTP is to turn

government into a high-performance workplace that focuses on external and internal customers, and it makes it possible by turning

improvement into a daily undertaking that involves all of the employees.

I believe it is one of the most important initiatives I started

when I was Governor of Ohio. I can tell you that many people, as

I met them over the years, told me how our empowerment agenda

got them excited about their job for the first time in years. Many

of them said that the process that we used changed their lives. People wanted to come to work because they knew their knowledge

and opinions mattered. QSTP reenergized the State workforce and

the taxpayers are reaping the benefits.

I believe that this kind of change is possible on the Federal level

with leadership and commitment from the top, and there are several agencies that have recently been brought to my attention

where it is going on. Although the range of human capital challenges before the government will be described in detail by the

Comptroller General and the Director of OPM, I would like to briefly mention some aspects which I believe must be aggressively

addressed.

One, the government must attract people with the right skills,

which will increasingly mean information technology skills, to provide services in the information age. We just had a hearing in the

Environment and Public Works Committee with the Nuclear Regulatory Commission, and they are recognizing the importance of

3

training and that they need to integrate it into their total operations.

Two, how to attract people to government service in an era of tremendous economic prosperity and low unemployment. It is tough

to get good people today.

Three, the government must position itself to hire new workers

as the baby boomers who entered government service in the 1960’s

and 1970’s retire in the hundreds of thousands during the coming

decade.

Four, how can we ensure that Federal workforce downsizing is

managed strategically to ensure that our need for experienced,

skilled employees is not compromised and the government’s ability

to provide quality service is maintained and even advanced. For example, I suspect in some instances the employees most likely to

take buy-outs are those the Federal Government can least afford

to lose.

Five, the government must provide its employees with incentives

and training which will maximize their talent.

And six, how does the government leverage partnerships with

unionized Federal employees address these and other human capital challenges? I think this sixth issue is one that will make the

most difference.

The bottom line is that Congress and the administration, managers and employees, must work together if we are to meet the

human capital challenges of the 21st Century, and I hope we can

start today.

I see that Senator Akaka is here. Senator, do you have an opening statement that you would like to make.

OPENING STATEMENT OF SENATOR AKAKA

Senator AKAKA. Thank you very much, Mr. Chairman. I want to

commend you for holding this hearing. Your deep interest in managing human capital in the 21st Century certainly shows you are

looking ahead on this.

As the Ranking Minority Member of the Subcommittee on International Security, Proliferation, and Federal Services, I am pleased

to participate with you, Mr. Chairman, in today’s hearing and appreciate the recognition that you and the Subcommittee have made

and recognition that our jurisdictions appropriately overlap. I commend my colleague’s interest in reviewing how the Federal Government manages its varied resources—especially its most critical resource—the Federal employee.

Today’s hearing on managing the Federal workforce in the new

millennium provides the Comptroller General and the Director of

the Office of Personnel Management with an opportunity to broaden our knowledge of the issues surrounding human resource management in the 21st Century. I am well aware of Mr. Walker’s commitment in this area, and I hope to learn from Director Lachance

her views on the subject, as well.

Over the past 2 decades, there have been dramatic changes in

the way personnel and related activities have evolved. Technological advances, shifting demographics, and renewed efforts by

Congress and the Executive Branch to ensure an efficient and effective government have contributed to these changes.

4

1The prepared statement of Mr. Walker appears in the Appendix on page 27.

Throughout the 1990’s, legislation enacted by the Committee on

Governmental Affairs has affected how the Federal Government

manages its programs and assets, including its workforce.

The Government Performance and Results Act, which requires

Federal agencies to develop strategic plans, performance measures,

annual performance plans, and performance reporting, has transformed the way agencies do business.

I am hopeful that as we continue down the road of achieving

results through improving management and performance, that

employees be actively involved in these initiatives. It should be obvious that without employee involvement, improvement efforts instituted solely by statute or management will never have a lasting

effect and stand little chance of becoming a part of an agency’s culture.

These are exciting times for the Federal Government, and I am

pleased that there are fresh views on how to improve management

and performance within the Federal Government. However, there

is much work to be done, and I look forward to hearing from today’s witnesses, and again, I thank you, Mr. Chairman.

Senator VOINOVICH. Thank you, Senator Akaka.

We have a custom in this Subcommittee that we swear in the

witnesses. I would ask our witnesses to stand and raise your right

hands. Do you swear the testimony you are about to give before

this Subcommittee to be the truth, the whole truth, and nothing

but the truth?

Ms. LACHANCE. I do.

Mr. WALKER. I do.

Senator VOINOVICH. Let it be noted in the record that the witnesses answered in the affirmative.

I would remind you that your entire statement, of course, will be

entered in the record. Normally, we request that oral statements

be limited to 5 minutes, but as there are only two of you here today

and in the interest of having as informative a hearing as possible,

I would invite you to take some additional time if you think that

is necessary.

Mr. Walker, we are glad to have you here with us today and I

appreciate all of the time that you have spent with me. I am looking forward to working with you in the next several years to see

if we cannot make a difference. I am anxious to hear your testimony this morning.

TESTIMONY OF DAVID M. WALKER,1 COMPTROLLER GENERAL

OF THE UNITED STATES, GENERAL ACCOUNTING OFFICE

Mr. WALKER. Thank you, Mr. Chairman and Senator Akaka. I

appreciate both of you being here for what arguably is one of the

most important issues that needs to be addressed in order to maximize the performance and assure the accountability of the Federal

Government, that is, active management and appreciation of our

most valuable asset, our people.

Mr. Chairman, I know that you, in particular, are uniquely positioned to address this, because having been Mayor of Cleveland,

Governor of Ohio, and having been very actively involved in perVerDate 11-SEP-98 10:23 Jul 14, 2000 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 64552.TXT SAFFAIRS PsN: SAFFAIRS
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formance management at both the State and local level, that obviously gives you a wealth of experience to draw upon. I know based

upon our prior meetings that the performance management area is

one of your two highest priorities, and I know, Senator Akaka, that

you care deeply about this, as well, and I commend both of you for

being here.

Human capital management or people management is really the

missing link in our attempts to achieve a high performance, results-oriented government for the 21st Century. There are three

key enablers in order to maximize the performance and assure the

accountability of any enterprise, whether it be in government, the

private sector, or a not-for-profit entity. These enablers are process,

technology, and people. People is clearly the most important of the

three. In fact, people will be the key to attaining and maintaining

competitive advantage in the 21st Century for any type of enterprise.

The Congress has addressed process and technology over the last

10 years or so through a variety of acts. In conjunction with process, the Government Performance and Results Act (GPRA) and the

CFO Act are two examples. In the area of technology, the ClingerCohen Act and the Paperwork Reduction Act represent two examples. There has not been major legislative reform in the area of

human capital, and frankly, while there is general agreement that

this is an area that needs to be looked at, a consensus has not yet

emerged as to what the proper approach should be and it will take

time for us to get there.

Eventually, the needed reform will occur in order to provide more

flexibility while providing protection for workers and better positioning the government to be able to get its job done in the future,

especially to be able to consider skills and competencies in making

human capital decisions.

But it is important that we not wait for legislation. There is

much that can and should and, in fact, must be done within the

context of current law and administratively by various parties.

There is no time to waste. The Federal workforce is aging. The

baby boomers who possess very valuable skills, experience, and

knowledge are drawing near retirement. Job markets are increasingly competitive. Federal agencies are increasingly requiring more

technical skills and a knowledge-based workforce that are very

much in demand. Many agencies have been downsized over the last

10 years, and while they are smaller, in many cases, the results

are significant skills gaps. Many agencies are out of shape, and

they have got major succession planning challenges on the horizon.

Clearly, the Federal workforce, like all employers, needs to also

deal with the need to look for a greater mix of full-time, part-time,

and temporary workers. They need to look at flex time. They also

need to look at job remoting and a number of other possibilities in

order to be able to attract and retain a motivated and skilled workforce.

There are serious concerns that are emerging with regard to potential flight of knowledge from the Federal workforce because of

retirement eligibility. There are serious shortcomings in a number

of aspects of the human capital management systems of the Federal Government, in particular, the performance appraisal system

6

as well as the linkage to performance awards. These need reengineering and in some cases reinvention in order to make them

meaningful to both management and to the employees and in order

to provide timely, accurate, useful, and constructive feedback to

employees based upon clearly-defined standards. Effective performance appraisals tell employees where they are strong, and where

they need additional emphasis. They also help you recognize and

reward contributors, assure that you can help everybody, and enable you to deal with non-performers in a reasonably timely manner.

Mr. Chairman and Senator Akaka, candidly, change management and cultural transformation are major parts of this effort.

GAO is the third Federal agency that I have headed, and I have

also headed some private sector entities. As you know, my immediate position prior to becoming Comptroller General was as a partner and Global Managing Director for the Human Capital Services

practice of Arthur Andersen, so this is an area that I have got a

fair amount of experience and interest in.

In general, I find that many governmental organizations tend to

be more hierarchial, more process oriented, more siloed or

stovepiped, and more inwardly focused than they need to be for the

21st Century. We need to try to help effect a transformation, a cultural transformation, which will take years to try to move government toward being more partnerial, which means more empowerment, but more accountability. It means a more results-oriented

style of management, focused on outcomes rather than outputs,

more integrated, meaning that there is more working together in

teams across borders, across boundaries, across departments and

agencies, and frankly, across Congressional committees, and more

externally focused in order to get the job done. Clearly, there needs

to be greater linkage between human capital planning and strategic planning, and performance management is clearly an important element of this.

There are several key points that I would like to make. First,

Federal employees should not be viewed as a cost to be minimized.

They should be viewed as an asset to be appreciated. And like all

assets, we should try to take steps to maximize the value but manage the risk.

In addition, we have conducted a study of leading private sector

organizations on their human capital practices and we have identified a number of best practices to consider. I commend to you this

report, issued in January of this year, that summarizes those practices.

Individual Federal agencies, as well as OPM and OMB, have a

major role to play in taking the necessary steps to get us to where

we need to be, and quite frankly, Congress has a major role to play

in getting us to where we need to be, because ultimately, it is going

to take the combined efforts of agency leadership, of OMB, of OPM,

of the Congress, and of GAO and other accountability organizations

to help us see the way forward and to make progress.

The first step is self-assessment and we published late last year

a self-assessment guide in the human capital area. This guide is

designed to help agency heads help themselves, and to assess

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where they are and where they need to go in the critical area of

people management.

Much remains to be done at the executive level by the central

management agencies, OMB and OPM. However, we are encouraged in certain regards. First, OMB has recently announced in the

President’s fiscal year 2001 budget that the human capital area is

a Priority Management Objective. It is getting higher visibility. It

is getting more attention. However, it is going to take sustained attention over a number of years in order to get the job done.

OPM is creating a methodology and accompanying web-based

tools in order to try to help agencies in their workforce planning

efforts. These, too, are encouraging developments, but we need

more and it is going to take a number of years and it is going to

take sustained attention from the very top over a considerable

number of years, both within the Executive and the Legislative

Branch, in order to get this done.

We at GAO are trying to lead by example. We have conducted

our own self-assessment. We have done extensive due diligence on

ourselves and trying to make sure that we take all the actions that

we can within the context of current law to make people a priority

in order to deal with our size, shape, succession planning, and

skills challenges. I am confident that, in time, we will be able to

meet that challenge.

Last, but not least, Mr. Chairman, let me reemphasize that I

think it is extremely important that Congress stay engaged in this

matter. I think it is very important that Congress be committed

and be concerned about this area. It is an emerging crisis, there

is no question about it. And, in fact, based upon work that we are

doing, I would not be surprised if the human capital area were

deemed to be a high-risk area in January 2001. We are still doing

the work. We have got some preliminary results. And quite frankly,

some of those results are surprising.

Agencies such as NASA, and even some agencies that are viewed

to be extremely well-managed agencies, such as the Social Security

Administration, which has won a number of awards, have major

problems right below the surface, major problems with regard to

succession planning, major problems with regard to skills in balances, and other major challenges in this area.

So I think it is going to take sustained attention and commitment as occasions arise, whether it be oversight hearings, whether

it be appropriations hearings, whether it be the confirmation process for leadership, or whether it to be when agencies come up to

the Hill and ask for exemptions from Title V. Agencies should be

asked to come up with a business case, and to make sure that they

have done what they can do within the context of current law, before they start asking for exemptions from Title V.

So again, I thank you both and I look forward to hearing Ms.

Lachance’s comments and look forward to being able to entertain

any questions you may have. Thank you.

Senator VOINOVICH. Thank you.

Ms. Lachance, we are glad to have you with us this morning.

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1The prepared statement of Ms. Lachance appears in the Appendix on page 49.

TESTIMONY OF JANICE R. LACHANCE,1 DIRECTOR, OFFICE OF

PERSONNEL MANAGEMENT

Ms. LACHANCE. Thank you, sir. It is wonderful to be here and I

am very grateful for the opportunity to testify. Senator Akaka,

thank you, too, for your attention to this issue.

I know, Mr. Chairman, this is a very important issue for you,

and as you said, you have been a leader in this effort, both as a

big city mayor and as a governor, and I think you probably have

many lessons to teach us and we are looking forward to working

with you.

I am pleased to have this opportunity to discuss the administration’s plans to strategically and fully align the Federal workforce

to support agency goals. It is good to see so many people discussing

what we at OPM hold as a core belief, that the government’s

human resources, our people, are our most valuable asset. We must

engage in the war for talent. That is, secure, develop, empower,

and retain the talented people we need to accomplish our mission

for the American people.

This is the foundation for OPM’s strategic vision of human resources management. That strategic view is driven by dramatic

change in two areas. The first is the way work itself has changed,

particularly through the impact of the information revolution.

Human resources systems that were designed for the stable bureaucracies of the 1950’s and 1960’s simply have to change to cope

with the reality that we must all adapt or be pushed aside.

The second area of dramatic change in the shift from process to

results and from merely following the rules to serving our

customers. Agencies must be prepared to fully integrate human resources management with their mission critical initiatives. I believe this integration embraces the current emphasis on human

capital.

I describe this effort simply as getting the right people with the

right skills in the right jobs at the right time, and in the Federal

Government, we must always add, and in the right way. This ensures that we honor the merit system principles, veterans’ preference, and other important public policy and law.

For decades now, getting the right people at the right time

meant doing our work according to Hoyle. Nowadays, it means

doing our work in ways that contribute to achieving results and

that difference has truly transformed human resources management.

When the President included strategic human resources management as a priority management objective in the fiscal year 2001

budget, he sent an important signal that people are our most important asset. This objective includes three critical actions.

First, OPM will help agencies strategically assess their human

resources to ensure a quality workforce for the 21st Century. To do

this, we will give agencies a workforce planning model that will

help managers determine the kinds of talent they will need in the

future.

Second, we will support all Federal employees as they strive to

improve customer service and get mission results. They will be emVerDate 11-SEP-98 10:23 Jul 14, 2000 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 64552.TXT SAFFAIRS PsN: SAFFAIRS
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powered. In our unionized environment, labor-management partnerships are an essential vehicle for genuine empowerment, and

that is why President Clinton recently reaffirmed his commitment

to partnership. We have seen over the last 6 years that partnerships have cut costs, enhanced productivity, and improved the

delivery of service to the American people. However, without continuous learning and an investment in training and development,

empowerment is truly just an empty phrase. Up-to-date knowledge,

skills, and abilities are critical for both organizational performance

and individual employee success.

Finally, employee empowerment can only succeed when employees can balance their work and family needs. The evidence is in

and it is clear—these programs foster greater productivity and

higher worker morale.

As the third major action to meet the priority management objective, OPM will ensure that agencies have the tools to attract, manage, and retain the talented employees they need and we will encourage agencies to make better use of existing flexibilities to fit

their specialized situations.

OPM has introduced a number of changes and flexibilities in the

last 6 years. For example, we delegated to agencies the authority

to assess applicants in order to bring the hiring decision and the

recruitment action closer to the managers who must deliver the results. We also decentralized performance management, again, to

allow agencies to design programs that work best for them.

But more change is needed. Today, most candidates for Federal

jobs are assessed against a rigid set of qualification standards with

narrowly defined skills. This system simply does not measure the

wider and more flexible range of skills that are important to today’s organizations. So OPM is designing a new system that will

allow agencies to assess candidates against a broad range of job

competencies.

We also hear from managers and job applicants alike that it

takes the government far too long to hire employees. In the very

near future, we will propose new hiring tools to bring the government’s hiring practices in line with the realities of today’s job market. In addition, OPM will continue to speed selection and hiring

decisions by using technology OPM pioneered—the use of touch

screens, phone applications, and now the Internet.

Have these technological advances helped? They absolutely have.

The Census Bureau, just as one example, has been able to reduce

the time required to hire computer specialists and statisticians

from 6 months to as little as 3 days.

Of course, effective human resources alignment must also consider the compensation systems that help the government compete

for talent in a tight labor market as we have now. We are currently

looking at the entire structure of our compensation systems to see

how they must change to support the government’s mission today

and well into the future. In the meantime, to give agencies more

immediate assistance, we are working on a proposal that would enhance recruitment, relocation, and retention incentives.

Employee performance management offers another opportunity

for aligning human resources management with agency goals by

linking what employees do in their day-to-day work to the achieveVerDate 11-SEP-98 10:23 Jul 14, 2000 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 64552.TXT SAFFAIRS PsN: SAFFAIRS
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ment of organizational results, customer satisfaction, and employee

feedback. These are the balanced measures cited in the President’s

budget for fiscal year 2001.

Now, despite our hard work and our innovative plans, if we do

not manage our people well and with compassion, our programs

will fail. So we are working on a series of initiatives to ensure that

the government selects and develops exceptional executives with

the leadership expertise needed to meet the challenges of our new

century. While it is the job of line managers and executives to deploy people to achieve an agency’s goals, human resources professionals also play a crucial role as their expert advisors. At OPM,

we are committed to helping agencies build a strategically focused

human resources workforce.

In conclusion, Mr. Chairman, it should be clear that the Federal

Government’s most valuable asset is truly the talented and diverse

women and men who work every day to make a difference in the

lives of the American people they serve. Without attracting, managing, and retaining the right people in the right jobs with the

right skills, no organization can perform its mission.

That concludes my prepared remarks, sir, and I have submitted

a statement for the record, but I will be pleased to answer any

questions you may have at this time.

Senator VOINOVICH. Thanks very much.

I read the report, ‘‘Human Capital: Key Principles from the Nine

Private Sector Organizations,’’ and about 40 percent of them had

to do with quality management and the rest of them had to do with

some other things. This was a report on successful private sector

businesses. Do you, Ms. Lachance, have any kind of tools to ascertain whether or not a department is really doing a good job in

terms of human capital?

Ms. LACHANCE. We use a number of ways to evaluate how an

agency performs. We are so pleased to have received the input from

GAO. We think it is very helpful. It has been presented to the

President’s management council and we will be moving forward to

utilize the very important tool that General Walker has put together for us.

But in addition, we have a very important function at OPM

which is to provide oversight to the entire Federal Government on

human resources management. We have changed our focus on that

oversight function. It is no longer punitive. It is not a ‘‘gotcha’’

game. It is not about finding mistakes and getting people in trouble. It is a productive dialogue that we enter into periodically with

every major Federal agency and work with them to make sure that

they are maximizing their human resources functions.

In addition, we have spent a considerable amount of time on a

couple of other initiatives. First of all, we believe that it is key to

have human resources strategically involved and aligned with the

entire mission and performance of the agency. So we have actually

developed a pyramid that is based on effective human resources

practices and an efficient human resources profession and function

at an agency, and then finally at the very top, the place where it

all comes together, to make sure that everything is based on inert

principles and that the human resources strategy is aligned with

an agency’s mission.

11

We have also, Mr. Chairman, done a significant study on the

state of the human resources profession in the Federal Government

and we have found there are skills lacking, that the human resources profession has suffered from being considered a support

function in an agency. We are hoping to elevate the entire profession, advise agencies on the kind of training and skills that the

human resources professionals need and urge every agency to have

their human resources professionals at the table when they are developing their strategic plans and goals for the next several years.

Senator VOINOVICH. I would be interested in the methodology

that your folks use when they go over an agency to determine

whether or not they have the ingredients that are necessary to be

successful from the human capital point of view——

Ms. LACHANCE. I will be happy to provide them.

Senator VOINOVICH. One of the GAO reports I reviewed said that

you have to bring your human resources people right into the management and tie that in with a strategic plan for the business. You

recognize that that needs to be done?

Ms. LACHANCE. Absolutely, and I will be happy to provide for the

record the kind of evaluation that we conduct when we go on-site

and work with you on that.

Mr. WALKER. Mr. Chairman, could I mention something?

Senator VOINOVICH. Certainly.

Mr. WALKER. As a follow-up, I think it is very important that we

take a constructive engagement approach to this important issue,

and that is what we are trying to do at GAO. For example, these

two documents are not ‘‘gotcha’’ documents, they are ‘‘help you’’

documents. They are tools that people can use to help themselves

address these issues, information of help them to assess where they

stand as compared to other leading organizations.

Clearly, we at GAO are part of the Legislative Branch and clearly we are going to have evaluative responsibility, and clearly we

are going to need to assess which agencies are doing well and

which ones are not, but we do not just want to focus on that. We

also want to focus on trying to help people get to where they need

to be in order to generate the results that we all want.

Senator VOINOVICH. How long has that been out, that self-assessment?

Mr. WALKER. The self-assessment guide has been out since September 1999. Our best practice guide was issued in January of this

year.

Senator VOINOVICH. Ms. Lachance, do you know if any of your directors have read that self-assessment guide?

Ms. LACHANCE. Everyone in my agency has, and I know that it

has received some government-wide attention. We were fortunate

enough to have General Walker come to the President’s Management Council, which as you know is made up of the government’s

chief operating officers from every major department, and I think

that was a good exchange. We have spent a lot of time discussing

the checklist and I know it is being taken seriously across the entire administration.

Senator VOINOVICH. I would be interested in, again, what their

response to it is and whether or not they think it is worth while

for them to follow through. It is very interesting. I wrote a note

12

1The questions and responses from Mr. Walker and Ms. Lachance appears in the Appendix

on pages 74 and 77 respectively.

down here that I am going to do an assessment of my own organization.

Mr. WALKER. Mr. Chairman, I think that is an important point.

We have used this to assess ourselves, and I think one of the

things that I believe very strongly in is that we have got to practice

what we preach.

Senator VOINOVICH. I think, Senator Akaka, you have somewhere to go and would like to ask some questions this morning, so

we would like to hear from you.

Senator AKAKA. Thank you very much, Mr. Chairman. I have an

unexpected scheduling conflict, so I thank you for yielding to me.

Mr. Walker and Director Lachance, I want to thank you for your

testimony. I will be submitting, Mr. Chairman, other questions,1

but let me ask this one. Mr. Walker, you mentioned the quality

management tools noted in the blue pamphlet, which emphasis results. Are there tools in place to ensure that measurements used

to assess the performance of the Federal Government and its regular workforce are adequate for the Federal contract workforce?

Mr. WALKER. I think more needs to be done in this area, Senator.

Part of this relates to the Government Performance and Results

Act. Obviously, as part of the Government Performance and Results Act, in addition to the strategic planning exercise, there is

supposed to be an effort to come up with performance measures,

performance measures that are not just focused on outputs but also

outcomes. Some agencies are doing better than others in trying to

come up with ones that are relevant and understandable to the

Congress and to the public.

I think once that is done, then these measures have to be linked

to the performance management system for evaluating your people

at all levels, both individually and as teams, to make sure that

they are linked with the measures that you are trying to promote

for the organization as a whole. So I think we have got more work

to do in that area.

Senator AKAKA. Is there any indication of any agencies using

these tools?

Mr. WALKER. Yes. Actually, we have had quite a bit of interest

in the self-assessment guide. As Director Lachance mentioned, I

had the opportunity to go and meet the President’s Management

Council. There was a significant amount of interest in this topic.

There has been a lot of interest, frankly, even beyond the government in this topic.

I find that when I go out and visit on the front lines with agency

leadership, I find that the human capital challenge resonates. I remember being at NASA, at the Johnson Space Flight Center. They

were there to brief me on the space station and on also the new

technology to replace the shuttle, yet when I talked to them about

human capital, a great deal of motion came out because they face

so many challenges in this area and they felt that it has been so

sorely needed to place more time and attention on this area.

So yes, we are getting a lot of attention and we are hopeful.

13

Senator AKAKA. Thank you very much. Thank you, Mr. Chairman, for giving me this opportunity.

Senator VOINOVICH. You are welcome.

Senator VOINOVICH. There is a lot of talk today in some of the

agencies like NASA and other agencies that need new skilled

workers, particularly in the area of technology. There is some consideration being given to legislation which would allow for early retirements of individuals. For example, last year, we tried to get legislation to deal with the challenging problems that we have at

Wright-Patterson Air Force Base in their research center. We were

not able to get it through because it was felt that you should not

just select one agency or facility to do that.

I would like to know where your agency stands on legislation

that would make it possible, across the board, to allow agencies to

start looking at authorizing early retirement to make room so that

they can bring in some new folks that they really need. In some

instances with older workers—I found this in State Government—

where you had early retirement and you lost them, you wondered

whether you would be able to replace them, you saved some money

and brought in new people, but you just sometimes wonder how

much you benefitted from it. But overall, my experience has been

that it has been good.

But we do have Federal agencies today that really need to bring

in some new people and are unable to do it and need this kind of

flexibility. I am just wondering whether or not the Office of Personnel Management would support legislation of that sort.

Ms. LACHANCE. Well, as a matter of fact, Mr. Chairman, the

President’s budget actually urges Congress to enact early-out authority and buy-out authority to use as a workforce shaping tool,

not just as a tool to downsize, which I think is an important distinction. In the past, we had used those two authorities to shrink

our workforce. Now, I think we have to get a little bit more sophisticated and realize that we have skills imbalances, that we need

perhaps different kinds of competencies as we enter the 21st Century. So we would be thrilled to work with you on something like

that.

You rightfully noted, and I would like to confess at this point, I

do have a concern about flexibilities for just one particular agency

unless that agency can make a case that it is so different from all

the others that it should not apply to the entire government. I just

do not want to create a government of haves and have nots and

have some agencies with a lot of flexibility and ability to really

meet their mission, while other maybe less popular agencies or the

ones that do not have perhaps as compelling a mission as someplace like NASA would still be struggling under some of the older

rules and restrictions. So I would be thrilled to work with you on

that kind of legislation.

Senator VOINOVICH. Yes, Mr. Walker?

Mr. WALKER. Mr. Chairman, I think this is critically important.

You put your finger on a very important issue. In the past, to the

extent that early-out authority or buyout authority has been granted, as Director Lachance said, generally, you had to give up the

slots, and therefore you did not really gain that much from it.

14

We have a lot of agencies that are out of shape, that face major

succession planning challenges, that have not hired for years, that

need to reinvigorate their organizations, that need to be able to attract certain skills, and to be able to gain reasonable flexibility

while, with appropriate protections and safeguards, to be able to

use that to realign or reshape the organization.

One other thing, Mr. Chairman, that you touched on earlier: You

talked about how difficult it is to be able to attract people now,

given the current economy, and the compensation differentials have

grown greater over the years between the private sector and the

Federal workforce. But in addition to that, the debt loads that

many individuals have as they come out of college are much greater than they used to be, and in cases of agencies like GAO and

NASA, where most employees have masters or doctorates, the debt

loads that they have are considerable.

I think one of the things that we need to think about is if the

Defense Department can end up giving incentives for debt relief for

selected hires, why cannot certain civilian agencies be able to do

that, too, especially in conjunction with realignment, reinvigoration, and the need to acquire certain critical skills. I think it is

something we need to think seriously about, which, frankly, could

be very helpful and could be done on a tax-favored basis that might

help reduce our competitive disadvantage.

Ms. LACHANCE. If you do not mind, Mr. Chairman, we do have

some thoughts on that very issue and would love to hear your

views and work with you on developing that kind of proposal.

Senator VOINOVICH. The average Federal employee is 45 years

old. In 10 years, he will be eligible for retirement. Nine-hundredtwenty-three-thousand Federal employees, more than half, are between 45 and 69 years of age. Five-hundred-and-seventy-five-thousand Federal employees are between 50 and 69, meaning that over

30 percent of the workforce is either eligible for retirement or will

be within the next 5 years.

It seems to me that there are aspects of this that really need to

be thought out in terms of long-range planning and we ought to get

on it ASAP. One aspect of it is that many Federal employees are

going to be retiring and how do you replace them. Another issue

is, in highly technical job areas, how do we compete with the private sector? How do you attract the people that you want so that

you have the workforce that you need?

The other is an immediate problem, and that is the issue of how

do you provide for early retirement for those that would like to

leave the service, save that slot, and then bring new folks into the

organization. From what I understand, the Office of Management

and Budget has taken the position that they do not want to get

into this because of the fiscal impact of the early retirements, they

are concerned that it is going to cost the Federal Government too

much money to do this.

The point I am making is, is anybody sitting down and really

looking at all aspects of this to determine where we are going? We

are going to have a new president next year and that president is

going to be faced with some tremendous challenges. The job right

now is to identify those challenges that need to be addressed so

that they do not get lost in the shuffle when the new administraVerDate 11-SEP-98 10:23 Jul 14, 2000 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 64552.TXT SAFFAIRS PsN: SAFFAIRS
15

tion comes in, because you know and I know that it takes a while

for that transition to occur, even if, say, Vice President Gore is

elected.

Even in that case, you are going to have a lot of change. People

are moving, coming in, and so on, and somewhere, this has got to

be elevated in terms of a real crisis that needs to be addressed. I

would be interested, are you doing anything in that area, either

one of you?

Mr. WALKER. Well, first, I can tell you what we are doing, Senator. We are doing work right now on retirement eligibility for the

Senior Executive Service to try to get a handle on that. We are also

doing work on critical occupations. We are asking the major departments and agencies to identify what they deem to be their critical

occupations and where they stand with regard to their needs

versus what they have on board. Obviously, we are trying to increase the visibility of the issue and encourage greater action both

in the Executive and the Legislative Branch.

I do think that if we end up putting this on our high-risk list,

and it is early yet, we have not made that final judgment, but I

think there is a good possibility that will be the case, that historically has gotten some attention. That has gotten some attention

both in the Executive Branch as well as the Legislative Branch, although we need to make sure that we have the appropriate support

for it. But I do not have a whole lot of doubts that we can do that.

Ms. LACHANCE. And Mr. Chairman, if I could, I want to assure

you that OPM is, in fact, performing the role that you outlined

here. We are thinking strategically about this problem on a holistic

and comprehensive level. We may be slicing it up in terms of finding solutions, but our thinking, our approach to the issue is

extremely comprehensive and I think you will be pleased with the

results of our work.

I think there is an important point to make, as well. The statistics that you cited, I think really transcend the traditional political

calendar that we are all used to operating with here in Washington, DC. This is an election year, but I think that everyone now

realizes, everyone in leadership positions across the Executive

Branch understands that these numbers are real, that they are

catching up to us, and that they have to act.

We have a number of initiatives on the way that are going to,

we believe, help the agencies do a good job at it. Sort of the centerpiece of that effort is our workforce succession model, which is

going to be an e-enabled, web-based effort to provide agencies with

an unprecedented amount of data and access to statistics than they

have ever had before. They are going to have the ability, Mr.

Chairman, to compare their own situation in their agency with not

only the government-wide numbers but also private sector numbers

from BLS and from the Census Bureau, and also to assess what

kind of talent is available in the educational pipeline.

So we are hoping this is going to help people shape their thinking on these issues. In addition, it is going to allow them to run

some ‘‘what if ’’ scenarios so that they do not have to start down

the road, take on a lot of risk, invest a lot of resources into a particular strategy and then find it is not working. We are hoping this

16

tool will help them do that, and we are hoping to have that ready

as soon as possible. It is one of our major priorities.

But even beyond that, we are taking a complete look at the compensation systems. We have an entire unit dedicated entirely to

that effort, and that is not only looking at pay but also benefits to

make sure that we keep up with the private sector in that area,

as well.

So we are looking at that. We have an entire effort on the Senior

Executive Service. We have come up with a leadership pipeline

that provides training for people, virtually at the GS–11 or GS–12

level, once they have been identified as potential leaders, all the

way up through when they get into the Senior Executive Service,

and we are not stopping there because, obviously, once you get into

the SES, you still have to keep learning.

So we have established a learning center which is going to focus

on training opportunities for the SES and also encourage mobility,

which we believe is a key factor in people keeping up their skills

and learning different ways and approaches to getting results for

the American people.

I am also pleased to chair, Mr. Chairman, the President’s Task

Force on Federal Training Technology to assist in Federal employee

training, where we are looking at some innovative approaches

using technology, including some pilot programs on individual

learning accounts where each employee can have a voice in their

training at the Federal worksite.

So we are very excited about the potential of all of those tools

and we think that it is going to be a strategic, comprehensive approach to this very important crisis that we are facing.

Senator VOINOVICH. Well, I do not mean to be critical, but it is

late in the game, and from a practical point of view, if I were in

your shoes right now, I would be putting together transition manuals, and I hope the Federal Government does that. In Ohio, I know

we were already well underway with transition manuals for the

next administration, prepared for whoever.

But the fact is that somebody ought to be really concentrating on

human capital at the agencies. There is a GAO self-assessment

guide, and somebody should be identifying the human capital problems and prioritizing the areas that have to be immediately addressed when the new administration takes office.

Second, the Federal Government has not done a job classification

since 1978. If you talk to the presidents of the respective unions,

as I have, they think it is terrible. Now, job classification is tough.

Part of the problem is that the current classification system is not

flexible enough, people are in the wrong classification, and it is out

of whack. I think that the next administration better come in and

start looking at this issue, because maybe it is one of the reasons

why we are not as competitive as we should be.

One of the things around here that gets me is that there are periods of time when you do certain things. You can get started with

some new initiatives this year, but the next administration is going

to come in and they are going to have their own ideas. I am just

going to say this to you. If you really want to make a contribution

to this area, I think for the remainder of the year, you should conduct a government-wide appraisal of human capital. You will find

17

that you have got some wins and you have got some losses, and it

would show that you care about these agencies.

You could then give this appraisal to the next administration and

say, hey, you had better start paying attention to this. I mean, the

issue of training, it is terrible. Just talk to your union presidents.

The training is not there. The training budgets have been reduced

in many areas. The incentive program, where is it? Quality management, again, not there but for a few agencies.

So those are some of the things that ought to be looked at, and

the other thing is the issue of, and I will yield momentarily because

Senator Durbin is here and I am sure he would like to make a

statement or ask some questions, but how do you, from an administrative point of view, make sure that human capital does not fall

to the bottom like it always does, and that goes for this administration and for administrations in the past.

The problem is that when the new secretaries and assistant

secretaries come in, they spend most of their time worrying about

their budgets, have very little time to do anything else, and

management just gets shoved to the side. You have to have some

mechanism, either in the Office of Management and Budget or elsewhere, and you might just want to think about it with your colleagues, where would we put this issue to make sure that when the

next administration comes in, this gets the attention that it really

needs. We probably need it now more than ever before in light of

some of these statistics.

Ms. LACHANCE. If I could, Mr. Chairman, the fact is that we are

a very small agency and we did not start these efforts this year,

in the last month or even since General Walker gave us some of

his tools and his thinking on it. The fact is that we have been

thinking this way for several years now and we could not be at the

point we are at with some of these tools and some of the thinking

that has already gone into this subject if we had not started in

1993 essentially redesigning ourselves, first of all, as an agency so

we could serve as a model employer, and then looking to the rest

of the government as to how we could be most helpful to them in

the challenges they are facing.

But I also would like to maybe disagree with you on one small

point. I do not think we have a year to concede to this problem.

I think that this is a critical issue. These numbers are catching up

with us. Every day, they are getting worse. Every day, the Federal

Government ages. Every day, more Federal employees are eligible

for retirement.

I am going to keep working for the rest of this year on this and

I think that in these next several months, we can make a lot of

progress in these efforts. I would love to join with you on this effort. I agree that the transition is important. I am going to focus

on that, as well. But I also think that we can also get a lot done

between now and January on the PMO, on some of the things that

have been identified in there, on increasing partnership, labormanagement, on getting our workforce succession planning tool in

shape and ready to go for people to use no matter who is President,

in using, as General Walker has said, the flexibilities that are already on the books. So I am going to keep working on it.

18

Senator VOINOVICH. Well, I would not want you to put aside the

pressing problems that you have. You have to run your agency. I

am just saying, you have X-amount of time, you have X-resources,

and you have to decide where can you put in your resources to get

the most return on their investment. That is all I am suggesting.

Senator Durbin, would you like to make a statement this morning?

OPENING STATEMENT OF SENATOR DURBIN

Senator DURBIN. Thank you, Mr. Chairman, and thank you for

this Subcommittee hearing to focus our attention on the Federal

Government and to really determine what we should be doing to

manage, empower, and value its greatest assets, its workforce of

1.8 million dedicated men and women. I appreciate your commitment to work on this issue and I have a complete opening statement which I would like to make part of the record at this point

and in the interest of time, just ask a few questions.

[The prepared statement of Senator Durbin follows:]

PREPARED STATEMENT OF SENATOR DURBIN

Thank you, Mr. Chairman, for scheduling this morning’s Subcommittee hearing

to focus our attention on how the Federal government is—or should be—managing,

empowering, and valuing its greatest asset—the 1.8 million dedicated men and

women who serve the public as Federal employees. I appreciate your interest and

work on this issue.

As you have pointed out, the Federal Government faces a host of serious demographic and fiscal challenges in ensuring a vital workforce for the next few decades.

The reality of today’s marketplace is that there is strong competition for talent, and

the public sector must vigorously compete with the private sector for human resources with increasingly complex skills.

The advent of new technologies that we may not have fathomed even a year ago,

creative ways of organizing work, alternative means of delivering public services,

and an increasing reliance on a temporary workforce have redefined the nature of

public work. However, the structure and systems for acquiring and developing

human capital have not necessarily kept pace.

I look forward to hearing the insights and guidance of our distinguished witnesses, Mr. Walker and Ms. Lachance, who have been asked to share their perspectives about what Federal agencies should be doing to ensure that our greatest

asset—today’s and tomorrow’s Federal service—is equipped with the flexibility, vitality, and focus to deliver top-notch services to the American public.

Senator DURBIN. First, an observation. Ms. Lachance refers to

this war for talent in her statement. I run into this, I am sure that

Senator Voinovich does, as well. Just to give you an illustration,

within the last 6 weeks, the major law firms in the City of Chicago

have decided that in order to attract the best law school graduates

to come to work for them, they have to offer $130,000 a year because otherwise they are going to lose them to dot-coms and you

name it. They do not have a chance.

At the same time, and this was a source of great celebration at

a lot of the favorite watering holes of Chicago, all the first and second-year employees in their firms got $42,000-a-year increases, so

they were out celebrating for quite a bit.

Well, what does that mean? Well, congratulations if you happen

to be at the top of your class at Harvard or University of Illinois

or Chicago or whatever it happens to be and you happen to go to

one of those law firms. But let me tell you how it also plays out.

When I put an ad in the paper and say I would like to see which

19

lawyers would be interested in becoming Federal District Court

judges in the Chicagoland area, the Northern district area, with

tens of thousands of lawyers, I had 12 applications. The job pays

$139,500. I think that is roughly what we are paid, the same level.

It has stature. It has a great pension system. It has all of the

above. But surely it is not keeping up with the real marketplace.

I sense that in many respects in attracting the talented people

that we need in so many areas of the Federal Government, we are

running into the same thing. If we are not going to be salary competitive, we are going to find ourselves attracting some good people

prepared to sacrifice for public service, but not even catching the

attention of a lot of others who have a great deal of talent but are

not prepared to make a fantastic economic sacrifice to serve our

government. Is that your impression, General Walker?

Mr. WALKER. It is a major problem, Senator, and I think we have

to recognize several things. First, why do people come into government? That is one of the questions that I have asked all our employees through a survey. Why did you come to work for government? And in many cases, they came because they want to make

a difference, because of the balance of work and family, because of

the challenge of the work, and because of the rewards of public

service. Clearly, money was not one of the reasons they came to

government.

On the other hand, what we are finding is that it is a new

ballgame now because the people we surveyed at GAO were hired

10 years ago, 15 years ago, 20 years ago or more, because we had

hiring freezes for 5 or 6 years in the 1990’s. The kind of people that

are coming out of college now and the kind of opportunities they

have, it is a whole different ballgame.

I think we need to look at it from a variety of perspectives. One,

there are only certain people that are going to be interested in

working in the government to begin with, and we have got to identify those. But second, we need to also be able to say, what can we

do to enhance our hiring opportunities? I mentioned earlier in the

hearing that a lot of people that we hire and other agencies hire

have master’s degrees or Ph.D.s and they are highly sought after.

Not only is the compensation differential a problem, but the debt

burden is a problem.

One of the things we ought to be thinking about is whether or

not we can give some debt relief. The DOD does it. Why can we

not do that for critical occupations in the civilian workforce, and we

could do it on a tax-favored basis and that might help to shift the

equation here and attract more people.

Further, why can we not look at our compensation structures

and start compensating more for skills and performance than for

more tenure? I think it is something we need to think about doing.

Now, we obviously have to be careful about it. We need to make

sure that we have got protections, that it is not discriminatory and

things of that nature. But I think we need to fundamentally step

back and reassess our approach, not just for the new people that

we are trying to get but for the people we already have.

I am on the front lines on this. I am going to Florida A&M next

month. I am going to Cal-Berkeley. I went to the University of

Texas and I am trying to attract promising new talent. So I think

20

we need to step back and ask ourselves some of these questions.

We are going to have to do some things differently, I think, if we

are going to compete in the future.

Senator DURBIN. I think the image of government service when

I was graduating from college was the following: It does not pay

as well. You are going to be in a lot of offices with battleship grey

desks and filing cabinets. But you have job security and a lot of

holidays and a great pension when it is all over. That was kind of

the package. Take your pick. What is your view on life? Maybe that

is an oversimplification, but that was an image that a lot of my fellow students shared.

I do not know if that is an image that can sell the product today.

I think a lot of people are willing to take a little more risk in their

life if the reward is there, and if we do not build that into government service, as you suggest, we are going to lose some of these

creative people who might just otherwise be willing to make that

economic sacrifice.

Mr. WALKER. I think the other consideration we have, Senator,

is that job security is not what it used to be. When you look at all

the downsizing that has occurred in this last decade, one thing we

have to keep in mind is it is not only the entry-level people that

have been affected. One of the things I think we have to recognize

is that there are a lot of early retirees who have a lot of skills and

who want to do something for their country. We ought to be taking

advantage of these skilled people. We ought to be going after them

to try to see if we can get them in to make a contribution to their

country, as well.

Senator DURBIN. Ms. Lachance and General Walker, have you

taken a look at this college debt forgiveness? We do have college

debt forgiveness. Ironically, Mr. Chairman, we have college debt

forgiveness for those who want to be prosecutors but we do not

have college debt forgiveness for those who want to be defense attorneys. It tells you something, does it not?

But let me ask you, could you give me, or do you know a breakout of the areas where we have college debt forgiveness in our law?

Mr. WALKER. I do not know it off the top of my head. Director

Lachance may. It is an area that she mentioned that they are looking at.

Ms. LACHANCE. Senator, we are actually working on this very

issue. The legal authority is there. There is obviously a budget implication, a very serious one, and so we are working with other

agencies to develop regulations to implement this on a broader

basis than where they are utilizing it now.

But I know one of the places, I was a keynote speaker at the

Army JAG school down in Charlottesville and they just got the authority and they had a lot of interest in talking to me about how

to apply it and what kind of service contracts and requirements

they should have for it.

So it exists. I think we could do it and we are working on it, and

so hopefully we can come up with a way to do it that is equitable

and fair and that gets at this recruitment issue.

Senator DURBIN. If the Chairman is interested, I will certainly

follow his lead, but I would like to get into this.

Ms. LACHANCE. Right.

21

Senator DURBIN. I would like to figure out where the debt forgiveness programs are and whether we can identify critical areas

of need in Federal employment where we can create incentives for

people to consider public service.

When you went to the major corporations and looked for the best

practices, I would assume that many of those corporations had

spent some money in developing their concepts, in other words,

went beyond the theoretical in reading the books and writing it

down and probably engaged focus groups, a lot of interviews, tried

to cull from the prospective applicants to their corporations what

they were looking for, then went to their employees who stayed on

and did a good job and said, what does it take to keep you here?

Why did you stay and why did you not leave? Have we done anything comparable when it comes to Federal public service?

Mr. WALKER. I cannot comment for the Executive Branch. I can

say that we are doing those things at GAO. One of the things that

we have done is to survey all of our employees. We got an 87 percent response rate, which is incredibly high. Eighty percent of the

persons provided supplemental written narratives, of which I read

every one, 678 pages. We had a number of focus groups. We have

a number of other outreach efforts under way in order to try to find

out from people what they like, what they are concerned about,

why did they come here, why did they leave, and so I think that

is critically important.

I think another thing that you mentioned, Mr. Chairman, which

is relevant here, too, is investments. Sometimes you have to make

targeted investments in order to be able to get to where you need

to be. One of the things that suffered in the 1990’s was training

budgets which in many cases were absolutely slashed. Training is

an investment in the future, and I think we need to do some reinvestment there.

Ms. LACHANCE. Senator, if I could, we have done a number of

studies on some of these issues, and not only talked to Federal employees and surveyed Federal employees through our organizational assessment survey and through the National Partnership for

Reinventing Government’s employee survey, but we have also

talked with some of the colleges and universities, conducted focus

groups with students who were thinking about what kind of career

to have, and we have found a number of things.

The compensation issue is always going to be a problem and it

is always going to be one where we cannot compete, or probably

cannot compete, barring any dramatic change. But what we are

finding is that the people with the skills we need are looking for

a more total picture, a more comprehensive picture of a work environment than just pay. They are looking for family-friendly policies, the ability to balance their work life and their home life. They

are looking for training. They want somebody to make a commitment to them and help them with continuous learning because they

recognize, probably better than those of us who are a little older,

that the world of work is constantly changing and you constantly

have to update your skills.

They want to be in an environment where their contribution is

recognized, and that is another key area that we are looking at in

our overhaul of the compensation system. How do you recognize top

22

performers? I think in the Federal Government, we do ourselves a

disservice by focusing very often on poor performers. The fact is

that there are a number of outstanding performers and we have to

find a way to distinguish them beyond even what is available now,

which are some very significant bonuses and opportunities for bonuses and Presidential rank awards, but there has got to be more

and there has got to be a more comprehensive approach to that.

So we are finding that it is a much bigger picture than just the

paycheck and we are trying to adapt that as we look to the kind

of people we are trying to attract.

We are also getting away, and I mentioned this in my testimony,

getting away from the strict skills-based approach to hiring. You

know, we used to hire an accountant, for example, by saying you

had to have 24 hours of accounting courses in college. That does

not tell me or any other manager how that person is going to perform in the job. What we have to do is move to competencies, get

beyond the very strict technical skills, move to someone’s ability,

for example, to work in a team, someone’s ability to learn and relearn and adjust to change. That is the environment we are faced

with and that is what we are going to be able to measure in the

very near future and base our hiring decisions on those competencies.

Senator DURBIN. I want to make an observation here and I want

to exempt the Chairman from my observation because he is relatively new on the scene here. But I think one of your single biggest problems is the U.S. Congress when it gets right down to the

bottom line, the businesses that you have talked to sit down at the

highest levels and develop a team concept and say, now let us execute it and we are going to try to prove to the shareholders it was

the right decision.

Just about the time you have developed your team concept, you

have to come up with an appropriations bill and then you have to

go through the GAO studies and then you have to go through all

of the scrutiny and oversight which is part of our governmental

system, and if it ends up looking like a skeleton of the original concept, it probably is after everybody has had a crack at it.

I have seen over the years, and just in most recent memory in

the last 6 or 8 years, a shameless scapegoating of Federal employees on Capitol Hill. This concept of an army of clerks, costs to be

cut, some of the things that you have noted here was repeated over

and over and reached its extreme when we had a government shutdown and a lot of people said, who will ever notice? If we closed

it down, who will ever notice? Mr. Limbaugh notwithstanding, people did notice, and that may have been a turnaround moment in

our history. I hope it was.

But it just strikes me that if we are going to ask you to attract

the best and brightest and keep them, we have to really grow up,

too, in our attitude toward the Federal workforce. We have cut

back dramatically in size over the last 6 or 7 years, putting more

burdens on those that remain and creating uncertainty, I am sure,

in their minds about their futures. We have not invested in training, which you have noted to be one of the major elements that

needs to be encouraged if good people are going to come and stay.

23

And we have not given you the flexibility to manage many areas

where you needed to. We pushed our oversight to an extreme.

Let us just for a moment focus on the whole question of contracting out and privatization. I can recall a conversation in the

Appropriations Committee where there was a suggestion about

privatizing a function of a Federal agency and I said, I just want

to put an amendment that says we should not do this unless we

are going to save money, and the people said, no, you do not understand. We want to privatize. Saving money is not the goal. We

want to privatize. And when that mindset is running rampant on

Capitol Hill, no one is safe because you are not really judging anybody by performance or cost to taxpayers. You are just bound and

determined to reduce the number of FTEs at any cost, and frankly,

we have sacrificed that in the process.

So I think we in Congress bear a major part of the burden, I

guess the blame, for where we are today with Federal employees.

I think we could change it, but it is going to take some visionary

thinking to realize that if we do not, some of the predictions about

losing some of the best people are going to come true and then we

will have to answer to the country for it.

Senator VOINOVICH. Senator Durbin, I would like to say to you

that I agree with what you have said here. I want you to know,

and I am going to say this publicly, I am sticking with this for the

next 2 to 3 years. I am not going to let up on this. We are going

to have hearings on training. We are going to have hearings on incentives. We are going to have hearings on quality. We are going

to get into all of these issues and raise their profile.

We have to talk about the shadow government that is out there,

the result of privatization. You have reduced Federal workers and

hired the private sector and there is little or no oversight of the individuals. It is just a kind of a game because everybody wants to

show at the end that we have fewer employees, but, in fact, we do

not have fewer employees in most instances, except in the military.

It is going to take people like you and me to stand up and say,

these agencies have to have the people and the wherewithal and

they have to be competitive if the government is going to provide

decent services.

We were talking earlier about the issue of early retirement. We

have a real personnel problem at the labs at Wright Patterson Air

Force Base. They have to hire some new people. The Air Force requested the authority to offer early reitrement to some individuals

that would then free up some slots and some money so that they

could bring in new people. The proposal was turned down because

it was agency specific. We are looking at maybe doing this more

uniformly across the Federal Government.

There is the issue of, which you just mentioned, college education. I just got a note from staff that said that agencies already

have the authority to provide debt relief to employees. It is not exercised often because of high cost. Now, this legislation I mentioned

which allows for early retirement, OMB is concerned about it because of the high retirement costs when these people leave early.

The government is going to have to pay retirement annuities out

sooner. And then they have these new folks coming in and it is

going to affect their budgets.

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But if it is the logical thing to do in order for them to get the

people, then they should be doing it and we should welcome that.

The people are the most important part of this government.

Senator DURBIN. I agree, and that means just changing our

mindset. I applaud the Chairman for his leadership.

Mr. Walker, did you want to make an observation?

Mr. WALKER. Senator, yesterday, I gave a speech before the

Council for Excellence in Government and it was about how to

improve government performance and enhance public trust in government. A number of the comments you made were echoed in my

remarks. I think the Congress is going to have to do some things

differently in order to achieve those objectives, as well. I am encouraged that the Chairman has made a commitment to keep at

this for several years. I know you and other Senators will be part

of that process.

Regarding contracting out, I think there is a linkage, quite frankly, to some of the challenges we face in human capital, because

what we find is that all too frequently, people spend a lot of time

and effort determining what and to whom are they going to contract out, but then they do not have adequate skills internally to

manage contractors’ cost and quality. The contractor is on autopilot and therefore we get in trouble.

So these issues are inherently linked in many different ways. I

have heard everybody say, and I think rightfully, that people are

our most valuable asset and that we face some serious challenges

and they are known challenges. I think we need the flexibility. I

think we need additional visibility and support. And we may need

some targeted resources to try to help us get to where we need to

be.

Senator VOINOVICH. Thank you.

I just have a couple of anecdotes. When I came in as Mayor of

Cleveland, we established an operations improvement task force. I

had the private sector come in and they spent almost a year going

out into agencies, and actually not telling them what to do but just

getting their ideas on how they could improve things. The city had

farmed out data processing to a firm and the private sector people

said, you are so far behind in systems, it is unbelievable. Well, the

company that we had hired wanted so much money to develop new

systems that it did not happen. The private sector advised us to get

rid of them and bring people in-house, and that is exactly what we

did. It took a couple of years and we got back on track and we are

competitive again.

When I was a county assessor, they had farmed all the appraisal

work out to a private firm. We did not have the people in-house

to do our annual maintenance work nor did we have the people inhouse to tell me whether or not these private sector people were

ripping us off or not.

I think that there is too much of this, where you just hire somebody from the outside, and before you know it, you are stripped

down of the talent that you need in your agency to make intelligent

decisions.

We want to thank you for coming here this morning and I look

forward to continuing these hearings and working with both of you

25

1The prepared statement of Ms. Lee appears in the Appendix on page 71.

to see if we can make some progress on this very, very important

issue. Thank you very much.

Ms. LACHANCE. Thank you, sir.

Mr. WALKER. Thank you.

Senator VOINOVICH. I would like to insert into the record a statement from Deidre Lee, the Acting Deputy Director for Management

at the Office of Management and Budget.1

The Subcommittee is adjourned.

[Whereupon, at 11:25 p.m., the Subcommittee was adjourned.]

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